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InvestorPresentation

September 2018

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 because of new information, future events or 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.

3

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

LantronixEnabling 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%

New Experienced Leadership Team


5

PROVEN LEADERSHIP TEAM

Jeffrey BenckPresident & CEO

Jeremy WhitakerCFO

Michael A. FinkVP, Operations

Fathi HakamVP, Engineering

Shahram MehrabanVP, Marketing

Kurt ScheuermanVP, General Counsel

Tom MortonVP, Human Resources

Kevin YoderVP, WW Sales


OUR GROWTH STRATEGY


Expand SaaS IoT Platform with New IoT and ITM Appl icat ions

Pursue Strategic Acquisit ion Opportunit ies

Grow IoT Revenue with New Gateway Products

Pursue Market Share Gains with IT Management Products

what

STRONG BASE OF GLOBAL BLUE-CHIP CUSTOMERS

Wel l P o s i t i on ed i n K ey M a r k et S eg m en t s

RETAIL INDUSTRIAL ENERGY / UTILITIESHEALTHCARE SMART BUILDING

TRANSPORTATION FINANCIALS EDUCATIONMILITARY & GOV’T TELECOM


http://www.rockwellautomation.com/

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


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


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

9

IOT SOLUTIONS FROM THE DEVICE TO THE DATA CENTER

New Connected Devices

Legacy Devices

Network

LantronixEmbedded Modules

& Gateways

Data Center

LantronixExternal Device

Gateways

LantronixIT Management

Solutions


Broad Suite of IIoT Solutions

11

IOT GATEWAYS & BUILDING BLOCKS

Connectivity Without Complexity

IT MANAGEMENT SOLUTIONS

Management of Enterprise IT Infrastructure

MANAGEMENT SOFTWARE

Scalable Software Made Simple


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

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 2050

Enhanced Ethernet, Wi-Fi Bluetooth

SGX5150Ethernet, Wi-Fi

Bluetooth

PremierWave XC HSPA+

Ethernet, Cellular

xPico 250Mid-range

Ethernet, Wi-FiBluetooth

XPort EdgeSerial to Ethernet


Lantronix IT Management

ADVANCED CONSOLE MANAGER BRANCH OFFICE MANAGER REMOTE KVM-OVER-IP

Enterprise Data Centers & Development Labs Retail Store & Branch Offices Kiosks, Digital Signs, Test Labs


MACH10 Management Software PlatformRecurring Revenue Through SaaS Model

Global Device Manager

Gateway Central

ConsoleFlow

for IoT OEMs

for Lantronix Gateways

for Lantronix Console Managers


15

Operating Results


SELECTED FISCAL YEAR FINANCIAL PERFORMANCE

$-

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

$14,000

$16,000

FY15 FY16 FY17 FY18

Liquidity

Working Capital Cash

$-

$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 %

COMPANY CONFIDENTIAL. DO NOT DISTRIBUTE 21* 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 s u r e s

SELECTED QUARTERLY FINANCIAL PERFORMANCE

$-

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

Q1

FY16

Q2

FY16

Q3

FY16

Q4

FY16

Q1

FY17

Q2

FY17

Q3

FY17

Q4

FY17

Q1

FY18

Q2

FY18

Q3

FY18

Q4

FY18

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%

56.6% 57.1%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

$(1,500)

$(1,000)

$(500)

$-

$500

$1,000

$1,500

Q1

FY16

Q2

FY16

Q3

FY16

Q4

FY16

Q1

FY17

Q2

FY17

Q3

FY17

Q4

FY17

Q1

FY18

Q2

FY18

Q3

FY18

Q4

FY18

Improving Margins and Profitability

GAAP Income Non-GAAP Income GPM %

COMPANY CONFIDENTIAL. DO NOT DISTRIBUTE 22* 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 s u r e s

SELECTED BALANCE SHEET INFORMATION

(In thousands except price per share data)June 30, June 30,

2017 2018

Cash and Cash Equivalents $ 8,073 $ 9,568

Accounts Receivable, Net 3,432 4,244

Inventories, Net 6,959 8,439

Total Current Assets 19,380 23,270

Current Liabilities 8,989 9,726

Working Capital 10,391 13,544

Common Shares Outstanding 17,809 18,908

RSUs Outstanding 300 140

Stock Options Outstanding 4,184 3,931

Weighted Average Exercise Price Per Option $ 1.78 $ 1.73


** Does not include net proceeds of $9.3M and issuance of 2.5M common shares related to the Company’s September 2018 public offering.

