SMSI - Earnings call transcript Q2 2018 | Smith Micro Software, Inc.

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Operator

Good day, everyone, and welcome to the Smith Micro Second Quarter Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today’s presentation there will be an opportunity to ask questions. [Operator Instructions] Please note, today’s event is being recorded. At this time, I’d like to turn the conference call over to Charles Messman, Vice President of Investor Relations and Corporate Development. ahead. go please Sir

Charles Messman

year and the discuss everyone. results Smith of results. received XXXX second operator, now, XXXX. us should release you for for with today quarter have fiscal – fiscal to Micro copy our June good you, XX, Thanks By of afternoon, a joining the ended press Thank Software’s financial financial the

some smithmicro.com please or a will development On information discussion visit market not Company’s of Bill us during expenses our to of you regarding have copy of limitation, profitability, consist our hear new Officer the product and Board, and the website Financial like one of Micro; do Smith and Chairman Tim that Smith, and Huffmyer, at you’ll Investor today the and today’s XXX-XXX-XXXX, statements, Chief one, revenue and call the Chief Relations and at those have e-mail reserves. we Executive section new including, If would forward-looking of future President call, company will without cash we operating note immediately. you Officer. opportunities, Please

or statements. to Forward-looking and results by trends could those uncertainties, differ forward-looking implied expressed materially cause statements or our from actual which risks involve

forward-looking for the measures. press more release of refer made. back our any Please as filed statements, certain earlier measures. in that the to today non-GAAP refer are only in forthcoming which XX-K. management’s For prepared they want to a information, remarks, to and obligation non-GAAP we’ll to I out the date recently of assumption point update to refer speak financial reconciliation disseminated discussed Smith Smith no Micro’s please risk factors to Micro belief the assumes our financial

on company. all we turn the to occurred I’ll our pleased that for Microcap the now by turn positive this are to that Bill? want over Bill, I note the With Index, the also XX. which as call a June We step call Russell addition Before to see I to over said, Bill.

Bill Smith

quarter $X.X in will very and the CommSuite. the The $X.XX I we $X.X go quarter profit in afternoon, The I our for everyone. earnings the good revenue. detailed non-GAAP review and is a Later am XXXX of for sets year the more million, great the milestone quarter million, improved Thanks, up share. I’ll at the year. to came us to the of but of the company, for wireless pleased Thank XXXX $X.X the the half in for quarter half Charlie, significant in to earnings quarter. attributable call, is from us now, was second for into today during and or for achieved and This gross quarter million turn profitability first joining Revenue the made of last second quarter you million second core progress and $X.X year. SafePath our up a and second up per financial a Tim? over conference the products, pleased two first over call. detail, $XXX,XXX call with from growth I XXXX second that Tim

Tim Huffmyer

Bill. you, Thank

warrant total issuance million. to SafePath purchased product platform each and as maps, newly and $X continues cash and a provided was completed and net earnings in funding business, the May for stock The last million proceeds look above priced the M&A share at Sprint of allocation and at during stock $X.X discussed call, May, of our prioritize $X.XX to of was for completed issued the reminder a The our common grow. as As common warrants. we support opportunities quarterly market a we placement road and on resource of private X included

agreement, In within into completed. registration the these company have agreement rights initial all addition been entered obligations securities the agreement to purchase and a also

this of excited we We new our continue round growth. with funding, are revenue journey as extremely and back profit to

quarter. the review let’s second numbers Now the for

second to revenue last compared compared $X.X segment of quarter, the of million of $X.X same quarterly The quarter posted for we the million increase XX%. last million reported revenue $X.X year, For $X.X to wireless million an year.

reported compared million of Our $XXX,XXX segment $X.X Graphics revenue quarterly to last year.

