SMSI - Earnings call transcript Q1 2021 | Smith Micro Software, Inc.

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Operator

Good day and welcome to the Smith Micro Software’s Financial Results for the First Quarter of 2021. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Charles Messman, Vice President of Investor Relations and Corporate Development. ahead. go Please

Charles Messman

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

Smith, the new website and our new If financial some recently how and Chairman Safety discussion forward. may of we Investor Business Relations the today you’ll one, please you opportunities, of do market visit completed President call, hear statements, the Board, not Family the Mobile during Smith consist note information our today’s cash have going Avast operations of strategy, of a regarding future from Financial product acquisition at our and company’s profitability, copy forward-looking reserves, have Officer development, including, that and position On Officer. expenses, those operating impact business Please the Bill and and company revenue Tim the would like Smith Executive the Chief Micro’s www.smithmicro.com. section of acquisition of limitations, the Chief Huffmyer, Micro; without

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

of back forthcoming Please the non-GAAP out we financial and With turn point to certain refer said, respect as supplement our no earlier the release forward-looking remarks, with our that measures. want in the recently prepared disseminated assumes refer beliefs Bill. assumptions press filed most non-GAAP update reconciliation filed any Bill? our our now for will financial today Form over I Smith that please they included the of speak information, statements, factors more I’ll in and preliminary risk only of call those to to date to For made. prospectus to refer public management’s obligation our measures. XX-K which Micro to to offering. are

Bill Smith

thank and excited for year. conference for be start call. XXXX Thanks, been our first very what talking fiscal am you about on the today to us joining transformational a XXXX to truly Charlie. everyone, Good quarter our progress has afternoon, I

Our ever employee is of and customer closing the incredibly the diversified strongest our beyond. are case forward-looking And base by the throughout I'm and the strengthened business well-positioned execution been. acquisition. it's the year team's Bolstered portfolio, of proud rest maximize Avast revenues to we in

in the flow cash Revenues business is the Let's quarter look provided $XXX,XXX. came income million. XXXX. million, from Non-GAAP in first of first net operations the quarter of was for at $XX.X better which generated solid $X.X the The results quarter for for than the previous guidance March. free

over accelerate development. R&D invest our results. financial can on back the call, the to to our the people, continue we in I Tim? I'll look will depth forward. turn During the to also the to we SafePath R&D quarter, integrating of product have This our attention us believe turn will where now ratchet spending. growth enable we reached related the point Avast path technology Later more at the acquisition. in first for color for customers add to an the and through quarter But gains Tim I in call now,

Tim Huffmyer

Thanks, Bill.

acquisition were net was March review million and public since previously base Business, XX, activities public approximately issuance let deducting stock. along X.X we announced shares purchase of Location million the delivered US-based interests $X.X Avast all million Safety payment last Labs, the a the Mobile any of through On the April common with including million. offering all the close Family The $XX summary the results, Software of $XX of in $XX our million LLC, completed of Before costs, proceeds first raised unregistered in of cash membership certain previously assets common XX, the the After a offering, related provide issued the substantially me of subsidiary. liabilities, the we approximately price announced quarter shares of of we all On also stock. call.

As Bill to these time mentioned, the complete as transactions very we are that on efforts pleased and planned. extended

Now, let's quarter. first the financial cover details of the

million, of was of than For million our X%, a the the expectations XX%. posted which down the of was quarter last compared When same quarter we revenue quarter, compared last decrease XXXX, first $XX.X revenue for year, $XX.X to better communicated quarter. to fourth

our of in in acquired revenue. the product, last Family revenue year, to first to customer, was SafePath acquisition decreased exercising Safety the the deferred of reduce recorded was the Family X% of modification, Instead customer the revenue, and exceeded This service UK-based result was expected XX% the related Safety contract offset was by XXXX. years. reason modification our increase contract ending expectation XXXX. million for quarter of to inclusive acceleration and quarter revenue The last primary now During option in to subscribers. The a to a the Family in This $X.X sequential sequentially Safety contract communicated of resulting an Circle increase quarter. increased a of expected increase related to two XXXX, by of our an in in Sprint compared the the first XXXX, customer of quarter previously is compared period to reduction fourth end

