LTRX - Earnings call transcript Q4 2020

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Operator

Good day and welcome to the Lantronix Inc. 2020 Q4 Results Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded. to conference like Tinz. to now would turn over the Amber I go Please ahead.

Amber Tinz

and joining you Quarter afternoon thank Good everyone for Conference Fiscal Call. the XXXX Fourth Lantronix's

and are Joining Chief Lantronix's company's will A webcast Pickle, call be on archived Officer. Officer; today and today's us Lantronix's Jeremy the Financial President website. of Chief live Whitaker, available Executive and the Paul call on

dialing replay p.m. through passcode phone a XXX-XXXX will in by Eastern, September p.m. addition, starting XXX X:XX be or In at XXXXXXXX. U.S. today X:XX Pacific XX callers, for XXX-XXX-XXXX the available international entering and

During our Chief Lantronix's that, will forward-looking company any non-GAAP discuss Whitaker, to publicly now I between and the in measures. presents circumstances. call the release, cause events section is measures to this our may our or cautionary Investor factors in With contained the statements financial which earnings statements, posted and encourage management's website will forward-looking use. furnished XX-K could and Today's differ to release undertakes was risks to on SEC reconciliations some Officer. XX-Q. GAAP Jeremy We call, differences such its which to from in non-GAAP and the the Relations materially reflect Furthermore, reporting available during financial risk describes involve is today call, as revise management or of which results Lantronix current statements the that turn and we for update obligation review and earnings and to our uncertainties the the company's filings SEC that expectations. future non-GAAP Financial over the no make the you website

Jeremy Whitaker

the this as XXXX as information and quarter to everyone of Investor details fiscal news will hand Amber. commentary. Please commentary. refer afternoon's of fourth today's results to for business before going to additional financial it over the And for you, our provide to I website some Paul in well highlights release that Thank Relations my our the financial call. for his for us supplement section joining I'm welcome

quarter a supply continuing we XXXX, the pandemic. acquisitions XXXX. for high and driven COVID-XX by in fourth in the million in fiscal customer net quarter increase compared when the reported of of as revenue quarter for compared For disruptions was for XX.X% fourth a third was of from fiscal the $XX.X to Gross profit, XXXX. year-on-year XXXX. XX.X% The was XX% contribution $XX.X percentage an reported revenue, quarter up third for $XX.X fourth our as the record chain of primarily fiscal XX.X% revenue the XXXX net Sequentially, quarter fiscal million and despite compared with X% of of of fiscal the million growth related to fiscal to demand quarter XXXX, of fourth the of

obsolete decline. plus accounted mix for the leasing we quarter, COVID-XX inventories gross we gross expense took inventories. and for for charge of fourth the product as fourth two the increased a recent quarter, the in end-of-life, issues While of below product margins affects lowered had levels. logistics a always the excess certain classic result pandemic which This majority quarterly In margin,

While we expect we will logistics to ongoing continue of them to pandemic, a the see expenses sequentially. as elevated result decline

share expenses In $X.X ago for fourth loss to Non-GAAP revenue to additional of per upcoming primarily acquisitions costs, for a $X.X fiscal advantage fiscal timing products $X.X in headcount the expect fourth increase $X.XX administrative income net of leverage fiscal quarter million XXXX of related substantially or was net of the increase fiscal million quarter the we for $X.XX fiscal the for third non-GAAP XXXX year was R&D quarter due of our operating and of for Selling, synergies The and income recent in gross loss quarter the continue quarter, the audit. million of to $X.X XXXX. and year-on-year net fourth quarter and of or created recent fiscal to quarter. expenses during we quarter of per to XXXX. an annual as with share of $X.XX factors, September two net margins non-GAAP SG&A compared were for of GAAP expect to fiscal fourth third the the the general and expenses we the these quarter fourth quarter $XXX,XXX third $X.X Given improve quarter increase quarter non-GAAP XXXX. million in net development per we're million share XXXX. compared $X.XX in operating the $XXX,XXX in the fiscal fiscal XXXX income of expenses the Non-GAAP fiscal This to to million per during net compares the in fiscal fourth $X.X XXXX quarter million of for of the sequentially acquisitions. with of for of fourth fourth from to share $X.XX XXXX compensation. fourth fourth and GAAP $X $X.X or Research was down revenue take from of fiscal due third from $X.X XXXX quarter XX% and fiscal million, of the million the were and the net quarter, operating in financial upcoming XXXX. compared as we quarter of of decreased or XX% XXXX. sequentially a And XX% share statement percentage capture per XXXX, share-based or