revenue of year-to-date, product increase SafePath revenues, was in quarter million $XX.X both increase growth adoption increased of last for CommSuite the customer an revenue a both second million was as year, families. the in X%. $XX.X result compared The to and For wireless rates

rolled of revenue we growth of has family. expect three XXXX the We modest do which now enhancements, XXXX, of for resulted During rest in quarter CommSuite the growth. out CommSuite in product quarters fourth the consecutive revenue

quarter from contract XXXX, second SafePath by XXX%. grew revenue over the the During of Sprint

required. These revenue We to continue on based recent actions. are actions execution, expect as dependent efforts and expected support acceleration through completely XXXX we and continue to Sprint Sprint on

operational lower an Sprint has products. based expect but originally in base XXXX product into launched first been this of termination using the a unique recently Sprint change product. subsequently additional decrease was Sunset in is legacy result quarter decision. This product The the existing in similar sales later and has new legacy Graphics agreement a on year. that discussed, previously a our to of The As of legacy unit the was studio launch product and Sprint launches clip the revenue distribution We a of was due channels of subscribers, delayed.

compared last mentioned. million is second For in related gross wireless during $X.X the to increase to the margin for compared profit just revenue margin last The million was same second directly to $X.X the higher period quarter, year. the Gross year. XX% XX% gross quarter was

X% to quarter year. expense for quarter year. XX% last was XX% million, quarter million quarter million, or or gross last was of million year. X% year-to-date decrease the period year-to-date $X.X second profit second compared to was second a the year-to-date, Operating Operating $XX.X last the to $XX compared compared For compared margin last for the $X.X the was year. for during same decrease second a $XXX,XXX of $X.X million to expense Gross

reduction a resulting of million. restructuring program expected and with XXXX, cost activities, second an $X This executed annual the staff reduction modest we management reduction program, During a of savings other cost included cost quarter on in of expense.

operating operating operating be quarter million of compared our million or or compared was second million loss new The the $X.X for million, operating of loss approximately per $XXX,XXX quarter excludes operating loss last for year. $X.X The quarterly quarter non-GAAP The income share $X.X expect last loss loss expense which year-to-date second for or net quarter non-GAAP share $X.X restructuring $X.X $X.XX year-to-date $X.XX was year. to million was earnings to We per loss non-GAAP year. compared to a non-GAAP $XXX,XXX loss The or the a of unannounced of $X.XX any the for non-GAAP loss last to income the non-GAAP $X.X plans. to a second net a compared net non-GAAP $XXX,XXX $X.XX million loss per share was share non-GAAP net year. second per last

a press comparable the Within issued most the to provided recently metrics. we metrics of our non-GAAP GAAP reconciliation release, have

value of debt includes $XXX,XXX; intangible discount the the quarter, fair of adjustments of million; following: of $XXX,XXX. of $X.X of preferred expense compensation $XX,XXX; amortization and amortization $XX,XXX; and For the issuance dividends cost Stock second reconciliation

expense $XXX,XXX; For expense million; debt primarily of compensation $XXX,XXX. of value of amortization due the is of few $XXX,XXX; discount our GAAP net losses taxes. years, $XXX,XXX; tax the amortization issuance intangible the second our adjustments preferred over Due dividends quarter foreign year-to-date, Stock income cost of the and of to and reconciliation fair following: includes to past $X.X cumulative

concludes XXXX. resulting and financial tax non-GAAP For a This second quarter the The tax was purposes, was for review. tax benefit we utilized expense year-to-date $XXX,XXX. non-GAAP quarter rate XX% non-GAAP second my $XX,XXX,

to Bill. back Now

Bill Smith

Tim. Thanks,

our starting into was SafePath that saw quarter in contribution sales report versus details, some from $XXX,XXX with QX significant in this happy which I Let’s am revenue, topline a SafePath. $XXX,XXX the in generating XXXX. first we to jump to

important made on continues add Safe Sprint the daily new off, to of progress a Found First subscribers which was with basis. service, & rollout

which retail Safe promote about Sprint a includes spoke I Found. nationwide & quarter, As new to value-added last campaign services, launched

is Sprint a out the campaign & Found. associate sales Safe to ask in the very still you with chance, have the a are early we store progress. When materials and about stop check local your the While stages, pleased by

just Safe in I pushing the Found to associates and sales to the compensating mentioned, and country Sprint existing & is sell new actively the retail As stores service across subscribers.

