Q4 2024 Smith Micro Software Inc Earnings Call
Good day and welcome to the Smith Micro fourth quarter 2024 earnings Conference call.
All participants will be in a listen only mode should you need assistance. Please signal conference specialist by pressing the star key followed by zero after today's.
Presentation, there will be an opportunity to ask questions.
Speaker Change: Ask a question you May press Star then one on your Touchtone phone and Swift. All your question. Please press Star then two please note. This event is being recorded I would now like to turn the conference over to Mr. Charles Messman, Vice President and marketing. Please go ahead Sir.
Speaker Change: Thank you operator, and good afternoon to everyone. We appreciate you joining us today to discuss Smith micro software's financial results for the fourth quarter and year ended December 31 2024.
By now you should have received a copy of the press release with financial results.
Speaker Change: 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.
Speaker Change: On today's call we have Bill Smith, our chairman of the Board, President and Chief Executive Officer and.
Speaker Change: Jim Kempton, our Chief Financial Officer.
Speaker Change: Please note that some of the information you'll hear during today's discussion consist of forward looking statements.
Speaker Change: Including without limitation, those regarding the company's future revenue and profitability.
Speaker Change: Our plans and expectations.
Speaker Change: New product development and they've availability.
Speaker Change: New and expanded market opportunities.
Speaker Change: Future product deployment migration, and our growth by new and existing customers operating expenses and the company's cash reserves.
Speaker Change: Forward looking statements involve risks and uncertainties, which could cause actual results or trends to differ materially from those expressed or implied by forward looking statements.
Speaker Change: For more information please refer to the risk factors included in our most recent filing Form 10-K.
Smith Micro: Smith micro assumes no obligation to update any forward looking statements, which speak to the managements belief and assumptions only.
Speaker Change: The date, they're made.
Speaker Change: I want to point out that in our forthcoming prepared remarks, we will refer to specific non-GAAP financial measures.
Speaker Change: Please refer to our press release disseminated earlier today for a reconciliation of these non-GAAP financial measures.
Bill Smith: With that said I'll turn the call over to Bill.
Bill Smith: Thanks, Charlie Good afternoon, and thank you for joining us today for our fourth quarter and fiscal year 'twenty 'twenty Four conference call. We appreciate your interest.
Bill Smith: Let me begin by looking back at 2024, and reviewing some of the significant changes we've made to position the company to return to a state of growth and profitability.
Speaker Change: I'll also speak a little about the substantial shift in focus we are making as a company. She has moved us even further ahead.
Speaker Change: Throughout the history of Smith micro and the company has been recognized as a leading business partner with mobile operators around the world.
Speaker Change: We have distinguished ourselves by offering white label over the top applications with our cities, Pat and consciously platforms, which.
Speaker Change: Which we have traditionally sold as value added services through our mobile partners.
Speaker Change: More recently, our latest innovations in the say staff platform focus instead on the line with mobile operators core business.
Speaker Change: And then with solutions that support what they sell best.
Speaker Change: With our latest innovations and safe as kids and safe that Wes terrorists can now leverage the strengths of our safety solutions to offer devices and rate plans aimed at creating a safer mobile experience.
Speaker Change: That is value added services, but it is an integral component of the carriers core offerings.
Speaker Change: When we launched safe TACE kids with Orange, Spain to your solution during the fourth quarter.
Speaker Change: We made our first significant deployment under this renewed focus.
Speaker Change: Safe that kids is a new and innovative safe TACE solution there.
Speaker Change: The first of its kind to watch.
Speaker Change: Aligns extremely well with our customers vision of offering the right play and just work is aimed at a safer first mobile user experience.
With this deployment safe that is not offered as a value added service.
Speaker Change: Well it is integrated directly into the carriers offering.
Speaker Change: Every device on a two year rate plan is sold with our built in safe past powered protections.
Speaker Change: Let's see there's kids and two yeah, the strength of safe <unk> is fully aligned with the carriers key strengths and core business.
Speaker Change: Selling new rate plans and supports their vision of offering a safer solution to kids for their first loan experience.
Speaker Change: Well, it's safe to have kids Orange skin offer parents peace of mind that comes with starting a child's modal journey the correct way.
Speaker Change: Like keeping them safer online.
Speaker Change: Limousine screen time teaching healthy online habits from the get go.
Speaker Change: We believe that this will prove to be a recipe for success.
Speaker Change: The launch is in its early stages and while we can't reveal too much. We do know is safe that kids. This unique ability to support a child. So this rate plan.
Speaker Change: Less appeal to attract subscribers from other carriers.
Speaker Change: Parents, what a safer mobile experience for their kids.
