LTRX Lantronix Inc

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

 

 

FORM 8-K

 

 

CURRENT REPORT

 

Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported): November 7, 2024

 

 

LANTRONIX, INC.

(Exact Name of Registrant as Specified in Charter)

 

 

Delaware		1-16027		33-0362767
(State or other jurisdiction of incorporation)		(Commission File Number)		(IRS Employer Identification No.)
48 Discovery, Suite 250 Irvine, California 92618
(Address of Principal Executive Offices, including zip code)
Registrant’s telephone number, including area code: (949) 453-3990
Not Applicable
(Former name or former address, if changed since last report)

 

 

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:

 

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each Class	Trading Symbol		Name of each exchange on which registered
Common Stock, $0.0001 par value		LTRX	The Nasdaq Stock Market LLC

 

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. ☐

 

 

 

 

Item 5.02

Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

 

On November 7, 2024, Lantronix, Inc., a Delaware corporation (the “Company”), issued a press release setting forth the Company’s financial results for its first fiscal quarter ended September 30, 2024.  A copy of the press release is attached hereto as Exhibit 99.1.

 

The information furnished under this Item 2.02, including Exhibit 99.1, shall not be deemed “filed” for purposes of the Securities Exchange Act of 1934, as amended.

 

In addition, on November 7, 2024, the Company posted on its website at www.lantronix.com a transcript of management’s prepared remarks for the Company’s first quarter fiscal 2025 investor conference call and audio webcast, scheduled for 3:30 p.m. Pacific Time (6:30 p.m. Eastern Time) on November 7, 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.

 

On November 7, 2024, the Company issued a press release announcing the entry into a definitive agreement to acquire the assets of the enterprise Internet of Things (IoT) business of NetComm Wireless Pty Ltd. A copy of the press release is attached hereto as Exhibit 99.3 and 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

 

The following exhibits are filed with this Current Report on Form 8-K:

 

Exhibit No.		Description
99.1		Press Release, dated November 7, 2024, reporting the Company’s financial results for the first fiscal quarter ended September 30, 2024
99.2		Transcript of management’s prepared remarks for first quarter fiscal 2025 investor conference call and audio webcast, scheduled for November 7, 2024.
99.3		Press Release, dated November 7, 2024, announcing the planned acquisition of DZS’s NetComm Enterprise IoT portfolio
104		Cover Page Interactive Data File (embedded within the Inline XBRL document).

 

 

 

 

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/ Brent Stringham
			Brent Stringham
			Interim Chief Financial Officer and Chief Accounting Officer

 

Date: November 7, 2024

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exhibit 99.1

 

 

 

Lantronix Reports Results for First Quarter of Fiscal 2025

 

	·	First Quarter Net Revenue of $34.4 Million, up 4 Percent Year-Over-Year
	·	First Quarter GAAP EPS of ($0.07) vs. ($0.05) in the Prior Year
	·	First Quarter Non-GAAP EPS of $0.06 vs. $0.07 in the Prior Year

 

IRVINE, Calif., November 7, 2024 – Lantronix Inc. (NASDAQ: LTRX), a global provider of secure turnkey solutions for the Industrial Internet of Things (IoT) and Intelligent IT market, today reported results for its first quarter of fiscal 2025.

 

Net revenue totaled $34.4 million, up 4 percent year-over-year and down sequentially as expected.

 

GAAP EPS of ($0.07), compared to ($0.05) in the prior year and $0.01 in the prior quarter.

 

Non-GAAP EPS of $0.06, compared to $0.07 in the prior year and $0.15 in the prior quarter.

 

Business Outlook

 

For the second fiscal quarter of 2025, the company expects revenue in a range of $29.0 million to $33.0 million and non-GAAP EPS of $0.01 to $0.05 per share. This guidance does not include any contribution from the acquisition of NetComm’s IoT product line as it is dependent on the closing date.

