• Revenue: $34.4 million for Q1 fiscal 2025, up 4% year-over-year.
• Non-GAAP EPS: 6 for Q1 fiscal 2025.
• Embedded IoT Solutions Revenue: Increased by 18% sequentially and year-over-year.
• IoT System Solutions Revenue: Decreased by 47% sequentially and 1% year-over-year.
• Software and Services Revenue: Up 8% sequentially, down 13% year-over-year.
• GAAP Gross Margin: 42.1% for Q1 fiscal 2025.
• Non-GAAP Gross Margin: 42.6% for Q1 fiscal 2025.
• GAAP SG&A Expenses: $9.5 million for Q1 fiscal 2025.
• GAAP R&D Expenses: $5 million for Q1 fiscal 2025.
• GAAP Net Loss: $2.5 million or 7 per share for Q1 fiscal 2025.
• Non-GAAP Net Income: $2.3 million or 6 per share for Q1 fiscal 2025.
• Cash and Cash Equivalents: $26.4 million at the end of Q1 fiscal 2025.
• Operating Cash Flow: Positive $2.7 million for Q1 fiscal 2025.
• Net Inventories: $29.5 million as of Q1 fiscal 2025.
• Q2 Fiscal 2025 Revenue Guidance: Expected to be in the range of $29 to $33 million.
• Q2 Fiscal 2025 Non-GAAP EPS Guidance: Expected to be in the range of 1 to 5 per share.

• Warning! GuruFocus has detected 4 Warning Signs with LTRX.

Release Date: November 07, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Lantronix Inc (NASDAQ:LTRX) reported a 4% increase in revenue for the first quarter of fiscal 2025 compared to the same quarter last year.
• The acquisition of Netcom's IO product line is expected to be immediately accretive to EPS and generate $6 million to $7 million in revenue in calendar year 2024.
• The collaboration with Qualcomm has led to significant milestones, including a development agreement to advance AI applications and the launch of AI-enabled edge compute gateways.
• Lantronix Inc (NASDAQ:LTRX) is implementing initiatives to streamline its product portfolio and reduce operating expenses by approximately $4.5 million for fiscal year 2025.
• The company is expanding its market reach with new geographic opportunities in Australia and New Zealand through the Netcom acquisition.

Negative Points

• Revenue for the first quarter of fiscal 2025 was at the lower end of guidance, with a sequential decrease from the previous quarter.
• There was a significant 47% decrease in IO system solutions revenue sequentially, largely due to reduced shipments to a large smart grid customer and a delayed federal government order.
• GAAP net loss for the first quarter of fiscal 2025 was $2.5 million, compared to a net loss of $1.9 million in the year-ago quarter.
• The company expects sequentially lower revenue in the second quarter of fiscal 2025 due to reduced volume from its largest automotive customer in Turkey and slightly lower activity in the enterprise vertical market.
• Some federal projects and enterprise spending have been delayed, impacting revenue expectations for the coming quarters.

Q & A Highlights

Q: Can you provide insights on the expected growth or recovery in the second half of the fiscal year, considering the pushouts in federal projects and headwinds from the large automotive customer? A: Saleel Awsare, President and CEO, mentioned that while there is a slowdown with the largest automotive customer in Turkey and slight slowdown in the enterprise vertical market, improvements are expected sequentially throughout the fiscal year.

Q: What is the update on the smart grid opportunities, especially with the large customer and potential new opportunities in the U.S. and other regions? A: Saleel Awsare explained that deployments in Italy are ongoing, and there are new opportunities in North America and Latin America. The company is also seeing traction in other European areas, with the smart LV product being showcased in collaboration with Qualcomm.

Q: Are there any monetary connections to the signed development agreements with Qualcomm, and how should we think about these going forward? A: Saleel Awsare stated that while specific dollar amounts are not disclosed, the collaboration with Qualcomm involves providing services to improve their AI hub, which allows end customers to develop products faster.

Q: What are the synergies and channel relationships expected from the acquisition of Netcomm's business, and how does it integrate with Lantronix's existing operations? A: Saleel Awsare highlighted that the acquisition adds 5G IoT gateways and routers, complements existing products, and brings new blue-chip enterprise customers. The acquisition is expected to grow by 20% into calendar 2025, with cost efficiencies from leveraging existing capabilities.

Q: Regarding the edge AI development, what are the potential applications and verticals that Lantronix is targeting? A: Saleel Awsare noted that the focus is on enterprise areas like video conferencing, smart cities, robotics, drones, and industrial applications. The company expects to see momentum in fiscal 2026 and beyond, leveraging its Western-based supplier status and certifications.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.