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LTRX

Lantronix NasdaqCM:LTRX Stock Report

Last Price

US$7.33

Market Cap

US$255.1m

7D

-2.7%

1Y

44.0%

Updated

10 Aug, 2022

Data

Company Financials +
LTRX fundamental analysis
Snowflake Score
Valuation1/6
Future Growth4/6
Past Performance0/6
Financial Health5/6
Dividends0/6

LTRX Stock Overview

Lantronix, Inc. provides software as a service (SaaS), engineering services, and hardware for edge computing, the Internet of Things (IoT), and remote environment management (REM) in the Americas, Europe, the Middle East, Africa, and the Asia Pacific Japan.

Lantronix, Inc. Competitors

Price History & Performance

Summary of all time highs, changes and price drops for Lantronix
Historical stock prices
Current Share PriceUS$7.33
52 Week HighUS$10.25
52 Week LowUS$4.55
Beta2.27
1 Month Change41.78%
3 Month Change39.62%
1 Year Change44.01%
3 Year Change113.08%
5 Year Change252.40%
Change since IPO-84.73%

Recent News & Updates

Aug 10

Lantronix: Breakdown Of My Second Largest Holding

LTRX is a provider of IoT hardware, used to aid companies communicate with its devices from anywhere. The company is looking to move away from low-margin sales to provide recurring IoT as a Service. I remain bullish on the company's ability to improve its finances, but I discuss risks that are present. Introduction Lantronix (LTRX) is now my second largest holding as shares have risen over 50% from my last article, I have not trimmed my position, and other assets remain weak. However, as the share price reaches all-time highs again, I wanted to dive into the financials again to make sure I am placing my money in the right spot. As so, I will share my thoughts on the recent and long-term financials with you. What is most important to consider for Lantronix is whether the company can break out of its historically volatile revenue cycle. As a small internet of things (IoT) hardware provider, the company had lumpy revenues as clients submitted bulk purchases or contracts. However, management wants more, and it is looking to drive a more circular and lasting platform. This is through combining its expertise in IoT hardware design with software solutions in order to drive recurring revenues. Then, as the platform expands in scope, more and more clients will spend on high “value added services” to incorporate both hardware and software into their ecosystems. LTRX Investor Presentation August 2021 Growth Over the past few years, Lantronix has performed a series of acquisitions to expand the platform, and while some issues have arisen, revenues do seem to have finally found the organic growth they need. To be sure, I will look at the current product mix and sales drivers as provided by the management. With over 2 million listed customers across the world, Lantronix is far more globalized than the sub-$300 million market cap would surmise. In fact, Lantronix has a wide mix of major corporations supporting the business and buying LTRX products. The problem is that these products are not the most expensive, are fairly niche, and are typically one-time purchases. As hardware sales typically see low growth and margins, this highlights why SaaS and service revenues are being sought. Lantronix Investor Presentation August 2021 Lantronix Store One reason for the strong share price performance of late is that the company has performed well despite global tech supply chain issues. This may be thanks to its relationships with its third-party contractors, or merely a result of higher volumes of sales. Most production is based in China, and this may be seen as a risk, but so are the majority of hardware sales in the US. As it seems supply chain issues are beginning to unwind, I believe that any risks associated with the pandemic are resolving, leading to true financial performance to be reflected moving forward. LTRX FY 21 Annual Report LTRX FY 21 Annual Report Beginning with the long-term data, we can see that Lantronix has a long operating history, but only until 2020 has growth taken off. A new CEO, Paul Pickle, took the reins in 2018, and so we perhaps can attribute the new success to the change in leadership. Proponents of the leader cite Pickle’s experience in leading his prior company, Microsemi, to be acquired by Microchip Technology (MCHP), and perhaps are looking for the same here at Lantronix. So far, significant changes have occurred and I believe the current revenue growth is a great first step. Koyfin Now I will discuss the recent quarter. As of the May 4th earnings, the $23.3 million in revenues beat consensus by $2.8 million to drive 89% YoY growth. These are separated into two major segments, IoT products and radio environment map ((REM)) products. Both involve hardware sales, but REM is the new segment driving both growth and higher margin applications in software connectivity. For the IoT segment, growth was seen most significantly across two product lines: XPico and XPort. XPico uses Wi-Fi embedding to connect hardware to servers, while XPort is a series of devices that embed operations systems to hardware. These are the important backbone devices that allow for non-operated machines to be connected to each other and a network in order to allow IoT to occur. Essentially, the advanced communication and data transfer that is required to increase efficiency now, and in the future. In the REM segment, sales were driven by three main product groups: SLC 8000 family for data center console management, Spider for remote server connectivity, and SLB for IT device connection management. These products are seeing significant growth, although they hold a far smaller portion of total revenues. As these products aid in connectivity and remote access, I expect these product lines will have significant growth due to the range of viable applications. See the highlighted image below for more details. With the flourishing growth of Internet-of-Things (IoT) applications, cellular-assisted IoT networks are promising to support the ever-increasing wireless traffic demands generated by various kinds of IoT devices. As one of the emerging technologies in next-generation cellular systems, small cells, or so-called “femtocells” in indoor environments, are expected to be densely deployed for ubiquitous coverage and capacity enhancement in a cost-effective and energy-efficient way… REMs enable operators to detect existing coverage and capacity problems at any interested location. To verify the feasibility of indoor diagnoses, we collect real trace data from an indoor testbed and then conduct a series of experiments to evaluate the performance of the machine-learning algorithms in terms of the accuracy, the time complexity, and the sensitivity to data volumes. LTRX FY 21 Annual Report Profitability While speedy revenue growth is always welcome, it is also important to consider profitable growth. Unfortunately, this is where some of the cons show up for Lantronix. Historically, the company was skating on thin ice, barely making positive EBITDA. At the same time, net income losses were relatively tame at the same time, not too extreme. Then, beginning in 2016-2018, EBITDA began to rise to stable positivity. However, the current EBITDA margin is only 3.25%, and there are still meaningful improvements that must be seen. At the same time, as the result of acquisitions and investments, net income losses have remained elevated over the past two years. I will be looking to see both margins increase meaningfully over the following quarters as recurring revenues drive profitable growth. Koyfin To understand where the money is going, I broke down the total operating expenses in the chart below. Revenues typically are in-line with operating expenses, with the main driver being the cost of goods sold. It seems that Lantronix can react quickly to changing supply costs and offload them to customers. Also, as I will discuss in a bit, recent acquisitions have not damaged the expense profile to an extreme degree, but LTRX has sold off underperforming assets over the past two years. I expect that margin expansion will occur when revenues are increasing at a faster rate than expenses, but this is not the case yet. However, it is good to see SG&A and stock-based compensation remain low. There is no issue of unnecessary expenditures on marketing or staff payments. The only problem is that the curse of hardware profitability and competition are driving the company to spend on reinvestments. Koyfin As of the most recent earnings, management claims recent profitability issues were the result of both underperforming assets that have been sold off plus supply chain costs. Also, the acquisition of Intrinsyc has brought in other low-margin product lines that have also impacted profitability. Thankfully, we can see that SG&A costs are being managed well, and we can in fact see a reduction in ad/marketing costs, share-based compensation, and other losses. If ads/marketing and SBC were up, I would feel less comfortable about the investment.