an expect year The low-margin XXXX was in as of for It the quarter, million is product fiscal of XXXX. million, due XXXX noting for Now fiscal product with in in represents see $X.X expenses in during $XX.X the worth increase revenue a And XXXX. acquisitions forward, results. headwind full this for a margins and revenue, two to in Gross XXXX in in recent of It an with to gross product compared improvement XX% expenses expenses Operating were Net advantage of integrate XX% increase began fourth line fiscal related revenue our costs million as going Intrinsyc primarily the see fiscal to fiscal represented mix. to net single-digit our revenue was XXXX. XXXX model. assumed due we were we compared for exit of of XXXX. compared acquisition. fiscal in XXXX, profit our revenue $XX.X was million gross small exited a to XXXX. and for revenue XX% take and during from decline $XX.X of XXXX as result change XX.X%, operating the margin the percentage companies. to the for the of line primarily turning were a in in Maestro of to XX% integration fiscal million, while and Maestro fiscal leverage to about The combined $XX.X the efforts synergies completed $X.X fiscal operating of Non-GAAP that million in fiscal resulting we acquisitions efforts and we benefits fiscal operating

share $X.X fiscal GAAP a fiscal costs. net or in for to share GAAP per loss or loss per net GAAP or Included to for million Non-GAAP income $X.XX compared $X.XX we XXXX. the or fiscal For was $X.XX million net in per reported XXXX, loss as $X.X of approximately a $X.XX $XX.X XXXX $XXX,XXX of net XXXX. were and acquisition compared per $X.X XXXX fiscal severance-related million million of share share

primarily by XX XXXX. as XX, June XXXX, as related XXXX. of June in of of XX, for sheet. Cash inventories million of million use the million Now working The $XX.X was compared were of June cash during we capital XX, grew as quarter Working $X.X were June we cash operating of XXXX. fiscal of of equivalents quarter, million XXXX, as capital cash compared the XXXX. million flow with the balance of as turning approximately with during made from to and XXXX, two March million as that the XXXX. $XXX,XXX decline to approximately Cash $XX.X Net XX, to prior $X $XXX,XXX as the acquisitions as fiscal compared $XX.X fourth generated June is XX, $XX.X

EPS. flat providing non-GAAP operating on targets and of first fiscal That specific expect to non-GAAP we pandemic, revenue slightly quarterly increase. will created ongoing guidance. to provide to the quarter providing for uncertainty be for be our And we'll by said, COVID-XX I'll and the we light guidance quarter and to upcoming In earnings revenue some annual not year. the growth fiscal XXXX Now up transition of

For Paul. non-GAAP XX% to are XXX%. XX% turn the of growth we growth now targeting of XXX% fiscal EPS XXXX, to call over to revenue I'll and

Paul Pickle

Jeremy. you, Thank

shareholders I'm quarter our increase for year-over-year which in today. flows a in earnings related resulted efficiencies hampered world record revenue by While operating significant acquisitions, more report we synergies still a operate our while growth, to the pleased cash with margin pandemic, to to in than results included and fiscal are revenue COVID-XX revenue of the double. record XXXX, in guidance a Results XX-plus growth expected to percent realization

year at we to what do. Lantronix, much Looking back here at our first accomplished of we full out have set

strategic acquisitions terms XXXX. product In Adding portfolio. to computing edge executed asset in tracking, on growth, fiscal cellular two solutions we intelligent highly and inorganic of our mobility,

grow With fiscal year able XX% and Lantronix for to on challenging acquisitions board classic in products, a our despite these was XXXX. year-over-year

capability $XX.X revenues we model XX% All-in, and sequentially within product efficiency our acquisitions accretive our innings backlog SAM still growing synergies from recent improved at the our Work-from-home the delivering and shareholders. of stack, XX% early of believe toward management focused while to through this timeframe. quarter shift we and many accretion our as additive of with initiatives non-GAAP have million a year-over-year. this on our XXXX at X% IoT have pursue and same to over a IoT completed in fiscal customers. for operating we most continue our of and many year-over-year fallen QX, to Since bolster our lines revenues in massive XX% XX% increase of QX expenses integration remote of and the customers contributed We transactions. Realizing already remaining strengthened did operating are up

