Smith Micro Software(US:SMSI)2022-11-11 03:48Financial Data and Key Metrics Changes - For Q3 2022, the company reported revenue of $11.7 million, a decrease of approximately 29% compared to $16.4 million in Q3 2021, primarily due to a decline in CommSuite revenues and family safety revenues [11][12] - Year-to-date revenues through September 30, 2022, were $37.1 million, down from $43.7 million in the same period last year, reflecting a decrease of $6.6 million [11] - The GAAP net loss for Q3 was $7.3 million or $0.13 loss per share, compared to a net loss of $18.6 million or $0.34 loss per share in Q3 2021 [19] - Non-GAAP net loss for Q3 was $5.2 million or $0.09 loss per share, compared to a non-GAAP net loss of approximately $300,000 in Q3 2021 [20] Business Line Data and Key Metrics Changes - Family safety revenue decreased by $2.3 million or 20% compared to Q3 2021, primarily due to attrition of legacy Sprint subscribers [12] - CommSuite revenue was $1.1 million, down approximately $2.4 million from $3.5 million in Q3 2021, attributed to the decline in legacy Sprint subscribers [12][13] - ViewSpot revenue was approximately $1 million, flat compared to Q3 2021, but decreased by approximately $100,000 compared to Q2 2022 [14] Market Data and Key Metrics Changes - The company expects consolidated revenue for Q4 2022 to be flat to lower by 5% compared to Q3 2022 [15] - The integration of legacy Sprint subscribers is ongoing, with efforts to stabilize churn as customers migrate to the T-Mobile network [24] Company Strategy and Development Direction - The company is focused on completing the migration of Tier 1 customers to the SafePath platform, which is expected to create new market opportunities [7][8] - Cost rationalization efforts began in Q3 2022, resulting in $1 million in sequential quarter-over-quarter reductions in operating costs, with a target to reduce quarterly operating expenses by over $3 million by Q2 2023 [9][18] - The company aims to achieve a target of quarterly operating expenses below $11 million by Q2 2023 [33] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the future growth potential, citing strong relationships with Tier 1 carriers and a clear path for growth [45] - The company acknowledges potential economic pressures but believes that the fundamental need for family safety products will mitigate some negative impacts [62] Other Important Information - The company reported $19 million in cash and cash equivalents as of September 30, 2022 [22] - The effective date for the closure of operations in Prague is December 31, 2022, which will result in further cost reductions in Q1 2023 [18] Q&A Session Summary Question: Clarification on operating expenses and gross margin recovery - Management confirmed that the expectation for operating expenses to be below $11 million is for Q2 2023, and gross margins are expected to rebound in 2023 [40] Question: Revenue expectations from Sprint and SafePath suite growth - Management indicated that the migration efforts to T-Mobile are well underway, and Safe & Found is now branded to T-Mobile [42] Question: Simultaneous launches with all three carriers - Management stated that they are staffed to handle simultaneous launches and that the efforts by one carrier could benefit the others [60] Question: Impact of economic conditions on business growth - Management acknowledged economic pressures but emphasized the fundamental need for family safety products, which may not be as price-sensitive [62]