Smith Micro Software(SMSI) - 2019 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Total revenues for Q1 2019 were $4.5 million, representing a 54% increase from the same quarter last year [9] - Non-GAAP net income was approximately $600,000 or $0.02 per share, significantly up from the prior year [9] - Gross profit for Q1 was $7.5 million compared to $4.2 million during the same period last year, with a gross margin of 89% compared to 76% last year [16] - Operating expenses for Q1 were $7.5 million, an increase of $1.3 million or 21% compared to last year [17] Business Line Data and Key Metrics Changes - Wireless segment revenue was $8.2 million, up 70% from $4.8 million last year, with a 48% increase excluding acquisition revenue [13] - Revenue from the SafePath platform increased to approximately $2.1 million during Q1, with a 75% growth compared to Q4 2018 [10][14] - Revenue from the newly acquired ViewSpot product line was $1.1 million for the quarter [16] - The graphic segment reported quarterly revenue of $260,000 compared to $647,000 last year [13] Market Data and Key Metrics Changes - The market for smart home technologies is anticipated to reach $53 billion by 2022, indicating strong growth potential for the SafePath platform [27] - Subscriber growth related to the CommSuite product continued, although advertising revenue was lower compared to Q4 2018 due to uncertainty around advertising on the platform [15] Company Strategy and Development Direction - The company plans to leverage momentum from Q1 2019 and build upon growth in its core wireless solutions: SafePath, CommSuite, and ViewSpot [11] - A new strategic partnership with Gryphon Online Safety aims to expand the SafePath platform into home security and parental controls [11][25] - The company is focused on integrating the ViewSpot product and enhancing its features to support growth and demand [31] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about continued growth throughout 2019, particularly in the SafePath platform [41] - The company is monitoring potential regulatory changes regarding the use of Mobile Device Management technology in its products [24] - Management indicated that while growth may not continue at the same rate as Q1, they expect ongoing progress [51] Other Important Information - The acquisition of the Smart Retail division of ISM Connect was completed on January 9, 2019, involving the issuance of approximately 2.7 million shares and $4 million in cash [12] - Non-GAAP pre-tax income for Q1 was $780,000 compared to a non-GAAP pre-tax loss of $1.9 million last year [19] Q&A Session Summary Question: Clarification on SafePath revenue and subscriber numbers - Management confirmed that SafePath revenue was $2.1 million for the quarter but did not provide specific subscriber numbers [38][39] Question: Composition of SafePath subscriber base - The majority of new subscribers are from new acquisitions rather than conversions from existing products [42] Question: Pricing strategy for SafePath home solution - Management indicated that the new home solution would be viewed as an add-on feature to the SafePath platform [46] Question: Timeline for additional carriers on the SafePath platform - Management aims to add another carrier in the first half of the year while expanding efforts across all product offerings [48] Question: Nature of growth in SafePath revenues - Management confirmed that the growth in SafePath revenues was organic and driven by subscriber increases [50] Question: CommSuite revenue trends - Core subscriber base revenue for CommSuite was up, but advertising revenue was down quarter-to-quarter [52] Question: Operating expenses outlook - Management indicated that the $7.5 million in operating expenses for Q1 is higher than typical and expected to decrease in subsequent quarters [54]