Lantronix Reports Results for Second Quarter of Fiscal 2023

Rhea-AI Summary

Lantronix Inc. (NASDAQ: LTRX) announced its second quarter fiscal 2023 results, reporting net revenue of $31.5 million, a 6% decline year-over-year, and a 1% decrease sequentially. The GAAP EPS was ($0.07), improving from ($0.08) in the previous year, while non-GAAP EPS was $0.04, down from $0.10 year-over-year. For the full fiscal year 2023, the company anticipates revenues between $135 million and $145 million, forecasting a growth of 4% to 12% year-over-year. However, non-GAAP EPS guidance is projected at $0.27 to $0.33, reflecting a potential decline of 22% year-over-year.

Positive

• Full year fiscal 2023 revenue guidance between $135 million and $145 million, indicating potential growth.
• Improvement in GAAP EPS from ($0.08) to ($0.07) year-over-year.

Negative

• Net revenue decreased by 6% year-over-year and 1% sequentially.
• Non-GAAP EPS declined from $0.10 to $0.04 year-over-year.
• Non-GAAP EPS guidance flat to down 22% year-over-year.

• Second Quarter Net Revenue of $31.5 Million, Down 6 Percent Year-Over-Year and 1 Percent Sequentially
• Second Quarter GAAP EPS of ($0.07) vs. ($0.08) in the Prior Year
• Second Quarter Non-GAAP EPS of $0.04 vs. $0.10 in the Prior Year
  

IRVINE, Calif., Feb. 09, 2023 (GLOBE NEWSWIRE) -- Lantronix Inc. (NASDAQ: LTRX), a global provider of secure turnkey solutions for the Industrial Internet of Things (IoT) and the Intelligent IT market, today reported results for its second quarter of fiscal 2023.

Net revenue totaled $31.5 million, down 6 percent year-over-year and down 1 percent sequentially.

GAAP EPS of ($0.07), compared to ($0.08) in the prior year and ($0.05) in the prior quarter.

Non-GAAP EPS of $0.04, compared to $0.10 in the prior year and $0.07 in the prior quarter.

Business Outlook

The company currently expects full year fiscal 2023 revenues in a range of $135 to $145 million, up 4 percent to 12 percent year-over-year, and non-GAAP EPS in a range of $0.27 to $0.33 per share, flat to down 22 percent year-over-year.

Conference Call and Webcast

Lantronix will host an investor conference call and audio webcast on Thursday, Feb. 9, 2023, at 2:00 p.m. Pacific Time (5:00 p.m. Eastern Time) to discuss its results for the second quarter of fiscal 2023 that ended Dec. 31, 2022. 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 Q2 FY 2023 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 Thursday, Feb. 9, 2023, at the Lantronix website. A telephonic replay will also be available through Feb. 16, 2023, by dialing 1-877-344-7529 (US) or 1-412-317-0088 (international) and entering passcode 3746642.

About Lantronix

Lantronix Inc. is a global provider of secure turnkey solutions for the Internet of Things (IoT) and Remote Environment Management (REM), offering Software as a Service (SaaS), connectivity services, engineering services and intelligent hardware.

Lantronix enables its customers to accelerate time to market and increase operational up-time and efficiency by providing reliable, secure and connected Intelligent Edge IoT and Remote Management Gateway solutions.

Lantronix’s products and services dramatically simplify the creation, development, deployment and management of IoT and IT projects across Robotics, Automotive, Wearables, Video Conferencing, Industrial, Medical, Logistics, Smart Cities, Security, Retail, Branch Office, Server Room, and Datacenter applications. For more information, visit the Lantronix website.

Learn more at the Lantronix blog, which features industry discussion and updates. Follow Lantronix on Twitter, view our YouTube video library or connect with us on LinkedIn.

