Socket Mobile(US:SCKT)2024-03-06 00:52Financial Data and Key Metrics Changes - The company's 2023 revenue was $17 million, a 20% decrease from $21.2 million in 2022 [11] - Operating loss for 2023 was $3.1 million compared to a loss of $446,000 in 2022 [11] - Diluted loss per share for 2023 was $0.27, down from diluted earnings per share of $0.01 in 2022 [15] - Q4 adjusted EBITDA was $52,000, down from $300,000 a year ago and a loss of $866,000 in Q3 [16] - Gross margin improved to 49.7% in 2023 from 48.8% in 2022, attributed to decreased component costs [23] Business Line Data and Key Metrics Changes - Sales out from distribution partners totaled $19.1 million in 2023, a 2.8% decrease from $19.7 million in 2022 [11] - Operating expenses for the year reached $11.6 million, a 7% increase from $10.8 million in 2022 [46] - Q4 revenue decreased 15% to $4.4 million compared to $5.2 million in the prior year’s quarter but increased 37% sequentially from $3.7 million in Q3 [24] Market Data and Key Metrics Changes - Channel inventory decreased from $4 million at the beginning of 2023 to $2 million by year-end [14] - The company experienced softened demand and reduced channel inventory due to distributor actions [14] Company Strategy and Development Direction - The company plans to maintain R&D and sales and marketing expenditures at levels of approximately $4.5 million to $5 million [6][7] - New product launches, including SocketCam C860 and XtremeScan, are expected to contribute significantly to future revenue [12][20] - The company aims to align reported sales more closely with underlying demand by managing distributor inventory levels [17][29] Management's Comments on Operating Environment and Future Outlook - Management acknowledged that 2023 financial performance was below expectations but believes reported revenue does not reflect underlying demand [11] - The company expects cash flow to improve in the second half of 2024 and is monitoring cash levels closely [31] - Management indicated that the current inventory levels are more normal and should remain stable going forward [27] Other Important Information - The company raised $1.6 million by issuing subordinated convertible notes during 2023 [25] - The company concluded the year with a cash balance of $2.8 million, down from $3.6 million at the end of 2022 [31] Q&A Session Summary Question: Alignment of reported sales with underlying demand - Management clarified that the issue relates to balancing inventory in the channel and that revenue recognition is based on sales into distribution [17] Question: Future cash flow and need for additional capital - Management expressed that they do not feel comfortable with the current cash level but have no plans to raise additional cash, expecting cash flow to improve in the second half of the year [31]