SMSI - Earnings call transcript Q1 2020 | Smith Micro Software, Inc.

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Operator

Good day, and welcome to the Smith Micro First Quarter 2020 Earnings Conference Call and Webcast. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. Please note, this event is being recorded.

I would now like to turn the conference over to Charles Messman. ahead. go Please

Charles Messman

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

the copy Investor not do like would you at and www.smithmicro.com. have website a section Relations please If of our visit one,

Bill have Chief we On Chairman Smith of and and call, today's Chief President Board, Smith, Executive Micro; the of Officer Financial Tim Huffmyer, Officer.

Please product of you'll hear forward-looking development opportunities, operating and that revenue company regarding during consist without of including future will those new reserves. limitations, market today note the and statements, the expense some new our cash profitability, information company's discussion and

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

risk filed more factors to forward-looking For to to made. our statements, of no and only the which are XX-K. our update as Micro Form most they date obligation any assumptions speak information, assumes in included beliefs Smith management's please refer the recently

out refer press measures. point the to want the financial today of non-GAAP non-GAAP disseminated remarks, Please we'll measures. for in I earlier prepared to refer forthcoming release back that our financial certain to a reconciliation

turn I'll said, now call the over Bill? that With Bill. to

Bill Smith

current today for safe, Call. us are you you Thanks, during your I of thank all for XXXX well Charlie. that and First and pandemic. Good everyone, afternoon, Earnings the hope joining our Quarter Conference and COVID-XX families

normal pleased number world, of while from to business most offices have of with us. home. home a very Due of for course the team our I continue productive the as working from really around be remote we is to working very Overall, we am

has year, across have equipped the great IT invested our company, we that quarter During to our team a collaboration to productivity. with last significantly technology upgrade we and the maximize fourth our of employees remote capabilities

I First quarter quarter Revenues pleased XXXX at first was the with another $X.X for Micro. the results XXXX. over $XX.X delivered. came million, increase great strong for in reported quarter of million in the am very Smith a XX% the quarter we

the free million million the or million per same $XX.X $X.X compared million. net for And quarter note, $X.X quarter Non-GAAP profit to cash last share. operations for from Gross year. was $X.X the flow of to delivered for it's to solid quarter income we important increased first $X.XX

These growth down the are break continued quarter SafePath, controls have growth Since acquisition for we of solution, with engine Circle will set parental digital last our for be we lifestyle Tim the the the driving the continues spoke into very further his the we feature remarks. to solid made the in as in numbers company. strong financials the and profitability. expansive March, good progress goal integrating code via gained SafePath towards early family base.

to offering home. for us white the enable long-time service to competitive will realize outside to X.X Micro Smith comprehensive, and that offer of effort, controls only we vision both now solution of see family for safety location market on a edge parental label kind digital this and completed of SafePath its lifestyle as be for best-in-class functionality, We integration this year bringing our the this significant the wireless Once market providers. have mid-summer most the will family services planned inside

on having Sprint merger, standpoint, in acquisition of a the which safety was position enviable T-Mobile the X. solutions sides us both completed on family Circle the From strategic puts April of

the The strategic its encouraging, progress map point made new safety remain our and partnership on the product. out T-Mobile. the family of We closely laser-focused is we with to with executing are to working have new we T-Mobile future vision this in

Safety have While looking growth Safe the forward seen our from very the regarding more Family T-Mobile. even we at potential strong of bullish Found under Sprint, we platform & are new growth

we In the addition most of to new having marketing what be market; sell on opportunity much will the exciting to to next-generation complete T-Mobile. of might we subscriber by the supported have also now is believe we the as the This a product is the base. SafePath now larger

progress not all It of also the with with very am discussions global is the even sales sales of near-total pipeline. encouraging pleased and has with sales that I continued our slowed the at of strength the our lockdown economy. our activity

at Looking ViewSpot.

