Below is my summary of the SCKT earnings and conference call. Based upon their report I expect earnings to grow sequentially in Q3 and possibly in Q4. I expect earnings to grow in 2015 and 2016. I've been buying shares today.
1. EPS made a big jump to $0.07/share on a slight improvement in revenue.
2. Ignoring larger deployments which are lumpy, cordless barcode scanner sales grew 27% YOY. Revenue growth is much better than one would notice by just looking at the top line.
3. The seasonal pattern is going to change this year and going forward because of the 8 series products. The 7 Series products are mostly sold for point-of-sale applications whereas the 8 Series products are sold largely for inventory applications. Sales for inventory applications are greater in Q4 and Q1 which will somewhat offset the point-of-sale seasonal weakness in Q4 and Q1.
4. They received a large $1.6M order for SOMO that will be delivered in Q4 and Q1. They expect more than half of this order to fall in Q4.
5. They expect Q3 revenue to be higher than Q2 revenue. Also, Q4 revenue is likely better than Q3 revenue due to the SOMO order and the seasonality change related to 8 Series products
6. They indicated that the improved GM in Q2 to 47% is sustainable. The margin improvement is due to cost reductions of components. They did indicate that the large SOMO order will have lower margin so expect Q4 overall margin to be perhaps 2% lower.
7. Operating expenses are not expected to increase much as they increase revenue.
8. Growth is expected in 2015 and 2016. In the press release they stated: "We believe 2015 should be a year of growth for Socket Mobile, primarily driven by mobile point of sale as well as an expanding Socket Mobile product portfolio and maturing mobile markets. We believe we are well positioned in our targeted markets and remain focused on increasing our profitability and building the business for further growth in 2016."
