Q3 2021 Smith Micro Software Inc Earnings Call
[music] [music].
Okay.
Okay.
Good day and welcome to the Smith Micro third quarter 2021 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 to 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, Vice President of Investor Relations and corporate development. Please go ahead.
Thank you operator, and good afternoon, everyone. We appreciate you joining us today as we discuss Smith Micro's financial results for the third quarter of 2021 ended September 30th 2021 by.
By now you should have received a copy of the press release with the financial results. If you do not have a copy 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 Michael Fox Interim Vice President of Finance and Jim Kempton, Our new CFO, who joined November 3rd 2021.
Please note that some of the information you'll hear during our discussion today consist of forward looking statements, including without limitation those regarding the company's future revenue and profitability, our future plan, new product development, new and expanded market opportunity future product deployment migration and our growth by new existing customers.
Estimates.
Operating expenses company cash reserves and the expected impact of our recently completed acquisition.
And our business strategy operations and financial position going forward.
Forward looking statements involve risks and uncertainties, which could cause actual results or trends could differ materially from those expressed or implied by our forward looking statements.
For more information please refer to the risk factors included in our recently filed Form 10-K, and our final prospectus filed with respect to our recent public offering.
Smith micro assumes no obligation to update any forward looking statement.
Let's speak to our management's beliefs and assumptions only as the date they're made.
I'd like to point out that in our forthcoming prepared remarks, we refer to certain non-GAAP financial measures.
Please refer to our press release disseminated earlier today for a reconciliation of these non-GAAP financial measures.
That said I will now turn the call over to Bill Bill.
Thanks, Charlie and good afternoon, everyone.
Thank you for joining us today for our third quarter 2021 earnings call. Our third quarter was very busy for us on several fronts I am pleased with the overall progress and the significant milestones we achieved since our last earnings call.
First I am excited to announce that we have come to an agreement with T. Mobile U S. Commercial terms for family mode, three which is powered by our safe path platform.
And we are all aware coming to this agreement took much longer than we originally expected due to multiple delays outside of our control.
Unfortunately, these things tend to happen when two giant corporations like T mobile and sprint merger.
I am very pleased with the team for getting the agreement done.
We are now looking forward to the launch of family boat, three which will soon start driving revenue for Smith micro.
There are several other T mobile related activities that I will discuss later in the call.
On the AT&T front I am delighted with the progress we've made working closely with their team to build a plan to fuel new subscriber growth for their secure family App.
We're developing a plan to launched AT&T on a safe path platform before the end of 2022.
During his remarks, Mike will provide more specifics on the earn out related to the AT&T contract.
I expect to see great opportunity ahead with AT&T in the coming quarters.
We also advanced on several fronts with Verizon, which became the first tier one carrier in the U S to launch driver monitoring functionality as part of a family safety offering.
Working with Verizon and our technology partner CMT, we were able to launch the first major U C.
Family Safety feature since our acquisition of the Airbus family Safety business.
We also launched new marketing effort to promote horizon smart family during the quarter as we continue to drive new subscriber growth for the App.
This was all accomplished while we continue to plan to merge the existing spark family user base onto the safe path platform.
Our vision goes far beyond offering just the white label family safety application.
We strive to provide a comprehensive solution for their family's entire digital lifestyle <unk>.
Including the smart home and the consumer Internet of things to markets that are in and the emphases stage of their life cycles.
We're particularly focused on the digital lifestyle strategy, because it would increase the total addressable market for carriers and will generate more revenue opportunities for Smith micro.
Now, let's take a look at the financial results for the third quarter.
Revenue came in at $16 $4 million compared to $12 6 million for the same quarter last year.
30% increase.
Revenue when viewed on a quarter over quarter basis increased approximately $524000.
Non-GAAP net loss for the quarter was $258000, which equates to zero cents per share or breakeven.
Our cash balance at the end of the quarter was $32 4 billion. The subsequent earn out paid to a bus with the AT&T contract occurred after the end of the quarter.
Okay, Let's now turn the call over to Blake.