future. marketing Sprint in on retail An upgrades push for We efforts, some sales coincide continue to training also augment Safe integrated store is very in Found ongoing environments. on campaign and closely the the work plan that new significant the & will marketing with digital the digital near with new retail works and focused

as this platform, in SafePath safety. offering our the efforts of Connected history are in upgrade vital enhance IoT, as devices cars. as gain can you expanded with such of exciting upgrades Safe platform. to tell, last platform that enhanced As to Life spoke provide has of enabling to Family, services well and Found. about devices as a Known putting IoT these & It to behind-the-scenes briefly a Needless to important adoption maximize comprised is XXst Features families IoT platform call, momentum deployment for connected accuracy distinct expand knowledge and the our continuing evolving SafePath. as our services location note continue Connected the consumer we of filtering the and just location But for will is Life Life parental strong space IoT will are as say, to our partner of beginning. household. of such well a platform ecosystem types is as consumer controls horizon. things lot just provides parental this On into I SafePath are work solutions: SafePath the we which service and platform subscriber and SafePath necessary trackers also family include Connected SafePath on scope, expanding in consumer and home. security feature smart beyond as enhancements the horizon the for as family are and This the Connected controls; market. technology, and century us with been the web lifestyle The our on digital functionality home SafePath new SafePath the ecosystem The Life build two its wearables we pet a other

Building the subscribers by on substantially gained last both momentum QX. Now increased increased on prepaid nine the service, we’ve postpaid to our Visual Sprint’s over Voicemail platform generated past months and exciting quarter. in with another CommSuite Revenues topic.

been I achieved our nearly quarters have and has growth, pleased three of that share We is it at to three in now base consecutive highest the am years. subscriber

visual carrier-grade attributed back-end to believe billing As year product last the integration in can the today. I we we this be UI/UX have done the majority that to late best I But yet. growth improvements mentioned aren’t subscriber last and made voicemail strongly call, earnings of during enhancements. available market the we

is Our features investment we development services, our adding develop while expanded pipeline Home to very that we Alexa, such and integrating value enhance in making easier this offering, Amazon user have and will new use. strong, experience our voice-assisted access and Google revenue end voicemail By opportunities. into are as additional to and product

Just of every as next young mobile needs of platform providing users the by people. are into that generations the we important, meeting messaging the of day life modern fits a

are to meet millennials Generation expectations We a of Z. legacy service transitioning and the the

experiences provide With compelling communication service value-added We on voice for will focused for remain enable connected relevant providing a generates solutions revenue to these that that operators. enhancements, and consumers. continue mobile we seamless rich service

QuickLink our about bit a for platform. IoT Now

the explosion intriguing security, a the connected we With network of are devices, stream smart and wireless use continuous seemingly performance improvement new, witnessing with IoT cases. steady of paired endless of

the begun majority innovation the IoT to exciting nascent. has know ecosystem and of this it, world as transform remains While the fragmented we

platform As our directly challenges. QuickLink know, these you IoT addresses

variety of QuickLink As the over-the-air of a are intelligence, secure for updates challenge and solved activating and smart solution, smart industries. consumer across for IoT compliance all that insecurity, Device cities top-of-mind by Management, end-to-end businesses and value connected critical robustness carrier businesses, is as The IoT IoT standards-based QuickLink attributes remains IoT applications. to device a on-device provides true such

to healthy the the such, see from marketplace. As interest continue we platform in

into mobile Micro’s as service NetWise. network streaming, business, for cause and we to all unprecedented costs this products to continues several consume on use of By case enhancing With graphics fronts. users, providers. connectivity related users these wireless to types to Smith intelligent established at new of of network cases, tier capacity experience and in for with channels. compelling communication on of our increasing launching continue of popularity paired data side the to helping progress as quality simultaneously X the reduce service have carriers, while a high-bandwidth highly revamping such The challenges mobile of and to our complexity cable Moving remain relevant NetWise business quality operators video limited business platform end rates. MSOs to continues MVNOs make end

