UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of Securities Act. ☐
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Item 2.02 | Results of Operations and Financial Condition. |
On April 29, 2024, Lantronix, Inc., a Delaware corporation (the “Company”), issued a press release setting forth the Company’s financial results for its third fiscal quarter ended March 31, 2024. A copy of the press release is attached hereto as Exhibit 99.1.
In addition, on April 29, 2024, the Company posted on its website at www.lantronix.com a transcript of management’s prepared remarks for the Company’s third quarter fiscal 2024 investor conference call and audio webcast, scheduled for 2:00 p.m. Pacific Time (5:00 p.m. Eastern Time) on April 29, 2024.
The information furnished under this Item 2.02, including Exhibits 99.1 and 99.2, shall not be deemed “filed” for purposes of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
Item 7.01 | Regulation FD Disclosure. |
The information disclosed in Item 2.02 of this Current Report on Form 8-K is incorporated by reference into this Item 7.01.
The information furnished pursuant to this Item 7.01 shall not be deemed “filed” for purposes of Section 18 of the Exchange Act or incorporated by reference in any filing under the Securities Act or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
Item 9.01 | Financial Statements and Exhibits. |
(d) Exhibits
Exhibit Number | Description | |
99.1 |
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99.2 | Transcript of management’s prepared remarks for third quarter fiscal 2024 investor conference call and audio webcast, scheduled for April 29, 2024. | |
104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
LANTRONIX, INC. | |||
By: | /s/ Jeremy Whitaker | ||
Jeremy Whitaker Chief Financial Officer |
Date: April 29, 2024
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Exhibit 99.1
Lantronix Reports Record Revenue for Third Quarter of Fiscal 2024
· | Third Quarter Net Revenue of $41.2 Million, up 11 Percent Sequentially and up 25 Percent Year-Over-Year | |
· | Third Quarter GAAP EPS of ($0.01) vs. ($0.08) in the Prior Year | |
· | Third Quarter Non-GAAP EPS of $0.11 vs. $0.06 in the Prior Year |
IRVINE, Calif., April 29, 2024 — Lantronix Inc. (NASDAQ: LTRX), a global provider of compute and connectivity IoT solutions, today reported results for its third quarter of fiscal 2024.
Net revenue totaled $41.2 million, up 11 percent sequentially and up 25 percent year-over-year.
GAAP EPS of ($0.01), compared to ($0.08) in the prior year and ($0.07) in the prior quarter.
Non-GAAP EPS of $0.11, compared to $0.06 in the prior year and $0.08 in the prior quarter.
Business Outlook
For the fourth fiscal quarter of 2024, the company expects revenue in a range of $46.5 million to $51.5 million and non-GAAP EPS of $0.12 to $0.18 per share.
Conference Call and Webcast
Management will host an investor conference call and audio webcast on Monday, April 29, 2024, at 2:00 p.m. Pacific Time (5:00 p.m. Eastern Time) to discuss its results for the third quarter of fiscal 2024 that ended March 31, 2024. To access the live conference call, investors should dial 1-844-802-2442 (U.S.) or 1-412-317-5135 (international) and indicate that they are participating in the Lantronix Q3 FY 2024 call. The webcast will be available simultaneously via the investor relations section of the company’s website.
Investors can access a replay of the conference call starting at approximately 7:00 p.m. Pacific Time on April 29, 2024, at the Lantronix website. A telephonic replay will also be available through May 6, 2024, by dialing 1-877-344-7529 (U.S.) or 1-412-317-0088 (international) or Canada toll-free at 1-855-669-9658 and entering passcode 1167329.
About Lantronix
Lantronix Inc. is a global provider of compute and connectivity IoT solutions that target high-growth industries, including Smart Cities, Automotive and Enterprise. Lantronix’s products and services empower companies to achieve success in the growing IoT markets by delivering customizable solutions that address each layer of the IoT Stack. Lantronix’s leading-edge solutions include Intelligent Substations infrastructure, Infotainment systems and Video Surveillance, supplemented with advanced Out-of-Band Management (OOB) for Cloud and Edge Computing.
