Lantronix, Inc.

Good evening and welcome to the Lantronics first quarter fiscal 2025 results 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 two. Please note, this event is being recorded. I would now like to turn the conference over to Brent Stringham, Chief Accounting Officer and Interim Chief Financial Officer. Please go ahead.

Good afternoon, and thank you for joining our quarterly earnings call. Joining me on the call today is our President and Chief Executive Officer, Salil Al-Saray. 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 financial measures to 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 Saleel.

Thanks, Brent, and thank you, everyone, for joining us on the call today. We reported revenue of $34.4 million for the first quarter of fiscal 2025, which was up 4% compared to the same quarter last year. Non-GAAP EPS in fiscal year Q1 was $0.06. Brent Stringham, our interim CFO, will provide more details on the first quarter financial results shortly. On the call today, I would like to highlight three topics with you. Our recently announced acquisition of Netcom's IoT product line, the progress we are making in our collaboration with Qualcomm and Edge AI, and our strategic focus on investing in areas where we can differentiate and demonstrate IoT leadership while continuing to emphasize operational efficiency and cost savings. First, our purchase of Netcom's IoT product line for $6.5 million in cash fits very well with our compute and connect strategies. It strengthens our Connect offerings by providing our customers with leading edge IoT solutions. The acquisition expands our portfolio in gateway, routers, and modems, including the latest 5G products, enhancing our edge compute solutions. It also adds new blue chip enterprise customers for additional cross-selling opportunities, and opens target rich unserved geographic markets for our products such as Australia and New Zealand. In calendar year 2024, the Netcom products are expected to generate approximately 6 million to 7 million in revenue and the acquisition is expected to be immediately accretive to EPS. In summary, this transaction improves our competitive position in the cellular gateway market It reduces our R&D requirements for the development of 5G IoT gateway and router line and contributes additional revenue to our enterprise business. The deal is expected to close in November, subject to customary closing conditions. Second, on the topic of Edge AI, I'm very pleased to report the last four months have been very productive in our engagement and strategic collaboration with Qualcomm, for AI and machine learning. We delivered on three milestones recently, including, first, we are thrilled to announce the signing of a development agreement with Qualcomm to advance their graphical composer tool to accelerate new edge AI applications. What we are doing is optimizing Qualcomm's AI Hub toolkit to manage complex AI workflows making it easier for end users to do AI modeling. The collaboration with Qualcomm demonstrates our ability to deliver scalable, high-performance AI solutions for our partners, customers, and the AI ecosystem. Second, we are expanding our offerings in the smart city vertical by successfully launching the first AI-enabled edge compute gateway called SmartLV in collaboration with Qualcomm. Our SmartLV gateway, which deploys the IQ615 processor, was designed specifically for low-voltage substations and in next-generation smart grids, utilities, and other industrial applications. SmartLV provides operators with real-time management of their networks, enabling them to deliver energy on demand while ensuring network stability during periods of peak loading. And third, earlier this month, we announced five new system and package solutions based on the latest Qualcomm processors. These new SIPs and SOM solutions work at the edge of the network and help to accelerate the development of AI applications in the enterprise and industrial markets. such as video surveillance, robotics, and industrial automation. As AI moves to the edge, we are positioning ourselves to lead not only with Qualcomm-based system and package solutions, but also our gateway hardware and software solutions. We have differentiated IP development capabilities, and we are a Western-based supplier. While this will take time, we expect to see momentum in this area in 2026 and beyond. Together, these achievements with Qualcomm allow us to lay the foundation for a long-term strategy to become a key player in the edge AI ecosystem, driving innovation and delivering end-to-end solutions that address the evolving needs of industries transitioning to an AI-powered, edge-centric architecture. And finally, we are implementing initiatives to drive business focus, improve operating efficiency, and enhance future profitability. Specifically, we are in the process of streamlining our product portfolio. Going forward, we will not be making future investments in some non-core products, such as our Wi-Fi and GNSS modules. These lines are smaller contributors to our top line, and we want to direct our development resources on core growth areas where we provide differentiation and leadership. We are in the process of moving from seven sites globally to four centers of excellence, providing scale and efficiency. With these initiatives and others already identified, we expect to reduce our fiscal year 25 operating expenses by approximately $4.5 million relative to fiscal year 24, and we expect these initiatives to be fully implemented by the end of March 2025. In conclusion, We remain focused on the megatrend of enabling edge intelligence with our computer and connect solutions, allowing our customers to improve their real-time decision-making while increasing their operational efficiency. And we are continuing to focus on profitable growth, cash generation, and making the right investments that help scale the business into fiscal year 2026 and beyond. We will continue to look for acquisitions that complement our core strategy as demonstrated by a pending NetCom acquisition. Overall, I'm very pleased with our accomplishments this quarter, including the acquisition of NetCom's IoT product line, our progress with Qualcomm and Edge AI, and our focusing of our product portfolio and improving our operating efficiency. With that, I will now turn the call over to Brent Stringham, our Interim CFO.