Served as our interim CFO during the third quarter for a more in depth analysis of the third quarter financials Mike.
Thanks, Bill and good afternoon, everyone.
As you know we acquired the Avast family safety mobile business in the second quarter, which impacts the period over period comparisons that I'll be covering today.
As such I'll also be highlighting the sequential changes to provide some additional context on our quarterly results now.
Now, let's cover the financial details of the third quarter.
For the quarter, we posted revenue of $16 4 million compared to $12 6 million for the same quarter last year, an increase of 30%.
When compared to the second quarter of 2021 revenue was up 3%.
For the third quarter year to date revenue was $43 7 million compared to $38 9 million last year, an increase of 13%.
During the third quarter of 2021, our family safety revenue inclusive of safe path, Andy a vast family safety mobile business increased 77% to $12 million compared to the third quarter of last year and increased 8% sequentially compare.
To the second quarter of 2021.
This increase was slightly lower than our expectations communicated last quarter as the T. Mobile agreement that bill touched on at the start of our call was not executed until this month, which was later than we had anticipated.
That being said we are very excited to have reached a commercial agreement with T mobile and look forward to the new version of family mode launching on our safe path platform.
The increase in family safety revenue was primarily related to the Avast family safety Mobile business acquisition that was completed in Q2 of this year.
This increase was offset by the continued reduction of safe Paas platform revenue related to declining legacy sprint subscribers.
As a reminder, all current marketing initiatives are only focused on T mobile branded products and not the sprint branded products.
In the upcoming quarter based on the current subscriber trends through October which include our newly acquired family safety products, We expect family safety revenue to be flat to 5% compared to the third quarter.
During the third quarter of 2021 comp suite platform revenue was $3 5 million, which was down 24% from the third quarter of last year.
Compared to the second quarter of 2021 comp suite revenue decreased 12% it was lower than expected to a great due to a greater number of legacy sprint VM subscribers, leaving the platform during the quarter.
This was partially offset by better than expected advertising revenue for the comp suite platform.
Regarding the continuing wind down of our legacy Com sleep based service at Sprint. We now have more clarity and are beginning to see subscriber loss accelerate which will impact fourth quarter call them sweep revenue.
This acceleration is driven by subscribers, having the option to move from sprint to the T Mobile network for voice services.
As more and more subscribers transition off of the sprint network comp suite related revenues will continue to decline.
We anticipate this revenue decline to continue to accelerate during the fourth quarter of 2021.
As a result, we currently expect <unk> revenue to be down 30% to 35% compared to the third quarter of 2021 we.
We currently expect this deployment to reach end of life sometime the middle of next year.
Boost mobile formerly owned by Sprint and now part of dish comprises approximately 35% of the comp suite platform revenue.
We are working towards expanding our strategic relationship with dish in the future and we'll aim to grow the number of subscribers, both the boost and a dish using our <unk> platform for premium visual voicemail services.
As a reminder, dishes currently in the process of rolling out as Greenfield five gene network with the goal of covering 70% of the U S population by June 'twenty 'twenty three.
These spot revenue was approximately 971000 for the third quarter of 2021 up 19.
Percent when compared to the second quarter of 2021.
This increase was higher than our expectations communicated last quarter. It was primarily related to a higher volume of variable revenue with our tier one U S customer.
Based on our current outlook, we expect view spot revenues in the fourth quarter to be lower by 20% to 25% compared to the third quarter.
This decrease is primarily related to lower variable revenue activity expected in the fourth quarter due to seasonality associated with this revenue stream.
For the fourth quarter of 2021, we expect overall consolidated revenue to be lower by approximately 5% to 10% compared to the third quarter of 2021.
For the third quarter gross profit was $12 8 million compared to $11 3 million during the same period last year.
Gross margin was 78% for the third 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 acquired a vast family safety mobile business as we merged third party application and service contracts and execute on other cost synergy opportunities.
In the short term, we expect gross margin to be near this current run rate.
For the year to date period ended September 32021.
Gross profit was $35 1 million, which was consistent with a $35 1 million during the corresponding period last year.
Gross margin was 80% for the September 30th 2021 year to date period.
