Smith Micro Software, Inc. (NASDAQ:SMSI) Q1 2020 Earnings Conference Call May 6, 2020 4:30 PM ET Company Participants Charles Messman - Vice President of Investor Relations & Corporate Development Bill Smith - Chairman of the Board, President & Chief Executive Officer Tim Huffmyer - Chief Financial Officer Conference Call Participants Scott Searle - ROTH Capital Josh Nichols - B. Riley FBR Jim McIlree - Chardan Operator Good day, and welcome to the Smith Micro First Quarter 2020 Earnings Conference Call and ...

Financial Data and Key Metrics Changes - Total revenues for fiscal year 2019 increased 65% to $43.4 million compared to $26.3 million in fiscal year 2018 [7] - Fourth quarter revenue increased 67% to $12.3 million compared to $7.4 million in the same quarter last year [14] - Non-GAAP net income for fiscal year 2019 was $9.8 million or $0.26 per share, compared to a non-GAAP net loss of $67,000 in the previous year [24] - Gross profit for the fourth quarter was $11.3 million with a gross margin of 92%, compared to $6.4 million and 87% gross margin last year [21] Business Line Data and Key Metrics Changes - Wireless segment revenue for the fourth quarter was $12.2 million, up 77% from $6.9 million last year, driven by SafePath platform growth [14][15] - SafePath revenue for fiscal year 2019 grew 435% to $18 million from approximately $3 million in 2018, with fourth quarter revenue of $6.7 million, up 28% sequentially [34][15] - CommSuite VTT revenue for the fourth quarter was $4.3 million, a 3% sequential increase, while annual revenue increased 15% to $17 million [16] - CommSuite Advertising revenue decreased 53% for the fiscal year 2019 to $1 million, with expectations for Q1 2020 between $100,000 and $300,000 [17] Market Data and Key Metrics Changes - ViewSpot revenue for the fourth quarter was approximately $600,000, impacted by competitive pressures and a delayed launch with AT&T in Mexico [18] - ViewSpot revenue for fiscal year 2019 increased 11% to $4.2 million [20] Company Strategy and Development Direction - The acquisition of Circle Media Labs is seen as transformational, enhancing customer relationships and expanding the technology portfolio [9][38] - The company aims to lead in the family digital lifestyle market, leveraging the SafePath platform and the new capabilities from the Circle acquisition [10][37] - The company plans to launch a new combined SafePath 7.0 platform in the second half of 2020 [39] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the opportunities arising from the Sprint and T-Mobile merger, as well as Dish Network's growth [11] - The company anticipates continued growth in SafePath revenue, with expectations of 10% to 20% sequential growth in Q1 2020 [16] - Management highlighted the importance of integrating the Circle codebase and expects to complete this by mid-2020 [49] Other Important Information - The company ended December 2019 with a cash balance of $28.3 million and plans to preserve capital while evaluating strategic alternatives for shareholder returns [13] - Operating expenses for the fourth quarter increased by 33% to $7.6 million, primarily due to increased expenses in the ViewSpot business and headcount growth [22] Q&A Session Summary Question: Clarification on SafePath-Circle growth guidance - Management indicated that approximately $500,000 of Circle revenue is included in the 10% to 20% sequential growth guidance for SafePath [44] Question: Expectations for Circle's revenue in 2020 - Management expects Circle's revenue to maintain an annual run rate of $4 million until renegotiated contracts are discussed [44] Question: Timeline for integrating Circle's source code - The integration project is expected to be completed in the next quarter, with testing and integration to follow, aiming for a product launch in Q3 2020 [49] Question: Operating expenses related to the Circle acquisition - Higher-than-normal operating expenses are anticipated in Q2 and Q3 due to code integration activities and aggressive hiring [53] Question: Guidance for CommSuite and potential revenue from Dish - Guidance is based on current run rates without assuming new significant wins from Dish [63] Question: Pricing dynamics between SafePath and Circle - The Circle deal is primarily fixed in nature, with some variable components, and pricing strategies will be evaluated as integration progresses [66]