to April first April, the revenue reminder, initiatives quarter current through second on In the guidance coming This on newly products. subscriber T-Mobile are trends trends the and current branded continue by current to only XXXX. products our the quarter. compared Family not the XX% focused quarter, a based on products all marketing Sprint assumes Safety XX% expect to the Safety acquired branded through As of and increase subscriber XX, Family we

comp revenue suite XX% million, the which first from platform first the sequentially CommSuite last was platform greater XXXX fourth year. from expected than advertising the was an decrease of was to XXXX. last This quarter. expected to down the decrease better $X.X by decreased compared offset During Revenue of due subscribers quarter communicated quarter of was of quarter loss revenue. slightly This X% than

We navigate as subscribers Sprint to an for move services. continue option the merger to voice to network now T-Mobile the from T-Mobile/Sprint have

As in transition continued Sprint CommSuite the expect Sprint the subscribers network, decline subscribers. we a from

reminder, to Boost approximately with CommSuite the owned formerly the a in the look As of subscribers. comprised relationship We forward CommSuite revenue. Sprint by Boost part our of Mobile, XX% including DISH Mobile and is future increase goal to now platform expanding DISH

outlook, quarter Based last X was quarter current second XX% first compared the decrease on the revenue first the Tier XX% than ViewSpot compared the is by to related our activity. revenue revenue slightly US second to our quarter increase expect compared quarter. last first XXXX, year During XXXX, to platform communicated visibility compared of revenue of expectations and our to higher in variable to This was term to primarily expect a was of to CommSuite of XX% up the This quarter primarily X% of and with the be XXXX. the the quarter be customer. quarter. XXX,XXX for quarter higher to volume first ViewSpot revenue X% lower variable we down fourth to down we approximately XX% near of to related

the we quarter compared first approximately by For consolidated XX% of quarter higher to of the XXXX, including the be Family acquired to newly XXXX. revenue, Safety XX%, to expect second products

an of $XX.X compared first $X.X was operating was gross non-GAAP increase during of $X.X year. of the million to For million compared first quarter was $X.X last year first as is related of increase contract decrease and last and $X million, the quarter resources. $X.X for first the trade resulting an last to for number and increase year related for development the in expenses. by quarter year. to increase XX% or increase The at This profit related are travel operating increased the third same XXX,XXX million These of expense, party XX% million or employees was flexibility Gross compared GAAP business first $XX.X to compared employee to Non-GAAP or year. an operating costs. first headcount period the the an quarter decrease increase primarily the of us million offset of expenses, show allow end variable a to expense costs was year, engaged XX% to million, compared quarter for compensation XX% and to in XXX,XXX related Margin the for expense over quarter last year. XX% XXX last increase

XXXX The first million communicated expense operating fourth than exceeded $XXX,XXX, $X.X of and quarter expectations the last less non-GAAP quarter quarter. the was of

development the phase the rate in reduce continue quarter. first third costs as headcount the throughout and the quarter, During party to we run we employee costs contract increase

quarter. first the diluted family compared employees consolidated safety expect net newly $X.XX or the income for be quarter related non-GAAP than the business. acquired earnings earnings to non-GAAP or This mostly the higher million the operating second we non-GAAP additional Then approximately diluted expenses increase per For XX% per of $X.XX to of from $XXX,XXX quarter share. XXX $X.X income share, is XXXX, to net cents first a was

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

over $X following million, The the amortization previously state of to expense income expense million of few tax includes past certain to customer which $XXX,XXX, compensation one first items. our Taxes. of of foreign X.X in reconciliation of and acquisition years, GAAP due is are mentioned. the costs the intangible modification the quarter, net acceleration intangible time expense stock the non million cumulative adjustments, amortization expense cash losses to related contract Due our For a primarily includes some $X.X

for each Any non-GAAP income the we reflects rate X% during tax my This concludes period. For expense taxes both review. non-GAAP XXXX. the utilize financial purposes, XXXX tax actual and resulting expense

you to Now Bill. back

Bill Smith

Thanks, Tim.

