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DATE
Feb. 19, 2026 at 5 p.m. ET
CALL PARTICIPANTS
- Chief Executive Officer — Kevin Mills
- Chief Financial Officer — Lynn Zhao
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TAKEAWAYS
- Q4 Revenue -- $4 million, down 18% year over year, and up 28% sequentially from $3.1 million in Q3.
- Q4 Gross Margin -- 50%, compared to 51% last year, and 48% in Q3.
- Q4 Operating Expenses -- $2.6 million, a 10% year-over-year decrease, and a 2% sequential increase.
- Q4 Operating Loss -- $730,000, compared to a $513,000 loss last year, and a $1.2 million loss in Q3.
- Q4 Net Loss Per Share -- $1.43, versus $0.00 last year, and $0.15 in Q3.
- Q4 Adjusted EBITDA -- Loss of $94,000, against a gain of $140,000 last year, and a loss of $540,000 in Q3.
- Full-Year Revenue -- $15 million, a 20% decrease compared to $19 million last year.
- Full-Year Gross Margin -- 49.7%, versus 50.4% last year.
- Full-Year Operating Expenses -- $10.7 million, down 10% from $11.9 million, mainly due to employee cost management.
- Full-Year Operating Loss -- $3.7 million, versus a $2.8 million loss last year.
- Full-Year Net Loss Per Share -- $1.81, compared to $0.30 last year.
- Full-Year Adjusted EBITDA -- Loss of $1.2 million, versus a loss of $320,000 last year.
- Full Valuation Allowance -- $10.7 million established against deferred tax assets under ASC 740, triggered by cumulative losses.
- Year-End Cash -- $2 million, after $1.4 million in cash used for operations, and $5.5 million in capital expenditures, partially offset by $1.5 million in convertible note proceeds.
- Year-End Inventory -- $4.2 million net of reserves, down from $4.9 million last year.
- Product and Market Initiatives -- Launch of CaptureSDK 2.0, new SocketScan S721, expanded ruggedized line, and approval of S370 and S550 as My Number Card readers in Japan enable growth in targeted verticals.
- Enterprise Engagement -- XtremeScan product featured at Apple Connected Worker series with 50+ major companies, catalyzing "significant interest," and a pipeline of "high-value opportunities."
- Warehousing and Logistics Penetration -- Deployed with a Fortune 10-level customer, 150 units in daily use; product feedback led to updates in the second-generation XtremeScan 16e.
- Management’s Short-Term Outlook -- CEO Mills said, "Overall, I would say we're on track for a reasonable Q1. So I wouldn't say we're overly optimistic or pessimistic. I think things are kind of as expected as we started the year."
SUMMARY
Socket Mobile (SCKT +3.75%) management outlined sequential revenue growth in Q4 following year-on-year declines, with disciplined cost controls moderating operating expense and loss trajectories. The enterprise sales pipeline expanded after a prominent Apple-hosted industry event, positioning the XtremeScan line for large-scale enterprise projects, while newly certified products secured a foothold in Japanese government markets. A full valuation allowance was recognized against deferred tax assets, significantly impacting quarterly net loss per share and signaling a material accounting adjustment tied to recent loss history.
- Cash balances at year-end reflected ongoing investment in capital expenditures, partially supported by convertible debt issuance, while inventory reductions pointed to improved working capital management.
- Annual adjusted EBITDA moved further negative, indicating continued earnings pressure despite efficiency initiatives.
- Management’s product strategy centered on expanded platform support, and feedback-driven refinement of key hardware, notably in warehousing and logistics applications.
- Gross margin performance demonstrated resilience amid revenue contraction, attributed by management to operational discipline.
INDUSTRY GLOSSARY
- My Number Card: Official Japanese government-issued digital identity card enabling electronic authentication in both governmental and commercial settings.
- ASC 740: U.S. accounting standard governing the recognition, measurement, and presentation of income taxes, requiring companies to assess realizable deferred tax assets.
Full Conference Call Transcript
Kevin Mills, Chief Executive Officer; and Lynn Zhao, Chief Financial Officer. Now I'll turn the call over to Kevin. Please go ahead.
Kevin Mills: Thank you, operator. Good afternoon, everyone, and thank you for joining us today to discuss our performance for the fiscal year 2025. In 2025, we operated within a very challenging macroeconomic and distribution environment. While sales volumes were impacted by these external headwinds I am pleased to report that we made significant progress strengthening our product portfolio, expanding our technology capabilities and enhancing the overall value we deliver to our customers. Despite the volume pressure, our gross margins remained resilient. This is a direct result of our disciplined cost management and a relentless focus on operational efficiency.
We took deliberate steps this year to reinforce our financial position and preserve the resources necessary to support our longer-term innovation and service goals. We advanced our position in the mobile data capture market through a series of critical innovations designed to meet the needs of a more integrated digital world. We launched CaptureSDK 2.0, a unified next-generation development toolkit to simplify the lives of developers making it easier than ever to build seamless integrations across both iOS and Android platforms. We introduced the SocketScan S721 with Bluetooth Low Energy for faster pairing and lower power usage.