GAAP operating expense for the third quarter was $31 2 million, an increase of $20 1 million or 181% compared to last year.
When compared to the second quarter of 2021, GAAP operating expense during the third quarter increased sequentially by 76%.
GAAP operating expense for the year to date period ended September 32021 was $62 1 million, an increase of $35 million or 97% compared to last year.
The increase in the GAAP operating expense for the year to date period ended September 32021, compared to last year is primarily related to <unk>.
A charge of $12 9 million.
Due to the change in fair value of contingent consideration related to the Avast acquisition.
An increase of $1 4 million for compensation and employee related expenses, primarily related to the acquisition as head count increased 47% year over year, resulting in 377 employees at the end of the third quarter compared to 257 at the end of the third quarter.
In 2020.
An increase in amortization of $5 7 million, primarily driven by the vast acquisition an increase in acquisition cost of 700000.
CFO transition cost of 143000 and cost related to the acquisition of certain non development intellectual property up 1 million.
Non-GAAP operating expense for the third quarter was $12 9 million, an increase of $3 4 million or 36% compared to last year, driven primarily by the acquisition.
On a sequential basis, the third quarter non-GAAP operating expenses were 12000 or 1% lower than the second quarter of 2021.
Non-GAAP operating expense for the third quarter year to date was $34 9 million, an increase of $8 7 million or 33% compared to last year also primarily driven by the addition of the <unk> business.
For the fourth quarter of 2021, we expect consolidated non-GAAP operating expenses to be approximately 2% to 4% higher than the third quarter. The increase is mostly related to additional sales and marketing expenses as we support family safety revenue and overall preparation.
For new expected product launches.
The non-GAAP net loss for the third quarter was 258000 or breakeven from an EPS perspective.
Pair to a non-GAAP net income of $1 8 million or four cents diluted earnings per share last year.
The non-GAAP net income for the year to date was 139000 or breakeven from an EPS perspective, compared to a non-GAAP net income of $9 million or 21 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 the third quarter. The reconciliation includes the following adjustments some of which are noncash items.
<unk> compensation expense of $1 3 million intangibles amortization of $3 million.
CFO transition costs of 143000, the change in the fair value of contingent consideration of $12 9 million for the Avast acquisition, resulting from the AT&T contract renewal and cost related to the acquisition of certain non development intellectual property of 1 million.
For the year to date period ended September 32021. The reconciliation includes the following adjustments some of which are noncash items.
Stock compensation expense of $3 6 million intangibles amortization of $8 million CFO transition cost of 143000 acquisition related cost of $14 5 million, which includes the previously discussed $12 9 million change in fair.
Value of contingent consideration and costs related to the acquisition of certain non development intellectual property of $1 million.
The company is currently working on the formal a vast family safety mobile business purchase price allocation.
During the second and third quarters, we made estimates to allocate the purchase price among intangible assets goodwill and estimated amortization expense.
In the fourth quarter 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 utilized a zero percent tax rate for 2021 and 2020.
Any resulting non-GAAP tax expense reflects the actual income taxes expense during each period.
From a balance sheet perspective, we reported $32 4 million of cash and cash equivalents as of September 32021.
As Bill mentioned earlier, we have subsequently paid the remaining portion of the earn out to a vast and the amount of $12 9 million, which positions us to grow our family safety solutions with this major carrier.
This concludes my financial review now.
Now back to Bill.
Thanks, Mike.
As I stated earlier I am happy to report that we have.
Finally reached a commercial agreement with T Mobile U S regarding the future of family mode.
New agreement is in line with what we expected and I want to thank everyone on this call and all Smith micro investors for their patience as we work through this process with one of our largest customers.
When we started negotiations last year, we expected T mobile's merger with sprint to cause some delays it.
It goes without saying that I'm incredibly glad to have the contract negotiations behind us.
Look forward to shifting our focus to the launch of family mode three.
As a reminder.
The current legacy version of family mode is powered by the Circle code base and provides parental controls functionality such as.
Screen time limits digital rewards and scheduled screen free times location.
