Q3 2020 Smith Micro Software Inc Earnings Call
[music].
Good evening and welcome to the Smith Micro <unk> third quarter 2020 earnings Conference call.
All participants will be in listen only mode should you need assistance. Please signal a conference specialist by pressing the star key followed by zero.
After todays presentation, there will be an opportunity to ask questions.
Ask a question you May press Star then one on your Touchtone phone to withdraw your question. Please press Star then two please note. This event is being recorded I would now like to turn the conference over to Charles Messman. Please go ahead.
Thank you operator, and good afternoon, everyone. We appreciate you joining us today to discuss Smith micro software financial results for the third quarter up 2020 fiscal year ended September Thirtyth 2020.
By now you should have received a copy of the press release with the financial results.
If you do not have a copy and would like one please visit the Investor Relations section of our website at Www Dot Smith micro Dot com.
On today's call we have Bill Smith, Chairman of the Board President and Chief Executive Officer of Smith, micro and to help our Chief Financial Officer.
Please note that some of the information you'll hear during our discussion today will consist of forward looking statements, including without limitation.
Those regarding the company's future revenue and profitability.
New product development <unk>.
New market opportunities operating expenses.
The company's cash reserves.
Forward looking statements involve risk and uncertainties, which could cause actual results or trends to differ materially from those expressed or implied by our forward looking statements.
For more information please refer to the risk factors included in our most recently filed form 10-K.
MS Micro assumes no obligation to update any forward looking statements, which speaks to our management's beliefs and assumptions only as up to date. They are made.
I'd like to point out that in our forthcoming prepared remarks.
We will refer to certain non-GAAP financial measures.
Please refer back to our press release disseminated earlier today for a reconciliation of the non-GAAP financial measures.
That said I'll now turn the call over to Bill Bill.
Thanks, Charlie Good afternoon, everyone and thank you for joining us today for 2023rd quarter earnings Conference call.
I hope that you are all well and are staying safe during these unique and challenging times.
Overall, the third quarter was extremely productive for Smith micro.
Our efforts led to a significant milestone as announced earlier this week.
With the launch of safe past seven.
The latest and greatest version of our connected lifestyle platform.
This was and continues to be an enormous undertaking for the entire company.
I couldn't be more pleased with the hard work and dedication of our team.
He was created the industry, leading application for family safety.
Going forward safe past seven is the standard to be used to measure any competing application.
As we spoke about at length on the last call. We continue to focus on the deployment.
A number of new carrier customers for both safe path and you spot.
Our efforts are all proceeding forward with the full support of these new customers.
As we have said previously in order to make all of that's the reality, we knew it would require some heavy investments in additional R&D resources.
That investment has now been made and we are turning our attention to the mission of staffing a growing number of customer deployments.
These deployments also include moving both T mobile and Sky offer the circle product to say faster revenue in the first half of 2021.
Well there is much work still to be done. These are exciting times at Smith micro and I look forward to what the future holds.
Now, let's take a look at the core.
From a revenue standpoint third quarter came in at $12.6 million, which was ahead of street expectations.
When compared to our revenue for the same quarter last year revenues increased by $800000 from 11.8 million.
Gross profit for the quarter was $11.3 million compared to $10.8 million for the same quarter last year.
Non-GAAP net income for the third quarter was 1.8 million or four cents per share.
We delivered strong cash flow from operations of 3.9 million during the quarter ending with a cash balance of approximately $26 million.
Overall I am pleased with these results the company remains cash flow positive and continues to deliver profitable quarterly results. Despite the sequential decline in revenues and our aggressive investment in R&D.
Later in this call I will provide more color on our three main product lines as well as provide you an update on our expectations for the last quarter of 2020.
But for now let's turn the call over to Jim for a more detailed review of the third quarter financial results Jim.
Thanks Bill.
For the third quarter, we posted revenue of 12 point Sixmillion compared to 11.8 million for the same quarter last year, an increase of 7%.
When compared to the second quarter of this year revenue was down 2%, which was within the guidance range provided.
