Lantronix Reports Results for Third Quarter of Fiscal 2022

• Third Quarter Net Revenue of $32.3 Million, up 89 Percent Year-Over-Year
• Third Quarter GAAP EPS of ($0.09) vs. ($0.04) in the Prior Year
• Third Quarter Non-GAAP EPS of $0.08 vs. $0.05 in the Prior Year
• Raises Full Year Fiscal 2022 Revenue Guidance to a range of $125 Million to $129 Million

IRVINE, Calif., May 04, 2022 (GLOBE NEWSWIRE) -- Lantronix Inc. (NASDAQ: LTRX), a global provider of secure turnkey solutions for Intelligent IT and Internet of Things (IoT), today reported results for the third quarter of fiscal 2022.

Net revenue totaled $32.3 million, up 89 percent year-over-year and down 4 percent sequentially.

GAAP EPS of ($0.09), compared to ($0.04) in the prior year and ($0.08) in the prior quarter.

Non-GAAP EPS of $0.08, compared to $0.05 in the prior year and $0.10 in the prior quarter.

Business Outlook

While supply chain dynamics remain challenging, the company expects continuing growth in the fourth quarter and is raising its full year fiscal 2022 revenue guidance to a range of $125 million to $129 million, representing growth of approximately 75 percent to 80 percent year-over-year. After adjusting share count following the first full quarter after the company’s second quarter capital raise, Lantronix now expects non-GAAP EPS in the range of $0.31 to $0.37 cents per share, up approximately 64 percent to 95 percent year-over-year.

Conference Call and Webcast

Lantronix will host an investor conference call and audio webcast on Wednesday, May 4, 2022, at 2:00 p.m. Pacific Time (5:00 p.m. Eastern Time), to discuss its results for the third quarter of fiscal 2022 that ended March 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 Q3 FY 2022 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 Wednesday, May 4, 2022, at the Lantronix website. A telephonic replay will also be available through May 11, 2022, by dialing 1-877-344-7529 (US) or 1-412-317-0088 (international) and entering passcode 9393049.

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.

References in this Report to “fiscal 2021” refer to the fiscal year ended June 30, 2021, and references to “fiscal 2022” refer to the fiscal year ending June 30, 2022.

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 2022. 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 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; 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; 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, 2021, filed with the Securities and Exchange Commission (the “SEC”) on August 27, 2021, 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.

© 2022 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)
	March 31,				June 30,
		2022				2021
Assets
Current assets:
Cash and cash equivalents	$	22,782			$	9,739
Accounts receivable, net		23,189				13,515
Inventories, net		33,166				15,059
Contract manufacturers' receivables		2,028				1,960
Prepaid expenses and other current assets		3,995				2,880
Total current assets		85,160				43,153
Property and equipment, net		2,333				1,577
Goodwill		18,757				15,810
Purchased intangible assets, net		16,037				9,355
Lease right-of-use assets		8,360				2,431
Other assets		332				240
Total assets	$	130,979			$	72,566
Liabilities and stockholders' equity
Current liabilities:
Accounts payable	$	15,510			$	9,122
Accrued payroll and related expenses		3,690				4,942
Current portion of long-term debt, net		1,671				1,472
Other current liabilities		12,468				7,328
Total current liabilities		33,339				22,864
Long-term debt, net		14,691				2,210
Other non-current liabilities		7,920				1,396
Total liabilities		55,950				26,470
Commitments and contingencies
Stockholders' equity:
Common stock		3				3
Additional paid-in capital		286,686				249,885
Accumulated deficit		(212,031	)			(204,163	)
Accumulated other comprehensive income		371				371
Total stockholders' equity		75,029				46,096
Total liabilities and stockholders' equity	$	130,979			$	72,566

