Socket Mobile (SCKT) 30 Jul 222022 Q2 Earnings call transcript

Company Profile

Participants

Kevin Mills	President and CEO
Lynn Zhao	CFO
David Holmes	Chief Business Officer
Charlie Chambers	C3
Steve Swanson	Private Investor
Chris Sakai	Singular Research

Call transcript

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Operator

Welcome to the 2022 Second Quarter Financial Results for Socket Mobile. My name is Hilda and I will 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. Such statements involve risks and uncertainties and actual results could differ material from the results anticipated in such forward-looking statements. predicted of manufacture but be the of not out number the limited delayed availability a market rolled that technological and risk Socket's as capital. of of product factors factors, necessary not including, to or or components Because financial to working including due products may Commission. Socket's or risk acceptance as distribution anticipated, in that that Socket's Socket's may Securities products, and application of markets The risk sales described filed Exchange not not risks as and distribute of risk most acceptance well may products choose opportunities may to as reports and vertical XX-K doing the current Form the channels successful that XX-Q market not anticipated, application may not happen recent so, in happen as be partners with other the the and

update a any this will listen-only undertake conduct not time, does conference that [Operator is being participants this obligation mode. are all At recorded. Socket such a question-and-answer Please Instructions] in to forward-looking note statements. we session. Later, any

Kevin turn Kevin call On Holmes, Financial Chief me now with I today, Mills, the Mr. Mills. Chief may Business you begin. are Zhao, will Officer, Executive Chief Officer, to and call over Mills, Lynn Officer. Dave the

Kevin Mills

thank Thank revenue our of In and operator. increased you, Good us $X.XX afternoon, QX million over $X you today. slightly XXXX. joining for everyone, QX, in to our revenue million

in XX.X% XX.X% compared QX were Our to margins XXXX. gross

and costs the global ongoing Our margins we to due were were supply higher for as more freight lower paid issues. components

of were by scanner deployment system QX, and Historically, of impacted our which share issues the of $X.XX to where by to sale strong headwind of XX% were we included from the our plan In benefit remaining and of driven tax QX initial we per purchased The some the our new deployment other shortage in new business component. ability our a some reduced as hardware supply upgrade compared material as cash after This XXXX, $X.XX app scanners refer significantly control. by were that a earnings experienced portrait Our impacted comes retail per QX, deploy retail mobile share. In partner's of the whole chain sold of is is our results as business printers components, drawers. a we $X.XX business. revenue solutions. to point of our retail and which such shortages about XX% saw was deployment, outside

portion year. increased issues, the of support. business we QX, of SocketScan SXXX an version with to changes a upgrade were we [indiscernible] shortages The of plan XX% unforeseen remainder the in SXXX position revenue result, our In our expected to not especially market the to the hard end replacement upgraded sometime In XX% and without control system fact, and dropped our for impacted scanning customers business to we our were business while and retail able of best-selling As hours announced outside to upgrade they remains deployment worked deployed sale revenue. business to the the and in on these strong a of added few issue. the portion any associated our and retail the the upgrade mobile These be we our scanner deliver total and of point supply response deliver. more for pastures, were focus business after of despite our our total

SXXX. we the serve coming used aggressively SXXX X% ubiquitous We designed many you has As QR related in at $XXX is The see quarters and the SXXX small in that requirement are support this been will have believe activities. many payment codes regionally life, to retailers and daily of priced need higher your the in than and become requirement. to

will home attractive it XXX,XXX trade production feel program we'll SXXX within desirable especially have. be also an more for end We the users, than a

made August, QX in in start us to impact SXXX it's to of that believe while our expect the Dave supply to growth term significantly QX, success. impacting the also and call regardless will the resume will be feel long to Dave? those I'd shipping growth ensure our market. QX issues We we enable late provide initiatives Business our initiatives. In significant it and small, on will over progress on we Officer update to And the like an now Holmes, we hand Chief