Speaker Change: And they will change carriers to get it.
Speaker Change: Our experience thus far is completely aligned with our hypothesis of what could happen by offering this type of solution.
Speaker Change: More notable however.
Speaker Change: Is that we continue to demonstrate our ability to innovate and adapt our safe test platform to align with our mobile operators core strengths and festival business objectives.
Speaker Change: New rate plans and devices and adding new subscribers.
Speaker Change: On our last earnings call I spoke about our new solution safe fast O S.
Speaker Change: Another new and innovative expansion of our platform, which enables mobile operators to all.
Speaker Change: Otherwise stay every mobile device as it kids phone or tablet.
Speaker Change: With built in limits aimed at a safer mobile experience the kids cannot bypass.
Speaker Change: I also mentioned that we plan to accelerate the development of our schedule for say fast OS deployments due to the strong interest we saw in the market.
Speaker Change: I am excited to see that ensures continues to broaden in fact, we are in in depth discussions with several partners throughout the world.
Speaker Change: Later in the call.
Speaker Change: A bit more detail around how we plan to maximize this growing interest.
Speaker Change: I will also introduce you to the newest addition to our C staff platform, which builds on the same themes of aligning our strategy with the strengths and objectives over our mobile operator partners.
Jim Kempton: But now let's turn the call over to Jim to discuss the results Jim.
Jim Kempton: Thanks, Bill and good afternoon, everyone.
Jim Kempton: I'll now be covering the 2020 for financial results for the fourth quarter and full year.
Jim Kempton: During the fourth quarter, we recognized revenue of $5 million compared to $8 6 million for the same quarter of 2023.
Jim Kempton: A decrease of approximately 42%.
Jim Kempton: When compared to the third quarter of 2024 revenue increased by approximately 300000 or 7%.
Jim Kempton: Revenues for 2024 were $20 6 million versus $40 9 million in 2023.
Jim Kempton: The 50% decline compared to the prior year is primarily due to the conclusion of the Verizon family safety contract in the fourth quarter of 2023, coupled with a decline in safe <unk> found family safety revenue related to the continued attrition of legacy sprint subscribers driven by T Mobile's acquisition.
Jim Kempton: [noise] of sprint.
Jim Kempton: During the fourth quarter of 2024 family safety revenues were $3 8 million, which decreased by approximately $3 7 million or 49% compared to the fourth quarter of the prior year.
Jim Kempton: Primarily due to the conclusion of the Verizon family safety contract in the fourth quarter of 2023, coupled with the continued decline in legacy sprint safe <unk> found revenue as was expected.
Jim Kempton: Family safety revenues decreased by approximately 100000 or 3% compared to the third quarter of 2024.
Jim Kempton: During the fourth quarter of 2024 comp suite revenues were $1 1 million, which increased by approximately 600000 compared to the fourth quarter of 2023.
Jim Kempton: Revenue from Comed Tweed increased by approximately 500000 compared to the third quarter of 2024 due to a favorable adjustment to revenue recognized during the fourth quarter, coupled with continued subscriber growth on the boost comps, we premium visual voicemail platform.
Jim Kempton: <unk> revenue was nominal for the fourth quarter of 2024 and declined by approximately 500000 compared to the fourth quarter of the prior year.
Jim Kempton: The decline in spot revenues compared to the fourth quarter of 2023 was primarily due to the end one of our abuse spot contracts earlier this year.
Jim Kempton: Can you just bought revenues decreased nominally compared to the third quarter of 2024.
Jim Kempton: In the first quarter of 2025, we are expecting consolidated revenues to be in a range of approximately $4.6 million to $5 million.
Bill Smith: This revenue range is driven in part by the expected timing of revenue associated with the opportunities. The bill touched on in his opening remarks, offset by an anticipated decline in calling suite revenues as compared with the fourth quarter due to a favorable adjustment to revenues recognized in the fourth quarter.
Bill Smith: In a few minutes bill is going to give you more color on the opportunities that we're pursuing but the level of engagement and activity that we're currently seeing is very encouraging.
Bill Smith: For the fourth quarter of 2024 gross profit was approximately $3 8 million compared to approximately $6 4 million during the same period the prior year.
Bill Smith: A decrease of approximately $2 7 million, primarily due to the period over period decline in revenues.
Bill Smith: Gross margin was at 76% for the quarter compared to the 75% realized in the fourth quarter of 2023.
Bill Smith: The gross profit of $3 8 million in the fourth quarter of 2024 increased by approximately 400000 compared to the gross profit produced in the third quarter of 2024, driven by the sequential increase in revenues quarter over quarter, coupled with the decline in cost of sales.