already for we components strong are led and a driven year computing top-tier as increasing while of for work COVID projects lead-times expect number the intelligent multiple from has has use, We products, our an year see customers. we a revenues on begun ramp fiscal progresses. stretched of design videoconferencing by processing from the to looking to edge Design solution wins

saw a management heavily environment. applications weaker our bookings are as telematics European offset more products tied as in our by weakness cellular remote from activity out-of-band part solutions good ongoing well which medical We and business and to solutions Asian connectivity Wi-Fi for our solutions also billings and in our and

ago. referred management as year previously XX% sequentially ITM up revenues up product environment million, from remote XX% $X.X Our to totaled and a

and in efforts grow. our validate bolster our to validating SaaS continues Interest solution continues integrated glass single long-term newly pane are the Software solution. of prospects. our to Customers

to revenue over While years. recurring revenue and in at expected we the annually these next annually $XXX,XXX licensing is revenue small approximately relatively be see revenues a software steep ramp three still the

can I our of from many for discern growing. is As my hope comments demand you solutions

for While quarters XXXX. in at expect line strengthened for our which completes supply in effects chain. In demand we disruptions the pandemic, some improving today. grow the optimistic fiscal still our prospects that see and untethered the about could the situation dissipating time our we we our to business chain remarks two increasingly our that, we due face with are supply over products demand prepared our and has by in is next With aggregate,

our turn session. So, now I to to conduct the Q&A will over operator, Brent, it

Operator

We go question-and-answer Please Co. question first Our the ahead. Valera from will will Instructions] Needham with now [Operator Rich session. & begin come

Rich Valera

areas sustainable sense you. the the And been down you've as it wins strength there number management like like design more that just it for to previously there you? got to on I into Thank videoconferencing. but tailwind of sounds the could you some you company, was of products know of how maybe that's drill in it could out-of-band there's a been a how you've you're of kind us I of Paul COVID. a Can big due IT particular wondering referred give if recently mentioning big sounds sort then just be? the -- seeing

sounds it good put and and are pipeline the quite You up nice bookings a real quarter there. like

notable next wondering strength from this then seeing maybe Thank areas that I So, about standpoint? really as of move other there was the beyond sustainability finally, could talk you you're we And any strength the you. quarter? if a are

Paul Pickle

the really because suppose products. but Okay. are haven't this betting revenue. come we've really, us. able activity. disappointingly Sure. in really a been realize The it's plus negative to waiting wins, we're design but a just been is I a that been It's terms revenue been lot orders of Videoconference and on kind of in, we for of on

and So the standpoint. And been definitely it's year, hardware actual the we for. well far from small so but that contribution services loaded both fairly pretty a a has have visibility back-end in it's some something

March it weren't as on quarter. components. XX-week we're June tripled. customers of the the able of of and our to in shipped kind out order product January territory, and So of XX that And course, units just that on kind that those once launched year the one were And be of first had -- videoconferencing and then their -- They some have about get just X,XXX into waiting to stretched half expecting it we they lead ship through of to doubled ramped we out time

seen guess in the We the second it of We be the the see the see yet. in in should is I it realized really see year. bookings. in haven't backlog We and it half So it we demand. it positive the

So the is contribution to come half. the second in real

Some those a -- additional contract got design we've some wins standpoint. of from

contracts those work are signed really we videoconferencing starting on for gotten those and those quite in-house, haven't build services but applications, we've the So yet.

of milestone are those kind hardware So after comes fact. the and based then the

even us, of for -- show though time from definitely seen we're those management, we've of quarter. wins nice or January frame, definitely I a some remote ITM a a billing a have yet ramp is this will salesforce bit environment standpoint. business the always been even really the lumpy to that the say activity So forecasting but increase saw up a year. up. since to a we has new in billings It good have

