Socket Mobile (SCKT) 2 Aug 232023 Q2 Earnings call transcript

Welcome to the Socket Mobile Inc. Q2 2023 Earnings Call. My name is Paul, and I will be your operator for today's call.

Before we begin, I'd like to remind everyone that this conference call may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 as amended and Section 21E of the Securities and Exchange Act of 1934 as amended.

Such forward-looking statements include, but are not limited to, statements regarding mobile data collection and mobile data collection products, including details on timing, distribution, and market acceptance of products and statements predicting the trends, sales, and market conditions and opportunities in the markets in which Socket Mobile sells its products.

including, and results actual statements anticipated a of risks materially could risk because components or rolled that capital. and include technological, to, or number the limited necessary from out in factors, delayed statements uncertainties results the and differ including to not financial due of working the manufacture Such not but such factors, products predicted availability be Socket's market of may as of product forward-looking

anticipated, and acceptance most The be market that described Socket's The acceptance the as and that opportunities application may Form application and anticipated. recent products risk The may channels successful as of markets distribute Commission. other Securities and with in as happen sales the so. not vertical filed risk risks XX-Q happen partners Exchange not not doing products reports or Socket's risk to Socket's that in and well may XX-K current distribution as choose may not

does Socket obligation such any update statements. to forward-looking undertake not any

On with me Chief Chief Holmes, Dave Lynn call Officer; Kevin are and Officer; Chief Business Executive Zhao, Mills, Financial today Officer. the

call now Mills, may Mills. sir. Kevin I turn you over Mr. will begin, the to

thank and for Thank Good afternoon, you, Operator. everyone, joining today. us you

and revenue was the QX in decrease million QX $X Our XXXX. $X.X XX% million, to compared

XXXX. $XXX,XXX loss gross an margins Our were operating in XX.X% and we compared to of QX of compared an operating XX.X% recorded to income $XXX,XXX

remains the impacted largest revenues QX of retail revenue. market, by were weakness our Our the point-of-sale source of global which

and investments decisions, our The has in immediate of outside saw it regions North resulted uncertainty in spread retail a and QX in we during which and various in America QX, uncertainty malaise general concern in regions economic and deployment delayed the to control. other a and is the saw We world. continue industry

on point-of-sale our recover with benefit However, we based business the portfolio. and retail as market-leading the markets get believe iPad-based continue the to will of and strengthen solutions associated majority available do product we

we into QX, made our significant product new and on market products development QX. the progress plans many During in we'll get

for Our and retail, we and are industrial and impact could markets, long a over more designed where new services feel products time. both which our have robust meaningful currently are technology than areas commercial

will going on in the challenging challenging on to they the another our provide Dave and few impact reduce more addition, be will In moments. sector. dependency products is QX retail quarter. potential a details

time able our As to meaningful we have believe remain weak, our QX will to expect profitable impact. do, and the operations. retail to and to contribute new revenue enable a be will to products products We to however, us make not new return

With now to turn that I'd Dave? over Holmes. the said, Dave call to like

more of and Extreme industrial bit Kevin, talk you, and Scan airports. journey oil QX achieved in products a I'd working company. harsh everyone. significant little up targeted hard Apple construction, and products. new of of products milestones highlight the we a the some continue have Today, our we a Thank like data coming and capture new more we comprehensive to good afternoon, in few that about becoming later conjunction These introducing be that month. such develop has We'll new with products as manufacturing, are product ultra-rugged been line of Engineering gas team work our environments, a line this to for as

also diversified more app our this for within will reach make Scan extend a us and partner Extreme sustainable less and on retail. Mobile also Ultimately, new of will markets base. open and current some dependent Socket our

well. camera-based significant scanning In progress promoting as QX, continued free we our to make

their apps. SocketCam our of out of to of free critical. can partners in now end the app apps app camera users an base SocketCam with are of scanning CaptureSDK users enable Thousands our version of their Our version software use latest building updating with to SocketCam, capture installed data was

next end have the The users version free the value and and app same both barcodes the of to their advanced to to of to for enable application, damaged who brings apps. extremely need and CXXX end Play month adopter end upgrade implementation our these The future monthly read unique with users on the complex capture upgrade or more live is advanced best about app users to select a This Store. expected option to Apple's subscription through app early to App more their needs. been the version, partners instant basis partners a it allow Store SocketCam requirements step ease data the go support positive Google enabling next will cost-sensitive from

