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]

Financial Data and Key Metrics Changes - For Q2 2025, net sales increased by 8% to $97.7 million compared to $90.5 million in Q2 2024 [16] - Gross profit was $29.2 million, representing 29.9% of sales, up from 28.3% in Q2 2024 [18] - Operating income improved to $2.9 million from an operating loss of $1.1 million in Q2 2024 [19] - Net income for Q2 2025 was $2.4 million or $0.18 per diluted share, compared to a net loss of $1.2 million or $0.09 per diluted share in Q2 2024 [19] - Year-to-date operating cash flow was strong at almost $18 million, achieving a net cash position of $4.1 million for the first time since December 2021 [8][20] Business Line Data and Key Metrics Changes - Connected Home sales grew by 46% to $34.1 million in Q2 2025, driven by new orders and product launches [16][18] - Home Entertainment sales decreased by 5% to $63.6 million, reflecting lower demand in Latin America [17] - The company expects Connected Home sales for the full year 2025 to range from $30 million to $34 million, representing growth of 14% to 29% [21] Market Data and Key Metrics Changes - The company noted that customer orders in the Connected Home channel can be inconsistent, impacting quarterly revenue forecasts [10] - Home Entertainment is expected to continue facing uncertainty over the next 12 to 24 months, with anticipated declines into 2026 [11] Company Strategy and Development Direction - The company is focused on nurturing long-term growth in the Connected Home sector while optimizing its operating model [24] - Plans to close the facility in Mexico by the end of the year to optimize its footprint and respond to market changes [12] - The company aims to protect its intellectual property and is actively engaged in litigation against Roku [13] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term vision for growth in Connected Home, despite short-term variability in order demand [10] - The company anticipates total revenue to decline in the third and fourth quarters compared to the same periods last year, due to inconsistencies in Connected Home and pressures in Home Entertainment [11] - Management is optimistic about maintaining profitability in the fourth quarter despite expected sequential declines in sales [23] Other Important Information - The company has made significant progress in improving its cost structure and working capital [20] - Adjusted non-GAAP metrics are used for budget planning and operational decisions, providing a clearer view of core performance [4][5] Q&A Session Summary Question: Comments on weakness in Latin America and North American business outlook - Management noted that trends in North America are stable but offset by challenges in Latin America and Europe [27][28] Question: Customer concentration in the quarter - Two customers accounted for over 10% of sales: Daikin at 18.7% and Comcast at 12.2% [29] Question: Historical performance in Q4 for Connected Home and Home Entertainment - Management provided Q3 figures but did not disclose specific Q4 historical data, indicating expected sequential declines for both segments [30][32] Question: Impact of tariffs on business units - Management stated they are monitoring tariff impacts and are confident in managing through the current environment without significant cost absorption [36][38]