Smith Micro Software Q4 2023 Earnings Call Transcript

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February 22, 2024

There are 7 speakers on the call.

Operator

day, and welcome to the Smith Micro Software 4th Quarter 2023 Earnings Conference Call. All participants will be in listen only mode. Please note this event is being recorded. I would like to turn the conference over to Charles Messman. Please go ahead.

Speaker 1

Thank you, operator, and good afternoon, everyone. We appreciate you joining us today to discuss Smith Micro's financial results for the Q4 and the fiscal year ended December 31, 2023. By now, you should have received a copy of our press release with the financial results. If you do not have a copy and would like one, please visit the Investor Relations section of our website at www.smithmicro.com. On today's call, we have Bill Smith, our Chairman of the Board, President and Chief Executive Officer and Jim Kempton, our Chief Financial Officer.

Speaker 1

Please note that some of the information you will hear during today's discussion consist of forward looking statements, including without limitation, those regarding the company's future revenue and profitability, our plans and expectation, new product development, new and expanded market opportunities, future product developments, migrations and or growth by new and existing customers, operating expense and the company's cash reserves. Forward looking statements involve risks and uncertainties, which could cause actual results or trends to differ materially from those expressed or implied by our forward looking statements. For more information, please refer to our risk factors included in our most recently filed 10 ks and our subsequent filings on Form 10 Q. Smith Micro assumes no obligation to update any forward looking statements, which speak of our management's beliefs and assumptions only as of the date they are made. I want to point out that in our forthcoming prepared remarks, we will refer to specific non GAAP financial measures.

Speaker 1

Please refer to our press release disseminated earlier today for a reconciliation of these non GAAP financial measures. With that said, I'll turn the call over to Bill. Bill?

Speaker 2

Thanks, Charlie. Good afternoon and thank you for joining us today for our 2023 Q4 year end conference call. We appreciate your interest. Reflecting on last year, we certainly faced some challenges, which initiated several decisive changes to build a new path forward for the company. And I believe we have found that path.

Speaker 2

The termination of a large customer contract earlier in the year came as a surprise causing us to quickly pivot and implement necessary changes to better align our resources. It was a large undertaking and difficult task, but I'm proud how our team worked collectively to rise to the occasion and accomplish several critical objectives that we absolutely needed to achieve despite this challenge. The most impactful of those achievements was the successful launch of AT and T Secure Family on the SafePath platform. While there were some challenges along the way, we got it across the finish line and now have a fantastic opportunity to significantly expand subscriber growth in fiscal 2024. With the migration efforts finished, we now have the flexibility to further develop and expand our roadmap, delivering meaningful innovative enhancements to the SafePath platform that will launch this year, which I expect to broaden our market reach and enable us to add new revenue streams.

Speaker 2

I will cover several of these enhancements in more detail later in the call, but one innovation where I do want to add a bit of color now is SafePath OS. As you may have seen in our earlier press release announcing SafePath OS, it will bring yet another new market opportunity to Smith Micro by delivering a unique solution to our M and O partners that build on their strong relationships with handset manufacturers. SafePath OS is a pure software solution that will allow our partners to promote a safe and secure child's phone or tablet. This product will be fully functional and set up right out of the box with preloaded software pre configured for Android devices to control the functionality of the phone itself to set digital parameters for safe use by the child. This new initiative for kids devices will deliver substantial flexibility to our partners for new go to market strategies.

Speaker 2

In addition, SafePath OS will provide enhanced capability for parents and guardians to adjust features and functionality as their children enter new age groups, allowing them to grow through their digital journey. This is just one of the new initiatives underway for Smith Micro as we enter 2024 full speed ahead. Our core vision continues to be the creation of safe and healthy digital experiences for families, while allowing operators around the world to add new lines to family accounts, enabling them to build closer and more valuable relationships with their subscribers over time. Now let's turn the call over to Jim for more detail on the financial results. Jim?