Controls did not exist a legacy product.
Family mode, three will be based on say fast seven and will provide T mobile subscribers with the extended family safety functionality, such as real time location tracking and bread crumbs Configurable safety areas and location based alerts in addition to strong parental controls.
Yeah.
Well, we are still in discussions with our customer regarding launch timing, we expect that T. Mobile will launch and begin marketing family bodes III as early as possible in Q1 2022.
Through our extensive discussions with the carrier we have also begun to get more clarity regarding the subscriber migration and end of life timing of some of the other legacy family safety apps that we continue to support.
During the third quarter, we had four different family safety apps with T mobile and sprint.
Last month at T. Mobiles request, we discontinued the older Sprint family Locator App that was one of the legacy of <unk> products, we acquired.
As you May recall, when we acquired of US we gave no value to the legacy products. So this should not come as the surprise.
The shutdown of the sprint family Locator, we will have a short term revenue impact in the fourth quarter and the first quarter of 2022.
Overall family safety revenues grow the impact of this event will be minimal.
With the three remaining apps our shared goal with T. Mobile is to migrate their user bases, which are larger and integrated into the carrier's billing system.
Over to the safe task based family mode three product.
As we rollout failure modes, three supported by strong integrated marketing efforts I am confident that we will start to see a return to real growth in 2022.
We have an aggressive plan in place and are quite eager to get going.
This has been in the works for such a long time, but we're finally here.
Now, let's talk about our second major.
Family safety customer Verizon wireless.
In Q3, we work with Verizon to successfully launched the latest version of their smart family.
This app update was notable in that it included driver safety monitoring functionality.
Making Verizon the first tier one carrier to include this feature set as a carrier branded family safety App.
The driving safety features now included in all Smart family premium subscriptions include driver behavior monitoring collision detection automatic alerts as well as personalized driver scores for each member of the family.
Our marketing team in collaboration with Verizon launched new digital marketing initiatives during the third quarter to raise awareness of this new feature set with Verizon subscribers.
In addition to digital efforts, we are working closely with the carrier on some retail base campaigns to promote smart family and most of horizons corporate owned retail stores.
These initiatives are in the final planning stages, and I expect them to come to fruition sometime this quarter or early Q1 2022.
To close out my Verizon updates I'm happy to report that we have aligned with the carrier on how and when smart family users will migrate over to our safe have code base.
Well, we're still working out the details we believe that this effort will begin shortly with completion slated well before the end of 2022.
As I shared during our last Investor call, we were able to retain AT&T as a family safety customer after initial expectation that the business would be winding down.
Well, Mike already discussed the short term financial ramifications of the earn out allow me to provide a bit more perspective on what I see as a very positive long term growth opportunity for Smith micro.
Here's committed to investing in the growth of the secure families subscriber base going forward I expect and I am confident that we can drive significant new user acquisition once we get the marketing engine going next year.
Moving onto our voice messaging platform Commsuite, we continue to engage in the contract discussions with America's newest tier one operator dish wireless.
While we understand that the approval process involves multiple factors some of which are out of our control. We remain optimistic that we will have the opportunity to launch com sleep powered premium visual voicemail and voice to tech services at some time in 2022.
Regarding the legacy visual voicemail service still used by some sprints subscribers.
We have more clarity on timing and now expect this legacy service to continue to accelerate to an end of life.
Right now our best guess is that sometime in the third quarter of 2022. Most of the subscribers will have migrated to T Mobile's network and off of our Commsuite platform.
This accelerated migration began in the beginning of September. So there was a revenue impact to our Q3 numbers in Q4 will be the first quarter to reflect a full quarter impact.
As we have seen historically.
End of life migrations can take a very long time at wireless carriers, but this timing reflects our best estimate based on what we know today.
Nevertheless, unexcited with dish opportunity ahead, and still believe the product has legs for Smith micro.
<unk> continues to build out it's greenfield five G network on a national scale.
While this unenviable task will certainly take time the carriers should start growing postpaid subscribers soon which would increase the total addressable market for constantly power premium visual voicemail services.
