Investor
PresentationMarch 2019
Copyright © Lantronix 2018. All rights reserved.COMPANY CONFIDENTIAL. DO NOT DISTRIBUTE
Forward-Looking Statements
COMPANY CONFIDENTIAL. DO NOT DISTRIBUTE 2
This presentation contains forward-looking statements, including statements concerning our business and product development plans and
strategies, the perceived benefits of our products, and our future growth and financial performance. Any statement relating to our plans, goals,
expectations or any future event should be considered a forward-looking statement. While we have based our forward-looking statements on
our current assumptions and expectations, forward-looking statements are not guarantees of future performance and are subject to substantial
risks and uncertainties. As a result, our actual results could differ materially from those indicated in our forward-looking statements, and you
should not rely on any of these forward-looking statements.
Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking
statements include the risks and uncertainties described in “Risk Factors” in our Annual Report on Form 10-K filed with the Securities and
Exchange Commission, or SEC, as well as in our other filings with the SEC. In addition, new risks emerge from time-to-time and we cannot
predict all future risks or assess the impact of all risks to our business. Our forward-looking statements are based on our view as of the date
they are made. Except as require by law, we expressly disclaim any intent or obligation to update any forward-looking statements after the date
hereof becauseof new information, futureeventsor otherwise.
This presentation references certain non-GAAP financial measures, including non-GAAP net income (loss). A reconciliation of the non-GAAP
financial measures to the corresponding GAAP financial measures, along with important information regarding our disclosure of the non-GAAP
financials, is provided in Appendix A.
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OUR MISSION
CREATING SECURE DATA ACCESS & MANAGEMENT
SOLUTIONS FOR THE INDUSTRIAL IOT
Our mission is to be the leading supplier of IoT solutions that
enable companies to dramatically simplify the creation,
deployment, and management of IoT projects while providing
secure access to data for applications and people.
COMPANY CONFIDENTIAL. DO NOT DISTRIBUTE
Lantronix
Enabling the Industrial
Internet of Things
• Global provider of secure data access and
management solutions for Industrial IoT
• Industry leading connectivity solutions that are
easy to deploy and accelerate time to market
• Millions of devices connected worldwide
• Strong Blue Chip customer base
• Significant financial momentum and operating
leverage
IoT Pure Play
Return to Growth with
Margin Expansion
Global Revenue• Americas 55%
• EMEA 30%
• APJ 15%
Experienced
Leadership Team
COMPANY CONFIDENTIAL. DO NOT DISTRIBUTE 4
5
PROVEN LEADERSHIP TEAM
Paul Pickle
CEO (effective 4/22/19)
Michael A. Fink
VP, OperationsFathi Hakam
VP, Engineering
Shahram Mehraban
VP, Marketing
Kurt Scheuerman
VP, General Counsel
Tom Morton
VP, Human Resources
Kevin Yoder
VP, WW Sales
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Jeremy Whitaker
CFO
OUR GROWTH
STRATEGY
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Expand SaaS IoT P lat fo rm w i th New IoT and ITM App l icat ions
Pursue Strateg ic Acqu isi t ion Opportun it ies
Grow IoT Revenue w i th New Gateway Products
Pursue M arket Share Gains w i th IT M anagement Products
what
STRONG BASE OF GLOBAL BLUE-CHIP CUSTOMERS
W e l l P o s i t i o ne d i n K e y Ma r ke t S e gme nt s
RETAIL INDUSTRIAL ENERGY / UTILITIESHEALTHCARE SMART BUILDING
TRANSPORTATION FINANCIALS EDUCATIONMILITARY & GOV’T TELECOM
COMPANY CONFIDENTIAL. DO NOT DISTRIBUTE 7