David Holmes

afternoon, tools. of capture we company. Today, to our capture as we I'd more like software significant that We the achieved SDK our a milestones you, Thank in good a Kevin journey strides made becoming and continue key QX everyone. highlight couple data of comprehensive with

any provide to CXXX, continue turns has all partners work market that our are the device camera-based and high of today. in development support we to team our for very best-in-class major barcode been SocketCam the we scanner. application SDK of a development that grown software In we they SDK proud scanning have performance include delivering. We environments the upgraded tools into and mobile free Capture The QX,

developer SDK performance with to integration. begin allows customers. sensitive price all app developer their with partners to CXXX from their Capture our users sensitive Our serve now to offering scanning end of partners free to one

in a will NFC journey captured subscription with as SXXX scanners ran a will phase partners the market We app in team data of to to and capture deliver a Capture to exceptional our when our capture customers begin commanding capabilities to commercial in loyalty data scanning not audience. to scanning reader piece emoney is data the hardware through a monthly we're performance primarily market, our on socket share. Mobile the The socket SDK, more experiences, their complete think said, they're Capture consumer performance users now and camera used ticketing, end which company expertise of Historically, wider sensitive and data in contactless capture basis. make scanners of data add second partners, offer free hard it enhanced positive software will and experts. camera happy they Within allow and but adding XXXX, this projects. capture by partners applications completion working scanning often only much heading NFC our the SDK we us the SDK with portion a developers into have mobile Initial application needs, That business or critical into half XXXX. of CXXX one, productivity is bring different resulting have are rider technology. and deployments typically issues. development for Also, Socket signs support more are seeing follow-on we embracing addition development of

device. SocketScan and reader. code the NFC flexibility Finally, universal multiple a with mobile partners our introduced we app SXXX, formats accept wallet QR This one gives to

credentials worry driver's standard wrong not space. mark a opportunity states the feel will and device NBL most and significant around can data With space. read being about seeing is also in reader well provides to evolution peace the the have become countries. in ID capture a We're there positioned is invest another or in types Mobile our MDL also positive they with signs We the of SXXX following digital that This in player adopted choosing Socket MDL and big to the and partners journey. we this all of to license is and mind continue myriad technology. out implement for one can mobile credentials that SXXX the This ISOXXXXX-X.

Lynn data turn reading more addition who and Lynn? In details be for it that, to reading in credentials to barcodes, codes about also people QR products over to about I'll will capture NFC our things results. With on financial and identities.

Lynn Zhao

Thanks, David. Thank you, call. today's everyone for joining

our QX -- was to million because in year unable X% We drawers, been flat obtain have of revenue result pair. scanners was with million and QX. that their believe mobile to last decreased our $X.X retail QX at cash and their to $X QX Our printers sequentially compared by slowdown compared customers in switch

the QX by second decrease points cost. year compared were compared year gross basis increase margin and component quarter. of freight the margin expenses the increase versus by in persistent driven The the quarter. decreased to prior The but prior the quarter, basis million higher points operating quarter of year preceding quarter's over XX prior to XX% $X.XX was XXX

agreement Fremont, lease effective new We in XXXX. to was have May The location XX, a moved our business entered we California.

in increased are three included to XX% expenses benefit is X%. per share the in for the marketing increase provide income in administrative Adjusted was are activities, were balance cost we ended operating and prior quarter development. Spend professional cost and of development essential the representing May for EBITDA entitled prior the maintain and $XXX,XXX X% fully and offering operating share a and by in generated to XX%, research margin. fully higher we in by free as an compared diluted which and with our rent and engineering Increases $X.X income SDK diluted quarter, assets, free line headcount the customer a of XX% associated diluted commitment to million. $X.XX first to expenses, $X.XX key million year software the or engineering in June and of expense. the of street a decreased which Earnings share. invested the operating months, existing increased $X.X Although $XXX,XXX to X% was equipment from to capital customers our per driven flow with General million fully to support services. year new QX continue rent which $X.XX a the $X.X first cash for QX, tax provide hiring is million. million $X.X QX In products. website to of the $X.X consulting our team cash quarter We including per charged was to by support reflecting sales, product external on the

purchases net June to the of at last compared of $X.X million even As at Increased year. QX end inventory inventory our was prior XX, related reserve committed $X.X million to or level to quarter was XXXX. off

navigating to healthy in headwinds. remark. the and inventory to out a challenging meet believe we increased sheet remainder chain prepared disruption, of us Although of steps manage face the the to the taking in our supply inventory the the continue position the liquidity XXXX our This balance environment. near-term wraps We for the are helps be

to Now I will operator hand the for call over the questions.

