Smith Micro Software(SMSI) - 2022 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - For Q1 2022, the company reported revenue of $12.7 million, a 12% increase from $11.4 million in Q1 2021, driven by Family Safety revenue growth, partially offset by a decline in CommSuite revenue [15] - Family Safety revenue increased 64% to $10.4 million compared to Q1 2021, but decreased 11% sequentially from Q4 2021 [16] - CommSuite revenue was $1.4 million, down 35% sequentially from Q4 2021 and down $2.7 million from Q1 2021 [17] - Gross profit for Q1 2022 was $9.1 million, with a gross margin of 71%, down from 86% in Q1 2021 [21] - GAAP net loss for Q1 2022 was $7 million, or $0.13 loss per share, compared to a GAAP net loss of $3.2 million, or $0.07 loss per share in Q1 2021 [25] Business Line Data and Key Metrics Changes - Family Safety revenue growth was attributed to additional customers from the acquisition of Avast's Family Safety Mobile business [16] - CommSuite revenue decline was primarily due to the transition of Sprint subscribers to T-Mobile, impacting legacy revenue streams [17] - ViewSpot revenue was approximately $900,000, flat compared to Q1 2021 and up 11% from Q4 2021 [18] Market Data and Key Metrics Changes - The company is focused on migrating U.S. Tier-1 carriers and European customers to the SafePath platform, which is expected to enhance Family Safety applications and create cost synergies [10] - The launch of SafePath 7 at T-Mobile was well received, setting the stage for subscriber growth [34] Company Strategy and Development Direction - The company aims to enhance its product offerings by integrating features from the Avast platform into SafePath 7, targeting the digital family lifestyle market [32] - The strategy includes a focus on marketing initiatives and training programs to drive subscriber growth for Family Safety applications [43] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving revenue growth in the latter half of the year, with a goal to return to historical gross margins of 80% to 90% [44] - The company is optimistic about the potential of the Family Safety space, particularly with the upcoming launches and marketing initiatives [38] Other Important Information - The company entered into a revolving credit facility with Wells Fargo, providing up to $7 million in funding capacity [28] - A new shelf registration was filed with the SEC to establish a three-year term for future needs [30] Q&A Session Summary Question: T-Mobile marketing and training initiatives - Management indicated that specifics about T-Mobile's marketing initiatives are confidential and should be directed to T-Mobile [47] Question: Revenue trajectory and legacy Sprint impact - Approximately one-third of CommSuite revenue in Q2 is expected to be related to legacy Sprint subscribers [49] Question: Contract updates for AT&T and Verizon - Management stated that updates on contracts will be provided once agreements are finalized [51] Question: Contractor costs for migration - Contractor costs are temporary and expected to be eliminated post-migration [54] Question: Risks to SafePath growth - Risks include the execution of marketing plans and the timely deployment of the new software by customers [60]