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SM

SOCKET MOBILE, INC. (SCKT)·Q1 2025 Earnings Summary

Executive Summary

  • Revenue declined to $4.0M, down 20% year over year and 18% sequential; gross margin held at 50.4% while operating loss widened to $0.9M as demand softened domestically and internationally .
  • Management began shipping XtremeScan products and formally entered the $27B iOS-powered industrial handheld computing market, citing early Fortune 50 traction and long-term rollout purchase orders as growth catalysts .
  • CFO renewed a $3M domestic credit line (matures April 2026), ended Q1 with $1.7M cash, and guided to positive EBITDA in Q2 and profitable operating levels in H2 2025, framing a path to near-term improvement despite tariff uncertainty .
  • No formal Wall Street consensus (S&P Global) was available for Q1 revenue or EPS to assess beat/miss; prior quarters show momentum in Q4 2024 before Q1’s pullback, reinforcing the narrative that industrial product adoption timing is pivotal for 2025 .

What Went Well and What Went Wrong

What Went Well

  • Initial shipments of XtremeScan in Q1 and expansion into iOS-integrated handheld computing broaden growth vectors beyond retail; management emphasized iPhone 16e integration and long-range scanning for harsh environments .
  • Fortune 50 Tier 1 industrial customer issued purchase orders for a long-term rollout, validating product-market fit in ruggedized scanning and handheld computing .
  • Operating expenses remained contained at $2.9M, flat sequentially and down versus prior-year quarter, supporting margin preservation amid lower revenue .

What Went Wrong

  • Revenue was below projection, down 20% year over year and 18% sequential, as uncertainty froze deployments and routine business, pressuring operating profit and adjusted EBITDA to a $485k loss .
  • Tariff dynamics added supply chain complexity; management detailed sourcing exposure (Mexico ~30%, Taiwan ~20%, China ~10%) and flagged cost risks that require strategic sourcing and pricing adjustments .
  • Cash fell to $1.7M from $2.5M at year-end as operations consumed cash; inventory increased to $5.3M, reflecting working capital tied to the ramp and potential demand timing risk .

Financial Results

MetricQ3 2024Q4 2024Q1 2025
Revenue ($USD Millions)$3.87 $4.83 $3.97
Gross Margin (%)49.0% 51.0% 50.4%
Operating Expenses ($USD Millions)$2.93 $2.88 $2.89
Operating Loss ($USD Millions)$(1.03) $(0.41) $(0.89)
Diluted EPS ($USD)$(0.15) $0.00 $(0.13)
Cash And Equivalents ($USD Millions)$2.91 $2.49 $1.71

KPIs

KPIQ3 2024Q4 2024Q1 2025
Adjusted EBITDA ($USD Millions)$(0.50) $0.14 $(0.49)
Inventory ($USD Millions)$5.25 $4.94 $5.28
Accounts Receivable ($USD Millions)$1.44 $1.59 $2.06
Total Equity ($USD Millions)$17.96 $18.16 $17.24

Note: No formal segment reporting was provided for the quarter .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
EBITDAQ2 2025NonePositive EBITDA Initiated
Operating ProfitabilityH2 2025NoneProfitable operating levels Initiated
RevenueFY 2025NoneNo formal guidance provided n/a
Gross MarginFY 2025NoneNo formal guidance provided n/a
Tariffs/Supply ChainNear termNot quantifiedMonitoring, mitigating via sourcing/pricing/supply planning n/a
OpEx, OI&E, TaxFY 2025NoneNo formal guidance provided n/a
DividendsFY 2025NoneNone mentioned n/a

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024, Q4 2024)Current Period (Q1 2025)Trend
AI/Technology initiativesCaptureSDK updated for iOS 18; React Native; SocketCam subscription concept for recurring revenue Alfred AI developer support and ongoing SDK platform breadth; multilingual support to accelerate integrations Building capability and partner engagement
Industrial products (XtremeScan)Evaluations at marquee customers; BYOD Mag devices; airlines showcase; pilots rolling into late 2024/2025 Began shipping; Fortune 50 long-term rollout POs; iPhone 16e integrated models launched Moving from evaluation to commercialization
Supply chain & tariffsWorking capital financing; general supply commentary Tariff uncertainty; sourcing split MX ~30%, TW ~20%, CN ~10%; mitigation via sourcing/pricing/planning Heightened headwind; mitigation in progress
Customer demand/macroQ3 uneven bookings; $2.2M backlog entering Q4; 2024 retail POS growth Domestic/international softness; deployments frozen by uncertainty; expecting retail to remain at current levels near term Near-term softness
R&D execution2024 R&D $4.7M; SDK upgrades across platforms Continued investment with products now shipping; focus on industrial ramp Transitioning to revenue impact

Management Commentary

  • “Our first quarter revenue came in lower than projected… The encouraging news is that we began shipping our new XtremeScan products during the quarter. This marks a key milestone in our two-year effort to enter the industrial barcode market.” — Kevin Mills, CEO .
  • “These devices are designed to serve as full-featured handheld computers… These products put Socket Mobile into the $27 billion mobile handheld computing market.” — Kevin Mills; Dave Holmes .
  • “The tariff situation has greatly complicated everyone’s lives… we source about 30%… from Mexico, 20% from Taiwan and about 10% from China… We are working with our customers to minimize the impact.” — Kevin Mills .
  • “We received purchase orders for a long-term rollout from the Fortune 50 Tier 1 industrial customer.” — David Holmes .
  • “On April 21, we renewed our $3 million domestic bank credit line… There are no outstanding draws.” — Lynn Zhao, CFO .

Q&A Highlights

  • No analyst Q&A occurred; the operator noted no questions were received on the call .
  • Guidance clarifications were confined to qualitative outlook: positive EBITDA in Q2 and profitable operating levels in H2, with tariff impacts monitored and mitigated via sourcing and pricing .

Estimates Context

  • S&P Global consensus estimates were unavailable for Q1 2025 (no Primary EPS Consensus Mean or Revenue Consensus Mean returned, and no estimate counts), so we cannot benchmark results vs Street expectations. Values/retrieval status from S&P Global.*

Key Takeaways for Investors

  • Near-term softness but credible path to operational improvement: management guided to positive EBITDA in Q2 and profitable operating levels in H2, contingent on industrial ramp and macro clarity .
  • Industrial handheld computing entry is the principal catalyst: XtremeScan shipments, iPhone 16e integration, and Fortune 50 rollout POs position SCKT to diversify beyond retail and drive mix/volume upside over 2025–2026 .
  • Watch tariff headlines: exposure across MX/TW/CN and international customers implies potential cost/price dynamics; management is pursuing strategic sourcing and pricing actions to protect margins .
  • Liquidity is adequate for ramp: $1.7M cash at Q1 and a renewed $3M A/R-backed line (matures 2026) provide flexibility to support working capital and deployment schedules .
  • Operating discipline matters: OpEx held at $2.9M with gross margin stable at ~50%; preserving margin while scaling industrial shipments will be central to achieving H2 profitability targets .
  • Monitor inventory and AR build: inventory rose to $5.3M and AR to $2.06M, reflecting ramp dynamics; successful conversion of backlog and pilot-to-deployment transitions should unwind working capital and support cash flows .
  • Narrative pivot from retail to diversified data capture: continued SDK/AI developer support (Alfred) and SocketCam subscription strategy aim to expand ecosystem and introduce recurring revenue elements alongside hardware .

Footnote: *S&P Global consensus estimates unavailable; retrieval attempted via S&P Global.