our CommSuite, Let's voice out platform. start messaging with

in well. is a quarter service premium, We value first This about States. Mobile marketing will cover one user Boost become is us Micro goal launched WiFi Boost the major secure of services to bundles of the in in Voicemail conversion Visual completed. trial voicemail, with and tier owned granted increase for of offering DISH screener momentum. United for DISH’S Visual call quarter subscribers. the expanding Smith as to another that this for campaign gaining Dish, a by mobile with added not other new efforts June and premium our profitable but rollout their XG first a build into is just the digital commenced for opportunity other carrier focus users. paying newest strategic includes CommSuite some to has the premium premium to users Voicemail DISH in privacy premium initiated by this already products marketing popular to great the to US on XX% population for network XXXX their base, network carrier customer of CommSuite yet a once Life CommSuite, service customer

bundle, please As this phone to view every Voicemail as a app CommSuite the this for Visual vulnerabilities good mobile smartphone addressed grow by user, a pose boost. premium revenues to risk opportunity

future retail take a no trend is habits promotions now an that promises and mortar conceivable may to be should traffic via vaccines delivery normalcy ViewSpot as be bright. shift, reasonable Europe at for the may revenues. return well about that that is Now a XXXX cable retail in of It is that COVID platform. that both There the for will vaccine with reduced the that demand assume rising for news very stores. delivered here is that to to shopping The follow. the the of holds ViewSpot, our and has XXXX aggressive And our smart ongoing consumers for sector East activity retail customers return going And to excited of ViewSpot. it what to the good significantly in look a for in paired by to change. a distribution ViewSpot promotions COVID-XX store consumer storefronts. also is XG ViewSpot Thanks return component bodes US, Middle phones forward. critical let's device brick On and with in be the balance additional to pandemic has carrier Thus retail accelerates secret

hit we where earlier, commented excited I running. software clearly the wireless and am, Safety, proud ground the as provider number Smith how let's one carriers. I'm of I are the Avast Now, Family turn has to to Micro acquisition, with very

us as This As during Family the two to the happy productivity transition last quite team clients Safety the maximize minimize call, applications. of will run and new went to will we smoothly. acquisition. that of Safety our for I report disruption this these enable gained initially talented we of XXX our Family employees strategy stated I'm part

the to these family. capable individuals We are thrilled welcome and to Smith highly experienced Micro

higher slightly first potential than were quarter the far quarter expected. a Safety Family forward, results. positive first Our growth have than significant We revenues believe larger we going

look years in supporting initiatives has been high this follow Safety the Currently, to prior the plan the X this on T executed to let's to T-Mobile largest invaluable, subscriber with On working to and similar Safety it channel and will Sprint enabled acquisition of user to sound some in blueprint has hand a past successful of building launch. few our track and strategy out retention. merger customers is where campaign both Mobile. safe other mid-year. gained develop stand geared Family marketing believe things a towards their multi new user this regard, level, with on I with support SafePath the been the integrated, us the We've experience In to hand Family Now we've new see, over launch deployments. base support T-Mobile to an

have launch part we renegotiating Family completed contract addition circle these made case. which our XXXX business aligned the as In T-Mobile, in be the with progress better we with in gained acquisition to of preparations, Safety to

While outcome. in reaching process, the we remain work still confident positive a in

in SafePath for Smith this growth beyond. a revenues X Micro, resolving a XXXX T-Mobile the of and confident also are impact will new with ignite We meaningful half engine back launch new on

direction our shift let's to Now Verizon.