Mexico's more January. platform of began We are across with XX excited the largest footprint with with deploying subscribers. the our Mexico, operators store early million technology Mexico retail a AT&T than smart one in mobile X,XXX for win AT&T

spread global the to temporary the a of deployment. halt COVID-XX However, forced

will expect up is restriction We this the open lifted once regionally.

the quarter, Mobile and Dish am with integration continue progress. the we platform, both CommSuite T-Mobile During on closely across work with with the our to the board, I new and pleased efforts

a With to detailed review quarter for financials. call over first more that, the the turn Tim Tim? let's of

Tim Huffmyer

Bill. Thanks,

For the completed result of year, million operator was increase quarter XX%. Circle business February. primarily continued revenue SafePath of posted growth $XX.X platform, revenue and due to first the of an to the increase million activity The $X.X we same last both acquisition a organic for on in quarter, revenues the compared in

the in SafePath quarter quarter all million. last grew compared the to by $X.X the provided revenue range of During SafePath fourth from of XX% and of XXXX, first guidance within year, revenue sequentially resulting

increased of SafePath quarter, last the to year. compared first first XXX% quarter the During

Sprint reason year. do is reduction revenue of the quarter decrease be stores planned subscribers not The initiatives of first executed. to also the have those XXXX, and to COVID-XX unemployment closed SafePath we primary causing to related between For compared marketing for of stores be related as COVID-XX is to in revenue causing majority decreased directly of XX% platform the the X% quarter number the situation The to second the for the increased. expect this rates to a

we return expect a reopen, to stores SafePath as growth. quarters, coming the revenue In

T-Mobile solution to SafePath the excited the base. and their opportunity also Bill selling minutes. We user a in further discuss are this about the with will new future few

X% was of quarter subscribers first of to the was quarter first XXXX, and Sprint of current fourth decrease loss our last the Boost premium services. due During compared compared the down The X% year of CommSuite the quarter to down million, year. using to quarter last and $X.X CommSuite revenue

to with We to Sprint the second Boost expect be with we CommSuite the to Dish quarter down continue flat mergers, XXXX, for of and as T-Mobile. navigate

was results for expectations. and quarter The year. quarter an our during the which with to quarter approximately comparable of was $XXX,XXX last in of last line fourth to the first year CommSuite of compared Revenue $XXX,XXX, the advertising first were current quarter increase

reminder, dependent third-party and a revenue is activities. this variable As on

We expect revenue between $XXX,XXX to of and quarter second the XXXX advertising $XXX,XXX. CommSuite be

XX% year. customer. XXXX, quarter of last exceeded ViewSpot revenue for our $XXX,XXX of The quarter greater X year approximately results with expectations XX% our compared down quarter variable of compared first fourth the the due revenue current first to to was last to and quarter U.S. up the Tier

be Based in fixed resulting a less revenue. promotional XXXX. the rates, ViewSpot into revenue continue are run and to expect variable. license predictable. down we of on categories; we XXXX bursts device the two As the and our flat of is portion is component for activity variable the The and separate campaigns, of volume related of is to the reminder, revenues current revenue, recurring which to generally short The fixed revenue to portion to fees revenue and related is ViewSpot

compared on for the X% be Overall, first reasons between the we having second down the quarter to including COVID-XX to impact X% are and all discussed, is of store expecting year. quarter this activity, revenues

year. $X.X to first period same quarter, million last last for during the quarter, For gross to was compared compared Gross was million the XX% margin $XX.X year. profit first XX% the

$X.X increase operating $X.X last first is this million year. for increase compensation The show increase trade an or grown headcount GAAP year-over-year related and million, $XX.X event expenses expenses and an was million compared related due primarily last an operating extra to $X.X non-GAAP XX% the in an million, operating first expenses year. our Non-GAAP to XX% to increase of has in was increase for year. an to quarter as expense expense the quarter in compared of

We all continue hire and of our to in aggressively resources recruit markets.

