Minim, Inc.

Thank you for standing by. Mr. James Carbonara from Hayden IRR, thank you. Please go ahead.

Thank you. And once again, welcome to Minim's second quarter 2021 earnings call. With me on the call are Gray Chinoweth, Chief Executive Officer, and Sean Daugherty, Chief Financial Officer. As a reminder, all materials, including today's live presentation, are available on the company's investor relations website at ir.minim.com. Before we begin, I want to remind everyone that today's conference call may contain forward-looking statements. Forward-looking statements include statements regarding the future, including expected revenue, operating margins, expenses, and future business outlook. Actual results or trends could differ materially from those contemplated by these forward-looking statements. For discussion of such risks and uncertainties, which could cause actual results to differ from those expressed or implied in the forward-looking statements, please see risk factors detailed in the company's annual report on Form 10-K contained in subsequent filed reports on Form 10-Q, as well as in other reports that the company files from time to time with the Securities and Exchange Commission. Please note, too, that today's call may include the use of non-GAAP numbers that management utilizes to analyze the company's performance. A reconciliation of such non-GAAP numbers to the most comparable GAAP measures is available in our most recent press release, as well in our periodic filings with the SEC. Now I would like to turn the call over to Gray Chinawith, CEO of Minim. Gray, please proceed.

Thanks, James. Good morning, and welcome to Minim's second quarter 2021 conference call. If you're following along with the deck available on ir.minim.com, we're getting started on slide three. In the second quarter of 2021, the company grew top-line revenue by 45%. This represented a 73% acceleration of growth from Q1 of 2021, when we grew at a 26% pace. I'm especially pleased with this result given that the results of some of our key competitors have shown single-digit growth or significant declines in our product segment for the same period. I'm excited to share with you today how we're doing it and where we're headed. Please turn to slide four. It all begins with our vision. We believe the simple, single-purpose router must go the way of the mobile phone. It must transform into an intelligent device capable of making everyone's connected home safe and supportive for life and work. At Minim, that's what we deliver. We sell intelligent networking products under the globally recognized Motorola brand and Minim trademark in leading U.S. retailers, over 140 ISP service providers, and now to SMBs. We operate in a massive and expanding market for high-performance Wi-Fi and look to serve the billion homes that are connected to the Internet today and the billion homes that have yet to come online. We have exciting technology inflection points ahead of us, including the adoption of 5G, fiber to the home, mesh networking, Wi-Fi 6, Wi-Fi 6E, DOCSIS 3.1, DOCSIS 4.0, and smart home devices. These advancements are accelerating network product replacement cycles and increasing consumer spending on the latest offerings. On slide five, you'll see today I'm joined by Minim CFO, Sean Doherty, who will be speaking later on in the call, and President and CMO Nicole Tseng, who will be available for questions at the end of this discussion today. Turning to our financials on slide six. Our second quarter again demonstrates the momentum we're building in the market and the progress we're making towards growing software revenue bookings and achieving positive EBITDA profitability this year. We accelerated our year-over-year revenue growth to 45%, up from 26% in the first quarter of 2021. despite this typical second quarter seasonal slowdown, and drove our gross margin to more than 30%, representing a significant improvement year over year. Our subscription business gained additional traction as evidenced by the increase in deferred revenue on the balance sheet, which is driven by expanding sales of our intelligent, software-enabled hardware products. Our ratio of deferred revenue to recognized revenue for the second quarter was 7%, up from just 2% in the first quarter, Over time, we expect this ratio to continue to climb as our sales increase and the mix shifts towards more software-driven intelligent networking products. On the expense side, most notably, we incurred a $500,000 one-time material scrap expense that marked the completion of a warehouse organization and optimization project. We also met higher component costs and increased spend on air freight to meet the Amazon Prime Day demand. which Sean will cover later on in the conversation when he looks at the financials. Without normalizing for the impact of this one-time $500,000 charge, our Q2 2021 adjusted EBITDA was negative $300,000 versus a positive $300,000 EBITDA recorded in Q1. Notably, cash flow from operations was an area of marked improvement on a quarter-over-quarter basis. Q2 saw a net negative cash flow of $400,000, whereas Q1 saw net negative of 5 million. Subsequent to the end of the quarter, we raised $22.7 million in net proceeds from a secondary public offering of our common stock. Completion of this offering provides us with the opportunity to invest in inventory to sales optimization, global market expansion, and new product development and marketing. Also, after the end of the quarter, Having completed the rebranding of the company to Minimum June, we executed a disposition of the Zoom-related trademark