For more information, visit the Lantronix website.
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Discussion of Non-GAAP Financial Measures
Lantronix believes that the presentation of non-GAAP financial information, when presented in conjunction with the corresponding GAAP measures, provides important supplemental information to management and investors regarding financial and business trends relating to the company’s financial condition and results of operations. Management uses the aforementioned non-GAAP measures to monitor and evaluate ongoing operating results and trends to gain an understanding of our comparative operating performance. The non-GAAP financial measures disclosed by the company should not be considered a substitute for, or superior to, financial measures calculated in accordance with GAAP, and the financial results calculated in accordance with GAAP and reconciliations of the non-GAAP financial measures to the financial measures calculated in accordance with GAAP should be carefully evaluated. The non-GAAP financial measures used by the company may be calculated differently from, and therefore may not be comparable to, similarly titled measures used by other companies. The company has provided reconciliations of the non-GAAP financial measures to the most directly comparable GAAP financial measures.
Non-GAAP net income consists of net loss excluding (i) share-based compensation and the employer portion of withholding taxes on stock grants, (ii) depreciation and amortization, (iii) interest income (expense), (iv) other income (expense), (v) income tax provision (benefit), (vi) restructuring, severance and related charges, (vii) acquisition related costs, (viii) impairment of long-lived assets, (ix) amortization of purchased intangibles, (x) amortization of manufacturing profit in acquired inventory, (xi) fair value remeasurement of earnout consideration, and (xii) loss on extinguishment of debt.
Non-GAAP EPS is calculated by dividing non-GAAP net loss by non-GAAP weighted-average shares outstanding (diluted). For purposes of calculating non-GAAP EPS, the calculation of GAAP weighted-average shares outstanding (diluted) is adjusted to exclude share-based compensation, which for GAAP purposes is treated as proceeds assumed to be used to repurchase shares under the GAAP treasury stock method.
Guidance on earnings per share growth is provided only on a non-GAAP basis due to the inherent difficulty of forecasting the timing or amount of certain items that have been excluded from the forward-looking non-GAAP measures, and a reconciliation to the comparable GAAP guidance has not been provided because certain factors that are materially significant to Lantronix’s ability to estimate the excluded items are not accessible or estimable on a forward-looking basis without unreasonable effort.
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Forward-Looking Statements
This news release contains forward-looking statements, including statements concerning our revenue and earnings expectations for the fourth fiscal quarter of 2024. These forward-looking statements are intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. We have based our forward-looking statements on our current expectations and projections about trends affecting our business and industry and other future events. Although we do not make forward-looking statements unless we believe we have a reasonable basis for doing so, we cannot guarantee their accuracy. Forward-looking statements are subject to substantial risks and uncertainties that could cause our results or experiences, or future business, financial condition, results of operations or performance, to differ materially from our historical results or those expressed or implied in any forward-looking statement contained in this news release. Other factors which could have a material adverse effect on our operations and future prospects or which could cause actual results to differ materially from our expectations include, but are not limited to: the effects of negative or worsening regional and worldwide economic conditions or market instability on our business, including effects on purchasing decisions by our customers; our ability to mitigate any disruption in our and our suppliers’ and vendors’ supply chains due to the COVID-19 pandemic or other outbreaks, wars and recent conflicts in Europe, Asia and the Middle East, hostilities in the Red Sea, or other causes; our ability to successfully convert our backlog and current demand; our ability to successfully implement our acquisitions strategy or integrate acquired companies; uncertainty as to the future profitability of acquired businesses, and delays in the realization of, or the failure to realize, any accretion from acquisition transactions; acquiring, managing and integrating new operations, businesses or assets, and the associated diversion of management attention or other related costs or difficulties; our ability to continue to generate revenue from products sold into mature markets; our ability to develop, market, and sell new products; our ability to succeed with our new software offerings; fluctuations in our revenue due to the project-based timing of orders from certain customers; unpredictable timing of our revenues due to the lengthy sales cycle for our products and services and potential delays in customer completion of projects; our ability to accurately forecast future demand for our products; delays in qualifying revisions of existing products; constraints or delays in the supply of, or quality control issues with, certain materials or components; difficulties associated with the delivery, quality or cost of our products from our contract manufacturers or suppliers; risks related to the outsourcing of manufacturing and international operations; difficulties associated with our distributors or resellers; intense competition in our industry and resultant downward price pressure; rises in inventory levels and inventory obsolescence; undetected software or hardware errors or defects in our products; cybersecurity risks; our ability to obtain appropriate industry certifications or approvals from governmental regulatory bodies; changes in applicable U.S. and foreign government laws, regulations, and tariffs; our ability to protect patents and other proprietary rights and avoid infringement of others’ proprietary technology rights; issues relating to the stability of our financial and banking institutions and relationships; the level of our indebtedness, our ability to service our indebtedness and the restrictions in our debt agreements; the impact of rising interest rates; our ability to attract and retain qualified management; and any additional factors included in our Report on Form 10-K for the fiscal year ended June 30, 2023, filed with the Securities and Exchange Commission (the “SEC”) on Sept. 12, 2023, including in the section entitled “Risk Factors” in Item 1A of Part I of that report; in our Quarterly Report on Form 10-Q for the fiscal quarter ended Dec. 31, 2023, filed with the SEC on Feb. 8, 2024, including in the section entitled “Risk Factors” in Item 1A of Part II of such report; and in our other public filings with the SEC. In addition, actual results may differ as a result of additional risks and uncertainties of which we are currently unaware or which we do not currently view as material to our business. For these reasons, investors are cautioned not to place undue reliance on any forward-looking statements. The forward-looking statements we make speak only as of the date on which they are made. We expressly disclaim any intent or obligation to update any forward-looking statements after the date hereof to conform such statements to actual results or to changes in our opinions or expectations, except as required by applicable law or the rules of the Nasdaq Stock Market LLC. If we do update or correct any forward-looking statements, investors should not conclude that we will make additional updates or corrections.
