Smith Micro Software, Inc.

Good day and welcome to the Smith Micro Software Fourth Quarter 2023 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on your touchtone phone. To withdraw your question, please press star, then two. Please note this event is being recorded. I would like to turn the conference over to Charles Messman. Please go ahead.

Thank you, Operator, and good afternoon, everyone. We appreciate you joining us today to discuss Smith Micro's financial results for the fourth quarter 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 .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. Please note that some of the information you will hear during today's discussion consists of forward-looking statements, including, without limitation, those regarding the company's future revenue and profitability, our plans and expectations, 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 risk 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-K and our subsequent filings on Form 10-Q. Smith Micro assumes no obligation to update any forward-looking statements which speak of our manager's beliefs and assumptions only as the dates are made. I want to point out that in our forthcoming prepared remarks, we will refer to specific non-GAAP financial measures. Please refer to our press release disseminated earlier today for 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 2023 fourth quarter and 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. 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 am 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&T Secure Family on the Safe Path 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 Safe Path platform that will launch this year, which I expect to broaden our market reach and enable us to add new revenue streams. 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 Safe Path OS. As you may have seen in our earlier press release announcing Safe Path OS, it will bring yet another new market opportunity to Smith Micro by delivering a unique solution to our domino partners that build on their strong relationships with handset manufacturers. Safe Path 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 -to-market strategies. In addition, Safe Path 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?

Thanks, Bill. Good afternoon, everyone. I'll now be covering the financial details of the fourth quarter in full year 2023. For the fourth quarter, we posted revenue of $8.6 million compared to $11.4 million 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 third quarter of 2023, revenue decreased by $2.4 million, or 22%, 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 $40.9 million versus $48.5 million produced last year. The approximate $7.6 million decrease was primarily due to a decline in legacy safe and found family safety revenue related to the continued attrition of legacy Sprint subscribers driven by TMA's acquisition of Sprint and the conclusion of the Verizon contract, coupled with a decline in comm suite revenues. During the fourth quarter of 2023, family safety revenue decreased by approximately $2.1 million, or 22%, compared to the fourth quarter of prior year, primarily due to the decline in Verizon family safety revenues in the fourth quarter of 2023, as the post-termination transition period for that contract included, and the continued decline in legacy Sprint revenues. Family safety revenues decreased by approximately $1.7 million, or 18%, compared to the third quarter of 2023. During the fourth quarter of 2023, comm suite revenue was $500,000, which decreased by approximately $400,000, compared to the fourth quarter of 2022. This decrease is attributable to a decline in dish revenue, coupled with a period over period decline in revenue generated from legacy Sprint deployment, which generated no comm suite revenue in the fourth quarter of 2023. Revenue from comm suite decreased by approximately $200,000, compared to the third quarter of 2023. I would note that in December, we were able to 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 2024, which we anticipate will yield additional growth in subscribers. View spot revenue was approximately $600,000 for the fourth quarter of 2023, which declined by approximately $300,000, compared to the fourth quarter of prior year, and decreased by approximately $500,000, compared to the third quarter of 2023. The decline in view spot revenues was in line with our expectations. In the first quarter of 2024, we are expecting consolidated revenues to decrease by 32 to 36%, or $2.7 million to $3.1 million, compared to the fourth quarter of 2023, driven primarily by no further Verizon Family Safety revenues being recognized in the first quarter, as the post-termination transition period for that contract concluded in the fourth quarter of 2023. For the fourth quarter of 2023, gross profit was $6.4 million, compared to $8.1 million during the same period of the prior year, a decrease of approximately $1.7 million. While gross profit declined for the fourth quarter of 2023 versus the same period of 2022, gross margin was higher at .9% for the fourth quarter of 2023, compared to .8% realized in the fourth quarter of 2022. The gross profit of $6.4 million in the fourth quarter of 2023 decreased sequentially by approximately $2 million, compared to the gross profit produced in the third quarter of 2023, driven primarily by this sequential decline in revenues quarter over quarter. In the first quarter of 2024, we expect gross margins to be in the range of 64 to 68%. For the -to-date period ended December 31, 2023, gross profit was $30.3 million, compared to $34.3 million during 2022. Gross margin was .2% for the year ended December 31, 2023, versus a gross margin of $70.7 produced in 2022, an improvement of approximately 350 basis points. Gap operating expenses for the fourth quarter of 2023 were $12.1 million, a decrease of $3.1 million, or 20%, compared to the fourth quarter of 2022. Gap operating expenses for the year ended December 31, 2023, or $48.4 million, a decrease of $16.9 million, or 26%, compared to the prior year. Non-gap operating expenses for the fourth quarter of 2023 were $8 million, compared to $11.7 million in the fourth quarter of 2022, a decrease of approximately $3.8 million, or 32%. Sequentially, non-gap operating expenses increased by approximately $200,000, or 3%, from the third quarter of 2023. We expect first quarter 2024 non-gap operating expenses to increase by 1% to 4%, compared to the fourth quarter of 2023, partially attributable to an increase in marketing and event activities, including Mobile World Congress, our largest trade show event of the year. Non-gap operating expenses for the year ended December 31, 2023, was $35.3 million, a decrease of $16.2 million, or 31%, compared to last year. The gap net loss for the fourth quarter of 2023 was $6.7 million, or $0.09 loss per share, compared to a gap net loss of $8 million, or $0.14 loss per share in the fourth quarter of 2022. The gap net loss for 2023 was $24.4 million, or a $0.38 loss per share, compared to a gap net loss of $29.3 million, or a $0.53 loss per share in 2022. The non-gap net loss for the fourth quarter of 2023 was $1.7 million, or a $0.02 loss per share, compared to a non-gap net loss of approximately $4 million, or a $0.07 loss per share in the fourth quarter of 2022. The non-gap net loss for 2023 was $5.3 million, or an $0.08 loss per share, compared to a non-gap net loss of approximately $17.6 million, or a $0.32 loss per share in 2022. Within today's press release, we have provided a reconciliation of our non-gap metrics to the most comparable gap metric. For the fourth quarter of 2023, the reconciliation includes adjustments for intangible asset amortization of $2.4 million, stock compensation expense of $1.5 million, notice stock offering amortization of $600,000, 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 -to-date period, the non-gap reconciliation includes adjustments for intangible asset amortization of $6.8 million, stock compensation expense of $4.8 million, note in stock offering amortization of $6 million, changes to derivatives and warrants of approximately $200,000, depreciation of approximately $600,000, and costs related to severance and reorganization activities of approximately $1.1 million. Due to our cumulative net losses over the past few years, our gap tax expense is primarily due to certain state and foreign income taxes. For non-gap purposes, we utilized a 0% tax rate for 2023 and 2022. The resulting non-gap tax expense reflects the actual income taxes expense during each period. From a balance sheet perspective, we reported $7.1 million of cash and cash equivalents as of December 31, 2023. During the fourth quarter, use of cash and operating activities amounted to $1 million. I would also note that, at the end of 2023, our senior secure convertible notes were retired at maturity. This concludes my financial review. Now, back to Bill.

