Bsquare Corp (BSQR) 2023 Q2 法說會逐字稿

Good day, and welcome to the Bsquare Corporation Second Quarter 2023 Earnings Call. (Operator Instructions) Please note this event is being recorded. I would now like to turn the conference over to Ralph Derrickson, President and CEO. Please go ahead.

大家好，歡迎參加 Bsquare Corporation 2023 年第二季財報電話會議。 （操作員指示）請注意，此事件正在被記錄。現在，我想將會議交給總裁兼執行長 Ralph Derrickson。請繼續。

Thank you. Good afternoon, investors, and welcome. Joining me today is Cheryl Wynne, Bsquare's Chief Financial Officer. Before we go any further, we'd like to remind you that the call is being webcast, and that a recording of the call and the text of our prepared remarks will be available on the Bsquare website.

謝謝。各位投資者下午好，歡迎。今天與我一起的是 Bsquare 的財務長 Cheryl Wynne。在繼續之前，我們想提醒您，此次電話會議正在進行網路直播，電話會議的錄音和我們準備好的演講文字將在 Bsquare 網站上提供。

During today's call, we will be making forward-looking statements. These statements are based on current expectations and assumptions that are subject to risks and uncertainties that could cause actual results to differ materially.

在今天的電話會議中，我們將發表前瞻性陳述。這些聲明是基於目前的預期和假設，這些預期和假設受風險和不確定性的影響，可能導致實際結果大不相同。

In our commentary, we may also refer to GAAP and to non-GAAP financial measures. Please refer to the cautionary text regarding forward-looking statements contained in Bsquare's earnings release issued today on our website at www.bsquare.com under Investors. All per share amounts discussed today are fully diluted numbers where applicable.

在我們的評論中，我們也可能參考 GAAP 和非 GAAP 財務指標。請參閱今天在我們網站 www.bsquare.com 的「投資者」專欄下發布的 Bsquare 收益報告中包含的關於前瞻性陳述的警示性文字。今天討論的所有每股金額均為完全稀釋的數字（如適用）。

We will be taking questions after our prepared remarks. For anyone who would like to arrange a follow-up conversation with us, please send an e-mail to investorrelations@bsquare.com. This mailbox is monitored regularly, and you will get a response within one business day.

我們將在準備好的發言後回答問題。如果您希望與我們安排後續對話，請發送電子郵件至 investorrelations@bsquare.com。此郵箱會定期受到監控，您將在一個工作天內得到回應。

Let's start by having Cheryl take us through the Q2 results in detail, and I'll continue with my remarks after that. Cheryl, why don't you get us started?

首先讓 Cheryl 向我們詳細介紹第二季的業績，然後我將繼續發表我的評論。謝麗爾，為什麼不帶我們開始呢？

Thank you, Ralph, and good afternoon, investors. Today, I'll be providing an overview of our financial results for the second quarter of 2023. Let's take a look now at the components of our results. I'll start with a review of our income statement and then move to a discussion of our liquidity. Most of my comparisons will be to the first quarter of 2023. I'll let you know when I'm comparing to other periods.

謝謝你，拉爾夫，投資者們下午好。今天，我將概述我們 2023 年第二季的財務表現。我將首先審查我們的損益表，然後討論我們的流動性。我的大部分比較都是與 2023 年第一季進行的。

Total revenue for the second quarter was approximately $6.5 million, which was a decrease of $1.6 million or 20% from the first quarter. The Partner Solutions segment was the primary driver of the decrease with a $1.5 million decline. Edge to Cloud revenue decreased $100,000. Despite the revenue decline, total gross profit increased by $90,000.

第二季總收入約 650 萬美元，較第一季減少 160 萬美元，即 20%。合作夥伴解決方案部門是造成這一下降的主要原因，下降了 150 萬美元。 Edge to Cloud 收入減少了 10 萬美元。儘管收入下降，但總毛利增加了 90,000 美元。

Let's take a look at our revenue and gross profit results at a segment level, starting first with Partner Solutions. Partner Solutions revenue decreased $1.5 million or 21% quarter-over-quarter. The decline is the continuation of a general trend that we've seen in this segment for quite some time now.

