Socket Mobile Reports Fourth Quarter 2023 and Full Year Results
- Sequential revenue increase of 37% in Q4 2023 compared to Q3 2023.
- Introduction of new products like SocketCam, XtremeScan, DuraScan Wear, and NFC products to drive growth.
- Improvement in gross margin by 8.5% in Q4 2023 compared to Q3 2023.
- Efforts to align reported sales with underlying demand for products and services.
- Certifications for NFC products to cater to various needs like VAS Passes, mDL, and cryptocurrency payments.
- 15% decrease in Q4 2023 revenue compared to the prior year quarter.
- 20% year-over-year revenue decline for the full year 2023.
- Operating losses reported for both Q4 2023 and full-year 2023.
- Reductions in distributor inventory impacting reported revenue for 2023.
Insights
Socket Mobile's reported decline in year-over-year revenue by 20% is a significant figure that warrants attention from investors. The company's gross margin improvement from 48.8% to 49.7% in 2023 indicates a better control over cost of goods sold or a shift in sales mix towards higher-margin products. However, the operating loss widening from $446,000 in 2022 to $3.1 million in 2023 raises concerns about the company's operating efficiency and cost management. The sequential increase in Q4 revenue and gross margin suggests a possible turnaround or seasonal impact, but it remains to be seen if this is sustainable.
It's also noteworthy that the company's revenue through distribution partners did not decline as sharply as the reported revenue, suggesting there may be issues with inventory management or timing of shipments. This discrepancy highlights the importance of understanding a company's supply chain and distribution strategy when evaluating its financial health.
Socket Mobile's entry into the industrial barcode market with XtremeScan and the development of wearable scanning solutions like DuraScan Wear indicate a strategic move to diversify its product offerings and tap into new market segments. The adoption of NFC technology and certifications like Apple's VAS Protocol and NFC Forum certification for their NFC products could open up additional revenue streams. These developments suggest Socket Mobile is attempting to align with industry trends towards mobile and contactless solutions.
However, the impact of these product launches on the company's market share and competitive positioning will depend on the rate of customer adoption and the performance of these products against established competitors. The focus on innovation and product development could be a positive sign for long-term growth, but it's critical to monitor customer feedback and sales performance in the coming quarters.
The technological advancements highlighted by Socket Mobile, such as the SocketCam C860's ability to read damaged barcodes in low-light conditions, demonstrate the company's commitment to addressing niche market needs. The emphasis on compatibility with both iOS and Android platforms for their camera scanning solution is a strategic move to cater to a wider audience.
The mention of compliance with international security standards and certifications for their NFC products underscores the importance of data security in the data capture market. These enhancements in product features could strengthen Socket Mobile's value proposition in a market where data security and versatility are becoming increasingly important. However, it is essential to track how these technological advancements translate into sales, as R&D investments must be justified by corresponding revenue growth.
Fourth Quarter 2023 Financial Highlights:
- Revenue of
$4.4 million 15% decrease compared to$5.2 million 37% increase sequentially compared to$3.7 million - Gross margin of
52.8% compared with49.3% in the prior year quarter and44.2% in the preceding quarter. - Operating loss was
$475,000 $152,000 $1,399,000 - Diluted earnings per share of
$0.08 $0.06 $0.16
Full Year 2023 Financial Highlights:
- Revenue for the full year of 2023 was
$17.0 million $21.2 million 20% year-over-year. - Gross margin for 2023 was
49.7% compared to48.8% in 2022. - Operating loss was
$3.1 million $446,000 - Diluted loss per share of
$0.27 $0.01
"Our financial performance in 2023 was below our expectations. However, we believe that the
"In Q4 2023, we saw a
"In 2023, we achieved significant milestones aimed at driving sustained growth in the data capture market. Our latest offerings include SocketCam, XtremeScan, DuraScan Wear, and NFC products."
"The SocketCam C860, our cutting-edge camera scanning solution, offers an upgrade path for users on both iOS and Android platforms with advanced capabilities such as swift and accurate reading of damaged barcodes, even in low-light conditions, using the phone's camera."
"Our XtremeScan marks our initial entry into an expansive industrial barcode market. It enables the use of iPhones and iOS applications in rugged work environments, combining robustness with top-tier protection. Additionally, our DuraScan Wear products feature a glove-like, wearable design, enhancing speed and flexibility for scanning tasks in warehouse, manufacturing, and distribution settings," continued Mills.
"Our SocketScan S550 NFC Mobile Wallet Reader is Apple-certified to comply with Apple's VAS Protocol, enabling seamless integration with Apple Wallet. Additionally, it meets Sony's FeliCa standards and CIPURSE international security standards. Similarly, our SocketScan S370 Universal NFC & QR Code Mobile Wallet Reader received certification from NFC Forum. These certifications empower our NFC products to cater to a wide range of needs, including VAS Passes, Mobile Driver's Licenses (mDL), and non-traditional payments such as cryptocurrency," continued Mills.
"We remain committed to returning profitable operating results as we continue to innovate and strive to deliver world-class data capture solutions to our application partners," concluded Mills.
