8-K
LANTRONIX INC (LTRX)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of theSecurities Exchange Act of 1934
Date of Report (Date of earliest event reported): September 10, 2020
Lantronix, Inc.
(Exact Name of Registrant as Specifiedin Charter)
| Delaware | 1-16027 | 33-0362767 |
|---|---|---|
| (State or other jurisdiction<br><br>of incorporation) | (Commission File Number) | (IRS Employer<br><br>Identification No.) |
| 7535 Irvine Center Drive, Suite 100<br><br>Irvine, California 92618 | ||
| (Address of Principal Executive Offices, including zip code) | ||
| Registrant’s telephone number, including area code: (949) 453-3990 | ||
| Not Applicable | ||
| (Former name or former address, if changed since last report) |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securitiesregistered pursuant to Section 12(b) of the Act:
| Title of each Class | Name of each exchange on which registered | |
|---|---|---|
| Common Stock, 0.0001 par value | LTRX | The NASDAQ Stock Market LLC |
All values are in US Dollars.
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of Securities Act. ☐
Item 2.02 Results of Operations and Financial Condition.
On September 10, 2020, Lantronix, Inc., a Delaware corporation (the “Company”), issued a press release setting forth the Company’s financial results for its fourth fiscal quarter and fiscal year ended June 30, 2020. A copy of the press release is attached hereto as Exhibit 99.1.
The information furnished under this Item 2.02, including Exhibit 99.1, shall not be deemed “filed” for purposes of the Securities Exchange Act of 1934, as amended.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
| Exhibit Number | Description |
|---|---|
| 99.1 | Press Release, dated September 10, 2020, reporting the Company’s financial results for the fourth fiscal quarter and fiscal year ended June 30, 2020 |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Date: September 10, 2020 | LANTRONIX, INC. |
|---|---|
| By: | /s/ Jeremy Whitaker |
| Jeremy Whitaker<br><br> <br>Chief Financial Officer |
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EXHIBIT INDEX
| Exhibit Number | Description | |
|---|---|---|
| 99.1 | Press Release, dated September 10, 2020, reporting the Company’s financial results for the fourth fiscal quarter and fiscal year ended June 30, 2020 |
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Exhibit 99.1
LantronixReports Record Revenue for the
FourthQuarter of Fiscal 2020 ****
| · | Fourth Quarter Net Revenue was $17.4 Million, Up 71% from the PriorYear and 5% Sequentially |
|---|---|
| · | GAAP EPS, Inclusive of Acquisition and Severance Related Costs,was ($0.06) per share |
| · | Non-GAAP EPS was $0.04 per share, Driven by Revenue Growth, EffectiveIntegration, and Rigorous Expense Controls |
| · | Company Guides Fiscal 2021 Revenue Growth of 20%-25% and Non-GAAPEPS Growth of 120%-160% |
Irvine, CA – September 10, 2020 – Lantronix, Inc. (NASDAQ: LTRX), a global provider of software as a service (“SaaS”), engineering services, and intelligent hardware for the Internet of Things (IoT) and Remote Environment Management (REM), today reported results for the fourth quarter of fiscal 2020 that ended June 30, 2020.
Net revenue totaled $17.4 million, up 71% year over year and 5% sequentially.
GAAP EPS was ($0.06), compared to ($0.19) in the prior fiscal quarter.
Non-GAAP EPS was $0.04, compared to $0.02 in the prior fiscal quarter.
“We executed on our plan despite the ongoing challenges of the Covid-19 pandemic,” stated Paul Pickle, president and CEO of Lantronix. “Revenues for the fourth quarter grew 5% sequentially and 71% year over year, while year over year non-GAAP operating expenses fell from 50% to 32% of revenues. As we look to fiscal 2021, the team is laser-focused on continuing the transformation of Lantronix through increased scale, improved operating efficiencies, growth of our software platform, and the integration of additional value-added technologies and products through acquisition.
