Smith Micro Software, Inc. (SMSI) Q4 2018 Earnings Report, Transcript and Summary

Good day and welcome to the Smith Micro Fourth Quarter 2018 Earnings Conference Call and Webcast. All participants will be in a listen-only mode. [Operator Instructions] After today’s presentation there will be an opportunity to ask questions. [Operator Instructions] 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. Thanks for joining us today to discuss Smith Micro Software’s financial results for the fourth quarter and fiscal year-end of 2018 ended December 31, 2018. By now, you should have a copy of the 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, Chairman of the Board, President and Chief Executive Officer of Smith Micro; and Tim Huffmyer, Chief Financial Officer. Please note that some of the information you will hear during our discussion today will consist of Forward-Looking Statements, including, without limitation, those regarding the Company’s future revenue and profitability, new product development and new market opportunities, operating expenses and Company 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 the risk factors discussed in Smith Micro’s most recently filed 10-K. Smith Micro assumes no obligation to update any forward-looking statements, which speak to our management’s belief and assumption only as of the date they are made. I want to point out that in the forthcoming prepared remarks, we will refer to certain non-GAAP financial measures. Please refer back to our press release disseminated earlier today for a reconciliation of the non-GAAP financial measures. With all that said, I will now turn the call over to Bill. Bill.

Thank you, Charlie, good afternoon everyone, and thank you for joining us today for our 2018 fourth quarter and year-end conference call. Looking at our fiscal 2018, we achieved several significant milestones across all facets of the organization. We began the year with a concentrated focus of returning the Company to growth, profitability and positive cash flow. I’m pleased to report that we achieved success on all three fronts. For the fourth quarter, total revenue came in at $7.4 million, up approximately 28% over the same quarter in 2018 with a non-GAAP profit of $939,000 or $0.03 per share. For the year, total revenues were up 14% to $26.3 million for the non-GAAP breakeven. During 2018, we continue to streamline our operations and rationalize our product line-up. We made difficult decisions to discontinue efforts on marginal product families and to do so in a manner that would not damage important customer relationships, which are key to our continued growth in 2019 and beyond. We also successfully strengthened our balance sheet, paid down substantially all our debt obligations and strategically acquired a third leg to our wireless products tool with the acquisition of the smart retail products suite that we have branded ViewSpot. We are pleased to have answered 2019 with a strong win to our back. Sales activities are focused and backed with the level of energy we have not seen in almost 10 years. Our products SafePath, CommSuite, and ViewSpot are garnering increasingly strong interest and support from wireless carriers and cable MSOs around the world. We had over 50 medians at the recently concluded Mobile World Congress in Barcelona. Revenue growth from new customers and owners are definitely part of our plan for 2019, and we are looking to achieve continued revenue growth with the expanded profitability and strong creation of free cash flow. All the work during the past few years to rationalize our expense profile and build out an exciting product line-up around the customer of freshness of strong returns. This is an exciting time for our Company. Now let's turn the call over to Tim to give more in-depth financial details on the quarter and the year. Tim.

