Lantronix(US:LTRX)2021-02-12 01:53Financial Data and Key Metrics Changes - For Q2 fiscal 2021, the company reported net revenue of $16.6 million, a 25% increase compared to $13.2 million in Q2 fiscal 2020, but a 3% decrease from $17.1 million in Q1 fiscal 2021 [9] - Gross profit as a percentage of net revenue was 42.2% for Q2 fiscal 2021, down from 51.2% in Q2 fiscal 2020 and 48.1% in Q1 fiscal 2021, primarily due to increased manufacturing costs from component shortages and elevated logistics costs [11] - GAAP net loss was $1.5 million or $0.05 per share in Q2 fiscal 2021, compared to a GAAP net loss of $1.4 million or $0.06 per share in Q2 fiscal 2020 [13] - Non-GAAP net income was $861,000 or $0.03 per share in Q2 fiscal 2021, compared to $666,000 or $0.03 per share in Q2 fiscal 2020 [14] Business Line Data and Key Metrics Changes - IoT products generated $13.4 million in Q2, down 8% sequentially but up 20% year-over-year, with strong growth from device servers [22] - Remote Environment Management (REM) revenues totaled $3.1 million, up 29% sequentially and 69% year-over-year, driven by growth in remote work and access initiatives [27] Market Data and Key Metrics Changes - The company entered Q3 with a customer-requested hardware backlog 35% higher than the prior quarter, indicating strong demand despite supply chain constraints [21] - The company noted that the second wave of COVID-19 has impacted logistics and component availability, particularly in the EMEA region [62] Company Strategy and Development Direction - The company is focused on acquisition targets that bring scale, strategic value, and earnings accretion, with a strong pipeline of potential acquisitions [29] - The company aims to ramp up production of video conferencing compute solutions in the second half of the fiscal year, despite potential delays from semiconductor suppliers [26] Management's Comments on Operating Environment and Future Outlook - Management acknowledged that supply chain disruptions have worsened, impacting gross margins and pushing revenue out of the quarter, but expressed optimism for growth in the second half of the fiscal year [20][30] - The company expects to achieve revenue growth of 15% to 25% and non-GAAP EPS growth of 75% to 125% for fiscal 2021 [16] Other Important Information - The company ended Q2 with cash and cash equivalents of $7.6 million, consistent with the prior quarter, and working capital improved to $19.4 million [15] Q&A Session Summary Question: Component availability issues and guidance for the second half - Management indicated that component shortages have worsened, affecting various components beyond just processors, but they are optimistic about achieving growth in the second half [37][40] Question: Update on platform development and M&A activity - The company is actively expanding its SaaS offerings and has a strong pipeline of acquisition targets, although valuation expectations have changed slightly due to market conditions [49][50] Question: End market strengths or weaknesses within the IoT segment - Management noted that while there are challenges in retail and small business sectors, overall demand remains strong, particularly in telematics and gateways [61][62] Question: Record backlog and its implications - The backlog is a result of both strong bookings and the inability to ship due to supply constraints, with management expecting to fulfill delayed orders in the coming months [75]