Socket Mobile, Inc. (SCKT)

Q2 2010 Earnings Call

July 22, 2010 5:00 pm ET

Executives

Jim Byers - IR, MKR Group

Kevin Mills - President and CEO

Dave Dunlap - CFO

Analysts

Presentation

Operator

Greetings and welcome to the Socket Mobile second quarter 2010 management conference call. (Operator instructions) It is now my pleasure to introduce your host, Jim Byers, MKR Group, for Socket Mobile.

Jim Byers

Good afternoon and welcome to Socket's conference call to review financial results for its 2010 second quarter and six months ended June 30, 2010. Online today are Kevin Mills, President and CEO of Socket; and Dave Dunlap, CFO of Socket.

Socket Mobile distributed its earnings release over the wire service at the close of the market today. The release has also been posted on Socket's website at www.socketmobile.com. In addition, a replay of today's call will be available at vcall.com shortly after the call's completion, and a transcript of this call will be posted on the Socket website within a few days.

We have also posted replay numbers in today's press release for those wishing to replay this call by phone. The phone replays will be available for one week.

Before we begin, I would like to remind everyone that this conference call may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 as amended and Section 21E of the Securities Exchange Act of 1934 as amended. Such forward-looking statements include, but are not limited to, statements regarding mobile computer, data collection and OEM products, including details on timing, distribution and market acceptance of products, and statements predicting trends, sales and market conditions and opportunities in the markets in which we sell our products.

Such statements involve risks and uncertainties and actual results could differ materially from the results anticipated in such forward-looking statements as a result of a number of factors, including, but not limited to, the risk that our new products may be delayed or not rolled out as predicted, if ever, due to technological, market, or financial factors, including the availability of necessary working capital; the risk that market acceptance and sales opportunities may not happen as anticipated; the risk that our application partners and current distribution channels may choose not to distribute the products or may not be successful in doing so; the risk that acceptance of our products in vertical application markets may not happen as anticipated; and other risks described in our most recent Form 10-K and 10-Q reports filed with the Securities and Exchange Commission. Socket does not undertake any obligation to update any forward-looking statements.

With that said, I would now like to turn the call over to Socket's CEO, Kevin Mills.

Kevin Mills

Thanks, Jim, and thank you for joining us today. Our second quarter revenue of $3.7 million reflects record quarterly sales of our SoMo handheld computer along with the sales of our scanning products and connectivity and service-driven revenue.

In my quarterly overview, I'll mention the market dynamics for our SoMo handheld and scanning products and how we see these core elements of our business translating to growth going forward. I'll also discuss the outlook for our current markets and the business for the rest of 2010. I'll start with the SoMo and SoMo-driven barcode scanning solutions.

We generated record quarterly SoMo sales of $1.7 million in Q2, which is a sequential quarterly increase of 19%. The SoMo continues to grow steadily, driven by the increasing number of applications that our software partners have developed over the past two years and are now deployed.

While the market remains challenged and lacks any great sense of urgency due to the slow economy, we are seeing a steady increase in deployments of application solutions in various markets.

Our record SoMo sales in Q2 reflect deployments to a solid base of current customers we've established. Epocal, our largest customer in the quarter, began the rollout of their product worldwide in Q2 and launched in a number of new markets, including the U.K., Germany, Italy and Japan. We expect our sales to continue to grow with this customer, as they continue to grow their business.

Other major customers, Hospira and 3M, continue to actively market a SoMo-based solution. And we have potential sales opportunities that are under evaluation and testing.

As we've noted previously, corporate sales deployments require software-based solutions which can involve lengthy processes as companies carefully test and evaluate the overall solution.

I'm pleased to report that 3M after entering the market in mid-Q2 has received very positive feedback on their SoMo-based asset management solution from a number of large agencies. We believe the product, coupled with SoMo handheld 3M is currently working on, should result in increased sales for both 3M and Socket prior to the end of this year.

Hospira is also now actively selling their patient medicine administration solutions and promoting SoMo, and they have a few deals currently in evaluation mode.

In addition to these major customers, we have added a significant longer-term care provider to our list. This company has purchased SoMo units for a trial that begun late last month, and they expect to complete their evaluation by late August and begin a rollout in Q4.

The customer has been a long term user of PDAs, and we feel confident that the SoMo will more than meet their expectations. The requirement of the deal is more than 5,000 units, which would result in revenue of several million dollars over several quarters.

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