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Socket Mobile Reports Profitable First Quarter with 39 Percent YoY Growth

NEWARK, Calif., – May 5, 2017 – Socket Mobile, Inc. (NASDAQ: SCKT), a leading innovator of data capture and delivery solutions for enhanced productivity, today reported profitable operating results and record cordless scanning revenue for the first quarter ended March 31, 2017.

Revenue for the first quarter of 2017 was $5.6 million, an 11 percent increase compared to revenue of $5.0 million for the same quarter a year ago. Cordless barcode scanning revenue for the first quarter of 2017 was $5.5 million, a 39 percent increase year over year, and comprised 99% of total first quarter revenue, compared to barcode scanning revenue of $4.0 million, or 79 percent of total revenue of $5.0 million, for the same quarter of 2016.

Net operating income, consisting of net income before interest and taxes, was $668,000 in the first quarter of 2017, an 11 percent increase compared to net operating income of $600,000 in the same quarter a year ago.

Net income for the first quarter of 2017 was $386,000, or $0.07 per share, compared to net income of $548,000, or $0.10 per share, in the same quarter a year ago. The decrease was due to a change in the application of tax accounting rules. Income tax expense for the 2017 full year will be covered primarily by net operating loss carryovers with minimal impact on cash.

Gross profit margin for the first quarter of 2017 increased to 51.8 percent, compared to 49.7 percent for the same quarter a year ago.

Operating expenses for the first quarter of 2017 were $2.2 million, compared to operating expenses of $1.9 million for the same quarter a year ago, reflecting added development and production resources and higher operating costs associated with growth.

Kevin Mills, president and chief executive officer, commented, “Growth in sales of our cordless barcode scanners continues to be driven by the deployment of business applications that require barcode scanning, with mobile point of sale (mPOS) continuing to be the primary driver.  mPOS remains a large and underserved market and is increasingly being addressed by many venture capital funded application developers.

“Workforce mobilization around enterprise-issued smartphones and tablets running business applications is creating significant worldwide growth opportunities. We are also seeing developer activity increasing internationally, as well as in other mobile business application areas, including asset management and transportation, that represent emerging growth areas for Socket Mobile.

“Socket Mobile offers a wide range of barcode scanner choices for mobile application developers that enable them to support many different scanning requirements and solutions. We’re expanding our DuraCase offerings to add additional smartphones.  We’ve released to application developers our durable Near Field Communication reader/writer, our model D600.  The D600 captures data from RFID tags or from smartphones with Near Field Communications capabilities including identification, tickets and loyalty information. We expect this product to become a contributor to our revenue growth starting in 2018. 

“As smartphone and tablet technology continues to evolve, we remain focused on attracting and supporting mobile application developers with data capture products designed for the mobile markets they serve and on achieving continued growth and profitability,” Mills concluded.

-- Financial tables to follow--

Socket Mobile, Inc.
Condensed Summary Statements of Operations (Unaudited)
(
Amounts in Thousands except per share amounts and percentages)



Revenue
Cost of revenue
Three months ended March 31,
2017
$5,622
  2,709
  2016
$5,044
  2,538
 Gross profit
Gross profit percent
Research & development
Sales & marketing
General & administrative
Total operating expenses
2,913
51.8%
797
759
689
2,506
49.7%
657
687
562
 2,245  1,906
Operating Income
Interest (income) expense, net
Income tax expense*
 Net income
668
30
252
600
44
8
 $386  $548
Net income per share:
Basic
Fully Diluted

$0.07
$0.05

$0.10
$0.09
Weighted average shares outstanding:
Basic
Fully Diluted

5,912
7,771

5,646
6,504

*Deferred tax asset valuation allowance in effect for 2016

Socket Mobile, Inc.
Condensed Summary Balance Sheets
(Amounts in Thousands)

March 31, 2017
(Unaudited)

December 31, 2016*  
Cash
Accounts receivable
Inventories
Other current assets
Property and equipment, net
Goodwill 
Deferred tax assets
Other assets
$1,622
3,355
1,842
539
569
4,427
9,017
76
$1,319
2,867
1,537
260
564
4,427
9,589
76
 Total assets   $21,447   $20,639
Accounts payable and accrued liabilities
Convertible notes payable
Deferred income on shipments to distributors
Deferred service revenue
Other liabilities
$2,483
753
478
67
359
$2,214
753
1,063
73
366
Total liabilities 4,140   4,469  
Common stock
Accumulated deficit
63,144
(45,837)
62,896
(46,726)
Total equity 17,307 16,170
Total liabilities and equity $21,447 $20,639

*Derived from audited financial statements.

Conference Call

A live and replay audio webcast of the conference call can be accessed through a link on Socket Mobile’s website at www.socketmobile.com. From the home page, select “About Socket”/”Investor Relations”/ and “Conference Calls and Events.”

About Socket Mobile:
Founded in 1992, Socket Mobile is a leading innovator of data capture and delivery solutions for enhanced productivity in retail point of sale, field service, transportation, manufacturing and other mobile markets. Socket Mobile’s revenue is primarily driven by the deployment of third party barcode enabled mobile applications that integrate Socket Mobile’s cordless barcode scanners. Socket Mobile has a robust network of thousands of developers registered to use its software developer’s kit to add sophisticated barcode scanning to mobile applications. Socket Mobile is headquartered in Newark, Calif. and can be reached at +1-510-933-3000 or www.socketmobile.com. Follow Socket Mobile on Facebook and Twitter @socketmobile and subscribe to SocketTalk, the company’s official blog.

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