For the third quarter year to date revenue was 38.9 million compared to 31.1 million last year, an increase of 25% the increase in revenues compared to same quarter last year and year to date was the result of safe path platform revenue.
Gross.
Also contributing to the results both the comp suite and view spot performance was relatively consistent.
During the third quarter of 2020.
<unk> increased 30% to 6.8 million compared to the third quarter of last year.
Revenue from these safe path platform decreased 8% sequentially compared to the second quarter of this year.
This decrease was slightly outside of the guidance range provided.
The primary reason for the sequential decrease in revenue was related to a reduction of in store marketing initiatives due to merger activities between sprint and T mobile.
Earlier this year, so the 19, Kosmos sprint stores to shutdown and windows stores reopened the marketing initiatives did not focused on sprint based products.
We also believe that the general unemployment related to cold at 19 has caused a reduction in the number of subscribers.
In the coming quarter based on the current status of the marketing initiatives within stores and the current subscriber activity in October we expect say fast to be down 7% to 12% compared to the third quarter.
This guidance assumes the current subscriber trending continues throughout the fourth quarter.
We remain excited about new safe path opportunities and are encouraged by continued progress around the launch of the new T mobile product.
During the third quarter of 2020 Con Swede revenue was 4.5 million down 1% compared to the third quarter of last year.
Revenue from the comp suite platform increased 5% sequentially compared to the second quarter of this year.
The increase was higher than expected and outperformed the guidance provided.
The current quarter increase was due to base subscriber stability and growth in both sprint and boost subscribers, whose.
Boost is now part of dish and comprised approximately 25% of the comp suite revenue in the third quarter.
We continue to navigate these sprint T. Mobile merger has subscribers now have an option to move from sprint to the T Mobile network for voice services.
Additionally, we are excited to work with dish to increase the boost calm suite subscriber base.
Consequently, we expect comp suite revenue to be flat to down for the fourth quarter, a 2020 compared to the third quarter.
Revenue for comp suite advertising during the third quarter was approximately 260000, which was relatively consistent with the second quarter of this year and last in the third quarter of last year.
The current quarter amount was in line with expectations.
As a reminder, this is a variable revenue stream and dependent on third party activities.
We expect the fourth quarter of 2020, Commsuite advertising revenue to be between 150 and $250000.
You spot revenue was approximately 1.2 million for the third quarter of 2020 down 8% compared to the third quarter of last year.
And up 19% compared to the second quarter of this year.
This increase was higher than expected and outperformed the guidance provided primarily due to the high volume of variable revenue activity with our tier one U.S. customer.
As discussed last quarter during the second quarter of this year, we added a new view spot customer, which contributed to the increase in our view spot revenue base. This.
This was the second new customer to be added in 2020, and we look forward to additional wins in the coming quarters.
As a reminder, we.
We separated these spot revenue into two categories fixed and variable.
The fixed portion of the revenue is related to license fees and is generally the recurring component of the revenue.
The variable portion of the revenue is related to device and promotional campaigns, which are short burst of activity, resulting in revenue and the volume is less predictable.
Based on our outlook, we expect few spawn revenues to be approximately 10% to 15% higher in the fourth quarter compared to the third quarter inch.
This increase is primarily related to our near term visibility of variable revenue.
Overall for the reasons discussed we expect the fourth quarter total revenues to be flat to down by 5% compared to the third quarter of this year.
For the third quarter gross profit was 11 point threemillion compared to 10.8 million during the same period last year.
Gross margin was 90% for the third quarter compared to 91% last year.
For the third quarter year to date gross profit was 35.1 million compared to 28.2 million during the same period last year.
Gross margin was 90% for the third quarter year to date compared to 91% last year.
GAAP operating expenses for the third quarter was 11.1 million, an increase of 3.8 million or 52% compared to last year.
GAAP operating expense for the third quarter year to date was 31.6 million, an increase of 9.9 million or 46% compared to last year.
Non-GAAP operating expenses for the third quarter was 9.5 million, an increase of 2.8 million or 41% compared to last year and an increase of 800000 compared to the second quarter of this year.
Non-GAAP operating expenses for the third quarter year to date was $26.2 million, an increase of 6.4 million compared to last year.