Business Outlook
Due to the ongoing uncertainties caused by the COVID-19 pandemic that continue to impact supply chains, Lantronix is transitioning from specific quarterly guidance in favor of annual growth targets. For the first quarter of fiscal 2021, Lantronix expects net revenue to be flat to up slightly and non-GAAP EPS growth on a sequential basis. For the full year fiscal 2021, the company currently expects revenue growth of 20%-25%, with year over year non-GAAP EPS growth on the order of 120%-160%.
Conference Call and Webcast
Lantronix will host an investor conference call and audio webcast today at 2:00 p.m. Pacific Time (5:00 p.m. Eastern Time) to discuss its results for the fourth quarter of fiscal 2020 that ended June 30, 2020. To access the live conference call, investors should dial 1-844-802-2442 (US) or 1-412-317-5135 (international) and indicate that they are participating in the Lantronix Q4 FY 2020 call. The webcast will be available simultaneously via the investor relations section of the Company’s website at www.lantronix.com.
Investors can access a replay of the conference call starting at approximately 5:00 p.m. Pacific Time today at www.lantronix.com. A telephonic replay will also be available through September 17, 2020, by dialing 1-877-344-7529 (US) or 1-412-317-0088 (international) and entering passcode 10146169.
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About Lantronix
Lantronix, Inc. is a global provider of software as a service (“SaaS”), engineering services, and hardware for Edge Computing, the Internet of Things (IoT), and Remote Environment Management (REM). Lantronix enables its customers to provide reliable and secure solutions while accelerating their time to market. Lantronix’s products and services dramatically simplify operations through the creation, development, deployment, and management of customer projects at scale while providing quality, reliability and security.
Lantronix’s portfolio of services and products address each layer of the IoT Stack including Collect, Connect, Compute, Control and Comprehend, enabling its customers to deploy successful IoT and REM solutions. Lantronix’s services and products deliver a holistic approach, addressing its customers’ needs by integrating a SaaS management platform with custom application development layered on top of external and embedded hardware enabling intelligent edge computing, secure communications (wired, Wi-Fi, and cellular), location and positional tracking, and environmental sensing and reporting.
With three decades of proven experience in creating robust industry and customer specific solutions, Lantronix is an innovator in enabling its customers to build new business models, leverage greater efficiencies and realize the possibilities of the Internet of Things and Remote Environment Management. Lantronix’s solutions are deployed inside millions of machines at data centers, offices, and remote sites serving a wide range of industries, including energy, agriculture, medical, security, manufacturing, distribution, transportation, retail, financial, environmental, infrastructure and government.
We were incorporated in California in 1989 and reincorporated in Delaware in 2000.
Lantronix is headquartered in Irvine, California. For more information, visit www.lantronix.com.
Learn more at the Lantronix blog, www.lantronix.com/blog, featuring industry discussion and updates. To follow Lantronix on Twitter, please visit www.twitter.com/Lantronix. View our video library on YouTube at www.youtube.com/user/LantronixInc or connect with us on LinkedIn at www.linkedin.com/company/lantronix
References in this Report to “fiscal 2020” refer to the fiscal year ended June 30, 2020 and references to “fiscal 2019” refer to the fiscal year ended June 30, 2019.
Discussion of Non-GAAP Financial Measures
Lantronix believes that the presentation of non-GAAP financial information, when presented in conjunction with the corresponding GAAP measures, provides important supplemental information to management and investors regarding financial and business trends relating to the company’s financial condition and results of operations. Management uses the aforementioned non-GAAP measures to monitor and evaluate ongoing operating results and trends to gain an understanding of our comparative operating performance. The non-GAAP financial measures disclosed by the company should not be considered a substitute for, or superior to, financial measures calculated in accordance with GAAP, and the financial results calculated in accordance with GAAP and reconciliations of the non-GAAP financial measures to the financial measures calculated in accordance with GAAP should be carefully evaluated. The non-GAAP financial measures used by the company may be calculated differently from, and therefore may not be comparable to, similarly titled measures used by other companies. The company has provided reconciliations of the non-GAAP financial measures to the most directly comparable GAAP financial measures.