讓我們從細分市場的角度來看我們的收入和毛利結果，首先從合作夥伴解決方案開始。合作夥伴解決方案收入較上季減少 150 萬美元，即 21%。這種下降是我們在這一領域已經看到一段時間的整體趨勢的延續。

Partner Solutions gross profit increased $164,000, and gross margin rate improved 6.8 percentage points. The gross profit decrease driven by the revenue decline was offset by margin rate improvement primarily related to rebate credits earned through Microsoft distributor incentives program. These credits are recorded as a reduction of Partner Solutions' cost of revenue and have always had a favorable impact on Partner Solutions' gross profit. However, the impact this quarter was greater as there were changes to the program. As a result of the changes, we recorded onetime adjustments of approximately $300,000 that favorably impacted Partner Solutions' gross profit.

合作夥伴解決方案毛利增加了164,000美元，毛利率提高了6.8個百分點。收入下降導致的毛利下降被主要透過微軟經銷商激勵計劃獲得的返利相關的利潤率提高所抵消。這些信用被記錄為合作夥伴解決方案收入成本的減少，並始終對合作夥伴解決方案的毛利產生有利影響。但由於計劃發生了變化，本季的影響更大。由於這些變化，我們記錄了約 30 萬美元的一次性調整，這對合作夥伴解決方案的毛利產生了有利影響。

In the Edge to Cloud segment, revenue was $774,000, which was a decrease of $100,000 compared to the first quarter. The decline was driven by reduced professional services provided to one of our customers who is transitioning to a new technology platform. The revenue decrease was the primary driver of the quarter-over-quarter gross profit decline of $77,000.

在邊緣到雲端部門，收入為 774,000 美元，與第一季相比減少了 100,000 美元。下降的原因是，我們為一位正在向新技術平台過渡的客戶減少了提供的專業服務。收入下降是本季毛利環比下降 77,000 美元的主要原因。

Turning our attention now to expenses. Total operating expenses were $2 million, which was a $300,000 increase compared to the first quarter. The increase is entirely driven by selling, general and administrative, or SG&A, costs as our research and development costs were flat quarter-over-quarter.

現在讓我們把注意力轉向費用。總營運費用為 200 萬美元，較第一季增加 30 萬美元。由於我們的研發成本與上一季持平，因此這項成長完全是由銷售費用、一般及行政費用（SG&A）所推動的。

Of the $300,000 increase in SG&A, about 2/3 was due to a decrease in the recognition of cooperative rebate funds from Microsoft. We record these co-op funds as a reduction of marketing expense in the period the expenditure is approved. Timing related to the process of submitting claims and receiving expenditure approval can cause fluctuations in the amount of co-op funds recognized each quarter.

在銷售、一般及行政費用增加的30萬美元中，約有2/3是由於微軟合作回饋資金確認的減少。我們將這些合作資金記錄為支出批准期間的行銷費用減少。提交索賠和獲得支出批准的過程相關的時間可能會導致每季確認的合作資金金額波動。

Please note that going forward, due to the changes in Microsoft's distributor incentive program, the full amount of rebate from Microsoft will be recognized as a reduction of Partner Solutions' cost of revenue. None of it will be recognized as a reduction of marketing expense because there will no longer be requirements related to how the funds are spent.

請注意，由於微軟經銷商激勵計畫的變化，微軟的全部回饋將被確認為合作夥伴解決方案收入成本的減少。這些都不會被視為行銷費用的減少，因為不再有與資金使用方式相關的要求。

The remaining $100,000 increase in SG&A was due primarily to an increase in professional fees related to our annual shareholder meeting and strategic transaction activity. As you may recall, during the third quarter of 2022, we implemented an investment strategy intended to take advantage of favorable interest rates while maintaining a focus on liquidity. Our Q2 results include $390,000 of interest income. We intend to continue investing our cash reserves for the foreseeable future until there is an alternative use of the reserves that will produce a higher return for our shareholders.

銷售、一般及行政費用其餘 10 萬美元的增加主要由於與我們的年度股東大會和戰略交易活動相關的專業費用的增加。您可能還記得，在 2022 年第三季度，我們實施了一項投資策略，旨在利用優惠利率，同時保持對流動性的關注。我們第二季的業績包括 39 萬美元的利息收入。我們打算在可預見的未來繼續投資我們的現金儲備，直到找到其他用途，為我們的股東帶來更高的回報。

Our loss from operations for the quarter was $650,000, which was a deterioration of $300,000 compared to the first quarter driven by the SG&A cost changes discussed earlier. Net loss for the quarter was $300,000 or $0.01 per diluted share compared to the first quarter net loss of $100,000, less than $0.01 per diluted share. On a year-to-date basis, loss from operations was $1.1 million, an improvement of $500,000 compared to the same period in 2022. Year-to-date net loss was $300,000, an improvement of $1.2 million compared to the first half net loss of $1.5 million in 2022.

