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Lantronix, Inc. Litigation Report

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Published March 28, 2024

Case Introduction

Neilsen v. Lantronix, Inc., et al 8:24-cv-00385

On February 23, 2024, investors sued Lantronix, Inc. (“Lantronix” or the “Company”) in United States District Court, Central District of California.

The federal securities class action alleges that plaintiffs acquired Lantronix stock at artificially inflated prices between May 11, 2023 and February 8, 2024 (the “Class Period”). Plaintiffs are now seeking compensation for financial losses incurred upon public revelation of the Company’s alleged misconduct during that time. To learn whether you may be eligible for a recovery under this class action, go to:

Summary of the Allegations

Company Background

Lantronix (NASDAQ:LTRX) purportedly does business as a “global leader” in the Internet technology space.

As such, the Company claims it engages in the provision of Software as a Service (SaaS) and connectivity services. Lantronix says it also provides engineering services, intelligent hardware and turnkey solutions for the Internet of Things (IoT) and Remote Environment Management (REM) to its customers.

According to the complaint, the Company’s “solutions” supposedly target high growth applications in specific verticals such as smart grids, intelligent transportation, smart cities, and artificial intelligence (“AI”) data centers.

As also detailed in the complaint, Lantronix makes its solutions available through distributors, resellers, and direct sales to larger original equipment manufacturers (“OEMs”) and end users, as well as through its ecommerce site.

Summary of Facts

Lantronix and two of its current and/or former senior officers (the “Individual Defendants) now stand accused of deceiving investors by lying and withholding crucial information about the Company’s business practices and prospects during the Class Period.

In particular, they are accused of omitting truthful information about demand for certain products, inventory, and ancillary matters, from SEC filings and related material. By knowingly or recklessly doing so, they allegedly caused Lantronix stock to trade at artificially inflated prices during the time in question.

The truth came out on February 8, 2024. That’s when the Company announced its announcing its financial results for the second quarter of its fiscal year 2024 in a press release. In this context, Lantronix negatively revised its fiscal year 2024 guidance, advising that “[f]or fiscal year 2024, the company [now] expects revenue in a range of $155 million to $16 million”—versus the previously provided range of $175 million to $185 million—“and non-GAAP EPS in a range of $0.35 to $0.45 per share”—versus the previously provided range of $0.50 to $0.60 per share.

During an ensuing  conference call with analysts and investors that same day, Company management mostly attributed the change to “lower expected sales for our embedded IOT solutions as a result of two factors”, namely, “[a] general slowdown in our broad based channel business as customers work through their inventories, and an embedded compute design win in video applications that was slated for revenue in the second half of fiscal 2024 that pushed into fiscal 2025.”

A closer look…

As alleged, Lantronix and/or the Individual Defendants repeatedly made false and misleading public statements throughout the Class Period.

During a conference call with analysts and investors at the outset of the Class Period, for instance, the Company’s then-CEO (an Individual Defendant) stated in pertinent part: “We need only modest performance from our classic products to meet our growth target due to market share gains and new customer revenue despite a softening macroeconomic environment.”

Next, during a conference call with analysts and investors on September 7, 2023, the Company’s CFO (an Individual Defendant) stated in pertinent part: “[W]e remain confident about the fiscal year ahead of us, and expect to deliver upon the fiscal 2024 guidance that we provided during our previous earnings call.”

Then, in an annual report filed with the SEC just five days later, the Company stated in relevant part: “We are executing on a growth strategy that includes continuous innovation…This strategy is starting to bear fruits as we continue to strengthen our position in the market and more customers come to us for a wider variety of applications.”

Actions You May Take

If you have purchased the Company’s stock during the Class Period, you may join the class action as a lead plaintiff, remain a passive class member, or opt out of this litigation and pursue individual claims that may not be available to the class as a whole. To learn more about your options, go to:

NOTE: The deadline to file for lead plaintiff in this class action is April 23, 2024. You must file an application to be appointed lead plaintiff prior to this deadline in order to be considered by the Court.