Socket Mobile Inc (SCKT) 2026 Q2 法說會逐字稿

Welcome, everyone, to Socket Mobile, Inc. Q2 2026 earnings call. My name is Lynn Zhao, CFO at Socket Mobile. Before we begin, I would like to remind everyone that this conference call may contain forward-looking statements. Within the meaning of Section 27A of the Securities Act of 1,933, as amended, and Section 21E of the Securities and Exchange Act of 1,934, 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 the market acceptance of products and the statements predicting trends, sales and market conditions and the opportunities in the market 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 a number of factors including.

But not limited to the risk of manufacture of Socket products may be delayed or not rolled out as predicted due to technological, market, or financial factors, including the availability of product components and the necessary working capital.

The risk that market acceptance and sales opportunities may not happen as anticipated.

The risk. Thus Socket's 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 Socket's products in vertical application markets may not happen as anticipated, as well as other risks described in Socket's 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 is Dave Holmes, President and Chief Executive Officer.

I will now turn the call over to Dave.

Dave, you may begin.

Thanks, Lynn.

Good afternoon, everyone, and thank you for joining us today to discuss our results for the second quarter of 2026.

The environment we are operating in remains difficult.

Our top-line results reflects the continued challenge we are seeing with our retail scanning business.

Our second quarter revenue of $3.0 million fell short of expectations.

Gross margin was 46.4% versus 49.9% in the prior year's quarter, and operating expenses came in at $2.6 million versus $2.7 million in the prior year's quarter.

We are not at all satisfied with that outcome. We have implemented several plans to help bolster sales.

We have also cut our costs further and have implemented several cost cutting measures, including selective headcount reductions.

These measures will remain in effect for the remainder of 2026.

Along with our intense focus on cost control and cost elimination, we are aggressively implementing AI to make our resources more effective and more efficient.

Our engineering team has systematically rolled this out over the last several months and will continue deploying with a similar comprehensive approach to the rest of the organization in Q3.

This will allow us to deliver key revenue-producing projects and efficiencies with our streamlined staff.

We will also sharpen our focus on what we are selling.

We have great products.

We will simplify the decision process for our customers and cold products that are not producing revenue to make our offering easier to understand.

We continue to focus on supporting our customers, executing our strategic priorities, and managing our business with financial discipline.

Management believes these actions position the company to respond effectively as customer demand improves.

With that, I will turn the call back to Lynn for more details on our financial results. Lynn.

Revenue for Q2 was $3 million compared to $3.9 million in the same quarter last year and $3.7 million in Q1 2026. Gross margin for the quarter was 46.4% compared with 49.9% in Q2 2025 and 51.3% in Q1 2026.

The decline primarily reflected the underutilization of our manufacturing capacity at the current production and the revenue levels, resulting in higher fixed manufacturing costs as a percentage of the revenue.

Operating expenses for Q2 were $2.6 million, down from $2.7 million in the same prior year quarter and in Q1 2026.

Reflecting our continued focus on managing operating expenses.

As a result, we reported an operating loss of $1.2 million compared with $680,000 loss in Q2 2025 and $760,000 in Q1 2026.

Adjusted EBITDA for Q2 was a loss of approximately $745,000. Compared with a loss of $100,000 in the prior quarter and $298,000 in Q1 2026.

Loss per share was $0.16 compared with $0.10 in Q2 2025 and $0.11 in Q1 2026.

Turning to the balance sheet, cash totaled $1.6 million as of June 30, 2026. Compared with $1.7 million at March 31, 2026.

During the quarter, we continued to manage working capital and maintain a disciplined approach to operating expenses.

Inventory net of reserves was $3.8 million as of June 30, 2026, down from $3.9 million at March 31, 2026.

Reflecting our continued efforts to align inventory levels with current demand.

This concludes our prepared remarks.

(Conference Instructions)

Steve.

Good afternoon.

A couple of questions. Are we still a preferred supplier to Shopify or is our financial situation deteriorated enough that they are not on board with us anymore?

We are still a preferred supplier to Shopify, so nothing has changed there. Our revenue was down in retail and was down specific to the Shopify business over the last few quarters, but we.

But we are still a recommended supplier for Shopify.

Okay, and our cash burn rate, are there any going concern issues?

Is your auditor opined on a going concern issue or not?

No going concern issue was raised.

And our burn rate looks like we took down some inventory to give us some cash and we were $100,000 less, I think you said, than we were the prior quarter. Our burn rate, how is our burn rate looking? Are we good for another year worth of cash flow burn or what is your horizon for that?

No, we tried to find our working capital with operations, but we still have the bank lines we could tap in that we have not.

Yeah, so hopefully, with their management of the expenses and the growth of revenue, we can continue to support their operations.

And I guess the last question I would have is I have always liked this business model because you guys just supplied the hardware and the designers out there provided the software and designed it and sold it to the customers. But that is great when the business is moving ahead and growing.

But what do you guys do now that that is fallen off? we are kind of waiting on them to sell their product, which would then include our hardware in that sale.

How can management impact our business if we are waiting on our customers to sell a service to a third-party customer that would then buy our hardware to deliver the solution?

That is a great question. I think traditionally our business has worked exactly as you suggest and it is a great model when things are chugging away. So, the downside of that business model is things are a little bit out of good control and we anticipated this and over the last couple of years we have been.

We have been working real hard to enter new markets and we have started to do that. We have talked about it in the past couple of meetings, our entree into the industrial scanning market.

That is a completely different business model, really. It is entering and selling directly to enterprise customers, so not necessarily going to the software vendors first. We do go to software vendors first at times, but a lot of times we are selling directly to the enterprise customers. And that business has started to pick up. We had our, I believe it was about 10% of our revenue in Q2, and we expect that number to go over the next few quarters. And that is really, those are much bigger deals that we are working on. So, when they hit, they have an immediate impact. And that is going to be one of the major hedges.

Not only for hedging for retail and our dependency on retail, but also in the model that you suggest, Steve.

Okay.

Have we had any successes with that? I know you had a few companies that were, I do not know, I will call it beta testing, where they were trying out your equipment in the process to see if they liked it.

Harder to purchase orders yet or are we still more in the testing process and that is more of a 27 kind of a thing?

We have definitely had some purchases.

I mentioned it was, I believe it was 10% of our revenue in Q2.

So it is not just a couple of people testing here and there anymore. It is really rolling these things out and in some cases we are in phase two of rollouts.

What we have deployed out there has been working really well. It is all based on iOS and Apple platforms, which is gaining a lot of traction in the industrial space because of the familiarity of the UI. And people are just used to using Apple devices at home and they like to use them at work as well. So, that is really working in our favor.

And so, yeah, we have seen some success and we expect more of it in the second-half of the year.

Okay, and then one final question, Lynn, are we going to need to go tap into the, we have done several loans, convertible loans. Are we going to need to do any more of those to our Chairman, or are we just going to try to live off the bank loans going forward?

We try to live off operating generated cash.

Yes, like you mentioned, we had convertible financing in the past. Our board approved the financing, but we are not going to comment anything before the information is released to public.

Okay, so you have not tapped into that yet, but that is a lever there that if you want to pull it, management can decide to do so.

Okay, thank you. Appreciate the feedback today. I will get off the call.

Thanks, Steve.

Thank you, Steve.

(Conference Instructions)

Okay Dave I do not see other questions.

I think we can go ahead and close it.

Okay all right yeah this concludes today's conference call thank you for attending thanks everyone bye now host ended the conference goodbye.