Now, let's talk about our smart family platform view spot.
We've made some great development progress on the product during the first three quarters of 2021.
Especially in terms of enhancing the utility and usability abuse sponge studio the platforms backend management dashboard feed.
Features such as pre define device profiles bulk management of device.
In pricing information as well as the ability to test in previews, new promo experiences prior to deployment provides carriers with powerful capabilities to streamline their retail operations.
Q rated digitally rich experience that Viewspot enables provides wireless carriers with a competitive advantage by making it easier and faster to create deploy it remotely manage these digital retail experiences viewspot studio enables carriers.
To take these experiences to the next level.
There are several new activities underway around are used spot platform and as these evolve we look forward to sharing our progress.
As you can see we have been extremely focused and hard working over the past few months and I am both proud and excited about the progress we've made.
The next chapter of Smith micro growth story is just beginning.
MS Smith micro now having the three largest tier one carriers in the U S.
Among our customers selling the best family safety platform to their large subscriber basis is an exciting opportunity.
Our goal a goal supported by our customers is to build a subscriber base in the billions at each of these important tier one carriers.
Remember that family serves are viewed as the highest quality serves by carriers as historically, they churn far less and are willing to grow our food much faster and other demographic groups.
With that said I'll open the call for questions operator.
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 were using a speaker phone please pick up your handset before pressing the keys to withdraw your question. Please press Star then too.
At this time, we will pause momentarily to assemble our roster.
The first question.
From Scott Cyril with Roth capital.
Please go ahead.
Hey, good afternoon, Thanks for taking my questions and congratulations on getting T mobile across the finish.
Finish line.
He may be to start just bill if she could calibrate us in terms of what's the magnitude of the family Locator App that goes away and then in terms of family mode Free launching you start with that circle base. So is that going to be a quick switch over we should expect in the first quarter and what's the timing then that we should expect with phase two starting to convert.
Over the larger sprint.
Safe path base.
Okay, let's take those.
A couple of different steps then so the family Locator App.
Was the legacy.
At at at.
<unk>.
Sprint.
It's space has continued to to dwindle.
The impact will be felt for the in the fourth quarter.
We will give approximately a full full month of revenue will will lose two two months and.
And so.
Will.
We'll be looking at about a half the half million dollars drop in.
Revenue.
Off of that.
As far as with the <unk>.
Launch of.
Fairly mode three.
I think you'll see that it will be a very smooth tran transition from the circle code base.
<unk> to safe past server.
And as I said.
Think it will happen as soon as possible in the first quarter of 22.
As far as for the.
Sprint safe and found we will also be transitioning sprint safe and sound too safe past seven as a second instance.
Safe.
A safe path and that will happen.
Part of the first quarter of 22.
The remaining legacy product.
From a vast at T. T mobile we are in the planning stages, we don't don't have a date or timing set for that as yet.
But just to clarify so did the majority of the the existing safe path.
Subscriber base at sprint will convert over or will be turned on at some point in the first quarter is that is that what you just said.
Yes.
Okay.
Sprint safe and found base will will then move over to safe past seven as well it will be a second instance of safe past seven.
And our goal will be to just smoothly trans transitioned all those folks over.
We will also work too.
Make it possible that.
People can stay on the spread billing system or chance transition to the T.
T mobile billing system.
That will stop the.
The melting ice cube.
Syndrome that we felt Delaware since since the merger.
Great perfect and one more question if I could Verizon it sounds like you are starting to have some pretty good level of engagement with them both within the organization and some marketing dollars I'm wondering if you could provide a little bit of color in terms of how you expect that growth in that rule out to happen over the course of 2022, and maybe if you could as well.
Address if there are any pricing issue there how you're feeling about about the opportunity with Verizon in general going into 2022. Thanks.
I think that Verizon offers us a.
Great growth opportunity, we see the opportunity to substantially grow the overall installed base.
In discussions with executives at Verizon.
You are talking about this we are developing.
A joint goal.
That we will all March two and we are looking for a very large large growth.
22 and into 23 and beyond so we see this as being an an extreme growth.
