Company: SONM
Filing Date: 2025-05-12
Form Type: 10-Q
Source: 0001641172-25-009749
Chunk: 28

Company: SONIM TECHNOLOGIES INC
Filing Date: 2025-05-12
Form: 10-Q
Item: Item 8
Chunk 28
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of Revenues

Cost
of revenues for the three months ended March 31, 2025, decreased by $5.5 million as compared to 2024. The first quarter of 2024 included
white label phones with cost of revenues of $7.2 million. The decrease resulting from the loss of this revenue was partially offset by
higher cost of revenues in the first quarter 2025 because of higher revenue from feature phones and hotspots.

Gross
Profit and Margin

Gross
profit for the three months ended March 31, 2025, increased by $5.5 million compared to 2024 because of the $5.3 million adjustment
to revenue from the expiration of customer allowance agreements in the first quarter of 2025. Gross margin for the three months
ended March 31, 2025, was 50%, which reflects the positive impact from the expiration of customer allowance agreements that has no
related cost of sales, compared to 17% in the first quarter of 2024, which reflects the negative impact of white label products that
had a gross margin of approximately 6%.

20

Research
and Development

R&D
expenses for the three months ended March 31, 2025, increased by $1.2 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. In the second quarter of 2025 we expect to continue to incur R&D expenses for these products.

Sales
and Marketing

Sales
and marketing expenses for the three months ended March 31, 2025, increased by $0.7 million compared to 2024 primarily due to an increase
in marketing spend to support new products in 2025, compliance work for Europe, as well as an increase in compensation primarily related
to sales in Europe.

General
and Administrative

General
and administrative expenses for the three months ended March 31, 2025, increased by $0.2 million compared to 2024 primarily due to an
increase in legal expenses.

Liquidity
and Capital Resources

Historically,
we have funded operations from a combination of public and private equity financings,