Socket Mobile, Inc. (NASDAQ: SCKT) is rocketing in the market this morning, and for good reason. The company announced its financial results for the third quarter, exciting investors. Here’s what we saw from the release:
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SCKT Stock Rockets on Q3 Financial Results
In a press release issued after the bell yesterday, Socket Mobile provided its financial results for the third quarter of 2020.
Importantly, SCKT was not able to complete its annual review process related to goodwill impairment. The company said that if there are any goodwill adjustments to the numbers, they will be reported once the annual review is complete.
Nonetheless, the company did pretty well in the third quarter. During the quarter, the company generated a 17% year over year and 51% sequential growth in quarterly revenues, which came in at $4.1 million. Earnings also proved to be a hit, with third quarter earnings coming in at $424,000 or $0.07 per share. In the same quarter last year, the company generated a loss of $94,000. Last quarter, the loss was $768,000. So, the company’s swing to profitability is impressive to say the least.
Gross margins also saw impressive growth. During the quarter, gross margin came in at 55.3%, up from 52.9% one year ago.
In a statement, Kevin Mills, President and CEO at SCKT, had the following to offer:
We were pleased to report revenue growth in Q3. We believe our Q3 results demonstrated our ability to adjust quickly to the extreme economic challenges posed by the COVID-19 pandemic and resulting uncertainties. We offset our lower revenues by proactive cost reductions, delays in non-critical discretionary spending and capital expenditures while maintaining critical longer-term projects. We also developed and implemented strategies to strengthen our balance sheet, including raising additional capital through debt financing. These actions allowed us to navigate the last two quarters well – returning to profitability in Q3, after experiencing abrupt and dramatic declines in economic and business activity in Q2.
The future will remain uncertain until the global pandemic is under much better control. Our Q3 results, coupled with our stronger balance sheet, have put us in a good position to withstand the uncertainty and rapidly changing economic situation. We will continue to serve our many application centric customers, who continue to service their customers with our products in these difficult times. We will continue to manage our expenses tightly while limiting our investment to long term strategically important projects. We would like to thank our employees for their continued commitment and hard work and thank our business partners for their support. We look forward to a stronger 2021
I need to point out the Q3’s net income* may be impacted by adjustment to our goodwill, which is currently under review. Unfortunately, this annual review was not started in time and therefore, could not be completed before today’s announcement. We will report the results in the Form 10-Q that will be filed on or around November 13th.
This Is Big News
The financial report issued by Socket Mobile after hours yesterday proved to be overwhelmingly positive. With COVID-19 weighing heavy on the economy and the company in the third quarter, the company was able to generate growth in revenue and a swing to profitability. That’s impressive!
With the swing to profitability, investors are excited about the future opportunities. So, it’s natural to see that demand for the stock is climbing, which is actually helping to send the stock on the dramatic run for the top. In fact, with a float of just 4.7 million, what we’re seeing may just be the tip of the iceberg in terms of gains.
All in all, with the strong financial report, SCKT stock is one for the watchlist.
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