Smith Micro Software(SMSI) - 2021 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Revenue for Q3 2021 was $16.4 million, a 30% increase from $12.6 million in Q3 2020, and a sequential increase of approximately $524,000 from Q2 2021 [17][19] - Non-GAAP net loss for the quarter was $258,000, equating to breakeven per share, compared to a non-GAAP net income of $1.8 million or $0.04 diluted earnings per share in the same quarter last year [36][37] - Cash balance at the end of Q3 2021 was $32.4 million, with an earnout payment of $12.9 million made to Avast after the quarter [18][42] Business Line Data and Key Metrics Changes - Family Safety revenue, including SafePath and the Avast Family Safety Mobile business, increased 77% to $12 million compared to Q3 2020, but was slightly lower than expectations due to delays in the T-Mobile agreement [20][21] - CommSuite platform revenue was $3.5 million, down 24% from Q3 2020, and down 12% sequentially from Q2 2021, primarily due to legacy Sprint subscriber losses [24][26] - ViewSpot revenue was approximately $971,000 for Q3 2021, up 19% compared to Q2 2021, but expected to decrease by 20% to 25% in Q4 2021 due to seasonality [29][30] Market Data and Key Metrics Changes - The company anticipates a continued decline in CommSuite revenue, expecting it to decrease by 30% to 35% compared to Q3 2021, as legacy Sprint subscribers transition to T-Mobile [27] - Boost Mobile, now part of DISH, comprises approximately 35% of CommSuite platform revenue, with plans to expand the relationship [28] Company Strategy and Development Direction - The company aims to provide a comprehensive solution for families' digital lifestyles, focusing on smart home and IoT markets to increase the total addressable market [16] - The strategy includes transitioning all Family Safety business to the SafePath 7 platform by the end of 2022, with a focus on the three largest Tier 1 carriers in the U.S. [99][100] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the growth potential with T-Mobile, Verizon, and AT&T, highlighting the importance of marketing efforts and retail engagement to drive subscriber growth [75][81] - The company expects to see a return to growth in 2022, particularly with the launch of FamilyMode 3 and enhanced marketing initiatives [49][76] Other Important Information - The company is working on the formal purchase price allocation for the Avast Family Safety Mobile business, with adjustments expected in Q4 2021 [40] - GAAP operating expenses for Q3 2021 were $31.2 million, an increase of 181% compared to last year, primarily due to the Avast acquisition [33][34] Q&A Session Summary Question: What is the magnitude of the Family Locator app that goes away? - The Family Locator app's revenue impact is expected to be about $0.5 million drop in revenue due to its discontinuation [69] Question: How aggressive will T-Mobile be in marketing FamilyMode 3? - T-Mobile has a strong team committed to growing the business, and there is optimism for momentum and growth post-launch [81] Question: What are the expectations for Verizon's growth and rollout in 2022? - There is a significant growth opportunity with Verizon, with expectations for large growth over 2022 and beyond [75] Question: What expenses will be maintained for CommSuite at lower revenue levels? - The expense load for CommSuite is very low and will be adjusted based on the business opportunity presented by DISH [97] Question: When will all Family Safety business be on the SafePath 7 platform? - The goal is to have all customers transitioned to SafePath 7 by the end of 2022 [99]