Non-GAAP net income (loss) consists of net income (loss) excluding (i) share-based compensation and the employer portion of withholding taxes on stock grants, (ii) depreciation and amortization, (iii) interest income (expense), (iv) other income (expense), (v) income tax provision (benefit), (vi) severance and restructuring charges, (vii) acquisition related costs, (viii) impairment of long-lived assets, (viiii) amortization of purchased intangibles, and (x) amortization of manufacturing profit in acquired inventory.
Non-GAAP net income (loss) per share is calculated by dividing non-GAAP net income (loss) by non-GAAP weighted-average shares outstanding (diluted). For purposes of calculating non-GAAP net income (loss) per share, the calculation of GAAP weighted-average shares outstanding (diluted) is adjusted to exclude share-based compensation, which for GAAP purposes is treated as proceeds assumed to be used to repurchase shares under the GAAP treasury stock method.
Guidance on earnings per share growth is provided only on a non-GAAP basis due to the inherent difficulty of forecasting the timing or amount of certain items that have been excluded from the forward-looking non-GAAP measures, and a reconciliation to the comparable GAAP guidance has not been provided because certain factors that are materially significant to Lantronix’s ability to estimate the excluded items are not accessible or estimable on a forward-looking basis without unreasonable effort.
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Forward-Looking Statements
This news release contains forward-lookingstatements, including statements concerning our projected operating and financial performance for the first quarter of fiscal 2021,annual projections for fiscal 2021, the short- and long-term impact of COVID-19 on our business, and the expected effects and benefitsof the efforts of our team to transform our business, our acquisition strategy, and the development of value-added technologieswithin the IoT stack. These forward-looking statements are intended to qualify for the safe harbor from liability established bythe Private Securities Litigation Reform Act of 1995. We have based our forward-looking statements on our current expectationsand projections about trends affecting our business and industry and other future events. Although we do not make forward-lookingstatements unless we believe we have a reasonable basis for doing so, we cannot guarantee their accuracy. Forward-looking statementsare subject to substantial risks and uncertainties that could cause our results or experiences, or future business, financial condition,results of operations or performance, to differ materially from our historical results or those expressed or implied in any forward-lookingstatement contained in this news release. Factors which could have a material adverse effect on our operations and future prospectsor which could cause actual results to differ materially from our expectations include, but are not limited to: the impact of COVID-19and the measures to reduce its spread on our employees, supply and distribution chains, the global economy and our financial conditionand liquidity; the effects of negative or worsening regional and worldwide economic conditions or market instability on our business,including effects on purchasing decisions by our customers; our ability to continue to generate revenue from products sold intomature markets; our ability to develop, market, and sell new products; our ability to succeed with our new software offerings;fluctuations in our revenue due to the project-based timing of orders from certain customers; unpredictable timing of our revenuesdue to the lengthy sales cycle for our products and services and potential delays in customer completion of projects; our abilityto accurately forecast future demand for our products; delays in qualifying revisions of existing products; constraints or delaysin the supply of, or quality control issues with, certain materials or components; difficulties associated with the delivery, qualityor cost of our products from our contract manufacturers or suppliers; risks related to the outsourcing of manufacturing and internationaloperations; difficulties associated with our distributors or resellers; intense competition in our industry and resultant downwardprice pressure; rises in inventory levels and inventory obsolescence; undetected software or hardware errors or defects in ourproducts; cybersecurity