Bill Smith: In the first quarter of 2025, we expect gross margin to be in the range of 72% to 75%.
For the year ended December 31, 2024, gross profit was $14 4 million compared to $30 3 million during the prior year period.
Bill Smith: Gross margin was 70% for 2024 compared to 74% for the 12 months ended December 31 2023.
Bill Smith: GAAP operating expenses for the fourth quarter of 2024 were $8 2 million, a decrease of $3 9 million or 32% compared to the fourth quarter of 2023, primarily attributable to the cost reduction activities that we executed earlier this year.
Bill Smith: And a decline in amortization costs associated with our intangible assets.
Bill Smith: GAAP operating expenses for the year ended December 31, 2024 were $63 8 million compared to $48 4 million in 2023, an increase of $15 5 million.
Bill Smith: This year over year increase was driven by the noncash goodwill impairment charge of $24 million incurred in the first quarter of 2024, which was partially offset by approximately $7 5 million in cost reductions primarily related to reductions in personnel costs and decreases in marketing related expenses coupled.
Bill Smith: With a $1.1 million decline in depreciation and amortization costs.
Bill Smith: non-GAAP operating expenses for the fourth quarter of 2024 were $5 8 million compared to $8 million in the fourth quarter of 2023, a decrease of approximately $2 2 million or 27%.
Bill Smith: Sequentially non-GAAP operating expenses decreased by approximately $1 million or 15% from the third quarter of 2024.
Bill Smith: As we noted in our last earnings call, we had anticipated recognizing quarterly savings in the range of two four to $2 8 million in the fourth quarter of 2024 as compared to the first quarter of 2024 and.
Bill Smith: And we exceeded this goal with a decrease in total non-GAAP expenses of approximately $3 1 million.
Bill Smith: In other words, we have decreased our total quarterly non-GAAP operating expenses and cost of sales by $3 1 million when comparing first quarter 2020 for cost to the fourth quarter of 2024 based on cost reduction activities executed this year.
Bill Smith: We did recognize a one time benefit to occupancy cost of approximately $100000 in the fourth quarter, which helped us to exceed our goal.
Bill Smith: We expect first quarter 2025, Don GAAP operating expenses to increase by 4% to 7% compared with the fourth quarter of 2024 driven.
Bill Smith: Driven in part by the aforementioned benefit to occupancy recognized in the fourth quarter.
Bill Smith: Coupled with an increase in costs associated with a couple of major trade shows that we attend in the first quarter of the year Mobile World Congress in CES.
Bill Smith: As well as an increase in payroll benefit costs in the first quarter due to the annual reset of the 401K match and payroll taxes.
Bill Smith: non-GAAP operating expenses for the year ended December 31, 2024 were approximately $28 3 million compared to approximately $35 3 million for the year ended December 31 2023.
Bill Smith: A decrease of approximately $7 million or 20% compared to last year.
Bill Smith: The GAAP net loss for the fourth quarter of 2024 was $4 4 million or <unk> 25 loss per share compared to a GAAP net loss of $6 7 million or <unk> 74 loss per share in the fourth quarter of 2023.
Bill Smith: GAAP net loss for the 12 months ended December 31, 2024 was $48 7 million or $3 94 loss per share compared to a GAAP net loss of $24 4 million or $3 <unk> loss per share for the 12 months ended December 31 2023.
Bill Smith: The non-GAAP net loss for the fourth quarter of 2024 was $1 9 million or 11 cents loss per share compared to a non-GAAP net loss of approximately $1 7 million or an 18 cents loss per share in the fourth quarter of 2023.
Bill Smith: non-GAAP net loss for the 12 months ended December 31, 2024 was $13 7 million or $1 11 loss per share.
Bill Smith: <unk> to a non-GAAP net loss of $5 3 million or 65 loss per share for the 12 months ended December 31 2023.
Bill Smith: Within today's press release, we have provided a reconciliation of our non-GAAP metrics to the most comparable GAAP metric.
Bill Smith: For the fourth quarter of 2024. The reconciliation includes adjustments for intangible asset amortization of $1 3 million stock compensation expense of $1 million.
Bill Smith: Depreciation expense of 100000 and changes to fair value of warrants of 100000.
Bill Smith: For the year ended December 31, 2020 for the non-GAAP reconciliation includes adjustments for goodwill impairment of $24 million.
Bill Smith: Intangible asset amortization of $5 9 million.
Bill Smith: Stock compensation expense of $4 5 million depreciation of 400000.
Bill Smith: In adjustments for nonrecurring expenses, including severance of 800000, partially offset by 400000 and changes does the fair value warrants and 200000 and proceeds from licenses of patents.
