Q2 2021 Smith Micro Software Inc Earnings Call
[music].
Good day and welcome to the Smith Micro second quarter 2021 earnings Conference call.
All participants will be in listen only mode should you need assistance. Please signal of a conference specialist by pressing the star key followed by zero.
After today's presentation there'll be an opportunity to ask questions to ask a question you May Press Star then 1 on your Touchtone phone to withdraw your question. Please press Star then 2.
Please note this event is being recorded.
I'd now like to turn the conference over to Charles Messman, Vice President of Investor Relations and corporate development. 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 second quarter of 2021 ended June 30th 2021.
By now you should have received the copy of the press release with the financial results. If you don't have a copy of the like 1 please visit the Investor Relations section of our website at Www Dot Smith micro Dot com.
Today's call we of Bill Smith, Chairman of the Board, President and Chief Executive Officer of Smith, Micro and Tim Hoffmeyer, Chief Financial Officer.
Please note that some of the information of all here during the discussion today consist of forward looking statements, including without limitation those regarding the company's future revenue and profitability.
New product development, new market opportunities future products developed by new and existing customers operating expenses company cash reserves. The recently completed acquisition of the family safety of mobile business from the back and how the acquisition May impact Smith, Micro's business strategy operations and financial position going forward.
Forward looking statements involve risks and uncertainties, which could cause actual results or trends the differ materially from those expressed or implied by our forward looking statements.
The more information please refer to the risk factors included in our most recent filed the form 10-K, and the preliminary prospectus supplement filed with respect to our recent public offering.
This is my growth seems no obligation to update any forward looking statements, which speak to our management's beliefs and assumptions only as of the day they're made.
I'd like to point out that in the forthcoming prepared remarks, we will refer to certain non-GAAP financial measures. Please refer to our press release disseminated earlier today for a reconciliation of non-GAAP financial measures with that I'll turn the call over to Bill Bill.
Thanks, Charlie Good afternoon, everyone and thank you for joining us today for our 2021 second quarter Conference call.
Overall the results for the second quarter came in line with our expectations.
We continue to make great strides with the integration of the people customers and technology gained through the acquisition of Avast family safety of mobile business in April of this year.
Our team completed a detailed audits from the Vos family safety platform during the second quarter and the identify the areas where this technology will bolster the safe Paas platform. The further accelerate our product roadmap.
I'm, especially pleased to share that we now have a solid integration plan in place to combine both platforms into a best of breed family safety solution in the coming quarters.
We expect to have all of our customers running on a single platform.
Of the end of 2022.
On the sales and marketing front, we have active and productive.
Conversations underway with each of the customers gained through the acquisition.
I am extremely optimistic with regard to the untapped potential of the Verizon safe family deployment.
I'm also very encouraged with the potential of the new relationships. We are building with the other carrier customers the.
Came with the acquisition.
Although the updating of commercial agreement with T Mobile U S is still pending.
I believe we will come to a conclusion on terms of a fully executed amendment soon.
Later in the call I will provide a little bit more color on this evolving situation.
Lastly, I am also delighted to announce that we have won back AT&T as the customer.
Which means we will continue to support the carriers secure family mobile App going forward.
While I can't provide any details at this time.
Would like to say that this is the great accomplishment for our team and it will have a positive impact on the potential of our family safety business line in future quarters.
Now, let's look at the second quarter financial results.
Revenue for the quarter came in at $15.9 million compared to $12.9 million reported in the same quarter of last year.
An increase of 23%.
Furthermore, our Q2 revenue is up 40% from Q1 of this year.
Dan family Safety revenue for Q2 is up 77% from Q1.
Gross profit as a percentage of revenues was 79% for the quarter.
Non-GAAP net loss was $300000, where the loss of 1 cent per share.
Our cash balance at the end of the quarter was very strong just under $30 million and we carry no debt other than trade payables on our balance sheet.
In addition, my wife and I intend to exercise this quarter are 850000 warrants and his successful adding over $2 million to the company cash balance while also increasing our shareholders.
Okay now, let's turn the call over to Tim for a more detailed analysis of the second quarter plenty of options to him.
Thank you Bill.