FAVORABLE SECULAR TRENDS
Integration of
Renewables &
Distributed
Energy
Rise of
Robotics &
Automation
Connected
Healthcare &
Remote
Patient
Monitoring
Smart Building
Integration
Increase
Government &
Defense
Spending
M2M, Big
Data, Analytics
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THE
LANTRONIX
DIFFERENCE
Lantronix takes care of IoT
connectivity, management
and security so our
customers can take care of
their business
Reducing total cost of
ownership
Reducing OEM time
to market
COMPANY CONFIDENTIAL. DO NOT DISTRIBUTE
Industrial hardened
solutions
10%
12%
12%
10%
10%
12%
9%
10%
10%
0% 5% 10% 15% 20% 25% 30% 35% 40%
Implementation complexity
Cost/funding concerns
Security concerns
Ranked 1st Ranked 2nd Ranked 3rd
Top 3 Issues with IoT Deployments
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IOT SOLUTIONS FROM THE DEVICE TO THE DATA CENTER
New Connected
Devices
Legacy Devices
Network
Lantronix
Embedded
Modules
& Gateways
Data Center
Lantronix
External Device
Gateways
Lantronix
IT Management
Solutions
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Broad Suite of IIoT Solutions
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IOT GATEWAYS &
BUILDING BLOCKS
Connectivity Without
Complexity
IT MANAGEMENT
SOLUTIONS
Management of Enterprise
IT Infrastructure
MANAGEMENT
SOFTWARE
Scalable Software Made Simple
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LANTRONIX IOT GATEWAYS
Secure and certified enterprise-ready
connectivity, network intelligence and
management at scale for industrial and
commercial devices and machines
Embedded IoT Gateways
• Ideal to drop into any new or
inflight design
• Small size ideal for high-
volume integration
External IoT Device Gateways
• Ideal for connecting existing
devices and machines
• Or, when it is desirable to keep
connectivity external to asset
xPico 240Mid-range
Ethernet, Wi-Fi
PremierWave
2050Enhanced Ethernet,
Wi-Fi Bluetooth
SGX5150Ethernet, Wi-Fi
Bluetooth
PremierWave
XC HSPA+Ethernet, Cellular
xPico 250Mid-range
Ethernet, Wi-Fi
Bluetooth
XPort EdgeSerial to Ethernet
COMPANY CONFIDENTIAL. DO NOT DISTRIBUTE 12
SGX5150-MDEthernet, Wi-Fi
Bluetooth
Lantronix IT Management
ADVANCED CONSOLE MANAGER BRANCH OFFICE MANAGER REMOTE KVM-OVER-IP
Enterprise Data Centers &
Development LabsRetail Store & Branch Offices Kiosks, Digital Signs, Test Labs
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MACH10 Management Software PlatformRecurring Revenue Through SaaS Model
Global Device Manager
Gateway Central
ConsoleFlow
for IoT OEMs
for Lantronix Gateways
for Lantronix Console Managers
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THE LANTRONIX DIFFERENCE IN ACTION
Connecting
Weighing
Scale for
Higher
Efficiency
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Enabling
Secure Smart
Meter
Integration
Increasing
Warehouse
Efficiency
Through Fast
Roaming
Enabling
Secure
Medical
Device
Connectivity
Connecting
Hospital
Devices
Securely to the
WiFi Network
Enabling New
Business
Models in
Retail
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Operating Results
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SELECTED FISCAL YEAR AND QUARTERLY FINANCIAL DATA
$-
$10,000
$20,000
$30,000
$40,000
$50,000
FY15 FY16 FY17 FY18
Net Revenue by Product Line
IoT ITM Other
47.3% 47.7%
52.7%55.7%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
$(4,000)
$(3,000)
$(2,000)
$(1,000)
$-
$1,000
$2,000
$3,000
$4,000
FY15 FY16 FY17 FY18
Gross Margin and Profitability
GAAP Income Non-GAAP Income GPM %
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* R e f e r t o A p p e n d i x A f o r r e c o n c i l i a t i o n o f N o n - G A A P f i n a n c i a l m e a su r e s
$7,889 $9,061
$10,391
$13,544
$24,407 $25,545