Bill Smith: Due to our cumulative net losses over the past few years, our GAAP tax expense is primarily due to certain state and foreign income taxes.
Bill Smith: For non-GAAP purposes, we utilized a zero percent tax rate for the fourth quarter of 2024 and 2023.
Bill Smith: The resulting non-GAAP tax expense reflects the actual income taxes expense during each period.
Bill Smith: We reported $2 8 million of cash and cash equivalents as of December 31, 2024.
Bill Smith: I would note that in the fourth quarter, we had payment delays from our largest customers due to a change in the payment platform for that client.
Bill Smith: We successfully transitioned to a new payment platform in early January resulting in cash receipts of approximately $2 5 million from this customer by mid January that we had anticipated collecting in 2024.
Bill Smith: This issue drove our accounts receivable balance from approximately $3 4 million as of September 32024 to $5 7 million as of December 31, 2024.
Bill Smith: As we are now fully transitioned to the new platform, we do not anticipate any further issues with the timely collection of our receivables from this customer.
Bill Smith: This concludes my financial review now back to Bill.
Bill Smith: Thanks, Jim.
Bill Smith: Our path forward is clear.
Bill Smith: We'll focus a significant portion of our sales efforts.
Bill Smith: Three family safety offerings.
Bill Smith: First we will focus on safe as kids are unique deployment model.
Bill Smith: <unk> carriers to offer child focus rate plans.
Bill Smith: Which has already been successfully launched at Orange state.
Bill Smith: Second we will devote significant effort to the marketing.
Bill Smith: At Otis where kids votes.
Bill Smith: And finally.
Bill Smith: We will leverage <unk> to enable carriers to deploy a senior safety thought.
Bill Smith: Aimed at capturing another extensive market opportunity for Smith micro.
Bill Smith: Let's discuss the opportunity provided by safe TACE L S to deliver a senior safety.
Bill Smith: In more detail.
Bill Smith: Over the coming months, we plan on launching <unk> for seniors, which will target a largely untapped.
Bill Smith: Your served market and wish we believe promises great upside.
Bill Smith: Our research today clearly indicates the senior safety market is one of the fastest growing segments.
Bill Smith: The population age 65, plus is really up to four times faster than the younger population growth both here in the U S and across Europe.
Bill Smith: We also see.
Bill Smith: Paradigm shifts and the senior market.
Bill Smith: As their preferences moved from purchased seen traditional flip phones.
Bill Smith: Creating smart pumps.
Bill Smith: With increases in new Senior's purchasing smartphones.
Bill Smith: 90% of the time it is apparent that flip phones are far less desire as a phone its choice today.
We believe flip phones will gradually become a micro niche product.
Bill Smith: Personally I don't believe the term elderly properly defined the targeted market is 65, plus nor do I believe current phones on the market named elderly phones align with the current market demands.
Bill Smith: It is it is a diverse market the ranges from very active independent seniors.
Bill Smith: It was a little extra support.
Bill Smith: To those who want or need assistance from the caregiver.
Bill Smith: We recently conducted a survey and wish we interviewed seniors in this target market.
Bill Smith: Found it all.
Bill Smith: All what capabilities smartphones tablets, bringing to the table.
Bill Smith: Things like watching videos or lagging due to their favorite social media sites, such as Facebook or having the ability to video chat with their grandkids or France.
Bill Smith: While the experience on the senior phone will be different when compared to say just as OS or kids. It will deliver many of the same important safety tools on the same path OS platform, there's seniors need and want.
Bill Smith: As they age in place.
Bill Smith: Some key features that will be part of the senior launch will include.
Bill Smith: Easy to use interface with larger thoughts.
Bill Smith: Family safety net.
Bill Smith: Location sharing geofence.
Bill Smith: Yes.
Bill Smith: Drive and crash protection.
Bill Smith: Online safety suite.
Bill Smith: Check in and family Sos options.
Bill Smith: And compatibility with voice assistance.
Bill Smith: But this is just the beginning as we have a very robust roadmap in place for future updates.
Bill Smith: G fast O S powers senior safety phones will be preloaded and frequent seeger to fit the needs of the senior market.
Bill Smith: We already had.
Bill Smith: We see meaningful interest from the carrier market for this offering.
Bill Smith: As a matter of fact, we are receiving unbelievable interest from carriers close in North America and Europe.
Bill Smith: For all three of our primary go to market sales staff products Safe TACE Kids say SaaS OS for kids and <unk>.
Bill Smith: <unk> for seniors.
Bill Smith: The number of active sales efforts underway is challenging but it is a challenge we certainly welcome.
