Company: SONM
Filing Date: 2025-08-08
Form Type: 10-Q
Source: 0001641172-25-022821
Chunk: 43

Company: SONIM TECHNOLOGIES INC
Filing Date: 2025-08-08
Form: 10-Q
Item: Item 8
Chunk 43
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Cost
of revenues for the three months ended June 30, 2025, increased by $1.8 million as compared to 2024. The second quarter of 2025 included
$1.1 million related to the impairment of contract fulfillment assets, as well as additional costs related to tariffs.

Cost
of revenues for the six months ended June 30, 2025, decreased by $3.7 million as compared to 2024. The six months ended June 30, 2025,
includes $5.5 million in revenue related to the expiration of customer allowance agreements, which had no related cost of revenues. The
six months ended June 30, 2024, had higher cost 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 June 30, 2025, decreased by $2.1 million compared to 2024 primarily due to the $1.1 million impairment
of contract fulfillment assets, as well as additional costs related to tariffs in the second quarter of 2025. Gross margin for the three
months ended June 30, 2025, was 8%, which reflects the negative impact of the impairment of contract fulfillment assets and additional
tariff costs mentioned above, compared to 17% in 2024.

Gross
profit for the six months ended June 30, 2025, increased by $3.3 million compared to 2024 primarily due to the $5.5 million in revenue
related to the expiration of customer allowance agreements in 2025. Gross margin for the six months ended June 30, 2025, was 33%, which
reflects the positive impact from the expiration of customer allowance agreements that have no related cost of sales, compared to 21%
in 2024, which reflects the negative impact of white label products that had a gross margin of approximately 6%.

26

Research
and Development

R&D
expenses for the three months ended June 30, 2025, increased by $0.4 million compared to 2024, primarily due to there being limited R&D
projects during the second quarter 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,