The increase in non-GAAP quarterly operating expenses compared to last year is primarily related to an increase of 1.8 million for compensation and employee related expenses as head count increased 40% year over year, resulting in 257 total employees.
So at the end of the third quarter.
And an increase of 1.1 million for third party contract development costs.
These costs are variable and allows flexibility to increase or decrease the number of engaged resources.
The sequential quarter increase in non-GAAP operating expenses compared to the second quarter was slightly higher than the guidance provided and was primarily due to higher third party contract development costs.
As previously discussed and to provide additional comments around operating expenses, we continue to recruit and hire resources in all of our markets and currently expect to add approximately 12 to 15 employees in the fourth quarter of 2020.
We will continue to engage the third party contract development for as needed.
These additional internal and external costs were and are necessary to accelerate the same path roadmap by adding features and functionality sooner than originally expected.
And support the pursuit of new customers.
As discussed at length last quarter, we operate in a highly competitive environment and timing of customer opportunities is very critical we are currently pursuing multiple opportunities to sell our safestop platform for both family and identity.
Although there is no guarantee this effort will result in additional revenue we are optimistic enough to make the investments and pursue the win.
Based on this activity, we expect fourth quarter non-GAAP operating expenses to be relatively equal to the third quarter. This expectation includes a reduction of third party contract development costs and an increase of employee run rate costs as we continue to hire new employees through the quarter.
During this time of investment, we expect to remain profitable and cash flow positive.
The non-GAAP net income for the third quarter was 1.8 million or four cents diluted earnings per share compared to a non-GAAP net income of $4.2 million or 11 cents earnings per share last year.
The non-GAAP net income for the third quarter and year to date was 9 million or 21 cents diluted earnings per share compared to a non-GAAP net income of $8.5 million or 24 cents earnings per share last year.
Within the recently issued press release, we have provided a reconciliation of our non-GAAP metrics to the most comparable GAAP metric.
The third quarter. The reconciliation includes the following adjustments.
Compensation expense of 811000, and intangible amortization of 841000, all of which are non cash for.
For the third quarter year to date. The reconciliation includes the following adjustments stock compensation expense of $2.3 million.
Intangible amortization of $2.2 million and acquisition costs of 918000, some of which are noncash.
Due to our cumulative net losses over the past few years, our GAAP tax expenses, primarily due to certain state and foreign income taxes or.
For non-GAAP purposes, we utilize the zero percent tax rate for 2020 and 2019.
The resulting non-GAAP tax expense reflects the actual income taxes.
Expenses during each period.
To wrap up my financial review I will add some comments around capital.
We closed the third quarter of 2020 with 25.9 million of cash during the quarter, we generated 3.9 million of cash flow from operations.
In the short term, we will continue to invest the excess cash bounce to preserve capital in the mid to long term. The company will continue to evaluate strategic alternatives for utilization of capital to maximize shareholder return.
This concludes my financial review Bill now back to you.
Thanks, Tim now, let's talk about our three main products, starting with used by our retail display management platform.
As Tim has already discussed you spot revenues came in above expectations for the quarter, which is very encouraging considering the current state of the global retail marketplace.
While many people are still wary of shopping in brick and mortar stores because of the ongoing threat of the COVID-19 pandemic wire.
Wireless carriers continue to aggressively promote new services and capabilities through both pervasive advertising campaigns and in store promotions.
The recent surge in fiveg related advertising and promotions tied to Apple's launch of the iPhone 12, just last month is a perfect example.
In a very crowded marketplace with many different service options carriers are hungry to differentiate their offerings and capitalize on the buzz created by Fiveg.
Smith micro benefits from these promotions as they generate additional professional service revenues for you spot as curious develop complimentary in store campaigns to support their out of store advertising efforts.
As I discussed on last quarter's call, we develop new you spot functionality to assist our carrier customers in adapting their retail environments to meet customer concerns related to cope with.
This patent pending technology singularly leverages, the embedded sensors available on all smartphones and tablets to detect human phase and launch on device promotions without any physical interaction required.