Bill Smith: Carriers are even calling us.
Bill Smith: We believe that our pivot away from offering just value added services and now focusing our innovation efforts on products that carriers can leverage to add new subscribers.
Bill Smith: Sell more devices as the hallmark.
Resounding success.
Bill Smith: I believe that our safe to S O S offerings.
Bill Smith: Also have other competitive advantages.
Bill Smith: <unk> is unique as it allows mobile operators to leverage existing some inventory from popular handset manufacturers such as Samsung.
Bill Smith: To deliver our phone powered by states to have less out of the box.
Bill Smith: We also think go to market more quickly.
Bill Smith: This does not entail a backend integration.
Bill Smith: Beyond that our many years of experience in working with Oems on behalf of our carrier partners is a critical strengths that we believe can translate into a more rapid go to market timeline.
Bill Smith: This is it.
Bill Smith: And the focus of our company.
Bill Smith: While still supporting our existing customer base.
Bill Smith: And that's what we believe to be the largest opportunity we have seen in the last 15 years.
Bill Smith: Our sales pivot is generating an extraordinary level of interest and excitement and we believe that the market is telling us that's a right time for this solution is now.
Speaker Change: Let's drive deeper into Orange, Spain swatch of to you.
Bill Smith: The new rate plan.
Bill Smith: It was first made available in late November and Orange launched this multimedia marketing campaigns for the new offering in January.
Bill Smith: Overall I am quite pleased with the first wave of marketing campaigns, which included television commercial advertisements.
Bill Smith: Several digital and social media campaigns, and importantly in house promotions throughout the retail network.
Bill Smith: As a company they have done a fantastic job.
Bill Smith: Integrating the two you experience throughout their retail presence in Spain.
Bill Smith: Where in addition to prominent signage strategic placements through out their stores they have made.
Bill Smith: Purchase of a child's first phone a memorable events.
Speaker Change: Orange, Spain has done a great job training their staff on how to set.
Speaker Change: Up to the phone and ensure all this feature functionality is available at the point of purchase.
Speaker Change: With every customer deployment.
Speaker Change: Worked closely with the customer to arm them with training support resources and recommendations sharpening our own ability to support future launches.
Speaker Change: We believe we are still very early in the launch and we look forward to continued growth from this innovative new deployment.
Speaker Change: Before I move on.
Speaker Change: I'd also like to update you on mobile World Congress, the largest and most influential trade show in the industry.
Speaker Change: Which was just held last week in Barcelona, Spain.
Speaker Change: To you was showcased in demonstrated not only in our <unk>.
Speaker Change: With Mike leading suite, but also prominently.
Speaker Change: The Orange Spain's.
Speaker Change: These demos ignited considerable new interest is safe bass kids not only with other orange properties that we've met with.
Speaker Change: Also with several other mobile operators.
Speaker Change: We saw a tremendous interest across the board.
Speaker Change: I wish we believe heightens, our credibility as the market leader in the space.
Speaker Change: In addition, our team.
Speaker Change: Greatly passion with meetings with 30 companies, providing us with significant opportunity to introduce the safe test platform to a broad array of potential customers.
Speaker Change: Okay now, let's talk about AT&T.
Speaker Change: Overall, we have continued our ongoing advertising campaigns with all the different channels that I mentioned on our last call.
Speaker Change: We will be adding some near twist in the coming months, particularly around new updates to AT&T secure family income.
Speaker Change: <unk> significantly improved sign up flow enables subscribers to get up and running much faster.
Speaker Change: We are working with AT&T on changes that we expect will expand the total addressable market for this solution. While also expanding our reach with broader more diverse marketing campaigns, such as cross promotions with other services that AT&T.
Speaker Change: <unk> today.
Speaker Change: In addition, we are in discussion with about other new initiatives and upgrades of our safe path solutions.
Speaker Change: I look forward to sharing more of these developments with you in the coming quarters.
Speaker Change: Let's turn now to boost mobile.
Speaker Change: We continue to work closely together with this global in the retail channel to cross promote this family guard too.
Speaker Change: And attracting more family plans and postpaid subscribers onto their network.
Speaker Change: The timing is good as boost is undergoing a significant upgrade in their retail footprint with remodels, highlighting a theme of Allstate and family plans.
Speaker Change: This premium visual voicemail powered by our <unk> platform continues to do well, adding new subscribers and we expect this trend to continue going forward.
Speaker Change: They had been conducting several different ongoing promotional activities to drive continued growth to the platform and we believe there may be some opportunities for additional growth by bundling the service along with other cross promotion activities.