$4,989 $5,962
$8,073
$9,568
$18,925 $19,367
$-
$5,000
$10,000
$15,000
$20,000
$25,000
$30,000
FY15 FY16 FY17 FY18 Q1 FY19 Q2 FY19
Liquidity
Working Capital Cash
SELECTED QUARTERLY FINANCIAL PERFORMANCE
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* R e f e r t o A p p e n d i x A f o r r e c o n c i l i a t i o n o f N o n - G A A P f i n a n c i a l m e a su r e s
$-
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
Q1FY17
Q2FY17
Q3FY17
Q4FY17
Q1FY18
Q2FY18
Q3FY18
Q4FY18
Q1FY19
Q2FY19
Net Revenue by Product Line
IoT ITM Other
47.9% 48.1% 48.0% 47.0%
52.1% 51.8%
55.5%
51.3%52.7%
55.7%56.8% 57.1%
54.9% 55.0%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
$(1,000)
$(500)
$-
$500
$1,000
$1,500
Q1FY16
Q2FY16
Q3FY16
Q4FY16
Q1FY17
Q2FY17
Q3FY17
Q4FY17
Q1FY18
Q2FY18
Q3FY18
Q4FY18
Q1FY19
Q2FY19
Gross Profit Margin % and Profitabil ity
GAAP Income Non-GAAP Income GPM %
SELECTED BALANCE SHEET INFORMATION
(In thousands except price per share
data)
June 30, December 31,
2018 2018
Cash and Cash Equivalents $ 9,568 $ 19,367
Accounts Receivable, Net 4,244 6,134
Inventories, Net 8,439 9,352
Total Current Assets 23,270 36,024
Current Liabilities 9,726 10,479
Working Capital 13,544 25,545
Common Shares Outstanding 18,908 22,213
RSUs Outstanding 140 699
Stock Options Outstanding 3,931 3,352
Weighted Average Exercise Price Per Option $ 1.73 $ 1.76
COMPANY CONFIDENTIAL. DO NOT DISTRIBUTE 23
Invest in one of the few public company IoT pure plays
▪ Es t a b l i s he d g lo b a l I o T s o lut io ns p r o vid e r w i t h b lue c hip c us t o me r b a s e
▪ Se a s o ne d le a d e r s hip t e a m w / s ig ni f i c a nt e nt e r p r i s e e xp e r ie nc e
▪ Pur s uing f a s t g r o w ing I o T ma r k e t w i t h d o ub le d ig i t CAG R
▪ M ACH1 0 p la t f o r m a nd r e la t e d s o f t w a re a p p l i c a t io ns e na b le inc r e me nt a l g r o w t h
o p p o r t uni t y
Significant growth potential
▪ I n FY 1 8 , r e p o r t e d G AAP p r o f i t & ne a r l y d o ub le d no n - G AAP p r o f i t
▪ Bus ine s s mo d e l w i t h s ig ni f i c a nt o p e r a t ing le ve r a g e
▪ No lo ng - t e r m d e b t , nine c o ns e c ut i ve q ua r t e r s o f i nc r e a s e d c a s h
▪ Sub s t a nt ia l NO L f e d e r a l c a r r y o ve r
▪ Ne w p r o d uc t s la unc he s w i t h d e s ig n w in mo me nt um
▪ I no r g a nic s t r a t e gy c a n a c c e le r a t e g r o w t h
SUMMARY
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(In thousands) Q2 FY18 Q3 FY18 Q4 FY18 Q1 FY19 Q2 FY19 FY16 FY17 FY18
GAAP Net Income (Loss) $ 225 $ 344 $ 752 $ (83) $ 277 $ (1,962) $ (277) $ 680
Non-GAAP Adjustments:
Share-based Compensation 310 295 292 478 451 870 912 1,169
Depreciation and Amortization 109 110 106 105 114 759 594 442
Interest Expense (Income) , Net 5 5 4 4 (60) 32 23 18
Other (Income) Expense, Net (1) 1 9 10 (8) (61) 3 8
Withholding Taxes on Stock Grants 3 4 4 6 2 4 12 14
Severance and Restructuring Costs - (21) - 323 - 533 246 506
Provision (Benefit) for Income Taxes 38 29 6 40 14 63 68 98
Total Non-GAAP Adjustments 464 423 421 966 513 2,200 1,858 2,255
Non-GAAP Net Income (Loss) $ 689 $ 767 $ 1,173 $ 883 $ 790 $ 238 $ 1,581 $2,935
L a n t r o n i x b e l i e v e s t h a t t h e p r e s e n t a t i o n o f n o n - G A A P f i n a n c i a l i n f o r m a t i o n , w h e n p r e s e n t e d i n c o n j u n c t i o n w i t h t h e c o r r e s p o n d i n g G A A P m e a s u r e s , p r o v i d e s i m p o r t a n t s u p p l e m e n t a l i n f o r m a t i o n t o m a n a g e m e n t a n d i n v e s t o r s r e g a r d i n g f i n a n c i a l a n d b u s i n e s s t r e n d s r e l a t i n g t o t h e C o m p a n y ' s f i n a n ci a l c o n d i t i o n a n d r e s u l t s o f o p e r a t i o n s .