© 2024 Lantronix Inc. All rights reserved. Lantronix is a registered trademark.
Lantronix Investor Relations Contact:
Jeremy Whitaker
Chief Financial Officer
investors@lantronix.com
# # #
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LANTRONIX, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
March 31, | June 30, | |||||||
2024 | 2023 | |||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 24,642 | $ | 13,452 | ||||
Accounts receivable, net | 28,542 | 27,682 | ||||||
Inventories, net | 40,552 | 49,736 | ||||||
Contract manufacturers' receivables | 1,562 | 3,019 | ||||||
Prepaid expenses and other current assets | 2,586 | 2,662 | ||||||
Total current assets | 97,884 | 96,551 | ||||||
Property and equipment, net | 4,409 | 4,629 | ||||||
Goodwill | 27,824 | 27,824 | ||||||
Intangible assets, net | 6,561 | 10,565 | ||||||
Lease right-of-use assets | 10,128 | 11,583 | ||||||
Other assets | 586 | 472 | ||||||
Total assets | $ | 147,392 | $ | 151,624 | ||||
Liabilities and stockholders' equity | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 13,845 | $ | 12,401 | ||||
Accrued payroll and related expenses | 4,539 | 2,431 | ||||||
Current portion of long-term debt, net | 3,002 | 2,743 | ||||||
Other current liabilities | 22,188 | 28,813 | ||||||
Total current liabilities | 43,574 | 46,388 | ||||||
Long-term debt, net | 13,970 | 16,221 | ||||||
Other non-current liabilities | 11,763 | 11,459 | ||||||
Total liabilities | 69,307 | 74,068 | ||||||
Commitments and contingencies | ||||||||
Stockholders' equity: | ||||||||
Common stock | 4 | 4 | ||||||
Additional paid-in capital | 301,117 | 295,686 | ||||||
Accumulated deficit | (223,407 | ) | (218,505 | ) | ||||
Accumulated other comprehensive income | 371 | 371 | ||||||
Total stockholders' equity | 78,085 | 77,556 | ||||||
Total liabilities and stockholders' equity | $ | 147,392 | $ | 151,624 |
4 |
LANTRONIX, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
Three Months Ended | Nine Months Ended | |||||||||||||||||||
March 31, | December 31, | March 31, | March 31, | |||||||||||||||||
2024 | 2023 | 2023 | 2024 | 2023 | ||||||||||||||||
Net revenue | $ | 41,183 | $ | 37,038 | $ | 32,964 | $ | 111,252 | $ | 96,265 | ||||||||||
Cost of revenue | 24,679 | 22,007 | 18,328 | 65,620 | 53,799 | |||||||||||||||
Gross profit | 16,504 | 15,031 | 14,636 | 45,632 | 42,466 | |||||||||||||||
Operating expenses: | ||||||||||||||||||||
Selling, general and administrative | 9,753 | 10,224 | 9,946 | 29,147 | 28,916 | |||||||||||||||
Research and development | 5,186 | 4,725 | 5,067 | 15,017 | 14,677 | |||||||||||||||
Restructuring, severance and related charges | 350 | 530 | 490 | 900 | 664 | |||||||||||||||
Acquisition-related costs | – | – | – | – | 315 | |||||||||||||||
Fair value remeasurement of earnout consideration | – | – | 140 | (9 | ) | (533 | ) | |||||||||||||
Amortization of intangible assets | 1,310 | 1,310 | 1,424 | 4,004 | 4,340 | |||||||||||||||
Total operating expenses | 16,599 | 16,789 | 17,067 | 49,059 | 48,379 | |||||||||||||||
Loss from operations | (95 | ) | (1,758 | ) | (2,431 | ) | (3,427 | ) | (5,913 | ) | ||||||||||
Interest expense, net | (171 | ) | (232 | ) | (465 | ) | (741 | ) | (1,081 | ) | ||||||||||
Other income (loss), net | 2 | (23 | ) | (29 | ) | (2 | ) | (21 | ) | |||||||||||
Loss before income taxes | (264 | ) | (2,013 | ) | (2,925 | ) | (4,170 | ) | (7,015 | ) | ||||||||||
Provision (benefit) for income taxes | 159 | 580 | 140 | 732 | 312 | |||||||||||||||
Net loss | $ | (423 | ) | $ | (2,593 | ) | $ | (3,065 | ) | $ | (4,902 | ) | $ | (7,327 | ) | |||||
Net loss per share - basic and diluted | $ | (0.01 | ) | $ | (0.07 | ) | $ | (0.08 | ) | $ | (0.13 | ) | $ | (0.20 | ) | |||||
Weighted-average common shares - basic and diluted | 37,509 | 37,354 | 36,548 | 37,283 | 36,105 |
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LANTRONIX, INC.