Speaker 3

Thanks, Bill, and good afternoon, everyone. I'll now be covering the financial details of the Q4 and full year 2023. For the Q4, we posted revenue of $8,600,000 compared to $11,400,000 for the same quarter of 2022, a decrease of approximately 25%, primarily attributable to a decline in family safety revenues period over period. As anticipated, when compared to the Q3 of 2023, revenue decreased by 2,400,000 dollars or 22 percent, primarily as a result of the conclusion of the Verizon Family Safety post termination transition period, with no revenue recognized in December 2023 related to this contract. Revenues for 2023 were approximately $40,900,000 versus $48,500,000 produced last year.

Speaker 3

The approximate $7,600,000 decrease was primarily due to a decline in legacy Found Family Safety revenue related to the continued attrition of legacy Sprint subscribers driven by T Mobile's acquisition of Sprint and the conclusion of the Verizon contract, coupled with the decline in CommSuite revenues. During the Q4 of 2023, Family Safety revenue decreased by approximately $2,100,000 or 22% compared to the 4th quarter of prior year, primarily due to the decline in Verizon Family Safety revenues in the Q4 of 2023 as the post termination transition period for that contract included and the continued decline in legacy Sprint Safe and Found revenues. Family Safety revenues decreased by approximately $1,700,000 or 18% compared to the Q3 of 2023. During the Q4 of 2023, CommSuite revenue was 500 dollars which decreased by approximately $400,000 compared to the Q4 of 2022. This decrease is attributable to a decline in DISH revenue, coupled with a period over period decline in revenue generated from the legacy Sprint deployment, which generated no CommSuite revenue in the Q4 of 2023.

Speaker 3

Revenue from CommSuite decreased by expand our premium visual voicemail offering more broadly across the DISH network and did see an increase in subscribers in that offering post expansion. We are expecting a further expansion of the PVVM offering across the DISH network in the first half of twenty twenty four, which we anticipate will yield additional growth in subscribers. ViewSpot revenue was approximately 600,000 for the Q4 of 2023, which declined by approximately 300,000 compared to the Q4 of prior year and decreased by approximately $500,000 compared to the Q3 of 2023. The decline in ViewSpot revenues was in line with our expectations. In the Q1 of 2024, we are expecting consolidated revenues to decrease by 32% to 36 percent or $2,700,000 to $3,100,000 compared to the Q4 of 2023, driven primarily by no further Verizon Family Safety revenues being recognized in the Q1 as the post termination transition period for that contract concluded in the Q4 of 2023.

Speaker 3

For the Q4 of 2023, gross profit was $6,400,000 compared to $8,100,000 during the same period of the prior year, a decrease of approximately 1,700,000 dollars While gross profit declined for the Q4 of 'twenty three versus the same period of 2022, gross margin was higher at 74.9 percent for the Q4 of 2023 compared to 70.8% realized in the Q4 of 2022. The gross profit of $6,400,000 in the Q4 of 2023 decreased sequentially by approximately $2,000,000 compared to the gross profit produced in the Q3 of 2023, driven primarily by the sequential decline in revenues quarter over quarter. In the Q1 of 2024, we expect gross margins to be in the range of 64% to 68%. For the year to date period ended December 31, 2023, gross profit was $30,300,000 compared to $34,300,000 during 20 22. Gross margin was 74.2 percent for the year ended December 31, 2023 versus a gross margin of 70.7% produced in 2022, an improvement of approximately 350 basis points.

Speaker 3

GAAP operating expenses for the Q4 of 2023 were $12,100,000 a decrease of $3,100,000 or 20 percent compared to the Q4 of 2022. GAAP operating expenses for the year ended December 31, 2023 were $48,400,000 a decrease of $16,900,000 or 26% compared to the prior year. Non GAAP operating expenses for the Q4 of 2023 were $8,000,000 compared to $11,700,000 in the Q4 of 2022, a decrease of approximately $3,800,000 or 32%. Sequentially, non GAAP operating expenses increased by approximately $200,000 or 3% from the Q3 of 2023. We expect Q1 2024 non GAAP operating expenses to increase by 1% to 4% compared to the Q4 of 2023, partially attributable to an increase in marketing and event activities, including Mobile World Congress, our largest trade show event of the year.

