Financial Data and Key Metrics Changes - Revenue for Q3 2025 was $90.6 million, down 11% from $102.1 million in Q3 2024, slightly below expectations due to temporary and structural market factors [12][6] - Gross margin was 29.1%, compared to 30.1% in the prior year period, impacted by tariff timing issues [13][6] - Net income was $1.1 million or $0.08 per diluted share, down from $1.4 million or $0.10 per diluted share in the previous year [15][6] - The net cash position increased significantly by $9.1 million to $13.2 million as of September 30, 2025, marking the second consecutive quarter of positive net cash since December 2021 [15][6] Business Line Data and Key Metrics Changes - Connected home revenue grew 13% to $29.8 million, driven by new product performance, while home entertainment sales declined 20% to $60.8 million due to soft demand in Latin America and EMEA [12][6] - Operating expenses decreased to $24.8 million from $28.2 million in the prior year, reflecting ongoing cost reduction initiatives [14][6] Market Data and Key Metrics Changes - The company faced structural challenges in Latin America and Europe, with lower-than-expected television sales impacting Asian customer volumes [6][12] - Retail channel performance softened due to elevated inventories and slower sell-through [12][6] Company Strategy and Development Direction - The company is focusing on advancing control and sensing technologies while diversifying into adjacent markets such as utilities and multi-dwelling unit property management [5][6] - Innovation remains central to the strategy, with new technologies and products being developed, including the TideTouch platform for energy management [9][10] - The company is also enhancing its product offerings to meet growing demand for energy efficiency in Western Europe [8][9] Management's Comments on Operating Environment and Future Outlook - Management acknowledged revenue headwinds but expressed confidence in long-term growth, particularly in the connected home segment, expecting full-year growth of 12%-16% compared to 2024 [6][16] - The company anticipates Q4 2025 net sales to range from $82 million to $92 million, reflecting a decline from Q4 2024 [16][6] - Management emphasized the importance of operational discipline in navigating unpredictability and headwinds [18][6] Other Important Information - The company is undergoing a leadership transition with an ongoing search for permanent CEO and CFO positions [20][21] - The trial date for ongoing litigation against Roku has been set for March 2027, which management views as favorable [11][6] Q&A Session Summary Question: Status of leadership positions - Management is confident in navigating the interim CEO and CFO roles and is conducting an ongoing search for permanent positions [20][21] Question: Dynamics of connected home business downturn - Management noted uneven order patterns affecting connected home revenue but expects full-year growth compared to 2024 [22][23] Question: Impact of tariffs on gross margins - Management acknowledged a temporary gross margin headwind related to tariffs, which is expected to persist into Q4 [26][27] Question: Assumptions for Q4 operating expenses - Management expects Q4 operating expenses to be materially lower than Q3 due to ongoing cost optimization efforts [29][6] Question: Customer concentration in the quarter - Two customers accounted for over 10% of sales, with Daikin at 20.5% and Comcast at 14.9% [30][6]