new and and expand for coming books, revenue a started we Verizon. the should smart and Avast look the engagement growth closed the focus newly with Safety Verizon’s and acquisition acquired customers working user enhance acquisition, drive in greater potential untapped exciting program in on Family app designed encourage here closely With We new our is The family. maximize strong very drive to with a to marketing revenue joint quarters. have

like vision to around long-term for I'd business. Lastly, bit our a you color Family provide Safety our little more

code assume, in correctly running we plan perpetuity. separate bases parallel would two Safety you not As on do Family

and already strategy we to amount components resources from product both Our have and And has SafePath team very this solid directive. best enormous plan on to an the talent a developed blend the platforms. Avast deliver of

our as the base deployments SafePath Over a unified in we our to coming safety support all at code wireless two family we quarters, bases, code will carriers. of teams develop integrate the

a very well and we a that As we mission. of our reasons also continue our in said, there profits, Rightsizing maximize margins. to processes significantly resurgence work to while quarters. base expenses streamline With growing grow our strong revenue to are for number is coming are positioned

our are people reopen retail more will economy to interest vaccinated, continue recover. As world the and to more show continue stores will in Carriers around the products. growing

never Operator? Our growing continues generate call diversify. vast questions. brighter a Micro. will future that we And revenue has that, opportunities partnership growth. to have With for Smith the will a new I for with customer additional been open for The place base in

Operator

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

Scott Searle

sounds SafePath of energy said sure outlook I services from numbers on going revenues. of clarify, then the around to what quantify And I'm could growth, repeat for sequentially the like back the T-Mobile Hey, well, to as and we terms schedule Couple taking that outlook SafePath good And of for couple was into know location nice a quick lot ahead to did follow-ups. in could attributable revenue deferred Tim not I'm the sequential a points Verizon. it accounting the correct? don't ViewSpot? then questions. change? afternoon. XX% related you hear the is I you heard Thanks It's sure add for to in my right. moving you of

Tim Huffmyer

that purchase we're the was as I XX% question, XXX,XXX. last ViewSpot than we The Safety, greater the the going quarter. looking was at our revenue the portfolio that the now, to Avast discussed which And I look Scott, about will forward Family product product. deferred to product so be SafePath multiple products, right, first gave and X% here, guidance which include impact All includes

revenues. about I of talking total. and that I a the outlook we the XX% that XX% So And first to top be was growth quarter's for revenue will the gave in on gave guidance

Scott Searle

to that of the further is so the million the Tim, net on that Got Is clarify you. just not one-time that X.X X.X benefit. And, correct? growth

Tim Huffmyer

on X.X. That's the fair. It's growth

Scott Searle

Perfect.

initially you're Bill, that in expectations? continue was you're was wondering, additional of some from if something soft I that subscriber strategy it customer how rising aggressive quickly? like you any progress Okay. sounds And about? the omni-channel does I followed be? that When rollout terms could And by well, provide T-Mobile. what your of be again? Should to with could standpoint accelerate push the you color as does this more a launch with initially look? start As with How kind expecting aggressive shifting are re-engaging a base, of talking to to we

Bill Smith

Okay. questions. Scott, are good those

with side, be they -- could a of I initially, launch T-Mobile or few soft that the could will On so. to launch a think start a a soft month weeks take matter a

is go and Just sure of into would everything we to as full more planned, rollout. set then make a

that's So probably we should I think set. the expectation

side, pronged think to Verizon goals user a what of base, strong of conversations. very, going we to a have marketing have Micro with forward. between And the very size the good do are strategy. the I and Clearly, On grow Verizon that, desire good there's both our we Smith and understanding multi a had

then time quarter now. And lot so, over next weeks, fairly next I are a say, this would that is we're discussions to be There's the these -- next the going of follow-up by things clear. working already on few

better be that you can give some to able I I So now. won't guidance

Scott Searle

speaking. of lot activity Perfect. Bill, I been within a if the could helpful. lastly, And from level, broadly a industry, Very there's Okay. high

And In building ecosystem, competitive, terms You tracking. or location and their it's while and introduced it ago, of go the not a Apple right? so conductivity directly Tags. week Apple back is

So LifeXXX of brought along I'm location now see wondering Jiobit, that, to you're pushed and to is starting with forefront. kind the really

in see what and platform. you get the in to it in terms your of the terms expanding bringing of of with guess So ecosystem I devices do the those mind, items development

and with for those Now carrier the platform services. fighting and that? Apple bringing interest able from location of equivalents? those things, people, of devices with to of tracking approach challenging otherwise? And of understanding level looking The forward carriers the kind Effectively, of services? it's being on with for other Tags suite the kind now or they also to are type that tag suite they Apple fighting kind back whether back dog of Thanks. and capabilities, Are pets, things the to

Bill Smith

yes. Yes,

Let me comment on that.

think Apple is launch the I intriguing.