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Financial Data and Key Metrics Changes - Total revenues from operations increased 81% year-over-year and 9% sequentially to $11.8 million for the quarter [4] - Non-GAAP net income from operations rose significantly to $3.2 million or $0.08 per share compared to $241,000 or $0.01 per share for Q3 2018 [4] - Gross profit for Q3 was $10.8 million with gross margins at 91%, up from $5.5 million and 85% respectively in the same period last year [16] - Free cash flow was strong at $5.9 million, with a cash balance of approximately $24 million, nearly double compared to last year [4][9] Business Line Data and Key Metrics Changes - Revenue from the wireless segment was $11.6 million, an increase of 85% year-over-year, driven primarily by the SafePath platform [11] - SafePath Family revenue grew by 38% sequentially, contributing $5.2 million for the quarter, exceeding expectations by 26% [4][12] - CommSuite experienced a slight decline in subscribers, with revenue decreasing sequentially by approximately 7% due to the launch of new iPhones [12][13] - ViewSpot revenue was $1.3 million for the quarter, in line with expectations, but faced a sequential decline due to decreased promotional campaigns [15] Market Data and Key Metrics Changes - The company anticipates continued growth in SafePath revenue based on ongoing marketing activities and expected seasonal trends [12] - The merger of T-Mobile and Sprint presents both risks and opportunities for the company, with potential access to a larger customer base [6][7] Company Strategy and Development Direction - The company is focusing on expanding its product offerings, particularly in the IoT space, with plans to enhance the SafePath platform and introduce new consumer IoT devices [29][30] - The strategy includes differentiating the ViewSpot product suite to reduce dependency on professional services and enhance recurring revenue streams [25][26] - The company is actively recruiting to support growth in all markets, particularly for ViewSpot and SafePath product development [18] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the growth trajectory of SafePath and the potential for new subscriber acquisitions, particularly with the upcoming launch of new Android devices [13][29] - The company expects to finish the fiscal year strong, with operating revenues increasing 64% compared to the first three quarters of 2018 [33] - Management is cautious about Q4 due to seasonal factors affecting carrier focus on new subscribers rather than value-added services [54] Other Important Information - The company has seen a significant increase in cash reserves, with a $17.3 million increase in cash balance during the quarter [9][10] - Non-GAAP pre-tax income for Q3 was $4.2 million compared to $317,000 last year, indicating strong operational performance [19] Q&A Session Summary Question: Can you discuss traction with Sprint and Boost, and plans for IoT expansion? - Management noted that Boost is in a challenging position due to the merger, but SafePath growth is progressing, with expectations for consumer IoT devices to expand in 2020 [36] Question: What is the market opportunity with Sprint? - Management believes there is potential for millions of subscribers, with revenue growth driven by an expanding installed base [37] Question: What are the hiring expectations for the next quarters? - The company is looking to fill approximately 20 open positions and plans to pause hiring after reaching around 200 employees to evaluate future needs [38] Question: Can you provide more details on operating expenses? - Management indicated a couple of hundred thousand increase in operating expenses is expected for Q4, following the trend from Q2 to Q3 [42] Question: What is the impact of bundling on SafePath growth? - Management confirmed that growth has been driven by new accounts rather than conversions, and bundling has positively impacted growth [44] Question: What is the level of interest in the 5G router opportunity? - Management sees significant opportunities for mobile carriers to enter the home market, enhancing family safety through a unified application [46] Question: Will IoT have a meaningful impact on financials? - Management expects continued growth in IoT revenues into 2020, leveraging multiple approaches to engage carriers [55] Question: Will product changes in ViewSpot affect development costs? - Management confirmed that investments in engineering talent for ViewSpot are already accounted for in operating expense guidance [57]

Smith Micro Software, Inc. (NASDAQ:SMSI) Q2 2019 Earnings Conference Call July 25, 2019 4:30 PM ET Company Participants Charles Messman - Vice President of Investor Relations William Smith - Chairman, President and Chief Executive Officer Tim Huffmyer - Chief Financial Officer Conference Call Participants Scott Searle - Roth Capital Partners Josh Nichols - B Riley FBR Jim McIlree - Chardan Capital Markets Mark Gomes - Pipeline Data Operator Good day and welcome to the Smith Micro Second Quarter 2019 Earning ...

Smith Micro Software, Inc. (NASDAQ:SMSI) Q1 2019 Earnings Conference Call May 8, 2019 4:30 AM ET Company Participants Charles Messman - Vice President of Investor Relations Bill Smith - Chairman, President and Chief Executive Officer Tim Huffmyer - Chief Financial Officer Conference Call Participants Scott Searle - Roth Capital Partners Joe McIlree - Chardan Capital Markets Mark Gomes - Pipeline Data Operator Good day and welcome to the Smith Micro First Quarter 2019 Earnings Conference Call. All participan ...

Smith Micro Software, Inc (NASDAQ:SMSI) Q4 2018 Earnings Conference Call March 13, 2019 4:30 PM ET Company Participants Charles Messman - Vice President of Investor Relations William Smith - President and Chief Executive Officer Timothy Huffmyer - Chief Financial Officer Conference Call Participants Scott Searle - Roth Capital Partners Jon Gruber - Gruber & McBaine Capital Management James McIlree - Chardan Capital Markets Brian Swift - Sutter Securities Operator Good day and welcome to the Smith Micro Four ...