BSQUARE(BSQR) - 2023 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Total revenue for Q1 2023 was approximately $8.1 million, an increase of$200,000 or 2% from Q4 2022, driven by the Partner Solutions segment [8][17] - Loss from operations improved to $448,000 in Q1 2023 from a loss of$1.5 million in Q4 2022, primarily due to decreased operating expenses [17][12] - Net loss for the quarter was $71,000, significantly improved from a net loss of$1.2 million in the previous quarter [17] Business Line Data and Key Metrics Changes - Partner Solutions revenue increased by $190,000 or 3$874,000, with a slight increase in gross profit due to favorable cost of revenue [11] - Gross margin rate for Partner Solutions improved by 10 basis points, while Edge to Cloud saw a 180-basis point improvement in gross margin rate [10][11] Market Data and Key Metrics Changes - The Partner Solutions segment is heavily reliant on the success of Microsoft's Windows IoT operating system, facing competition from Linux and Android [21][22] - The Edge to Cloud segment continues to provide stable revenue, primarily from a few large customers with long-term contracts [25] Company Strategy and Development Direction - The company aims to maximize the Partner Solutions segment while preserving margins and minimizing revenue decline [24] - A shift in positioning for the SquareOne product is intended to enhance customer engagement without altering the business model [26] - The company is exploring both organic and inorganic growth opportunities, including potential acquisitions and special dividends for shareholders [29][36] Management's Comments on Operating Environment and Future Outlook - Management anticipates a continued year-over-year decline in Partner Solutions revenue, exacerbated by COVID-19 [21][24] - The company is focused on running efficiently and has implemented headcount reductions to align with revenue realities [27] - Future growth strategies will be evaluated, with a focus on shareholder value creation [29][36] Other Important Information - The company has a plan to repurchase up to $5 million worth of common stock, with approximately 304,000 shares repurchased for$400,000 in Q1 2023 [19] - The Annual Shareholder Meeting is scheduled for June 15, 2023, where key proposals, including the declassification of the Board of Directors, will be voted on [30][31] Q&A Session Summary Question: What options are being considered for shareholder value? - The company is contemplating using cash for complementary acquisitions or making a special dividend to shareholders, with no specific timeline provided [36] Question: How is the company addressing the revenue decline in Partner Solutions? - Management acknowledges the long-term revenue decline and is focused on maximizing the segment while preserving margins [24]