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• Core Q2 2026 Financial Results

  • Total revenue came in at $3.0 million, which missed internal and analyst expectations. Gross margin declined to 46.4% from 49.9% in the year-ago quarter, driven by underutilized manufacturing capacity that increased fixed production costs as a share of revenue.
  • Operating expenses decreased slightly to $2.6 million from $2.7 million in Q2 2025, resulting in an operating loss of $1.2 million, a widening from the $687,000 operating loss in the prior year quarter. Adjusted EBITDA loss was $745,000, and loss per share was $0.16.
  • As of June 30, 2026, the company held $1.6 million in cash and $3.8 million in net inventory, with inventory reduced by $100,000 from the end of Q1 2026 to align with current weak demand.

• Operational and Strategic Changes

  • Management has implemented new cost-cutting measures, including targeted headcount reductions, that will remain in place for the rest of 2026 to preserve cash.
  • The company is aggressively rolling out AI tools across the organization to improve resource efficiency and effectiveness, with full deployment across all departments planned for Q3 2026, to allow delivery of key revenue-generating projects with the streamlined headcount.
  • Management is simplifying the company's product portfolio by discontinuing low-revenue products to make the company's offerings clearer and easier for customers to understand.
  • The company is expanding into the new industrial scanning market, a direct-to-enterprise business model that reduces dependence on the legacy retail scanning market and third-party software partner sales cycles. This new segment already contributed 10% of Q2 revenue and is growing.

Management did not provide formal numerical revenue or profit guidance for the full 2026 fiscal year or remaining quarters. The only forward-looking statements confirm the following expectations:

• Cost-cutting measures will remain in effect through the end of 2026
• Full company-wide deployment of AI efficiency tools will be completed in Q3 2026
• Revenue contribution from the new industrial scanning segment is expected to grow over the next several quarters, with additional growth expected in the second half of 2026
• Management expects its restructuring, cost control, and strategic shift actions will position the company to capitalize if customer demand improves in the future

Only overall company financial results were provided in the call, with no detailed breakdown of performance for individual product segments. Overall Q2 2026 revenue was $3.0 million, down from $3.9 million in Q2 2025 and $3.7 million in Q1 2026. The only segment-level data shared is that the new industrial scanning segment contributed 10% of total Q2 2026 revenue, with the remaining 90% coming from the legacy retail scanning business, which has faced continued demand challenges that drove the top-line miss.

• The legacy retail scanning business continues to face challenging market conditions, resulting in weaker-than-expected revenue that missed Q2 targets
• The traditional business model is dependent on third-party software partners and their sales of end-customer solutions, which means Socket Mobile has limited direct control over demand for its hardware
• Cash reserves are relatively tight at $1.6 million as of the end of Q2, with ongoing operating cash burn
• The company faces general forward-looking risks related to product manufacturing delays, component availability, access to working capital, market acceptance of new and existing products, partner willingness to distribute products, and adoption of the company's products in new vertical markets, as detailed in SEC filings
• The company's small cash position leaves it vulnerable to unexpected demand drops or delays in the growth of the new industrial scanning segment

Q: Is Socket Mobile still a preferred supplier to Shopify, given the recent decline in retail revenue and weak financial performance? / A: Management confirmed that Socket Mobile remains a preferred and recommended supplier to Shopify, with no changes to the partnership status. The company acknowledged that revenue from the Shopify-related business has declined over recent quarters, consistent with the broader weakness in the retail scanning segment. This question confirms that the retail segment's poor performance is partially tied to lower Shopify-related sales, which has been a key driver of the Q2 revenue miss.

Q: Have auditors raised a going concern issue, and is the company's current cash balance sufficient to cover operating burn for another year? / A: Management stated that auditors have not raised any going concern issues. The company noted that it has an undrawn bank credit line available to support working capital needs, and expects that ongoing cost management and eventual revenue growth will be sufficient to support ongoing operations without immediate liquidity issues.

Q: How can management drive growth when the legacy business model depends entirely on third-party software partners selling solutions to end customers, which puts demand out of Socket's direct control? / A: Management explained that the company has intentionally worked over the past two years to enter the new industrial scanning market specifically to address this risk. The industrial segment operates on a mostly direct-to-enterprise sales model (rather than relying entirely on third-party software partners) and already contributed 10% of Q2 2026 revenue. Management expects this share to grow, and larger enterprise deals will move the needle on overall revenue once closed, reducing dependence on the legacy retail model.

Q: Are additional convertible loans from the Chairman required to fund operations going forward, or will the company rely on existing bank facilities? / A: Management stated that the company prioritizes funding operations through operating cash flow. It noted that the board has approved potential financing if needed, but declined to comment further until any financing is finalized and publicly disclosed, confirming that access to additional financing from existing stakeholders remains an available option if required.