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.

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

Lantronix Reports Results for Second Quarter of Fiscal 2023