We resources and platform, SafePath invest in integration Circle additional integrations. specifically around the will resources code the additional on focus a device and SafePath IoT with current continue to

previous on rate. this run calls, headcount expense result operating quarterly discussed the activity conference As of will in growth

current looking scalable are at contract third-party capacity options we to and arrangement a meet needs. through permanent Additionally, a be development use of is allow to increase which all not will cost. This would developers,

earnings for share, to compared non-GAAP non-GAAP $X.XX or earnings the net of $XXX,XXX last quarter first per per diluted or million income share net $X.X income was a year. $X.XX The

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

costs $XXX,XXX; are includes reconciliation intangible the quarter, expense of $XXX,XXX, of adjustments; compensation which some of first following the acquisition amortization $XXX,XXX; stock For the of and noncash.

over tax years, the few Due taxes. our due and primarily to our past net cumulative GAAP income expense certain to foreign state is loss

non-GAAP utilized a The For expense period. for and XXXX each non-GAAP the actual rate expense income tax taxes X% reflects resulting we XXXX. tax purposes, during

financial To cash. will add some million of review, around closed We wrap of capital. $XX.X the quarter I up my with XXXX comments first

and the million During we of million April, warrant currently now from Separately, million operations warrants received million during $X.X have $XX.X of million used generated we from $X.X Circle received of cash on from cash we business. of warrant outstanding. $X acquisition We the and the flow exercises cash quarter, X.X exercises. operator we

alternatives excess maximize preserve long-term, evaluate will In strategic the return. the continue to short of invest shareholder capital for continue mid balance to term, capital. to the cash utilization company In we will to to the

us think shortly. we needs capital As initiating the offers will the believe having place registration that We we in overall a next greatest years. shelf three about corporate be flexibility best a company's long-term practices, the and over shelf

businesses, keep provide Program, direct small to for the Protection due on the Paycheck workers Business payroll. the designed incentive Administration to on to their administer businesses to was COVID-XX Lastly, impact the Small approved a

the has qualifications the by not accepted Although the the small business, of Business does opportunity. the company meet Small April company on guidelines Administration, issued based the loan XX a

review. This concludes my financial

back to Now Bill.

Bill Smith

Thanks, Tim.

content with our for feature creation. product on beginning to platforms, about significant product some devices, quarter, for ViewSpot more in-store talk new let's as self-service significant such adding the a improvements during content pricing URL Now made as development core progress and portal, first We dynamic filtering well as ViewSpot. new the functionality three

Studio. around branding capability ViewSpot better to the addressable We different fit as needs of market world. enhanced are the this significantly broadens ViewSpot Studio our self-service carriers

own Before ViewSpot much rely ViewSpot larger and to are not in-store to services pool tiered create With able a to carriers Studio, market their needed and to as European we content. device smaller Studio solution able of and base, the such as update a potential to campaigns now were professional bring has deploy carriers that on customers, MVNOs.

with several announce new discussions ViewSpot-related the in in wins carriers and coming currently quarters. expect are We to customer

on move our voice Mobile. to and Boost solution, deployed messaging let's Now Sprint CommSuite, at both

work mentioned to that Boost working I while on earlier, we Voicemail to to on new and ensure good to are As have forward. efforts, in executives the T-Mobile made progress also closely T-Mobile Visual the with Voicemail legacy CommSuite integration their And we access Sprint was Visual new plans subscribers similar continue with provides, with premium Dish. the services continue going discussions

