Smith Micro Software(SMSI) - 2020 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - For fiscal 2020, total revenue from operations increased 18% to $51.3 million compared to $43.3 million in fiscal year 2019 [9] - For Q4 2020, revenue increased slightly to $12.4 million compared to $12.3 million in Q4 2019 [9] - Non-GAAP net income for 2020 was $10.4 million or $0.24 per share, while for Q4 it was $1.4 million or $0.03 per share [9][46] - Gross profit for Q4 was $11 million, with a gross margin of 89%, compared to $11.3 million and 92% in the same period last year [42] Business Line Data and Key Metrics Changes - SafePath revenue decreased 9% to $6.1 million in Q4 compared to Q4 2019, but increased 58% for the fiscal year from $17.8 million to $28.1 million [30] - CommSuite platform revenue was $4.8 million in Q4, consistent with the same quarter last year, but decreased 3% for the fiscal year [34] - ViewSpot revenue was approximately $1.4 million for Q4, up 146% year-over-year, and $4.2 million for the fiscal year, consistent with 2019 [38] Market Data and Key Metrics Changes - The Family Safety Mobile Software Business being acquired from Avast experienced an 18% revenue decline from 2019 to 2020 [27] - The acquisition adds five mobile operator contracts, including Verizon and two European carriers, enhancing the customer portfolio [13][79] Company Strategy and Development Direction - The acquisition of the Family Safety Mobile Business from Avast is seen as transformational, positioning the company as the number one family safety software provider to wireless carriers globally [52] - The company plans to operate SafePath and the acquired Family Safety as two separate product lines to ease customer transition [56] - The collaboration agreement with Avast is expected to create significant growth opportunities in the IoT security and family safety markets [54] Management's Comments on Operating Environment and Future Outlook - The management acknowledged the challenges posed by the COVID-19 pandemic and the merger of Sprint and T-Mobile, which impacted revenue growth [10][11] - The company remains optimistic about growth opportunities with T-Mobile and expects significant outcomes from the new SafePath 7 offering [66] - Management expressed confidence in the business case and competitive position moving into 2021, bolstered by the acquisition [62] Other Important Information - The company announced a follow-on public offering for $62 million to fund the cash portion of the acquisition and for general corporate purposes [19][26] - The acquisition is expected to close early in the next quarter, with a strong balance sheet projected post-offering [26] Q&A Session Summary Question: Update on T-Mobile and future opportunities - Management indicated that planning with T-Mobile is progressing well, with a new offering called FamilyMode expected to launch midyear [66] Question: Opportunities from the collaboration agreement with Avast - Management highlighted the potential for partnership in IoT security and family safety, emphasizing a complementary approach rather than competition [69] Question: Clarification on the Avast model and European carrier relationships - Management confirmed that Avast operates on a subscription model and mentioned new partnerships with Vodafone Czech and Wind Tre in Italy [78] Question: Revenue outlook for 2021 - Management stated that the $18 million to $19 million forecast reflects the entire year, prorated based on the expected closing date of the acquisition [84] Question: Customer excitement about the transaction - Management noted that being recognized as the leader in the space reassures carriers and fosters excitement about future growth [91] Question: CommSuite revenue surprises - Management attributed the strong performance to seasonal advertising revenue, while acknowledging ongoing challenges with Sprint subscribers [103] Question: Potential for future acquisitions - Management expressed a cautious approach to future acquisitions, focusing on opportunities where they can be a top player in the market [112]