Speaker Change: We have very meaningful discussions in progress on how to expand our reach throughout the organization and have been working diligently on several different potential opportunities beyond boost Stanley guard and visual voicemail.
Speaker Change: We are also engaged in discussions related to our newer offerings that I spoke of earlier in this call.
Speaker Change: I am pleased with the direction of these discussions and confident that we will get to the finish line for one or more of our new offerings.
Speaker Change: Our partnership with T. Mobile continues to broad we have recently made great strides with the introduction of our newest safehouse offerings with key stakeholders throughout the organization.
Speaker Change: The object is aligned very well with the focus and go to market strategies of these innovative family safety products.
I am quite excited with the headway we have made to date and believe that we are on the correct path forward as we look to 2025 and beyond.
Speaker Change: In conclusion, we are bringing enhanced and powerful new portfolio.
Speaker Change: Our family safety solutions to market I have already tried to put in perspective, just how large an opportunity. This is.
Speaker Change: Just one new win was safe fast O S offerings with be a game changer for our entire company.
Speaker Change: And impressively, we have many opportunities, which should lead you to think about a lot more than just one customer win.
Speaker Change: Now these are mobile operators and of course, we must be mindful of how things can take longer or some of their processes.
Speaker Change: Corporate structures.
Speaker Change: Yeah.
Speaker Change: We know better than most.
Speaker Change: But when a line together with a purpose and a timeline, we know things can get done more quickly.
Speaker Change: We have proven throughout our history that things can quickly.
Speaker Change: Change for the better.
Speaker Change: That is our mission.
Speaker Change: I really can't give justice to how excited I am and the company truly is about the path we're on.
We believe the opportunity is a mess.
Laser focus to capitalize on it now.
Speaker Change: Timing and alignment of goals is always critical for success and I truly believe that pivot.
Speaker Change: They position us to tipping point needed for profitability and considerable growth.
Speaker Change: With that operator.
Speaker Change: I'll open the call for questions.
Speaker Change: Thank you we will now begin the question and answer session.
Speaker Change: To ask a question you May Press Star then one on your Touchtone phone.
Speaker Change: If you're using a speakerphone please pick up your handset before pressing the keys.
Speaker Change: And to withdraw your question. Please press Star then two and at this time, we'll pause momentarily to assemble our roster.
Speaker Change: And the first question will come from Scott Searle with Roth Capital. Please go ahead.
Scott Searle: Hey, good afternoon, thanks for taking the questions. It seems like you had a lot of good things going on as we entered 2025 Bill.
Speaker Change: Hey, maybe to start on on two Yo I had the opportunity to see the booth and the level of activity. There I'm wondering while it's still early if you could help us kind of frame. How you guys are going to think about success as we look out.
Speaker Change: Towards the end of this year into 26 I think in the first 18 months of the initial launch at sprint you've got the 7% penetration is this the same type of magnitude of opportunity.
Speaker Change: And in terms of other customers I'm wondering if you could help us understand the number of carriers may be that you are talking to you. It sounds like orange is going to roll it out into additional markets, but I'm wondering how quickly you can bring up new customers on a two year type service.
Speaker Change: Okay, let me try to tackle that.
Speaker Change: First off.
Speaker Change: There was a lot of positive interest throughout Europe now.
Speaker Change: Being driven by <unk>.
Speaker Change: All of the other carriers are watching what's going on and there are some numbers that I think are really compelling.
Speaker Change: Uh huh.
Speaker Change: Sign ups that Orange, Spain has been able to attract so far.
Speaker Change: It's approaching half of those sign ups are coming from competitors. These are families that did not buy from Orange state. They were buying from somebody else and this is an exciting number for carriers and when they can see that kind of pet penetration.
Speaker Change: This is a very good sign.
Speaker Change: I would say that.
Speaker Change: Overall penetration in Spain, we look to be very strong.
Speaker Change: We think that they have it.
Speaker Change: On a real need I think parents recognized back.
Speaker Change: Yes, there is a need for online safety for children.
Speaker Change: That they are.
Speaker Change: Our able to claim the.
Speaker Change: The opportunity to be the first wanted to have an answer.
Speaker Change: And I think they're really trying to capitalize on that.
Speaker Change: I also think it was not lost on other orange properties.
Speaker Change: <unk> success in Spain has had.
Speaker Change: As you know is very positive so I think.
Speaker Change: You should look to see further growth.
Speaker Change: That way in other words another part of your question you want to come back.
Bill Smith: Oh, just bill in terms of the timeline, how long does it take to bring a new carrier yeah. Yeah. Okay. You actually asked the question I had I assume one of you guys would ask and that is we'll just.
Speaker Change: How many.