We relationship have both enthusiastic with about very CommSuite. who customers strong are a

but At ultimate outcome well this will of it's positioned. are be, the believe tell early our we I too of what to point, discussions all

carriers. in the is providing for to mergers. I traditional further updates proven to cost CommSuite unique through as work revenue is solution systems, with which are CommSuite we when generator, compared you market forward look and Voicemail especially centers a Our the

million let's quarter. the quarter, the for From the last up company. the SafePath, XXX% XX% for Revenues and performance came perspective, a Now for our matched about up in product SafePath's $X.X lead at expectations over year. talk sequentially revenue

financial Tim reasons. review, down second mentioned main quarter the SafePath-related during to expect for revenue As his in two be we

stay-at-home First, negative mandates will SafePath-related resulting a COVID-XX-related store impact on closures revenue have and growth. the

new driver Found, months. the Heavy the the FamilyMode of footprint the & of some the we with to as on promotion expect growth XX And offerings. merger, with over & and we been last Safe Sprint, in-store across work Sprint's subscriber integrate how Safe has T-Mobile nationwide second, service service the major disruption Found T-Mobile

growth On should challenges the second be a half of expect in XXXX. SafePath trajectory to bright the side, and temporary, we to these back return

lockdown like universal worldwide of value SafePath. the societal underscored Additionally, products has relevance and the

for never have important as gaming, Screen an as use help media are parents at now. content, never high. media usage tools time, online online manage services digital all-time social and digital is need and The that right been they consumption device more and Connectivity pressing. been has effectively

its The extensive and of of to eyes process increase wireless resonate all that will SafePath has X.X in a consumers. user-friendly in that motivated are addresses parental the service savvy controls In digitally SafePath, with the integrating Smith we services circle provide only Micro proven in these solution a manner. cable operators, value challenges into value-added of functionality, providers always-on

bed Our The time expanded also part connected home we Home, limits, which new parental settings, online rewards and as well. functionality mid-summer and PCs. time will manage SafePath SafePath of to as safety age-based our the that will to are such adding be time the device consoles connected solution, platform, X.X, a is filters, both subscribers customers scheduled enable home the that gaming ready as empowers controls off digital and comprehensive such cellular to solution offer non-cellular devices, for

will most Home broadband the the the enable the router, important service is in and family most our via router brand lightweight home. relevance providers will routers. with extend be to agent wireless XG home to lifestyle, SafePath that Delivered SafePath compatible their modems digital that in place SDK home connected a resides

things happening digital Exciting of the lifestyle IoT, also third SafePath are pillar with our solution.

form During value quarter, product solution, the extends on other and platform SafePath SafePath smartphones functionality the team children's first connected of our our lifestyle device for made ecosystem beyond IoT designing wearables. good in-home like to Much our the progress factors.

combined, the delivering proposition platform, connected SafePath SafePath comprehensive Home, for SafePath a creates value When IoT SafePath family. Family, the and

one management SafePath see centralized with provided glass devices single SafePath to ties management pane users all app. of control one end together. allows all The connected by on and functionality interface it screen

facing are revenues somewhat very position In QX if pandemic. closing, being this we impacted. we said, able enviable maintain are COVID-XX negatively companies, our we the believe in as short-term I other through headwinds work most in like are profitability to That even a of

outlook Our long-term has for been the never brighter.

to portfolio to it's been of product worldwide. have customers mobile Our deliver and millions enables our strategic stronger a services ever is sales pipeline strong we than subscribers that profitable

Our is balance strong. sheet

year. results We cash are committed to this flow and continue free deliver profitable to

said, to the open questions. that for With operator, call I'd like

Operator

We question Capital. question-and-answer of Searle now from And first Please the begin Scott will [Operator session. the Instructions] comes today go ahead. ROTH

Scott Searle

the afternoon. hear Bill on Thanks your along to healthy off, of for maybe sound questions the for my taking you you provided, was if an included And that's kick Circle that was that Tim, quarter on are good Circle million? Hey, and year. could safe, in SafePath us what with not, the glad still and and for teams. guys million to idea the and $X.X you track in numbers give it $X

some And possibly and been about then of turnover the going linearity model some forward? idea looking might out into March to have churn the to second us quarter, what that to in or give how give idea us or the April