 

Conference Call and Webcast

 

Management will host an investor conference call and audio webcast on Thursday, November 7, 2024 at 3:30 p.m. Pacific Time (6:30 p.m. Eastern Time) to discuss its results for the first quarter of fiscal 2025 that ended September 30, 2024. To access the live conference call, investors should dial 1-844-802-2442 (US) or 1-412-317-5135 (international) and indicate that they are participating in the Lantronix Q1 FY 2025 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 Nov 7, 2024, at the Lantronix website. A telephonic replay will also be available through Nov 14, 2024, by dialing 1-877-344-7529 (US) or 1-412-317-0088 (international) or Canada toll-free at 1-855-669-9658 and entering passcode 8899754.

 

 

 

 

 

 

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 succeed 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.

 

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.

 

 

 

 

 

Forward-Looking Statements

 

This news release contains forward-looking statements, including statements concerning our revenue and earnings expectations for the second fiscal quarter of 2025. 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;  the impact of the COVID-19 pandemic or another pandemic or similar outbreak, including the emergence of new more contagious and/or vaccine-resistant strains, on our business, employees, supply and distribution chains and the global economy; 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, 2024, filed with the Securities and Exchange Commission (the “SEC”) on Sept. 9, 2024, including in the section entitled “Risk Factors” in Item 1A of Part I of that 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:

investors@lantronix.com

 

# # #

 

 

 

LANTRONIX, INC.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

 

 

		September 30,				June 30,
		2024				2024
Assets
Current assets:
Cash and cash equivalents		$	26,395			$	26,237
Accounts receivable, net			30,801				31,279
Inventories, net			29,533				27,698
Contract manufacturers' receivables			2,722				1,401
Prepaid expenses and other current assets			3,169				2,335
Total current assets			92,620				88,950
Property and equipment, net			3,642				4,016
Goodwill			27,824				27,824
Intangible assets, net			4,000				5,251
Lease right-of-use assets			9,165				9,567
Other assets			607				600
Total assets		$	137,858			$	136,208
Liabilities and stockholders' equity
Current liabilities:
Accounts payable		$	17,149			$	10,347
Accrued payroll and related expenses			3,440				5,836
Current portion of long-term debt, net			3,057				3,002
Other current liabilities			11,859				10,971
Total current liabilities			35,505				30,156
Long-term debt, net			12,409				13,219
Other non-current liabilities			11,014				11,478
Total liabilities			58,928				54,853
Commitments and contingencies
Stockholders' equity:
Common stock			4				4
Additional paid-in capital			304,078				304,001
Accumulated deficit			(225,523	)			(223,021	)
Accumulated other comprehensive income			371				371
Total stockholders' equity			78,930				81,355
Total liabilities and stockholders' equity		$	137,858			$	136,208

 

 

 

 

LANTRONIX, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

 

 

		Three Months Ended
		September 30,				June 30,				September 30,
		2024				2024				2023
Net revenue		$	34,423			$	49,075			$	33,031
Cost of revenue			19,948				30,353				18,934
Gross profit			14,475				18,722				14,097
Operating expenses:
Selling, general and administrative			9,496				11,059				9,170
Research and development			4,956				5,265				5,106
Restructuring, severance and related charges			900				523				20
Fair value remeasurement of earnout consideration			–				–				(9	)
Amortization of intangible assets			1,251				1,310				1,384
Total operating expenses			16,603				18,157				15,671
Income (loss) from operations			(2,128	)			565				(1,574	)
Interest expense, net			(119	)			(175	)			(338	)
Other income (loss), net			(37	)			9				19
Income (loss) before income taxes			(2,284	)			399				(1,893	)
Provision (benefit) for income taxes			218				13				(7	)
Net income (loss)		$	(2,502	)		$	386			$	(1,886	)
Net income (loss) per share - basic		$	(0.07	)		$	0.01			$	(0.05	)
Net income (loss) per share - diluted		$	(0.07	)		$	0.01			$	(0.05	)
Weighted-average common shares - basic			38,024				37,697				36,982
Weighted-average common shares - diluted			38,024				38,096				36,982

 

 

 

 

LANTRONIX, INC.

