SCKT - Earnings call transcript Q3 2021

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Operator

Welcome to the Socket Mobile Q3 2021 Management Conference Call. Today we have Kevin Mills, President and CEO; and Lynn Zhao, CFO. My name is Adrian, and I'll be your operator for today's call.

Before we begin, I'd like to remind everyone that this conference call may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 as amended, and Section 21E of the Securities and Exchange Act of 1934 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 market acceptance of products and statements predicting the trends, sales and market conditions and opportunities in the markets in which Socket Mobile sells its products. including, may and results not risk channels partners actual statements products product not may of out components happen that working distribute not the of Socket's anticipated a as XX-K not of risks and due delayed and Exchange reports materially so, could because as Securities include choose in the vertical to, as risks factors, Commission. number Socket's anticipated, including the happen other the limited distribution market acceptance or from that as the the or current markets in anticipated, successful or factors, risk statements uncertainties that that results and may differ and of the XX-Q Form sales technological, in Such be necessary well risk products not manufacture Socket's market financial recent and be described and but to such products opportunities acceptance and the may predicted application may Socket rolled not to filed availability and doing of with most capital, as risk forward-looking application

call any undertake is being Later, in recorded. I forward-looking not to to Please begin. Mills, now participants conference Mills, this over a the you Instructions] Kevin CEO. note will Kevin At any does question-and-answer all obligation conduct a this time, Socket we President statements. mode. update may are listen-only session. and turn [Operator will

Kevin Mills

and today. operator. joining afternoon, us everyone, you, for you Good Thank thank

applications the our Operating The was breakdown the our driven loss $X.X of deployment increase an period driven a of Our customers to by QX, income operating retail an minutes. few led by third million to a compared in revenue detailed In more $X.X the was third same prior by quarter million, will was in the compared quarter the $X of industry. in XX% revenue for retail our $XXX,XXX was for results Shopify. growth of year. Lynn the XXXX. of million provide XXXX in business centric

benefit Our the retail of ongoing mobile be friendly continues to serviced the centric require reopening a business in the from that economy way. both retail to more customers changes and

see from benefited we the performance revenue assisted QX, to QX. solid centric Commercial Sales taper expect in to this retail allow to QX. also to the traditional in QX, businesses. enter deployment increases We in offset segment app seasonal were expect enter the QX. we slowdowns robust QX QX in it for so and an the we selling as QX the of as retail demand further we We in as traditional The deliver another is retail us half Services continues of more second and Application believe we saw segment gains in will solid

very the supply and shortages environment electronic to On situation, it continue and is delay. we challenging industry-wide a component navigate

partners application the However, be our nine we our many and and continue we to focused inventory would past supply XXXX We many strategic on throughout the consumers. remain to to under supply increase took months, delivery issues. in navigating able actions various so to

wallets, in possible functionality many XX, functionalities. a NFC mobile In it as making iOS expect persist increase into So this driver's expand NFC Apple centric wallets We carry and shortages, driver to significant the such it identification, our and which revenue in we to beyond. XXXX. XXXX. in component lengthening to invest a in to they well as a support to lead mobile emerging digital capabilities costs your market mobile for digital possible and applications. the customers XXXX be need can anticipate continues inflationary to continue times pass readers We made as Apple will the products our integrate we into license,

As by products Emerging possible DXXX blockchain the which NFC Secure outlined press for these Chain technologies. is and Supply in are also recent ideal markets. segment, in and our we combining NFC SXXX opportunities emerging release, new We see our believe that

QX we now expect very and XXXX. another that Lynn us. to even Zhao, into for good Lynn? growth over weak turn And further look a CFO. momentum in to the said, summary, seasonally maintain to our it's So to we quarter forward quarter was QX our call With though I'd in like

Lynn Zhao

share nine be period a with months same In and Thanks, delivered QX QX, last afternoon, which I'm with increase operating million, XXXX everyone. quarter gross reduced a XX%. freight performance. financial revenue costs was representing rate Kevin. component The a slightly between increases, revenue growth Good months we and The XX% year of last by to nine which another was a our compared the $XX.X results, our XXXX prior year. you the the margin and to X%, both experienced of quarter. the we pleased today strong in and from