I thing think to grow. this to it lot think foot the that, desired. candidly, validate to this you function. It's helps the be you, to for I say for order segment approach for a product us will, device. leaves have Crowdsource however, iPhone have Bluetooth the out I network users basically market the a desire I a Apple around is mean, Apple other in

work. network with don't, controls is a and you is and all that a It If grade it network operating carrier of carrier security. carrier just doesn't not sorts with quality, like

think I space. great there's role for said, significant room that So a to the the carrier's in very play

than or reach the fact I device devices is a out broader geographical areas and cellular over point. can think a starting that much the get, Bluetooth can

be marketing that that major part the we going a coming see see you're obviously be the from going forward you'll pushing behind that. family to carriers. to embrace lifestyle, efforts what of we call of I the will digital think And

so yes, this a there's think market. I lot in of And excitement

just of of we this there's sort I things end tuned. the through think a will stay that develop say usually year. of And lot that

the it's launch think answer. just market, the Apple the but I validates not

does needs that the of the talk think marketplace. mentioned again I about Apple answer. and the filled the is as to is need the it and networks enabled in the be think group But that's by professional again, think this one. carrier the frailties a need real I I their LifeXXX acquisition has same launch also devices, nonetheless, Bluetooth But You and a

Scott Searle

so Thanks Great. much.

Operator

Please next The ahead. go Lake Street. from Martinuzzi question Eric with comes

Eric Martinuzzi

else renew customer correctly more a a I question Safety XXXX. relationship? If Family XXXX rather Is the Family tell about customer Does different what ending this understand relationship? have the behavior. going this about Safety, in a amount about -- there the upside the not contract this away? potential this under the than that customer and regarding customer me does dollar us understand I contract? customer Help Is on

Bill Smith

more as on such, more acquisition to customer side. on Yes, came This are the side unit. really broadband cable cellular as of they service. on the And the based Circle Eric, were they Okay. question well. us They're a the in good that’s business They're particular than focused the via UK.

as when does, So is didn't quite you're cellular service the as this providers. about product sense offering much brand name it constituted make talking as

don't conceived yes, So, think but preordained. begin it and was I was that with takeaway, CSA think the product that. reflects think I somewhat the it to it I well

Eric Martinuzzi

a, our what there, But what stretches Okay. on more And third pretty just total substantial next I'm I'm deeper but important. revenue is launch analyst bit that it's further obviously, us growth model, the the the back then -- kind then obviously, and step? if model reiterated to difficult becomes of know, achieve, this that's to soft take step QX you contract, -- as talk goes Family if bulk I T-Mobile scenario about of into as a up, all own little timing a for also quarter Smith is you a this layer what that saying? then, sequential Micro, on a the you is the And step my believe Safety, next could is you the if you the curious

Bill Smith

trick not we're -- any pony one one at But longer. Yes.

So there's customers they're multiple and customers. big

basis, it's quarter-over-quarter name. the just start of you on our about growth not when the back of business, So one thinking on a

successful. customer I plays are well to a one. business are to going Family So a that And important incredibly strong of in space, it. their They very in subs there T-Mobile interest way, re-enter I our this forward. all the meaningful part obviously is Number been two, believe Safety number case the that's think on the family

that being as think business simultaneously, have meaningful, that thinking micros So a of to as can start very about we all one fact case number of the launch X relaunch the this the as players the T-Mobile be we've I a new into T-Mobile as customer able that now that of Safety with be space. -- to very we'll really SafePath Family in got well significant

-- the So and very let's I wait out. see how work positive. numbers just I But remain

Eric Martinuzzi

Okay. issue And then on we think, signs AT&T said talking the I ViewSpot Mexico, were COVID, about to quarter, take of, business. your returning? we to -- with Last due had kind any that with that recovering, just a pause here businesses

Bill Smith

Well, Mexico. an still issue COVID in is

So Middle it in as in it is is Europe, as the East.

