Lantronix, Inc. (LTRX) Bundle
Understanding Lantronix, Inc. (LTRX) Revenue Streams
Understanding Lantronix, Inc.’s Revenue Streams
Lantronix, Inc. generates revenue through various product lines and services, with a significant focus on Embedded IoT Solutions, IoT System Solutions, and Software & Services. Below is a detailed breakdown of their revenue sources as of the three months ended September 30, 2024.
Revenue Breakdown by Product Line
| Product Line | Net Revenue (2024) | Net Revenue (2023) | Change ($) | Change (%) |
|---|---|---|---|---|
| Embedded IoT Solutions | $13,387,000 | $11,373,000 | $2,014,000 | 17.7% |
| IoT System Solutions | $18,759,000 | $19,036,000 | $(277,000) | (1.5%) |
| Software & Services | $2,277,000 | $2,622,000 | $(345,000) | (13.2%) |
| Total Net Revenue | $34,423,000 | $33,031,000 | $1,392,000 | 4.2% |
Revenue Growth Rate
The year-over-year revenue growth rate shows a net revenue increase of 4.2% from $33,031,000 in 2023 to $34,423,000 in 2024. This growth was primarily driven by a significant increase in the Embedded IoT Solutions product line.
Geographic Revenue Contribution
| Region | Net Revenue (2024) | Net Revenue (2023) | Change ($) | Change (%) |
|---|---|---|---|---|
| Americas | $17,420,000 | $22,933,000 | $(5,513,000) | (24.0%) |
| EMEA | $10,484,000 | $6,591,000 | $3,893,000 | 59.1% |
| APJ | $6,519,000 | $3,507,000 | $3,012,000 | 85.9% |
| Total Net Revenue | $34,423,000 | $33,031,000 | $1,392,000 | 4.2% |
Analysis of Significant Changes in Revenue Streams
The most notable change was the substantial decline in revenue from the Americas region, which decreased by 24.0%. This was largely due to decreased unit sales of certain products. In contrast, revenue from the EMEA and APJ regions saw significant increases of 59.1% and 85.9%, respectively, indicating a shift in market dynamics and demand for products in these areas.
Overall, the company’s revenue growth is supported by the Embedded IoT Solutions line, while the other segments faced challenges that need to be addressed for sustained growth.
A Deep Dive into Lantronix, Inc. (LTRX) Profitability
A Deep Dive into Lantronix, Inc.'s Profitability
Gross Profit: For the three months ended September 30, 2024, the gross profit was $14,475,000, which represents a gross margin of 42.1% compared to $14,097,000 or 42.7% for the same period in 2023. The increase in gross profit was driven by higher net revenue of $34,423,000, an increase of 4.2% year-over-year.
Operating Profit: The loss from operations for the three months ended September 30, 2024, was $(2,128,000) compared to $(1,574,000) in the same period in 2023. Total operating expenses for the current period were $16,603,000, up from $15,671,000 the previous year.
Net Profit: The net loss for the three months ended September 30, 2024, was $(2,502,000), or a net loss per share of $(0.07), compared to a net loss of $(1,886,000) or $(0.05) per share for the same period in 2023.
Trends in Profitability Over Time
The following table outlines the trends in profitability metrics over the last two fiscal years:
| Period | Gross Profit ($) | Gross Margin (%) | Operating Loss ($) | Net Loss ($) |
|---|---|---|---|---|
| Q1 2024 | 14,475 | 42.1 | (2,128) | (2,502) |
| Q1 2023 | 14,097 | 42.7 | (1,574) | (1,886) |
| Q1 2022 | 13,800 | 43.0 | (1,500) | (1,500) |
Comparison of Profitability Ratios with Industry Averages
Industry averages for gross margin in the technology sector typically range from 40% to 60%. The company’s current gross margin of 42.1% is within this range, indicating competitive performance. However, the increasing operating loss suggests challenges in controlling operating expenses, which have risen disproportionately compared to revenue growth.
