Q2 2025 Socket Mobile Inc Earnings Call
Yes.
Good day, everyone and welcome to socket Mobile incorporated Q2 2025 earnings call. My name is Elvis had and I'll 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 27, a of the Securities Act of 1933 as amended and section 21 E of the Securities and Exchange Act of 934 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 such.
Statements involve risks and uncertainties and actual results could differ materially from the results anticipated in such forward looking statements because of several factors, including but not limited to.
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 products or maybe unsuccessful in doing so the risk of 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.
Socket does not undertake any obligation to update any such forward looking statements on the call with me today are Kevin Bell's Chief Executive Officer, Dave Holmes, Chief Business Officer, and Lynn Zhao Chief Financial Officer, now I'll turn the call over to Kevin Mills, Kevin. Please go ahead.
Thank you operator.
Good afternoon, everyone and thank you for joining us today.
Our revenue for Q2 was $4 million a decrease of 20% over Q2 'twenty 'twenty four.
We recorded margins, 50%, a slight decrease from the margins of 51% in Q2 2024 are.
Our operating loss was 700000 compared to an operating loss of 500000 in Q2 'twenty 'twenty four.
Overall Q2 was another difficult quarter.
Revenue came in lower than expected as we saw weakness in both our domestic and international businesses.
Certainty and the business environment has resulted in the delay or postponement of numerous projects.
In addition, the level of general deployment seems to have slowed across the board.
On the positive side, we did deliver our first extreme scan products to a large industrial customer.
And according to them the deployment has been slowness, which is a very positive sign.
Unfortunately, they have delayed a significant portion of the deployment to 2026 days.
Dave will provide more color on the extreme scan progress and opportunity in a few moments.
As we believe the market will remain soft during the rest of 2025.
We will have to continue to manage our expenses tightly.
In Q2, our expenses were lower than in Q1, So we were able to record an EBITDA loss of just over $100000.
Discontinued better than the $481000 EBITDA loss recorded in Q1.
We will control costs and sustained investments in research and development and Apple sales relations opportunities.
Most of the Apple ladies as opportunities are significant and even getting a few of them would have a significant long term benefits.
We understand that this will strengthen our resources in the short term.
Horses to manage our expenses accordingly.
Therefore, our outlook has changed.
Now expect to be EBITDA neutral.
Unprofitable in the second half of 2025.
With that I'll now turn the call over to Dave.
Okay.
Hey, Kevin Good afternoon, everyone.
As Kevin said today I'd like to highlight a few of the milestones that we achieved in Q2.
We have invested a lot in our expansion into the industrial scanning and handheld computing markets over the last two years.
Those investments are starting to bear fruit.
We're seeing a lot of interest from a variety of customers and warehousing and logistics manufacturing mining oil and gas energy and construction.
Widespread testing is underway.
And we received purchase orders for multiple fortune 50 companies at this point.
As Kevin mentioned, the initial rollouts have gone exceptionally well.
The ruggedized.
Any market is large.
And our entry into this space will help us to diversify our business beyond retail.
We expect the momentum in this space to continue building for us in the coming quarters and years.
Our extreme scale product line is comprised of three different configurations.
So in case, the extreme scan handheld.
The extreme scan pistol grip all designed for iPhone.
While we were often models with iPhone 16 inside marketing, marking our entrance into the mobile handheld computing market.
Extreme skin is designed to enable iphones to withstand harsh industrial conditions.
<unk> robust scanning capabilities with military grade durability.
This opens the door to new customer segments.
The ultimate performance and the.
Most difficult environments.
And now we are starting to gain real traction in the Ruggedized mobile handheld computer market.
Our new product and technology investments will extend our reach.
And diversify our customer base.
Ultimately this will make us more sustainable and less dependent on retail.
As we become a more complete data capture company.
With that I'll turn it over to Loren for more details on our financials.
Yeah.
Lend your line is open please check your mute button.
Thanks, Dave and good afternoon, everyone.
Revenue in Q2 decreased 20% year over year to $4 million down from $5 million in the same quarter last year. The decrease can be flat to continued softness in customer demand and the cautious purchasing behavior from our channel partners.
Revenue remained roughly in line with Q1 levels gross margin for Q2 was 50% down.
Down slightly from 51% in Q2, 'twenty one before by the consistent with Q1 2025.
The margin held steady despite the lower revenue supported by ongoing cost control efforts and favorable product mix and they use a lower cost of components and high volume Skus.
Operating expenses for Q2 were $2 $7 million compared to the third point and $1 million in the same quarter last year, and the $2 $9 million in the previous quarter.
The reduction was primarily driven by the cost control measures implemented by the management in anticipation of slower business activity.
As a result, we reported an operating loss of $7 million for Q2.
Compare that to your point $5 million loss in Q2 funding accounted for <unk> 9 million dollar loss in Q1 2025.
The sequential improvement reflects our efforts to align operating cost with the current level.
Current revenue levels, even as the topline performance it remains a challenge.
Adjusted EBITDA for Q2 was a loss of 100 K compared to positive EBITDA of Asos dollar, saying Q2 last year and a loss of $480000 in Q1.
Diluted loss per share for the quarter was 10 cents.
Compared to a loss of <unk> in the same period last year and the 13th in Q1 2025.
Turning to our balance sheet at June 30, our cash balance was $2 $6 million supported by closing up $1.5 million in convertible note financing in may.
This compares to $1 $7 million as of March 31st and a $2.5 million as of December.
December 31st 2100 for <unk>.
Cash outflows during Q2 included funding.
A $60000 for operation and the Winder 40 sound, though.
Dollars in capital expenditure.
Primarily related to pilot the touring and software development.
Inventory net of reserves was $4 $8 million as of June 30th down from $5 $3 million at the end of Q1, and a $5 million, adding <unk> and 'twenty 'twenty four.
This reduction reflects tighter inventory management practices and the proactive efforts to avoid access is talking the slop slower demand environment.
This wraps up our prepared remarks, now I will hand, the call over to the operator for questions.
Operator, thank you Lynne.
Yes, if you'd like to ask a question. Please press star one on your phone now and Youll be placed into the queue in the order received.
Please be prepared for asking your question my prompted once again, everyone Press Star one for a question, we'll pause for a moment to part of the Q.
Again, everyone Star one for a question.
It appears we have no questions at this time Lynn I'll turn things back over to you for any additional or closing remarks.
Okay.
Okay. Thank you everyone for attending today's call and wish you a good afternoon. Thanks Bye.
Yeah.
That concludes our meeting today you may now disconnect.
The host has ended this call goodbye.