Lantronix, Inc. reported its financial results for the three months ended September 30, 2024, showing a net revenue of $34.4 million, a 4.2% increase from $33.0 million in the same period of 2023. This growth was primarily driven by a 17.7% increase in the Embedded IoT Solutions product line, which generated $13.4 million, accounting for 38.9% of total revenue. However, the company experienced declines in its Software & Services and IoT System Solutions product lines, with revenues decreasing by 13.2% and 1.5%, respectively.

Despite the revenue growth, Lantronix reported a net loss of $2.5 million for the quarter, compared to a loss of $1.9 million in the prior year. The increase in net loss was attributed to a $932,000 rise in operating expenses, largely due to restructuring and severance charges amounting to $900,000, a significant increase from just $20,000 in the same period last year. Gross profit for the quarter was $14.5 million, representing a slight increase from $14.1 million in 2023, although the gross margin decreased slightly to 42.1% from 42.7% due to a shift in product sales mix.

The company’s total current assets rose to $92.6 million as of September 30, 2024, up from $89.0 million at the end of June 2024. Total liabilities also increased to $58.9 million from $54.9 million, while total stockholders’ equity decreased to $78.9 million from $81.4 million. Cash and cash equivalents showed a modest increase to $26.4 million, compared to $26.2 million at the end of the previous quarter.

In terms of strategic developments, Lantronix announced a definitive agreement to acquire the enterprise IoT business from NetComm Wireless Pty Ltd for $6.5 million in cash, expected to close in the second fiscal quarter ending December 31, 2024. The company has also been actively managing its financial obligations, extending the maturity of its Senior Credit Facilities to August 2, 2026, and maintaining compliance with all financial covenants.

The company continues to face challenges, including a material weakness in internal controls related to information technology, which management is working to remediate. Additionally, the competitive landscape and macroeconomic conditions, including rising interest rates, pose risks to future profitability and operational performance.