We also augmented view spot power attract loops with dynamic device sanitization notifications that notify in store shoppers, whether a demo device has been sanitized.
Our product development team continues to explore.
Other technologies, such as QR codes and near field communication.
Further enhance touchless capabilities of the view spot platform.
Like you spot our comp suite product line performed above expectations in the third quarter.
Our legacy calm sleep subscriber base at sprint and boost mobile continued to generate revenue and profit for the company.
I have discussed before the ongoing merger of T mobile and sprint creates some uncertainty for commsuite revenues, but generally I'm pleased with our current position.
This is especially true with dish, which acquired boos back in July.
I am very bullish regarding the overall potential.
This new relationship as dish seeks to Pete and win market share as the news tier one carrier in the U.S.
As an established partner, we are very well positioned with dish.
They look to build boost overall customer base and launch a postpaid service offering in the future.
We have a great knowledge base to support them.
Securely when it comes to housing market and grow value added services, such as visual voicemail voice to text transcription.
The fact that our market leading safe path platform is also deployed to boost prepaid subscriber base is an added benefit.
All of these factors are working in our favor as we continued to build a relationship with dish and explore additional partnership opportunities.
Now lets discuss safe path Smith micro's flagship product Monday.
Monday's safe past seven announcement was a major milestone for our connected lifestyle vision and for the company as a whole.
This release was the culmination of thousands of hours of development and integration work.
It includes several new features as well as all the parental control functionality that we gained through the acquisition of circles operator business back in February.
What's more all of these features are available for both Android and iOS.
Full feature parity between operating systems has long been a goal of ours and is now a reality safe past seven.
Now, let's take a look at the highlights of the release.
These past seven introducing several new location based features such as a real time tracking location history and bread crumbs and a pick me up feature that enables users to request a ride with one click with.
With real time location tracking parents can see exactly where their children and other family members are on the safe pass family map.
The location history feature provides an event based view of family location activity. So parents can you save task to quickly see <unk> Horton location events, such as when their child arrived at school or when they left an after school activity.
The bread crumbs feature enables say staff users to drill down on specific location events to view the path of child travel between two locations.
Feature provides enhanced visibility to parents and provides them with greater peace of mind as they will know if their child made an unplanned stop in route.
With the integration of the <unk>.
Critical functionality complete safe path now provides robust parental control functionality on par with the location based features that have long been the strength of our offering new say fast features such as age based content filters screen time limits.
That time mode and the ability to schedule off line time are all features that are in high demand as parents everywhere seek tools to help manage screen time block inappropriate online content and improve the digital wellbeing of their children.
The social restrictions.
Those by club.
19 have only made digital parenting challenges more acute as kids have been forced to rely on connected devices for socialization Entertainment and education.
According to a survey that we conducted.
August seven out of 10 parents feel helpless when it comes to limiting their kids screen time during the pandemic, while 69% of parents agree that online schooling has made them more concern about the internet safety of their children.
The new parental control functionality that we have added was safe past seven directly addresses these concerns.
When discussing these new features it is also important to note.
That with our safe path home parental controls are available on in home connected devices, such as gaming consoles, smart Tvs laptops and tablets as well as connected devices used outside the home on cellular networks.
This is an important differentiator for Smith micro in the family safety space as we are the only white label solution provider to provide extensive parental controls both inside and outside of the home from the same mobile app.
People are spending more time than ever at home.
Fact that our family safety solution enables parents to extend powerful parental controls to all kinds of connected devices within the same app interface is powerful and reinforces our leadership position in the space.
When these components are considered holistically.
It's easy to get excited about the untapped potential of snakes pad.
We continue to make great progress with safe path related sales discussions on several fronts as carriers in many parts of the world have shown interest in deploying our solution to their respective subscriber bases.
We will continue to work closely with our carrier partners to explore new features and use cases for safe path that will further enhance its value proposition and enable us to continue the progress of our diverse sales efforts.
We will continue to invest in R&D initiatives for the balance of 2020.
We hired more than 70 people during the first nine months of the year and have aggressively invested in sales and marketing initiatives, our cash flow and profits remained healthy.
