Exchange: NASDAQ | Sector: Technology | Industry: Communication Equipment
Q3 2024
Published: May 15, 2024
Earnings Highlights
Revenue of $6.18M down 47.9% year-over-year
EPS of $-0.10 decreased by 575.2% from previous year
Gross margin of 8.3%
Net income of -1.18M
"N/A" - N/A
Franklin Wireless Corp (FKWL) QQ3 2024 Results Analysis: Revenue Contraction and Lean Margins Amid Strong Liquidity
Executive Summary
Franklin Wireless Corp reported a difficult QQ3 2024, with revenue of $6.18 million and a gross profit of $0.51 million, translating to a gross margin of 8.26%. The quarter delivered an operating loss of $1.56 million and a net loss of $1.18 million, with an EPS of -0.0998. Year-over-year comparisons show steep declines across revenue (-47.9%), gross profit (-75.1%), and net income (-574.8%), while QoQ figures also reflect weakness, particularly in revenue and gross profit.
Despite the profitability challenges, the company maintains a strong liquidity position, ending the period with cash and cash equivalents of $7.00 million and total cash-related assets (including short-term investments) indicative of substantial cushion relative to short-term liabilities. Net debt stood at approximately -$5.44 million, highlighting a net cash position. Cash flow from operations was negative (-$0.78 million) driven by working capital movements (notably increases in accounts receivable and reductions in accounts payable), while capital expenditures were modest (-$0.09 million). Management commentary on QQ3 2024 cadence and strategic priorities is not supplied in the provided transcript data; thus, the analysis relies on the financials and balance sheet signals. Investors should monitor whether operating leverage improves, whether working capital dynamics stabilize, and whether management communicates optionality in product mix, cost control, or go-to-market efficiency going forward.
Net Income: -1,175.7; Net Margin: -19.03%; YoY: -574.77%; QoQ: -53.76%
EPS: -0.0998; YoY: -575.24%; QoQ: -53.78%
Financial Highlights
Performance highlights and trend context (USD, in thousands unless noted):
- Revenue: 6,176.5; YoY: -47.89%; QoQ: -30.19%
- Gross Profit: 509.9; Gross Margin: 8.26%; YoY: -75.07%; QoQ: -38.41%
- Operating Income: -1,555.2; Operating Margin: -25.18%; YoY: -437.26%; QoQ: +0.05%
- Net Income: -1,175.7; Net Margin: -19.03%; YoY: -574.77%; QoQ: -53.76%
- EPS: -0.0998; YoY: -575.24%; QoQ: -53.78%
- EBITDA: -1,315.4; EBITDA Margin: -21.30%; YoY: not disclosed in a directly comparable form here; QoQ: -
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
6.18M
-47.89%
-30.19%
Gross Profit
509.90K
-75.07%
-38.41%
Operating Income
-1.56M
-437.26%
0.05%
Net Income
-1.18M
-574.77%
-53.76%
EPS
-0.10
-575.24%
-53.78%
Key Financial Ratios
currentRatio
4.17
grossProfitMargin
8.26%
operatingProfitMargin
-25.2%
netProfitMargin
-19%
returnOnAssets
-2.35%
returnOnEquity
-3.19%
debtEquityRatio
0.04
operatingCashFlowPerShare
$-0.07
freeCashFlowPerShare
$-0.07
priceToBookRatio
0.96
priceEarningsRatio
-7.49
Net Income vs. Revenue
Expense Breakdown
Management Commentary
Transcript availability for QQ3 2024 is not provided in the data set. As a result, no management quotes or call-specific themes can be cited. The analysis below relies on the disclosed financials and balance sheet signals. If an earnings call transcript becomes available, relevant themes to capture would include: product mix shifts, GTM strategy updates, customer concentration risk, gross margin improvement plans, and any guidance on operating discipline or cost optimization. Current gaps: no direct management commentary on revenue drivers, backlog, pricing, or cost-control initiatives.