Although while electronic we navigating are supplier in industry-wide costs. supply and shortages result management, disruptions ongoing production higher inventory currently the challenges diversification future through and could the component

the Our to services, with executing in with reflects XXXX compensation non-cash is the consulting X% and of in expenses higher impairment the the quarter. external associated year The to technology, the increased performance. increase QX increase year a compared increased goodwill professional operating to the charge investment last headcount, related and of million improve the company the cost compared prior QX, in XX% prior compared with $X.X quarter

an strategic quarter our as the flow Even our of the increase to of in third quarter, growth, receivables with position, due the position, at with sales in balance ended in million an Moving a well increase thanks inventory from cash increase cash $X.X profit. strong compared we net investments XXXX. to increased million $X.X in end operations to capital as in our with the

our happy balance with The X.XX very as with for is been our operator first of for of believe your strong strength underlying we current the driven of things With Our business the has year, Through and a the application September to the that, further turn which our performance. drive will demand model, strengthened we've questions. sheet ratio our to business, Operator? products I back of will nine-month profitable growth. long-term testament XX. a

Operator

[Operator first Thank our Frank question from Instructions] to comes And [indiscernible] Prudential. you.

Your open. is line

Unidentified Analyst

have speakerphone. but really Hello, guys Can hearing I'm it hear you I on hard me okay?

Kevin Mills

we are Yes, good, yes. Frank

Unidentified Analyst

over all see investing Okay. well I a your hour over a company have the very, not street is $X think not the the its years your doing understand now, PR minute that basically million get X and firm for is it I job been what $X stock when up or in or traded problem. very is does word next shares you one down one to $X, to Today get wrenching again, something $XX, close is and sudden $X nerve to out. something minute of X,X it's later can

I fantastic think products. have you

your for brokerage really reason I've company, anything is sorry good is it's I as your steadies. have of Thank forgone this as seen for your it there the as growth great. am is my far on. And so factor all PR horrible? you, not firm, forth you. one worked [technical [indiscernible] any and difficulty] why and size another but I five company the years [indiscernible] so this to bother own I like had seems as think for I from

Kevin Mills

okay. Yes

but is this color is possibly you just give can happening, why I this on theory. some a So

exceedingly our be let we it become driven we do a And we so has to audience have would situation. it day in people buy - sell And that when pretty and on application as mailing, Robin Hood we far to do trading easy and or shareholder stocks emotions. large notice run what the trading, for

think I should the And energy a our that. don't on think we stock view, I spend lot fundamentals we of the And of business. really to we don't control price. from trying point do focus of

think We biggest of apps to make amounts story institutional small I investors the think continue get But high trading to and availability that because the is continues Robin Hood easy trade stock issue tell people there's others, to our day better. on exceedingly I emotion. for like and And today it of others. in to of volatility the which story

Unidentified Analyst

day Well, a stocks. shortage, traders, but their trading aspect in of market number I'm started it of Robin trading my not behind the the don't long I agree with large a with dealership. of I I Hood analogy a I look was of I the what me. maybe lot okay, one daylight in six of agree the is all XX end in years. I I doesn't SEC is understand had sudden with one, own with brokers playing come take And I the think been taking but But the halted that Hood I trading their backfire all with company investing think do at but kind sure them, it's a months but a really to this? people day the don't at steps. it like it's $X going because is effective some $X, that has next going for and some it, the Because other had reasoning the the hurting Robin stock there agree day $X, that see can I'm shareholders, I mean of Robin partial to gyrations is I be XX BD like notice, games multitude are security not Hood. broker before their of side. of to But had SEC that companies.

Kevin Mills

and here, don't theories we many is there think have certainly I again, answer. Well the

our we think value I that is focused to build represent company, the main shareholder, we're I we the still do. I to a view, continue And of long-term of the good long-term think the opportunity. point from for think thing on which

Unidentified Analyst

time love like I XXX when the they as just afraid good investors shareholders. nothing have not they're positions, to have long more to deaf yours. of me. on but my discouraged I growth, and on followed they good I the because I I bench, them it, Well, picked companies few on add say a news with had probably ears. every as would And I term some bench, left When but buy - long-term because falls their good was very shareholders it are

Kevin Mills

okay, It's okay.

Unidentified Analyst

mention bother they ridiculous. they've investigated few I but I Robin again to don't want people and make Hood with Share it's is because that stocks, to a quite maybe know, input, know if down damaged my the once Game I you want $XXX just be $XX it to should

again. thank you I So

Kevin Mills

right. All

Unidentified Analyst

people Thank there's in. to question, my talk other follow don't you. that Please want

Kevin Mills

you. Thank

Operator

And our from Sakai comes Singular next question Chris Research. from

line open. Your is

Chris Sakai

on in car. that But it just there's a to hear Hi Kevin. hard might does your up be the guess mentioned increase XXXX? Where going stand to currently had in question and what's Particularly I'm like in headcount. backing you I your headcount, I an

Kevin Mills

Okay.

model the increased areas engineering to understaffed I But little addressing tied substantially it's more So a our we're unless it's think the growth more feel a I need it key We marketing we that. headcount, few not revenue in people. headcount. long-term. we're think changes in have we primarily under and don't short-term, directly to add

Chris Sakai

Okay.