Through three quarters, we have generated $8 million in cash flow from operations and have approximately 26 million in cash reserves.
We are extremely well positioned for growth as we prepare to launch our solutions with additional carriers, which should make for a fantastic 2021.
Overall these are exciting times for both Smith micro and its shareholders.
Well the global economic impact of Cove at 19, and the merger of our largest customer has tempered short term growth. The company remains profitable our sales pipeline is healthy and our products are in demand.
With that said operator, I'd like to open the call for questions.
Thank you we will now begin the question and answer session to ask a question you May Press Star then one on your Touchtone phone.
If you are using a speakerphone please pick up your handset before pressing the keys.
So try your question. Please press Star then two this.
This time, we will pause momentarily to assemble our roster.
The first question will be from Scott Searle of Roth capital.
Good afternoon. Thanks for taking my questions Hope you and your families and team are doing well in the current environment and a nice job on the quarter.
Hey, real quickly to start I missed one of the numbers on comps Sweet Oh looking at the fourth quarter, what was the sequential guidance as it related to the comp suite and if I could dig a little bit in on that front. The boost makes I thought you said was around 25% of the mix how did that do in terms of the growth perspective in the third quarter, what's the outlook for those get that in the fourth quarter.
And then to clarify on the dish front.
Does this mean now you have a formal relationship for dish <unk> outside of the NVNO with boost as they start to roll out their Fiveg network. In the you know 2021 2022 time period, and then I had a couple of follow ups on say path.
Okay, Skus listen much less.
Tim handle of the numbers and then I'll come back and talk about the.
The relationship.
It's Scott Thanks.
The.
Guidance related to Tom Sweet for next quarter was basically flat to down for the fourth quarter off of the third quarter.
Gotcha, so flat to down low single digits, maybe down.
As you as you know and as the T. Mobile population may migrate I'm starting to sprint population may migrate to T mobile that I could speed up at some point, but but based on our visibility. That's that's the way we see it.
Okay.
And on the same path front congrats if it now that you've got to have seven out a big milestone for you guys, you mentioned T mobile and Sky and Onboarding them in the first half of this year I was wondering if you could put some more color around that in terms of the number of subscribers maybe related to that transition how quickly that's going to occur and then I guess as part of that.
Bill I'm the pricing model as it relates to T. Mobile does this actually then indicate that there was a formal transition now from the previous circle media labs relationship in fixed fee and moving more to a subscription based model. Thanks.
[noise] [noise] you at all.
All of that is in the works I really can't comment about it.
As it is is being just discussed between us and both of these companies. So all we can say is that we.
We are working on plans with the carriers they.
They set the schedule not us we have to respond to them there. The boss. So we're looking at a transition away from the circle Coke code base.
In the first half of the year for both of these customers, which will end the use of the circle code code base and they will be moved to say fast.
In the case of T mobile, it's a little bit more complicated because you also have a very large base of users that are on say some found as the script product and they will also need to be transitioned to the safe passage of a product offering from G. T mobile.
The good news obviously wants this is to complete.
There will be a single family safety product.
That can be marketed to all T T mobile customers going forward, whether they are original G. T mobile users were.
Acquired sprint customers and you know some marketing and everything and efforts like like that can really start to kick in so were quite excited about the opportunity to get this done. We're very focused you asked the question earlier that we Didnt answer and yes, we are working on a very strong relate.
And show with dish.
We do plan on working.
And with dish.
In all facets both.
The prepaid side, but also from.
Postpaid side as well.
Great if I could and then I'll get back into queue. Just in terms of the pipeline for safe path. It sounds like there is a lot of activity around it I was wondering if there was any other way to quantify or qualify some of your comments related to geography is number of carriers number of subscribers. Maybe that are represented by the carrier is that you're engaging with thanks.
Yeah, I <unk> I can answer part of that I can say that.
By and large the.
New customers will come from North North America.
From Europe and from the Middle East. So those are the geos that where we have the primary focus.
And.
As far as the number of subs or things like that I have to kind of hold off on that until we can either.