Operator

you. Thank

[Operator Chambers go Charlie a begin CX. now instructions] ahead. session. will question from the We have from We question-and-answer Please

Charlie Chambers

you. on Thank Can Thank you you. Question buyback. about light share some shed that? the

Lynn Zhao

in XXBX the entered plan We Yeah. April. Okay.

So our the XX purchasing as next K we'll another -- quarter. the purchase have started according we Then from K enter quarter XXX continue plan quarter. will purchased market shares the our the we common this shares we after XXBX of plan and next for new of for there a XXBX today, of the stock to

Operator

Prudential question ahead. from next go Please The you. Thank comes Securities. [ph] Frank from

Unidentified Analyst

going wasn't Frank hear Lynn. was it you Is buyback how I using that certain question, of here. Well, month criteria to Hi on partially my the of one predicated percentage? the first Kevin, many be answered. the use, at or you shares. on buy Hi, can you the [ph] question My it but questions on question. my shares That's first previous a previous week back previous volume is, the

Lynn Zhao

shares, we to XXBXX, plan, their pricing, four volume, preceding XXBX only which to purchase according Yeah, date. average, rule the their starting their general, it's defines weeks the volume volume XXBX the plan pursuant in the trading --

Unidentified Analyst

Okay.

General as where Now we good question are the everything, is of since chips, new oh One market, with most up, companies recently to Powell missing advance, by to up the car, and And example, couple are but now my there well by telegraphing, end. heads we settle rates is exit fed's lease then, here, have by the houses, very well says, are booming, the over and builders a he and the is year now car, a some expect subsiding move reducing to houses by chips point housing the the way, with $XX,XXX. I'm interest like final pretty this locks all question $XX,XXX dealer, going locally in or the to twofold. which but tried it's I was a had the $XXX,XXX Motors enthusiastic, the buy ready

houses. the So can the people for qualify

I'm things been possible have supply know COVID. gone your your around and on that denote plan you new for that, your come is shorts. and, fell their your arena. a they but that their still the question gyration some novice the you The there's in hand, run are businesses, in it's the products. Is see new have them world the phones in if the is question applaud But I projection by I what people they're business I with the world, meaning is lot like up iPhones it's for so expectations normal question. of if bottom the everything is each products. was your And, product abated with and to costs Now line been and a you the contribute each your for, to it that's have with could would all what material once one you're place, each my chain I street, that is tough product -- on tough could what know the

Kevin Mills

All right.

bit So of complicated it's question. a a

the activity we the answer business. benefit is in and following. deploy So in XX% cash registers space. our driven in boutiques it business Primarily by let as me small retail people iPad-based various of

that more more more Motors to ultimately not merchant Motors, the and QR coming that General they requirement code-based option, four level etcetera. engine, liter And finds requirement. scanner even that We at liter also, only a into now petrol people are whether performance need. General have products basically market have needs requirements, just QR what engine the then as to they customers issues. buy. the fall have product or their option. customer the you their end requirement. just of consumer with electric The to a code-based an this And has our choose conscious, needs going additional a car two product SXXX to we the It's allow what is level some we're supports scanning are size. QR the three we similarly to liter into introducing same diesel have that bought car therefore the one between same the because that range engine, the performance reading, but from where need and people, car, And serve fix because they're barcode, determines and of do offer product variations, a a to fuel coupon, range a our code a with a engine, And payment difficult electric like conscious, a see and a benefits service that is diesel entry with linear stores the who of of they different option, very petrol We a a meets just offer, that

disposable traffic you're have a to even lot end book make system, register and the through cash but income, a our get a less have ultimately of the inventory leverage this shop is need your benefits, we and do So of to customers impact interest if correct, items model if short-term rates the because running scan you people that you the sure have you and your the balance period. at less

So question. the to answer your that's

believe Dave investment pointed and new areas going as some into has those will forward. out, we're open we areas Holmes new up Now we the have going opportunities in

you do answer, it's a the that the of but cover a sorry of it's I circuitous question I So, best can bit think asked. kind to

