Socket Mobile Q2 2026 operating loss widens as revenue falls

Socket Mobile's operating loss widened in Q2 2026 as revenue declined, according to the company's latest earnings report. The company's shares fell as it reported results.

Socket Mobile, whose stock trades under the ticker SCKT, reported Q2 2026 revenue of $3.0 million, down from $3.9 million in Q2 2025 and $3.7 million in Q1 2026. CEO Dave Holmes said the revenue fell short of expectations.

Gross margin for the quarter was 46.4%, down from 49.9% in Q2 2025 and 51.3% in Q1 2026. Management attributed the compression primarily to underutilization of manufacturing capacity, which raised fixed costs per unit.

Operating expenses fell to $2.6 million from $2.7 million in both the prior-year and prior-quarter periods. The adjusted EBITDA loss was approximately $745,000, compared with a loss of $100,000 in the prior quarter and $298,000 in Q1 2026. Loss per share was $0.16, versus $0.10 in Q2 2025 and $0.11 in Q1 2026.

Cash totaled $1.6 million as of June 30, 2026, down from $1.7 million at March 31, 2026. Inventory, net of reserves, was $3.8 million, down from $3.9 million in the prior quarter.

Socket Mobile's retail scanning business, particularly within the Shopify ecosystem, continued to face challenges that negatively impacted performance. The company said the revenue decline reflected broader retail market weakness rather than a change in its Shopify partnership status. CEO Dave Holmes said, "Yes, we are still a preferred supplier to Shopify" and "We're still a recommended supplier for Shopify."

Management is implementing a product rationalization strategy to eliminate non-revenue producing items and simplify customer decisions. It is also deploying AI across engineering and administrative functions after selective headcount reductions, part of a $2.6 million quarterly operating expense target. The rollout of AI-driven efficiency tools is planned to be completed during Q3 2026, with cost-cutting measures staying in effect for the rest of the year.

The company is shifting strategic focus toward the industrial scanning market, which accounted for approximately 10% of Q2 revenue. This shift leverages adoption of iOS and Apple platforms in work environments and is intended to hedge against dependence on third-party software designers to drive hardware sales. CEO Dave Holmes said the traditional model has the downside of being partly out of the company's control. Management expects the industrial segment to grow as a percentage of revenue, with future growth depending on the successful conversion of large-scale enterprise deals currently in phase two of rollout.

On liquidity, CFO Lynn Zhao said there are no going concern issues and the company aims to fund operations through cash flow and an existing bank line of credit. Management confirmed no going concern qualification was issued by auditors. They declined to comment on future convertible note financing, noting such decisions require board approval and public disclosure. Zhao also reminded that the call may contain forward-looking statements under US securities laws. The company files periodic reports, including Form 10-K and Form 10-Q, with the SEC.