it's so is early too still that. And for

trend you're think to stores. you're here people the through think see see of I reopen, to re-entering starting you're and I I this ViewSpot as vaccines Europe the as Middle and the like And grow. the will in and demand Mexico I the effect you’ll think we the stores for able distribution in East, the US places of going happens, product see and the distribution vaccines that think, same however, And the to starting to follow-up. -- are broaden see

will don't a that's -- bear question facts the my it's -- not when. question just And of that. subscribe think of you think timing. about all I it's I So if, it of out. it's a judgment. it's the matter But I But to just may think

Eric Martinuzzi

the are for know where the there is an the was have -- Tim. Last post sheet what’s question balance if Curious of April you closed? cash numbers for to XX debt,

Tim Huffmyer

no we cash-wise, around million, out sitting a XX debt. about were On Yes.

Eric Martinuzzi

you. Thank

Operator

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

Josh Nichols

code through And investment little Yes. know some you Good is start little R&D are the more the hear cycle to kind on Thanks historically front. what of for potential bit like integration my you going had think How longer operating seems this do Could on the the that’s getting the updates leverage a timeline? bit given large taking leverage? just for and integration, code to of I improvements? business lot elaborate of plans. margin went a you're some of long take just target question. of, a it'll companies, the you some key that on gross term the metrics that a a some of And

Bill Smith

during start that, as possible as bottom if should approach line during said, we capital And we top those margins as we street should range. line. both software was is company. And to raise. Josh, able company to from was Avast be be that, acquired XX% it see an the our the we to to at improvement that start the then a goal in gross that, level. our over few well Yes. to that not where the down I we business looking the think there. that We're around And in we we'll are we to margins goal. made needed as a should presentations, points. on the at should gross Clearly, it we get next get And quarters of flow our goal margins such XX back And That's, early said that execute And as to. margin the to in the even and XXXX.

have execute. And care take business we have we So how to our flow. to make don't of I think disrupt of, how we to we customers. new that these levers. that are know any But sure the also things And

additional And so, manner. our do to without grow we're sales, obviously, is thoughtful very through obviously, in right that it expenses. going to, our revenues our by do increasing our this gross is choice. And margins, a And increasing way first the to

Josh Nichols

And support the hit kind of can in course, earlier year? diversifying provide Are the those SafePath of Okay. the initiative year then, the know announced you to those a growth its this Thanks. wins? has second wins expected company on revenue other few of the I stream. this company, and revenue half updates And on you add much

Bill Smith

Verizon, the tends history point at if it the where history, that to the Mobile that have and started both that of for next launch into to And think look a there, kind T Sprint, well. going Yes. meaningful that itself. hold should we able grow start and always good out I've these ventures for we're they of these established year. flow, we slow because then numbers into all true growth and and I about be they overtime. you think a and looking at And and some with about for feel grow. from launched XXXX was should revenue But I the And year accounts in talked we news as to accounts now, Look, others with grow is to to kinds more to grow will repeat look what happened when of have

Josh Nichols

take a Bill. someone turn. Thanks, let else I

Bill Smith

Josh. Thanks,

Operator

comes Schappel ahead. with from question Mark next Benchmark. The go Please

Mark Schappel

Thank is taking to couple to question. respect this X% the product expectation ViewSpot, my grow beyond XQ, to but for or questions. for you up be for One, the each with year? in sequentially quarter just sequentially a Hi. revenue It's expectation that, the XX% is to of

Bill Smith

year-over-year that's Mark. actually. out we Hey, are for looking ViewSpot growth lay Yes, it on and how would

dial right into it. XX I'll that day to the think think each way view a I that's quarter. Now But about

Mark Schappel

Okay. Thanks. is whether And just currently then that comment portion Could on growing? CommSuite, Boost you is Mobile. the that XX%

Bill Smith

Boost positive work promotions about, to out that and the portion were grow. first not did to with revenue. talked to on grow quarter We're with Boost. that are Bill focused that in continue Yes, continuing there some we'll work that DISH about