我們本季的營業損失為 65 萬美元，與第一季相比增加了 30 萬美元，原因是先前討論的銷售、一般及行政費用變化。本季淨虧損為 300,000 美元，即每股攤薄虧損 0.01 美元，而第一季淨虧損為 100,000 美元，即每股攤薄虧損不到 0.01 美元。年初至今，營業虧損為 110 萬美元，與 2022 年同期相比改善了 50 萬美元。

Turning now to our liquidity. Cash, cash equivalents, restricted cash and short-term investments totaled $33.4 million on June 30, 2023, a decrease of $2.3 million compared to December 31, 2022. $660,000 of the decrease was driven by share repurchases, and $1.5 million was due to changes in our working capital accounts.

現在來談談我們的流動性。 2023 年 6 月 30 日，現金、現金等價物、受限現金和短期投資總額為 3,340 萬美元，與 2022 年 12 月 31 日相比減少 230 萬美元。

As a reminder, we announced a plan to repurchase up to $5 million worth of our common stock. During the first 6 months of 2023, we repurchased approximately 550,000 shares for just over $660,000. Since program inception, we have repurchased approximately 730,000 shares for just over $860,000. The repurchase program expired on June 30, 2023, and was not renewed, which Ralph will speak to in a moment.

提醒一下，我們宣布了回購價值高達 500 萬美元普通股的計畫。在 2023 年的前 6 個月，我們以略高於 66 萬美元的價格回購了約 55 萬股。自計劃啟動以來，我們已以略高於 860,000 美元的價格回購了約 730,000 股。回購計畫於 2023 年 6 月 30 日到期，且未續簽，拉爾夫稍後將會談到這一點。

This concludes my summary of our second quarter results, and I'll turn it back to Ralph now.

這是我對第二季業績的總結，現在我將把總結轉交給拉爾夫。

Thank you, Cheryl. The decrease in Partner Solutions' revenue is disappointing, but consistent with the year-over-year decline in Microsoft OS licensing revenue that we have discussed on previous calls. Embedded product developers are increasingly turning to Linux and Android for their operating system in an effort to lower their product costs, especially for the smaller footprint devices.

謝謝你，謝麗爾。合作夥伴解決方案收入的下降令人失望，但與我們在先前的電話會議上討論過的微軟作業系統授權收入的同比下降一致。嵌入式產品開發人員越來越多地選擇Linux和Android作為其作業系統，以降低其產品成本，尤其是佔用空間較小的設備。

That said, we are winning new customers for Windows IoT with superior service and technical support, aggressive pricing and giving them a path to device management and IoT operations. Unfortunately, revenue from new customers is not keeping pace with erosion from customers whose products are going end of life or are switching to alternatives for their OS software. We continue to work closely with Microsoft to share our experience and help them to strengthen the story for Windows IoT in the embedded market. But our expectation is that keeping licensing revenue erosion under 15% would be an achievement.

也就是說，我們正在透過卓越的服務和技術支援、有競爭力的定價以及為他們提供設備管理和物聯網運營的途徑為 Windows IoT 贏得新客戶。不幸的是，來自新客戶的收入跟不上那些產品壽命即將結束或正在轉向作業系統軟體替代品的客戶的收入流失。我們繼續與微軟密切合作，分享我們的經驗並幫助他們加強 Windows IoT 在嵌入式市場的故事。但我們的預期是，將授權收入流失率控制在 15% 以下將是一項成就。

Let's turn our attention now to our bottom line and our efforts to run the business as efficiently as possible. As I've shared on the last 3 calls, achieving breakeven operations is a priority. Our progress towards that goal is most evident in the difference in year-to-date results. 2023 year-to-date operating results are $500,000 better than 2022, a 31% improvement. Further, our net loss improved by $1.2 million, a 78% improvement as our bottom line results were bolstered by interest income. The operating improvements came, in part, as a result of the staffing reductions we made in December of last year and efforts across the board to reduce expense. These improvements are playing out in our operational cash consumption as well.

現在讓我們把注意力轉向我們的底線以及盡可能高效地經營業務的努力。正如我在過去三次電話會議中所分享的，實現收支平衡是當務之急。我們朝著這目標所取得的進展從年初至今的績效差異中表現得最為明顯。 2023 年迄今的經營績效比 2022 年好 50 萬美元，成長 31%。此外，我們的淨虧損減少了 120 萬美元，改善了 78%，因為我們的底線表現受到了利息收入的推動。營運狀況的改善部分是由於我們去年 12 月裁員以及全面削減開支的努力。這些改進也在我們的營運現金消耗中發揮了作用。

Stepping back from operations, I'd like to turn our attention to what is happening on the strategic front. During the Q1 2023 earnings call, I said that we were not going to continue the status quo, and that action would be taken in a time line measured in months and quarters. As we shared in the earnings press release today, we have been working with Telegraph Hill Advisors, a San Francisco-based investment bank, to run a process to explore the full range of strategic options for generating shareholder value.