Unidentified Analyst

ago got well, the and this interested company companies, these sign that. big loose, thank a understand and a I $XX a you when in did your I larger Well, they've understanding. I three billion years and and got oh, the believe $XX saw, understand from everybody's I you're growth I first have appreciate The billion gross for so, little a expect say, not consider loose but I factor, I in to the you products answer small, and certain huge all bumps tried me, and company road. I got so's

Kevin Mills

I very Thank Okay. much. it, Frank. appreciate you

Operator

you. Thank

from who's investor. a go Please next Steve Our question comes private ahead. Swanson,

Steve Swanson

in sold afternoon. first that second sold about had for quarter. count the like XX,XXX was quarter? you Hey Good looks What scanners you it

Kevin Mills

About a but less, thousand not a XX,XXX, little bit I units all. was believe. left It

Steve Swanson

back asking is forward to, to prices going increasing we what long I going Are our going we to a target to input to scanner increased get offset going on -- trying help Okay, and Socket margin of the prices? planning gross are what's roundabout what And it? component thanks. guess I'm is how be, term to way

Kevin Mills

margin gross by increased last X.X% we quarter. Well about

plan we that the we're the months nine nine the comfortable stabilized in to the And lot a range comfortable a the some margin will that think -- point prices. previous I first component did side, products are XX is have less to even of are though gross premiums. which new side Obviously have without we premiums paying We help six the margin we're increasing price attractive. point on to the introducing that like get SXXX, very We prices. back on the in still pay

impact the on fixed. is short the actually term, in overhead margin think biggest allocation, the is which I really

half units another as made a, I last as a percent. quarter we us by impact that to because few less much think quarter,

we're to because margin whom XX attractive we of to in point the So don't the comfortable either And raising much right to the have term back short prices. us thing the is gross do prices more prices. a competition, makes without raising it plan have the we get raised think against some

Steve Swanson

Okay. for that. Thanks

which term or Another question And on? what Is money for spending is run it the do first and marketing $X increase the under money And XX% half spending a be getting permanent, on XX% going actually actually thing? the of sales this a in and million what we costs we first chain -- full more to half if this this it's is is sales extra permanent of last kind for this it just step the are out we're marketing? see is and of year, up rate quarter a year. Is long heads? year this, over

Kevin Mills

countries and and make to launching website to vehicle other our it to market go primary languages. our sites other lot of revamp We've upgrade spent sure is that a including in money

time. honest we for that, underspending I quite to some were think be

to to more in but we person product with world global have what line expects lot the want a do in increase a Japan, read this going in to and be It's our a in buy not Japanese. I onetime product much the cost the able to today's, buying who's is is do. think more we of which product And to largely the about investment. incurred work, level

the obviously but significantly will at my bit there's our months. particularly have maintain it, to we opinion, We six in as the moment over lift upgraded website have a a of last

Steve Swanson

professional agree I it looks in lot Well, user the do website than did your past. more friendly a that and

of for marketing sales So like $XXX,XXX or increase there's it half sounds million $X.X year. and first the in the

You're be bit. It'll be a it, There will rate in run saying of off the that more had some get that going the you I'm that maintaining because half understanding? bigger what upgraded. Is first year to forward. but tail gonna push isn't spend of that a the

Kevin Mills

other Yeah, the and push quarter we're probably but higher we're Maybe that work and product to market include another we maintain believe to like still done primary for doing we're lot yet. selectors which going but enhance will things, I a forward. out, it's two, If it'll think And strategy. quarter. a the things and then not business to our honest, of have we levels go level

have you actually on don't anymore. street sales people feet we the As know,

the will. really our webpage window, So you is our if flow case, display

Steve Swanson

Okay. kind to they Thanks is Last accomplish software you keep scanner trying from SXXX, cost send just this help moving this you understand and SXXX to new where a or old this people program to upgrade that we're send of, their existing with you the can at the think more upgrade going color is you can I me got I program? scanner them for what question their that, scanner, you they're the a around little that is Kevin. something QX provide you're a