CLIP While new animation the impact rights year distribution of pick version to and short-term leading software XD it unveil negative up STUDIO the termination will a of expect back of on late a we we product. as have our release new in Moho, revenue, titles

have the as for focused on opportunity front to our both As I enormous but in we the we overall that, business a made the stated We I’ll call of to half in With ways open be understand, execute and emerging the with earlier, we’ll go. an case. decisive some questions. excited company have progress we are in act year, still we as ways and see bold first of us, operator,

Operator

comes Please go Sutter [Operator with question. Swift first Instructions] question Our your Securities. today from ahead Brian from

Brian Swift

Thank you.

a you First Could in give from congratulations little quarter. of you that us of the first on of Could a said new – subscribers a give terms in Sprint basis versus that profitable how color is revenues from having people you the you mix all, on while. of bit for subscriber on a converted much plus base quarter non-GAAP $XXX,XXX of have incumbent? the generated us

Bill Smith

the something every that needs is continues it seven Sprint. Bill. grows and Yes, well. things days is going Brian, kept day, and and are I to we All really grow, this to data. Actually, be week, give can’t you can that with say That’s a that base

Brian Swift

the you numbers never as as how a in was. base you’ve that kind give maybe installed put of making but that of – set? how – you of percentage has progress idea given you’re date ported number to Can of another can without Okay. That it a way the many that way – us But any just benefit end-of-life an an just over? give much migration

Charles Messman

Brian, Charles. is Charles. This Hi, this is

if grow. allowed think, not allowed start that a But think But that we do both say We’re it’s we’ll start we it’s to that’ll grow, to give metric as healthy this not to we’re share to I time. be I that and, on out. as it fair at to sides just

Brian Swift

subscribers around either on you give world? Could us other kind in what in are progress you And of North making America or terms of update that? bringing of the carrier kind an

Bill Smith

a a Yes, that number lot of we X sales underway on. of tier are carriers with there’s activity focused

new We good are tell getting a reception. I don’t you anything to have today.

bring I we and As interest we’re of soon news to we’ll, just Street. stand the level encouraging obviously, say by. that The as just do, would it’s the But getting, that

Brian Swift

those? interest for customers? up How with that ones so? about The existing on going the international year past had the signed Anything of you’ve or

Bill Smith

much They good, continue to perform. can’t they’re really in else. active I They the say product, are pushing and customers. solid

Brian Swift

thank back, Well, another Okay. I’ll you. question. I come have

Operator

ahead with McBaine. Jon comes go Please next your Gruber Our question. from from question Gruber

Jon Gruber

your Good questions. unimpressed but your with Brian’s afternoon, guys. profitability turning I’m answers impressed to with

converted the that AT&T, supposed here, of information almost And relative in talking very efforts Tmobile? what the was which people we’re – making And the because getting on what that how where a of of subscribers on What the May. did update time. AT&T, give U.S. than about any universe. And progress mobile? to guys, to – the stand guys we the long anything an we’re no didn’t maybe into now then Sand few rest of this Sprint are And in on efforts the by You program. other other be we’re Verizon the you in You or doing May, on now, we’ve Sprint $XXX,XXX any and August were revenue. end the we American was been are revenue we’re

Bill Smith

Jon. Okay,

so First off, you revenues that. total SafePath segment $XXX,XXX is from customers, the all can’t from

But I strong we as performing As forward a nonetheless, over a had company, I as the than our the far XXXX. base to got think, hoped. Obviously, movement and installed are, well continues. Sprint smaller at it’s look it we of to platform,

Jon Gruber

are that you’re you in base many adding But that how sign-ups. – do the new subscribers weren’t when Sprint And were new Sprint you converted? think Sprint

Bill Smith

subscriber growth users new of is the the strong quite to users that and number for have moved Yes, comparable over. very

about made. So that’s good progress no, very feel been the we

As will I legacy decision. far Sprint brought a as really really that’s system talk when be the to that. down, can’t

as far and very companies, all of AT&T, As the say the say. all Verizon we active we believe are are is we I future, news And aggressive. other that have mentioned, you all that with and carriers good we in T-Mobile, I will those can that can

Jon Gruber

Thank you.