Thanks Bill. Let me start with a summary of certain activity completed since our last earnings conference call. First, we completed a private placement of common stock and warrants with funding finalized on November 7th, which provided $6.8 million of net cash to support the business as we evaluate our product roadmaps, M&A opportunities, debt repayment and subscriber growth continues on the Sprint SafePath platform. The newly issued common stock was priced above market at $2.32, and included the issuance of a warrant for each share purchased for total proceeds of $7.5 million. In addition to the securities purchase agreement, the Company also entered into a registration rights agreement. These actions were fully completed during Q4 2018. In conjunction with this transaction and these agreements, the Company amended the previously issued March and May private placement warrant agreements. These amendments allow the Company to modify the warrant accounting from liability to equity treatment, resulting in the elimination of the warrant liability and an increase to stockholders equity of $7.6 million during Q4 of 2018. On December 11th, we announced the use of net proceeds from the November private placement to repay certain short and long-term debt obligations of $3.2 million. A combination of both the private placement and debt repayment significantly strengthens the Company's balance sheet as we enter 2019. As previously announced on January 9th, we completed the acquisition of the ISM Connect smart retail product suite. Pursuant to the terms of the transaction, the Company paid an aggregate purchase price of approximately $9.1 million, consisting of $4 million in cash and $5.1 million through the issuance of Company common stock. The Company has committed to certain registration rights of which these actions are in process and expect to be completed in the coming weeks. We are extremely pleased with the execution of the strategic transactions, as each contributes to the strengthening of the Company's business and provide shareholder value, all as the Company continues its journey to consistent revenue and profit growth. Now, let's review the numbers for the fourth quarter and fiscal 2018. For the fourth quarter, we posted revenue of $7.4 million, compared to $5.7 million for the same quarter last year an increase of 28%. The wireless segment reported quarterly revenue of $6.9 million, compared to $4.7 million last year an increase of 47%. Our graphics segment reported quarterly revenue of $482,000, compared to $1.1 million last year. For the year, revenue was $26.3 million, compared to $23 million last year an increase of 14%. This growth was mostly related to the wireless segment reporting annual revenue of $24.5 million compared to $18.3 million last year an increase of 33%, offset by the graphics segment reporting annual revenue of $1.8 million compared to $4.6 million last year. The increase in the wireless revenue was a result of revenue growth in both the CommSuite voice messaging and SafePath connected life platforms, as customer adoption rates increase for both product families. During the fourth quarter of 2017, we had rolled our CommSuite product enhancements, which has now resulted in five consecutive quarters of revenue growth, and the highest number of premium subscribers. Although, we expect modest growth in CommSuite premium subscribers during 2019, we do expect these revenues to level out. This is specifically due to the uncertainty around advertising revenue generated on the CommSuite platform and Sprint’s recent divestiture of Penn size media. During the fourth quarter of 2018, revenue from Sprint SafePath Family grew by 30%. We expect revenue growth to continue based on recent and expected Sprint actions, which include continued retail store promotions. These actions are completely dependent on Sprint execution, we continue to support efforts as required. As a reminder, the Sprint launch is unique and that Sprint had an existing base of subscribers using a legacy product. The legacy product was originally due to sunset in the first quarter of 2018, but was delayed. This change was based on a Sprint operational decision. We continue to support Sprint on a new sunset date. The decrease in the Graphics revenue was in-line with our expectations, attributed mostly to the CLIP STUDIO distribution agreement termination and lower unit sales of legacy products. For the fourth quarter, gross profit was $6.4 million compared to $4.4 million during the same period last year. Gross margin was 87% for the fourth quarter compared to 76% last year. The increase in gross margin is directly related to the higher Wireless revenue and a mix of both Wireless and Graphics revenues. For the year, gross profit was $22 million compared to $17.9 million last year. Gross margin was 84% for the year compared to 78% last year. Operating expense for the fourth quarter was $5.7 million, an increase of $833,000 or 17% compared to last year. This increase is mostly related to the previously announced Q4 2017 reversal of real-estate restructuring reserves combined with 200,000 of acquisition related expenses incurred in Q4 2018. Operating expenses for the year was $23.2 million, a decrease of $400,000 or 2% compared to last year. During Q2 2018, we announced a cost reduction program, resulting in modest restructuring expenses at that time. This cost reduction program included a reduction of staff and other cost management activities within expected annual savings of $1 million. We are pleased with the operating expense savings achieved from this program. The non-GAAP pre-tax income for the fourth quarter was $1.2 million, compared to a loss of $1.1 million last year. The non-GAAP pre-tax loss for the year was $88,000, compared to a loss of $5.6 million last year. The non-GAAP net income for the fourth quarter was $939,000 or $0.03 earnings per share compared to a non-GAAP net loss of $693,000 or $0.05 loss per share last year. The non-GAAP net loss for the year was $67,000 or breakeven loss per share compared to a non-GAAP net loss of $3.5 million or $0.26 loss per share last year. Within the recently issued a press release, we have provided a reconciliation of our non-GAAP metrics to the most comparable GAAP metrics. For the fourth quarter, the reconciliation includes the following adjustments, stock compensation expense of $261,000, intangible amortization of $60,000, amortization of debt discounts and issuance costs and $42,000, fair value adjustments of $2.3 million, loss on debt extinguishment of $203,000, acquisition cost of $201,000 and preferred stock dividends of $34,000, some of which are non-cash adjustments. For the year, the reconciliation includes the following adjustments. Stock compensation expense of $935,000, intangible amortization of $249,000, amortization of debt discounts and issuance costs of $239,000, fair value adjustments of $812,000, loss on debt extinguishment of $203,000, acquisition cost of $201,000 and preferred stock dividends of $404,000, some of which are non-cash adjustments. Due to our cumulative net losses over the past few years, our gap tax expense is primarily due to foreign income taxes. For non-GAAP purposes, we utilize a 24% tax rate for 2018, the resulting fourth quarter non-GAAP tax expense was $297,000, and a non-GAAP tax benefit for the year was $21,000. This concludes my financial review. Back to you, Bill.