Bill Smith: Opportunities are you working with.
Bill Smith: Well, if you use the fingers on both your hands you wouldn't have enough thinkers and you know you might borrow somebody else's hands and you might be able to get pretty close. So that gives you an idea of the magnitude of what we're talking about.
Bill Smith: There is a strong interest among carriers to be able to launch a product for back to school.
Bill Smith: So that's the summer launch and that's what we are really busy at bell.
Bill Smith: Well, we have been doing a lot of demos, we've done a lot of trials.
Bill Smith: In house use with a number of these carriers and they come to us with that.
Bill Smith: Things that they would like to see added before launch just make us that much more of a.
Bill Smith: Complete offering.
Bill Smith: So we are really busy right now getting that done but our goal is to have everything done launch is going to happen. This summer.
Bill Smith: And so that should give you some some sort of.
Bill Smith: Rational I mean look at how this rollout.
Bill Smith: Is a lot of work and the team has been stressed but you know what.
Bill Smith: We've had some tough years. This is good stress and so.
Bill Smith: The upside is there in the future should be very bright.
Bill Smith: Very good that's very helpful.
Bill Smith: And maybe if shifting too.
Bill Smith: The aging in place opportunity. This is certainly a nice adjacency that makes a lot of sense, but how far along is the product when could we expect commercialization and the first customer to go along with it. It's a huge market I think the numbers are.
Bill Smith: $40 million to $50 million that are directly addressable in the United States. So if.
Bill Smith: If you could frame maybe the Tam for US and then the timeline to this reaching commercialization with your first customer.
Bill Smith: Well it is.
Bill Smith: It is a big opportunity.
Bill Smith: And the market is grossly underserved.
Bill Smith: This is a senior market.
Bill Smith: Really.
Bill Smith: Covers a broad spectrum of people.
Bill Smith: <unk> got a lot of really active seniors that are out and about.
Bill Smith: And they just are looking for ways to establish a safety network replaced them and their family and their friends, where they can each all I'll take care of each other and so yeah.
Bill Smith: Sure.
Bill Smith: <unk> past OIS product does all of that.
Bill Smith: It's already there.
Bill Smith: You don't need for stages, you don't need parental controls. So we just take that out and we add in the drive and crashed.
Bill Smith: The tax because those are the other things.
Bill Smith: Seniors.
Bill Smith: So I kind of know what this is all about and.
Bill Smith: This is a very exciting market, we're getting very strong.
Bill Smith: Reaction from that all the carriers that we're primarily focused on the senior market, but also affecting some of the large carriers. It just has no offering for seniors at the present time.
Bill Smith: So not only are we talk to them about okay, let's watch safe that the loss for kids, while you're at it why don't you also launched state that the less risky.
And.
Bill Smith: I just think it's.
Bill Smith: An incredible opportunity for our <unk>.
Bill Smith: Great and maybe one last one and I'll get back into queue.
Bill Smith: In terms of returning to growth sequentially.
Speaker Change: We saw a little bit of that in the fourth quarter I'm wondering if you adjusted for the guidance in the first quarter for the onetime catch up in Tom Sweet are we up sequentially and then just the way we look out into the second quarter. There are a lot of positive trends that are developing whether it's orange to you or others that could be coming on shortly do you.
Speaker Change: Do you expect going forward then from March to June we should start to return to.
Speaker Change: Periods of sequential growth. Thanks.
Speaker Change: Yeah.
Speaker Change: Yeah, I think so I think what we are.
Speaker Change: Looking for us.
Speaker Change: Back half of the year, showing very nice growth.
Speaker Change: Just on the launching of <unk>.
Speaker Change: Various cost.
Speaker Change: Our offerings.
Speaker Change: As we've spoken about.
Speaker Change: We had to take a pause on this quarter because we can't bring on these new users yes.
Speaker Change: Customers, yet because we had to finish some of these product issues that we needed to just.
Speaker Change: Really address.
Speaker Change: So, yes, it's a little bit of a slow slow down, but it's just a push out.
Speaker Change: There's no other issues.
Speaker Change: But it should take.
Speaker Change: I think that you'll see the growth you've seen.
Speaker Change: Hospitality and the generation of free cash flow in the back half.
Speaker Change: Great. Thank you.
Speaker Change: And again, if you have a question. Please press Star then one our next question will come from Matthew Harrigan with benchmark. Please go ahead.
Matthew Harrigan: Thank you my questions were already largely addressed but I had a couple of at least one dangling.
Matthew Harrigan: The Black Sea Verizon was it caused a lot of dislocation over the last.
Matthew Harrigan: Two years I mean, there I know they had kind of an institutional.