Speaker 3

Non GAAP operating expenses for the year ended December 31, 2023 was $35,300,000 a decrease of $16,200,000 or 31% compared to last year. The GAAP net loss for the Q4 of 2023 was $6,700,000 or $0.09 loss per share compared to a GAAP net loss of $8,000,000 or $0.14 loss per share in the Q4 of 2022. The GAAP net loss for 2023 was $24,400,000 or a $0.38 loss per share compared to a GAAP net loss of $29,300,000 or a $0.53 loss per share in 2022. The non GAAP net loss for the Q4 of 2023 was $1,700,000 or 0 point 0 $2 loss per share compared to a non GAAP net loss of approximately $4,000,000 or $0.07 loss per share in the Q4 of 2022. The non GAAP net loss for 2023 was $5,300,000 or 0 point 0 $8 loss per share compared to a non GAAP net loss of approximately $17,600,000 or a $0.32 loss per share in 2022.

Speaker 3

Within today's press release, we have provided a reconciliation of our non GAAP metrics to the most comparable GAAP metric. For the Q4 of 2023, the reconciliation includes adjustments for intangible asset amortization of $2,400,000 stock compensation expense of $1,500,000 notice stock offering amortization of $600,000 dollars changes to derivatives and warrants of $300,000 costs related to severance and reorganization activities of approximately $100,000 and depreciation of approximately 100,000. For the year to date period, The non GAAP reconciliation includes adjustments for intangible asset amortization of $6,800,000 stock compensation expense of 4,800,000 dollars note and stock offering amortization of $6,000,000 changes to derivatives and warrants of approximately $200,000 depreciation of approximately $600,000 and costs related to severance and reorganization activities of approximately $1,100,000 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. For non GAAP purposes, we utilized the 0% tax rate for 2023 2022. The resulting non GAAP tax expense reflects the actual income taxes expense during each period.

Speaker 3

From a balance sheet perspective, we reported $7,100,000 of cash and cash equivalents as of December 31, 2023. During the Q4, use of cash in operating activities amounted to $1,000,000 I would also note that at the end of 2023, our senior secured convertible notes were retired at maturity. This concludes my financial review. Now back to Bill.

Speaker 2

Thanks, Jim. Okay, I want to get back to the Q1 guidance that Jim provided. But first, let me start out by addressing the preliminary proxy statement that we filed earlier today. It relates to a special shareholder meeting to give our Board the discretion to effectuate a reverse stock split. As we described in the preliminary proxy statement, there are several reasons why we feel that this is the prudent approach for the company at this point.

Speaker 2

But our primary goal with the reverse stock split is to increase the per share market price of our common stock to meet NASDAQ's minimum bid price requirement. Given the current price of the stock as we have been trading under $1 since last earnings call, We expect this action would sufficiently increase our share price to help us regain compliance. Additionally, we believe it will create increased flexibility, which we believe positions the company to be opportunistic on any strategic opportunities that we identify including M and A. We feel strongly that this approach is the appropriate go forward strategy for the company and our shareholders to ensure the long term success of the company. Now let me circle back to our guidance for the Q1.

Speaker 2

We've indicated for some time now that the Q1 would be challenging as the Verizon Family Safety revenue will no longer be contributing to our revenue during 2024. We reacted quickly to the termination of the contract last year and significantly adjusted our cost structure in anticipation of this decline in revenues. We have been focused on efforts to grow our revenues to fill the gap including through the expansion of our SafePath product portfolio to drive growth, selling our solutions to additional MNOs and MDNOs and working to grow subscriber bases with our existing customers. I'll cover the expansion of both our customer and product portfolio shortly, providing a bit more color on our contract win with a major Tier 1 carrier in Europe that we announced in December. But first, I wanted to address our efforts with our current customers in a little bit more detail.