Mark Schappel

Thank all for me. you. Okay. That's

Operator

with question Chardan. next [ph] ahead. McIlree Bill comes go The from Please

Jim McIlree

quarter Family to Safety and I'm you of going impact what Can gross about me. in that's QX? Well, margins, the to why it will little business the prior bit be the a was versus assume down talk

Tim Huffmyer

we've the so are Thanks, little a which bit the higher Jim. more environment, SafePath margins code with bit. little X integration on a year. the last were down Costs little Yes, been complicated a environments, working what for is and absorbing Yes.

down, next revenue and obviously, goes respectable in our into is we costs lower to some start is that through be as that the we know those margins do costs we getting the got that's and than year to talked out like, this Bill would year of creating dialing and be margin obviously, going year rest on. we're about. on the but where Certainly to we opportunity in there. to got improve We why sliding that's our expect going increasing that merging So purchase now in are business, going really

Jim McIlree

when versus going decline -- business, the you quarter look did sequential that reported gross to see QX, So right? Family at this Safety I we're and blending hear XX% we that another the and margin in

Tim Huffmyer

Yes, the go margin down. will percentage

Jim McIlree

Okay.

Bill Smith

add, And, if Avast margin at the you down gross low Jim, that if it was could, me let let for we look let the acquired, the I add, business me percentage me XXs. in

expect So there this get to on we something both expense that growing business the and integrate see. as around and will to impact in, reducing you will be to it on revenues be then an initial back would XX points working we us,

Jim McIlree

at you. trying Understood. the the Family trajectory and T-Mobile. understand I'm Safety Thank business, Sprint of primarily And to

replaced, early So least that it completely in about Sprint the at that going to Am be not build it's correct hearing sounds like off, follows trajectory launch, you that… replaced it to continues same quarters, migrate to had. the if have or as base the that customer me Sprint by talked that that T-Mobile I

Bill Smith

helpful might that be Yes, add some let then. me color

part stay that the and and to safe think of on the sound. system Sprint the Found billing I T-Mobile over migrate allow Safe of on strategy will First all, to to users and be

ice quarters, cube substantially. dynamic melting down number as should the talked that we've about of last slow X So the for that

as of and Sprint through the strategy think move found the product off product acquired to this we how Avast of overall platform. is the the as the easily figure is well over out T-Mobile part a gracefully and transaction users Sprint to as I safe

T-Mobile which you've that going There's circle of part a product, with into that their billing you'll circle T-Mobile, came the of of there's SafePath the got Avast a -- the to the you So be of as how be I got been FamilyMode, lot will the looking moving you've there's clear message was launch Micro thought new think Smith were lot lot make incorporates the system. gone of legacy which this users original code, a of have parts. best and the products would products SafePath parts to for to transaction, a we've on the a But new X T-Mobile all that of like the get the easy. got now moving

system. and should billing things in to that's quarter, stay safe And decline can found will be one start on more is and go T-Mobile -- on be will that away. about so how of think problem still we the drip talking probably that And people the and be in next I the the

is time, the While X, we X. SafePath at the which FamilyMode same launched new based on

of It's of work lot and that's a there's of parts. into execute on. think But gone thing I planning moving this. lot So to not a simple been a lot there's a

Jim McIlree

but you. anything can of specific launch I well, mid-year? know SafePath the about I tell us than I'm reluctant that at don't Thank know, to timing But more probably T-Mobile. the helpful. other there you you're is guessing you're X And talk That's Okay.

Bill Smith

think how May pretty years I now. is and about I've that been far accurate see right We'll we're not off. mid But it in

change. subject we're life where carrier I'm with that's obviously, plan So to working all the towards. sit. with But it's that's carriers. That's big working

Jim McIlree

Thanks everything. and with a good lot Very Okay. luck good.

Bill Smith

Thanks, Joe.

Operator

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

Charles Messman

us conference to Thanks, on free our feel additional We if have great any and here, call. questions look a have to us next reach today. afternoon. talking quarterly Please everyone joining you you for out forward Thanks. to to

Operator

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

be now may You disconnect.

Smith Micro Software (SMSI) 6 May 212021 Q1 Earnings call transcript