assets. The combination of the proceeds from this sale and a secondary offering, a net impact of almost $27 million, has strengthened and significantly improved the balance sheet of the company and places us as an incredibly strong position to execute on our operational plan. From an operational perspective on slide seven, I'd like to share the following highlights. In corporate development, we formally changed her name to Minimink, uplisted to the NASDAQ, and elevated Nicole Tseng to president. In sales and marketing, we saw tremendous momentum and performance in e-commerce and retail and have expanded our sales channel in the U.S. and to India. In product and innovation, we were awarded a new patent that protects our differentiated innovation in mesh networking and made strides in the cloud platform we have at scale. On supply chain, we navigated chipset supply challenges and price challenges with a five-pronged strategy. The Minim brand was designed both for business and consumer appeal, and it represents AI-driven software that creates harmony in the smart home and office. Musicians of the call may recognize Minim as the term representing one half note. Looking forward, our Minim identity now carries reduced risk of investor confusion, and provides a solid foundation for building enterprise value. Lastly, in corporate matters, I'll note with great excitement and pleasure that we elevated Nicole to the role of president and CMO. As president and CMO, Nicole has taken on a broader leadership role in company management while retaining her existing responsibilities in the company's marketing operations. Nicole's deep technology background, she holds two bachelor's degrees from Carnegie Mellon in engineering, combined with her amazing track record as a three-time CMO, and experience as a co-founder of Minim, the pre-merger organization, make her a simply amazing partner for me as we look to drive growth and enterprise value. Turning to our sales and marketing highlights in slide nine, this quarter saw an incredible Prime Day sales performance in June. More specifically, this year, we sold more than the past four years of Prime Day events combined, with DOCSIS 3.1 modem router category leading our path to success. Our marketing department accomplished this through collaborations with operations for optimized inventory, combined with effective advertising strategies on Amazon's Seller Central platform. The sales volume was almost matched by our June product sales in Best Buy, where we took the number one spot in modem router orders to run competing Amazon Prime Day promotions. In addition to great sales numbers for Q2, given the typical seasonality, we added new retailer partners, including the Home Shopping Network, the Home Depot, Lowe's Sam's Club, and BJ's Wholesale Club. Beyond the financial and market share impact of our Amazon sales, I'm also excited about the results for two reasons. First, they reflect our strategic advantage in pairing Amazon Seller Central platform with exceptional marketing performance and talent. By leveraging Seller Central, where we directly sell to consumers, simply using Amazon as a platform, we can control pricing, marketing, and the resulting net profitability better than competitors who are using the buyer central model. And it's a great time to be good at this. Industry analysts, Park Associates, just reported that for the first time, online retailers are dominating channels for smart home device sales. Second, our Amazon results bode well for our new market expansion goals as we can combine the global power of the Motorola brand with Amazon's massive global footprint in consumer markets and last mile logistics. To that end, we began selling in India for the first time this July, a new market entry executed in a matter of months. Consumers in India can now find the Motorola MH7020 mesh system powered by the Minimap on amazon.in and flipkart.in, which we intend to formally launch with local influencers this fall. Our speed to market is a great testament to both our e-commerce execution and the outsized benefits we retain by being a Motorola license partner. Our products and marketing are amplified by Motorola's brand expertise, existing distribution channels, market intelligence, security testing, public relations, and more. We are excited to continue to leverage these resources and our continued effort to grow into new markets and scale under that amazingly recognized brand In our business-to-business sales channels, I'd like to highlight a customer announcement from the quarter. South African Internet Service Provider, Vox, has selected Minim to be its cloud software platform, which will underpin its next-generation Vox Wi-Fi Home Manager offering for Fiber-to-the-Home subscribers. Leveraging Minim software with third-party MicroTik routers, Vox has chosen Minim to deliver top-notch customer service, improve customer retention, and reduce support costs. Vox subscribers will benefit from our intuitive mobile app, offering device management, threat protection, parental controls, and more. The Vox network targets 400,000 Fiber to the Home subscribers, aiming to be one of the region's largest broadband service providers in the next few years. On the product side, on slide 10, we're happy to report our top three earning products in the second quarter were our highest ASP products in each category, lending to our year-over-year margin expansion. These products were the Motorola MG8702, DOCSIS 3.1 modem router combo with our mobile app, which made up for 13% of sales in Q2, a 14% increase over the strong launch it