BSQR - Earnings call transcript Q3 2021

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Operator

Good day, and welcome to the BSQUARE Corporation Third Quarter 2021 Financial Results Call. Today’s conference is being recorded. At this time, I’d like to turn the conference over to Mr. Steven Gottlieb, Vice President, Corporate Affairs. Please go ahead, sir.

Steven Gottlieb

afternoon, good and you, everyone. Thank

our we’d Before this call remind be of that to is we and on being website. text the begin, call of webcast you recording will like and BSQUARE’s remarks prepared the available a

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

Please refer this the and Investors. measures. on fully During under financial All www.BSQUARE.com management numbers non-GAAP forward-looking BSQUARE’s regarding today refer applicable. will non-GAAP in website release press are GAAP as diluted where the GAAP to to per-share statements call, also comparable measures well amounts text contained at today our issued cautionary financial as reconciliation discussed

turn BSQUARE’s Now to call the CEO. and I’d over like President Ralph to Derrickson,

Ralph Derrickson

and afternoon, the Thank investors, XXXX Steven. welcome you, call. quarterly BSQUARE to earnings Good QX

would Steven Affairs, follow-up for a like anyone arrange a responsible is who VP As Gottlieb, for Investor who reminder, to Relations. contact of please conversation Corporate

You Steven by inquiries discover e-mail been for problem recently monitored get We forwarding reach you the messages sent day. address, investorrelations@BSQUARE.com. of this but at with this will business is response and address a a This did to corrected. within e-mail one can has

Okay.

get started. Let’s

taking I on this welcome. to Joining time If and in first is your call, appreciate BSQUARE’s this you the Chris fellow us today’s COO. interest for call and CFO your me entrepreneur, Chris be and Wheaton, is afternoon. BSQUARE, with thank

have to glad We’re you.

little is us different. length going a be today’s following time, any call If been for you’ve to of

off, expense smaller rational am a paying team I over business business with we’ve more been Today, years. progress. period It’s are time and an last structure. focused have is a and and pleased been stable substantially which we As you well two Chris know, heavily the internally during our work, engaged of on unglamorous in entrepreneurial however, fundamentals. been I The building with and

that we I growth. to before our go today. learned needs. Additionally, lot details us with our me reputation of through Through turn I for to about strategy work, we’ve let there, restore driving and partners. those about insights over their plans and But to more hard return a a plans are and worked things our These critical our customers will to take results. over quarter our to you. share Chris the Chris, customers third

Chris Wheaton

good I’ve point and Ralph, you, evening, inflection forward is it looking to for Thank BSQUARE. call been as important Today’s something represents an investors.

for now. growth, in which remarks, go been we’ve some but further we’ve where We’re plans me been. that for at openly by time my even investing start sharing into let looking Ralph after will

XXXX our apparent. quarter of those and hamper seen important plans products the continued quarters, their became have Supply behaviors. verticals in and marked disruptions we’ve demand soft the of six The pandemic business sixth as quarter alter our third since and point-of-sale to effects on chain hospitality, our gaming customers’ the systems. full for buying Over Solutions such Partner

hold. X.X% in compounded represents of of improvement. million total though the find when been and financial to since we’ve new adapt companies, $XX.X consistent forced effects business As ways QX steady many QX’s is the pandemic to of our results new yet, the case shown And doing have to period, this growth revenue a for XXXX to quarterly throughout took rate grow. ways really

quarter-over-quarter control with $XXX,XXX Our kept a expenses by third quarter decrease XXXX. than more This stock years. in second a operating announced than stronger at-the-market position cash puts of ATM or been we raised the program. And results in selling, general selling now financial under we’ve early QX, administrative through XX% of of in quarter and in amount improved costs. We’ve cash previously common a over BSQUARE significant our

a take at details Let’s the results. these behind look

revenue. or Edge of was Cloud up in results. project $XX.X second the million $XXX,XXX for offset the third X% by revenue for increase customers. decrease the Solutions quarter’s line a million result in by small our Partner revenue was pandemic. The quarterly device of larger This since in the one Despite $XXX,XXX revenue second is of the the was Partner or the management segment completion Solutions total with in decrease, $X.X to a quarter’s onset XX%, driven highest the

upward, While issues. remain ordering affected they to customers’ global by patterns COVID supply continue varying Partner and trending Solutions revenue be our both is unpredictable to generally chain as degrees

profit. gross to Moving

Partner second the of the quarter to about $XXX,XXX. of while in lower balance decline the customer was profit the Less for Solutions shifts Microsoft. decreased by product from and volume, decrease was due $XXX,XXX by in driven and quarter mix mix reduction rebates a Third gross than sales

as distributors reminder, to to and are recorded available a As makes rebates Microsoft sold. an product goods of our to certain and offset according these cost partially achievement mix targets of volume

cloud of fees. to are About recognized The capitalization to Selling, As ATM to QX an which related services costs due decreased across decrease this expensed of decrease gross increase the improved. profit for the revenue professional were as by program. segment, reduction costs was issuance administrative dominant in our this profit expenses, gross the X/X and increased labor quarter-over-quarter. of periods. general rate profit previously and compared in expenses XXXX segment’s favorable personnel this driven With in our gross margin both stock factor and a $XXX,XXX rest gross to $XXX,XXX and the was favorability

rate the were business slightly of XXXX successful. third overall quarter the in this Our largely development in which up efforts XXXX. compared to than Variations to QX align performance the are customer to development expenses of expenses the R&D our that Research product efforts and line resources costs we are were SG&A of P&L with a team current rather driven at item for engineering our by capitalized labor to portion projects. and point