As Bill just mentioned we are excited to refocus efforts to further support the acquired contract with AT&T.
This revenue stream was originally classified as legacy revenue with the of boss family Safety Mobile acquisition.
We will continue to work with the customer on expanding the platform in the future and then separately evaluate earn out implications based on the terms and conditions of the asset purchase agreement.
Which could result in additional cash payments to the seller.
Now, let's cover the financial details of the second quarter.
For the second quarter, we posted revenue of $15.9 million compared to $12.9 million for the same quarter last year as bill indicated an increase of 23%.
When compared to the first quarter of 2021 revenue was up 40%, which was better than our expectations communicated last quarter.
For the second quarter year to date revenue was $27.3 million compared to $26.3 million last year, an increase of 4%.
During the second quarter of 2021, our family safety revenue inclusive of sales path and the Avast family safety mobile business.
Increased 51% to $11.1 million.
Compared to the second quarter of last year.
And an increase of 77% sequentially compared to the first quarter of 2021.
This increase exceeded our expectations communicated last quarter.
The increase in family safety revenue was primarily related to the Avast family safety mobile business. The acquisition completed on April 16th for which we received additional revenue compared to the first quarter of 2021.
This was offset in part by the expected reduction of safe path platform revenue related to lower legacy sprint subscribers.
As a reminder, all current T mobile marketing initiatives, our only focus on T mobile branded products and not the sprint branded products.
In the coming quarter based on the current subscriber trends through July and our newly acquired family safety products, We expect family safety revenue to increase by 9% to 14%.
Compared to the second quarter.
This guidance assumes the current subscriber trends continue through the third quarter of 2021.
During the second quarter of 2021 comp suite platform revenue was $3.9 million, which was down 9% from the second quarter of last year.
Revenue from the comp suite platform decreased 4% sequentially compared to the first quarter of 2021 and was better than expected as communicated last quarter.
This decrease was due to an expected loss of subscribers offset by better than expected advertising revenues.
We continue to navigate the T mobile sprint merger as subscribers now have an option to move from sprint to the T Mobile network from voice services as the subscribers transition from the Sprint network. We expect a continued decline in the sprint comp suite subscribers.
As a reminder, boost mobile formerly owned by Sprint is now part of dish and comprised approximately 25% of the comp suite platform revenue.
Look forward to expanding our relationship with dish in the future, including the goal to increase boost mobile comp suite subscribers.
During the third quarter of 2021, we expect comp suite platform revenue to be down 5% to 10% compared to the second quarter.
These spot revenue was approximately 817000 for the second quarter of 2021 down 16% compared to the second quarter of last year and down 12% compared to the first quarter of 2021.
This decrease was higher than expectations communicated last quarter and was primarily related to a lower volume of variable revenue with our tier 1 U S customer.
Based on current outlook.
We expect the spot revenues in the third quarter to be higher by 5% to 10% compared to the second quarter.
This increase is primarily related to our near term visibility of variable revenue activity.
The near term pipeline of new customers, which has slowed due to continued global COVID-19 challenges.
For the third quarter of 2021, we expect consolidated revenue, including the newly acquired family safety products to be higher by approximately 5% to 10% compared to the second quarter of 2021.
For the second quarter gross profit was $12.6 million compared to $11.7 million during the same period last year.
Gross margin was 79% for the second quarter compared to 90% last year.
Our longer term goal for gross margin continues to be 90%.
To achieve this goal we will continue to work through the newly purchased the boss family safety Mobile business fixed third party application and service contracts.
Until that process is complete within the next few quarters, we expect gross margin to be near the current run rate.
For the.
The quarter year to date gross profit was $22.4 million compared to $23.8 million during the same period last year.
Gross margin was 82% for the second quarter year to date compared to 91% last year.
GAAP operating expense for the second quarter was $17.8 million, an increase of $7.5 million or 73% compared to last year.
GAAP operating expense for the second quarter year to date was $30.8 million, an increase of $10.4 million or 51% compared to last year.
Non-GAAP operating expense for the second quarter was $12.9 million, an increase of $4.2 million of 49% compared to last year.