UNAUDITED RECONCILIATION OF NON-GAAP ADJUSTMENTS
(In thousands, except per share data)
Three Months Ended | Nine Months Ended | |||||||||||||||||||
March 31, | December 31, | March 31, | March 31, | |||||||||||||||||
2024 | 2023 | 2023 | 2024 | 2023 | ||||||||||||||||
GAAP net loss | $ | (423 | ) | $ | (2,593 | ) | $ | (3,065 | ) | $ | (4,902 | ) | $ | (7,327 | ) | |||||
Non-GAAP adjustments: | ||||||||||||||||||||
Cost of revenue: | ||||||||||||||||||||
Share-based compensation | 66 | 64 | 47 | 171 | 159 | |||||||||||||||
Employer portion of withholding taxes on stock grants | 1 | 1 | 1 | 6 | 13 | |||||||||||||||
Amortization of manufacturing profit in acquired inventory | 190 | 189 | 77 | 696 | 181 | |||||||||||||||
Depreciation and amortization | 144 | 109 | 116 | 339 | 364 | |||||||||||||||
Total adjustments to cost of revenue | 401 | 363 | 241 | 1,212 | 717 | |||||||||||||||
Selling, general and administrative: | ||||||||||||||||||||
Share-based compensation | 1,337 | 1,628 | 1,293 | 4,238 | 4,132 | |||||||||||||||
Employer portion of withholding taxes on stock grants | 21 | 10 | 25 | 68 | 167 | |||||||||||||||
Depreciation and amortization | 352 | 338 | 280 | 1,024 | 695 | |||||||||||||||
Total adjustments to selling, general and administrative | 1,710 | 1,976 | 1,598 | 5,330 | 4,994 | |||||||||||||||
Research and development: | ||||||||||||||||||||
Share-based compensation | 469 | 484 | 388 | 1,381 | 1,090 | |||||||||||||||
Employer portion of withholding taxes on stock grants | 9 | 5 | 5 | 27 | 29 | |||||||||||||||
Depreciation and amortization | 76 | 52 | 37 | 236 | 164 | |||||||||||||||
Total adjustments to research and development | 554 | 541 | 430 | 1,644 | 1,283 | |||||||||||||||
Restructuring, severance and related charges | 350 | 530 | 490 | 900 | 664 | |||||||||||||||
Acquisition related costs | – | – | – | – | 315 | |||||||||||||||
Fair value remeasurement of earnout consideration | – | – | 140 | (9 | ) | (533 | ) | |||||||||||||
Amortization of purchased intangible assets | 1,310 | 1,310 | 1,424 | 4,004 | 4,340 | |||||||||||||||
Litigation settlement cost | – | – | 250 | – | 330 | |||||||||||||||
Total non-GAAP adjustments to operating expenses | 3,924 | 4,357 | 4,332 | 11,869 | 11,393 | |||||||||||||||
Interest expense, net | 171 | 232 | 465 | 741 | 1,081 | |||||||||||||||
Other (income) expense, net | (2 | ) | 23 | 29 | 2 | 21 | ||||||||||||||
Provision for income taxes | 159 | 580 | 140 | 732 | 312 | |||||||||||||||
Total non-GAAP adjustments | 4,653 | 5,555 | 5,207 | 14,556 | 13,524 | |||||||||||||||
Non-GAAP net income | $ | 4,230 | $ | 2,962 | $ | 2,142 | $ | 9,654 | $ | 6,197 | ||||||||||
Non-GAAP net income per share - diluted | $ | 0.11 | $ | 0.08 | $ | 0.06 | $ | 0.25 | $ | 0.17 | ||||||||||
Denominator for GAAP net income per share - diluted | 37,509 | 37,354 | 36,548 | 37,283 | 36,105 | |||||||||||||||
Non-GAAP adjustment | 1,674 | 1,228 | 839 | 1,021 | 1,066 | |||||||||||||||
Denominator for non-GAAP net income per share - diluted | 39,183 | 38,582 | 37,387 | 38,304 | 37,171 | |||||||||||||||
GAAP cost of revenue | $ | 24,679 | $ | 22,007 | $ | 18,328 | $ | 65,620 | $ | 53,799 | ||||||||||
Non-GAAP adjustments to cost of revenue | (401 | ) | (363 | ) | (241 | ) | (1,212 | ) | (717 | ) | ||||||||||
Non-GAAP cost of revenue | 24,278 | 21,644 | 18,087 | 64,408 | 53,082 | |||||||||||||||
Non-GAAP gross profit | $ | 16,905 | $ | 15,394 | $ | 14,877 | $ | 46,844 | $ | 43,183 | ||||||||||
Non-GAAP gross margin | 41.0% | 41.6% | 45.1% | 42.1% | 44.9% |
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LANTRONIX, INC.