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 fiscal 2023. 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 successfully convert our backlog and current demand;  the impact of the COVID-19 pandemic, including the emergence of new more contagious and/or vaccine-resistant strains of the virus and the impact of vaccination efforts, including the efficacy and public acceptance of vaccinations, on our business, employees, supply and distribution chains and the global economy; our ability to mitigate any disruption in our and our suppliers’ and vendors’ supply chains due to the COVID-19 pandemic, the war between Ukraine and Russia or other causes; 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; the level of our indebtedness, our ability to service our indebtedness and the restrictions in our debt agreements; 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, 2022, filed with the Securities and Exchange Commission (the “SEC”) on Aug. 29, 2022, 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 September 30, 2022, filed with the SEC on November 9, 2022, 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.

© 2023 Lantronix, Inc. All rights reserved. Lantronix is a registered trademark.

Lantronix Investor Relations Contact:
Jeremy Whitaker
Chief Financial Officer
investors@lantronix.com

LANTRONIX, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
	December 31,				June 30,
		2022				2022
Assets
Current assets:
Cash and cash equivalents	$	6,805			$	17,221
Accounts receivable, net		27,675				26,262
Inventories, net		49,156				37,679
Contract manufacturers' receivables		2,784				3,454
Prepaid expenses and other current assets		3,625				5,417
Total current assets		90,045				90,033
Property and equipment, net		5,081				3,652
Goodwill		27,151				20,768
Purchased intangible assets, net		14,113				14,559
Lease right-of-use assets		10,836				8,037
Other assets		559				325
Total assets	$	147,785			$	137,374
Liabilities and stockholders' equity
Current liabilities:
Accounts payable	$	16,717			$	20,644
Line of credit		2,000				-
Accrued payroll and related expenses		3,209				4,729
Current portion of long-term debt, net		2,224				1,671
Other current liabilities		15,325				8,477
Total current liabilities		39,475				35,521
Long-term debt, net		17,723				14,274
Other non-current liabilities		11,069				7,683
Total liabilities		68,267				57,478
Commitments and contingencies
Stockholders' equity:
Common stock		4				4
Additional paid-in capital		292,930				289,046
Accumulated deficit		(213,787	)			(209,525	)
Accumulated other comprehensive income		371				371
Total stockholders' equity		79,518				79,896
Total liabilities and stockholders' equity	$	147,785			$	137,374

LANTRONIX, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
	Three Months Ended												Six Months Ended
	December 31,				September 30,				December 31,				December 31,
		2022				2022				2021				2022				2021
Net revenue	$	31,506			$	31,795			$	33,681			$	63,301			$	61,386
Cost of revenue		17,712				17,759				19,241				35,471				34,483
Gross profit		13,794				14,036				14,440				27,830				26,903
Operating expenses:
Selling, general and administrative		9,813				9,157				8,935				18,970				16,841
Research and development		5,084				4,526				4,310				9,610				8,351
Restructuring, severance and related charges		82				92				167				174				709
Acquisition-related costs		102				213				68				315				609
Fair value remeasurement of earnout consideration		(673	)			-				1,259				(673	)			1,259
Amortization of purchased intangible assets		1,497				1,419				1,440				2,916				2,633
Total operating expenses		15,905				15,407				16,179				31,312				30,402
Loss from operations		(2,111	)			(1,371	)			(1,739	)			(3,482	)			(3,499	)
Interest expense, net		(354	)			(262	)			(595	)			(616	)			(974	)
Other income (expense), net		(26	)			34				45				8				(57	)
Loss before income taxes		(2,491	)			(1,599	)			(2,289	)			(4,090	)			(4,530	)
Provision for income taxes		118				54				106				172				148
Net loss	$	(2,609	)		$	(1,653	)		$	(2,395	)		$	(4,262	)		$	(4,678	)
Net loss per share - basic and diluted	$	(0.07	)		$	(0.05	)		$	(0.08	)		$	(0.12	)		$	(0.15	)
Weighted-average common shares - basic and diluted		36,352				35,406				31,848				35,883				30,540