And non-GAAP operating expenses for the second quarter year to date was $22 million, an increase of $5.3 million or 31% compared to last year.
Now the increase in non-GAAP operating expense compared to last year is primarily related to an increase of $3.7 million for compensation and employee related expenses.
As our head count has increased 69.
The 68% year over year.
The resulting in 402 employees at the end of the second quarter.
Also an.
The increase of approximately 400000 in marketing and advertising related expenses to support our family safety revenues.
This increase was offset by lower third party contract development costs.
The second quarter non-GAAP operating expense of $12.9 million was $3.7 million of higher in the first quarter of 2021 or 41%.
Matching the expectations communicated last quarter.
For the third quarter of 2021, we expect consolidated non-GAAP operating expense to be approximately 123% higher than the second quarter.
The increase is mostly related to a full quarter run rate for the newly acquired business and additional sales and marketing expenses as we support family safety revenue and prepare for product launches.
The non-GAAP net loss for the second quarter was 300000 or 1 loss per share compared to a non-GAAP net loss net income of 3 million or 7.
Diluted earnings per share last year.
The non-GAAP net income for the second quarter year to date was 400000 or 1 set diluted earnings per share compared to a non-GAAP net income of $7.1 million of <unk> 17 diluted 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 for.
For the second quarter. The reconciliation includes the following adjustments stock.
Compensation expense of $1.3 million intangible amortization of $2.6 million and acquisition costs of 1 million some of which are non cash items.
For the second quarter year to date. The reconciliation includes the following adjustments.
Stock compensation expense of $2.3 million intangible amortization of $4.9 million and acquisition costs of $1.6 million of some of which are non cash items.
Yeah.
The company is working on the formal of Vos family safety mobile business purchase price allocation.
For the second quarter, we made estimates to allocate purchase price among intangible assets goodwill and estimated amortization expense and.
In the second half of 2021 these amounts will be adjusted to match the final purchase price allocation.
The GAAP tax expense is due to certain state and foreign income taxes for non-GAAP purposes, we utilize a zero percent tax rate for 2021 and 2020.
Any resulting non-GAAP tax expense reflects the actual income taxes.
Expense during each period.
This concludes my financial review.
Now back to you Bill.
Yeah.
Thanks, Tim.
I'm quite bullish about the prospects with our largest customers. So let's start with an update on the 2 largest family safety customers T Mobile U S and Verizon.
As I mentioned earlier, although we continue to progress on the ongoing commercial discussions with T. Mobile our progress has been slower than expected due to the organizational changes within the carrier.
While I am not concerned about getting the deal over the finish line with a positive outcome for Smith micro we must continue to be patient as we work through negotiations with our largest customer.
On a good note we've had positive engagement with the new leadership in place the T Mobile U S.
I had a very productive initial meeting with them and I am confident we will conclude contract negotiations very soon.
We've also made great progress with T mobile regarding plans to integrate the 4 different legacy family safety apps, we have with them on to the safe path platform.
We expect that once this initiative is completed the subscribers who currently use the legacy services with the consolidated onto 1 platform powered by say kind of simple.
Now, let's talk a bit about Verizon family safety.
Other large family safety deployment.
Since acquiring the business from of US last April we've made significant strides in a variety of areas with Verizon and we will continue to strengthen strategic relationships within the carrier.
I'm happy to report the initial discussions regarding the migration of smart family users from of Vos platform to safeguard is going very well.
Frankly ahead of our original expectations.
We have also seen early success on the marketing front with Verizon the.
Horizon team has been very open to the collaboration on future marketing and user acquisition plans for the Martin family service.
Thanks to our strong relationships with Verizon and past success growing the user base at sprint. We believe this joint product marketing approach will help to grow the Verizon user base and tap into additional revenue for Smith micro.
In addition to Verizon we also made good initial progress with the other new customers gained through the acquisition.
Clearly I am very excited to see AT&T revisit their prior decision and continue to offer our family's safety solution.
We plan to work with AT&T to grow their user base by promoting proven marketing initiatives.
We see significant opportunity for growth in the coming year.
A transition to a safe path will also allow AT&T to offer a feature rich platform to their family customers.