risks; our ability to obtain appropriate industry certifications or approvals from governmental regulatorybodies; changes in applicable U.S. and foreign government laws, regulations, and tariffs; our ability to successfully implementour acquisitions strategy or integrate acquired companies; uncertainty as to the future profitability of acquired businesses, anddelays in the realization of, or the failure to realize, any accretion from acquisition transactions; acquiring, managing and integratingnew operations, businesses or assets, and the associated diversion of management attention or other related costs or difficulties;our ability to protect patents and other proprietary rights and avoid infringement of others’ proprietary technology rights;the level of our indebtedness, our ability to service our indebtedness and the restrictions in our debt agreements; our abilityto attract and retain qualified management; and any additional factors included in our Annual Report on Form 10-K for the fiscalyear ended June 30, 2019, filed with the Securities and Exchange Commission (the “SEC”) on September 11, 2019, includingin the section entitled “Risk Factors” in Item 1A of Part I of such report, as well as in the section entitled“Risk Factors” in Item 1A of Part II of our Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2020,filed with the SEC on May 15, 2020, and in our other public filings with the SEC. In addition, actual results may differ as a resultof additional risks and uncertainties of which we are currently unaware or which we do not currently view as material to our business.For these reasons, investors are cautioned not to place undue reliance on any forward-looking statements. The forward-looking statementswe make speak only as of the date on which they are made. We expressly disclaim any intent or obligation to update any forward-lookingstatements after the date hereof to conform such statements to actual results or to changes in our opinions or expectations, exceptas required by applicable law or the rules of the Nasdaq Stock Market[] LLC. If we do update or correct any forward-looking statements,investors should not conclude that we will make additional updates or corrections
Lantronix Investor Relations Contact:
Jeremy Whitaker
Chief Financial Officer
investors@lantronix.com
© 2020 Lantronix, Inc. All rights reserved. Lantronix and XPort are registered trademarks, and ConsoleFlow is a trademark, of Lantronix, Inc.
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LANTRONIX, INC.
Unaudited Consolidated Balance Sheets
(In thousands, except share and par value data)
| June 30, | |||||
|---|---|---|---|---|---|
| 2019 | |||||
| Assets | |||||
| Current Assets: | |||||
| Cash and cash equivalents | 7,691 | $ | 18,282 | ||
| Accounts receivable (net of allowance for doubtful accounts of 460 and 36 at<br> June 30, 2020 and 2019, respectively) | 11,411 | 7,388 | |||
| Inventories, net | 13,781 | 10,509 | |||
| Contract manufacturers' receivable | 337 | 1,324 | |||
| Prepaid expenses and other current assets | 1,290 | 687 | |||
| Total current assets | 34,510 | 38,190 | |||
| Property and equipment, net | 1,587 | 1,199 | |||
| Goodwill | 15,810 | 9,488 | |||
| Purchased intangible assets, net | 12,449 | – | |||
| Other assets | 3,577 | 67 | |||
| Total assets | 67,933 | $ | 48,944 | ||
| Liabilities and stockholders' equity | |||||
| Current Liabilities: | |||||
| Accounts payable | 5,331 | $ | 4,716 | ||
| Accrued payroll and related expenses | 2,658 | 2,060 | |||
| Short-term debt, net | 1,472 | – | |||
| Other current liabilities | 6,308 | 4,696 | |||
| Total current liabilities | 15,769 | 11,472 | |||
| Long-term debt, net | 3,682 | – | |||
| Other non-current liabilities | 1,962 | 206 | |||
| Total liabilities | 21,413 | 11,678 | |||
| Commitments and contingencies | |||||
| Stockholders' equity: | |||||
| Preferred stock, 0.0001 par value; 5,000,000 shares authorized; none issued<br> and outstanding | – | – | |||
| Common stock, 0.0001 par value; 100,000,000 shares authorized; 28,231,054 and<br> 22,811,743 shares issued and outstanding at June 30, 2020 and 2019, respectively | 3 | 2 | |||
| Additional paid-in capital | 246,265 | 226,274 | |||
| Accumulated deficit | (200,119 | ) | (189,381 | ) | |
| Accumulated other comprehensive income | 371 | 371 | |||
| Total stockholders' equity | 46,520 | 37,266 | |||
| Total liabilities and stockholders' equity | 67,933 | $ | 48,944 |
All values are in US Dollars.
