Socket Mobile, Inc. Price & Performance (SCKT)

Socket does not undertake any obligation to update any such forward looking statements. On the call with me today are Kevin Mills, Chief Executive Officer Dave Holmes, Chief Business Officer and Lin Zhao, Chief Financial Officer. I will now turn the call over to Kevin Mills. Kevin Mills, you may begin.

Thank you, operator. Good afternoon, everyone, and thank you for joining us today. Our revenue for 2024 was $18,800,000 an increase of 10% over 2023. We recorded margins for the year of 50.4%, a slight increase over the 49.7% recorded in 2023. Our operating loss was $2,500,000 slight improvement over the $3,100,000 loss in 2023. A significant portion of our operating loss related to employee equity compensation. Overall, 2024 was a difficult year from a revenue point of view. We started 2024 with an expectation that we would be able to add revenue in the latter portion of the year from our Extreme products. The Extreme products are targeted at the industrial market. During the year, we engaged with a good number of customers, received positive feedback on our solution and experienced a good level of interest from customers. However, the evaluations have taken much longer than we expected. And as a result, we did not have any meaningful deployment in 2024. We are continuing to work with these potential customers and do expect to see deployments in 2025 that will enable us to grow our revenue and establish a foothold in the industrial market. In 2024, we spent $4,700,000 on R and D, primarily on improvements to our capture SDK, which continues to be the foundation of our business.

We upgraded our capture SDK in significant ways and we currently support all the major operating systems and the top three cross development platforms, which is allowing us to grow our rates of applications that support our data capture solutions. With that said, I'd now like to turn the call over to Dave Holmes, who will outline our plans for 2025. Dave?

Thank you, Kevin, and good afternoon, everyone. As Kevin said, today I'd like to highlight a few of the significant milestones that we achieved in 2024 and talk a little bit about what we are focused on in 2025. In 2024, we concentrated on expanding our market presence in new markets with the launch of several new products, primarily focused on the industrial environments. Although adoption has taken longer than we expected, we now have several positive proof points that point to our investments in this category beginning to pay off in 2025, including our first long term commitment from a Fortune 50 Tier one industrial customer. The ruggedized scanning market is large and our entry into this space will help us diversify our business beyond retail. ExtremeScan product line is comprised of three different configurations ExtremeScan Case, ExtremeScan and ExtremeScan Grip, all designed for iPhone. This product family represents a significant milestone our commitment to delivering high quality data capture solutions for our customers in industrial, manufacturing, warehousing, oil and gas and airports. ExtremeScan is designed to enable iPhones to withstand harsh industrial conditions, offering robust scanning capabilities with military grade durability. This opens the door to new customer segments that demand the ultimate performance in the most difficult environments.

The ExtremeScan product family grew in 2024 with the introduction of several ExtremeScan MAG devices designed for the increasing number of workers who use a single phone for both personal and business needs. The bring your own device or BYOD category represents a significant yet underserved market where we see strong growth potential. ExtremeScan is fully compatible with iPhone 16 E. IPhone 16 E is durable, cost effective device ideally suited for industrial environments. With an extra long battery life, enhanced drop resistance and the trusted iOS platform, it is expected to quickly become the go to device for demanding industrial sectors. ExtremeScan combined with iPhone 16 E will empower industrial businesses with durable, adaptable and future forward data capture technology. We believe that iPhone 16 e makes the choice for enterprise customers a lot easier. This clarity allows decision makers to feel good about the device commitment they are investing in. Over 80% of young people in The U. S. Are iPhone users. As these people move into the workforce and become frontline workers, employers can deploy familiar devices with a well known operating system and user experience to help minimize training and mistakes and maximize productivity. IPhone 16 E with ExtremeScan can become an obvious choice for industrial customers with data capture needs for digitizing their workflows.

Beyond new products, we also invested in our customer and developer experience in 2024 by introducing a new website, developer portal and AI powered developer support, which we call Alfred. Alfred is helping our developers around the world with multilingual support to integrate our Captura SDK into their apps, so they can enable best in class scanning capabilities into their mobile apps. Our new products and technology investments will extend our reach and diversify our customer base. Ultimately, this will make us a more sustainable and less dependent on retail as we become a more complete data capture company. With that, I'll turn it over to Lynn for more details on our financial results. Lynn?

Thanks, Dave. Good afternoon, everyone. Our 2024 revenue increased to 10.2% year over year compared to $17,000,000 in 2023. Gross margin rose to 50.4%, up from 49.7% in 2023, driven by the allocation of manufacturing overhead costs across higher production volumes. Operating expenses for the year reached $11,900,000 reflecting a 2.8% increase from $11,600,000 in 2023, primarily due to higher peer related expenses from salary adjustments and the increased benefits costs. In 2024, we reported an operating loss of $2,500,000 compared to $3,100,000 loss in 2023. The net loss per share was $0.3 in 2024 compared to $0.27 in 2023. Both years reflected the adoption of Section 174 of the Tax Cuts and Jobs Act of 2017, requiring capitalization and amortization of R and D expenditures. Adjusted EBITDA for 2024 was negative $318,000 compared to a negative $1,000,000 in 2023. Revenue in Q4 twenty twenty four grew 10% year over year to $4,800,000 up from $4,400,000 in the prior year quarter and an increase of 25% sequentially from $3,900,000 in Q3 twenty twenty four. Gross margin for Q4 was 51% compared to 52.8% in Q4 twenty twenty three and forty nine percent in Q3 twenty twenty four. Operating expenses for Q4 reached $2,900,000 marking a 2.9% year over year increase, but a 1.8% sequential decrease from the preceding quarter.

We recorded a Q4 operating loss of $411,000 compared to $475,000 loss in Q4 twenty twenty three and $1,000,000 loss in the preceding quarter. Q4 adjusted EBITDA was $138,000 up from $52,000 in Q4 twenty twenty three and $505,000 loss in Q3 twenty twenty four. Diluted earnings per share in Q4 was $0 compared to $0.08 in Q4 twenty twenty three. Both quarters included income tax benefits of $550,000 and $1,400,000 respectively. Turning to our balance sheet, we ended 02/2004 with a cash balance of $2,500,000 During the year, we invested $800,000 in capital expenditure, spend $500,000 in operations and raised $1,000,000 through the issuance of subordinated convertible notes. As of 12/31/2024, our inventory level net of reserves stood at $4,900,000 compared to $5,400,000 a year earlier. This wraps up our prepared remarks. Now, I'll hand the call over to the operator for questions. Jan?

Thank And our first question will come from Steve Swanson, investor.

Good afternoon. Are we going to need to raise any cash this year? And if so, how much and when do you foresee that happening?

Currently, we do not have any plans to raise cash this year. So we start here with enough cash. We expect the first six months to be a little bit of a strain on our cash, but then we expect in the second half to be cash positive. But we don't expect to raise any cash this year right now. So that's the current plan.

All right.

And it appears there are no further questions at this time. Kevin, I'll turn the conference back to you.

Thank you, operator. I'd just like to thank everyone for participating and wish you all a good afternoon. Thank you.

And this concludes today's conference call. Thank you for attending.