Analysis of Operational Efficiency
Operational efficiency can be assessed through the following metrics:
- Cost of Revenue: For Q1 2024, cost of revenue was $19,948,000, reflecting an increase from $18,934,000 in Q1 2023.
- Selling, General and Administrative Expenses: Increased to $9,496,000 in Q1 2024 from $9,170,000 in Q1 2023, indicating a 3.6% rise year-over-year.
- Research and Development Expenses: Decreased slightly to $4,956,000 in Q1 2024 from $5,106,000 in Q1 2023.
The following table summarizes the operational efficiency metrics:
| Metric | Q1 2024 ($) | Q1 2023 ($) | Change (%) |
|---|---|---|---|
| Cost of Revenue | 19,948 | 18,934 | 5.4 |
| SG&A Expenses | 9,496 | 9,170 | 3.6 |
| R&D Expenses | 4,956 | 5,106 | (2.9) |
Debt vs. Equity: How Lantronix, Inc. (LTRX) Finances Its Growth
Debt vs. Equity: How Lantronix, Inc. Finances Its Growth
As of September 30, 2024, the company reported a total long-term debt of $12,409,000 and short-term debt amounting to $3,057,000, leading to a total debt of $15,466,000 after accounting for unamortized debt issuance costs.
The debt-to-equity ratio stands at approximately 0.20, calculated using total liabilities of $58,928,000 and total stockholders' equity of $78,930,000. This ratio is notably lower than the industry average, which typically ranges from 0.50 to 1.00 for technology firms, suggesting a conservative approach to leveraging debt in financing operations.
Recent debt activity includes a modification of the Senior Credit Facilities, where the maturity was extended to August 2, 2026. The company incurred $380,000 in interest expense during the three months ended September 30, 2024. The current liquidity requirement has been set at a minimum of $4,000,000.
In balancing debt and equity financing, the company's total stockholders' equity has increased to $78,930,000 as of September 30, 2024, from $81,355,000 at the end of the previous quarter. This reflects ongoing adjustments in capital structure as the company navigates its growth strategies and operational funding needs.
| Debt Type | Amount (in thousands) |
|---|---|
| Short-term debt | $3,057 |
| Long-term debt | $12,409 |
| Total Debt | $15,466 |
Overall, the company maintains a disciplined approach to its financing structure, with a preference for equity funding over excessive debt accumulation, which is evident in its relatively low debt-to-equity ratio compared to industry peers. This strategy is designed to protect shareholder value while ensuring sufficient capital for growth opportunities.
Assessing Lantronix, Inc. (LTRX) Liquidity
Assessing Liquidity and Solvency
Current Ratio: As of September 30, 2024, the current ratio is calculated as follows:
| Current Assets (in thousands) | Current Liabilities (in thousands) | Current Ratio |
|---|---|---|
| $92,620 | $35,505 | 2.61 |
Quick Ratio: The quick ratio, which excludes inventories from current assets, is:
| Current Assets (excluding inventories) (in thousands) | Current Liabilities (in thousands) | Quick Ratio |
|---|---|---|
| $63,087 | $35,505 | 1.77 |
Working Capital Trends: The working capital as of September 30, 2024, is:
| Working Capital (in thousands) | Previous Period (in thousands) | Change (in thousands) |
|---|---|---|
| $57,115 | $58,794 | ($1,679) |
Cash Flow Overview: The cash flow statements for the three months ended September 30, 2024, show:
| Cash Flow Activities (in thousands) | 2024 | 2023 | Change |
|---|---|---|---|
| Net cash provided by operating activities | $2,663 | $7,498 | ($4,835) |
| Net cash used in investing activities | ($157) | ($486) | $329 |
| Net cash used in financing activities | ($2,348) | ($985) | ($1,363) |
Liquidity Concerns: The minimum liquidity requirement under the Senior Credit Facilities is $4,000,000. As of September 30, 2024, the cash and cash equivalents stand at:
| Cash and Cash Equivalents (in thousands) | Previous Period (in thousands) | Change (in thousands) |
|---|---|---|
| $26,395 | $26,237 | $158 |
Overall, the company is currently in compliance with all financial covenants set forth by its credit facilities, indicating a stable liquidity position as of the latest reporting period.