Opportunities. So we're very bullish on what's happening at Verizon and.
Your primary takeaway is we're very bullish at the growth opportunities at all three of these U S tier tier one carriers.
Clearly, we will continue to sell and focus on growing the family's safety business outside of the U S. But while we're focused today just getting these three carriers up and running unsafe fast seven and it's very clear.
There is great growth.
Potential going forward.
Great. Thank you.
The next question comes from Eric Martin <unk> with Lake Street. Please.
Please go ahead.
My congratulations from T mobile contract as well I wanted to dive in a little bit deeper I know one of the reasons at the Sprint program was so successful was the retail by and just curious to know what are the reasons that T. Mobile agreement had been delayed I think was in part due to some.
Personnel changes at T mobile as far as the folks that were in charge of the program has had stabilized and then can you talk to their the level of aggressive aggression or how how aggressive they are going to be marketing this as far as digital.
In store.
The early leading indicators so people first and then marketing.
Yeah I guess.
I would look at it. This this this way.
I think we have a very strong.
<unk> team on the cheek T mobile side today, I'm very very happy with.
The people that have come come on board.
And I think they are very much too.
Admitted to growing this business so.
All of that I think is very very positive.
The T mobile folks.
Also have a number of former sprint equal they know how sprint was.
Rude this.
Our base grew it very successfully.
And clearly I don't think any of the.
The positive things that sprint did are lost.
So I would look forward to.
Seen that kind of momentum growth.
Built up over time at C. T mobile post launch a family mode three.
So I feel very very very positive about that I also mentioned invite.
Prepared comments that were making some strong progress at.
Verizon wireless also on bringing the.
The safe safe path offering into their retail stores, because we know that the.
The retail stores offer a really strong opportunity to grow the size of the user base. So.
I think you're seeing a lot of the things that we've learned over the years being applied now evenly to all three of these large tier tier one carriers.
Okay, and then for those of us modeling at home.
I had.
In the absence of an outlook from you guys I sort of modeled in family safety.
Troughing.
Yeah.
Sort of the legacy business I guess, Sir Troughing.
Troughing hearing Q1, and then kind of flattish and cute too and then really kind of a back half step up.
So.
I know things you sound like flipping a light switch T mobile you hammer out the contract and.
What was in November of 2021.
<unk>.
<unk> to the marketing effort in January of 2022, but there's a back half of 22 step up make sense to you Q3 up from Q2 or or is that still potentially too aggressive given some of the other puts and takes in the revenue.
Hey, Eric I think that's fair and that's kind of how I would love to see how it rolled out over time, but I think that's kind of a good way to look at it as an over high overview.
Okay Alright.
All right. Thanks for taking my question.
The next question comes from Josh Nichols with be Riley.
Please go ahead [noise] yeah.
Yeah. Thanks for taking my question and congratulations.
Congratulations on getting that commercial agreement with T. Mobile I know the team has worked exceptionally hard on that for for a long time now.
You mentioned that the agreement was in line with what you kind of had expected does that to assume at a high level of that this is kind of similar to the to the sprint model, where it's like a monthly or food that you guys receive or some revenue share with T mobile without driving too much into specifics.
Yeah, I think that's the way you should think think about it it looks very very very strong for us.
Mhm and then I was curious so you you doing a lot of business with Verizon and it's good to see the additional traction there is that some based kind of like growing as it is today or what the expectations are.
For that as we look out over the next couple of quarters in your enhanced engagement now with shape hard drive.
[noise] well.
Okay, that's really two two different questions.
The launch of the of the drive Cape capabilities.
Is the first and and I think it has been well received we are doing a lot of work with the folks at Verizon to try to get that message out and get it out in a very clear and concise manner and we do look for growth in their premium service offering.
<unk> as a result of the fact that they are offering drive.
So.
As far as the overall growth if you look at the number of family subs that each of the three tier one carriers here in the U S.
There are.
There are millions of subs, there and we're just getting to the point, where we're starting to think about how we're going to get billions of subs onto the family safety. I think this is a very doable thing I think this is the goal that all of us need to set for ourselves.