If we're allowed to we will be able to tell you who the new customers are in some cases, we won't be able to do that so.
We'll just have to deal with it on a case by case basis.
Great. Thank you.
The next question is from Eric Martinuzzi of Lake Street.
Thanks Congrats.
Congrats on the quarter I had a question regarding your largest customer not a pro forma basis for Q2, I think we had a I was modeling or even you. It just closed 86% I think was the number for T. Mobile in Q2, and then the the fish transaction with Booz happened on July one.
So it's safe to say you know, we're kinda 78, plus eight equals 86% or if the number is significantly different from that for the Q3.
That's a that's reasonable.
That's a reasonable assumption correct.
Yeah.
Right and then you know right now we're talking about an outlook at $12.3 million at the midpoint you just frame it a quarter at 12.6 million feels like we're basing that I understand there's a lot of puts and takes you are talking about commercialization.
Commercialization of the safe at seven in the first half.
Are you anticipating Q1 is kind of a revenue troughing with all those puts and takes weight in or is it too soon to predict that.
Yeah, I think that some of this is all.
Bill will be guided by the schedules that we can do you deploy that.
The various carriers in question.
You know I would say that that's our best hope that Q Q1 would be the troughing.
And then you start to see some growth.
Tell we are the exact schedule.
We can staff to that.
It's difficult to answer that question for sure.
Okay, and then on the expense side.
Knowing that there are some predictability on the revenue troughing, but also knowing that at some point, we're going to get the announcement of these carriers I would assume that it's going to be at least you know three to six months.
You know we were really can throttle back and yeah, R&D investments that we've made but outside contractors, but what should we anticipate for for kind of getting back to a normalized R&D number.
I guess, it's actually asking two questions at the same time, but what's the delta in number of months, where we can start to throttle back on the expense side.
I guess I would.
Kind of look at that and this this this way.
With the completion of all the heavy lifting around safe path and we're still doing more 'cause. There's other features that are required.
That we have not announced yet.
They are being two completed has as well. They are these are features that are required for other new new accounts things like like that.
You will still see.
Heavy investment for the balance of the year as I said.
We will look and first quarter.
Point in time, where we might be able to reduce some of the I'll be upside.
Expenses.
But this will also be driven by the number of the deployments.
We need to get done in the first and second quarters. So that's going to require people as well I mean, there's there's a cost that comes with.
With a growing business and.
You will soon be able to see this is very much a growing business.
And then lastly, I'm anxiously awaiting the announcement of those new customers you talked pretty confidently about you know at least a couple in the next 30 days, perhaps a third one by yearend due recommit to that same number of carry a new customer signings in 2020.
That's our game plan.
Okay. Thanks for taking the questions.
Okay. Thanks.
The next question is from John Nichols of B. Riley.
Hi, guys. Thanks for taking my question and congrats on the same path seven release I know that was a big undertaking I had a follow up I know.
Alluded to on an earlier question about the transition from T mobile and Sky off circle to the new safe platform in the first half of next year.
Is it fair to assume I guess, the timing of a potential new agreement with T mobile would that be announced like beforehand concurrently or what would be the expectation would you move starts moved those customers on to the platform without a new agreement or what should we expect.
Yeah, we would expect a new new deals to be signed and executed.
So you know.
That's the answer to that question as far as you know the actual.
Launch of the new product, obviously that will be driven by.
Commentary from cheap cheap T mobile and Sky as as we move forward.
We are working very closely with them on lot of their marketing plans and things like that so we are heavily in you invested.
Yeah in the U.S overall efforts.
Okay. Thanks, and then bill just to follow up on the marketing efforts I know there was a little bit of a lag right or take some of the carriers and time to ramp up the marketing efforts train all the individual retail staff any additional color you can provide on how quick it takes to really start getting these carriers to ramp up.
And started selling through this this new safe offering once you have an agreements in place.
Well, we can look at history is usually probably the best place to go and.
If you look at when sprint launch it took about 12 months before they started to go into a really strong growth curve.
And they were able to maintain that until till the merger.
So you know I think that's one way to look at however that said in some cases some of the new carriers a.