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LANTRONIX, INC.
Unaudited Consolidated Statements of Operations
(In thousands, except per share data)
| Three Months Ended | Years Ended | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| June 30, | March 31, | June 30, | June 30, | ||||||||||||
| 2020 | 2020 | 2019 | 2020 | 2019 | |||||||||||
| Net revenue | $ | 17,397 | $ | 16,512 | $ | 10,153 | $ | 59,878 | $ | 46,890 | |||||
| Cost of revenue | 10,846 | 9,135 | 4,411 | 32,978 | 20,617 | ||||||||||
| Gross profit | 6,551 | 7,377 | 5,742 | 26,900 | 26,273 | ||||||||||
| Operating expenses: | |||||||||||||||
| Selling, general and administrative | 4,680 | 5,558 | 3,554 | 19,582 | 15,851 | ||||||||||
| Research and development | 2,010 | 2,724 | 2,200 | 9,691 | 9,079 | ||||||||||
| Restructuring, severance and related charges | 478 | 2,263 | 823 | 3,844 | 1,146 | ||||||||||
| Acquisition-related costs | 38 | 1,250 | 410 | 2,284 | 410 | ||||||||||
| Impairment of long-lived asset | – | – | 275 | – | 275 | ||||||||||
| Amortization of purchased intangible assets | 941 | 801 | – | 2,037 | – | ||||||||||
| Total operating expenses | 8,147 | 12,596 | 7,262 | 37,438 | 26,761 | ||||||||||
| Loss from operations | (1,596 | ) | (5,219 | ) | (1,520 | ) | (10,538 | ) | (488 | ) | |||||
| Interest income (expense), net | (90 | ) | (83 | ) | 89 | (133 | ) | 236 | |||||||
| Other income (expense), net | 1 | 129 | (1 | ) | 77 | (15 | ) | ||||||||
| Loss before income taxes | (1,685 | ) | (5,173 | ) | (1,432 | ) | (10,594 | ) | (267 | ) | |||||
| Provision for income taxes | 16 | 43 | 27 | 144 | 141 | ||||||||||
| Net loss | $ | (1,701 | ) | $ | (5,216 | ) | $ | (1,459 | ) | $ | (10,738 | ) | $ | (408 | ) |
| Net loss per share - basic and diluted | $ | (0.06 | ) | $ | (0.19 | ) | $ | (0.06 | ) | $ | (0.42 | ) | $ | (0.02 | ) |
| Weighted-average common shares - basic and diluted | 28,046 | 27,048 | 22,621 | 25,281 | 21,580 |
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LANTRONIX, INC.
Unaudited Reconciliation of Non-GAAP Adjustments
(In thousands)
| Three Months Ended | Years Ended | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| June 30, | March 31, | June 30, | June 30, | ||||||||||||
| 2020 | 2020 | 2019 | 2020 | 2019 | |||||||||||
| GAAP net income (loss) | $ | (1,701 | ) | $ | (5,216 | ) | $ | (1,459 | ) | $ | (10,738 | ) | $ | (408 | ) |
| Non-GAAP adjustments: | |||||||||||||||
| Cost of revenue: | |||||||||||||||
| Share-based compensation | 85 | 70 | 23 | 227 | 85 | ||||||||||
| Employer portion of withholding taxes on stock grants | – | 1 | – | 2 | – | ||||||||||
| Depreciation and amortization | 179 | 149 | 53 | 468 | 197 | ||||||||||
| Total adjustment to costs of revenue | 264 | 220 | 76 | 697 | 282 | ||||||||||
| Selling, general and administrative: | |||||||||||||||
| Share-based compensation | 783 | 939 | 491 | 2,959 | 1,441 | ||||||||||
| Employer portion of withholding taxes on stock grants | 12 | 3 | – | 21 | 12 | ||||||||||