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,
		2022				2021				2021				2022				2021
Net revenue	$	32,324			$	33,681			$	17,108			$	93,710			$	50,839
Cost of revenue		18,708				19,241				9,390				53,191				27,886
Gross profit		13,616				14,440				7,718				40,519				22,953
Operating expenses:
Selling, general and administrative		8,326				8,935				4,995				25,167				14,747
Research and development		4,483				4,310				2,519				12,834				7,540
Restructuring, severance and related charges		51				167				120				760				349
Acquisition-related costs		154				68				178				763				178
Fair value remeasurement of earnout consideration		1,203				1,259				-				2,462				-
Amortization of purchased intangible assets		1,479				1,440				754				4,112				2,515
Total operating expenses		15,696				16,179				8,566				46,098				25,329
Loss from operations		(2,080	)			(1,739	)			(848	)			(5,579	)			(2,376	)
Interest expense, net		(303	)			(595	)			(77	)			(1,277	)			(244	)
Loss on extinguishment of debt		(764	)			-				-				(764	)			-
Other income (expense), net		32				45				(224	)			(25	)			(183	)
Loss before income taxes		(3,115	)			(2,289	)			(1,149	)			(7,645	)			(2,803	)
Provision for income taxes		75				106				38				223				145
Net loss	$	(3,190	)		$	(2,395	)		$	(1,187	)		$	(7,868	)		$	(2,948	)
Net loss per share - basic and diluted	$	(0.09	)		$	(0.08	)		$	(0.04	)		$	(0.25	)		$	(0.10	)
Weighted-average common shares - basic and diluted		34,695				31,848				28,819				31,925				28,617

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,
		2022				2021				2021				2022				2021
GAAP net loss	$	(3,190	)		$	(2,395	)		$	(1,187	)		$	(7,868	)		$	(2,948	)
Non-GAAP adjustments:
Cost of revenue:
Share-based compensation		80				100				70				280				212
Employer portion of withholding taxes on stock grants		1				7				3				9				3
Amortization of manufacturing profit in acquired inventory		-				200				-				380				7
Depreciation and amortization		161				128				170				425				528
Total adjustments to cost of revenue		242				435				243				1,094				750
Selling, general and administrative:
Share-based compensation		1,264				1,178				803				3,568				1,919
Employer portion of withholding taxes on stock grants		25				91				19				129				30
Depreciation and amortization		78				75				38				220				130
Total adjustments to selling, general and administrative		1,367				1,344				860				3,917				2,079
Research and development:
Share-based compensation		268				222				170				745				405
Employer portion of withholding taxes on stock grants		10				10				5				28				13
Depreciation and amortization		79				74				57				224				140
Total adjustments to research and development		357				306				232				997				558
Restructuring, severance and related charges		51				167				120				760				349
Acquisition related costs		154				68				178				763				178
Fair value remeasurement of earnout consideration		1,203				1,259				-				2,462				-
Loss on extinguishment of debt		764				-				-				764				-
Amortization of purchased intangible assets		1,479				1,440				754				4,112				2,515
Total non-GAAP adjustments to operating expenses		5,375				4,584				2,144				13,775				5,679
Interest expense, net		303				595				77				1,277				244
Other (income) expense, net		(32	)			(45	)			224				25				183
Provision for income taxes		75				106				38				223				145
Total non-GAAP adjustments		5,963				5,675				2,726				16,394				7,001
Non-GAAP net income	$	2,773			$	3,280			$	1,539			$	8,526			$	4,053
Non-GAAP net income per share - diluted	$	0.08			$	0.10			$	0.05			$	0.25			$	0.13
Denominator for GAAP net income per share - diluted		34,695				31,848				28,819				31,925				28,617
Non-GAAP adjustment		1,992				2,145				1,700				1,967				1,821
Denominator for non-GAAP net income per share - diluted		36,687				33,993				30,519				33,892				30,438

LANTRONIX, INC.
UNAUDITED NET REVENUES BY PRODUCT LINE AND REGION
(In thousands)
	Three Months Ended												Nine Months Ended
	March 31, 2022				December 31, 2021				March 31, 2021				March 31, 2022				March 31, 2021
IoT	$	28,587			$	28,521			$	13,661			$	79,939			$	41,683
REM		3,614				4,977				3,305				13,357				8,802
Other		123				183				142				414				354
	$	32,324			$	33,681			$	17,108			$	93,710			$	50,839
	Three Months Ended												Nine Months Ended
	March 31, 2022				December 31, 2021				March 31, 2021				March 31, 2022				March 31, 2021
Americas	$	20,448			$	20,073			$	8,615			$	58,748			$	27,567
EMEA		5,071				5,751				4,096				15,481				11,475
Asia Pacific Japan		6,805				7,857				4,397				19,481				11,797
	$	32,324			$	33,681			$	17,108			$	93,710			$	50,839