Aid in customer acquisition.
Now with all 3 U S tier 1 carriers as customers.
And income.
Growth opportunity for the Smith micro of business case going forward.
Additionally, the 2 European carriers, Vodafone in the Czech Republic, and wintry in Italy are demonstrating strong willingness to work closely with us.
These carriers have been impressed by the robust functionality that our sales path platform provides.
I look forward to providing additional updates on the progress with these new customers on future calls.
Now, let's talk a bit about the progress we've made and the integration of the Vos family safety technology with state that.
After the details comparative analysis, our team has identified the strengths of each platform and the SaaS how the of Vos technology can be used to add functionality and features to safe zone.
I must say I am pleased with the proposal and I am confident it will produce the desired result for Smith micro of having the most comprehensive white label family safety platform on the market.
In addition to our overall product leadership another way, we maintain our competitive advantage in the family safety space is by providing unique and actionable consumer intelligence to our carrier customers.
The help carriers better understand market demand for safe have drive technology, we share the results of our recent survey of 2000 American parents regarding the impact smartphones have had on the safety of their team drivers.
This research initiative generated dozens of useful insights and provided powerful market validation of our safe drive.
Here are a few highlights to give you of the idea of how parents feel.
98% of parents, who expressed interest in this type of technology. So they would be willing to pay a monthly subscription fee.
Driver safety App.
2 thirds of these parents said they'd be willing to pay at least $15 a month.
The 36% said, they would pay $20 a month or more.
If you would like to learn more about this research I encourage you to watch the webinar, we hosted the last month.
<unk> on our website.
Now, let's talk about.
About our other 2 service platforms, the use spot and Commscope.
We continue to streamline existing deployments of our smart retail technology with view spot studio the.
Self service back end management Council, we launched last year.
Carriers value of the operational agility the view spot studio provides as it enables them to create the cash.
Roy and edit in store promotions.
In near real time.
This flexibility will only continue to grow in importance for mobile operators is in store promotional activities continue to rebound.
On the comp suite front, we continued to make progress with dish on contract negotiations and are exploring ways for our premium visual voicemail offerings to the bundled with other services to reach a wider audience.
I am pleased with the amount of work that is being done to ensure a strong rollout of our messaging platform is dish continues its overall expansion of their <unk> network.
Needless to say, we have been extremely busy on many fronts laying the groundwork for a strong back half of the year end of phenomenal 2022.
Smith micro.
I remain confident that news of our safe TACE deployment at T mobile will come shortly.
The news from Verizon is all positive.
And I'm overjoyed to see AT&T back in the fold.
All 3 tier 1 carriers in the U S are actively part of the Smith micro future.
The future that should provide the significant top and bottom line growth.
Yes.
Lastly.
I want to thank Tim Hoffmeyer for his many contributions to Smith micro over his tenure as the.
CFO as this will be his last earnings call with us.
Together, we have come.
Along the way over the past 4 years.
Jim has helped us build a very solid company that is poised for even greater things in the future.
Thanks, Tim and we wish you the best in your future endeavors.
With that I will open the call to questions operator.
We will now begin the question and answer session.
To ask a question you May Press Star then 1 on your Touchtone phone.
If you are using a speakerphone please pick up your handset before pressing the keys.
To withdraw your question. Please press Star then 2 at this time, we will pause momentarily to assemble our roster.
Our first question comes from Scott Searle with Roth Capital. Please go ahead, hey, good.
Afternoon. Thanks for taking my questions Tim Congratulations best of luck, sorry to see you go.
Hey, maybe just to dig in on the same path for and I wanted to confirm I heard the sequential guidance correctly in terms of.
Save path location night, the 14% growth sequentially and I'm wondering what are you building in in terms of T. Mobile your expectation for T. Mobile is that you sign the deal and she contribution during the quarter at the end of the quarter. How are you thinking about that.
Hey, Scott Thanks for.
For the kind words and.
Basically we were expecting that we sign and close that.
In the quarter, but we haven't assumed a lot of.
Upside on that.
And maybe the.