UNAUDITED RECONCILIATION OF NON-GAAP ADJUSTMENTS

(In thousands, except per share data)

 

 

		Three Months Ended
		September 30,				June 30,				September 30,
		2024				2024				2023
GAAP net income (loss)		$	(2,502	)		$	386			$	(1,886	)
Non-GAAP adjustments:
Cost of revenue:
Share-based compensation			64				66				41
Employer portion of withholding taxes on stock grants			5				1				4
Amortization of manufacturing profit in acquired inventory			–				126				317
Depreciation and amortization			123				124				86
Total adjustments to cost of revenue			192				317				448
Selling, general and administrative:
Share-based compensation			1,126				2,010				1,273
Employer portion of withholding taxes on stock grants			78				19				37
Depreciation and amortization			351				369				334
Total adjustments to selling, general and administrative			1,555				2,398				1,644
Research and development:
Share-based compensation			410				471				428
Employer portion of withholding taxes on stock grants			19				4				13
Depreciation and amortization			69				72				108
Total adjustments to research and development			498				547				549
Restructuring, severance and related charges			900				523				20
Acquisition related costs			29				–				–
Fair value remeasurement of earnout consideration			–				–				(9	)
Amortization of purchased intangible assets			1,251				1,310				1,384
Litigation settlement cost			40				115				–
Total non-GAAP adjustments to operating expenses			4,273				4,893				3,588
Interest expense, net			119				175				338
Other (income) expense, net			37				(9	)			(19	)
Provision (benefit) for income taxes			218				13				(7	)
Total non-GAAP adjustments			4,839				5,389				4,348
Non-GAAP net income		$	2,337			$	5,775			$	2,462
Non-GAAP net income per share - diluted		$	0.06			$	0.15			$	0.07
Denominator for GAAP net income (loss) per share - diluted			38,024				38,096				36,982
Non-GAAP adjustment			1,257				771				693
Denominator for non-GAAP net income per share - diluted			39,281				38,867				37,675
GAAP cost of revenue		$	19,948			$	30,353			$	18,934
Non-GAAP adjustments to cost of revenue			(192	)			(317	)			(448	)
Non-GAAP cost of revenue			19,756				30,036				18,486
Non-GAAP gross profit		$	14,667			$	19,039			$	14,545
Non-GAAP gross margin			42.6%				38.8%				44.0%

 

 

 

LANTRONIX, INC.

UNAUDITED NET REVENUES BY PRODUCT LINE AND REGION

(In thousands)

 

 

		Three Months Ended
		September 30,				June 30,				September 30,
		2024				2024				2023
Embedded IoT Solutions		$	13,387			$	11,364			$	11,373
IoT System Solutions			18,759				35,603				19,036
Software & Services			2,277				2,108				2,622
		$	34,423			$	49,075			$	33,031

 

		Three Months Ended
		September 30,				June 30,				September 30,
		2024				2024				2023
Americas		$	17,420			$	17,126			$	22,933
EMEA			10,484				26,194				6,591
Asia Pacific Japan			6,519				5,755				3,507
		$	34,423			$	49,075			$	33,031

 

 

 

 

 

 

 

 

 

 

 

 

Exhibit 99.2

 

Intro: Brent Stringham

 

Good afternoon 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 Awsare:

 

Thanks Brent, and thank you, everyone, for joining us on the call today.

 

We reported revenue of $34.4 million for the First Quarter of Fiscal 2025 which was up 4% compared to the same quarter last year. Non-GAAP EPS was 6 cents.

 

Brent Stringham, our interim CFO, will provide more details on the First Quarter financial results shortly.

 

On the call today, I’d like to highlight three topics with you:

 

1.

Our recently announced acquisition of Netcomm’s IoT product line;

2.

The progress we’re making in our collaboration with Qualcomm in Edge AI; and

3.