I remote think part because in this management. push that's largely to of

was was we single digits. to So I to growth It plan But in at area And continue. something we another really we're of this the applications. of bit medical strong low then driven medical to a call -- I'd that was see do also had bolstered optimistic by have. that primarily products the significant really something let's that kind That that medical Ethernet some us. juncture. serial Wi-Fi than highlight, that that and industrial In expect is for more original not it

remain was overall Cellular pretty little bit that So but does strong. a did back, come soft. telematics

various that the we're on seeing. color some that's So areas

Rich Valera

you you first And magnitude presuming great. give Jeremy I No, that's then that Paul. won't inventory sense of to is assumption? appreciate that that, rough the us in Can hit write-down of on a that a COGS. the took quarter, correct I'm the that? reoccur And

Jeremy Whitaker

when some They're Yes. -- end-of-life ago to of purchase made had. at few ago not a materials made. of years at for And those demand number the the point. expecting level years that decisions this materialize that to decision was of were couple some products it A expected didn't we a we that purchase a

inventory. Between of points some we expenses to close And the that basis those. XXX of that's so or the between the write-down increased logistic-related needed write-downs two XXX that, to upon based and

So gross wouldn't see necessarily pretty quarter's expect margin, significant basis. on to on a this which we go-forward impact

Rich Valera

Got it.

recover in You most first is the expect that quarter, that to fair? of

Jeremy Whitaker

Correct.

Rich Valera

Perfect. Got it.

Jeremy Whitaker

Yes.

business The That's other thing single-digit doing margin exited is from we're that somewhat acquisition. a million -- a is going the see $X.X in really going acquired the to year. low-margin Maestro we a low forward a business other benefit we about

should the go-forward front. gross a that So on also margin basis on help us

Paul Pickle

Yes. announced exit business. we're previously to that We've that going

And quarter, finally we fulfilled obligations. so this our all past

forward. in none no of So there numbers business going -- business is the that

Rich Valera

the million below contributed Was Got how fourth basis? you it business run rate it say a it. $X.X Was that on rate? annualized Can run below quarter? the that in much

Paul Pickle

slightly with slightly, just in line was above It it, yes. that

Rich Valera

it. Okay. Got

That's Okay. then the just And helpful. OpEx. on

increase nice we the very sounds year? of trending you're move in the of obviously any So, bit in OpEx balance expected quarter. XQ. a reported to us OpEx And about and it you Can the them in like on how decline sort give think the up just sizing should Jeremy expecting

Jeremy Whitaker

to -- our usually we as the of development a and outside some those such annual products. R&D Yes. quarter-to-quarter hard is then to spending the we varies of the some I have costs projects our other relates have of different the type mentioned, product from from related that related of Usually costs standpoint, what audit. costs to certification And spending and also,

So, that to between items given spending $XXX,XXX $XXX,XXX in those two could anywhere be fluctuation between in a quarter.

Rich Valera

it. Got great.

gentlemen. my Thanks Those Okay. much all very questions.

Paul Pickle

Thank you.

Operator

go with Street. will sir. Schmidt question Jaeson Please next Our Lake come from ahead,

Jaeson Schmidt

Yes. for taking questions. Thanks my

meaningful patterns any Just curious additional lead end? seeing you've color in quarter customers? if And been from the order provide since or you seen times changes could comment you're some how if have

Paul Pickle

Yes. long standpoint, we definitely lead chain supply time about I a talk from -- mean, we components.

to people and attribute would current most think I macro COVID those environment.

been long some I lead do think production really have some with we waiting that our that have coming lead kind that on a also processes are introduction. detection do those. we're associated just of product of new that have time from some processors is standpoint, some there new out nature But in the have times being

of delay have programs new And processor there's a some release bit allocation that coming new the little naturally XXX that's early we that related on revenue board from the place. takes to So, of is Qualcomm.

portion business. we've book quarter. patterns our XX% in been So, better the and turns quarter than high customers, always a from a We overall ordering of do the good ship

did and of so, seven-digit demand. two we have June I significant those if to kind numbers look look And at March and at delinquency quarters

won't probably of probably products end have the there that ship. December. I little in quite on exit truly up clean a bit, to weren't expect but did we to the September a until able just improving of we not and lot it So, that quarter

actually, now between at also just of can it, sure that five four a juggling allocation we get issue. right is We're enough to also stage three then least build locations. kind products and make We to and freight utilizing are continuing

to cases, -- some well they're giving placing us forecast, inside cycle our they're customers, – So orders it's in times. they be seem but

