Socket Mobile (NASDAQ:SCKT) reported lower second-quarter revenue and a wider operating loss as the company continued to face weakness in its retail scanning business, while management outlined further cost reductions, expanded use of artificial intelligence and a push into industrial scanning markets.
Revenue for the second quarter of 2026 totaled $3.0 million, down from $3.9 million in the year-earlier quarter and $3.7 million in the first quarter of 2026. President and Chief Executive Officer Dave Holmes said the company’s top-line performance reflected “the continued challenge we are seeing with our retail scanning business.”
Margins Decline as Manufacturing Capacity Is Underutilized
Gross margin was 46.4% in the quarter, compared with 49.9% a year earlier and 51.3% in the first quarter. Chief Financial Officer Lynn Zhao said the decline primarily reflected underutilization of manufacturing capacity at current production and revenue levels, which increased fixed manufacturing costs as a percentage of revenue.
Operating expenses were $2.6 million, down from $2.7 million in both the prior-year period and the preceding quarter. Despite the reduction in expenses, Socket Mobile recorded an operating loss of $1.2 million, compared with an operating loss of $687,000 in the second quarter of 2025 and $767,000 in the first quarter of 2026.
The company reported a net loss per share of $0.16, compared with losses of $0.10 per share in the year-earlier quarter and $0.11 per share in the first quarter. Adjusted EBITDA was a loss of approximately $745,000, according to the company.
Cash totaled $1.6 million as of June 30, compared with $1.7 million at March 31. Inventory, net of reserves, declined to $3.8 million from $3.9 million, as the company sought to align inventory with current demand.
Cost Actions and AI Deployment
Holmes said Socket Mobile has introduced several initiatives intended to support sales and reduce expenses. Those actions include selective headcount reductions, with the measures expected to remain in place through the rest of 2026.
The company is also expanding its use of AI tools. Holmes said the engineering team has systematically deployed AI over recent months and plans to implement a similar approach across the rest of the organization during the third quarter.
Management expects the effort to help the company deliver revenue-producing projects and operational efficiencies with a streamlined staff. Socket Mobile also plans to simplify its product offering by removing products that are not generating revenue, Holmes said.
“We have great products,” Holmes said. “We will simplify the decision process for our customers and cull products that are not producing revenue to make our offering easier to understand.”
Retail Weakness, Shopify Status and Industrial Opportunity
During the question-and-answer session, Holmes said Socket Mobile remains a preferred and recommended supplier to Shopify, though revenue from retail and Shopify-related business has declined over the past several quarters.
“Nothing has changed there,” Holmes said regarding the Shopify relationship. “Our revenue is down in retail and was down specific to the Shopify business over the last few quarters.”
Holmes said the company is seeking to reduce its reliance on the traditional model of selling hardware through software and application partners by expanding into industrial scanning. In that market, Socket Mobile is increasingly selling directly to enterprise customers, although it also works with software vendors in some cases.
Industrial scanning accounted for about 10% of second-quarter revenue, Holmes said, adding that the company expects the contribution to increase over the next several quarters. He characterized industrial opportunities as larger transactions that can have an immediate impact when they close.
The company has moved beyond isolated testing activity in the industrial market, according to Holmes, with customers conducting broader deployments and, in some cases, entering second phases of rollouts. He said the deployments use iOS and Apple platforms, which he believes are gaining traction in industrial settings because workers are familiar with Apple device interfaces.
Holmes said Socket Mobile has seen success in the industrial effort and expects additional progress during the second half of 2026.
Liquidity Discussion
In response to an analyst question, Zhao said no going-concern issue had been raised by the company’s auditor. She said Socket Mobile aims to fund working capital through operations, while retaining access to a bank line that has not been tapped.
Zhao also said the company has previously used convertible-note financing and that its board has approved financing, but she declined to comment on potential financing actions before information is publicly released.
Management said it remains focused on controlling expenses, supporting customers and maintaining financial discipline as it works to respond to improving demand.
About Socket Mobile (NASDAQ:SCKT)
Socket Mobile, Inc (NASDAQ:SCKT) is a provider of mobile data capture and wireless connectivity solutions, designing products that enable smartphones, tablets and PCs to collect and transmit information in a variety of business environments. The company specializes in Bluetooth-enabled barcode scanners, RFID readers and image-based data capture devices that streamline point-of-sale, inventory management and field-service workflows.
Its product portfolio includes handheld scanners that support 1D and 2D barcodes, near-field communication (NFC) readers and ultra-compact mobile scanners engineered for retail, hospitality, healthcare, transportation and warehousing applications.
