Lantronix(US:LTRX)2022-02-11 02:40Financial Data and Key Metrics Changes - The company reported record revenue of $33.7 million for Q2 fiscal 2022, an increase of 103% compared to $16.6 million in Q2 fiscal 2021, driven by a recent acquisition and organic growth of 57% [3][5] - GAAP gross margin was 42.9% for Q2 fiscal 2022, down from 45% in the prior quarter, primarily due to product mix [3][4] - GAAP net loss was $2.4 million or $0.08 per share in Q2 fiscal 2022, compared to a net loss of $1.5 million or $0.05 per share in Q2 fiscal 2021 [5] - Non-GAAP net income was $3.3 million or $0.10 per share in Q2 fiscal 2022, compared to non-GAAP net income of $861 thousand or $0.03 per share in Q2 fiscal 2021 [5] Business Line Data and Key Metrics Changes - Organic revenue growth was 47% year-over-year and 21% sequentially, excluding the recent acquisition [8] - The Intelligent Edge products saw product revenues more than double from Q1 levels, indicating strong demand in this segment [9] Market Data and Key Metrics Changes - The company ended the December 2021 quarter with cash and cash equivalents of $36.4 million, an increase of $26 million from the prior quarter [6] - Working capital improved to $64.2 million as of December 31, 2021, compared to $32.2 million in the prior quarter [6] Company Strategy and Development Direction - The company is focusing on high-potential Edge Compute projects, expecting volume production to drive growth into the next fiscal year [8] - A secondary equity offering raised almost $33 million to fund growth, pay down high-interest debt, and potentially fund future acquisitions [8][11] - The annual revenue guidance for fiscal year 2022 was raised to a range of $112.5 million to $127.5 million, representing growth of 57% to 78% [7] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding easing supply chain constraints, particularly for semiconductor products [10] - The company noted strong customer demand and backlog, indicating a positive outlook for future revenue growth [6][7] Other Important Information - The company successfully navigated supply chain constraints, reducing customer-requested products that could not be delivered from over $6 million to about $5.7 million [9] - The backlog grew to over $50 million, despite significant revenue growth in the quarter [26] Q&A Session Summary Question: Supply chain impact on gross margins - Management indicated that the sequential decline in gross margin was primarily driven by product mix rather than a change in component costs [16] Question: Operating expenses and future expectations - Management noted that higher revenue led to increased variable costs, but as revenue tempers, variable costs could decrease accordingly [17][18] Question: Areas of supply chain challenges - Management highlighted ongoing challenges with certain components, particularly pop-memory and flash, while securing additional vendors for future production [21] Question: Update on smart grid energy customer - Management confirmed that the smart grid energy program is on track, with expectations for significant contributions in fiscal year 2023 [26] Question: Organic growth rate expectations - Management projected a conservative organic growth rate of 20+%, factoring in extraordinary demand growth [28] Question: Contrast between core organic business and acquired business - Management reported strong performance in the Compute business, with expectations for continued growth, while the acquired business is expected to grow at a rate of 10+% [32][33]