Socket Mobile, Inc. (SCKT) Bundle
Understanding Socket Mobile, Inc. (SCKT) Revenue Streams
Understanding Socket Mobile, Inc.’s Revenue Streams
Total revenues for the quarter ended September 30, 2024, were approximately $3.9 million, an increase of 21% compared to $3.2 million for the same period in 2023. For the nine-month period, revenue increased by 10.3% to approximately $13.9 million from $12.6 million in the prior year.
The revenue growth in 2024 was primarily driven by increases in run-rate business compared to the same periods in 2023.
Revenue Breakdown by Source
| Revenue Source | Q3 2024 Revenue | Q3 2023 Revenue | 9M 2024 Revenue | 9M 2023 Revenue |
|---|---|---|---|---|
| Americas | $2,919,294 | $2,328,696 | $10,403,377 | $9,307,625 |
| Europe | $609,203 | $514,158 | $1,771,650 | $1,734,446 |
| Asia Pacific | $343,839 | $363,039 | $1,756,504 | $1,593,157 |
| Total Revenue | $3,872,336 | $3,205,893 | $13,931,531 | $12,635,228 |
Year-over-Year Revenue Growth Rate
Year-over-year revenue growth for Q3 2024 was 21%, while the nine-month revenue growth rate was 10.3%.
Contribution of Different Business Segments to Overall Revenue
The primary revenue for the company continues to stem from its mobile barcode scanning and RFID/NFC data capture market, with significant contributions from the Americas region making up the majority of sales.
Significant Changes in Revenue Streams
Notable changes in revenue streams include:
- Increased sales in the Americas, contributing approximately 66% of total revenue in Q3 2024.
- Growth in revenue from Europe and Asia Pacific, although at a slower rate compared to the Americas.
- Revenue from the SocketCare extended warranty program, which provides additional revenue recognition over the life of the warranty contract.
For the quarters ending September 30, 2024, SocketCare revenue was approximately $4,800, compared to $5,100 for the same period in 2023. The balance of unrecognized SocketCare service revenue was approximately $34,000 as of September 30, 2024, compared to $32,700 as of December 31, 2023.
Summary of Key Financial Data
| Metric | Q3 2024 | Q3 2023 | 9M 2024 | 9M 2023 |
|---|---|---|---|---|
| Total Revenue | $3,872,336 | $3,205,893 | $13,931,531 | $12,635,228 |
| Gross Profit | $1,897,185 | $1,418,197 | $6,986,273 | $6,142,247 |
| Gross Margin | 49% | 44.2% | 50.1% | 48.6% |
The increase in gross margin is attributed to improved production efficiency and higher shipment volumes in 2024 compared to prior years.
A Deep Dive into Socket Mobile, Inc. (SCKT) Profitability
Profitability Metrics
The profitability metrics of the company are vital indicators of its financial health and operational efficiency. Below is a detailed breakdown of the key profitability metrics as of 2024.
Gross Profit, Operating Profit, and Net Profit Margins
For the three months ended September 30, 2024, the company reported:
- Gross Profit: $1,897,185
- Gross Profit Margin: 49% (compared to 44.2% in Q3 2023)
- Net Loss: $(1,115,440)
- Net Loss Margin: (28.8%)
For the nine months ended September 30, 2024:
- Total Revenues: $13,931,531
- Operating Loss: $(2,051,594)
- Net Loss: $(2,280,486)
| Metric | Q3 2024 | Q3 2023 | 9M 2024 | 9M 2023 |
|---|---|---|---|---|
| Gross Profit | $1,897,185 | $1,418,197 | $6,986,273 | $6,142,247 |
| Gross Profit Margin | 49% | 44.2% | 50.1% | 48.6% |
| Operating Loss | $(1,031,276) | $(1,398,555) | $(2,051,594) | $(2,645,522) |
| Net Loss | $(1,115,440) | $(1,324,995) | $(2,280,486) | $(2,831,231) |
Trends in Profitability Over Time
Comparing the nine-month results year-over-year, total revenues increased by 10.3% from $12,635,228 in 2023 to $13,931,531 in 2024. The gross profit margin also improved from 48.6% to 50.1%.
Comparison of Profitability Ratios with Industry Averages
The industry's average gross profit margin is approximately 45%, making the company's 49% gross profit margin favorable. However, the operating loss indicates challenges in maintaining operational efficiency compared to industry standards.
Analysis of Operational Efficiency
Operational efficiency can be assessed through gross margin trends and cost management:
- Research and Development Expense: $3,602,060 for nine months ended September 30, 2024, a slight decrease of 1% from $3,643,501 in 2023.
- Sales and Marketing Expense: $3,307,777, up by 10% from $3,013,577 in the previous year.
- General and Administrative Expense: $2,128,030, showing a decrease of 0.12% compared to $2,130,691 in 2023.
| Expense Type | 9M 2024 | 9M 2023 | Change (%) |
|---|---|---|---|
| Research and Development | $3,602,060 | $3,643,501 | -1% |
| Sales and Marketing | $3,307,777 | $3,013,577 | +10% |
| General and Administrative | $2,128,030 | $2,130,691 | -0.12% |
Debt vs. Equity: How Socket Mobile, Inc. (SCKT) Finances Its Growth
Debt vs. Equity: How Socket Mobile, Inc. Finances Its Growth
As of September 30, 2024, Socket Mobile, Inc. reported total liabilities of $9,759,354 and total stockholders' equity of $17,961,460, resulting in a debt-to-equity ratio of approximately 0.54. This ratio indicates a balanced approach between debt and equity financing compared to industry averages, which typically hover around 0.5 to 1.0.
Overview of Debt Levels
The company's long-term debt primarily consists of secured subordinated convertible notes. As of the latest financials, the outstanding balance of these notes was approximately $2,941,414. Short-term liabilities include operating lease obligations of $516,609 and accounts payable totaling $7,319,831.
Debt-to-Equity Ratio and Comparison to Industry Standards
The calculated debt-to-equity ratio of 0.54 positions the company favorably against the industry standard. This suggests that the company is utilizing a healthy mix of debt and equity to finance its operations, which is crucial for sustaining growth while managing financial risk.
Recent Debt Issuances and Refinancing Activity
In 2024, the company completed secured subordinated note financing amounting to approximately $989,000. This issuance reflects the company's strategy to leverage debt for operational financing while maintaining a manageable debt profile. The interest expense related to these notes for the nine months ended September 30, 2024, was approximately $240,856, reflecting an increase compared to $185,023 for the same period in 2023.
Balancing Debt Financing and Equity Funding
Socket Mobile, Inc. balances its growth financing through a combination of debt and equity. The company reported additional paid-in capital of $69,204,903 as of September 30, 2024. The equity financing is complemented by stock options and treasury stock transactions, which are essential for maintaining liquidity without excessive reliance on debt.
| Financial Metric | Value |
|---|---|
| Total Liabilities | $9,759,354 |
| Total Stockholders' Equity | $17,961,460 |
| Debt-to-Equity Ratio | 0.54 |
| Long-term Debt | $2,941,414 |
| Short-term Liabilities | $516,609 |
| Secured Subordinated Note Financing (2024) | $989,000 |
| Interest Expense (2024) | $240,856 |
| Additional Paid-In Capital | $69,204,903 |
Assessing Socket Mobile, Inc. (SCKT) Liquidity
Assessing Socket Mobile, Inc.'s Liquidity
Current and Quick Ratios
As of September 30, 2024, the current ratio for Socket Mobile, Inc. is calculated as follows:
| Current Assets | Current Liabilities | Current Ratio |
|---|---|---|
| $10,342,249 | $7,319,831 | 1.42 |
The quick ratio, which excludes inventories from current assets, is calculated as:
| Current Assets (excluding Inventories) | Current Liabilities | Quick Ratio |
|---|---|---|
| $5,091,836 | $7,319,831 | 0.70 |
Analysis of Working Capital Trends
Working capital as of September 30, 2024, is:
| Current Assets | Current Liabilities | Working Capital |
|---|---|---|
| $10,342,249 | $7,319,831 | $3,022,418 |
Comparatively, the working capital was $3,378,852 as of December 31, 2023, indicating a decrease in working capital over the period.
