PCTEL, Inc.

Second-quarter revenue was $20.6 million, down 17.6% year over year and roughly $4.4 million lower than last year, and it landed at the midpoint of guidance. Non-GAAP gross margin was 49.5%, up 3.5 percentage points year over year. Non-GAAP operating expenses were $9 million, down $0.7 million year over year. Adjusted EBITDA was $1.7 million, down about 33% from $2.6 million a year ago, and non-GAAP diluted EPS was $0.07 versus $0.10 in the prior-year quarter. Cash and investments ended the quarter at $33.6 million, up about $3.4 million sequentially. For Q3, PCTEL expects revenue of $20 million to $21 million, non-GAAP gross margin of 48% to 49%, and non-GAAP EPS of $0.06 to $0.07.

David Neumann emphasized that order trends improved as inventory and supply-chain problems began to ease, and he framed the quarter as a step forward in PCTEL’s growth strategy. He pointed to new product launches, including expanded SeeHawk Monitor capabilities and the Edge Sensor, as well as design wins and channel expansion as drivers of future revenue. His tone was cautiously optimistic, stressing that demand remains healthy even though some customer inventory issues are still being worked through.

Kevin McGowan said the quarter’s revenue of $20.6 million was essentially the midpoint of guidance, with antennas and industrial IoT at $14.4 million and Test & Measurement at $6.2 million. He attributed the 49.5% gross margin to lower freight costs, favorable product mix, lower tariff costs, and efficiency gains at the Bloomingdale facility, while noting Test & Measurement margin was pressured by higher component costs. He also highlighted $33.6 million of cash and investments, a $1 million dividend payment, and the company’s intent to keep using cash for dividends and potential M&A. For Q3, he guided to revenue of $20 million to $21 million, margin of 48% to 49%, and EPS of $0.06 to $0.07.

Analysts focused on why gross margin beat expectations and management said the main drivers were lower freight costs, better mix, lower tariff costs, and operating efficiencies. Another question addressed EV traction in the U.S.; management said it is still earlier-stage than Europe but that PCTEL is cross-selling Smarteq-based products and pursuing accounts. On public safety OEM inventory, management said there is limited visibility, but they expect the issue to persist through the rest of the year and likely normalize in 2024 as orders continue to rise.