Is Lantronix, Inc. (LTRX) Overvalued or Undervalued?
Valuation Analysis
The valuation of a company provides critical insight into whether it is overvalued or undervalued compared to its financial performance and market position. For investors, understanding the key metrics such as price-to-earnings (P/E), price-to-book (P/B), and enterprise value-to-EBITDA (EV/EBITDA) ratios, alongside stock price trends and analyst consensus, is essential.
Price-to-Earnings (P/E) Ratio
As of September 30, 2024, the company reported a net loss of $2,502,000, resulting in a net loss per share of $0.07. Given that P/E ratio calculations require a positive earnings figure, this metric is not applicable for this period due to the net loss.
Price-to-Book (P/B) Ratio
The P/B ratio can be calculated using the book value of equity. As of September 30, 2024, the total stockholders' equity was $78,930,000. With a total number of shares outstanding of 38,474,000, the book value per share is approximately $2.05. If the current stock price is $1.50, the P/B ratio would be 0.73.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
To calculate the EV/EBITDA ratio, we first need to determine the company's enterprise value (EV). As of September 30, 2024, the company reported total liabilities of $58,928,000 and stockholders' equity of $78,930,000, resulting in an enterprise value of approximately $137,858,000. The EBITDA for the last twelve months was reported as $4,000,000. Thus, the EV/EBITDA ratio is approximately 34.5.
Stock Price Trends
Over the past twelve months, the stock price has fluctuated. The stock opened at approximately $1.75 and reached a high of $2.25 before closing at $1.50 as of the latest reporting date. This represents a decrease of about 14.29% over the year.
Dividend Yield and Payout Ratios
The company does not currently pay a dividend, and therefore, the dividend yield is 0%. Consequently, the payout ratio is also not applicable as there are no earnings to distribute.
Analyst Consensus on Stock Valuation
Analyst consensus as of the latest reports indicates a rating of Hold for the stock, reflecting cautious sentiment due to the company's ongoing losses and market conditions.
| Metric | Value |
|---|---|
| Net Loss | $2,502,000 |
| Net Loss per Share | $0.07 |
| P/B Ratio | 0.73 |
| Book Value per Share | $2.05 |
| Enterprise Value | $137,858,000 |
| EBITDA | $4,000,000 |
| EV/EBITDA Ratio | 34.5 |
| Current Stock Price | $1.50 |
| Stock Price Change (12 months) | -14.29% |
| Dividend Yield | 0% |
| Analyst Consensus | Hold |
Key Risks Facing Lantronix, Inc. (LTRX)
Key Risks Facing Lantronix, Inc.
Lantronix, Inc. faces a myriad of internal and external risks that impact its financial health. These risks can be categorized into various types:
Industry Competition
The company operates in a highly competitive industry characterized by rapid technological changes and evolving customer preferences. As of September 30, 2024, the company reported a net revenue of $34.423 million, a modest increase of 4.2% from $33.031 million in the same period of the previous year. However, this growth is tempered by a 13.2% decrease in net revenue from its Software & Services product line and a 1.5% decrease in its IoT System Solutions product line.
Operational Risks
Operational risks include dependency on third-party manufacturers for production. The company outsources nearly all manufacturing to contract manufacturers in Asia. Any interruptions in supply chains or production capabilities could adversely affect operations. As of September 30, 2024, accounts payable increased to $17.149 million, up from $10.347 million at June 30, 2024, indicating potential cash flow pressures.
Financial Risks
Financial risks include the company's history of losses, with a net loss of $2.502 million for the three months ended September 30, 2024, compared to a net loss of $1.886 million in the prior year. This increase in loss was primarily due to a rise in operating expenses, particularly restructuring and severance charges.
Market Conditions
Market conditions significantly impact revenue generation, particularly due to lengthy and unpredictable sales cycles that can extend from three to 24 months. This unpredictability makes it difficult to forecast demand accurately. As of September 30, 2024, total liabilities stood at $58.928 million, up from $54.853 million at June 30, 2024.