And to dive in a little bit on T. Mobile it sounds like initially you are going to convert over the circle media Labs base I was I was wondering if theres any color on that in terms of the detail on how big that is at the current time and then on the horizon from it sounds like Youre, making progress. There I was wondering if you could frame that a little bit in terms of <unk>.
And in terms of marketing dollars pricing et cetera, how we should be thinking about Verizon and save path as we go into 2022.
Yeah, Scott, let me try to take both of those questions I think of.
On the on the first 1 on the T mobile side, Yes, we will.
Start with the old Circle base first and then start rolling the others in.
Orderly fashion.
As far as the actual size of that base.
That's something that you really need to get from T. T mobile side I can't comment on that.
Can say that.
I feel very very positive about the getting this.
This tramp transition done is done in an orderly fashion and many of them over in a safe day.
I'm not worried about that.
Reorders happen within the carriers of when they do.
Cause things to slow slow down the time.
On the Verizon front.
The I'm really excited about horizon.
Have a very strong.
<unk> team in place.
They are heavily focused on growing their family safety business.
And they have a lot of initiatives planned for the balance of this year I won't go into those assets for them to tell people when they are ready to buy.
I think it's exciting and I think it will result in nice nice growth so.
I'm really tickled to have the.
The.
Verizon business they're in.
There are real Julien.
Work with so it's all positive great and less of it could congratulations on AT&T, that's big news.
Could you frame that a little bit in terms of.
How that transition occurs there currently I guess on the location of labs platform and so do they continue to operate <unk> do you manage this much like youre approaching the Verizon relationship where you manage 2 platforms and integrate and then transition over and how quickly do they get behind this how quickly would you expect to start to see some growth.
All of that platform. So I think the initial expectation was hey look we'll take this out of our numbers and our expectations because we don't want of a contract with them now that you've got that relationship in place. How does this how quickly does this turn of going the other direction.
That's a great question Scott It just happened and we don't have all the answers to your questions, Yes, I think in the.
And the next month or so, we'll probably be able to really dig in with it.
We have expressed our interest in the first number 1 servicing AT&T I think that was the great opportunity for us but number 2 we also said the we'd really like to see this business grow and the as.
As we undertake this effort.
We're really looking for some very strong signs the AT&T buys into that I think the initial conversations.
Give us confidence that we're going to have some more.
And.
Maybe in the month or so we can answer better.
Questions you're asking.
Great. Thanks congratulations.
Thanks.
Next question is from Omar <unk> with B Riley. Please go ahead.
Hey, guys. Thanks for taking my question on the company in for Josh are great.
Great to hear about AT&T.
I was wondering how much revenue do you think of the company can expect to generate from AT&T or maybe if you could provide what the.
Our run rate revenue wise.
From AT&T and then the second part of my question is how much do you think the cash earn out payment will be.
4 of Vos.
The.
With the AT&T coming on board.
Yeah.
All good questions. Let me just kind of refer you back to the.
The growth Road show when we were raising the capital to acquire of Vos, we talked about the <unk>.
Fact that we viewed AT&T as legacy that they were going to terminate the contract. We also said at the time that.
They are the face was smaller than the others of.
And we really don't go into much more detail the.
That.
We did also say that there wasn't an earn out of place in the.
That's something that we are evaluating right now.
And.
And the open kind of conversation that's going fine with the vast size so.
Look I I'm really excited to get them back I think they really 1 of b in the family safety market.
I think they're 1 of the things that they were pleased with was the professional way we approached them.
As we started the plan for the wind down of their family safety offering and they probably have some second thoughts.
They have a new new part partner now and the.
We gave them more confidence to move forward, but nonetheless they have.
He thought their decision and decided that they want to stay in.
We're very happy to have.
Got it helpful and.
Can you maybe talk about how.
How much family safety revenue in Q2 from a vast and what sort of assumptions, we should be of using win.
Thinking about of Vos revenue contribution in the third quarter and the fourth quarter.
Yeah.
Yes, so what we what we guided to last quarter was the combination of the family safety revenue.
Rather than running safe path and avast separately.
There is quite a reveal from a competitive standpoint.
So that's how we that's how we that's why we combined the family safety, which is what you heard US report last quarter and also this quarter.
