EX-99.1 2 lantronix_8k-ex9901.htm PRESS RELEASE

Exhibit 99.1

Lantronix Reports Second Quarter Fiscal 2019 Net Revenue of $12.1M

--Achieves 11% Revenue Growth for First Half Fiscal 2019--

Irvine, CA – January 24, 2019 – Lantronix, Inc. (NASDAQ: LTRX), a global provider of secure data access and management solutions for the industrial Internet of Things (IoT) today reported results for the second quarter fiscal 2019 that ended December 31, 2018.

Financial Highlights for Second Quarter of Fiscal 2019

•

Net revenue of $12.1 million, an increase of 7% from the second quarter of fiscal 2018

•

Gross profit margin of 55.0%, compared with 55.7% for the second quarter of fiscal 2018

•

GAAP net income of $277,000, or $0.01 per share, compared to GAAP net income of $225,000, or $0.01 per share for the second quarter of fiscal 2018, an increase in earnings of 23%

•

Non-GAAP net income of $790,000, or $0.03 per share, compared to non-GAAP net income of $689,000, or $0.04 per share for the second quarter of fiscal 2018, an increase in earnings of 15%

•

Cash and cash equivalents increased to $19.4 million

Operational and Product Highlights

•

In October, the company announced the new ConsoleFlow™ Cloud Edition, the industry’s only centralized out-of-band management software that provides VPN-free access to console managers and IT equipment

•

In November, the company announced the general availability of XPort® EDGE, the first embedded Ethernet gateway offering in the market-leading XPort family of serial to Ethernet device servers

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In November, the company also announced the introduction of SGX 5150-MD IoT gateway to accelerate secure IoT connectivity and management for medical devices

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Most recently, in January, Lantronix CEO, Jeff Benck, was recognized by IoT Breakthrough Awards program as the “CEO of the Year”

“I am pleased with our second quarter results and that we met our revenue guidance for the first half by delivering double digit organic top-line growth.” said Jeff Benck, Lantronix CEO. “We continued to generate cash and earnings while increasing our investment in new products and building out our go to market teams. The new products we introduced in the first half, coupled with our solid IoT design win pipeline, bode well for our long-term growth prospects.”

Conference Call and Webcast

Lantronix will host an investor conference call and audio webcast today at 2:00 p.m. Pacific Time (5:00 p.m. Eastern Time) to discuss its results for the second quarter of fiscal 2019 that ended December 31, 2018. 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 2019 call. The webcast will be available simultaneously via the investor relations section of the Company’s website at www.lantronix.com.

Investors can access a replay of the conference call starting at approximately 5:00 p.m. Pacific Time today at www.lantronix.com. A telephonic replay will also be available through February 24, 2019 by dialing 1-877-344-7529 (US) or 1-412-317-0088 (international) and entering passcode 10127701.

About Lantronix

Lantronix, Inc. is a global provider of secure data access and management solutions for the Internet of Things (IoT) assets. Our mission is to be the leading supplier of IoT solutions that enable companies to dramatically simplify the creation, deployment, and management of IoT projects while providing secure access to data for applications and people.

With more than two decades of experience in creating robust machine to machine (M2M) technologies, Lantronix is an innovator in enabling our customers to build new business models and realize the possibilities of the Internet of Things. Our connectivity solutions are deployed inside millions of machines serving a wide range of industries, including industrial, medical, security, transportation, retail, financial, environmental and government.

Lantronix is headquartered in Irvine, California. For more information, visit www.lantronix.com.

Learn more on the Lantronix blog, www.lantronix.com/blog, featuring industry discussion and updates. To follow Lantronix on Twitter, please visit www.twitter.com/Lantronix. View our video library on YouTube at www.youtube.com/user/LantronixInc or connect with us on LinkedIn at www.linkedin.com/company/lantronix.

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 (loss) consists of net income (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), and (vi) severance and restructuring charges.

Forward-Looking Statements

This news release contains forward-looking statements, including statements concerning our sales expansion efforts, our product development efforts, and our projected operating and financial performance. 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. Some of the risks and uncertainties that may cause actual results to differ from those expressed or implied in the forward-looking statements are described in “Risk Factors” in our Annual Report on Form 10-K filed with the Securities and Exchange Commission, or SEC, as well as in our other 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:

Shahram Mehraban

VP, Marketing

investors@lantronix.com
949-453-7175

# # #

LANTRONIX, INC.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

	December 31,			June 30,
	2018			2018
Assets
Current assets:
Cash and cash equivalents	$	19,367		$	9,568
Accounts receivable, net		6,134			4,244
Inventories, net		9,352			8,439
Contract manufacturers' receivable		419			649
Prepaid expenses and other current assets		752			370
Total current assets		36,024			23,270
Property and equipment, net		1,184			1,036
Goodwill		9,488			9,488
Other assets		55			61
Total assets	$	46,751		$	33,855