And the products. delinquencies, they same some so need at producing but of time the they know that's

the forecast. They're just business getting we're as their So appropriately managing well.

bit So of kind that the have coming moment, it's customers. of a of longer-term of the we some at disjointed are out the our seeing projections benefit but little

Jaeson Schmidt

the just know And could played helpful. that passed, with significant more That's time of or on if or them? expected has been comment I if as little with have that Okay. there bit time you any have more COVID. acquisitions a now kind challenging now out surprises, some But it's negative two you've had positive

Paul Pickle

Yes.

the we first what So was there. acquisition any the we on really that expected. the wasn't right did year There really of money first surprises

March if quarter, X say that think the to should the some just went end X, quarter with at March I it I was turned COVID in got down. I there the so shutting largely China just discount off near for with Asia-based business of because

we account that just for I still in the expected if it came first for So about year. had where

be had to we bit than projected little our a looks originally better in year financials. Second

it's our is still. first them. This full quarter with really early acquisition Second innings quite

we disappointing was June. we looked fiscal look expected a closed the to bit expect I where coming in though little around done exceed on say I'll watch their right year December, just I our think largely first the for that year expectations. in bit things given what So they're at March kind we we a that and year in normalize of calendar I'd as January. first If And say to first little

significant real a than So, accounted team contribution huge give initially. honestly quite but we And for little no take no impact. the more is a making and surprises

that well. excited pretty one really as So about

Jaeson Schmidt

be about as past you know would still for customer and the you contributor. could back queue. to Okay. But And software engagement the small the over one me talk far I'll months? into a feedback, has pipeline how then just customer jump going the or mentioned is I last few as tracked

Paul Pickle

quite really been It's solid.

knew We've way single that of when lot. was bit thesis that hardware a of Shipman Jon software would was And we Fathi in learned disjointed those ahead operating The we improved. to started we taking doing move Jon off intimate we've developments were had came We an sales. -- of and part our into there well software development an be merged software a a engineering. we had strategy. think was largely thesis came I platform We consolidated in. the needed a really kind back-end. Hakam range beyond

drops code at regular juncture. have We this

with line a what features are in asking with have next We the roadmap our are over months. software for that customers six

with kind part that hardware conjunction they really in of That's when been our kind software talking software really must that of hardware they me of and has it's excited kind and the solutions so strategy. of talk intimate they're that feedback. customers' And have that being part

been so pretty now feedback has the right And solid.

that So Medtronic come some people We up. good. for up filling already then the have of ramp will on starting we things pipeline product they're of went that and of promise putting that engagement top that signed the out And sell definitely deployed adding to The single into subscriptions that glass. through micro are be features the roll is pane can they and as that of little is offer. We with now. we'll services features devices their have we're their those the

it's like early $XXXXXX So though I say headed approximately juncture want innings. still At that contribution. this we're overall it's annual to where

three of revenue. least see revenue recurring years -- five XX% to three next like the Over be years to we'd our at

definitely we're on focused driving that. So

Jaeson Schmidt

Okay, guys. appreciate a color. the lot Thanks

Paul Pickle

Thank you.

Operator

ahead. question Searle come Our with Scott will from Please next Capital. go ROTH

Scott Searle

real Hey Thanks quick taking for Paul just clarify questions. Hey good remarks. my afternoon. earlier some to

is quarter terms issues, you the quarter September a could post sounds and impacted number like immediate -- there June to sounds it the like you around that? could put it sales that. supply of that outlook starts get But dollar In some of how chain alleviated the quantify

Paul Pickle

hesitate out, wise. rough order I'll could. a but percentage I'd break to I you that give

where we'd in going probably shift if we customer's that to forecast the we probably -- the had come of little a X% higher product for to I than think to a at. we're September, we'd order think be I needed all XX% to do bit on

Scott Searle

you. Got

that the figure another of take bit well to there's I line product of of produces X% little XX% if that terminated $XXX,XXX-or-so at Maestro higher as a So sequential headwind.

look would even better? it So

Paul Pickle

At least that.

