Q4 2024 Socket Mobile Inc Earnings Call
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The risk that manufacture of sockets products may be delayed or not rolled out as predicted due to technological market or financial factors.
Including the availability of product components and necessary working capital.
The risk that market acceptance and sales opportunities may not happen as anticipated.
The risk that sockets application partners and current distribution channels may choose not to distribute the products or may not be successful in doing so.
The risk that acceptance of sockets products and vertical application markets may not happen as anticipated as well as other risks described in sockets. Most recent Form 10-K, and 10-Q reports filed with the Securities and Exchange Commission.
It does not undertake any obligation to update any such forward looking statements on.
On the call with me today are Kevin Mills, Chief Executive Officer.
Speaker Change: Dave Holmes, Chief business Officer, and Lynn Zhao Chief Financial Officer.
I will now turn the call over to Kevin Mills.
Even though you may begin.
Kevin Mills: Thank you operator.
Speaker Change: Afternoon, everyone and thank you for joining us today.
Speaker Change: Our revenue for 2024 was $18 8 million an increase of 10% over 2023.
Speaker Change: We recorded margins for the year of 54% a slight increase over the 49, 7%.
Speaker Change: Margins in 2023.
Speaker Change: Our operating loss was $2 5 million slide.
Speaker Change: Slight improvement over the $3 1 million loss in 2023.
Speaker Change: A significant portion of our operating loss related to employee equity compensation.
Speaker Change: Overall 2024 was a difficult year from a revenue point of view.
Speaker Change: We started 2024 with an expectation that we would be able to add revenue in the latter portion of the year from our extreme products.
The extreme products are targeted at the industrial market.
Speaker Change: During the year, we engaged with good with a good number of customers received positive feedback on our solution and experienced a good level of interest from customers.
Speaker Change: However, the evaluations have taken much longer than we expected and as a result, we did not have any meaningful deployment in 2024.
Speaker Change: We are continuing to work with these potential customers and do expect to see deployments in 2025.
We're able us to grow our revenue and establish a foothold in the industrial market.
Speaker Change: And 'twenty 'twenty four we spent $4 7 million.
Speaker Change: R&D, primarily on improvements to our capture SDK, which continues to be the foundation of our business.
Speaker Change: We upgraded our capture SDK in significant ways and we currently support all the major operating systems and the top three cross development platforms.
Speaker Change: Which is allowing us to grow our base of applications that support our data capture solutions.
Speaker Change: That said I'd now like to turn the call over to Dave Holmes, who will outline our plans for 2025.
Dave Holmes: Thank you, Kevin and good afternoon, everyone.
Dave Holmes: Having said that I'd like to highlight a few of the significant milestones that we achieved in 2024 and talk a little bit about what we're focused on in 2025.
Dave Holmes: In 2024, we concentrated on expanding our market presence in new markets with the launch of several new products, primarily focused on the industrial environments.
Dave Holmes: Although adoption has taken longer than we expected.
Dave Holmes: Now have several positive proof points that point to our investments in this category are beginning to pay off in 2025.
Dave Holmes: Including our first long term.
Dave Holmes: Commitment from a fortune 50 tier one industrial customer.
Dave Holmes: The Ruggedized scanning market is large and our entry into this space will help us diversify our business beyond retail.
Dave Holmes: Extreme scan product line is.
Dave Holmes: This comprised of three different configurations extreme scanning case extreme scan extreme scan grip all designed for iPhone.
Dave Holmes: As product family represents.
Dave Holmes: A significant milestone our commitment to delivering high quality data capture solutions.
Dave Holmes: Our customers in industrial manufacturing warehousing oil and gas and airports.
Dave Holmes: Extreme scan is designed to enable iphones to withstand harsh industrial conditions operating robust scanning capabilities with military great durability.
Dave Holmes: This opens the door to new customer segments.
Dave Holmes: The ultimate performance and the most difficult environments.
Dave Holmes: The extreme scale product family grew in 2024 with the introduction of several extreme scan Mag devices designed for the increasing number of workers, who use a single solid for both personal and business needs.
Dave Holmes: Bring your own device or B Y O D category represents a significant underserved market, where we see strong growth potential.
Extreme scan is fully compatible with iPhone 16 E.
Dave Holmes: <unk> 16 is durable cost effective device ideally suited for industrial environments.
Speaker Change: With an extra long battery life enhanced drop resistance.
Speaker Change: And the trusted iOS platform. It is it is expected to quickly become the go to device for demanding industrial sectors.
Speaker Change: Extreme scan combined with iPhone 16 E will empower industrial businesses with durable adaptable and future forward data capture technology.
Speaker Change: We believe the iPhone <unk> makes the choice for enterprise customers a lot easier.
Speaker Change: As clarity allows decision makers to feel good about the device commitment theyre investing in.
Speaker Change: Over 80% of young people in the U S Alright, all users.
Speaker Change: As these people move into the workforce and become frontline workers employers can deploy familiar devices with a well known operating system and user experience to help minimize training and mistakes and maximize productivity.
