Company: SONM
Filing Date: 2025-10-31
Form Type: 10-Q
Source: 0001493152-25-020310
Chunk: 46

Company: SONIM TECHNOLOGIES INC
Filing Date: 2025-10-31
Form: 10-Q
Item: Item 8
Chunk 46
---
 of revenues from white label product sales that had a cost of revenues percentage
of approximately 94%.

Gross
Profit and Margin

Gross
profit for the three months ended September 30, 2025, decreased by $2.4 million compared to 2024. This increase reflects the lower margins
on the H500 as compared to phones, and the lower margins on the XP Pro as compared to the XP10.

Gross
profit for the nine months ended September 30, 2025, increased by $0.9 million compared to 2024 primarily due to the $5.4 million in
revenue related to the expiration of customer allowance agreements in 2025. Gross margin for the nine months ended September 30, 2025,
was 25%, which reflects the positive impact from the expiration of customer allowance agreements that have no related cost of sales,
net of the impact of the decrease in sales of our legacy products, which had higher margins in the aggregate, and the increase in the
sales of our new and replacement products, which have lower margins in aggregate, compared to 23% in 2024, which reflects the negative
impact of white label products that had a gross margin of approximately 6%.

27

Research
and Development

R&D
expenses for the three months ended September 30, 2025, decreased by $0.5 million compared to 2024, primarily due to there being limited
R&D projects during the third quarter of 2025 since most our new products launched throughout the first three quarters of 2025.

R&D
expenses for the nine months ended September 30, 2025, increased by $1.0 million compared to 2024, primarily due to there being limited
R&D projects during the first half of 2024. In 2025, R&D expenses were primarily from internal work on the development of new
variants of our XP Pro, including a version with a thermal camera, the HPUE hotspot, the XP400 phone for Europe, and the updated 5G version
of our XP3plus.

Sales
and Marketing

Sales
and marketing expenses for the three months ended September 30, 2025, decreased by $0.6 million compared to 2024 primarily due to a shift
in executive costs from sales and marketing to general and administrative expenses.

Sales
and marketing expenses for the nine months ended September 30, 2025, increased by $0.4