Speaker Change: We tried to do everything in house, but what's your sense for how their ferring and who's out there as far as competition because clearly.
Speaker Change: Definitely a very nice Tam both on the <unk> side.
Speaker Change: And then the senior side as I think is also a great degree.
Speaker Change: Right opportunity and then do you have any I know everything is kind of lumpy in step function, but do you have any vision for where you'd like to be five years from now in the sense of where you are on revenues without providing any.
Speaker Change: Any guidance for 25 or even 26. Thank you.
Speaker Change: Okay.
Speaker Change: Five five years is a long time I have to say I have to say I got to think that that was true.
Speaker Change:
Speaker Change: It has some periods in our history.
Speaker Change: Unbelievably success.
Speaker Change: There was a period where.
Speaker Change: We did over 100 million.
Speaker Change: Sales into in a year well over that.
Speaker Change: We were generating free cash flow like hand over fist.
Speaker Change: I believe this business case can do that again.
Speaker Change: And I think that's the course that we're on I think that while it was disappointing that we weren't able to really grow that value added service site level I thought we could.
Speaker Change: Thank making this pivot.
Speaker Change: And going more in line with how the carriers.
Speaker Change: About things.
Speaker Change: Really their whole focus is adding subs.
So they they wanted.
Speaker Change: These kids with their first foot.
Speaker Change: Wanna offer.
Speaker Change: You know at peace of mind offerings for seniors. These are things that can really help their overall business case.
Speaker Change: Not like the value added services for its mainstream.
Speaker Change: Stuffs favorite business to do.
Speaker Change: And.
Speaker Change: That way, we're more aligned with I think.
Speaker Change: Yes, so yes.
Speaker Change: Yeah.
Speaker Change: I can't.
Speaker Change: Overstate this.
Speaker Change: I just think there's theirs.
Speaker Change: There's a bright future and we're working diligently on it and we're going to get it done.
Speaker Change: And what's your sense for how I mean, clearly you know Verizon has to have a product in the category.
Speaker Change: You said that the implied they'd be drawing them.
Speaker Change: Because what's your you said it very well.
Speaker Change: Yeah.
Speaker Change: I guess not black Swan, but white Swan. She asked if they could come back to you I mean, I know you can't answer that explicitly but just thinking about is there any real alternative that's viable for them either what they're doing in house on the software if the app or another.
Speaker Change: And then in other words do you almost never mentioned your competitors and clearly.
Speaker Change: And in Europe, I would assume that people are either having to do things.
Speaker Change: In house or is there someone else who's.
Speaker Change: Also showing up in our Barcelona trying to attract folks.
Speaker Change: Yeah look.
Speaker Change: I think we.
Speaker Change: We have the strength in this.
Speaker Change: Servicing carriers, there's nobody else.
Speaker Change: So you know.
Speaker Change: I think as there is somebody that's going to win a carrier.
Speaker Change: It's most likely going to going to be us.
Speaker Change: In the case of.
Speaker Change: Horizon they.
Speaker Change: They built their own products.
Speaker Change: Took it in an in house and they created their own product.
Speaker Change: Yeah. No go go look at the App ratings on <unk>.
Speaker Change: All the safe path products that are out there whether it's at.
Speaker Change: Cheap T mobile with or with AT&T or with boost family Guard and now even to you all.
Speaker Change: Our app ratings are about as high as you could find.
Speaker Change:
Speaker Change: I don't know that.
Speaker Change: Two others that try to do it themselves are able to achieve that.
Speaker Change: Yes, there are people that build great apps and there are people that run rate carriers and maybe there is there is these are both proposals.
Speaker Change: When we talk about safe passage, where we're operating the operating system level.
Speaker Change: Some other carriers, but none of them are really focused on.
Speaker Change: There are some other competitors, but none are really focused heavily on the carrier market.
Speaker Change: So I think whether you're talking about the kids phone or a senior safety phone.
Speaker Change: These are unique opportunities that we want.
Bill Smith: Great Bill.
Bill Smith: Great on the apps, so I look forward to particularly the second half of this year. Thanks.
Matt: Thanks, Matt.
Matt: Again, if you have a question. Please press Star then one.
Matt: And this will conclude our question and answer session I would like to turn the conference back over to Mr. Charles Messman for any closing remarks. Please go ahead Sir.
Matt: Thanks, everybody for joining us today as always we appreciate your interest if anyone has any questions or comments that they might chat with us about please feel free to reach out to US. We also will be attending the Roth Conference next week.
Matt: So if anyone's there please come and say Hello.
Matt: And have a great afternoon. Thanks, everybody.
Matt: The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
Matt: [music].