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SM

SOCKET MOBILE, INC. (SCKT)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 revenue was $4.8M, up 10% year-over-year and 25% sequential; gross margin was 51.0%, and adjusted EBITDA turned positive ($0.14M), while operating loss improved to $0.41M .
  • Diluted EPS was $0.00 (vs $0.08 in Q4 2023), with both periods benefiting from tax items ($0.55M vs $1.44M), and net income was $0.04M vs $0.91M YoY, highlighting non-operating effects on EPS comparability .
  • Management reiterated industrial market progress but acknowledged 2024 deployment delays; they expect initial deployments and revenue contributions in 2025, with no current plans to raise cash and an expectation of H2 cash positivity .
  • Product catalysts include iPhone 16e compatibility for XtremeScan/DuraSled, new DuraScan D762 for logistics, and expanded developer support (React Native CaptureSDK update; “Alfred” AI portal), supporting diversification beyond retail POS .
  • Wall Street consensus estimates from S&P Global were unavailable at time of request; investors should focus on sequential improvement, margin stability, and industrial adoption milestones as near-term stock reaction drivers [GetEstimates error; S&P Global data unavailable].

What Went Well and What Went Wrong

What Went Well

  • Sequential revenue growth of 25% and year-over-year growth of 10% in Q4; adjusted EBITDA positive at $0.14M, and operating loss narrowed to $0.41M .
  • Strategic product launches and compatibility: XtremeScan/DuraSled support for iPhone 16e and new long-range DuraScan D762 enhance logistics/industrial positioning .
  • Management quote: “Our financial performance in both Q4 and 2024 improved… driven by growth… serving retail POS application providers… we’ve identified key areas for improvement and are taking steps to strengthen our position” .

What Went Wrong

  • Industrial adoption delayed longer than expected; no meaningful deployments in 2024 despite evaluations, pushing revenue contribution to 2025 .
  • Gross margin declined YoY in Q4 (51.0% vs 52.8%), and diluted EPS fell to $0.00 vs $0.08 YoY, with reduced tax benefits versus the prior year affecting comparability .
  • Ongoing retail sector weakness pressured earlier quarters; Q3 revenue fell 24% sequentially and EBITDA was negative ($0.51M), highlighting variability before Q4 rebound .

Financial Results

Quarterly Trend (Q2 → Q3 → Q4 2024)

MetricQ2 2024Q3 2024Q4 2024
Revenue ($USD Millions)$5.081 $3.872 $4.831
Gross Margin (%)50.9% 49.0% 51.0%
Operating Income (Loss) ($USD Millions)($0.535) ($1.031) ($0.411)
Diluted EPS ($USD)($0.08) ($0.15) $0.00
Adjusted EBITDA ($USD Millions)Breakeven ≈ $0.008 ($0.505) $0.138

Q4 YoY Comparison (Q4 2023 → Q4 2024)

MetricQ4 2023Q4 2024
Revenue ($USD Millions)$4.398 $4.831
Gross Margin (%)52.8% 51.0%
Operating Income (Loss) ($USD Millions)($0.476) ($0.411)
Diluted EPS ($USD)$0.08 $0.00
Net Income ($USD Millions)$0.912 $0.038
Deferred Income Tax Benefit ($USD Millions)$1.460 $0.551

KPIs and Balance Sheet Highlights

KPIQ4 2024
Cash ($USD Millions)$2.492
Accounts Receivable ($USD Millions)$1.588
Inventories ($USD Millions)$4.942
Subordinated Convertible Notes (related party) ($USD Millions)$3.818
Total Equity ($USD Millions)$18.161
Capex for 2024 ($USD Millions)~$0.8
Cash used in operations 2024 ($USD Millions)~$0.5

Estimates vs Actuals (S&P Global)

MetricActual Q4 2024Consensus (S&P Global)Beat/Miss
Revenue ($USD Millions)$4.831 Unavailable (S&P Global data unavailable)*N/A
Primary EPS ($USD)$0.00 Unavailable (S&P Global data unavailable)*N/A

*Values retrieved from S&P Global (consensus unavailable at time of request).