had in Q1, and it led in its category on Amazon Prime Day by units sold. The Motorola MB8611, DOCSIS 3.1 modem, which targets consumers with gigabit speed plans, which made up for 26% of sales in Q2, a 104% increase over Q1, and the Motorola MH7020 tri-band mesh system with our mobile app, which made up 11% of sales in Q2 and 881% increase over Q1. Also in the second quarter, Minimum was accorded a patent for our standard software-driven approach to mesh network setup. It's easy, reliable, and is standard across several hardware brands and models. Minimum's patented approach allows a guided Wi-Fi system setup solely using the device's Wi-Fi network instead of a one-time use Bluetooth radio or error-prone manual buttons. This innovation offers a competitive advantage in product component savings, better user experience, and improves the integratability of our software with a variety of hardware platforms. Behind the scenes, we've also been hard at work on successfully and efficiently scaling our cloud platform for resiliency and improved quality of service in new geographies. With the addition of a European data center that is now available for production use, we can better serve customers in Europe, Africa, and now India. The ModaSync app will drop this fall alongside our high-speed Wi-Fi 6 product family. We've already seen great interest in these products from across our retailer footprint, with special interest from those that are looking for an alternative to selling the house brand of one of their competitors. Turning to slide 11, to focus on supply change management, disruptions continue to create challenges across several industries around the world, including ours. To date, the team has navigated these rough waters, but we believe chipset strains and challenges will persist through at least the second quarter of next year. And we've been actively working to mitigate these risks. Now I'd like to share with you our five-prong mitigation strategy, which we've been following to great success. First, we extended component order forecast to 52 weeks. Second, we have started building relationships and negotiating directly with chipset vendors. Third, we're sourcing and purchasing our own supply chain from brokers and other channels. Fourth, we align our marketing and operations closely to manage product inventory and optimize for sales. Fifth, we source chip substitutes and have re-engineered products to take advantage of the availability of alternative components. As a result of this approach, while chipset availability remains an issue that we are paying incredibly close attention to, we are very pleased both that our efforts to date have resulted in minimal operational impacts and that our forecasts do not currently suggest future disruptions in product availability. Before I ask Sean to speak to our financial results, I'd like to take a look at what's ahead on slide 12. The back to school season has started and the holiday season is right around the corner. In the second half of the year, businesses will contemplate their performance with remote networking and revisit their real estate and IT budgets. As we expect organizations and families to continue to face the realities of the pandemic's effects on their locations, we know that they're going to be using their home networks even more intensely to live, earn, and learn. With this backdrop, we plan to launch our premium products for highly connected homes. This family includes an expandable Wi-Fi 6 mesh system and two powerful Wi-Fi 6 DOCSIS 3.1 modem routers, one of which will be the first to achieve the low-latency DOCSIS certification by CableLabs. Each of these products has an attractive new design and a new app, MotoSync, powered by Minim, often differentiated network security, automated performance improvements, parental controls, privacy protection, and more. These products have been designed for gamers, streamers, students, remote workers at excellent performance and value, earning them anticipated wide product placement in our retail and e-commerce channels. As we widen our product portfolio and placement, we will invest in the marketing to support successful product launches in business and direct-to-consumer channels in the U.S. and now India. For ISP customers, we look forward to launching a network speed performance test suite this year. to benchmark their broadband speed delivery to subscribers on their network. These test results will be used to meet government requirements, such as the Connect America Fund compliance, as well as in their product marketing materials. We're always looking for new and innovative ways to help ISPs acquire subscribers, lower their operational costs, and deliver superior service and customization. Looking ahead this year on other fronts, We'll continue to mitigate corporate risks, including supply chain challenges, which I've already discussed, and remain focused on the competition for the best talent. We have seen evidence of an increasingly competitive market for human resources in the technology sector with the move to work-from-anywhere models. Our shift to a remote-first approach has given us an advantage in this area that has strengthened our ability to recruit and retain top talent, which is especially important as we anticipate adding one to two senior-level positions over the next few quarters. Lastly, I'll land on our continued focus to drive top-line growth and the operational efficiency necessary to achieve EBITDA profitability during the year. I will now turn it over to Sean for an even more detailed discussion of the financial results.