UNAUDITED NET REVENUES BY PRODUCT LINE AND REGION
(In thousands)
Three Months Ended | Nine Months Ended | |||||||||||||||||||
March 31, 2024 | December 31, 2023 | March 31, 2023 | March 31, 2024 | March 31, 2023 | ||||||||||||||||
Embedded IoT Solutions | $ | 12,452 | $ | 11,764 | $ | 16,055 | $ | 35,589 | $ | 44,818 | ||||||||||
IoT System Solutions | 26,789 | 23,022 | 14,034 | 68,847 | 43,568 | |||||||||||||||
Software & Services | 1,942 | 2,252 | 2,875 | 6,816 | 7,879 | |||||||||||||||
$ | 41,183 | $ | 37,038 | $ | 32,964 | $ | 111,252 | $ | 96,265 | |||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||||||
March 31, 2024 | December 31, 2023 | March 31, 2023 | March 31, 2024 | March 31, 2023 | ||||||||||||||||
Americas | $ | 17,543 | $ | 20,601 | $ | 19,095 | $ | 61,077 | $ | 59,713 | ||||||||||
EMEA | 18,354 | 12,886 | 6,380 | 37,831 | 16,486 | |||||||||||||||
Asia Pacific Japan | 5,286 | 3,551 | 7,489 | 12,344 | 20,066 | |||||||||||||||
$ | 41,183 | $ | 37,038 | $ | 32,964 | $ | 111,252 | $ | 96,265 |
7 |
Exhibit 99.2
Lantronix, Inc.
Third Quarter Fiscal 2024 Earnings Call
Prepared Remarks
Introduction: Jeremy Whitaker
Good afternoon everyone and thank you for joining our quarterly earnings call. Joining me on the call today is our President and Chief Executive Officer, Saleel Awsare.
A live and archived webcast of today’s call will be available on the company’s website. In addition, you can find the call-in details for the phone replay in today’s earnings release.
During this call, management may make forward-looking statements which involve risks and uncertainties that could cause our results to differ materially from management's current expectations. We encourage you to review the cautionary statements and risk factors contained in the earnings release, which was furnished to the SEC today and is available on our website, and in the Company’s SEC filings such as its 10-K and 10-Qs. Lantronix undertakes no obligation to revise or update publicly any forward-looking statements to reflect future events or circumstances.
Please refer to the news release and the financial information in the investor relations section of our website for additional details that will supplement management’s commentary.
Furthermore, during the call, the company will discuss non-GAAP financial measures. Today's earnings release, which is posted in the investor relations section of our website, describes the differences between our non-GAAP and GAAP reporting, and presents reconciliations for the non-GAAP financial measures that we use.
With that, I’ll now turn the call over to Saleel.
Saleel:
Thanks Jeremy, and thank you, everyone, for joining us on the call today. I am pleased to report record revenue of $41.2 million for the Third Quarter of FY 2024, a year-over-year increase of 25% compared to the same period of 2023, and a sequential increase of 11% compared to the December quarter.
Non-GAAP EPS in FYQ3 grew 88% compared to the same period last year, demonstrating the leverage in our operating model as revenue improves.
Jeremy will provide you with more details and analysis on the Third Quarter financial results shortly.
As I’ve recently completed five months with Lantronix, and having spent a lot of time with our key customers, strategic partners, and most importantly the Lantronix team, I am very optimistic about the future given our strong products and solutions, our growing customer engagements, and our improving EBITDA & solid balance sheet.
1 |
We see both Compute and Connect technologies converging at the Edge of the Network - - and that’s exactly where we play with our core capabilities and solutions.
We have a deep understanding of Edge Compute requirements and provide our customers with complete solutions including Hardware, Software, Design Services, and our Percepxion IoT platform for device management and application integration.
○ | Our focus going forward will be on three key vertical segments including: (i) Smart Cities; (ii) Automotive Infotainment; and (iii) Enterprise. We estimate the Served Available Market the company is addressing in the three different verticals is $8.5 billion and we expect compound annual growth rate over the next few years to be approximately 12%. |
Let me give you an example in each of these verticals.