Operator

Please Kris go from question. from comes with Tuttle question ahead SoundView. next Our your

Kris Tuttle

I could IoT customer other that? just some QuickLink the thinking this product Yes, for if give Can currently on How a price that? you from you you Is how more compare mentioned product. that that you’re revenue where are – a currently standpoint? line up And the we follow should does about on – information be to product?

Charles Messman

time little a and customers just update Maybe answering of and a We’re bit having wanted tough I’ll an repeat. so view have a just general we of QuickLink the type on IoT that. on he

Bill Smith

Okay.

on space, money most exciting candidly, also But have banner. we number We will CommSuite is. have [indiscernible] the variety a on We we all that, that’s support of because come customers the that markets. a handsets It think in like and but is is and for not more QuickLink our of emphasis things do and it but – well an only where have IoT, IoT traditional we of that under different us. for SafePath

Kris Tuttle

rejuvenating. and opportunities these have the How that rapidly? XD any these you’re the that you’re mentioned sort Okay, graphics before, then puzzled growing know of working some probably synergy I on And you’ve other more is one fair. question. you between business? still And enormous is and that sort are why of but I’m material to that’s of that you business working there program are this others heard on

Bill Smith

a pressure. well. it’s really when you in say about business, relation Yes, under some They’re got wireless. late, of are business wireless you But come call we number at clearly, has years good. into – to when brand of look the Of all performed it’s ago. I products think a it’s The products. really It kind it

Kris Tuttle

news we’ll ground more look thanks Sprint for and Okay. getting off Well my congratulations taking to the questions and forward future. on the in

Operator

next you ahead with Cowen. Our Jeff with question. Bernstein comes Please from go question

Jeff Bernstein

Yes, hey guys.

details there get number Comcast to this guess, subscriber live some can NetWise. now an on us Or correlation like they bunch with burned Just building to getting Charter kind kind give both I of up, purchase Or you’re we whether see revenue you of the and and with exactly a there? on of – what detail do some initial licenses is start were subscriber through? kind what that of some growth? of haven’t when

Tim Huffmyer

We’re mobile positioned operators. well with the

As on additional their material would The right purchases our numbers numbers license grow, expect significantly now. we end. aren’t

emphasis So continue continue certainly to in we positive there be and disclosures in we our that in platform and customers. future. on And is the activity licenses that a the we But to in ton growth sell that them have. those of not on – to

we well that believe significantly we’re we As see there. industry grow, positioned

Jeff Bernstein

those from NetWise? year-to-date revenues had you’ve guys So for

Bill Smith

Correct.

Jeff Bernstein

Got you, okay.

ought as they they’re to there? now scale grow continue to their subscriber so bases And

Tim Huffmyer

Yes.

Jeff Bernstein

the size? guess, I kind like certain of pricing in is lot scale I more because that. that. detail of a or or at price, not – – Okay. certain little that together, something on, give And know, just happens money a a just the there’s don’t XXX,XXX any and the Or a is that’s or pricing pricing there on It’s subscribers change

Tim Huffmyer

pricing the term, near is it the what is. For

that. some there’s scales we’re it now, not millions right near but As break there, into the

is is the So what the to related price licensing. it

Jeff Bernstein

Thanks. Great. Okay.

Operator

from next Please Pipeline your go question. comes Our Mark question from Data. ahead with Gomes

Mark Gomes

Hey, off congratulations on kick with progress gentlemen. to on Safe the – I the Found. want &

account to given it would can’t might delay Looking would knock you indicator Sprint it specifically, out once side, for entrenched guys that be there? know you that, of an at in how I about know difficult for the on to what positive but the reasons sunsetting it be comment be say safe a you

Bill Smith

time to do they not easy. dealing change X you’re a It’s Yes. easy with and installed the big that for an carrier carriers here, Any done that. it’s to tier make not base. They a they’ve like have go what

And don’t a so business see very our leaving threat think as yes, us. to I of I case always customers being sticky.

very the do. feel it. we I of That’s yes, about essence So what positive

Mark Gomes

Great.