Scott Searle

the you Hey, the starting has Given of pipeline, module little to portfolio terms the product the of that you've provide expanded, portfolio you've in got the of two could color deals got months, acquisitions got looking at a past see and bit in now? Ethernet. Okay. size XX you've Wi-Fi, cellular, you're the

bring You the component Intrinsyc. now with processing edge

you're So, kind out-of-band in with? are with And opportunities? there the starting amounts that, each engage of I dollar well? pulled overall you're And, about that up channel that how attacking to talking larger customer getting is in like guess, the of are getting how things those shaping as you're terms

Paul Pickle

question. really a That's good

the much engagements are So much, larger.

kind lines, itself certain of For they lend to that. product

So might one for then There pull back design of out instance. another million it $XXX,XXX, runs the in be million. a dollars. be that But several when is contract, hardware services might there on that we sale for $X.X always

the below our we without think, was year where businesses, I on but to of thereabouts, of acquired a customer ago were that $XXX,XXX falling had, them And Lantronix order largest that. so, contrast if largely most I the

after to we significant have we to to So of to see the look a that. talking to the grab we year if much don't then, -- that a up we type make And having larger sure $X customer. $X going end much, players. generation concentration, need a million risk customer We're generation but and next million are

much to opportunity the which of a a the pieces able We're talk definitely lot solution, more bit So is makes our about larger. engagement broader.

Scott Searle

for just also some Got the well. a but you. concluded if the being also an both, bidding Great. talked were CBRS, bit as about there a capabilities couple mid-band could which a shared And quickly maybe is on -- enterprises quite I of lot networks, attractive ago, out for weeks auctions spectrum private spectrum,

starting So having I'm you're is and kind CBRS dialogue of at private into playing all opportunities of and you're engage to the around that customers. wondering networks, in with some if in as

Paul Pickle

the that something and at something that's that's we've market. looked industrial that that in a conversation definitely we've So, had --

you particular, at in They're if look market they're industrial somewhat think, automated warehouses crowded. I large. rather

Assembly spectrum. lines are crowded unbelievably and the assembly in gig X.X plants

something I think, Most gig X-gig being in implement deployments able them implement X.X in to would trying phenomenal. space. the are new of to be range all the

I question the of of we So the We're it think has terms lot these a a -- some trying table, implement. giving to of when as in is CBRS optionality. asking get seat that the them they're promise what at

we us, but move more of don't really implementation private me, a haven't network To type I of seen care on towards lot what it implement, they a CBRS." For LTE guys "LTE environments, and they makes There're sense. handoff to of they kind specifics some roaming in deal latency. But some terms of need those specs, like benefits. working the that in there're don't with

because To that it. the of of a it's so I hardware it big available some just X.X little kind inexpensive mind that lot and like to network -- at something means definitely solution But a And solution. But, go me, I'm I Personally, moment monitor I of a to use a not protocols. is we're network have it like that to seems great seems like still readily implement looking or get gig, think, forward. it's private you Wi-Fi So sure it for them it more. proprietary at concern. keeping in bit as we we it,

Scott Searle

parameters in lastly, Paul, a And pretty of you if terms the Thanks. Okay. think could, know are I that I I pipeline specific, opportunities but I'm there. just out are environment active starting targets, M&A to current Thanks. of a valuation discussions, with as potential sense terms be that the urgency is COVID well in how getting impacting of without on front, as had about? both wondering, thrown those with

Paul Pickle

still happening. are conversations The Yes.

those to easy have I think, conversations. it's

better that we're well. thesis operating really, the think still together works I really

apparent picking of guess are there for terms in a actually lot impacted. you like -- looks what's the And some and recovery have COVID us them. businesses tougher impacted, I think, a to sit target, made profoundly for definitely what of

deal fantastic the end but a contribution in they be could up negative it being So short-term.

will And contribute have businesses performance if up sense we trying so in then continue make careful we're -- the long-term. have short-term the that we're just be and can sure to in outsized that that great this to making picking is fundamentals good any

the at front benefit have I think quarters several Right I now being we've in moment. of patient us. growth of the got So of

the have And of benefit and the that's right being at contribute. so need right price find the the be to we financials target showing going make to and sure going patient, we that to we

So still selective, still is pipeline the a and very the we're healthy being are little conversations but happening.

we the sure right just so find make deal. that need And to we

Scott Searle

Great. Thanks so much.