The guidance last quarter was about 70% to 75% more.
Revenue in the second quarter versus the first quarter.
Mostly because of the of Vos.
Revenue additions in the second quarter, and we actually did a little better than that we are about 77% above the first quarter of this year. So you can you can back in in your models and come up with some numbers off of that but we would rather not for competitive purposes break that out at the end of the different numbers.
We believe it's too revealing in the Ed.
Okay. Thank you and then last question from me.
Nice to see that the code integration integration is progressing smoothly can you maybe talk about the profitability potential and margin profile of Smith micro once you've got a lot of that integration complete.
Yes.
I would look back again to what we said during the road show for the capital raise we said that the.
We would have little higher costs for a period of time until we could get to a single class platform.
Giving you.
And the 8 of the end of 'twenty, 2 clearly, we'd like to do it faster than that and we'll be working towards that goal.
As we do that we can.
Rationalize the the.
Overall expenses, we'd get away from running 2 platforms get back to 1.
But I really think what's going to happen as well.
We will be able to hold our expenses fairly flat and grow our revenues as our 3 key carriers now that the.
The Verizon T mobile and the AT&T.
I really look for some nice nice growth.
In 'twenty, 2 and that's how I think.
We should be thinking about it.
Yes.
Thank you I'll pass it on.
The next question is from Jim Mcelroy with Dawson James. Please go ahead.
Yes. Thank you good afternoon.
Can you indicate if the.
The AT&T.
Taking up the.
The platform that's going to require more operating expenses in what you had planned before either for R&D or for marketing, our customer retention or something like that.
Yes.
No Jim I think like I just said.
Our operating expenses will stay flattish.
We're fine we're covered on the.
The P&C business.
We'll be working hard with them to come up with the transition plan to get them over to the <unk> platform as well.
The sooner the better.
And can you clarify.
The direction of the mobile revenues.
In Q3 versus Q2, it's hard to tell if you've said they're flat.
Down the up work if you were silent on it.
Uh huh.
The T mobile consists of the 4 products now Jim.
And generally speaking the legacy sprint base.
Based on current run rates would would be down.
And the other products, we believe will be flat or slightly grow.
In the quarter.
Is the general expectation there.
Okay.
Okay.
<unk>.
And as far as 8 out of the garage.
Let me, let me expand on that real quick Jim and the growth that I forecasted really we get an extra couple of weeks because of the acquisition closed.
In the middle part of April So, we actually do get a full quarter run rate of loss of revenue also right. So you have to factor that into your model as well, but I just wanted to point that out.
Yes.
Right got the thank you.
And.
Is the.
As At&t's the station.
Leading to part of the the growth in the in Q3 revenues.
The family Safe.
So that would be too quick.
I would say that.
With the view that AT&T with hold fairly flattish, maybe some slight slight growth.
That's it.
I think we really need to spend time.
With their teams and really understand their goals and the.
Where it is.
The 1 of grow this.
<unk> had initial conversations everything sounds right.
And the but we'd need the test test that will get us give us a month or so.
Got it okay.
And then.
Lastly, we have been.
Talking about the boost in income sleep for a number of quarters now and I'm. Just wondering if there is any more specific update about how that take up is the.
Occurring or what your thoughts are on that I know Bill you Express express optimism on that but I was just wondering if theres more of.
Much of share there.
Yes, I would say say this first of this announced.
A few weeks ago that they've cut of new deals that rather than.
Running <unk> on the T mobile net net worth they won't be switching to AT&T.
That will also the the goal for the boost side as well.
It does mean that we will have more work to do.
Because we will now have the interface to the <unk>.
AT&T voice.
Voicemail system.
But thats, okay that will be fine.
It was just part of the process.
It was not totally expected so it's a little bit of us.
Price, but.
We will work through through that.
<unk>.
The fact is that the dish.
<unk> continues to build out their 5.5.
<unk> net network.
So.
As part of working with them and we.
The <unk>.
Opportunity.
I think you can safely say all 4 tier tier 1 carriers in the U S are working with us.
Alright.
Okay. Thanks, a lot guys. Good luck the everything.
Thanks.