We'll be bringing people over from competitive platforms, which will give us the opportunity to start with a larger base.
At the get go so yes.
Yes, there is two different what you really are going to have to wait until we can.
I get the names of the carriers.
Into public hands, and then I think it would be easier to try to evaluate the growth rates I know, what you're trying to do and it's not easy right now.
Right.
Understood and thanks for providing some additional detail there last question from me and then I'll hop back on the queue any.
Additional info you can provide I know you mentioned that you are still looking to roll out a couple new features as well that our request from some of the companys current or potential customer base.
Anything you talk about about what those features maybe or at least how long until those features are all done and completed.
I don't think you're going have to wait a long time to learn about it so stay tuned and we'll we'll get.
Some things into public hands view formal.
Well when we re leases.
Thanks, guys I'll hop back in the queue.
The next question is from Jim Mcilree, that's probably what's.
Thank you good evening.
Can you talk about.
Seasonality with new spot and I'm.
I'm focused mostly on.
What happens in Q1 relative to Q4, if that's it.
If it's reasonable to.
Think about any seasonal impact Q1 versus Q4.
Jim.
[laughter] I, we're going to finish the year pretty strong from a view spot perspective.
I would expect that to be sequentially down there in the first quarter and then ramp up through the summer second and third quarter.
And then typically in the fourth quarter, we do see that down this fourth quarter, you know based on our near term visibility in the projects in the works, we're going to be up.
And so that that's a little bit color as you model that through.
2021.
Okay, and I'm I'm trying to understand.
The decline in safe path. This is going to be the third.
Quarter of sequential declines and.
Hi, <unk>.
Is that is there any price involved is it is it mostly I you know I know this has been a weird year with with co bit in those stores shutting down in the merger. So I mean, maybe it's hard to disaggregate.
The the sources of the decline, but I was hoping you could take a stab at it.
Yeah, Jim It's a good question and I think there's a there's a rather straightforward answer.
The product yeah.
We sell today to cheat sheet T mobile that came over from spreads.
Product can only be sold to customers that are on the sprint billing system.
Well that limits number one.
Right.
Market. They can go after it also makes it very difficult for them to really prove true remote.
The service offering because they have two different service offerings there both from us.
Yes, the one from from Circle does the more people you put on it doesn't really help us from a financial standpoint, yet.
But in the case of safe and sound.
It's very difficult to to grow that base until we get to the new products.
Product that can be sold to all new T T mobile cost customers.
And you don't have to worry about whether you're right you have a yellow assuming your phone or a gentle.
Gentlemen, your pounds, it's all the same and that.
That's a.
That's really been the.
Causal factor for the decline and is also now something to look forward to because you can see where.
All this trend will switch over now at the same time.
As we launch.
New customers and we've told you we are launching new customers.
You will see the opportunity to sell to these new carriers.
Customer bases and that will also.
Provide us with an opportunity to start to grow our overall safe safe path.
Revenue so.
Just a moment in time and more kind of limited as to what we can do to remedy it.
And you know, it's just it's unfortunate, but that's that's where we are hopefully that helps.
No that does and from a from a simplistic standpoint, you needed you need two things to happen in order to.
Grow again with T. Mobile one is say past seven and that's that's done but now you need it now you need an agreement.
For the.
For migrating circle or for that.
Make and that's still to come.
To be to be announced when it's announced to that is that fair enough.
Yeah, I think that's the way to thing to think about that I would say that.
Yes, everything is in the works now we're not waiting any longer. We're you know, we're having meaningful discussions and I think we can drive throughs crews now.
Okay very.
Very good thanks, a lot appreciate it.
Once again, if you have any questions you can press Star then one at this time.
Seeing no further questions I would now like to turn the conference back over to Charles Messman for any closing remarks.
Thanks, everybody I appreciate you, taking the time to listen to US today, well look forward to updating you.
In 2021 should you have any further questions. Please feel free to reach out to us directly. Thanks.
Hey, safe and thanks, everybody have a great day.
Thank you. The conference has now concluded. Thank you all for attending today's presentation. You may now disconnect have a great day.
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