Smith Micro Software(US:SMSI)2020-11-05 00:24Financial Data and Key Metrics Changes - For Q3 2020, the company reported revenue of $12.6 million, an increase of 7% compared to $11.8 million in Q3 2019, but a 2% decrease from Q2 2020 [11][13] - Gross profit for the quarter was $11.3 million, up from $10.8 million year-over-year, with a gross margin of 90% [11][24] - Non-GAAP net income was $1.8 million or $0.04 per share, down from $4.2 million or $0.11 per share in the same quarter last year [31] - Cash flow from operations was $3.9 million, ending the quarter with approximately $26 million in cash [12][34] Business Line Data and Key Metrics Changes - SafePath revenue increased by 30% year-over-year to $6.8 million, but decreased by 8% sequentially [14][15] - CommSuite revenue was $4.5 million, down 1% year-over-year but up 5% sequentially [17] - ViewSpot revenue was approximately $1.2 million, down 8% year-over-year but up 19% sequentially [21] Market Data and Key Metrics Changes - The decline in SafePath revenue was attributed to reduced in-store marketing initiatives due to the Sprint and T-Mobile merger and COVID-19 impacts [15][16] - CommSuite's performance benefited from subscriber stability and growth in Sprint and Boost subscribers, with Boost now part of Dish [18][40] - ViewSpot's revenue increase was driven by variable revenue activity with a tier one U.S. customer [21] Company Strategy and Development Direction - The company launched SafePath7, enhancing its connected lifestyle platform and aiming to set a new standard in family safety applications [8][42] - Continued investment in R&D is planned to support customer deployments and product enhancements [10][50] - The company is pursuing multiple opportunities to sell the SafePath platform, focusing on North America, Europe, and the Middle East [29][49] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about future growth despite short-term challenges due to COVID-19 and the T-Mobile merger [51] - The company expects fourth-quarter revenues to be flat to down by 5% compared to Q3 [24] - Management highlighted the importance of transitioning customers to SafePath7 and the potential for growth once this is achieved [90][91] Other Important Information - The company plans to continue hiring, expecting to add approximately 12 to 15 employees in Q4 2020 [27] - Non-GAAP operating expenses increased significantly due to higher compensation and contract development costs [25][26] Q&A Session Summary Question: What is the sequential guidance for CommSuite in Q4? - Guidance for CommSuite is flat to down for Q4 [56] Question: Can you provide more details on the T-Mobile and Sky onboarding? - The transition to SafePath7 is in progress, with a focus on a single family safety product for all T-Mobile customers [62] Question: What is the outlook for SafePath revenue? - SafePath revenue is expected to decline by 7% to 12% in Q4 based on current subscriber trends [16] Question: How does the company view the relationship with Dish? - The company is optimistic about its relationship with Dish and plans to work with them on both prepaid and postpaid services [63] Question: What is the expected impact of seasonality on ViewSpot? - ViewSpot is expected to see a sequential decline in Q1 but ramp up through the summer [86] Question: What are the factors contributing to the decline in SafePath? - The decline is primarily due to limitations in selling to Sprint customers and the need for a new product that can be marketed to all T-Mobile customers [88][90]