-- this CXXX, stream The Mobile as revenue month. Socket provide the SocketCam customers upgrade will each customers with upgrade recurring to

apps in and and wide market a adopted services, entry field sectors. just industries to of Delivery a supporting name examples. being SocketCam apps, inventory variety few order

products hardware is scanning this believe move reach Our SXXX, that and We feel users. capture camera and create support end application data a CaptureSDKwas for continues critical scanning combo industrial NFC reader. us It makes and and to our our opportunities and Socket new a complete Mobile. can their data we larger set updated capture more also forward, software and We camera more of providers SocketScan in company. journey. step diverse QR for include code a to

in some wallet ensure features can identification. incorporate reader NFC that of SocketScan new associated XX well. writer, will Mobile as our development with This expected iOS the partners personal SXXX, our

been in contactless SFXX of driver's ID NFC new license certification. new enable the widely forefront used in card certification RFID Also, end position will and countries India, transactions. ID awarded makes the including convenient quick users others. used Bangladesh, SXXX Hong Sony the FeliCa transit, Socket Kong, and emerging Japan, other many new digital and smart markets Indonesia, payment, contactless a technology around Socket at This with FeliCa advances by in for and royalty, is Mobile apps, mobile and for regions developed Our digital This compatible multiple Socket Japan, SocketScan markets. has Vietnam world, FeliCa portfolio Mobile. system,

impact starts XXXX in the well-positioned foresee revenue it having reader on our is beyond. driver's as picking portfolio and license space contactless We steam. other for up in NFC an and need ID, mobile digital infrastructure, the Our

that, over it more Lynn to on Lynn? results. With for financial turn details our I'll

Thank for everyone, The thank XX% million, representing In served compared as revenue. the of was you, primarily our $X.X joining to decline the primary Dave, weakness was a which call. same today's decrease and their year. sector, to source QX, revenue the retail you, in previous is attributable in the quarter

a to when QX compared revenue Nevertheless, increase. XX% displayed

revenue balancing activities impacted inventory conducted partners. our As been the QX distribution had by by

costs year same a showed mainly improvement which to of XX.X%, allocation Our a reaching a an a compared period X.X% increase compared across The and QX X.X% over to sold. attributed QX units last margin number QX of represents increase in QX. improvement, efficient higher to gross the more overhead was

from In achieved comparison a sales period through the to increase the direct million attributed store. quarter. our higher a the in online same same the from a $X.X In to prior decrease previous the quarter but previous reflecting the in margin were to operating QX, compared is socket QX year, in our X% X% improvement expenses year,

the expenses drive the the invest and period, that critical company growth company. controlled to this long-term of while projects continuing During monitored in

year. to of a recorded compared net a we in or income $XXX,XXX $X.XX share net $XXX,XXX $X.XX QX, loss or per period share the During per of last same

an the tax prior and quarter same $XXX,XXX, expenses from our EBITDA $XXX,XXX amounted of decrease to was amortization, income depreciation, but a in to in which The equity-based total $XXX,XXX. in compared $XXX,XXX QX, improvement compensation year non-cash a QX, quarter. previous In negative the included expenses

balance cash $X.X our was lower XX, June XX, of December As reaches million compared to XXXX. $XXX,XXX

$X.X the the million and Over stock an we to additional convertible the cash six-month position. $XXX,XXX note exercises completed contributed option period, financing our

capital this during of for and activities, share $XXX,XXX. the loan expenditures $X.X expenditures, operating for buyback million $XXX,XXX Primary period $XXX,XXX included in repayment

In XXXX. million inventory, decrease a quarter we $X.X with end terms ended of at $X.X million, of the slight from the

wraps our prepared This remarks. up

call the Now, operator for hand over I questions. to the will

[Operator our Chris first from comes Research. Instructions] from Sakai And Singular question

Your line open. is

Good fourth a can quarter? And main hi. the the on drivers were for third expect gross quarter Yes, What margin the improvement. I afternoon. the and there? question what we had

like you that? Lynn, So answer would to

Yes.

QX, For -- -- QX by in higher improvement the the mainly to sales to compared was driven in compared like QX.

higher been Like online last shopping QX, our been have to a XX%. we doubled. like this store been and revenue compared QX X% our through – year, of our And has QX is in been to year. from has Like overhead sales at last last of So to -- direct sales like -- compared online allocation store units. the helps has increased we has margin year, our over we the store number that MSRP, that online increased year

increase. increase our online We will from expected sales continue the to store

sector industrial this? products how we DuraScan get to what demand affecting going you that. your in Okay. is forward? sort what some as with the you seeing DWXXX, And market idea Thanks wanted this like guys on far for seeing revenue anticipate for are here? What are new And the were the of can as then

let by okay, developed third on parties. that model is me are Well, dependent apps our that we say business

increased impact. space. expect we don't see And to them get retail we people we into entering have then So do the deployed, these they -- that products What revenue. industrial is adopting revenue into do as instant applications. the into We're see their

market We we have apps interest, of QX. products have that the number will we already a of and support a lot to instantly bring in

they a that a that use well maybe as expectations and is But and bring going it products primarily be basis. perform seeing we actually sure expect Apple the on Apple-based QX, like through very everything we under will operating going starting of think our environments we deployments I is of a real put to and QX to the and significant out believe We the we'd people guess industrial XXXX. then needs in revenue with meet primarily think ruggedized these would that impact end the of series will forward. those in on but underserved market the products, our will before what think products be for quarterly more in belt have make allow some the we I pilots world larger customers understanding products towards our

Okay. answers. Great. your all Thanks for

Thanks, Chris.

seeing further no Instructions] questions. to call [Operator our turn host. over I'll the back And

I'd participating you. a Thank call, Thank wish all good to like for you, operator. afternoon. thank you in and everyone today's

Thank now a has joining, and day. pleasant concluded. meeting for The have you