LANTRONIX, INC.
UNAUDITED RECONCILIATION OF NON-GAAP ADJUSTMENTS
(In thousands, except per share data)
	Three Months Ended												Six Months Ended
	December 31,				September 30,				December 31,				December 31,
		2022				2022				2021				2022				2021
GAAP net loss	$	(2,609	)		$	(1,653	)		$	(2,395	)		$	(4,262	)		$	(4,678	)
Non-GAAP adjustments:
Cost of revenue:
Share-based compensation		61				51				100				112				200
Employer portion of withholding taxes on stock grants		-				12				7				12				8
Amortization of manufacturing profit in acquired inventory		80				24				200				104				380
Depreciation and amortization		118				130				128				248				264
Total adjustments to cost of revenue		259				217				435				476				852
Selling, general and administrative:
Share-based compensation		1,434				1,405				1,178				2,839				2,304
Employer portion of withholding taxes on stock grants		10				132				91				142				104
Depreciation and amortization		260				155				75				415				142
Total adjustments to selling, general and administrative		1,704				1,692				1,344				3,396				2,550
Research and development:
Share-based compensation		370				332				222				702				477
Employer portion of withholding taxes on stock grants		2				22				10				24				18
Depreciation and amortization		63				64				74				127				145
Total adjustments to research and development		435				418				306				853				640
Restructuring, severance and related charges		82				92				167				174				709
Acquisition related costs		102				213				68				315				609
Fair value remeasurement of earnout consideration		(673	)			-				1,259				(673	)			1,259
Amortization of purchased intangible assets		1,497				1,419				1,440				2,916				2,633
Litigation settlement cost		80				-				-				80				-
Total non-GAAP adjustments to operating expenses		3,227				3,834				4,584				7,061				8,400
Interest expense, net		354				262				595				616				974
Other (income) expense, net		26				(34	)			(45	)			(8	)			57
Provision for income taxes		118				54				106				172				148
Total non-GAAP adjustments		3,984				4,333				5,675				8,317				10,431
Non-GAAP net income	$	1,375			$	2,680			$	3,280			$	4,055			$	5,753
Non-GAAP net income per share - diluted	$	0.04			$	0.07			$	0.10			$	0.11			$	0.18
Denominator for GAAP net loss per share - diluted		36,352				35,406				31,848				35,883				30,540
Non-GAAP adjustment		819				1,777				2,145				1,126				1,964
Denominator for non-GAAP net income per share - diluted		37,171				37,183				33,993				37,009				32,504

LANTRONIX, INC.
UNAUDITED NET REVENUES BY PRODUCT LINE AND REGION
(In thousands)
	Three Months Ended												Six Months Ended
	December 31, 2022				September 30, 2022				December 31, 2021				December 31, 2022				December 31, 2021
Embedded IoT Solutions	$	13,668			$	15,095			$	15,604			$	28,763			$	27,980
IoT System Solutions		14,913				14,621				16,366				29,534				29,524
Software & Services		2,925				2,079				1,711				5,004				3,882
	$	31,506			$	31,795			$	33,681			$	63,301			$	61,386
	Three Months Ended												Six Months Ended
	December 31, 2022				September 30, 2022				December 31, 2021				December 31, 2022				December 31, 2021
Americas	$	19,688			$	20,930			$	20,073			$	40,618			$	38,300
EMEA		4,905				5,201				5,751				10,106				10,410
Asia Pacific Japan		6,913				5,664				7,857				12,577				12,676
	$	31,506			$	31,795			$	33,681			$	63,301			$	61,386

FAQ

What were Lantronix's second quarter results for fiscal 2023?

Lantronix reported net revenue of $31.5 million, a 6% decline year-over-year, with GAAP EPS of ($0.07) and non-GAAP EPS of $0.04.

What is the revenue forecast for Lantronix for fiscal 2023?

Lantronix expects full year fiscal 2023 revenues between $135 million and $145 million, reflecting growth of 4% to 12% year-over-year.

How did Lantronix's earnings per share change in the second quarter?

Lantronix's GAAP EPS improved from ($0.08) last year to ($0.07) this year, while non-GAAP EPS declined from $0.10 to $0.04.

What is the guidance for Lantronix's non-GAAP EPS for fiscal 2023?

The guidance for non-GAAP EPS is between $0.27 and $0.33, which indicates a potential decline of 22% year-over-year.