Our strategic focus on investing in areas where we can differentiate and demonstrate IoT leadership, while continuing to emphasize operational efficiency and cost savings.

 

First, our purchase of Netcomm’s IoT product line for $6.5 million in cash fits very well with our Compute & Connect strategy. It strengthens our Connect offerings by providing our customers with leading-edge IoT solutions. The acquisition expands our portfolio in Gateway, Routers, and Modems including the latest 5G products, enhancing our Edge Compute solutions. It also adds new blue-chip Enterprise customers for additional cross-selling opportunities and opens target-rich unserved geographic markets for our products such as Australia and New Zealand. In Calendar Year 2024, the Netcomm products are expected to generate approx. $6M to $7M in revenue, and the acquisition is expected to be immediately accretive to EPS.

 

In summary, this transaction improves our competitive position in the cellular gateway market; reduces our R&D requirements for the development of a 5G IoT Gateways & Router line; and contributes additional revenue to our Enterprise business.

 

The deal is expected to close in November subject to customary closing conditions.

 

 

 

Second, on the topic of Edge AI, I’m very pleased to report the last four months have been very productive in our engagement and strategic collaboration with Qualcomm for AI & Machine Learning. We delivered on three milestones recently, including:

 

-

First, we are thrilled to announce the signing of a development agreement with Qualcomm to advance their Graphical Composer tool to accelerate new Edge AI applications. What we’re doing is optimizing Qualcomm’s “AI Hub” tool kit to manage complex AI workflows, making it easier for end users to do AI modeling. The collaboration with Qualcomm demonstrates our ability to deliver scalable, high-performance AI solutions for our partners, customers, and the AI ecosystem;

 

-

Second, we are expanding our offerings in the Smart Cities vertical by successfully launching the first AI-enabled Edge Compute gateway called SmartLV in collaboration with Qualcomm. Our SmartLV gateway, which deploys their IQ-615 processor, was designed specifically for low-voltage substations and in next-generation smart grids, utilities, and other industrial applications. SmartLV provides operators with real-time management of their networks, enabling them to deliver energy-on-demand while ensuring network stability during periods of peak loading; and

 

-

Third, earlier this month, we announced five new “System-in-Package” solutions based on the latest Qualcomm processors. These new SiP & SOM solutions work at the edge of the network and help to accelerate the development of AI applications in the Enterprise and Industrial markets such as video surveillance, robotics, and industrial automation. As AI moves to the Edge, we are positioning ourselves to lead not only with Qualcomm-based System in Package solutions but also gateway hardware and software solutions. We have differentiated IP, development capabilities, and are a Western-based supplier. While this will take time, we expect to see momentum in this area in 2026 and beyond.

 

Together, these achievements with Qualcomm allows us to lay the foundation for our long-term strategy to become a key player in the Edge AI ecosystem, driving innovation and delivering end-to-end solutions that address the evolving needs of industries transitioning to AI-powered, edge-centric architectures.

 

And finally, we are implementing initiatives to drive business focus, improve operating efficiency, and enhance future profitability. Specifically,

-

we're in the process of streamlining our product portfolio. Going forward, we’ll not be making future investments in some non-core products such as our WiFi & GNSS modules. These lines are smaller contributors to our top-line and we want to direct our development resources on core growth areas where we provide differentiation and leadership; and

 

-

we are in the process of moving from seven sites globally to four “centers of excellence”, providing scale and efficiency.

 

With these initiatives and others already identified, we expect to reduce our FY’25 Operating Expenses by approximately $4.5M relative to FY’24, and we expect these initiatives to be fully implemented by the end of March 2025.

 

In conclusion, we remain focused on the mega-trend of enabling Edge Intelligence with our Compute & Connect solutions, allowing our customers to improve their real-time decision making while increasing their operational efficiency. And we are continuing to focus on profitable growth, cash generation, and making the right investments that help scale the business into FY2026 and beyond. We will continue to look for acquisitions that complement our core strategy as demonstrated by our pending Netcomm acquisition.

