Smith Micro Software, Inc.

Good day and welcome to the Smith Micro second quarter 2022 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing star then zero on your telephone keypad. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Charles Messman, Vice President of Investor Relations and Corporate Development. Please go ahead.

Thank you, Operator, and good afternoon, everyone. We appreciate you joining us today to discuss Smith MicroSoftware's financial results for our second quarter, ended June 30, 2022. By now, you should have received a copy of the press release with the financial results. If you don't have one and would like one, please visit the investor relations section of our website at www.smithbiker.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. Please note that some of the information you'll hear during today's discussion consists of forward-looking statements, including without limitations, those regarding the company's future revenue and profitability, our future plans, new product development, new and expanded market opportunities, future product development, migration and growth by our new and existing customers, operating expenses, company cash reserves, and the expected impact of last year's acquisition of a vast family safety mobile business on our business strategy, operations, and financial positions going forward. Forward-looking statements involve risk and uncertainties, which could cause actual results or trends that differ materially from those expressed or implied by forward-looking statements. For more information, please refer to the risk factors included in our most recent filing, Form 10-K, and in our subsequent filings on Form 10-Q. Ms. Biker, it seems no obligation to update any forward-looking statements, which speaks to our managers' beliefs and assumptions only as a date they are made. I want to point out in forthcoming prepared remarks, we'll refer to specific non-GAAP financial measures. 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?

Thanks, Charlie. Good afternoon, and thank you for joining us today for our 2022 second quarter conference call. Over two years ago, in February of 2020, Smith Micro embarked on a mission to take over absolute industry leadership in the delivery of digital family lifestyle solutions for wireless carriers around the world. The first step of this journey was the acquisition of Circle Media's carrier business, through which we gained contracts with T-Mobile US and Sky in the UK. A little over a year later, in April of 2021, we concluded a second acquisition. This time, we acquired a boss family safety business, securing additional contracts with Verizon, AT&T, and Wintrae, a Hutchinson property in Italy, as well as additional business with T-Mobile US. While the additional contracts significantly expanded our business base, the acquisitions also provided significant intellectual properties, which afforded us the opportunity to leapfrog our product offering to be the absolute best available. As we have discussed on prior investor conference calls, when we set out to consolidate the best features of the acquired technology into our SafePath digital family lifestyle platform, we had to significantly grow our engineering teams to meet that goal. The exciting news is that we are quickly approaching the completion of our mission. In March of this year, we completed the integration of the best of the Circle codebase, which culminated in our launch of the first release of SafePath 7. We are now about to complete the integration of the best of the Avast codebase into SafePath 7 as well. This has been a massive undertaking for our engineering teams, and the successful completion will allow us to migrate all of our customers to the same SafePath platform going forward. The achievement of the migration will also result in another profound effect on our business as it allows us to significantly reduce our operating expenses beginning in the current third quarter. We expect that the full effect of the cost optimization will be realized by the start of the second quarter of 2023. As we have stated during our previous earnings calls since the acquisition from Avaz, we also anticipate a rebound of our gross margins into the 80 to 90 percent range after all customers are fully migrated. The resultant profit margin should fall in the mid-20 percent range. None of this is new, as we've stated this consistently since the acquisition from Avos. What is new is that we are at a point in time when the mission is virtually complete and the acquisition synergies can start to be realized. We expect to release the last build of the legacy Avos ring platform in Q4 this year. with the required updates to support the latest Android and Apple iOS releases. There will be no new releases of the Legacy Circle platform. And we will officially end of life the Avast platform in mid-year 2023, by which time we will have no remaining customers on the platform. This means that all customers will be operating on the SafePath platform. Overall, we are anticipating that these synergies would result in a quarterly operating expense reduction of over $3 million versus Q2 2022 by the end of Q1 2023. Now, a quick recap of our Q2 quarterly results. Revenue of $12.7 million for the quarter came in relatively flat when compared to Q1 2022. This revenue softness represents the continued decline of legacy Sprint revenues from both the CompSuite and Safe and Found product families. Sprint CompSuite revenues will essentially end in Q3 2022. The non-GAAP loss was slightly higher than guidance due to additional contract engineering being deployed to complete the migrations to Safe Path. As you can tell, we have been quite focused, and we are very excited to begin the next phase as a company, a period that should bring strong recovery of operating results and exciting growth for the company's business case. Now, let me turn the call over to Jim. to detail our second quarter results. Jim?