Thanks, Tim. Now let's take a deeper dive into our three core product suites, and provide some additional color. I'll begin with ViewSpot, as it is the newest and very exciting addition to our line-up. We closed on the smart retail product acquisition in early January, we acquired a very strong technology, an established team, and a profitable business that is growing with significant upside. We see this as a very strategic and synergistic addition to our product line. Adding a new profitable revenue stream that targets are sweet spot of selling the mobile networks and cable operators, as well as building on and deepening relationships already in place. The products suite generated approximately $4 million in revenues in 2018, building off two significant long-term contracts with the two largest Tier 1 carriers in the U.S. Both carriers have deployed the software solution throughout their company-owned retail store footprint. A third Tier 1 carrier in Europe rounds out the current customer base. The ViewSpot platform enables wireless carriers and frankly any large retailer selling mobile devices to control on-screen demos displayed on android handsets or tablets throughout the store, allowing them to deliver consistent, targeted and secure content that could includes specific promotional campaigns, device pricing that is dynamic and can be location dependant and on-device demos to educate consumers on the products and the service features. The ViewSpot platform truly becomes an extension of the carrier sales team helping to convert consumers browsing devices to buying customers. A good example of this dynamic interactive virtual methods of sales, occurred at the CES trade show back in January, with an OEM partner we were meeting the stated we love smart retail, it’s our silent salesperson. Coupled with the demo capabilities, the platform also collects several points of valuable real-time data, including customer engagements, device performance and diagnostic analytics to better understand store operations and overall device health. This collected data gives us very unique insights into consumers buying behavior, sales trends, campaign success and even the importance of device location in the store. These analytics are all delivered via a dashboard broken down regionally per location. This functionality truly allows our customers retail team to monitor and react quickly to assess and enhance overall sales performance. Our ViewSpot pipeline is strong and the sales cycle is significantly shorter than our other products. I’m very pleased with the integration process and how the team has hit the road running. We are very excited about having ViewSpot as part of our portfolio, and I look forward to talking about new customers we expect to bring on board in 2019 in future earnings calls. Okay. Let's move on to SafePath, which delivered approximately $1.2 million in revenue for the fourth quarter. Although it is early, we believe the slower growth in the fourth quarter is directly seasonal in nature. Our career customers truly focus marketing efforts on device sales during the holiday timeframe. I’m however quite pleased that in the first quarter of 2019, we have seen a significant surge in subscriber growth, exceeding growth rates of the last few quarters. Now let's talk a bit about season bound with Sprint. During the final quarter of 2018, we launched several new initiatives that we believe will continue to drive new adoption, as well as conversion of the legacy installed base. As I spoke on the last call, we launched an advanced version during the quarter to offer a Spanish version to broaden the audience of new subscribers. We also added LBS location capabilities, this is a change from earlier strategy that we did not allow the administrator of the account to directly add a functionality to a device without having the device owner download the app themselves. We made this change in a direct response to consumer demand from the legacy installed base to accelerate their conversion to safe and sound. All indications are that the conversions are accelerating and as Sprint is happy with the subscriber response. On the marketing front, several new programs are underway. First, a trial card initiative has been distributed to the retail stores for retail reps to hand out to consumers. This program has been very successful. Second, a point of sales activation at checkout is an all new sales approach. Similar to how Sprints retail stores sell insurance for devices when the purchase is made. This provides a quick and simple way for sales reps promote safe and sound and get new subscribers into a safe and sound trial. Third, call center training. We began training sessions, where we visited number of call centers throughout the U.S. to better educate reps on safe and sound. And finally, we continue the digital online marketing campaigns expanding to regions in which we are seeing the most success. The Sprint deployment is growing at an accelerated pace and it appears that this product offering has become, and will continue to be a very successful value-added services offering. Now let's look at the SafePath platform. We announced during the third quarter of 2018 that our next generation SafePath connected life platform was expanding beyond just location services, parental controls and web filtering to include an entire ecosystem of digital lifestyle technologies. Under a central hub, white labels for the mobile operators brand. To date I’m very pleased with the progress on this front. In fact at the Mobile World Congress a few weeks back, we demonstrated the next generation enhancement to the platform SafePath 6.0. These enhancements include a completely new user interface. It makes it easy to add new devices such as a pet tracker, a wearable device a smart home security camera, as well as a connected car, all under a single pane of glass bringing to life the connected digital life experience. I would suggest that you visit smithmicro.com and click on the SafePath demo video on the homepage. It gives a good feel for the application and its capabilities. Let's move on to our CommSuite voice messaging platform, which is our largest revenue producer and had an outstanding year. During late 2017, we implemented several changes to the platform to increase the ability to reach a much larger footprint of mobile subscribers at Sprint. As Tim mentioned in his remarks, we achieved our fifth quarter of consecutive revenue growth, and now have the highest number of paid CommSuite subscribers in the Company's history. To ensure continued success, we continue to innovate and as such, we recently announced some significant upgrades to the platform, unique in the space that positions CommSuite as the next generation voice messaging solution and includes CommSuite Voice, our traditional and core visual voicemail and voice to text services with an enhanced user interface and improve functionality on text generated response. CommSuite Anywhere our client list solution that works on any smart phone and enables users to receive and respond to the voicemail messages from any device at any time and recognize the preference to receive messages as SMS or MMS text messages. CommSuite Cloud, a scalable solution that provides the voice assistants that enables users to listen to messages without having their phone in hand. Users can listen and respond to messages through all the leading voice devices, such as Google Home and Alexa. Additionally, our contact service categorizes voicemails allowing users to better distinguish between spam and other unwanted calls. There is more to come throughout 2019, as we continue to explore innovative ways to expand the platform to better offer mobile operators new and preferred ways for their customers to receive their messages. The voicemail world has changed and we have updated and expanded CommSuite to take advantage of these new opportunities in this expanding market. So in closing, 2018 was a very good year for Smith Micro, as we made the turn back to growth and profitability while enhancing the products suite, diversifying our customer base and significantly strengthening our balance sheet. We entered 2019 with strong momentum focused on maintaining our technology leadership position, adding new customers and accelerating growth. I’m as encouraged, as I have ever been for the outlook of Smith Micro and our 2019 year ahead. With that said, I will open the call for questions. Operator.