Tim Huffmyer

Scott. Hey,

think, estimated about that beginning was The I did provided Circle. first I the SafePath $XXX,XXX, about $XXX,XXX number revenue of Circle. quarter It We had include in for acquisition. the of

-- to solid. for had we is quarter, pretty per second quarter, number quarter that and million going the about In a initially hold guided $X full

second $X be to it rest the around year. expect quarter million throughout we So of and the in the

Scott Searle

outcomes? be follow-up. just the a like of ready larger currently the you an what It your to with engagement Can untapped optimism is of or a half. T-Mobile? size, in granularity SafePath idea some It's subscription And to or a the too And bit more to platform, provide Circle Could to there track engaged standpoint, geography would bit get It Perfect. will from ahead with with is ability and services. sell when multiple sounds you terms little you. expect in give timing second of sounds maybe of maybe the part integration be roll code and carriers us on terms and in it of positive you a level like discussion, little for and platform. base. where is schedule of convert them as a in that Got the you of broader the color maybe continue

Bill Smith

Okay.

to me take try Let question. that

as was defined they which very legacy right may we teams with offering, the Safe closely move and FamilyMode to some, are very on both with as the was one feel the service to positive same with that offering based X.X being forward, as about one T-Mobile Circle off, First Found are on the & Sprint management new well T-Mobile the now. SafePath We I time. the planned-out ahead road deployment. not We'll both deploy probably over SafePath. see other clear these We the in. then at move We a think, based deploy bring working

of process, Smith side planning and on T-Mobile side in that's So the a on lot now. being discussed There's make to that Micro that's happen. both

summer looking late We we ready by that frame. maybe the mid-summer, will in at have such be time the deployments first could software

lot not process, have of a a It's mapped done. simple to we out. there's good work So but plan be being a

in far and deployments. These and will other as and As East. North very further for in the definite carriers, be than some we both cases in discussions along SafePath are America Europe maybe Middle in

some as see will the next you of So we the to there. coming point deployment get announcements months over

feel yes, So bullish. very we

part T-Mobile number doing way not closed. well had by in stores would that's work the have as done. other we in as different we're of have why of is of I having both lot many the that we a for and we a thought have we're headcount a we different and on reason on just have now the covers gotten also work doing grown products. There lot done what lot We That's areas, and CommSuite, a our of in effort Dish of the ways carriers that all COVID-XX ViewSpot, had probably being for we've the have. mean, many that in way we

lot lot through just a of to. So as as to problem. world, see everybody We forward to this in ViewSpot a the a we get -- get and of here you'll COVID-XX got with lot I to activity energy through this look need There's think wins and side well. on

Scott Searle

front? Great. But the in terms expect on Visual that base Because color. of queue. the sounds one quick what the that's competitive of just then Thanks Thanks. relatively immediate that back that? for offering the in And protected a the you for do you base? Voicemail Sprint you? And is CommSuite, existing now, that it get think Bill, has follow-up you like opportunities maybe premium the to I'll to up be on do T-Mobile right stack how

Bill Smith

Sure.

steady really to may picture users to system, will how the a that transition continue On think a from the be may Sprint that will et future. the CommSuite cetera, T-Mobile base take to side, be Sprint decline. take a There that, would foreseeable for take that will I'm we will time, a where these to two could offering. that Sprint be And at sure there longer year, not base the years, start billing the system moved and use

house, On opportunity and the for a by have think an to T-Mobile side, that we built contract that. improve offering there's was upon they them an

and So we'll wait see.

conversations, that be win in for very, are and We a nice us. would very

On very on meaningful with over their the for have are I to put area opportunity business a necessarily they concluded, out network. to the want focus really that strong we build on own and as Boost, when we will out at once to business, has been there's side XG well have, they is will good think as that, CommSuite and them forward, that merger building there postpaid their moved in would growth a be Dish especially think, will activity consider very going work that Dish be and side, I Dish the back

Scott Searle

Great. Thank you.