So look confident Safe products particular if T-Mobile And, your introduced, how would guess, and you positioning product? is, recently account contrast we at the around that to SafePath – of you still I next do in that that FamilyMode on and question that feel like opportunity? terms in compare

Bill Smith

Yes.

one did controls, It that strong Yes, yes, First they lacking. weaknesses. some is in strengths. some has wholly – it’s launch while product. the it rather parental a are controls has new off, profound location also Probably it’s very biggest

competitor differences. So a controls at lot of family, concept There And family there today compete it. I the in home doing that no controls a if to total managing the to ourselves. be to just proud also that’s can – going that, in devices to how that’s is that’s sell connected and not connected look a at lot we’re lead to add what all the When bring all offering, that you’re location the or really SafePath And the you think you we that’s we you them. with to are that digitally trying you do and important but of separate market, else a when everything of we and parental have level.

moving going You that’s and what don’t be to for keep very successful point that’s a And stand still, forward. think you us. I we’ve done, just

Mark Gomes

Okay.

to the player, product the gunning probably So appears this category, you’re is supplier best-of-breed safe I be say? carriers in premier that to think question. to next you that It really my answered

Bill Smith

Absolutely.

to one. be. – number be number nothing and being like to to we want it’s but three, is there’s goal There two nice Our one, where and be that’s

Mark Gomes

expected continued recent on that? based actions. could & Okay. on color Found Can you any expect in And there is bit mentioned Sprint growth provide a and any expand on little you you you Safe – way

Bill Smith

Well, stores sometimes is there’s customer digitally. we we supporting at going us, for activities a thought. those for partnership. on, lot with takes a efforts we points Sprint, little longer And have and a of than retail the we And in active both have the fine. strong It going very a good are and everything just

Mark Gomes

Absolutely.

Okay.

So final cede on Safe bit. then floor question and & Found, the I’ll a for

You Sprint But have this, linear or later. when when you’re new for when more mentioned bringing you’re at versus growth you new that, product obviously anticipate you customers, know a I’ll choice area? there the questions the in look like you – – growth in the legacy, first time for customers that do accelerating and

Tim Huffmyer

Mark, new subscribers? that to was specific

Mark Gomes

yes. to Specific subscribers, new

Tim Huffmyer

with is Yes, legacy a platform large the Sprint, interesting, in accessing we the a as existing to whole. the subscriber with subscriber opportunity but there’s and base think base Sprint getting The exposure a opportunity of population there’s on real subscribers. larger

Mark Gomes

or saying given opportunity believe than the the larger new Sprint are the that base, base? you that is you know larger you the about the So customer of with demographics substantially customers what installed

Bill Smith

fair Yes, a that’s statement.

think if very look a move. at could up. I strong It’s of if chart, users is the you growth going show actually you a the – I that just straight new

Mark Gomes

my and for dry into All back indulging Thanks. questions. right, come I’ll the great. when back get Thanks we queue up.

Operator

Steel Mike ahead [ph] City question next comes Hackey from Capital. question. with Our go your from Instructions] Please [Operator

Unidentified Analyst

good afternoon. guys Hey,

Tim Huffmyer

afternoon. Good

Unidentified Analyst

other calls, about today’s run have. prepared been perhaps it just have previous annual million way a remarks. pointed to of customers. and in That I seemingly rate $XX to a you guys the some On explicit SafePath than So the very wanted legacy go more about question people the talking ask was from from revenue absent back

slow and wanted Or your is changed? that just still has guidance? ask, on that the I So number expectation to based start,

Bill Smith

No, from changed. users. my prior you accelerated Based on has look opportunity That’s for the that can with new also I the just base. growth installed nothing answered, question

say the So question, don’t I it number, would your we’ll know when, answer changed. time. takes nothing and that I just That’s to get exactly there. has

Unidentified Analyst

very you all Thank Okay. for me. That’s much.

Bill Smith

you. Thank

Operator

follow Pipeline up is question And from Gomes from our a next Mark Data.