Operator

will come ahead. Sandler. from go question with Please Kumar next Harsh Our Piper

Harsh Kumar

actually. again. talking Yeah. I Hey, to Paul, be basic good a a had question quick question,

total us If capabilities have in And And for years? in time what capabilities what then follow-up. you three at to do this do had want the next you summarize point could five speaking? I then to you strategically have a

Paul Pickle

Okay. I It's voice. heard to good smile a hear you again. when Harsh, I from your got

Harsh Kumar

while, been a It's yeah.

Paul Pickle

an Wi-Fi, call we've is to in part historically So legacy. entrenched classic to And got hardware, serial Wi-Fi, it's the Ethernet serial to part we of Bluetooth. that of Lantronix's position serial what All business.

Over we year, the last added cellular.

as So bridges, think routers, cellular as well gateways, capability. radio you to can of Ethernet low

back-end, software That's of that camera wearables things, pretty be full those get fitness with that reason and on the connected imagine, picked have their a really tuning up compute SaaS capability interact to We've computer we running implemented back-end, from decent types from the that for gamut kernels broader health, matter. applications, then really arrival a standpoint. the the through why it of contract team in on lot I firmware the have and work web to through lot part a a Singapore team bit a down cargo these interface, think kind it's the on board. That capability systems. of a capability that Linux And endpoints take development any anywhere cloud a got between. by doesn't can able for Linux arrival -- we customize a of they're goes that monitors just connect would on we We're an And much van got so portfolio can that application videoconferencing those. UPS a do we now customer can electric of camera So compute in-house.

we that we India. up brought software Internally So a it team also of have in runs kind that gamut. development

algorithms, So capability future: we be at If to of the could I that develop end-up want us. our customers – have services we is anything we SaaS tools in-house able We a address look what specialty capability One, we our definitely like and plugging AI There more that enough about would in at solution. into be think, specialties wouldn't own back-end in-house. necessarily might throw analytics just front-end. some to those

viewed our customers strategically to those a customer’s a or traction, So be out because lot R&D bring bit know – a farm to make our us, in-house. We that because to I that, definitely those, that to we don't of need as something little and we that we're available. there's we missing, of want want to if loses beholding arm. acquire But that they piece need where we are sure go don't extended

too So color? does that give – you of a color bit little much

Harsh Kumar

long-term ask revenue Yes. to growth No. that revenue are this No. – is Xx organic but Those revenue include a understand, percent I just – in significant EPS – your of your long-term much follow-up. Xx all not I it's This kind target targets of okay. I targets, of year or growth. doesn't ask to great. then No. anything full more correct. And XX-plus of like That that, I is, had and have assume

Paul Pickle

for right only talk about have They were target. inorganic, but now the all some we organic organic. targets We definitely

Harsh Kumar

you No, I can fair. so think out have in some then more see what forward? far? you you of terms can synergies where done Like think kind that's And going so OpEx, you take of do well as

Paul Pickle

going that everything have need we programs. at engineering product closer now We're we're margin to going done. always probably order that, And We're numbers. XX%. drive year definitely looking where next beyond Do we think, that think driving op is I through looking can the that? not of an to it revenue, yes. this lines. to about be a OpEx that exercise or we're on we we certain to XX% I go revenue XX% to going do we that think need allocate to percentage we to to whether of to can – we as like back believe we're over the right I'd what sustaining continue is I answer at through certain

where allocate will so be we and a terms refinement the in future. of our our it And prioritization of and more capital for investment

component R&D remain good Roger to OpEx And got Holiday of spend, pretty need of in especially. in to pretty Roger's a now going high we've a our spend we definitely then come is that some make. Software on came handle investments sales that,

don't but where that. refinement little to maybe years two think X%, can if invest, next I so I we another of bit really good got grow, add year, it in we but needs think a And look terms of attached up. a allocation if we to this

Harsh Kumar

a pleasure Thank Always you. talking. Great.

Paul Pickle

you. Thank Likewise.

Operator

Paul concludes This to CEO any Pickle, to I would conference the our for closing session. turn back like over question-and-answer remarks.

Paul Pickle

I today great hope appreciate you, you a and Brent. have attending evening. guys Thanks. you Thank

Operator

The for now conference attending Thank concluded. you presentation. today's has

disconnect. You may now

Lantronix (LTRX) 10 Sep 202020 Q4 Earnings call transcript