| Depreciation and amortization | 69 | 81 | 48 | 257 | 192 | ||||||||||
| Total adjustments to selling, general and administrative | 864 | 1,023 | 539 | 3,237 | 1,645 | ||||||||||
| Research and development: | |||||||||||||||
| Share-based compensation | 122 | 123 | 97 | 453 | 345 | ||||||||||
| Employer portion of withholding taxes on stock grants | 2 | 3 | – | 10 | – | ||||||||||
| Depreciation and amortization | 27 | 39 | 22 | 122 | 75 | ||||||||||
| Total adjustments to research and development | 151 | 165 | 119 | 585 | 420 | ||||||||||
| Restructuring, severance and related charges | 478 | 2,263 | 823 | 3,844 | 1,146 | ||||||||||
| Acquisition related costs | 38 | 1,250 | 410 | 2,284 | 410 | ||||||||||
| Amortization of purchased intangible assets | 941 | 801 | – | 2,037 | – | ||||||||||
| Litigation settlement cost | – | 75 | – | 75 | – | ||||||||||
| Amortization of manufacturing profit in acquired inventory | 51 | 33 | – | 255 | – | ||||||||||
| Impairment of long-lived asset | – | – | 275 | – | 275 | ||||||||||
| Total non-GAAP adjustments to operating expenses | 2,523 | 5,610 | 2,166 | 12,317 | 3,896 | ||||||||||
| Interest (income) expense, net | 90 | 83 | (89 | ) | 133 | (236 | ) | ||||||||
| Other (income) expense, net | (1 | ) | (129 | ) | 1 | (77 | ) | 15 | |||||||
| Provision for income taxes | 16 | 43 | 27 | 144 | 141 | ||||||||||
| Total Non-GAAP adjustments | 2,892 | 5,827 | 2,181 | 13,214 | 4,098 | ||||||||||
| Non-GAAP net income | $ | 1,191 | $ | 611 | $ | 722 | $ | 2,476 | $ | 3,690 | |||||
| Non-GAAP net income per share (diluted) | $ | 0.04 | $ | 0.02 | $ | 0.03 | $ | 0.09 | $ | 0.16 | |||||
| Denominator for GAAP net income (loss) per share (diluted) | 28,046 | 27,048 | 22,621 | 25,281 | 21,580 | ||||||||||
| Non-GAAP adjustment | 1,959 | 1,641 | 1,909 | 1,603 | 1,998 | ||||||||||
| Denominator for non-GAAP net income per share (diluted) | 30,005 | 28,689 | 24,530 | 26,884 | 23,578 |
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LANTRONIX, INC.
Unaudited Net Revenues by Product Line and Region
(In thousands)
| Three Months Ended | Years Ended | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| June 30, <br><br>2020 | March 31,<br><br> 2020 | June 30,<br><br> 2019 | June 30,<br><br> 2020 | June 30, <br><br>2019 | ||||||
| IoT | $ | 14,588 | $ | 13,922 | $ | 8,327 | $ | 49,911 | $ | 35,299 |
| REM | 2,671 | 2,424 | 1,646 | 9,228 | 10,845 | |||||
| Other | 138 | 166 | 180 | 739 | 746 | |||||
| $ | 17,397 | $ | 16,512 | $ | 10,153 | $ | 59,878 | $ | 46,890 | |
| Three Months Ended | Years Ended | |||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| June 30, <br><br>2020 | March 31,<br><br> 2020 | June 30, <br><br>2019 | June 30, <br><br>2020 | June 30, <br><br>2019 | ||||||
| Americas | $ | 11,549 | $ | 10,126 | $ | 5,217 | $ | 33,279 | $ | 25,179 |
| EMEA | 3,093 | 3,612 | 3,229 | 15,588 | 14,586 | |||||
| APJ | 2,755 | 2,774 | 1,707 | 11,011 | 7,125 | |||||
| $ | 17,397 | $ | 16,512 | $ | 10,153 | $ | 59,878 | $ | 46,890 |
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