Speaker 2

With regard to AT and T, as we previously announced, we have successfully launched AT and T Secure Family on the SafePath platform and are winding down the legacy Avos platform. Since launch, we have released new updates to continue to improve the product and have expanded our addressable market with the launch of AT and T Secure Family to subscribers of Cricket owned by AT and T. We are currently partnering with AT and T for the next phase of marketing activities, including the launch of new initiatives that build on awareness programs, digital campaigns and maximizing the unique sales channels that AT and T has today. Experience has shown us that it sometimes takes longer to get things rolling with large carrier customers, but we believe we've turned the corner on the marketing front, a big step in the progress of the continued rollout of AT and T Secure Family. We see the excitement building at AT and T and believe there is a significant opportunity to drive new subscriber growth as we look to the remainder of the year.

Speaker 2

On the T Mobile front, since the last call, we've released updates to Family Mode to continue to enhance subscriber satisfaction. In addition, we're collaborating with the T Mobile team exploring new ways to expand our overall reach. We characterize our relationship as solid and we continue working to identify areas where we can expand the subscriber base. At DISH, we have continued to enhance CommSuite to meet the needs for Android based visual voicemail service. We enjoy a very strong relationship with DISH and believe that our business case with DISH Wireless will continue to expand throughout 2024 as they grow their business and we expand our reach.

Speaker 2

Turning to the European market, we were pleased to announce the new contract in Europe in the 4th quarter, in line with the expectations that we had outlined on prior calls. Activity under the new contract is well underway and we are very excited about the upcoming launch of SafePath with this Tier 1 carrier, which is slated to be in the early second half of the year. Our development efforts related to this project remain on track which brings a truly unique and interesting go to market approach that I will be excited to share more about after the launch. As you can tell from my comments, our customer relationships are very positive, but now let's focus on something that really gets me excited. I'm very energized by the growth of our sales pipeline and the impact of this activity on the forward looking success of our business in 2024.

Speaker 2

We see great momentum in the pipeline in both of our targeted geographies of North America and Europe. As a result, I believe we will deliver new business from both current and new carrier customers in 2024 and that there will be multiple announcements to be made. Our efforts over the last 3 years to establish Smith Micro as the premier provider of family safety software appears to have positioned us well. With all the turmoil around the world today, we see both governmental and societal pressures coming to bear to provide for both the digital and physical safety of our loved ones. And as a result, we are seeing strong interest in our SafePath platform.

Speaker 2

We will be attending the upcoming 2024 Mobile World Congress in Barcelona, one of the largest wireless trade shows in the world and have lined up a great schedule of meetings. Our participation in Mobile World Congress is aligned with our goal of growing the awareness of Smith Micro as a provider of solutions that are sorely needed in the EMEA region. I am pleased to share the announcement from earlier this week of Smiths Micro winning the Gold Barret Award in the Tech for Good category for Telecom and Wireless at Mobile World Congress for our industry leading SafePath family safety platform. This award further solidifies our position as the premier provider of family safety solutions. From a product perspective, we have expanded our portfolio to drive opportunities for revenue growth.

Speaker 2

On the last call, we spoke about a few new offerings coming to the market this year. Let me touch on those products again briefly. SafePath Premium broadens our SafePath portfolio adding new unique functionality that we believe is responsive to current market demand. It is well known that significant risks are not just prevalent, but are expanding in frequency and sophistication in both the digital and physical worlds. SafePath Premium will bring AI driven experiences that will enable users to manage risks associated with cyberbullying and inappropriate content on existing social media platforms and other digital communications channels.

Speaker 2

Additionally, this solution brings improved physical location intelligence and safety features to the application. We see great potential with this upgrade and expect this product to be available for launch in the second half of the fiscal year. We're already receiving great feedback from both existing customers and new prospects in the field regarding SafePath Premium, which has been very positive, creating a new value proposition while expanding our market opportunity. We also announced SafePath Global, a new streamlined deployment model which we have targeted to be available for launch in the next few months. SafePath Global delivers a quick to market SafePath solution with very low dependency on IT resources and other integration efforts from our carrier partners.