Thanks, Jim. Okay, I want to get back to the first quarter 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. 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 a dollar 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&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 first quarter. We've indicated for some time now that the first quarter would be challenging as the Verizon Family Safety Revenue will no longer be contributing to our revenue during 2024. We have 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 M&Os and MVNOs, 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 plan with a major tier one 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. With regard to AT&T, as we previously announced, we have successfully launched AT&T Secure Family on the SafePath platform and are winding down the legacy of OST 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&T Secure Family to subscribers of Cricket owned by AT&T. We are currently partnering with AT&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&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&T Secure Family. We see the excitement building at AT&T and believe there is a significant opportunity to drive new subscriber growth as we look to the remainder of the year. 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. I would 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 comms suite 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. Turning to the European market, we were pleased to announce the new contract in Europe in the fourth quarter in line with the expectations that we had outlined on prior calls. Activity under the new contract is well underway and we were very excited about the upcoming launch of SafeFest 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 -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 am 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. 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 three 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 Safe Path platform. 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 Smith Micro winning the Gold Barrett Award in the Tech for Good category for telecom and wireless at Mobile World Congress for our industry-leading Safe Path 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 and growth. 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. Safe Path Premium broadens our Safe Path 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. Safe Path 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. 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 are already receiving great feedback from both existing customers and new prospects in the field regarding Safe Path Premium, which has been very positive, creating a new value proposition while expanding our market opportunity. We also announced Safe Path Global, a new streamlined deployment model, which we have targeted to be available for launch in the next few months. Safe Path Global delivers a -to-market Safe Path solution with very low dependency on IT resources and other integration efforts from our courier partners. This product provides an expedited path to revenues via Safe Path 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 Safe Path. This Safe Path 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. Safe Path Global and Safe Path Premium, coupled with our newly announced Safe Path OS solution, will provide our company with a significant opportunity to expand our relationships with existing customers and to develop new customers with this broader suite of digital family lifestyle offerings. 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 Safe Path 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.