was from in our count, in this quarter in loss is done third second development, area. something remain advances from our product which to to true to the made we’ve and million our quarter. we’re shortly, show investment term. position a head near We’ve loss without Ralph in expect $XXX,XXX from expanding $X.X this operations Overall, a hear engineering you’ll compared of to in we As work progress the begin

our sheet. balance story The the stabilized and $XX.X over XX which our in during collections primarily is quarter. the on to created here June point from strong September This an proceeds XXXX. course, to the is after totaled Moving already decline, a operations, million we’ve dominant an which moment where million in $XX.X have available cash, return increase of access our cash At XX, profitability. are restricted that resulted the turning The balance $XX.X cash of can capital of shares X.X was million. driven the inflow and, $XXX,XXX through business BSQUARE. long by this program. was This The of July the of increase of history we us important grow $X.X stock supplemented million company’s period ATM common by sales million to due help in customer same for third our cash have ATM from us majority important

seek and our means thoughtful turnaround to of that make investments. new continuing entered in We’ll the opportunities investments, operations. efficiency measured and require phase drive now the while to we We BSQUARE’s have will those have

lie Let those go to we additional after and turn them. back things will over me Ralph provide how to perspective now opportunities on where

Ralph Derrickson

example that another and BSQUARE. deliberate was QX Chris. our utilize management of I Chris the in you, disciplined approach and of Thank

a that like businesses Let’s our BSQUARE’s for design our to I’d categories: with into businesses customers system of and and plans generally now switch discussion gears purpose-built devices. fall turn and two a of attention start sell devices on growth. rely to customers. that our

customers licenses makers. work of for limited their Microsoft devices. refer Historically, category First makers as system to been we device has with operating them selling to our device

been of devices, their revenue more sell they a licenses has revenue and function Our If grows. success. need our they more

less if devices, slows. seen our with licenses need as they and pandemic, However, revenue the less we’ve sell they

to operate Our to of to and set systems. on customers engaged them and systems what manage business. business They Historically, rely we between other software a we’ve devices run custom with call develop existing system their of glue builders. the their build to collection are

Our dealings clear way business. of profitability that currently us been not to is and provide us the we device but custom given growth growing with drive will a have the constrained IoT the to expertise space, or the helped interact with work. makers builders and that It develop serve nature in these does that healthy customers scalability revenue deep has system a

focus value organizations to is has knowledge new and that created All how our people, our customers. world and in connections ideas. between customers our the value from leverage a we different So the operate to become possess technology-enabled devices, expertise where and do provide we

building, to security devices. the complexity and is systems people-centric speed where deploying has However, of systems the themselves been participate these are connected challenging operating the devices number of of in these The their is the have traditional and approaches BSQUARE that management of focused. the and and to fact the system, connections, and operation

we’ve part learning that the always and captured and our the based intelligence. devices. create our the They solutions. must speed shared learning need with the also set of require of This product be information critical always At must of a management in to two customers. requirements They the forward, security meet individual They intelligence speed, operate that Today’s share always is on. is that solution, devices solutions not will we be the intelligence always the these pillars. our on, effortlessly. solutions Moving and work new at can induce of will informs use such in must individual concept a of say to and to were scale five to they need of many. is pillars to That must from problem. pillars the compelling approach many be the pillars that adapting of scale, core and the challenges outlined the that the requirements on the technology identified derived these solutions or the the captured unique informs month, and They be opportunities and

breach. introduce will recoverable and our a month, hardware failure in or for of device configured is adopter solution event ensure a system is feature on One, a operating the we’ll system that our the makers for system operating running for large We’ll builders available be Square an to One’s first IoT feedback grew this us system with get initial or product is program, widely The customers. to systems Harding Square these securely have and for Like system work early shared is Later is EAP. products, customers expertise important opportunity operating One Square EAP and about experience, systems. our Solution set. environments the building in with before that previous note is gained through One’s successfully it evaluate critical. the our an managing multi-OS developing, both rooted devices. The starting of Square and is capabilities hardening out of One,

As the to are we and they the that and of levels we’ve to experience carefully, devices. discuss The our expand our a and result, have will new and and core necessary the solution Harding we play Square competencies. our technology manage cross-selling to customers. That any related these than System that Solution expense We One with continue Taking engineering derived our rational basis grow will we opportunities products evolving They higher can making and investments said, BSQUARE today to believe products sales form customers, Android support to at both require business. rapidly investing as in customers. Linux pillars from combination growing create returning market. structure serving relevance relevant market relationship described in for our will to business Windows, products recently. They our marketing the current

to our prudently, reserves substantially into We cash our opportunities will accelerate bend growth tapping arise and if or our manage curve. when

are our plans. We to begin anxious executing

are We have customers products the that in relevant today and our for future.

strong and a team. leadership have disciplined We entrepreneurial

you morning, resources more succeed. can that score game, forward Chris we with a coach we a have we that is with you but We as please Steven arrange to the have your a follow-up predict for the Thank let the plan questions. Like and Thank Operator, of and today. you’d remind And sharing you the win. Sunday to on confidence discussion financial the for forward. look can’t and to you. Gottlieb. I like that me, happening, move while line you would Chris time please we contact open

Operator

conference Thank this the to queue have addition or [Operator we I’d remarks. in to It any time. appears the turn questions management you. that no like over for at back Instructions] closing

Ralph Derrickson

remarks. additional No

to attention like they’d to investorrelations@BSQUARE.com. for if people, remind e-mail I’d to please Just time a everybody their like today. conversation, thank and arrange And their

Operator

Thank now you. today’s your conclude you We all thank may and disconnect. That does conference. participation, for do you

Bsquare (BSQR) 11 Nov 212021 Q3 Earnings call transcript