Liabilities and stockholders' equity
Current liabilities:
Accounts payable	$	4,317		$	3,942
Accrued payroll and related expenses		2,731			2,808
Warranty reserve		106			99
Other current liabilities		3,325			2,877
Total current liabilities		10,479			9,726
Other non-current liabilities		256			316
Total liabilities		10,735			10,042

Commitments and contingencies

Stockholders' equity:
Common stock		2			2
Additional paid-in capital		224,422			212,995
Accumulated deficit		(188,779	)		(189,555	)
Accumulated other comprehensive income		371			371
Total stockholders' equity		36,016			23,813
Total liabilities and stockholders' equity	$	46,751		$	33,855

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,
	2018		2018			2017			2018			2017
Net revenue	$	12,114	$	12,279		$	11,336		$	24,393		$	21,942
Cost of revenue		5,453		5,538			5,022			10,991			10,034
Gross profit		6,661		6,741			6,314			13,402			11,908
Operating expenses:
Selling, general and administrative		4,159		4,472			4,173			8,631			8,159
Research and development		2,279		2,298			1,874			4,577			4,095
Total operating expenses		6,438		6,770			6,047			13,208			12,254
Income (loss) from operations		223		(29	)		267			194			(346	)
Interest income (expense), net		60		(4	)		(5	)		56			(9	)
Other income (expense), net		8		(10	)		1			(2	)		2
Income (loss) before income taxes		291		(43	)		263			248			(353	)
Provision for income taxes		14		40			38			54			63
Net income (loss)	$	277	$	(83	)	$	225		$	194		$	(416	)

Net income (loss) per share - basic	$	0.01	$	(0.00	)	$	0.01		$	0.01		$	(0.02	)
Net income (loss) per share - diluted	$	0.01	$	(0.00	)	$	0.01		$	0.01		$	(0.02	)

Weighted-average common shares - basic		22,091		19,323			18,073			20,721			17,970
Weighted-average common shares - diluted		23,442		19,323			18,739			22,263			17,970

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,
	2018			2018			2017			2018			2017

GAAP net income (loss)	$	277		$	(83	)	$	225		$	194		$	(416	)
Non-GAAP adjustments:
Cost of revenue:
Share-based compensation		23			17			13			40			26
Depreciation and amortization		45			48			53			93			115
Total adjustments to cost of revenue		68			65			66			133			141
Selling, general and administrative:
Share-based compensation		337			400			239			737			451
Employer portion of withholding taxes on stock grants		2			6			3			8			5
Depreciation and amortization		48			46			46			94			91
Total adjustments to selling, general and administrative		387			452			288			839			547
Research and development:
Share-based compensation		91			61			58			152			105
Employer portion of withholding taxes on stock grants		–			–			–			–			1
Depreciation and amortization		21			11			10			32			20
Total adjustments to research and development		112			72			68			184			126
Severance and related charges		–			323			–			323			527
Total non-GAAP adjustments to operating expenses		499			847			356			1,346			1,200
Interest (income) expense, net		(60	)		4			5			(56	)		9
Other (income) expense, net		(8	)		10			(1	)		2			(2	)
Provision for income taxes		14			40			38			54			63
Total non-GAAP adjustments		513			966			464			1,479			1,411
Non-GAAP net income	$	790		$	883		$	689		$	1,673		$	995


Non-GAAP net income per share - diluted	$	0.03		$	0.04		$	0.04		$	0.07		$	0.05

Denominator for GAAP net income (loss) per share - diluted		23,442			19,323			18,739			22,263			17,970
Non-GAAP adjustment		824			2,472			569			701			1,382
Denominator for non-GAAP net income per share - diluted		24,266			21,795			19,308			22,964			19,352

GAAP operating expenses	$	6,438		$	6,770		$	6,047		$	13,208		$	12,254
Non-GAAP adjustments to operating expenses		(499	)		(847	)		(356	)		(1,346	)		(1,200	)
Non-GAAP operating expenses	$	5,939		$	5,923		$	5,691		$	11,862		$	11,054

LANTRONIX, INC.

UNAUDITED NET REVENUES BY PRODUCT LINE AND REGION

(In thousands)

	Three Months Ended						Six Months Ended
	December 31, 2018		September 30, 2018		December 31, 2017		December 31, 2018		December 31, 2017
IoT	$	9,070	$	8,967	$	7,961	$	18,037	$	16,419
IT Management		2,888		3,101		3,218		5,989		5,007
Other		156		211		157		367		516
	$	12,114	$	12,279	$	11,336	$	24,393	$	21,942

	Three Months Ended						Six Months Ended
	December 31, 2018		September 30, 2018		December 31, 2017		December 31, 2018		December 31, 2017
Americas	$	6,182	$	6,914	$	6,292	$	13,096	$	11,989
EMEA		4,080		3,520		3,172		7,600		6,336
Asia Pacific Japan		1,852		1,845		1,872		3,697		3,617
	$	12,114	$	12,279	$	11,336	$	24,393	$	21,942