Speaker 2

This product provides an expedited path to revenues via SafePath for both our customers and Smith Micro, while quickly delivering a family safety solution to that operator's subscribers. We believe this offering will expand our brand while providing significant flexibility in launching new instances of SafePath. This SafePath deployment model will also reach a much larger untapped market including not only Tier 1 MNOs, but also Tier 2 and Tier 3 carriers as well as the ever expanding market of MVNOs around the world. I'm pleased to say that we already have a good idea as to where the first deployments of both premium and global will be, a great start in 2024 for Smith Micro. SafePath Global and SafePath Premium coupled with our newly announced SafePath OS solution will provide our company with a significant opportunity to expand our relationships with our existing customers and to develop new customers with this broader suite of digital family lifestyle offerings.

Speaker 2

We will continue the expansion of our product portfolio with innovative functionality as we align with our MNO and MVNO partners creating new distribution methods for a broader reach around the world, all based on the SafePath platform. In closing, I'm as excited as ever with our path forward as we continue expanding our vision for family safety. As we move into 2024, I remain both excited and confident about the new chapter we are writing for our company, our partners and our shareholders. With that operator, let's open the call for questions.

Operator

We will now begin the question and answer session. Our first question comes from Josh Nichols of B. Riley. Please go ahead.

Speaker 4

Yes, thanks for taking my question. I just wanted to touch on the new European customer. I realize you weren't able to put too much out obviously in the press release. But just curious, anything you could say? Does this customer have an existing solution?

Speaker 4

Or is this going to be their first family safety solution? And are there many deliverables on the company's part that Smith Micro has to do before this launch in the second half? Or is it most of it on the carrier side at this point?

Speaker 2

Okay, Josh. Let's approach this first by saying most opportunities in the European market are going to be greenfield. They typically will not have existing family safety basis builds up. So we're going to have to build them with the launch. I really can't say a whole lot about this exactly how this is going to work.

Speaker 2

It is a unique and a very innovative approach that we are jointly taking with this carrier. I think it's going to be exciting. And I really am looking forward to being able to talk about it in more detail once the launch has actually happened. But we are building some additional capabilities on SafePath for this and they will all be part of the launch that I spoke about.

Speaker 4

Thanks, Bill. And then great to hear you mentioned that you think that you've kind of turned the corner in terms of marketing efforts at AT and T. Just to dive into that a little bit, like what gives you the confidence that you expect those efforts to kind of ramp up in the near term? Is it the upcoming implementation of like spiffs to in store salespeople or other marketing efforts that give you confidence that that business is likely to see a more material ramp this year?

Speaker 1

Hey, Josh, it's Charlie. Yes, I think that now that the migration efforts are done, there's been an enormous amount of things that we've had to get in place prior to really starting to turn the channels on. And yes, it is going to be a multifaceted approach. I think we're doing some unique things with AT and T as well that I think will be quite visible, which is something that we're very excited about. And I think that you can sense the excitement around it now that the launch is behind us and we're all safe to that secure family going forward.

Speaker 1

So I think that gives me a lot of confidence in AT and T and us because I can see it happening.

Speaker 4

Appreciate the detail. Thanks.

Speaker 1

Thanks, Josh.

Operator

Our next question comes from Jim McIlree of Dawson James. Please go ahead.

Speaker 5

Yes, thanks. Just a follow-up on Josh's question about the European customer. When you say that a launch is going to be early second half, obviously, the carriers have a habit of pushing things to the right. But are there significant technological issues that need to be addressed at this point? Or is it more of a it's just you just need time to get things done?

Speaker 2

Okay. I think the best way to answer is this is the a beginning launch at a new Tier 1 carrier in Europe that has never had a family safety app before. So there are a number of steps that have to be completed in order to set this up for a very successful business opportunity. In addition, they have created a concept that is new. It's a little different approach than what has traditionally been done here in North America.

Speaker 2

And so that does require some technology to be developed and tested and implemented. And so it's a mixed bag. It's really a little bit above. But the carrier is very energized. They are really putting a lot of effort into this.