○ | In Smart Cities, we have the opportunity to drive revenue growth over couple of key areas, namely: (i) Smart Grid and (ii) Critical Infrastructure. We estimate the Serviceable Addressable Market of the Smart Cities vertical to be approximately $3.9 billion and the compound annual growth rate over the next few years to be approximately 12%. |
§ | In the Smart Grid sector, we see continued momentum with our lead smart grid customer, where we received our first follow-on order for the first half of FY25 as this customer is transitioning from design and initial production to a run-rate business. Our relationship continues to deepen with our lead customer, and we are engaged at all levels of the organization. We expect that as they expand their market beyond their current roll-out and into broader applications and geographies with the QED device and its variants, we will continue to partner with them to address these needs. I expect this to be a long-term, mutually beneficial engagement. | |
§ | Now moving to Critical Infrastructure. A great example of this sector is a recent Design Win with a Tier One telecom customer who is using our Fox telematics device coupled with our Percepxion SAAS solution for monitoring and managing cell site power generators. We are replicating this design win with multiple generator makers who have similar needs. Looking further out, the same solution can be extended to applications at construction sites, hospitals, and other such locations. |
○ | In Automotive Infotainment, the trend is clearly towards “Pillar-to-Pillar” large interactive displays with the Digital Cockpit becoming a highly valued part of the vehicle. |
§ | We estimate the current SAM in Auto Infotainment to be approximately $900 million and the annual growth rate to be about 21%. | |
§ | Our IP resides in the Automotive Infotainment Compute system we developed for Togg, the Turkish-based automotive OEM, and we’re seeing strong interest from Tier II and Tier III Automotive OEMs as well as manufacturers of commercial trucks, motorcycles, and heavy machinery. | |
§ | Let me also add an update on Togg. They recently unveiled their second vehicle - - the T10F sedan - - and our Embedded Compute solution is designed into the vehicle’s digital cockpit. Additionally, they have told us they plan to start shipping vehicles to Germany in calendar year 2025. We continue to collaborate and innovate with them as they expand their business. |
2 |
○ | In the Enterprise vertical, we are focused on Out of Band, Video conferencing, and security and surveillance. We estimate the SAM of our Enterprise vertical market opportunity to be approximately $3.7 billion growing at about 9% annually over the next few years. |
§ | Let me add some color on one of our products addressing the growing need for Out of Band management. Out of Band solutions provide alternative pathways to access servers, networks, and routers when the primary access path is unavailable. | |
§ | Providing uptime and resilient networks is important for many sectors including banks, government, healthcare, and the retail sector. | |
§ | We provide not only Hardware but also management software, ongoing support and warranty services. |
In summary, we are focused on three growing, attractive vertical markets with a combined SAM of $8.5B and growing. Our Business Teams are actively targeting new customer design wins across the three verticals and all our major geographic regions.
I remain excited about the growth opportunity ahead for Lantronix, especially given our broad portfolio, IP, and great customer base.
In summary, we have a great company and we’re building on strength. Moving forward we will become an even stronger company given the technology and talent we have in place, driving profitable growth and shareholder value.
With that, I will now turn the call over to Jeremy, our Chief Financial Officer, for his comments on FYQ3 and guidance for the next quarter.
Jeremy: Thank you, Saleel.
Now I will provide the financial results and some business highlights for our third quarter of fiscal year 2024 before commenting on our financial outlook for the fourth quarter of fiscal 2024.
For FQ3 2024, we reported revenue of $41.2 million, an all-time record for Lantronix. Revenue was up 11% and 25% from the sequential and year ago periods, respectively.
IoT System Solutions revenue increased by 16% and 91% from the sequential and year ago periods, respectively. The increase was primarily driven by the continued ramp of production shipments for our lead smart grid customer. In addition, the year-over-year increase was impacted by strong sales from our Out of Band Management products. For the remainder of the fiscal year, we expect continued growth from our IoT System Solutions.