We will now begin the question and answer session. [Operator Instructions] Our first question comes from Scott Searle with Roth Capital. Please go ahead.

Hey good afternoon. Thanks for taking my question. Nice quarter. Hey Bill just to follow-up on the SafePath front, it sounds like things were a little slower in the fourth quarter, but have started to accelerate. Could you give us a little bit of color of what that mix is looking like between new location based subs as opposed to converted location lab subs and it sound like you have got a new sunset date out there. I'm wondering if you are willing to share that with us or is that something that is expected to happen this year? And then I have a couple of follow-ups.

Okay, well let's see. What we have seen so far in the first quarter is a very substantial growth in the number of subs. Primarily I would say they are new subs, not legacy, however, we are starting to see a conversion of legacy users, primarily because I think I mentioned where we now allow a family head to force the capability on to every phone in the family. That was a feature that seemed a little heavy handed to us and the spread at time and we didn't do that. But it was done in the legacy app and that became an issue. So we fixed that. We are seeing very positive response. Sprint is becoming extremely confident in the ability to convert that legacy base. As far as a sunset date I will leave that strength that is not something I should be talking about, and we will just have to move forward.

Okay, thanks and just a couple of follow-ups from SafePath then. Your starting to demonstrate multiple devices that could be incorporated into the platform at Mobile World Congress. Do you have partnerships officially signed now. You mentioned pet trackers, other tracking devices, wearable et cetera. Is that currently part of the suite now that you can actually go out and offer to the carriers. And do you expect to have additional carriers beyond Sprint by the end of this year. And then I had a follow-up on ViewSpot.