We also expanded our ruggedized line with the XtremeScan v16e, the DuraScan D751 NFC and RFID reader and the compact DuraScan D764 for direct part marking applications. A notable highlight for our enterprise strategy occurred on December 18 when our XtremeScan product was featured in the Apple Connected Worker series. This Apple hosted invitation-only webinar series is specifically designed for major companies interested in transitioning their workforce to iOS-based devices. With over 50 large companies in attendance, we saw significant interest in our XtremeScan solutions. While we recognize that project with large-scale enterprises require time to mature, the first step is demonstrating what is possible.
We were honored to showcase our solutions on this platform and expect to spend a significant portion of 2026, pursuing the high-value opportunities that have already surfaced from this event. We also strengthened our international presence, particularly in the APAC region. We received official approval in Japan by our S370 and S550 as certified My Number Card readers. This milestone enables broader use in government services and digital identity authentication, contributing to growing engagement across retail, industrial and enterprise markets. Looking ahead, we remain focused on delivering dependable, high-quality data capture solutions that help our customers improve productivity and stay competitive. We have continued to invest in product development and global reach because we believe these investments drive long-term value.
We are proud of the progress we have achieved in 2025 and we sincerely appreciate the trust and support of our customers and partners as we continue to build for the future. With that said, I will now turn the call over to Lynn.
Lynn Zhao: Thank you, Kevin. Good afternoon, everyone. Thank you for joining today's call. Our Q4 revenue of $4 million decreased 18% year-over-year from $4.8 million in the prior year quarter, but increased 28% sequentially from $3.1 million in Q3 2025. Gross margin for Q4 was 50% compared to 51% in Q4 2024 and 48% in Q3 2025. Operating expenses for Q4 were $2.6 million representing a 10% year-over-year decrease and a 2% sequential increase from the preceding quarter. We recorded a Q4 operating loss of $730,000 compared to $513,000 loss in Q4 2024 and $1.2 million loss in the preceding quarter.
In Q4, driven by the cumulative losses in recent years, we recognized a onetime adjustment to establish a full valuation allowance of $10.7 million against our deferred tax assets in accordance with ASC 740. Net loss per share for Q4 was $1.43 compared to $0.00 per share in Q4 2024 and a loss of $0.15 per share in Q3 2025. Q4 adjusted EBITDA was a loss of $94,000 compared to an EBITDA gain of $140,000 in Q4 2024 and $540,000 loss in Q3 2025. The revenue for the year was $50 million, a 20% decrease year-over-year compared to $19 million in 2024. Gross margin for the year was 49.7% compared to 50.4% in 2024.
Operating expenses totaled $10.7 million, down 10% from $11.9 million in 2024, primarily reflecting employee cost management initiatives. We reported a full year operating loss of $3.7 million compared to an operating loss of $2.8 million in 2024. Net loss per share was $1.81 in 2025 compared to $0.30 in 2024. Adjusted EBITDA for 2025 was negative $1.2 million compared to negative $320,000 in 2024. Turning to the balance sheet. We ended 2025 with $2 million in cash. During the year, we used the $1.4 million in operating activities, invested $5.5 million in capital expenditures and raised $1.5 million through issuance of subordinated convertible notes.
As of December 31, 2025, the inventory net of reserves was $4.2 million compared to $4.9 million at the end of prior year. This concludes our prepared remarks. I will now turn the call over to the operator for questions.
Operator: [Operator Instructions] Our first question today comes from Steve Swanson, a private investor.
Steve Swanson: Kevin, can you comment a little bit, we're 7 weeks into 2026. How are you feeling about the business right now?
Kevin Mills: I think we got off to a reasonably good start in January. So we're feeling okay. We have a lot of activity subject to the follow-up we did for the Apple event in December. So we've been extremely busy. Overall, I would say we're on track for a reasonable Q1. So I wouldn't say we're overly optimistic or pessimistic. I think things are kind of as expected as we started the year.
Steve Swanson: Okay. Another one. We've been trying to get into the warehousing and logistics business for a while now. Have we had any successes yet?
Kevin Mills: Yes. We have one large customer who is, I suppose, a Fortune, I don't know, 10 or thereabout company that we have deployed with. We have something in the region of 150 units being used on a daily basis. I think based on the feedback we've gotten, we've been able to update the units, and we feel that the second generation, which we announced in December, is substantially stronger. I think with the benefit of hindsight, we covered the camera in the initial rollout of our XtremeScan.
And I think that we didn't realize how integral to many applications the camera is and that we incorrectly determined that the scanning would supersede the camera, which turned out to be not the case. In our second generation, which we focused on the 16e, we have corrected that and the camera is now fully available to the user. And we've also been able to improve a number of other, let's say, shortcomings in the product based on the feedback we've got and the tests we've done.
So I really feel that the V2 product, which we're in the process of now starting to ship is a large step forward in terms of the overall performance and benefit to the end user. So we feel particularly good about that.
Operator: [Operator Instructions] We have no further questions at this time. Lynn, I'll turn the program back over to you for any additional or closing comments.
Lynn Zhao: Okay. Thank you everyone, for your time and for joining the call. Wishing you a good rest of the day.
Operator: That concludes our meeting today. You may now disconnect.