Shareholder Returns

LTRXUS CommunicationsUS Market
7D-2.7%1.3%1.2%
1Y44.0%-10.7%-11.6%

Return vs Industry: LTRX exceeded the US Communications industry which returned -13.1% over the past year.

Return vs Market: LTRX exceeded the US Market which returned -13.5% over the past year.

Price Volatility

Is LTRX's price volatile compared to industry and market?
LTRX volatility
LTRX Average Weekly Movement10.3%
Communications Industry Average Movement8.3%
Market Average Movement7.9%
10% most volatile stocks in US Market17.0%
10% least volatile stocks in US Market3.2%

Stable Share Price: LTRX is not significantly more volatile than the rest of US stocks over the past 3 months, typically moving +/- 10% a week.

Volatility Over Time: LTRX's weekly volatility (10%) has been stable over the past year.

About the Company

FoundedEmployeesCEOWebsite
1989306Paul Picklehttps://www.lantronix.com

Lantronix, Inc. provides software as a service (SaaS), engineering services, and hardware for edge computing, the Internet of Things (IoT), and remote environment management (REM) in the Americas, Europe, the Middle East, Africa, and the Asia Pacific Japan. The company’s IoT products include IoT Connectivity, which provide wired and wireless connections that enhance the value and utility of modern electronic systems and equipment through secure network connectivity, power for IoT end devices through Power over Ethernet, application hosting, protocol conversion, media conversion, secure access for distributed IoT deployments, and various other functions; IoT Compute, such as application processing delivering compute to meet customer needs for data transformation, computer vision, machine learning, augmented/virtual reality, audio/video aggregation and distribution, and custom applications; and IoT Telematics, which provides power efficient products designed to support communications across interfaces and industrial protocols for vehicle, fleet, and asset tracking and management. It also offers network switches, media converters, power over ethernet, NICS and optical SFPs, system on modules, single board computers, and development kits; and services for mechanical, hardware, and software engineering for camera, audio, and artificial intelligence/machine learning development, as well as xPrintServer.

Lantronix, Inc. Fundamentals Summary

How do Lantronix's earnings and revenue compare to its market cap?
LTRX fundamental statistics
Market CapUS$255.07m
Earnings (TTM)-US$8.96m
Revenue (TTM)US$114.35m

2.2x

P/S Ratio

-28.5x

P/E Ratio

Earnings & Revenue

Key profitability statistics from the latest earnings report
LTRX income statement (TTM)
RevenueUS$114.35m
Cost of RevenueUS$63.37m
Gross ProfitUS$50.98m
Other ExpensesUS$59.94m
Earnings-US$8.96m

Last Reported Earnings

Mar 31, 2022

Next Earnings Date

Aug 18, 2022

Earnings per share (EPS)-0.26
Gross Margin44.58%
Net Profit Margin-7.84%
Debt/Equity Ratio21.8%

How did LTRX perform over the long term?

See historical performance and comparison