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueFY 2025Not providedExpect initial industrial deployments to contribute in 2025 Narrative update (no numeric)
Cash/FinancingFY 2025Not providedNo plans to raise cash; H1 cash strain, H2 expected cash positive New qualitative guidance
Industrial Adoption TimelineFY 2025Deployment expected late 2024 (prior narrative) Deployment delayed to 2025 Lowered/Deferred
Product AvailabilityQ1/Q2 2025Not applicableDuraScan D762 available now; distribution in March ($699 MSRP) New product availability
Platform CompatibilityQ1 2025iOS 18 support announced Q3 2024 iPhone 16e compatibility for XtremeScan/DuraSled Expanded compatibility

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 2024 and Q3 2024)Current Period (Q4 2024)Trend
Industrial/BYOD products (XtremeScan/DuraSled)Launches; pilots planned; BYOD XG640 targeting logistics; deployments expected late 2024/into 2025 Evaluations positive but delayed; first long-term commitment from Fortune 50; deployments expected in 2025 Slower adoption; clearer 2025 ramp
CaptureSDK and developer ecosystemEmphasis on SocketCam (C820/C860) and recurring revenue; React Native support delivered React Native CaptureSDK update; Alfred AI portal launched to support devs Ecosystem strengthening
Retail specialty macro exposureWeakness pressured revenue; diversification priority Q4 improved with POS customers; retail remains core while diversifying Stabilizing; diversification underway
Liquidity/working capital$1M convertible notes in Aug; cash $2.9M at Q3 end Cash $2.5M YE; no plan to raise cash; H1 strain/H2 positive Prudent liquidity; watch H1
Profitability metricsQ2 EBITDA ~breakeven; Q3 EBITDA -$0.505M Q4 adjusted EBITDA +$0.138M; operating loss improved Improving sequentially

Management Commentary

  • CEO: “Our financial performance in both Q4 and 2024 improved… driven by the growth of our business serving retail POS application providers. Adoption in the warehousing and logistics sectors is taking longer than expected… we’re taking steps to strengthen our position” .
  • CEO: “Looking ahead, we remain committed to innovation, expanding our product offerings, and strengthening our market position… building a solid foundation for the future” .
  • CFO: Q4 details—revenue +10% YoY to $4.8M; gross margin 51%; operating loss $0.41M; adjusted EBITDA $0.138M; diluted EPS $0.00 with $0.55M tax benefit (vs $1.4M last year); YE cash $2.5M; 2024 capex ~$0.8M; raised $1M notes .
  • CBO: “First long-term commitment from a Fortune 50 Tier 1 industrial customer” and positioning XtremeScan with iPhone 16e for industrial environments .

Q&A Highlights

  • Financing outlook: “We do not have any plans to raise cash this year… expect the first six months to be a little bit of a strain… second half to be cash positive” .
  • Limited Q&A participation; no additional guidance ranges or segment disclosures were provided .

Estimates Context

  • Wall Street consensus (S&P Global) for Q4 2024 EPS and revenue was unavailable at time of request; comparisons vs estimates cannot be made. Values retrieved from S&P Global.
  • Given sequential improvement and adjusted EBITDA turning positive, estimates (where they exist) may need to reflect stronger H2 seasonality contingent on industrial deployments and retail stabilization .

Key Takeaways for Investors

  • Sequential rebound with Q4 revenue +25% vs Q3 and adjusted EBITDA positive; operating loss narrowed meaningfully—evidence of near-term operational improvement .
  • YoY EPS compression and lower tax benefit vs prior year underscore that non-operating items influenced comparability; focus on operating loss trajectory and EBITDA .
  • Industrial adoption is the 2025 swing factor; Fortune 50 commitment and iPhone 16e compatibility are tangible milestones, but pace remains the primary execution risk .
  • Liquidity appears adequate with YE cash $2.5M and no planned raises; monitor H1 cash strain and inventory working capital ($4.9M) for conversion into revenue .
  • Product pipeline (DuraScan D762, SDK/Alfred support) broadens TAM beyond retail; track developer adoption and software subscription mix for recurring revenue potential .
  • Absence of formal quantitative guidance and unavailable consensus data heighten reliance on quarterly cadence and order/backlog indicators; watch updates on pilot-to-deployment transitions in upcoming calls .
  • Near-term trading: stock likely reacts to evidence of industrial deployment wins and margin sustainability; medium term thesis depends on diversification beyond retail and scaling BYOD industrial use cases .