Operator

ahead. FBR. Nichols question B. from comes Josh go next Riley The Please of

Josh Nichols

the my Thanks to question. for taking time answer

of part Bill, finished? platform. kind the in maybe reason is to just going Is mention, SafePath get with to T-Mobile just with headwind? a like to some that for be T-Mobile QX quarter work of second of disruptions how integrate said the you take really a the the you quarters off the back as that due to to coming going races Or And new growth again? couple on to did then decline for You to is expected it

Bill Smith

Okay.

and COVID-XX number First second that the off, are fact is stores headwind for closed. quarter the my one

you at that if that obviously, by was one look areas we sort Found driven platform. of the open, assume tends biggest the of and of history repeat to stores being curtails of retail and As itself, activity. at brought that programs Found of history, Sprint I Safe Without new said, & sort to Safe that & subs the the growth stores

do further we in to will expect reopen quarter. should second that start in Now part of the the third and quarter still stores latter opening be

think care should we So take problem of itself. that

mixture. As the the some I timing merger, was we have there now former are the far Sprint up is what teams yes, of the which some that. are some And T-Mobile alluding people, way of through to to, work made teams, as work made part of of with teams that was people to former of we our secondary up new have some and of with sort for a

such, as population to revenue takes objective, as a that growing on a growing the And turn, is getting in back a of safety which focus little platform stream. a has far that time gets family and build bit as out

most of think care by the end will be the second this I of of quarter. taken

starting are to I how forward. we think this strategies working point, as move and clarity, out we're and to plans the building at on see to the already

is and the the the parental to quarter I of return standpoint full guns And which expect I third Circle to controls underway. think features X.X, incorporates SafePath from blazing. should cases, a -- SafePath And all fourth location I are and all IoT well should that conjoined as growth that well product along recovery a quarter. think in as see Clearly, nice start in capabilities we would with technology, be

positive feel I So very that. very, about

Josh Nichols

curious And like to the Circle. Glad Are was the companies really the XQ, year, maybe current especially as of cash little you the acquisition That's of struggling bolt-on lot going best SafePath business-as-usual. attractive pricing back, have that I to be shelf, platform? type or have a did of M&A No, helpful. you the to the once lot going like Thanks. there's bit for you're ton Yes. it's you mention doing imagine It don't like have environment you guys are second a seeing the have? with half tangential of of X.X that some provides it flow of more hear in no, a a the looks color. a I like, in would to

Bill Smith

we it see opportunity. an as Yes,

now, think should as view we current And want that I just need times, go be corporate it. It such, you a the presented would here very capital can sit opportunity, governance. raise we way shelf good the as shelf. that such to we we right compelling the chance down if think if And place whatsoever pull in there future. just market we there's and the with it's are the should to that see as needs it. Clearly, I no that's for in

Josh Nichols

that one probably that you there are been the any that sense, have different that these depicted platform have to -- to the makes by a in as to looking see the like up? to good always And confidence lot Yes, you'd of out to then in fact place. when the be have you opportunities that you're employers hiring. that's you're corporate Do ready headcount the tackle good all of governance coming business obviously, of few a -- target think out you kind built get kind of

Bill Smith

ready we're tackle to them So now.

the a is platform, it as constant of far growth. As effort

to on of as into done as be XG heavily router with looking carriers strategies X.X are SafePath with controls XG forward as parental we'll very devices we focused more well working We Circle forward. areas. business the for getting SafePath IoT now get go going that and the will where to going Home to be them SafePath focus and the in IoT product Clearly, add finished power we a in technology spot deployment delivering can and routers and a actually

have So everywhere look. immense we opportunities right almost we now,

We see launch have a deals number expect us in that a we reasonable frame. time of to

be there's on lot reasons business case. to our to So lot the a of a and reasons look of bullish there's future, very for