Speaker Change: IPhone <unk> with extreme scan can become an obvious choice for industrial customers with data capture needs for digitizing their workflows.
Speaker Change: Beyond new products, we also invested in our customer and developer experience in 2024 by introducing a new website developer portal and AI powered developer support which we call Alfred.
Speaker Change: Alfred is helping our developers around the world with multilingual support to integrate our capture SDK into their apps. So they can enable best in class scanning capabilities into their mobile apps.
Speaker Change: Our new product and technology investments will extend our reach and diversify our customer base.
Speaker Change: Ultimately this will make us a more sustainable and less dependent on retail as we become a more complete data capture company.
Lynn: With that I'll turn it over to Lynn.
Speaker Change: For more details on our financial results.
Lynn: Thanks, Steve Good afternoon, everyone.
Lynn: The 'twenty 'twenty four revenue increased 10, 2% year over year compared to $17 million in 2023 gross margin rose to 54% up from 49, 7% in 2023, driven by the allocation of manufacturing overhead costs across higher.
Lynn: Production volumes.
Lynn: Operating expenses for the year reached 11 $9 million, reflecting a two 8% increase from $11 $6 million in 2023, primarily due to higher payroll related expenses from salary adjustments and the increased benefits costs.
Lynn: In 2024, we reported an operating loss of $2 $5 million compared to $3 $1 million loss in 2020 three.
Lynn: The net loss per share was <unk> 30 cents in 2024 compared to 27 cents in 'twenty three.
Lynn: Yes, we reflected the adoption of section 1004 of the tax cuts and jobs Act of 2017.
Speaker Change: Sorry, capitalization and amortization of R&D expenditures.
Speaker Change: Adjusted EBITDA for 'twenty 'twenty four it was negative $318000 compared to a negative $1 million in 'twenty two 'twenty three.
Speaker Change: Revenue in Q4.
Speaker Change: 'twenty 'twenty four grew 10% year over year to $4 $8 million up from $4.4 million in the prior year quarter, and an increase of 25% sequentially from $3 $9 million in Q3, 'twenty hunting for <unk>.
Speaker Change: Gross margin for Q4 was 51% compared to $2 52, 8% in Q4, 2023, and the 49% in Q3 hundred 94.
Speaker Change: Operating expenses for Q4 range to $2 $9 million, marking a two 9% year over year increase but at 1.8% sequential decrease from the preceding quarter.
Speaker Change: We recorded a Q4 operating loss of $411000 compared to 400 $475000 loss in Q4, 2023, and the 1 million dollar loss in the preceding quarter.
Q4, adjusted EBITDA was $138000 up from $52000 in Q4, 2023, and the $505000 loss in Q3 'twenty 'twenty four.
Speaker Change: Diluted earning per share in Q4, it was zero cents compared to <unk> in Q4 tiny tiny three both quarters included an income tax benefit of $550000 and the 1.1 point $4 million and respectively.
Turning to our balance sheet.
Speaker Change: We ended the 2004 with a cash balance of $2 $5 million.
Speaker Change: During the year, we invested.
Speaker Change: $8 million in capital expenditure spend $25 million in operations and the race the $1 million is through the issuance of the subordinated convertible notes.
Speaker Change: December 31 to <unk> 2024, our inventory level net of reserves stood at $4 $9 million compared to $5 $4 million a year earlier.
Speaker Change: This wraps up our prepaid prepared remarks, now I will hand, the call over to the operator for questions.
Ken: Ken Thank you.
Speaker Change: If you would like to ask a question. Please press star one on your telephone keypad now.
Ken: You will be placed into the queue in the order received.
Ken: Please be prepared to ask your question when prompted.
Ken: Once again, if you have a question. Please press star one on your phone now.
Speaker Change: And our first question will come from Steve Swanson Investor.
Steve Swanson: Good afternoon or are we going to need to raise any cash this year, so how much and when do you foresee that happening.
Steve Swanson: Currently we do not have any plans to raise cash.
Steve Swanson: Sure.
Steve Swanson: So.
Steve Swanson: We start the year with enough cash.
We expect the first six months too.
Steve Swanson: To be.
Steve Swanson: A little bit of a strain on our cash, but then we expect in the second half to be cash positive.
Steve Swanson: We don't expect to raise any cash.
Steve Swanson: This year.
Steve Swanson: Right now so.
Steve Swanson: That's the current plan.
Steve Swanson: Alright. Thanks.
Steve Swanson: And once again, if you'd like to ask a question. Please press star one at this time.
Yeah.
Steve Swanson: Yeah.
Steve Swanson: Yeah.
Speaker Change: And it appears there are no further questions at this time, Kevin and I will turn the conference back to you.
Thank you operator.
Speaker Change: Just like to thank everyone for participating and wish you all a good afternoon.
Speaker Change: Thank you.
Speaker Change: And this concludes today's conference call. Thank you for attending.