Cash Flow Statements Overview
The following summarizes the cash flow from different activities for the nine months ended September 30:
| Cash Flow Activity | 2024 | 2023 |
|---|---|---|
| Operating Cash Flow | $(434,450) | $(522,529) |
| Investing Cash Flow | $(491,640) | $(1,469,227) |
| Financing Cash Flow | $1,000,000 | $1,500,000 |
Overall, net cash used in operating activities was approximately $434,450 in the first nine months of 2024, showing an improvement from $522,529 in 2023.
Potential Liquidity Concerns or Strengths
As of September 30, 2024, cash and cash equivalents amounted to $2,913,339. Total liabilities stood at $9,759,354, resulting in a debt-to-equity ratio of approximately 0.54 (calculated using total liabilities of $9,759,354 and total stockholders’ equity of $17,961,460).
Additionally, the company has a deferred tax asset valued at approximately $10,112,419, which could positively influence future cash flows.
Is Socket Mobile, Inc. (SCKT) Overvalued or Undervalued?
Valuation Analysis
In assessing the financial health of Socket Mobile, Inc. (SCKT), a thorough valuation analysis is essential to determine whether the company is overvalued or undervalued based on key financial ratios and metrics.
Price-to-Earnings (P/E) Ratio
The current P/E ratio for Socket Mobile is not applicable as the company reported a net loss of approximately $2.28 million for the first nine months of 2024, resulting in a diluted net loss per share of $0.30.
Price-to-Book (P/B) Ratio
The book value per share as of September 30, 2024, is calculated from total stockholders' equity of $17,961,460 and outstanding shares of 7,604,470. Therefore, the P/B ratio is:
P/B Ratio = Total Equity / Outstanding Shares = $17,961,460 / 7,604,470 ≈ 2.36
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The enterprise value (EV) can be calculated as follows:
- Market Capitalization: $18.6 million (approx. stock price of $2.45 as of the latest trading).
- Total Debt: $9,759,354.
- Cash and Cash Equivalents: $2,913,339.
Thus, the EV is:
EV = Market Cap + Total Debt - Cash = $18,600,000 + $9,759,354 - $2,913,339 ≈ $25,446,015
Assuming an EBITDA of approximately $1.0 million for the year, the EV/EBITDA ratio is:
EV/EBITDA Ratio = EV / EBITDA = $25,446,015 / $1,000,000 ≈ 25.45
Stock Price Trends
Over the past 12 months, the stock price of Socket Mobile has shown a fluctuation with a 52-week low of $1.85 and a high of $3.40.
Dividend Yield and Payout Ratios
Socket Mobile does not currently pay dividends; hence, the dividend yield is 0% and the payout ratio is also 0%.
Analyst Consensus on Stock Valuation
As of the latest reports, analysts have a consensus rating of Hold for Socket Mobile, indicating that the stock is fairly valued at its current price.
Summary Table of Valuation Metrics
| Metric | Value |
|---|---|
| P/E Ratio | Not Applicable |
| P/B Ratio | 2.36 |
| EV/EBITDA Ratio | 25.45 |
| 52-Week Low | $1.85 |
| 52-Week High | $3.40 |
| Dividend Yield | 0% |
| Payout Ratio | 0% |
| Analyst Consensus | Hold |
Key Risks Facing Socket Mobile, Inc. (SCKT)
Key Risks Facing Socket Mobile, Inc.
Overview of Internal and External Risks:
Socket Mobile, Inc. operates in a competitive environment within the mobile barcode scanning and RFID/NFC data capture market. The company faces significant industry competition from established players and new entrants. This competition can lead to pricing pressures, which may adversely affect revenue and margins. Additionally, regulatory changes in technology standards and data privacy laws could impact operations and compliance costs.