T h e n o n - G A A P f i n a n c i a l m e a s u r e s d i s c l o s e d b y t h e C o m p a n y s h o u l d n o t b e c o n s i d e r e d a s u b s t i t u t e f o r , o r s u p e r i o r t o , f i n a n c i a l m e a s u r e s c a l c u l a t e d i n a c c o r d a n c e w i t h
G A A P , a n d t h e f i n a n c i a l r e s u l t s c a l c u l a t e d i n a c c o r d a n c e w i t h G A A P a n d r e c o n c i l i a t i o n s o f t h e n o n- G A A P f i n a n c i a l m e a s u r e s t o t h e f i n a n c i a l m e a s u r e s c a l c u l a t e d i n a c c o r d a n c e w i t h G A A P s h o u l d b e c a r e f u l l y e v a l u a t e d . T h e n o n - G A A P f i n a n c i a l m e a s u r e s u s e d b y t h e C o m p a n y m a y b e c a l c u l a t e d d i f f e r e n t l y f r o m , a n d t h e r e f o r e m a y n o t
b e c o m p a r a b l e t o , s i m i l a r l y t i t l e d m e a s u r e s u s e d b y o t h e r c o m p a n i e s . T h e C o m p a n y h a s p r o v i d e d r e c o n c i l i a t i o n s o f t h e n o n- G A A P f i n a n c i a l m e a s u r e s t o t h e m o s t d i r e c t l y c o m p a r a b l e G A A P f i n a n c i a l m e a s u r e s . M a n a g e m e n t b e l i e v e s t h a t n o n - G A A P n e t i n c o m e ( l o s s ) i s a n i m p o r t a n t m e a s u r e o f t h e C o m p a n y ' s b u s i n e s s . M a n a g e m e n t
u s e s t h i s f i n a n c i a l m e a s u r e t o m o n i t o r a n d e v a l u a t e o n g o i n g o p e r a t i n g r e s u l t s a n d t r e n d s t o g a i n a n u n d e r s t a n d i n g o f o u r c o m pa r a t i v e o p e r a t i n g p e r f o r m a n c e .
APPENDIX A: Reconciliation of Non-GAAP Financial Measures
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(In thousands) Q2 FY18 Q3 FY18 Q4 FY18 Q1 FY19 Q2 FY19 FY16 FY17 FY18
Net Revenue $ 11,336 $ 11,601 $ 12,037 $ 12,279 $ 12,114 $ 40,592 $ 44,730 $ 45,580
Gross Profit $ 6,314 $ 6,584 $ 6,876 $ 6,741 $ 6,661 $ 19,378 $ 23,580 $ 25,368
% of Net Revenue 55.7% 56.8% 57.1% 54.9% 55.0% 47.7% 52.7% 55.7%
GAAP Net Income (Loss) $ 225 $ 344 $ 752 $ (83) $ 277 $ (1,962) $ (277) $ 680
Non-GAAP Net Income
(Loss)$ 689 $ 767 $ 1,173 $ 883 $ 790 $ 238 $ 1,581 $2,935
▪ M a i n t a i n e d g r o ss p r o f i t % a t m i d - 5 0 s d e sp i t e
t a r i f f i m p a c t
▪ R e t u r n t o G A A P p r o f i t a b i l i t y
▪ 1 2 t h c o n se c u t i v e q u a r t e r o f n o n - G A A P n e t
i n c o m e
Q2 FY 2019 HIGHLIGHTS:
SELECTED INCOME STATEMENT INFORMATION
▪ 2 n d y e a r o f se q u e n t i a l r e v e n u e g r o w t h
▪ 3 0 0 B P i m p r o v e m e n t i n g r o ss p r o f i t %
▪ N e a r l y d o u b l e d n o n - G A A P n e t i n c o m e
FY 2018 HIGHLIGHTS:
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* R e f e r t o A p p e n d i x A f o r r e c o n c i l i a t i o n o f N o n - G A A P f i n a n c i a l m e a su r e s
Minimum impact from
Other (EOL) products
going forward
Significant progress
with meaningful
design-wins
New WiFi products
entering the market
IoT Software and SaaS
offerings launched
Inorganic growth
opportunities can
accelerate growth
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LANTRONIX DRIVERS FOR ACCELERATED GROWTH
Accelerating the development of secure connected machines
xPico 200 Series of Embedded IoT Gateways
Leading Embedded Solution for Managed Industrial Wi-Fi Connectivity
AGV Robot Connected Weighing Scale Traffic Control Systems Medical ScannerDrone
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XPort EdgeN e xt G e n e r a t i o n E m b e d d e d E t h e r n e t G a t e w a y & D e v i c e S e r ve r
I n d u s t r i a l I O T - A c c e l e r a t e d .
Next generation of the leading embedded
Ethernet device server providing full IoT
gateway connectivity to any device with serial
capability
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Connected Door Locks Commercial Smart Meter Connected Cash Drawer Connected Parking MeterGaming Machines
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LANTRONIX GATEWAY CENTRAL
Configuration, Management & Monitoring For Lantronix Gateways
… in the Cloud
Centralized Directory for IoT Gateways
Automate Updates
Monitor Network Statistics and
Configure Alerts
MINIMIZE TRUCK ROLLS.
INCREASE EQUIPMENT UPTIME.
Seamless Upgrade to Global Device Manager
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LANTRONIX
VALUE
PROPOSITION
Industrial
Networking
Experience
10-15 Years
Product Life
Industrial
Temperature
Industrial
Grade
Security
Industrial
Protocols
Ruggedized
Hardened
Designs
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Reducing Complexity, Risk, and
Time-to-Market for Delivering Industrial
IoT Solutions
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