Kevin Mills

that it able we the is would and you. upgraded be would send work the this you to buy so to then Yeah, way would that scanner

in old $XX allowed you unit in to you old the and the the units $XXX the would use of on from and depending rebate return then would the returned you we You that unit to the region something we whether us upgraded. motherboard units

straightforward. countries. reasonably in do have We it centers most made we return so And

returning person a would Germany be to Germany. for scanner us, their So people in they local bought in they a if

new get then and support So small. quite the system And it upgraded the can they they cost get and benefit they QR of then of returning the is codes.

forward the plan So them good been have we the to to have We plant a happy changed make aggressive we'll past. pretty have and reach customers see scanners. and they've that out as well requirements going people that in as already the want

going to well your pretty So question, and a automated make web we've lot done work of on it'll back to work previous actually process. this the a

are all your So of now units tracked.

the of was check You on upgrade it is, based automatically unit etcetera. can when rebates can see then how them in and old we customize your manufactured the terms we is

it'll will not people it's think we quite actually upgrade. it's a well, and update, get a refurbished go or physical a fully So but new software scanner,

Steve Swanson

Okay.

money. I'm I'll So a it'll for opt if I you program, be customer and this send some

old a scanner brand with at working send convert I'll can send that back I me so my and to you XXX, SXXX, XXX. You'll new keep the where,

you the scabbing I your be there use just Does you were or with over time. parts said think for might a upgraded thrown these XXX,XXX currently in return? happens trash in the of what get that return potentially that unit

Kevin Mills

you be select be when want landfills, would, and good motherboard to we unit the we Certainly and much people recycled into would can throwing units do don't rebate in is that. how to encourage Well, etcetera. return the usable fully we

to that refurbish and the would functional unit return we meets a make do. would respects. be And all is which that would think be environmentally and we So fully friendly and XXX, reused that thing the in idea sure responsible the is

Steve Swanson

it. Got

wanted, I a lower cost. If a one… be I new for be And if I there'll unit unit, some if the pricing it'll refurbish differences. second So brand I wanted guess wanted a

Kevin Mills

Exactly.

Steve Swanson

all a the had. which appreciate these good you you So questions end I you're is to up parts into landfill, hear. feedback on scavenge try so going to the to these where don't can, throwing I

Thanks. have I all that's today. So for

Operator

you. Thank

comes Our ahead. Research. from Please Chris from Singular go next question Sakai

Chris Sakai

increase? there? the the were Lynn. XX What and Kevin the just point driver had What question was to -- Hi, on gross increase a drivers margin. the I led basis what in

Kevin Mills

led was increase that the is the there reseller the margins I think the things, at halfway that main the we a compressed thing few through quarter. Well to but

the price, the increase categories, to And margin. So we that how and the but certain into elements user did discounts reduce reduce part didn't of of went up was channel. result, a price we end our effective certain our started in as we we give distribution to

think that is down that have happening thing premiums other during The slightly paid year that's the we costs half the and the component somewhat components I therefore come first on are better. of the

that did margins we get think as into it'll on the, mid-fifties on back adjustment could based channel. be step our QX the first less opposed So, and feel I that we distribution was going kind forward, the of but premium primarily product, in to

Chris Sakai

Okay. operating XX% And, for expenses increased that. year-over-year. Thanks All your from right.

sense, a get to was sequentially, back but will expenses X% I these, in wanted decrease know lower to operating we increase a see it levels? Just will

Kevin Mills

also Well requirements due a in had your to our you question. hate this QX GAAP about to answer I line $XXX,XXX But to straight rent.

is enormous bit little stuff, early but position find ourselves come in with a the we have scanning we have the based scanning the an a and plus we a in enhanced NFC in world. fraction feel camera the where will down opportunity we what expenses Our lot of free

next down in opportunity sales we bit you little gas on if tough be too So is front times our bit, reduce our the a to engineering because foot of have over the expenses. a the and these think six inclined tighten months. our marketing in good little even We us not to will, we're overly our belt we keep not but

Operator

CX. The comes next Charlie question from from Chambers

Charlie Chambers

Thank first average buyback, you. price for question. is in XQ, Yes. the year-to-date strike Stock the XQ