Mark Gomes

All right.

in guys How CommSuite. bullish, number three on of sounded subs you do of to feel It that kind have Moving years. product? what very do you in and about stickiness highest that

Bill Smith

preload as android that on understand Sprint It’s devices We all We business. are years. shipped number business of a we’ve had – a for the this sells.

product. our growing are We

and We’re going that voice we something new what bring it take exciting. adding to from be a and standpoint can new – legacy the and features of so into capabilities somewhat of

map a heavily focused way on younger in are to trying products it users well. will We to appeal our that as the

So think and is a long-term this play, it. bullish no, about we pretty we’re

Mark Gomes

odds most little odds and about bit more it then any because the that losing if a And hear the you the like you Okay. I’d about a earlier what you product, sounded believe decreases customers. it are on you obviously can little of competitive you bit competitive like said – to new customers increases the that of are expand in most offering this space. winning

Bill Smith

And but at And prior than already where solution. there some sell really a carriers there a going we’re wasn’t Yes, market to the others a it changes think in the voice to we opportunity. on is I other years, have had always In inflection an of tried that lot Sprint does. point world. just

that’s think I changing.

an and we carriers offer go positive. really opportunity something think them now and have other Tier to I X could to fresh that’s back be and new that really,

It’s I and Google the think – positive stuff. a it’s is it’s new, bit Home of and all of fresh attraction little integration it. Amazon really the got SBS to Alexa

it’s what sticky anybody, do space. with space Visual be not but So a sticky is And we prior more to almost question, very Voicemail. really your a impossible to than not really there’s really, feel would that we challenging It good. change. I’m

Mark Gomes

new tricks an that dog, of I’m and Google On old Home of Alexa kind integration, guy. kind

product one CommSuite provide or you that what Alexa? – use What or integrated are can the you do what Home or exactly, could would with two the you set So do? Google things cases, into like one two

Charles Messman

how one read application so can – saying, as Alexa, Alexa, phone they’ll take actual read for you of that Mark, in voicemail me?" areas last? can, And it. mean, Alexa "Hey, of, think up many of way you to walking going things the forward. sort then phone other called your into they’ll further go. Or and that me obviously, Does your to who you. I the the it like "Hey, well And think from any called the you sense? think That’s through voicemails home about do and I who if as these that would have?" be you of it do setting voicemail evolves things could as make the messaging other

Mark Gomes

round Appreciate sense. it. perfect makes that in One two. last one Yes,

Before of I $X.X sequentially. actually there cost cede that What that goods shift and created down the revenues were like floor, the one dynamic? sold more. million up were was Sequentially, mix

Tim Huffmyer

shift there Mark. products is CommSuite on margins there, mix The our higher SafePath Yes. and

So we’re associated with done we’ve achieving over what the just the levels. profit past in

Mark Gomes

higher for a in a – account need Yes, you doesn’t account to for of percent margins sold. decrease goods cost XXX-plus margins

lower margin across higher margin get So products lower maybe some had the these board just or somehow? revenue with other did products you

Tim Huffmyer

with our We product were current higher sets. achieving margins

Mark Gomes

Okay.

that percentage So brought of goods basis, the but not cost sold at just okay. down, a

Tim Huffmyer

Thanks, Mark.

Operator

from Sutter comes Securities. question next Swift Our from Brian

Brian Swift

bit. you if a wonder little clarify I

going that would stuff. and some to away, some or vehicle, far quarters have Is how that modules able Sprint and You Is the that said things again, you secondly, launching months others these vehicles, be the be your tracking shortly, SafePath months, when And quarters, platform platforms do for are that the or away? weeks have any for the would be? that to of and that, you’ll new away, of the then some home. a IoT away of like platform think find kept

Bill Smith

Well.

the about that Let we me can just talk control. part

if integration family product Tier the provide live they’re end not car of the will We product of that trackers, sourcing single to a these XX, interest The mode pet things XX and with access instead wearables, to app Tier the lot year, XX, shippable have have home security, will with active having And now. are right one of carriers a looking is is underway user should apps. before We very monitoring, the for that next efforts within application are just and sooner. what in that to we demonstrate little of have a probably a a quarter, have carriers. number that in X a –

it’s view they it So make get brand get they pretty exciting. to the and that’s their to it, something family, to

Brian Swift

And Okay. you of been the answered this you… platform. to back speaker is may away launch kind I of Could far go of question have how when this

Bill Smith

demo not that be in year, the said live shipped. be And Okay. within next the product of a able we was the Yes, quarter, this if sooner. to the will end by what environment platform should that, little I a

Brian Swift

Okay. Thank you.