Okay, let me handle that part first. Yes, we do have a number of product partners now signed up to support us and we in turn support their devices, this is very important to carriers they are asking for help and guidance as to where they can source devices that will come up and work immediately, so that is going extremely well. I would say as a result of the work done at Mobile World Congress we are in the process of adding a number of others. So this is a family just waiting to get much, much larger. As far as activities at other carriers it is quite robust and there is a lot going on and it's this fairly global. So I feel comfortable that we are going to do what I said that it will have another carrier by the middle of the year but in this first half and I start to see where we could have multiple carriers before the end of the year. So a lot of really exciting for our progress on the SafePath for it, a lot of interest, a lot of excitement, I think you are going to see some really good things. I know I have talked about that in the past, I really mean it.

Good, thank you for the color. And on the ViewSpot front Bill, you guys talked about $4 million in sales in 2018. What is the outlook into 2019. It sounds like you are very excited about that platform, other carriers at it, could you kind of take us through the thought process of what you are expecting at the baseline level of growth, where you are along within the carriers today, I believe you are in the carrier home stores at this point in time. But are you getting pushed down into other franchisees, into other retail outlets like the BestBuy’s et cetera and what kind of opportunity does that represent and what is the timing of when you would expect to add some additional carriers?

Well, there is a lot in the works right now. Again, I would say that it's possible by mid-year third quarter to see other carriers using ViewSpot. Your comment about large retailers is spot-on, anybody who sells mobile devices can benefit from this technology. So I think that we are very excited about the what we have acquired, it's a great group of people, we are expanding the size of the team, because we see that there is going to be a lot of growth. Tim do you want to add anything to that.

Yes. Hey Scott. From a revenue perspective as you said $4 million in 2018, I think a fair outlook would be lower double-digit growth into 2019 would be our expectation, down to the bottom line as we had indicated, this is an accretive deal so we expect double-digit operating margins as well. So that sort of gives you the top and bottom of what we are thinking and what we are expecting for 2019.

Hey Tim just follow-up on that. So is that baseline assumption the existing customer base that you have got today and incremental carriers would be on top of that. And then just directionally looking into the March quarter. What are you thinking about the different main business lines? Thanks guys nice quarter.

So the first part of that Scott that is pretty much existing customers so anything significant would be on top of that. And then the second part of your question Scott if you are still in the queue, if you could repeat that I did not get that.

Yes. The outlook by business unit going into the March quarter. What are you expecting sequentially, it sounds like SafePath would be up sequentially, there tend to be a little seasonality with CommSuite. How should we think about things just directionally moving into March? Thank you.

Yes, got you. SafePath, your spot-on there, we expect continued growth there quarter-over-quarter. CommSuite, we do expect to see that level out during 2019, although we may add paid subscribers, we are working with Sprint on the advertising revenue platform So there is some uncertainty around that, net-net we definitely will be at least flat in CommSuite here as we move through 2019 and then ViewSpot I have mentioned already where I expect it to be.

And I can add on that. We are also getting some traction with some other carriers with CommSuite, so whether we could actually get that launched and have generating revenue before the end of this year. I'm not sure, but there is excitement. So I think there is other things we could look forward to.

Great. Thank you.

Thanks Scott.

Our next question comes from Jon Gruber with Gruber & McBaine. Please go ahead.

The 1.2 revenue, so normally disappointing - why was it so low, I mean how many subscribers do we have now?

Well, I can't give you the exact number, I will tell you that the number we gave you last quarter I think we said we were over a 100,000. We have done another double and then some.

I'm sorry you said you are over what last quarter?

We told you we were over a 100,000 and I think you can look at it and say - based on the growth we are seeing in Q1 and there is another double and that the stock really bring in the legacy business.

Okay. And my other question is we were suppose to have a new win back in the summer or at least by September, here we are six months later, when can we expect the new customer?

Well, as I said, I think that we think we can get one done before the middle of the year, and Jon I'll make you a promise. I'll pick-up the phone and call you as soon as it's up.

Yes, but you even last betted all the way, but is that you think by mid-year you think you will have something? Is that what you just said?

Yes that is what I said.

Okay. Thank you.

Okay.

Our next question comes from Jim McIlree with Chardan Capital. Please go ahead.

Yes, thanks a lot. Good afternoon. Alright, can you just help me understand, how your pricing the ViewSpot product that is on a per device per campaign kind of pricing structure is that right?

Yes, I think you could look at it a couple of ways. There is a fixed amount per quarter that the carrier pays for the service, but then there is additional revenue that is just generated through the launch of new campaigns that is a right word - through the launch of new campaign and so it's a combination…

Yes, and so jus to add, its Bill. There is quarterly - think about it as a quarterly licensee fee basically to use the platform then and then you have some variable opportunity based on the number of campaigns, the number of device launches basically that happen on the platform.