 

Overall, I am very pleased with our accomplishments this quarter including the acquisition of the Netcomm’s IoT product line; our progress with Qualcomm in Edge AI; and focusing our product portfolio and improving our operating efficiency.

 

With that, I will now turn the call over to Brent Stringham, our interim CFO.

 

 

 

 

Brent Stringham:

 

Thank you, Saleel.

 

I will review the financial results and some business highlights for our first quarter of fiscal year 2025 before commenting on our financial outlook for the second quarter of Fiscal 2025.

 

For FQ1 2025, we reported revenue of $34.4 million, which was at the lower end of our guidance range. As expected, sequentially, revenue was down from the record revenues we reported last quarter which included relatively high shipments to our smart grid customer to support its initial deployments. On a year-over-year basis, FQ1 2025 revenue was up 4 percent.

 

Embedded IoT Solutions revenue increased by 18% from both the sequential and year ago periods. Sequentially, the increase was primarily driven by growth from a large enterprise video conferencing customer.

 

IoT System Solutions decreased by 47% and 1% from the sequential and year ago periods, respectively. The sequential decrease was largely driven by the expected reduction of approximately $16M in shipments to our large smart grid customer, and a large federal government agency order which did not materialize as originally expected. We expect this to be fulfilled incrementally in the coming quarters.

 

Software and Services were up 8% sequentially and lower by 13% from the year-ago quarter as products have moved into production.

 

GAAP gross margin was 42.1% for FQ1 2025 compared to 38.1% in the prior quarter and 42.7% in the year ago quarter.

 

Non-GAAP gross margin was 42.6% for FQ1 2025 compared to 38.8% in the prior quarter and 44.0% in the year ago quarter. As expected, gross margin improved sequentially as we did not experience similar inventory-related charges as in the previous quarter. We expect gross margin percent to remain in the low 40s range.

 

GAAP SG&A expenses for FQ1 2025 were $9.5 million compared with $9.2 million in the year-ago quarter and $11.1 million in the prior quarter. The sequential decrease was largely due to lower variable and share-based compensation owing to the lower revenue levels.

 

GAAP R&D expenses for FQ1 2025 were $5.0 million, compared with $5.1 million in the year-ago quarter and $5.3 million in the prior quarter.

 

GAAP net loss was $2.5 million, or 7 cents per share, during FQ1 2025 compared to GAAP net loss of $1.9 million, or 5 cents per share, in the year ago quarter.

 

Non-GAAP net income was $2.3 million or 6 cents per share during FQ1 2025 compared to non-GAAP net income of $2.5 million, or 7 cents per share, in the year ago quarter.

 

As Saleel mentioned earlier, the streamlining of our product portfolio and site consolidation is allowing us to reduce our operating costs.

 

These activities are underway, and we expect will result in quarterly non-GAAP Opex in the range of $11.25 to $11.75 million for the balance of the Fiscal Year.

 

For the full year, we expect to reduce our non-GAAP operating expenses by approximately $4.5 million relative to Fiscal 2024.

  

Now turning to the balance sheet...

 

We ended FQ1 2025 with cash and cash equivalents of $26.4 million, relatively flat with the prior quarter, and we generated positive operating cash flow of $2.7 million.

 

 

 

Net inventories increased slightly to $29.5 million as of FQ1 2025, as compared to $27.7 million in the prior quarter.

 

Now turning to our outlook. For the second quarter of Fiscal 2025 we expect:

 

	·	Revenue to be in the range of $29 to $33 million.
	·	We’re expecting sequentially lower revenue in FQ2 primarily due to lower volume from our largest Automotive customer in Turkey, and slightly lower activity in our Enterprise vertical market.
	·	As a result, we’re expecting non-GAAP EPS in a range of 1 cent to 5 cents per share in FQ2.
	·	This guidance for FQ2 does not include any contribution from the purchase of Netcomm’s IoT product line, as we have not yet closed the acquisition.