Next question is from Bruce Goldfarb with Lake Street Capital markets. Please go ahead.
Congratulations on the great quarter, and thanks for taking my questions.
So the first 1 of Tim you're.
Leaving is there any updates you can provide on terms of finding of his replacement.
We have an active search underway it is still fairly early.
I would anticipate that we will.
Bring on an interim CFO to give us the time to more appropriately.
The thoughtfully go through that search process.
So you can stay stay tuned for for that I have nothing else at this point that I'd like to say publicly.
Okay. Thank you and then can.
Can you talk about.
Some of the little bit more about the pipeline outside of the U S.
I mean, how do you feel about that.
Yeah look I think we have a lot of.
Opportunities that we're focused on.
In both Europe, and the Middle East and sales of the 2 geos that we.
That we really target.
I see a lot of activity around view spot on the Lcs.
A lot of activity for safe path as well.
Im excited that.
Both of the.
Carriers that came through the ex the acquisition.
They have embraced dealing with us.
I think that should go well clearly.
It's not the normal place that you would start a vodafone re relationship in.
In the Czech Republic, more likely you would start in Spain as we did in the case with reviews thought but it is the start and we'd like to really leverage that so we'd like to perform very very well.
Of the phone in the and earn the right to be in a lot of the other.
The other countries and they serve as well.
Great. Thank you and then with the new T mobile contract.
Your way that you're working on are there gating items or do you feel like it's just sort of bureaucratic kind of just going through the system.
That you are working through.
Well I think the big issue is that they did a very large reorganization.
And while we had agreements in place with.
People those people are no longer.
In the leadership role and so we had to re.
We do that process with the new folks that is an ongoing effort right now is going well I do not believe there's going to be any issues.
Unfortunately the.
The way.
Just can't do anything about that.
Great.
Thank you that's all my questions Congrats again on the quarter and.
Although we will look forward to hearing from.
<unk>.
Thanks Bruce.
Again, if you have a question. Please press Star then 1.
The next question is from Joe Bernardo with benchmark. Please go ahead.
Hey, guys. Thanks for taking my question. This is actually the Joe on for Mark Chapelle.
And congrats on a great quarter, and congratulations against Tim and good luck on future endeavors, but just the I guess my questions.
So when you had acquired of best I believe 1 of your goals is to boost the margins adjusted EBIT margins to about 25% are you, making any progress on that phone.
Right.
Well, it's the only all of them for 2 and a half months so.
You got to give me a little bit of time, but.
Look we were very clear that we believe that we need to get the the gross gross margins back up into the 90% and we could get the EBITDA margin that would naturally fall out closer to the 25 points I still believe that that's very very doable and it will be our goal and it may take us.
A couple of quarters.
Just try to work through some of the the.
The things that we've got to take care of.
Just to make sure that we don't have.
Duplicative con contracts of duplicative costs and the.
The start squeezing some of that out.
All of the rest of it takes it takes care of itself.
Alright, great. Thank you.
Yes in the next session with respect of Comm suite can you comment on any of the progress that this as marketing efforts to increase the conversion with its free trial to paying subscribers the working out.
Yes.
The way, we would say that now is that it.
It's an ongoing effort I think theres just so many bigger issues that dish is working on.
Clearly the move to.
Switch away from T mobile and go with AT&T on the <unk> side is a challenge and then.
Double of that with the fact, they're trying to build out there of 5 <unk> net network.
I just think there are some bigger issues that theyre focused on.
I think theyre going to be of great customer I think we have a lot of opportunity with them.
I think we'll just be volume.
Okay, Great and then just 1 more to follow up on comp suite.
Can you comment if the portion that is true boost mobile is growing.
I think it's fairly flat and they are working on growing.
Yes, I think thats the way to think of it.
Yes.
Okay, great. Thank you that's gonna be all from me.
Thank you.
This concludes our question and answer session I would like to turn the conference back over to Charles Messman for any closing remarks.
Well, we'd like to thank everyone for joining us today.
Should you have any further questions. Please feel free to give us the call.
We're more than happy to chat with you and we will look forward to talking to you on our next conference call. Okay, well have the great day. Thanks.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
Okay.
Okay.
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