Lantronix, Inc.

Good afternoon, and welcome to the Lantronics Third Quarter Fiscal 2024 Earnings Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on your telephone keypad. To withdraw your question, please press star, then 2. Please note, this event is being recorded. I would now like to turn the conference over to Jeremy Whitaker, Chief Financial Officer. Please go ahead.

Good afternoon, everyone, and thank you for joining our quarterly earnings call. Joining me on the call today is our President and Chief Executive Officer, Silio Asare. A live and archived webcast of today's call will be available on the company's website. In addition, you can find the call-in details for the phone replay in today's earnings release. During this call, management may make forward-looking statements which involve risks and uncertainties that could cause our results to differ materially from management's current expectations. We encourage you to review the cautionary statements and risk factors contained in the earnings release, which was furnished to the SEC today and is available on our website. and in the company's SEC filings, such as its 10-K and 10-Qs. Lantronics undertakes no obligation to revise or update publicly any forward-looking statements to reflect future events or circumstances. Please refer to the news release and the financial information in the investor relations section of our website for additional details that will supplement management's commentary. Furthermore, during the call, the company will discuss non-GAAP and financial measures. Today's earnings release, which is posted in the investor relations section of our website, describes the differences between our non-GAAP and GAAP reporting and presents reconciliations for the non-GAAP financial measures that we use. With that, I'll now turn the call over to Salil.

Thanks, Jeremy, and thank you, everyone, for joining us on the call today. I'm pleased to report record revenue of $41.2 million for the third quarter of fiscal year 2024, a year-over-year increase of 25% compared to the same period of 2023, and a sequential increase of 11% compared to the December quarter. Non-GAAP EPS in fiscal year Q3 grew 88% compared to the same period last year, demonstrating leverage in our operating model as revenue improves. Jeremy will provide you with more details and analysis on the third quarter financial results shortly. As I have recently completed five months with Lantronics, and having spent a lot of time with our key customers, strategic partners, and most importantly, the Lantronics team, I'm very optimistic about the future given our strong products and solutions, our growing customer engagement, and our improving EBITDA and solid balance sheet. We see both compute and connect technologies converging at the edge of the network, and that's exactly where we play with our core capabilities and solutions. We have a deep understanding of edge compute requirements and provide our customers with complete solutions including hardware, software, design services, and our perception IoT platform for device management and application integration. Our focus going forward will be on three key vertical segments, including smart cities, automotive infotainment, and enterprise. We estimate the server-available market the company is addressing in the three different verticals is 8.5 billion, and we expect compound annual growth rate over the next few years to be approximately 12%. Let me give you an example in each of these verticals. In smart cities, we have the opportunity to drive revenue growth over a couple of key areas, namely smart grid and critical infrastructure. We estimate the serviceable addressable market of the Smart Cities vertical to be approximately 3.9 billion and the compound annual rate over the next few years to be approximately 12%. In the Smart Grid sector, we see continued momentum with our lead Smart Grid customer where we received our first follow-on order for the first half of fiscal year 25 as this customer is transitioning from design and initial production to a run-rate business. Our relationship continues to deepen with our lead customer, and we are engaged at all levels of the organization. We expect that as they expand their market beyond the current rollout and into broader applications and geographies with the QED device and its variants, we will continue to partner with them to address these needs. I expect this to be a long-term, mutually beneficial engagement. Now, moving to critical infrastructure. A great example of this sector is a recent design win with a Tier 1 telecom customer who's using our Fox telematics device coupled with our Perception SaaS solution for monitoring and managing cell site power generators. We are replicating this design win with multiple generator makers who have similar needs. Looking further out, the same solution can be extended to applications at construction sites, hospitals, and other such locations. In automotive infotainment, the trend is clearly towards pillar-to-pillar large interactive displays, with the digital cockpit becoming a highly valued part of the vehicle. We estimate the current SAM in the automotive infotainment to be approximately 900 million, and the annual growth rate to be about 21%. Our IP resides in the automotive infotainment compute system. We developed for TOG, the Turkish-based automotive OEM, and we are seeing strong interest from Tier 2 and Tier 3 automotive OEMs, as well as manufacturers of commercial trucks motorcycles, and heavy machinery. Let me also add an update on TOG. They recently unveiled their second vehicle, the T10F sedan, and our embedded compute solution is designed into the vehicle's digital cockpit. Additionally, they have told us they plan to start shipping vehicles in Germany in the calendar year 2025. We continue to collaborate and innovate with them as they expand their business. In the enterprise vertical, we are focused on out-of-band video conferencing and security and surveillance. We estimate the served available market of our enterprise vertical opportunity to be approximately $3.7 billion, growing at about 9% annually over the next few years. Let me add some color on one of our products addressing the growing need for out-of-band management. Out-of-band solutions provide alternative paths to access servers, networks, and routers when the primary access is unavailable. Providing uptime and resilient networks is important for many sectors, including banks, government, healthcare, and the retail sector. We provide not only hardware, but also management software, ongoing support, and warranty services. In summary, we are focused on three growing, attractive vertical markets with a combined served available market of $8.5 billion and growing. Our business teams are actively targeting new customer design wins across the three verticals and all our major geographic areas. I remain excited about the growth opportunity ahead for Landtronics, especially given our broad portfolio, IP, and great customer base. In summary, we have a great company and we are building on strength. Moving forward, we will become an even stronger company given the technology and talent we have in place, driving profitable growth and shareholder value. With that, I will now turn the call over to Jeremy our Chief Financial Officer, for his comments of fiscal year Q3 and guidance for the next quarter. Jeremy?