Operator

Kris from Our proceed your next comes from question Please with SoundView. Tuttle question.

Kris Tuttle

the carriers what’s not guess, to the well lightning I a way fast, and if powerful my IoT little carrier would I’m going a I I this thanks. with in whole customers. Alexa, with on participate integration stuff were are know want Hi, a observing for more I but desperately connect as because obsessed with instance, that

this by sum the – potentially can is just to shippable something you so up having area So that talked you that year-end. demonstrate QX, about in

Bill Smith

would IoT for the part platform. SafePath the That be of SafePath overall

Charles Messman

what that Is was CommSuite actually I this CommSuite. year. referring launched think to saying? you were he’s When

Kris Tuttle

I is the the carrier’s have now, with which, severely Yes, least that. I would they my question no to consumer space, casual imagine want they participation say to at they it’s as the but – right – participate mean, super change but to formed, in a I ability observer, well IoT I’d really mean, next

Bill Smith

of Yes, the have at with we that I the would towards that looking goal. by could timetable the end Alexa That’s our say year a CommSuite. working we’re –

are that’s some in a of the made not they out a on that’s market, the comment market the about a it’s part to starting not just that big you a kinks. the part of a This IoT really – the the If player knock market work it’s is of now consumer space. carrier

the are in think So they forefront. really I

a the I subscriber value, add to their I way They think base. that see see value they think they they will. that can and

So able doesn’t this that lot is around be that’s market how market, IoT consumer fresh. you that one, dog. to to for IoT you’re the by whole when established players, while. the want to industrial get you something enter number the a But that’s top And right is you of to that’s and you way, have to market the not a a be say want been earn say

Kris Tuttle

that it. I Thanks for appreciate info. Okay. additional

Operator

Bernstein question with Cowen. with comes go your ahead Please next from Our Jeff question.

Jeff Bernstein

– your I to I et wanted discussion. can with on you cetera. Yes, read to cetera, on so, guess, Siri how And Apple just the voicemails many ask phone, texts, CommSuite et you you ask Siri Siri follow up today, can an have,

with going not do can exist you all of Alexa whatever exist? with, just or I integrated to services? So at that it that these does is not in Android Samsung’s other the once CommSuite or world voice And don’t know, is, it’s Bixby,

Charles Messman

it at I Jeff, that that Basically, it’s think way. stage, Charles. doesn’t work this

So on Android. it’s not available

Jeff Bernstein

Got you.

evening to what of with kind the in is you’ve Siri exists if on score market your already Apple the this phone. got Android So phones

Charles Messman

And So right? – closed who’s I setting that to can voicemails to it over now, unique go ways the broader there’s in in. that walk So think lots you take again, called is their Again, go you your maybe we way full There’s next think Yes, time. workings, that up even I your can it’s steps think home set a can you different have of a builds over and get it even sense say, this me? the of up, Apple a as correct? voicemail. and system, can also

Jeff Bernstein

just by there the in clarify talking gone I which have yet? wanted And or you. already very out Got then, about now, having Are not potentially Alexa you backlogged, right for you year-end. were is queue understand to certification, this I you

Charles Messman

we’re Yes, definitely there.

Jeff Bernstein

you. Got

you. Okay, great. Thank

Operator

comments questions. back And the ladies time, additional call closing – over at for remarks. I’m and to showing any like Charles this to no I’d turn Messman gentlemen,

Charles Messman

the everybody being call to like thank on I’d today. So for

yet. talking not and have excited I everybody to to to we’re Thanks, great obviously weekend. have feel think here. forward reach look if you and And further We’re earnings a me done great questions, on free day. Please has We to next out I hope a directly our very you call.

Operator

you that gentlemen, call. conference for conclude presentation. do today’s today’s and thank We attending Ladies does

lines. You may now disconnect your

Smith Micro Software (SMSI) 24 Jul 182018 Q2 Earnings call transcript