 

With that, we complete our prepared remarks for today, so I’ll now turn it over to the Operator to conduct our Q&A session.

 

 

 

 

 

 

 

 

 

 

 

 

 

Exhibit 99.3

 

 

 

Lantronix Accelerates IoT Leadership With Strategic

Acquisition of DZS’s NetComm Enterprise IoT Portfolio

 

	·	Expands Lantronix’s IoT Wireless Connect Portfolio With Cutting-Edge 5G Technology
	·	Strengthens Competitive Offering, Adds New Blue-Chip Customers

 

IRVINE, Calif., Nov. 7, 2024 – Lantronix Inc. (NASDAQ: LTRX), a global leader in IoT compute and connectivity IoT solutions, today announced that it has signed a definitive agreement to acquire from NetComm Wireless Pty Ltd (“NetComm”), a subsidiary of DZS, Inc., all of the assets of its enterprise Internet of Things (IoT) business for $6.5 million in cash together with assumptions of certain liabilities. The acquisition complements Lantronix’s focus on the Enterprise and Smart City vertical markets and expands its next-generation 5G capabilities.

 

“The strategic acquisition of Netcomm’s IoT portfolio strengthens our Compute and Connect offerings by providing our customers with leading-edge IoT solutions,” stated Saleel Awsare, president and CEO of Lantronix. “The acquisition expands our portfolio in Gateway, Routers and Modems, including the latest 5G products, which enhances our Edge Compute solutions. It also adds new blue-chip Enterprise customers for additional cross-selling opportunities and opens our products to target-rich unserved geographic markets, such as Australia and New Zealand.”

 

The closing of the acquisition is subject to certain conditions. Lantronix believes that the transaction will close during the second quarter of fiscal 2025. Lantronix expects the acquisition to be accretive upon closing and will accelerate the company’s strategic focus on innovative Industrial IoT solutions at scale. By integrating this new IoT portfolio, Lantronix will enhance its connectivity solutions in mission-critical areas, such as critical infrastructure, asset monitoring and telecommunications.

 

At the core of this acquisition are 4G and 5G solutions that enable ultra-fast Ethernet-to-Cellular and Wi-Fi^® connectivity for machines in the most demanding environments. Designed for industries that require rugged, reliable connectivity, these products deliver low-latency performance and superior remote management capabilities. This IoT suite is trusted by some of the world’s most prominent companies. Lantronix expects DSZ’s NetComm enterprise portfolio to generate between $6 million and $7 million in revenue during calendar year 2024.

 

About Lantronix

 

Lantronix Inc. is a global leader 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 succeed 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.

 

 

 

 

 

This news release contains forward-looking statements, including statements about our expectations concerning the benefits of our acquisition of DSZ’s NetComm enterprise IoT portfolio such as strengthening our competitive offering, bringing new blue-chip names to our customer base and unlocking growth opportunities for our IoT customers, as well as the anticipated completion of the proposed acquisition or the timing thereof and the accretive nature of the proposed acquisition. 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 ability to complete the proposed acquisition on anticipated terms and timetable; our ability to integrate the acquired assets successfully after the closing and achieve anticipated benefits from them; the possibility that various closing conditions for the acquisition may not be satisfied or waived; risks relating to any unforeseen liabilities assumed with the acquired assets; 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 Annual Report on Form 10-K for the fiscal year ended June 30, 2024, filed with the Securities and Exchange Commission (the “SEC”) on Sept. 9, 2024, including in the section entitled “Risk Factors” in Item 1A of Part I of that 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. Other trademarks and trade names are those of their respective owners.

 

#  #  # 

 

Lantronix Media Contact:

Gail Kathryn Miller

Corporate Marketing &

Communications Manager

media@lantronix.com

949-212-0960

 

Lantronix Analyst and Investor Contact:

investors@lantronix.com

 

 

 

 

 

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