Speaker 2

And I think they have high expectations. And we like that. That's something that we always look for. So you're just going to have to stand by. It's not that much longer anyway, and we'll be able to talk about it.

Speaker 5

Okay. Thank you for that. And can you characterize the attrition of the legacy Sprint customers, its impact on your revenue? Is it kind of at a steady quarter to quarter decline? Or is it accelerating or diminishing in its decline?

Speaker 2

Yes, okay. I think we talked about this some time ago on earlier conference calls. You can no longer sign up for the old Sprint safe and sound service. It's a capped out product offering. So it just slowly declines quarter over quarter and that's what you should expect.

Speaker 2

There will be a point in time where it just ceases, but that's part of the process. All the interest and all the efforts at T Mobile will be focused on the family mode product and we're starting to see some really strong interest there. So I feel positive.

Speaker 3

I don't know, Jim. Just real quick, Jim, to also note the comp suite revenues that had been affecting some of that, they're completely gone at this point. So this is really just on the family safety what Bill talked about. The CommSuite is now fully out of the numbers and you won't hear that in terms of the comparisons going forward.

Speaker 5

Understood. And just to be just to make sure I understand your answer, Bill, the quarter to quarter decline of those legacy customers is stable right now. At some point, it won't be. At some point, it will just drop to 0. But right now, it's got a steady decline.

Speaker 2

It is a quarter over quarter decline as users get new T Mobile phones and move then off of safe and sound they have the opportunity to move to family mode and that's part of the process.

Speaker 5

Got it. And then on gross margin in Q excuse me, gross margin in Q1, is the quarter to quarter decline solely a function of scale? Or are there costs that you're going to incur in Q1 that will be eliminated in subsequent quarters, costs associated with the Verizon termination and or the Avast platform?

Speaker 2

Well, I guess the best way to answer this, first off, Q1 always is the quarter that has the marketing costs from Mobile World Congress and that is something that happens each year. So that cost is in there, but I'll kick it to Jim. You might want to take it from there.

Speaker 3

Yes. From a gross margin perspective, Jim, it's really driven by scale in terms of like the revenues coming down to where we have certain fixed costs embedded in the cost of sales that are impacting that. Now the second part of your question in terms of like cost coming out related to the platform, That is correct. And in future periods, we are driving out some of those legacy ring costs, and they will not fully be out in Q1. That will be coming out over the course of Q1 and some will even tail into Q2 And then we would expect to have them completely out of the cost structure by the end of Q2.

Speaker 5

Okay. That's it for me right now. Thanks a

Speaker 4

lot. Thanks,

Operator

Our next question comes from Scott Searle of ROTH MKM. Please go ahead.

Speaker 6

Hey, good afternoon. Thanks for taking my questions. Maybe to dive in on Europe, I just wanted a quick clarification. In terms of the Tier 1 customer that has already been 1, is that SafePath Global or is that more of a traditional SafePath solution? Then I was wondering if you could elaborate a little bit more on the pipeline.

Speaker 6

Bill, it sounds like you're optimistic about some of the opportunities there. I was wondering if you give us an idea about where you're seeing the strength? Is it other Tier 1s? You've called out that SafePath Global is really targeted to Tier 2s, Tier 3s, is that where you're seeing the strength? And do you expect to have announceable deals and or other launches in the 2024 timeframe?

Speaker 2

Okay. Let's start with your last question. Absolutely, yes, I expect that we will be making additional announcements at existing and new carrier customers about many of the products that we've talked about on this call. As far as the SafePath Global part, no, the European customer is not launching SafePath Global. And as I said in my comments, we pretty much know who the first customer give you some idea that there are So that will give you some idea that there are other players.

Speaker 2

From a standpoint of the type of carriers, it covers a broad swath. We continue to focus heavily on the Tier 1 carriers in North America as well as in the European marketplace. But we're also seeing activity from Tier 2s, Tier 3s and from some really impactful MVNOs. So look, I think what is happening in this world, I've talked about it on previous calls, we are just in the right spot at the right time with all the turmoil and all the chaos that you see around the world to today. The need to keep our loved ones safe is becoming really a major driver and a product like Safe which is designed to help do that, it really tends to benefit from it.