Sequentially, Embedded IoT Solutions revenue was up 6% with continued contribution from our lead automotive customer. As expected, we experienced a year-on-year decline in Embedded IoT Solutions as the year ago period included a large enterprise video customer design that ended in FQ4 2023.
In FQ3 2024, Software and Services revenues were down from the year ago period, primarily a function of the completion of two large design services projects that transitioned into production during the first half of fiscal 2024.
3 |
GAAP gross margin was 40.1% for FQ3 2024 compared to 40.6% in the prior quarter and 44.4% in the year ago quarter.
Non-GAAP gross margin was 41.0% for FQ3 2024 compared to 41.6% in the prior quarter and 45.1% in the year ago quarter.
The decline in gross margin percentage was primarily a function of a change in product mix driven by the product ramp with our smart grid customer. For FQ4 2024, we expect gross margins in a similar range.
GAAP SG&A expenses for FQ3 2024 were $9.9 million compared with $9.7 million in the year-ago quarter and $10.2 million in the prior quarter.
GAAP R&D expenses for FQ3 2024 were $5.2 million, compared with $5.1 million in the year-ago quarter and $4.7 million in the prior quarter.
In the upcoming quarter, we expect a sequential increase in opex related to variable compensation as revenue and earnings are expected to improve in FQ4 2024.
GAAP net loss was $423,000, or $0.01 cent per share, during FQ3 2024 compared to GAAP net loss of $3.1 million, or $0.08 cents per share, in the year ago quarter.
Non-GAAP net income doubled from the year ago quarter demonstrating leverage in our operating model and strong cost control. Non-GAAP net income was $4.2 million, or $0.11 cents per share, in FQ3 2024 compared to non-GAAP net income of $2.1 million, or $0.06 cents per share, in the year ago quarter.
Now turning to the balance sheet.
We ended FQ3 2024 with cash and cash equivalents of $24.6 million, an increase of $2.5 million from the prior quarter.
Working capital was $54.3 million, an increase of $2.4 million from the prior quarter.
Net inventories were $40.6 million at the end of FQ3 2024, a decrease of $2.2 million from the prior quarter.
Now turning to our outlook. For the fourth quarter of fiscal 2024 we expect:
· | Revenue to be in the range of $46.5 to $51.5 million; and | |
· | Non-GAAP EPS in a range of $0.12 to $0.18 cents per share |
In summary, we are maintaining the annual guidance for fiscal 2024 that we provided during our February 2024 earnings call. At the mid-point of our FQ4 2024 outlook, we expect to deliver record revenue and non-GAAP earnings for fiscal 2024 with 22% organic revenue growth and a 74% increase in non-GAAP EPS as compared to our fiscal year 2023 results.
With that we complete our prepared remarks for today so I will now turn it over to the operator to conduct our Q&A session.
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Cover |
Apr. 29, 2024 |
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Cover [Abstract] | |
Document Type | 8-K |
Amendment Flag | false |
Document Period End Date | Apr. 29, 2024 |
Entity File Number | 1-16027 |
Entity Registrant Name | LANTRONIX, INC. |
Entity Central Index Key | 0001114925 |
Entity Tax Identification Number | 33-0362767 |
Entity Incorporation, State or Country Code | DE |
Entity Address, Address Line One | 48 Discovery |
Entity Address, Address Line Two | Suite 250 |
Entity Address, City or Town | Irvine |
Entity Address, State or Province | CA |
Entity Address, Postal Zip Code | 92618 |
City Area Code | 949 |
Local Phone Number | 453-3990 |
Written Communications | false |
Soliciting Material | false |
Pre-commencement Tender Offer | false |
Pre-commencement Issuer Tender Offer | false |
Title of 12(b) Security | Common Stock |
Trading Symbol | LTRX |
Security Exchange Name | NASDAQ |
Entity Emerging Growth Company | false |
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