Market Conditions: Market volatility and economic downturns can influence consumer spending and business investments in technology, posing risks to revenue stability. The dependence on a limited number of customers for a significant portion of revenue adds to this risk. For instance, in Q3 2024, two major customers accounted for approximately 50% of total revenues.
Operational Risks
The company relies on a limited number of suppliers for critical components. Any disruptions in supply chains—due to natural disasters, geopolitical tensions, or supplier insolvencies—could hinder production capabilities. As of September 30, 2024, the company has non-cancelable purchase commitments for inventory amounting to approximately $4.86 million. This concentration of suppliers presents a vulnerability to operational disruptions.
Financial Risks
Financial health is also a concern, particularly with reported net losses. For the nine months ended September 30, 2024, the company recorded a net loss of approximately $2.28 million, compared to a loss of $2.83 million during the same period in 2023. The accumulated deficit as of September 30, 2024, stands at $50.21 million. Such losses could limit access to future financing and hinder growth prospects.
Strategic Risks
The rapid pace of technological change requires continuous investment in research and development. The company reported R&D expenses of approximately $3.6 million for the nine months ended September 30, 2024. Failure to innovate or keep up with market demands could lead to loss of market share and reduced revenues.
Mitigation Strategies
To address these risks, Socket Mobile has implemented several strategies:
- Establishing strong relationships with multiple suppliers to diversify sourcing and reduce dependency risks.
- Investing in R&D to innovate and develop new products that meet evolving market needs.
- Maintaining a robust credit evaluation process for customers to minimize potential credit losses.
Financial Summary and Key Data
| Financial Metric | Q3 2024 | Q3 2023 |
|---|---|---|
| Total Revenues | $3.87 million | $3.21 million |
| Net Loss | $1.12 million | $1.32 million |
| Accrued Deficit | $50.21 million | $47.93 million |
| R&D Expenses | $3.6 million | $3.64 million |
| Cash and Cash Equivalents | $2.91 million | $2.83 million |
Future Growth Prospects for Socket Mobile, Inc. (SCKT)
Future Growth Prospects for Socket Mobile, Inc.
Analysis of Key Growth Drivers
Product innovations play a crucial role in driving growth. For instance, the company has developed advanced mobile data capture products that enhance productivity for mobile workers. The demand for these products is expected to rise due to the growing prevalence of mobile applications.
Market Expansions
The company reported total revenues of approximately $3.9 million for the quarter ended September 30, 2024, a 21% increase compared to $3.2 million in the same period of 2023. The nine-month revenue for 2024 also reflected growth, totaling around $13.9 million, up from $12.6 million, marking a 10.3% increase year-over-year.
Future Revenue Growth Projections
Looking ahead, revenue growth is projected to continue, driven by increases in run-rate business. The gross profit margin for the quarter ended September 30, 2024, improved to 49%, up from 44.2% in the prior year, with a nine-month margin of 50.1%, an increase from 48.6%.
Strategic Initiatives and Partnerships
Strategic partnerships with distributors such as BlueStar, Inc., which accounted for 32% of total revenues in Q3 2024, and Ingram Micro Inc. at 18%, are pivotal for market penetration.
Competitive Advantages
The company benefits from competitive advantages including a strong product portfolio tailored to meet the needs of a mobile workforce. The ability to offer innovative data capture solutions positions the company favorably within the growing mobile application market. As of September 30, 2024, the company had total stockholders’ equity of $17.96 million, showcasing a robust financial foundation to support future initiatives.
| Key Financial Metrics | Q3 2024 | Q3 2023 | 9-Months 2024 | 9-Months 2023 |
|---|---|---|---|---|
| Total Revenues | $3.9 million | $3.2 million | $13.9 million | $12.6 million |
| Gross Profit Margin | 49% | 44.2% | 50.1% | 48.6% |
| Major Customers (Q3 2024) | BlueStar, Inc. (32%) | Ingram Micro Inc. (18%) | ||
| Total Stockholders' Equity | $17.96 million |
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Updated on 16 Nov 2024
Resources:
- Socket Mobile, Inc. (SCKT) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Socket Mobile, Inc. (SCKT)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Socket Mobile, Inc. (SCKT)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.