Okay, and so when we look at a carrier, the growth is going to come from what Scott was talking about going from the company owned stores to the retailers and the non-company owned stores, as well as an increase in number of campaigns. Can you talk a little bit about, if there is a way to think about capacity utilization of the number of campaigns that you can deliver and kind of what that utilization is right now either average or an example from a carrier?

Sure. So I think if you look at some of the market carriers I think it’s typical around 20 to 30 different campaigns happened throughout the year that can change, but that is probably a pretty good number to think of. Well, I think that answers your first question. The other one I would add is that there is also ability to expand into authorized retailers as well and the stores that are owned by the carriers is quite a few of those as well, so I would add that as well it’s on the point of care.

Yes. Actually I will try to expand on that but most of Tier 1 carriers there are more indirect just distribution points then there are direct sales stores. So if that is an upside as we get into the 2019, we can get some of our current customers to expand away from just their store, the company-owned stores to go to the full and direct channel, that is actually a - it’s almost like getting another carrier.

And so I'm not trying to portray this as an estimate or guidance of any sort about this year with that product, but I'm just trying to frame it in my mind. So I think we can easily think of this business with the current carriers doubling if they had more campaigns and if it were deployed in the indirect channel and their retailer. Is that fair enough?

We are still learning Jim. I mean this is - we have had it - we have owned it now for a month and a half, so we are trying to understand some of the dynamics that you really don’t get a good feel for until you own it and so I would rather not get into giving you some sort of idea of the magnitude of growth, the only thing we can say is as we think there is growth. But I know that is not answering your question of four to five step and yet but I have to.

No its alright, I got it. Tim you talked about CommSuite leveling-off, is that leveling-off at current levels or is that we are going to get a couple, a little bit more growth in the first two quarters or first quarter and then level off or is it the visibility to pay to the retail?

Yes, we may see another quarter or so of the modest growth there Jim and then we would expect to see it a leveling off.

And then lastly on SafePath, so you guys have been increasing revenue somewhere around 200,000 to 300,000 per quarter - quarter-over-quarter. But I just want to make sure I understand Bill you are implying or suggesting or just light out stating that, that is going to accelerate beginning let's call it right now. Did I understand that correctly?

Yes, I think that is a fair way to say it and we will be looking forward to tell you how we are doing at the end of Q1 I guess is the way to think about it.

Okay. Very good. Thanks a lot guys, good luck with everything.

Thank you.

Thanks Jim.

Our next question comes from Brian Swift with Sutter Securities. Please go ahead.

Yes, thank you. Most of my questions already been answered, but I did want to get a bit more color on the CommSuite side, where - can you give us an idea of how much of the CommSuite revenues has historically come from advertising, and how the Sprint divestiture of that business that you - I guess Tim mentioned, just a little bit more color on how you feel that is going to be impacting going forward with Sprint on CommSuite?

Well before the Tim get into the actual number, let me just kind of give you a little color about what actually happened. Sprint owned a sub called the Pinsight. And Pinsight was their app, their advertising arm. That sub has been sold to another SoftBank owned company. It is not guaranteed that there will be no advertising going forward, it's just did kind of suspect, so a little bit kind of have to sit back and let what this thing pointed out. It’s clearly something that has to be worked between Sprint and SoftBank and this other party. So I think that is just - it’s that like we are sure, but we are trying to give you an idea on a more conservative approach. So Tim.

Yes, good summary Bill. So Brain the way to think about the range of advertising revenue here on this platform, its measured in several hundreds of thousands. So anywhere between four and six and it fluctuates based on campaigns that are run and seasonality really. So think about 400,000 to 600,000 a quarter, we could be adding subs, premium subs as I had indicated, but we could also be seeing that our advertising revenue fluctuate and or decrease is what we are guiding towards.

Fine. That is very helpful. Thank you and that is all I have.

Alright.

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

I just want to thank everyone for joining us today. If you have any further questions, please feel free to reach out directly to us. Also we will be at the ROTH conference next week, so if you happen to be there, please stop by and saw hello. And we look forward to talking to you in a couple of months when we release Q1. Thanks and have a great day everybody.

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