Josh Nichols

once me, may And say the a across did a do about then you like, of but next, different already couple there's the -- announced it's for trained already chance two to question wasn't you're may might it I feeling deals last months confident take a one, sales pretty deals -- are second for six you finalized for that then you this at up or so. like, two staff of part ability to have able think could fair guess, the think over things that COVID-XX, one been good little the part, close provide if sell it how as to high-level like about like, T-Mobile of gets rollout areas And bit you with Sprint? or you the place, platform color have

Bill Smith

market. marketing side service as a for goes that. that working program and strategy. as as They're that so lot will a from software them we well. to there's We're a lot go of overall bringing more there's We're expect complete Yes, to made with the than just on our looking a training delivering how part up. to have -- on, offering they project T-Mobile has it us that clear

because the case, code, they point one then decide to the particular platform offering. a forward their legacy platform they both they was based that those on they that and move want and conjoin strategy now in SafePath of the was how Circle that big a to have legacy a large platforms have And them, we code, have based also is on to

a look they need we a partner pay new lot offer. T-Mobile The There's their able much are big be we a huge, can to mess, is that that to to get it's customer. that Sprint big and for done. to bigger T-Mobile a And as we're work carrier, new much, undertaking. it want was of going doing a and from lot attention market such, opportunities The is us, our to the with than what are

Josh Nichols

the Appreciate. for Thanks detail.

Operator

[Operator Instructions] from ahead. of question The McIlree Jim go comes next Chardan. Please

Jim McIlree

of the put Yes. of G&A full you both is have range -- Thanks. a plus go have can on QX? acquisition those? It that the bit programs up SG&A Tim, can you of all as seems little or And and address OpEx the Circle, quarter you a direction a of you because OpEx? like in expenses, R&D, you underway, because right the total but a on number down absence and either

Tim Huffmyer

Yes.

growing reconciliation So couple non-GAAP now, and in non-GAAP included quarter. been I'm a per a OpEx we've the press release. hundred taking I

$X.X So first in did the quarter. million we

of So Most the item. on be you of coming that line thousands R&D should hundreds several taking increase.

Some item. and sales marketing line it of the on

and our didn't with acquire itself hiring. well The done of as get Circle in extra any acquisition and to own drive time because we OpEx, people. integration teams, that extra as extra certainly spending hours, didn't we're working money, necessarily But

well as the of my work for. we contract I alluded that to prepared us need labor we an some perform what a, as Bill help to of to need indicated, we see possibility as As remarks through in amount to

we as So that see an opportunity.

you So, increase should thousands several into of hundreds be XQ. thinking

Jim McIlree

Thank programs be have special the the And there note the or that on to in should would Is you. aware might then acquisition of working of rest operating you that terms take any Okay. capital? we or cash unusual year of? flow about going anything unusual impact for of anything

Tim Huffmyer

the of process, typically are With the billing the start-up longer. the just terms carrier acquisition,

ViewSpot, with the to associated we flowing with year nothing last delay I've material. that like and but cash month before with six significant see associated three about a start you just Circle, So may revenues talked

the flush to And by I expect out all third quarter. that

$X.X the a of quarter, see as second the open you'll million $XXX,XXX we to billing up might the problems fourth see into quarter, process. just third no into quarter, But in you So the all that measured get delay because there. start-up in

disruptions any expect to we that nothing So that.

Jim McIlree

for with a it me. Great. That’s Thanks lot. Good luck Okay. everything.

Tim Huffmyer

Jim. Thanks,

Operator

back turn question-and-answer Charles any remarks. our closing conference concludes to to the over Messman I for like session. would This

Charles Messman

all Bye. And today. forward everyone want talking us forward I should to joining speaking the a us quarter. you hope to safe. future. third for are hope you look We afternoon, comments, a to you to I please questions any thank you and look call. has the great to in in everyone have free to further or feel We give And we

Operator

now today's The Thank conference for concluded. has you presentation. attending

You may disconnect. now

Smith Micro Software (SMSI) 6 May 202020 Q1 Earnings call transcript