Kevin Mills

more We platforms like cover and have stuff this. to

view So from pretty think model model good. is of a I you point the still have

Chris Sakai

see then lot a Okay, seeing you passing all the And along is right, of of extra chain And your management how that your to a supply great. your are because lot, are inventory disruptions? in you growing is, you costs customer?

Kevin Mills

our costs chain, We costs associated in on supply are the growth. with seeing primarily increased

made decision believe disruptive on the we not our be it model. we will reasonable, on if short-term to pass have We very in because won't that it business and to pass it it's

action I as XXXX. November - we of October/November starting in So said, took

So inventory. we increased our

with and situation to some terribly we freight, not So are from able to panic we're delays sea air deal freight in everything and to have expensive. the is which not change a markets, in

moment, So probably cost cost continue us it's right difficult on margin. we the work daily And those on environment not we going a But now, basis. for in worth small fact. margin X% what disrupting increases gross have of the that at to very it's

Chris Sakai

guidance, guys quarter you any but the you say know I four is then, And worst Okay. give quarter. don't

goes? So revenue you as give can as how any color far there us growth

Kevin Mills

yes, think any and retail in revenue strong Well have still basically December growth I business The revenue you will don't be January. solid. compared XXXX to

new what would by may that's remember design. We last QX, expect months January. systems those don't maybe but substantially. quite not slightly less or than X.X. it deploy can't should really two year, People be are but in did we So be But December weak, I

So I quite the be growth think could that still that strong. over

Chris Sakai

Okay.

Lynn Zhao

X.X, was Kevin. QX year Last

Kevin Mills

Okay X.X.

over growth strong a still it's that. So

Chris Sakai

right, answer. Okay, great. and question - to answer all the thanks Well,

Kevin Mills

Okay, very good safely. drive and

Operator

And comes with question next from Research. Maltbie Robert Singular our

Your line is open.

Robert Maltbie

quarter. the on Hello, Kevin Lynn and congratulations

Kevin Mills

Thank you very much.

Robert Maltbie

digital recent I've to way ID. and the with XXX% demand got and frustrations share the I which comment the of in look ahead and caller a comment, his also question empathize a of regarding first a the with some the

entirely decide Street point takes understand from, they been calling brokers And distribution army for has The I of - on same at the it. time, all let's binary say their up and So clients. one having bet time, effect time of in traders an XX over analog the gone immediate years. act key the industry the that then can see digital it Reddit where to idea in on Wall real is

And that have take quite it lot company can so impact, X of a doesn't million for a shares with capital. an

evaluation his if the I and So if target, Alpha can that media we redacted he'd this Singular for offer helps we on us fundamental recent to want coverage Socket but your report, - Research in Socket And a they us, possibly between for to and wild that try quarter. gentleman version. called to mention Seeking Seeking of visit associates, gyrations them is what complimentary on will do update us these recently any anchor, we media. have up of have want Alpha, And very picked an kind like in based as the on for a to on we the soon understand your visit is to gentleman the

offer So in possibly? regarding, out plan if licenses IDs] in wallet, and I that there The mentioned driver X.X is or question our a wallet [Wax digital have there it's is helpful. to wanted with integration the I you

Kevin Mills

this I is fast Yes very mean, so space. changing a

idea And the carry of allowed time wallets. enclave in your your process. other Once have and certain on you status first including, more that information can they for phone. also your with you verifying cetera. the some medical the or Google know on step vaccination Apple people secure secure quite Apple introduced that's to like to recently So a then secure print face have for applications your ID They or your but information use have phone, things yourself any information allow conditions, information, verified fingerprint, under digital

process And up. of that And or end use do So health type ideal this world wallet a identification pretty can on digital some the is is status, mechanism tap to trained a using cetera. to that Pay access the to to this for payment, Apple time. you or is tap place for for same the et taking information is for

of of it, this So we're you journey a it readers. takes while and think as part need but I part deploying

we're you are more someone ultimately few them point application write And be to But coming know the think up expect XXXX. be types So on say we need, use all into elements these there have and core capabilities. is to place. would an applications. I that place beginning, and middle I of a and can you elements the to more of in before of them of coming seeing

getting some early been they in markets. time, So They we've time but take is always take actually these the shorter.

