Socket Cell, Inc. (NASDAQ:SCKT) Q2 2024 Earnings Convention Name July 31, 2024 5:00 PM ET
Firm Individuals
Kevin Mills – Chief Government Officer
Dave Holmes – Chief Enterprise Officer
Lynn Zhao – Chief Monetary Officer
Convention Name Individuals
Operator
Welcome to the Socket Cell Inc. Q2 2024 Earnings Name. My title is Jen and I will probably be your operator for at present’s name. Earlier than we start, I might wish to remind everybody that this convention name might include forward-looking statements inside the which means of Part 27A of the Securities Act of 1933 as amended and Part 21E of the Securities and Change Act of 1934 as amended.
Such forward-looking statements embrace however are usually not restricted to statements concerning cell knowledge collections and cell knowledge assortment merchandise, together with particulars on timing, distribution, and market acceptance of merchandise and statements predicting the developments, gross sales, and market situations, and alternatives within the markets by which Socket Cell sells its merchandise.
Such statements contain dangers and uncertainties and precise outcomes might differ materially from the outcomes anticipated in such forward-looking statements due to plenty of components, together with however not restricted to, the chance that manufacture of Socket’s merchandise could also be delayed or not rolled out as predicted attributable to technological, market, or monetary components together with the supply of product parts and needed working capital; the chance that market acceptance and gross sales alternatives might not occur as anticipated; the chance that Socket’s software companions and present distribution channels might select to not distribute the merchandise or might not be profitable in doing so; the chance that acceptance of Socket’s merchandise in vertical software markets might not occur as anticipated; in addition to different dangers described in Socket’s most up-to-date Kind 10-Ok and 10-Q stories filed with the Securities and Change Fee. Socket doesn’t undertake any obligation to replace any such forward-looking statements.
On the decision with me at present are Kevin Mills, Chief Government Officer; Dave Holmes, Chief Enterprise Officer; and Lynn Zhao, Chief Monetary Officer.
I’ll now flip the decision over to Kevin Mills. Kevin Mills, you might start.
Kevin Mills
Thanks, operator. Good afternoon everybody and thanks for becoming a member of us at present. Our Q2 income was $5.1 million, a 0.7% lower in comparison with $5.12 million from Q2 2023.
[Technical Difficulty] in Q2 2023. In Q2 2024, we had been EBITDA optimistic.
General, Q2 was a troublesome quarter in a difficult financial local weather, whereas we had been happy with our operational efficiency through the quarter as we maintained our deal with selling and demonstrating our newer merchandise.
We launched our newer merchandise in late 2023 and early 2024 and preliminary deliveries have been made. Suggestions has been very optimistic. [Technical Difficulty] to make a significant contribution to our income.
I’d now like to show the decision over to Dave Holmes who will present a extra detailed replace on our progress. Dave?
Dave Holmes
Thanks, Kevin and good afternoon everybody. As Kevin stated, at present I might like to speak concerning the progress we’re making with our newer merchandise and strategic initiatives and spotlight a number of of the numerous milestones that we achieved in Q2.
Our investments in innovation are serving to rework Socket Cell right into a extra complete knowledge seize firm. We’re seeing good traction with our XtremeScan military-grade industrial scanners in addition to our wearable merchandise. These merchandise had been constructed for the economic barcode scanning market, facilitating using iPhones and iOS purposes in rugged work environments.
We lately introduced our newest addition to the household, the XG640, particularly designed for the transportation and logistics markets. Our distinctive design was constructed for BYOD or carry your individual system. Supply drivers can use their very own cell system for communication, navigation or images and immediately connect with XtremeScan to allow high-performance barcode scanning. We expect it is good for small and medium-sized supply operations, which regularly use impartial drivers. Employees like it as a result of they not have to hold a number of gadgets. These product households signify a big milestone in our dedication to delivering high-quality knowledge seize options for our clients in industrial, manufacturing, warehousing, transportation, vitality and airports.
XtremeScan is designed to allow iPhones to resist harsh industrial situations and provide strong scanning capabilities with the final word sturdiness. Opens the door into new buyer segments within the large ruggedized computing area that demand the final word efficiency in essentially the most troublesome environments.
In Q2, we noticed a number of marquee clients placing these new merchandise by rigorous testing. We handed a number of the most intense testing with flying colours. Many of those clients are actually transferring into proof-of-concept and pilot tasks to place the gadgets into the fingers of their frontline staff. We anticipate to maneuver into deployments later this yr, and we anticipate these merchandise to start to contribute to our income in This autumn and into 2025.
We have additionally made vital progress in selling our camera-based scanning know-how. Our early adopter app companions have built-in SocketCam into their platforms, enabling their clients to scan barcodes straight into their apps utilizing the cell system digicam.
The free subscription model of SocketCam allow our app companions to serve all their numerous finish person wants from essentially the most price aware with our free SocketCam C820, to a extra feature-rich seize necessities with our subscription-based SocketCam C860.
And essentially the most intense customers can nonetheless entry our array of {hardware} handheld scanners. All of those are made accessible to our app companions’ ecosystem with a single, easy and free integration of our CaptureSDK. As adoption builds and finish customers improve to SocketCam C860, it will generate a recurring income stream for us every month.
Our new XtremeScan merchandise will lengthen our attain and diversify our buyer base and permit us to enter the big ruggedized cell computing market. SocketCam opens the door for Socket Cell to have a recurring income stream every month for software program subscriptions.
In the end, these initiatives will enable us to make, to develop into a extra diversified, sustainable most depending on retail. We’re evolving right into a extra full {hardware} and software program knowledge seize firm.
With that, I will flip it over to Lynn for extra particulars on our monetary outcomes. Lynn?
Lynn Zhao
Okay. Thanks, Dave. Thanks, everybody, for becoming a member of at present’s name. Our Q2 income was roughly $5.1 million, just like the prior yr quarter and the earlier quarter. Our channel stock degree was at $2.65 million, elevated from $2.1 million on March 31.
The reserve price for returns, nevertheless, decreased from 44% to 22.3%, leading to a rise of $320,000 income throughout Q2. We’ve maintained our gross margin of over 50 factors — 50 factors, sure. In Q2, our gross margin was 50.9% in comparison with 51.8% within the prior yr’s quarter and 50.3% within the previous quarter.
Working bills for Q2 totaled $3.1 million, a 6% enhance in comparison with the identical interval final yr and a 4% enhance over the earlier quarter. This rise is primarily attributed to price of dwelling wage changes carried out initially of Q2.
Throughout Q2, we recorded a web lack of $608,000 or $0.08 per share in comparison with a web lack of $513,000 or $0.06 per share in Q2 2023 and a lack of $557,000 or $0.07 per share in Q1 2024. Just like Q1, Q2 EBITDA was breakeven at $8000 in comparison with $234,000 in Q2 2023. Whole non-cash bills together with depreciation, amortization and fairness bills are $543,000 in Q2 2024.
Our money steadiness decreased to $2.1 million on the finish of Q2 from $2.Eight million on the finish of each 2023 and in Q1. Q2 spending contains $540,000 in working actions and $110,000 in capital expenditures. We diminished our stock from $5.Four million on the finish of each 2023 and the Q1 to $5.2 million.
This wraps up our ready remarks. Now I’ll hand the decision over to the operator for questions. Operator?
Query-and-Reply Session
Operator
Kevin Mills
Thanks, operator and thanks everybody for becoming a member of us at present and need you all a great afternoon. Goodbye.
Operator
And this concludes at present’s convention name. Thanks for attending.