We will now begin the question and answer session. To ask a question, you may press star, then 1 on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw it, please press star, then 2. At this time, we will pause momentarily to assemble our roster. Our first question comes from Josh Nichols of B. Riley. Please go ahead.

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

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 bases built 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. 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. 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.

Thanks, Bill. Great to hear you mention that you think that you kind of turned the corner in terms of marketing efforts at AT&T. Just to dive into that a little bit, 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 SPFs 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?

Hey, Josh. It's Charlie. Yeah, 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&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, secure family going forward. So I think that that gives me a lot of confidence in AT&T and us because I can see it happening. Appreciate the detail.

Thanks. Thanks, Josh. Our next question comes from Jim McElroy of Dawson James. Please go ahead.

Yeah, thanks. Just to 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?

Okay, I think the best way to answer is this is the 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. So that does require some technology to be developed and tested and implemented. So it's a mixed bag. It's really a little bit of both. But the carrier is very energized. They are really putting a lot of effort into this. 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.

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 -to-quarter decline? Or is it accelerating or diminishing in its decline?

Yeah, 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 Found service. It's a capped out product offering. So it just slowly declines quarter over quarter. And that's what you should expect. 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 strong interest there. So I feel positive.

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

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

It is a quarter over quarter decline. As users get new T-Mobile phones and move, then off of Safe and Found they have the opportunity to move to family-mode. And that's part of the process.

Got it. And then on gross margin in Q1, is the -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 quarters, costs associated with Verizon termination and or the Avast platform?

Well, I guess the best way to answer this is first up, 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.

Yeah. From a gross margin perspective, Jim, it's really driven by scale in terms of 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 relates 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'll 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 the second quarter.

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

Thanks, Jim.

As a reminder, if you have a question, please press star then one. Our next question comes from Scott Searle of Roth MKM. Please go ahead.

Good afternoon. Thanks for taking my questions. Maybe to dive in on Europe, I just wanted a quick clarification in terms of the tier one customer that has already been won. Is that SafePath Global or is that more of a traditional SafePath solution? And then I was wondering if you could elaborate a little bit more on the pipeline, Bill. It sounds like you're optimistic about some of the opportunities there. I was wondering if you could give us an idea about where you're seeing the strength. Is it other tier ones? You've called out that SafePath Global is really targeted at tier twos, tier threes. Is that where you're seeing the strength? Do you expect to have announceable deals and other launches in the 2024 timeframe?

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, the European customer is not launching SafePath Global. As I said in my comments, we pretty much know who the first customer will be for SafePath Global. And we also believe we have a really good idea who the first customer will be for SafePath Premium. That will give you some idea that there are other players. From a standpoint of the type of carriers, it covers a broad swath. We continue to focus heavily on the tier one carriers in North America as well as in the European marketplace. We're also seeing activity from tier twos, tier threes, and from some really impactful MVNOs. 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 today. The need to keep our loved ones safe is becoming really a major driver. A product like SafePath, which is designed to help do that, really tends to benefit from it. There's a lot to be excited about. Some of the new product ideas are really quite innovative. 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 pre-loaded 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. This becomes an exciting market as you see kids growing and they get their first phone. 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 pre-loaded. All the safety features are there from the minute you power up the device the first time.

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? 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?

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.

You've

packaged up an awful lot of questions.

The competitive landscape in Europe, given what you had to do to SafePath 7 and upgrade the security features, you've mentioned a couple of times about cyberbullying. I'm just wondering, what is the competitive landscape in Europe right now? It sounds like you check all the boxes.

Is it the same in Europe? From a marketing standpoint, we really are the only serious player that's marketing directly to carriers. The -the-top players like Life360 and .R.K., they also have presence in Europe just the same as they do here in the U.S. 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. 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. Whatever needs to be done is all built into the product before the product even launches. The privacy issues are paramount and really pretty much around the world, but definitely in the geos that we're focused on. We're really on that. That's a big effort.

I apologize if you covered this earlier. I hopped history. In the Sprint ramp, you really started to gain some momentum about 18 months plus in. How are you thinking about AT&T a little bit longer? Does it really start to get that meaningful inflection when you think about where Sprint was 18 to 24 months into the ramp, 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.

I think what we talked about on the call was that now that the migration's efforts are done, we're starting to see this next wave beginning to start. We're doing some very unique things at AT&T that I think is going to start to spark. It builds upon itself once it gets going. These things like going and getting all the employees used. There's lots of different activities that are going on right now to get the ball rolling. Now that, again, we're past migration, we think that we've turned the corner. That answer your

question? Yes. Perfect. Thanks, Charles.

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

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 first quarter. Thanks, guys.

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