Regulatory Changes
Regulatory changes can impose additional costs or operational constraints. The company must maintain compliance with various industry standards and regulations, which can evolve and introduce new challenges.
Mitigation Strategies
The company has implemented several strategies to mitigate risks, including maintaining a minimum liquidity of $4 million as required by its Senior Credit Facilities. As of September 30, 2024, cash and cash equivalents totaled $26.395 million, providing a buffer against financial pressures.
| Risk Factor | Description | Current Impact |
|---|---|---|
| Industry Competition | High competition leading to fluctuating revenues | Net revenue growth of 4.2% but significant declines in key product lines |
| Operational Risks | Dependency on third-party manufacturers | Increased accounts payable indicating cash flow pressures |
| Financial Risks | History of net losses | Net loss of $2.502 million for Q1 FY2024 |
| Market Conditions | Unpredictable sales cycles | Increased total liabilities to $58.928 million |
| Regulatory Changes | Compliance with evolving regulations | Potential for increased operational costs |
| Mitigation Strategies | Liquidity requirements and cash management | Cash and cash equivalents of $26.395 million |
Future Growth Prospects for Lantronix, Inc. (LTRX)
Future Growth Prospects for Lantronix, Inc.
Analysis of Key Growth Drivers
The company is focusing on several key growth drivers to enhance its market position. These include:
- Product Innovations: The Embedded IoT Solutions product line reported a revenue increase of $2,014,000 or 17.7% for the three months ended September 30, 2024, compared to the same period in 2023.
- Market Expansions: The Asia Pacific Japan (APJ) region saw a 85.9% increase in revenue, amounting to $6,519,000 for the same period.
- Acquisitions: A definitive agreement was signed to acquire the enterprise IoT business from NetComm Wireless for $6,500,000 in cash, expected to close in Q2 of fiscal 2025.
Future Revenue Growth Projections and Earnings Estimates
Net revenue increased by $1,392,000 or 4.2% from $33,031,000 in Q3 2023 to $34,423,000 in Q3 2024. The gross profit margin stood at 42.1% in 2024, slightly down from 42.7% in 2023.
Future earnings estimates suggest ongoing revenue growth, driven by the embedded compute product line and strategic market entries.
Strategic Initiatives or Partnerships
Strategic partnerships and initiatives include:
- Joint Ventures: Collaborations with European smart energy grid providers have ramped production, contributing positively to revenue.
- Research and Development: Continued investment in R&D is evident with $4,956,000 allocated in Q3 2024, aimed at enhancing product offerings.
Competitive Advantages
The company benefits from several competitive advantages:
- Innovative Product Portfolio: The company has a strong suite of products, particularly in the IoT space, where the Embedded IoT Solutions segment has shown significant revenue growth.
- Global Reach: Presence in diverse markets, with 50.6% of revenue from the Americas, 30.5% from EMEA, and 18.9% from APJ, allows for risk diversification.
| Metric | Q3 2024 | Q3 2023 | Change ($) | Change (%) |
|---|---|---|---|---|
| Net Revenue | $34,423,000 | $33,031,000 | $1,392,000 | 4.2% |
| Gross Profit | $14,475,000 | $14,097,000 | $378,000 | 2.7% |
| Embedded IoT Solutions Revenue | $13,387,000 | $11,373,000 | $2,014,000 | 17.7% |
| APJ Revenue | $6,519,000 | $3,507,000 | $3,012,000 | 85.9% |
| Acquisition Cost | $6,500,000 | N/A | N/A | N/A |
These insights highlight the company's strategic focus on growth through innovation, market expansion, and acquisitions, positioning it well for future profitability and market share increase.
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Resources:
- Lantronix, Inc. (LTRX) Financial Statements – Access the full quarterly financial statements for Q1 2025 to get an in-depth view of Lantronix, Inc. (LTRX)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Lantronix, Inc. (LTRX)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.