I total think about as the mentioned was XXX,XXX.

the it something forward. QR be combined see is for And to United XX,XXX question at a going here like and think the second the I shares. Thank barely about XQ used you China moving access, code then QR States. you. with strategy is on Do was WeChat which code

Kevin Mills

so first prices number, paid, I'll did right, the the question XXBX, we in have XXBX. the the we Lynn All answer but do we when the on

any which shares. know outstanding given the quarter, don't limited of exact in is prices. We to XX,XXX X.X% about are shares the I

actually Lynn maybe yes question. it's could So of quarter Lynn that -- outstanding the A it's of X.XX% - the answer per Yes, X.XX% Zhao shares. a

in about shares purchased the XX,XXX price average say average about at about quarter, shares first let's one XX,XXX we bought So we of have QX, And $X. there XXX. the yesterday, this at as their price,

Kevin Mills

Okay.

to used have of and particularly you're are a regard Europe. As your for rising in extent Asia exactly which I QR been in payments not codes in US in everywhere, large case think question, the and QR, China, is so to much the

However, this is changing.

convert payment using instead on now, they was use designed we the the code, inserter the swipe airplane doing we're is do that became that wave, your it as code the that upgrades. having doesn't as a and product do with of You big that even during have other kind reader credit etcetera. see QR which norm and QR COVID into card card. a And of so support can mechanism the why a that for merchants our an identification, to can or especially QR half product certifications types of Many of coming

codes but the SXXX as day support So to payment world, would just the in also do that they as another few need activities QR codes, the well we see coming that the at for newer everything version one them. does may

merchant We activities, a to the by and of a that have etcetera indicators weak are that a a set. not been position equivalent really be driven forward. PayPal And has in respond these of the see we credit a do companies, but charge device have card we it and you will going of or that can timing lot

over common and going months. particularly I China based that feel So will back, think have on QR that will in been you right, exactly Asia go issues next that XX are global the

Operator

you. Thank

[ph] have question securities. Prudential go ahead, from We a Frank Frank from Please

Unidentified Analyst

Florida, was international, ended on I Vietnam is example. Hawaii, in courses One national up We them had more ended Japanese the don't the cost sales selling see high. force, out. I friends. showing question, in I my too and golf up they

to your as, Vietnam. like the customers larger directing major into all website? the your businesses for far of -- majors What are logic the one like What website is tune driver their them, or our salesman would they as is them your potential versus, why the Now content, of potential in all

Kevin Mills

Right.

So website. Vietnamese we don't any have

lower very sell these already Primarily, Japanese The have able point. on Japan number they and that US not with things price contemplate in changing a we'll follows is price to well the in at doing Europe that iPad Western we we've expensive is China, and more Android this jeopardy would a support we're the now some by going Apple. with camera the though a model is Vietnamese to be bigger of feel the or we able people scanning had we and options be the free much other one we adding because which forward. the well in market, focused the of too sell would websites, in starting is service a point, world with unless We of of area. in countries iPad business in a of of been We even countries number countries. significant the sell Japan. They Asian And, and website products scanners and the Apple our and don't products, in and companion the being business

Spain I before. Today that. English. France, bit think down six UK seven Germany, So it's would We a website, have track Ireland, obviously including little the or we further consider and and

Japanese, have support. and maintenance but takes We Australian, that all etcetera,

Unidentified Analyst

iPad XX all grandkids date. years and you mother is way too update. Okay. their they either old, they expensive have back tell and games, of course new that crazy abroad, can They are eight I your but to selling have to they're They to father. nagged and like up And iPad whenever going my situation,

you. Thank Okay.

Operator

back [Operator the questions. I Mills would no instructions] final we Mr. to turn At to for call show like remarks. this moment, further

Kevin Mills

operator. you, Thank

all to you the like made very challenging next everyone two delivered a grow our to continuing So summary, in interest in progress and will and time We good results in wish for to in we years. solid enable and revenue are and QX, a a importance significant Mobile your Socket we afternoon. thank And I'd over build environment. foundation reveal solid us that

Operator

Thank Thank this gentlemen, you. today's Ladies and for participating. concludes you conference.

may You now disconnect.

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