Robert Maltbie

Terrific thank much. you very

Kevin Mills

Thanks, Robert.

Operator

from Carroll Sales. from And question comes our William next EMPOWER

Your line is open.

William Carroll

company terms us of catalysts that have with new long-term. does in the products, on anything share Kevin, I'm Yes XXXX revenue beyond maybe congratulations an good shareholder can investor, you a regard? quarter. What in

Kevin Mills

as Robert, I was that previous we just to Yes, do hardware enables to future the caller so need applications. mentioning

currently work are So on NFC growing products. products. for lot have a related community doing And of a we these developer we

continue as readers become know instant ad and overnight, to We products reads for recently So they our for and a more but of it's those we updated I SXXX well. more that our those writers. that sales drive reader We've applications the introduced will somebody's if driving products. like an version machine not other using available, barcodes, as are requirement using readable market cetera. up you doing what's ID, by a their in this zones et something scanner, licenses, people the passports called or international open port and they're to an but license all check for international reads on MRZ this. And have also

a So do we we new have actually believe hardware. of that lot

who audience capture that applications thing functionality, data benefit to a many the therefore other of the that for more The greater is we people from continue there's add and elements. need

complete drive to will XXXX always that explain in ingredient, we new there's because more the in of the coming sales solution, plenty it's have beyond. not short-term. the and So easy hardware don't But that

William Carroll

All take the gentleman right, stock continue then All to commented, stock price, some first you with about frustration care guys will the And think very of so right, itself, deliver. that the thank good. as I you.

Kevin Mills

very much. Thank you

Operator

from Frank [Operator we in [indiscernible] moment. have Instructions] queue, Prudential And the one

open. Your line is

Unidentified Analyst

to are your Nucor Okay. I'm question sorry much to components how to and/or is all abroad and And today. so of of chain. your a that on from Japan and can help components meaning China rate of supply Is part because XX% get of jumped over in How to the again, CEO come your CNBC China supply that to I ingredients he on take of do of your qualified and have saying your or was project? Taiwan companies? like supply of U.S. or Vietnam much called

Kevin Mills

complicated a it's a and give so Okay, reasonably answer. I'll simple question, you try

In of supply with have countries terms terms of of with dealings or no supply. in in direct Taiwan, terms either direct currently direct we China dealings those of

of for Mexico in many Whether of didn't that's place the have with are our good of or volume get Malaysia the that. components is we've or of China, currently the subcontractors direct many who China. it's last years deal in suppliers bad, used to only And enough components we because number available. However, because that the from China avoided by

are components So level through but other at the available that resistors, there capacitors only and many lower are components China. basic

And batteries well. China. we XX the at And doesn't hardest is like we the were situations a that moment with think from things don't exposure. [Clickbait] you're the exposure. days shipping have huge generally So batteries, supply when shipping getting they part after work would we the chain do say shipped But I I have an

four costs about to batteries beginning or we're situation. hard very pay months. the confident that the components that's was And five make to be supply that that you can make an make bring source that working sure an for to then additional have asked places situation and snuffing it's and battle those those same this XXXX. is today other day But to We every now decision to because previously. we're components further sure and we've everyday can have components - But of ongoing interruption. the had or freight we question so through Now

to your So answer there's simple Frank. no question

Unidentified Analyst

Well, XX these you or the I sitting or tankers answer. there where the for unload whatever Thank I they to and with empathize I download problem just did minutes months are can't a out have did see see shipping on segment for upload and they you. be. horrible It's and or

Kevin Mills

Frank. You're very welcome,

Operator

And your Karl]. next [Disney question comes from

line the on the - up recording. about out Your question, just to the is pick queued for you operator is I open. name This I am

line open. Your is

If you're you hear unmute mute, Speakers, could you phone. can me? please your

Kevin Mills

Yes, hear we can you.

Operator

have else queue we And the in now. [Operator Okay. Instructions] nobody right

Kevin Mills

All right okay.

So in good I for just participating I today's you. everyone wish like call. afternoon. you to thank a Thank all

Operator

today's Thank Thank you. participating for and you conference Ladies now and you this may disconnect. call. concludes gentlemen

Socket Mobile (SCKT) 22 Oct 212021 Q3 Earnings call transcript