Speaker 2

So there's a lot to be excited about. There's some of the new product ideas are really quite innovative. And with the SafePath OS carriers will be able to launch kids phones and kids tablets, which will not require anybody to buy a different brand phone. It can be a brand phone that the carrier already sells, but it will come preloaded with SafePath OS, which will then just out of the box make everything work. There's nothing that has to be done to get the thing up and up and running.

Speaker 2

This becomes an exciting market as you see kids growing and they get their first phone and this is when parents really have to take a moment and they go, wow, now I'm exposing my kid to all sorts of things I'm really not sure I really like that are on the Internet. So now I better figure out a way to keep them safe. Well, in this case with SafePath OS, they can get a tablet, which may be the first device or a phone and they can have it preloaded and all the safety features are there from the minute you power up the device the first time.

Speaker 6

Hey, Bill, maybe to just follow-up on that front, specifically in Europe, what does the competitive landscape look like considering that there are additional security requirements and privacy requirements, particularly around young adults, does that change the competitive landscape in the European theater or are there no competitors on the front? And then just a quick question on pricing. I assume premium pricing will have premium pricing, but SafePath Global, is that the expectation that's going to price in the same range of what you're seeing today or how are you thinking about that?

Speaker 2

Okay. Let me parse it apart and then come back if I missed one. First off, on the global product will price exactly the same price as the current SafePath offerings. The premium product will price at a premium price. So that gives both the Carrier and Smith Micro an opportunity to enhance revenue.

Speaker 2

You packaged up an awful lot of questions.

Speaker 6

So just the competitive landscape in Europe, given what you had to do to Space Pass 7 and kind of upgrade the security features, you've mentioned a couple of times about cyberbullying. I'm just kind of wondering what that what is the competitive landscape in Europe right now, because it sounds like you check all the boxes, is there anyone else who's able to do that?

Speaker 2

Well, honestly, from a carrier marketing standpoint, we really are the only serious player that's marketing directly to carriers. The over the top players like Life360 and Bark, they also have presence in Europe just the same as they do here in the U. S. So I think from a competitive landscape point of view, it's pretty much the same in both geographies. From a privacy issue, we have as many growing privacy laws here in North America as they already have in Europe.

Speaker 2

And so this is something that we pay a lot of attention to. We are constantly making sure that our software meets the needs and the spirit of the law of what ever needs to be done is all built into the product before the product even launches. So the privacy issues are paramount and really pretty much around the world, but definitely in the geos that we're focused on. So we're really on that. That's a big effort.

Speaker 6

And lastly, if I could, and I apologize if you covered this earlier. I hopped on the call a little bit late. But the AT and T ramp, if we look back to history and the Sprint ramp, you really started to gain some momentum about 18 months plus in. How are you thinking about AT and T a little bit longer? Does it really start to get that meaningful inflection when you think about where Sprint was 18 months to 24 months into the ramp?

Speaker 6

Or are there some headwinds that are going on in terms of marketing deployment or otherwise that it takes a little bit of a more muted trajectory? Thanks.

Speaker 1

Yes. So I think what we talked about on the call this is Charlie, Scott. What we talked about on the call was that now that the migrations efforts are done, we see we're starting to see this next wave beginning to start. And we're doing some very unique things at AT and T that I think is going to start to spark and this it builds upon itself once it gets going. These things like going and getting all the employees to use.

Speaker 1

There's lots of different activities that are going on right now to get the ball rolling. And we start to see some now that again, we're past migration, we think that we've turned the corner.

Speaker 2

Does that

Speaker 6

answer your question? Yes, perfect. Thanks, Charles.

Operator

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

Speaker 1

I want to thank everybody for joining us today. Should you have any further questions, please reach out to us. And we'll look forward to talking to you pretty soon here on the Q1. Thanks, guys.

Operator

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

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Earnings Conference Call
Smith Micro Software Q4 2023
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