**

**

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


LANTRONIX DRIVERS FOR ACCELERATED GROWTH

Invest in one of the few public company IoT pure plays

▪ E s t a b l i s h e d g l o b a l I o T s o l u t i o n s p r o v i d e r w i t h b l u e c h i p c u s t o m e r b a s e▪ S e a s o n e d l e a d e r s h i p t e a m w / s i g n i f i c a n t e n t e r p r i s e e x p e r i e n c e▪ P u r s u i n g f a s t g r o w i n g I o T m a r k e t w i t h d o u b l e d i g i t C A G R s▪ M A C H 1 0 p l a t f o r m a n d r e l a t e d s o f t w a r e a p p l i c a t i o n s e n a b l e i n c r e m e n t a l g r o w t h

o p p o r t u n i ty

Significant growth potential

▪ I n F Y 1 8 , r e p o r t e d G A A P 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 p r o f i t ▪ B u s i n e s s m o d e l w i t h s i g n i f i c a n t o p e r a t i n g l e v e r a g e▪ N o l o n g - t e r m d e b t , n i n e c o n s e c u t i v e q u a r t e r s o f i n c r e a s e d c a s h▪ S u b s t a n t i a l N O L f e d e r a l c a r r y o v e r▪ A d d i n g S t r a t e g i c A c q u i s i t i o n P o t e n t ia l t o S t r a t e g y

SUMMARY


[email protected]


22

(In thousands) Q4 FY17 Q1 FY18 Q2 FY18 Q3 FY18 Q4 FY18 FY16 FY17 FY18

GAAP Net Income (Loss) $ (52) $ (641) $ 225 $ 344 $ 752 $ (1,962) $ (277) $ 680

Non-GAAP Adjustments:

Share-based Compensation 267 272 310 295 292 870 912 1,169

Depreciation and Amortization 139 117 109 110 106 759 594 442

Interest Expense, Net 5 4 5 5 4 32 23 18

Other (Income) Expense, Net 6 (1) (1) 1 9 (61) 3 8

Withholding Taxes on Stock Grants 2 3 3 4 4 4 12 13

Severance and Restructuring Costs - 527 - (21) - 533 246 506

Provision (Benefit) for Income Taxes 21 25 38 29 6 63 68 98

Total Non-GAAP Adjustments 440 947 464 423 421 2,200 1,858 2,255

Non-GAAP Net Income (Loss) $ 388 $ 306 $ 689 $ 767 $ 1,173 $ 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 c i 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 p a 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


23

(In thousands) Q4 FY17 Q1 FY18 Q2 FY18 Q3 FY18 Q4 FY18 FY16 FY17 FY18

Net Revenue $ 11,044 $ 10,606 $ 11,336 $ 11,601 $ 12,037 $ 40,592 $ 44,730 $ 45,580

Gross Profit $ 5,670 $ 5,594 $ 6,314 $ 6,584 $ 6,876 $ 19,378 $ 23,580 $ 25,368

% of Net Revenue 51.3% 52.7% 55.7% 56.8% 57.1% 47.7% 52.7% 55.7%

GAAP Net Income (Loss) $ (52) $ (641) $ 225 $ 344 $ 752 $ (1,962) $ (277) $ 680

Non-GAAP Net Income (Loss) $ 388 $ 306 $ 689 $ 767 $ 1,173 $ 238 $ 1,581 $2,935

▪ H i g h e s t n e t r e v e n u e i n 2 0 q u a r t e r s▪ R e c o r d G M %▪ 3 r d c o n s e c u t i v e q u a r t e r o f G A A P p r o f i t a b i l i t y▪ 1 0 t h c o n s e c u t i v e q u a r t e r o f n o n - G A A P

p r o f i t a b i l i t y

Q4 FY 2018 HIGHLIGHTS:

SELECTED INCOME STATEMENT INFORMATION

▪ 2 n d y e a r o f s e 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 M %▪ N e a r l y d o u b l e d n o n - G A A P p r o f i t

FY 2018 HIGHLIGHTS:


* 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 s u r e s


BUILDING A FOUNDATION FOR GROWTH

06

05

04

03

02

01

Operating model at leverage tipping point

GAAP profitable in FY18

Consistent non-GAAP profitability

800 basis point of gross margin improvement

Drag on topline from decline in Other product line sales nearly eliminated

Reversed 3 years of revenue declines with growth in FY17 & 18

20

2019New Management Team

Operational Excellence

New Product Strategy

Inorganic Growth Potential

An Inflection Point forAccelerated 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


XPort EdgeN e x t 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 v e 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

27

Connected Door Locks Commercial Smart Meter Connected Cash Drawer Connected Parking MeterGaming Machines


LANTRONIX VALUE

PROPOSITION

Industrial Networking Experience

10-15 Years Product Life

Industrial Temperature

Industrial Grade Security

Industrial Protocols

Ruggedized Hardened

Designs


Reducing Complexity, Risk, andTime-to-Market for Delivering Industrial

IoT Solutions

27

29

LANTRONIX GATEWAY CENTRAL

Configuration, Management & Monitoring For Lantronix Gateways… in the Cloud

Centralized Directory for IoT Gateways

Automate Updates

Monitor Network Statistics andConfigure Alerts

MINIMIZE TRUCK ROLLS.INCREASE EQUIPMENT UPTIME.

Seamless Upgrade to Global Device Manager


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