And that's what we're operating towards.
Obviously, the revenues will will follow.
Yeah, I think I think.
Like you said, we don't want to get specific on each individual customer we have to watch that okay. I think what you'll see as a whole.
Of all of them, that's our goal to get all of them growing Josh hopefully that helps.
Yeah. It does the bed just for clarification.
I mean for.
For the Commsuite business, so that's going to be running.
Through mid next year, but is it fair to assume that you are going to be keeping it boosts was 35% of sales then effectively that the other 65% or so.
Revenue, it's it's gonna be what's running off not all of it you are going to be keeping the boost portion which is actually growing right.
Yes, we will keep the boost portion and then as the postpaid.
Dish offering comes to the marketplace with that will provide yet another opportunity to grow the size of the commsuite user user base. So.
That's where the upside.
Opportunities exist.
And then last question for me I mean, you're talking about some joint marketing initiatives.
I guess it is your understanding that this is something that T. Mobile is gonna be investing heavily and I think I know sprint did a very good job as far as training up their salespeople and whatnot and that was a big driver of the sales growth.
Something like that will happen with with T mobile as well, they're gonna put their their marketing weight behind it significantly.
Yeah, So I think that.
Josh Yes, we're all very excited we've we've been working this for quite some time. So I think it's fair to say that.
We have a very strong plan in place I think it's important to note that there are several people from sprint.
Part of this team.
And so we're actually quite excited about it.
Thanks, guys I'll hop back into cute.
The next question comes from Joe Mcelderry with Dawson James. Please go ahead.
Yeah, Thank you and Hello, everyone.
Can you talk a little bit about what the expenses you're going to have to maintain in order to keep.
Commsuite going at all at a lower revenue level how that.
How are you going to address expenses there.
[noise] well.
The expense load for comp constantly there is is very very low.
Right right now so.
I think you'll you'll you'll see it just get pushed down slightly as as we move forward and we will rationalize it based on the the business opportunity that presented by the overall dish offering.
Okay. That's helpful. Thank you and then.
When will.
All of your business all of your family's safety business beyond the safe path seven platform is that something that.
That is complete.
Complete by the end of next year or does it go into 2023.
As I said the last quarterly conference call. Our goal is to have all of our customers over to safe past seven by the end of 2022.
Re re remains the course that we're operating under.
And.
Clearly the the big heavy lift is to get the.
Three large U S tier tier one carriers over first.
And then moved to Europe, and bring some of those additional customers.
Over in the latter part of 22, but our goal is to be unified on a single Coca base for family safety going into 2003.
Okay, Great and then.
Looking at.
The the rest of the world It seems like you're busy through next year.
Servicing the domestic carriers does that.
Does that push any customer wins in Europe, or the rest of the world.
Into <unk>.
Late 2022 or early 20th 23 or is that do you still have.
You still have to work at maintaining the U S customer base working on just customer base before you start thinking about significant wins and the rest of the world.
Well look I think we're we're just following the cash and the cash right right now the big opportunity or the three cheer cheer ones here in the U S.
But there are other significant customer opportunities one at Vodafone that we talked about as a result of the vast acquisition.
In the Czech Republic, as well as it is.
At when when tree in Italy.
It's just part of the Hutchinson group.
<unk> are using the vast code code base now they will be migrated to safe path before the end of 22.
We have other opportunities that we're working on and as those become to a point, where we can make some public. This disclosure we will do so we are continuing to sell and grow.
Our base, but clearly as you're falling where the big revenue opportunities are we're talking about millions of subs each one of the.
Large tier tier one carriers here in the U S. That's where our focus is and that's where the caches right right now.
Others will follow empty additives.
Alright, that's it for me Thanks, a lot.
This concludes our question and answer session I would like to turn the conference back over to Charles Mussman Corny closing remarks.
I want to thank everybody for joining us today should you have any further questions. Please feel free to reach out this directly.
We're also participating in a raw conference next week. So if you are there we'll look forward to talking to you and we'll look forward to talking on our next door Nicole everybody have a great day. Thank you.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
[music].