Socket Mobile(US:SCKT)2020-02-13 01:32Financial Data and Key Metrics Changes - In 2019, the company's revenue was $19.3 million, an increase of 17% from $16.5 million in 2018 [7] - The net operating profit before tax for 2019 was $500,000, compared to a net operating loss of $700,000 in 2018 [7] - Earnings per share for 2019 was $0.05, compared to a net loss of $0.09 per share in 2018 [7] - For Q4 2019, revenue was $4.6 million with gross margins of 53.1%, compared to $4.1 million and gross margins of 50.3% in Q4 2018 [22][23] - Net income after tax for Q4 2019 was $0.1 million or $0.01 per share, compared to a net loss of $0.2 million or $0.03 per share in Q4 2018 [24] Business Line Data and Key Metrics Changes - The SocketScan family of products represented 65% of revenue in 2019 and grew by 22% [10] - The DuraScan family of products accounted for 21% of revenue but only grew by 1% [11] - The DuraSled and Attachable Scanners made up the remaining 13% of revenue, growing at a modest 5% [15] Market Data and Key Metrics Changes - On an annual basis, 74% of revenue was domestic and 26% international, with Q4 reflecting a return to normal levels after a spike in Q3 due to Japan [50] Company Strategy and Development Direction - The company aims to continue growth driven by its strong family of scanning products, particularly the SocketScan products through partnerships with Shopify and Square [18] - The company has redesigned the DuraScan family of products to enhance durability and added a sealed upgradeable battery option, expecting significant growth in 2020 [14] - The S550, a new Contactless Membership Card Reader/Writer, is anticipated to be a significant contributor to long-term revenue goals, with expected traction in the second half of 2020 [19] Management's Comments on Operating Environment and Future Outlook - Management views 2019 as a turnaround year with revenue growth and a return to profitability, expecting continued growth in 2020 [17][20] - The company anticipates strong revenue growth in Q2 and Q3 of 2020, driven by mobile point-of-sale partners and improvements in product offerings [20] Other Important Information - The company has improved cash flow due to profitable growth, with cash of $1.0 million at the end of 2019 [26] - The remaining net operating loss carryforwards are expected to shelter future income of approximately $20.6 million for federal tax and $11 million for state tax [26] Q&A Session Summary Question: Plans to engage with the investment community - The company plans to continue outreach to the investment community, especially after a profitable 2019 [32] Question: Hiring plans for sales and technical staff - The company is actively hiring, particularly in digital marketing and software areas [33] Question: Status of S550 scanners shipped to developers - Fewer than 50 S550 scanners have been shipped to developers, with ongoing development before full engagement [37][38] Question: Inventory increase from Q3 to Q4 - The increase in inventory was planned, with additional products shipped and inventory held at fulfillment centers like Amazon [40][41] Question: Plans for cash savings after paying off the term loan - The company plans to maintain a cash buffer and will have a plan for cash generation in 2021 [42] Question: Revenue breakdown between foreign and American sales - The revenue was approximately 74% domestic and 26% international on an annual basis, with Q4 reflecting a return to normal [50] Question: Marketing implementation by Delfin - The marketing efforts are ongoing, with a focus on digital space and new initiatives [52][53] Question: Replacement for the marketing position - A new Director of Digital Marketing is set to start at the end of the month [55] Question: Expectations for revenue growth in 2020 - The company believes maintaining current momentum could lead to a target of around 20% revenue growth in 2020 [56][57]