Lantronix(US:LTRX)2019-04-25 23:10Financial Data and Key Metrics Changes - For Q3 2019, the company reported net revenue of $12.3 million, a 6% increase from $11.6 million in Q3 2018 and a slight increase from $12.1 million in Q2 2019 [10] - Year-to-date net revenue grew by 10% for the nine months ended March 31, 2019 [11] - GAAP net income was $857,000, or $0.04 per share, compared to $344,000, or $0.02 per share in Q3 2018 [17] - Non-GAAP net income was $1.3 million, or $0.05 per share, compared to $767,000, or $0.04 per share in Q3 2018 [18] - Cash and cash equivalents increased to $18.2 million as of March 31, 2019, from $9.6 million as of June 30, 2018 [19] Business Line Data and Key Metrics Changes - Net revenue from the IoT product line decreased by 1% sequentially, with stable core IoT product revenue [11] - The IT Management product line saw a 63% increase year-over-year and an 11% increase sequentially, driven by a record quarter for the SLC 8000 solution [12] Market Data and Key Metrics Changes - The company is experiencing slower ramp-up in IoT business due to customer implementation delays and CapEx cycles [35][36] - The wired IoT revenue has been performing well, even as wireless revenue has faced delays [45] Company Strategy and Development Direction - The company is focusing on reducing exposure to China manufacturing by moving production to Southeast Asia [21] - There is an emphasis on investing in new products, with R&D expenses increasing to $2.4 million in Q3 2019 [16] - The company aims to leverage its strong cash position for both organic and inorganic growth strategies [31] Management's Comments on Operating Environment and Future Outlook - Management expects the slower ramp in IoT business to persist for a couple of quarters due to customer dependencies [35][36] - The company anticipates maintaining a similar level of tariff-related costs in the upcoming quarter [22] - Guidance for Q4 2019 includes expected net revenue between $11.4 million and $12.2 million [23] Other Important Information - The company has improved its gross profit margin to 57.4% in Q3 2019, up from 56.8% in Q3 2018 [14] - Selling, general and administrative expenses decreased to $3.9 million in Q3 2019 from $4.2 million in Q3 2018 [15] Q&A Session Summary Question: Continued slower ramp in IoT business - Management expects the slower ramp to continue for a couple of quarters, largely due to customer implementation delays and CapEx cycles [35][36] Question: Growth in IT Management segment - Growth is driven by both larger customer rollouts and new customer engagements, with a focus on proof-of-concepts [39] Question: Operating expenses outlook - Operating expenses are expected to remain relatively flat, with moderated SG&A spending but continued investment in R&D [40]