我們從營運中抽身而出，想把注意力轉向策略方面正在發生的事情。在 2023 年第一季財報電話會議上，我表示我們不會維持現狀，並將在以月和季度為單位的時間表內採取行動。正如我們在今天的收益新聞稿中所述，我們一直在與舊金山的投資銀行 Telegraph Hill Advisors 合作，探索為股東創造價值的各種策略選擇。

There isn't more information to share now, but rest assured, we are moving thoughtfully and as aggressively as the process allows. While the process is running, we opted not to renew the share repurchase program. We don't believe the current share price captures the full potential value of the company.

現在沒有更多資訊可以分享，但請放心，我們正在根據流程允許的情況，盡可能積極地採取行動。在流程執行期間，我們選擇不再續簽股票回購計畫。我們認為當前股價未能反映該公司的全部潛在價值。

Getting back to operations, we will continue to run the business as efficiently as possible and look for opportunities to demonstrate the potential for SquareOne to become the basis of a high-margin SaaS business. We haven't talked about SquareOne since we announced late last year that we were dialing back marketing. But that doesn't mean we've stopped all efforts. In fact, we are in active evaluation with a number of companies who are considering SquareOne as the basis for their device management needs and other customers considering SquareOne as the basis for their IoT system.

回到運營，我們將繼續盡可能高效地經營業務，並尋找機會展示 SquareOne 成為高利潤 SaaS 業務基礎的潛力。自從去年年底我們宣布減少行銷活動以來，我們就沒有再談論過 SquareOne。但這並不意味著我們停止了一切努力。事實上，我們正​​在與許多公司進行積極評估，這些公司正在考慮將 SquareOne 作為其設備管理需求的基礎，其他客戶也正在考慮將 SquareOne 作為其物聯網系統的基礎。

We have made significant architectural improvements to SquareOne that will allow developers to extend the core functionality via plug-ins and web socket. Notably, this allows us to use AI and ML at the edge and in the cloud to build sophisticated systems that allow individual devices to contribute data and participate in shared decision-making. All of these capabilities can be seen on the SquareOne evaluation site on our website that gives customers up to 30 days of access to SquareOne at no charge.

我們對 SquareOne 進行了重大的架構改進，讓開發人員透過外掛程式和 Web 套接字擴展核心功能。值得注意的是，這使我們能夠在邊緣和雲端使用 AI 和 ML 來建立複雜的系統，允許單一設備提供資料並參與共享決策。所有這些功能均可在我們網站的 SquareOne 評估網站上看到，該網站為客戶提供長達 30 天的免費 SquareOne 存取權限。

Concluding then, we will continue to serve our customers with superior products and services. At the same time, we will strive to maximize the operational assets of the business while aggressively pursuing strategic options. The Board, Cheryl and I are balancing those priorities with the objective of developing options and opportunities to return value to our shareholders.

最後，我們將繼續為客戶提供優質的產品和服務。同時，我們將努力最大限度地提高業務營運資產，同時積極尋求策略選擇。董事會、謝麗爾和我正在平衡這些優先事項，以期開發選擇和機會，為股東帶來回報。

With that, operator, please open the line for questions. While people are signaling to ask questions, remember if you'd like to arrange a follow-up conversation, please send an e-mail to investorrelations@bsquare.com.

接線員，請打開熱線來回答問題。當人們發出提問訊號時，請記住，如果您想安排後續對話，請發送電子郵件至 investorrelations@bsquare.com。

(Operator Instructions) Thank you. There are no questions at this time. I'll now turn the conference back over to Ralph Derrickson for any closing remarks.

（操作員指示）謝謝。目前還沒有問題。現在我將會議交還給拉爾夫·德里克森 (Ralph Derrickson) 並請他作結束語。

Thank you, operator, and thank you, investors. I really appreciate your time and attention this afternoon, and I would like to close our call by wishing our CFO a very happy birthday. Thank you.

謝謝運營商，謝謝投資者。我非常感謝您今天下午的時間和關注，最後，我祝我們的財務長生日快樂。謝謝。

Thank you. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

謝謝。會議現已結束。感謝您參加今天的演講。您現在可以斷開連線。