N/A
— N/A
N/A
— N/A
Forward Guidance
No formal forward guidance is included in the QQ3 2024 10-Q data provided. In the absence of explicit guidance, forward-looking considerations center on managing gross margin, scaling IoT/M2M and 5G-enabled device shipments, and improving working capital efficiency. Key factors investors should monitor if management revisits guidance: (1) revenue trajectory and order momentum in IoT/M2M markets, (2) gross margin trajectory and cost structure optimization (R&D vs. SG&A alignment), (3) capital allocation signals (capital expenditure cadence and potential strategic investments), and (4) any updates on partnerships or carrier/channel strategy that could unlock higher-margin revenue. achievability depends on market demand for Franklin’s wireless devices and the company’s ability to convert working capital improvements into cash flow.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
FKWL Focus
8.26%
-25.20%
-3.19%
-7.49%
BEWFF
28.30%
10.80%
3.98%
44.15%
CLGN
-67.00%
-1,135.50%
-25.60%
-3.29%
CXDO
77.10%
2.62%
3.90%
8.05%
ELST
50.50%
-24.80%
-4.81%
-3.85%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Neutral-to-cautious. Franklin Wireless demonstrates a strong liquidity cushion and a modest balance-sheet risk profile, which provides optionality for strategic moves. However, the QQ3 2024 results reflect material near-term profitability challenges, including a negative EBITDA and a sharp year-over-year revenue decline. Absent an explicit forward-looking guidance, the stock’s appeal hinges on visibility into revenue acceleration in IoT/M2M, improved gross margin through product mix and cost controls, and clearer capital allocation plans. If the company can stabilize working capital, deliver margin expansion, and articulate a credible growth path, upside could emerge from a re-rating of the stock on cash-rich balance sheet and potential margin recovery. Key catalysts to watch include any management commentary on cost optimization, entry into higher-margin IoT software services, and new carrier or partner agreements that could drive scale.
Key Investment Factors
Growth Potential
The company operates in the IoT/M2M space with devices and embedded modules, positioning it to benefit from growing connected-device ecosystems. Potential growth catalysts include expanded deployments with operators, new gateway/M2M solutions, and product enhancements enabling higher-margin software-enabled services. Longer-term upside could derive from scale efficiencies, cross-sell opportunities across operator channels, and broader 5G/GSM-enabled product adoption.
Profitability Risk
Key risks include ongoing profitability pressure with negative EBITDA and slim gross margins, revenue volatility, and potential customer/concentration risk in IoT deployments. Operating cash flow is negative driven by working capital changes, which could worsen if receivables grow or payables tighten. Competitive dynamics in the low-to-mid tier hardware segment, supplier costs, and macro softness in technology capex may pressure demand and pricing. The small-cap profile also implies liquidity and valuation risk should revenue trends deteriorate.
Financial Position
The balance sheet shows a robust liquidity position with cash and cash equivalents of $7.00M and short-term investments totaling $24.73M, yielding substantial net cash (~$5.44M). Total assets are $50.0M with stockholders’ equity of approximately $36.9M and only modest leverage (total debt about $1.56M). This capital structure affords strategic flexibility, including potential investments in R&D, selective acquisitions, or working-capital optimization.
SWOT Analysis
Strengths
Net cash position with substantial liquidity (net debt approx. -$5.44M) and a strong current ratio (4.17) indicating liquidity headroom.
Diverse product portfolio in wireless/M2MIoT hardware and embedded modules with opportunities for cross-sell into operator channels.
Solid equity base with minimal leverage and a stable balance sheet that supports R&D investment and potential strategic moves.
Weaknesses
Significant profitability erosion in QQ3 2024: gross margin ~8.26% and net loss of $1.18M, with EBITDA deeply negative.
Revenue decline YoY (-47.9%) and QoQ (-30.2%), signaling demand or mix challenges in the current quarter.
Negative operating cash flow (-$0.779M) driven by working capital movements, implying sensitivity to accounts receivable and payables cycles.
Franklin Wireless Corp (FKWL) QQ2 2025 Results — Strong QoQ Revenue Growth, Margin Expansion, and Robust Cash Position in the IoT/M2M Hardware Niche...