Conference Call
The management of Socket Mobile will hold a conference call today at 2 P.M. Pacific (5 P.M. Eastern) to discuss the quarterly and year-end results and outlook for the future. The dial-in number to access the live conference call is (800) 237-1091, toll-free from within the
About Socket Mobile, Inc.
Socket Mobile is a leading provider of data capture and delivery solutions for enhanced productivity in workforce mobilization. Socket Mobile's revenue is primarily driven by the deployment of third-party barcode-enabled mobile applications that integrate Socket Mobile's cordless barcode scanners and contactless readers/writers. The primary revenue drivers are mobile applications servicing the specialty retailer, field service, digital ID, transportation, and manufacturing markets. Socket Mobile has a network of thousands of developers who use its software developer tools to add sophisticated data capture to their mobile applications. Socket Mobile is headquartered in
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such forward-looking statements include, but are not limited to, statements regarding new mobile computer and data collection products, including details on the timing, distribution, and market acceptance of the products and statements predicting trends, sales, market conditions, and opportunities in the markets in which we sell our products. Such statements involve risks and uncertainties, and actual results could differ materially from the results anticipated in such forward-looking statements as a result of a number of factors, including, but not limited to, the risk that our new products may be delayed or not rollout as predicted, if ever, due to technological, market, or financial factors, including the availability of necessary working capital, the risk that market acceptance and sales opportunities may not happen as anticipated, the risk that our application partners and current distribution channels may choose not to distribute the new products or may not be successful in doing so, the risk that acceptance of our new products in vertical application markets may not happen as anticipated, and other risks described in our most recent Form 10-K and 10-Q reports filed with the Securities and Exchange Commission.
Socket Mobile Investor Contact:
Lynn Zhao
Chief Financial Officer
510-933-3016
lynn@socketmobile.com
Socket is a registered trademark of Socket Mobile. All other trademarks and trade names contained herein may be those of their respective owners.
© 2024, Socket Mobile, Inc. All rights reserved.
– Financial tables to follow –
Socket Mobile, Inc. Condensed Summary Statements of Operations (Amounts in thousands except per share amounts) | ||||
Year ended Dec 31, | Three months ended Dec 31, | |||
(Unaudited) 2023 |
2022* | (Unaudited) |
2022* | |
Revenue | $ 4,398 | $ 5,171 | ||
Cost of revenue | 8,571 | 10,872 | 2,078 | 2,623 |
Gross profit | 8,463 | 10,366 | 2,320 | 2,548 |
Gross profit percent | 49.7 % | 48.8 % | 52.8 % | 49.3 % |
Research & development | 4,832 | 4,362 | 1,188 | 1,091 |
Sales & marketing | 4,016 | 3,638 | 1,003 | 909 |
General & administrative | 2,736 | 2,812 | 605 | 700 |
Total operating expenses | 11,584 | 10,812 | 2,796 | 2,700 |
Operating income (loss) | (3,121) | (446) | (476) | (152) |
Interest expense | (242) | (175) | (72) | (41) |
Income (loss) before income taxes | (3,363) | (621) | (548) | (193) |
Deferred income tax benefit (expense) | 1,444 | 708 | 1,460 | 708 |
Net income (loss) | $ (1,919) | $ 87 | $ 912 | $ 515 |
Net income (loss) per share: | ||||
Basic | $ (0.27) | $ 0.01 | $ 0.11 | $ 0.06 |
Fully diluted | $ (0.27) | $ 0.01 | $ 0.08 | $ 0.06 |
Weighted average shares outstanding: | ||||
Basic | 7,230 | 7,185 | 7,327 | 7,135 |
Fully diluted | 7,230 | 7,533 | 9,486 | 8,246 |
*Derived from audited financial statements. | ||||
Socket Mobile, Inc. Condensed Summary Balance Sheets (Amounts in Thousands) | ||
(Unaudited) December 31, | December 31, | |
Cash | $ 2,827 | $ 3,624 |
Accounts receivable | 1,700 | 2,660 |
Inventories | 5,409 | 5,602 |
Deferred costs on shipments to distributors | 323 | 266 |
Other current assets | 441 | 617 |
Property and equipment, net | 3,033 | 1,657 |
Deferred tax assets | 10,112 | 8,668 |
Intangible assets, net | 1,559 | 1,694 |
Operating leases right-of-use assets | 3,088 | 3,560 |
Other long-term assets | 250 | 250 |
Total assets | $ 28,742 | $ 28,598 |
Accounts payable and accrued liabilities | $ 2,185 | $ 2,407 |
Bank non-formula loan | -- | 125 |
Subordinated convertible notes payable, net of discount | 150 | 147 |
Subordinated convertible notes payable, net of discount-related party | 2,836 | 1,231 |
Deferred revenue on shipments to distributors | 826 | 595 |
Deferred service revenue | 33 | 34 |
Operating lease liabilities | 3,292 | 3,737 |
Total liabilities | 9,322 | 8,276 |
Common stock | 68,391 | 67,165 |
Accumulated deficit | (47,933) | (46,013) |
Treasury stock | (1,038) | (830) |
Total equity | 19,420 | 20,322 |
Total liabilities and equity | $ 28,742 | $ 28,598 |
*Derived from audited financial statements. | ||
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SOURCE Socket Mobile, Inc.
FAQ
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