Lantronix(US:LTRX)2025-05-09 12:36Financial Performance - In the three months ended March 31, 2025, net revenue decreased by $12,683,000 or 30.8% compared to the same period in 2024, driven by a 45.0% decrease in the IoT System Solutions product line [107]. - The company reported a net loss of $3,868,000 for the three months ended March 31, 2025, compared to a net loss of $423,000 for the same period in 2024 [107]. - Net revenue for the nine months ended March 31, 2025, decreased by $17,168,000 or 15.4% compared to the same period in 2024, primarily due to a 24.4% decrease in the IoT System Solutions product line and a 14.3% decrease in Software and Services [118]. - The company reported a net loss of $8,742,000 for the nine months ended March 31, 2025, compared to a net loss of $4,902,000 for the same period in 2024 [118]. Gross Profit and Margins - Gross profit for the three months ended March 31, 2025, was $12,403,000, representing a gross margin of 43.5%, compared to 40.1% in the same period in 2024 [112]. - Gross profit for the nine months ended March 31, 2025, was $40,162,000, a decrease of $5,470,000 or 12.0% from $45,632,000 in 2024, with a gross margin of 42.7% [124]. - The company anticipates fluctuations in gross margin based on changes in product mix, average selling prices, and manufacturing costs [113]. Expenses - Selling, general and administrative expenses decreased by $794,000 or 8.1% to $9,753,000 for the three months ended March 31, 2025, primarily due to lower headcount-related costs [115]. - Research and development expenses decreased by $723,000 or 13.9% to $5,186,000 for the three months ended March 31, 2025, mainly due to lower personnel-related expenses [117]. - Selling, general and administrative expenses decreased by $1,910,000 or 6.6% to $27,237,000 for the nine months ended March 31, 2025, primarily due to lower spending on sales conferences and reduced share-based compensation [126]. - Research and development expenses decreased by $614,000 or 4.1% to $14,403,000 for the nine months ended March 31, 2025, mainly due to lower personnel-related expenses and reduced share-based compensation [127]. Revenue by Region and Product Line - The Americas region accounted for 57.9% of net revenue in the three months ended March 31, 2025, while EMEA accounted for 21.2%, and APJ accounted for 20.9% [108]. - The IoT System Solutions product line saw a significant revenue drop, with no revenue from a major European smart energy grid customer, which previously contributed nearly $12,000,000 in the prior year [110]. - Embedded IoT Solutions revenue decreased by 3.7% to $11,990,000, while Software and Services revenue decreased by 8.3% to $1,780,000 [108]. Cash Flow and Working Capital - Working capital as of March 31, 2025, was $47,897,000, a decrease of $10,897,000 from $58,794,000 as of June 30, 2024 [134]. - Cash and cash equivalents decreased by $6,238,000 to $19,999,000 as of March 31, 2025, compared to $26,237,000 as of June 30, 2024 [134]. - Net cash provided by operating activities for the nine months ended March 31, 2025, was $6,233,000, a decrease of $10,115,000 from $16,348,000 in 2024 [141]. - Cash provided by operating activities decreased compared to the prior year period, with a net loss of $9,705,000 in non-cash charges and net cash from operating assets and liabilities of $5,270,000 for the nine months ended March 31, 2025 [142]. Restructuring and Acquisition - The company incurred restructuring charges of $2,674,000 for the nine months ended March 31, 2025, primarily related to headcount reductions [128]. - Acquisition-related costs of approximately $337,000 were incurred during the nine months ended March 31, 2025, primarily in connection with the acquisition of Netcomm [130]. - The acquisition of Netcomm Wireless Pty Ltd for $6,458,000 in cash is expected to enhance connectivity solutions in critical infrastructure and telecommunications [103]. Inventory and Receivables - Accounts receivable decreased by $7,631,000, or 24.4%, from June 30, 2024, primarily due to lower net revenue levels and timing of payments from customers [143]. - Inventories increased by $453,000, or 1.6%, from June 30, 2024, mainly due to $797,000 of net inventories acquired in the Netcomm acquisition [143]. - Accounts payable increased by $658,000, or 6.4%, from June 30, 2024, primarily due to timing of inventory receipts and vendor payments [144]. - Accrued payroll and related expenses decreased by $1,931,000, or 33.1%, from June 30, 2024, due to accrued variable compensation paid out during the current year [144]. Investing and Financing Activities - Net cash used in investing activities included the acquisition of Netcomm for $6,458,000 and property and equipment totaling $362,000 for tooling and R&D projects for the nine months ended March 31, 2025 [145]. - Cash used in financing activities was primarily for principal payments on Senior Credit Facilities and tax withholdings for restricted shares during the nine months ended March 31, 2025 [146].