Smith Micro Software, Inc. (SMSI) Q2 2021 Earnings Report, Transcript and Summary

Good day, and welcome to the Smith Micro Second Quarter 2021 Earnings Conference Call. 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 Governance. Please go ahead.

Thank you, operator, and good afternoon, everyone. We appreciate you joining us today to discuss Smith Micro Software's financial results for the second quarter of 2021 ended June 30, 2021. By now, you should have received 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 consist of forward-looking statements, including, without limitations, those regarding the company's future revenue and profitability, new product development, new market opportunities, future product -- by new and existing customers, operating expense, company cash reserves, the recently completed acquisition of the Family Safety Mobile Business from Avast and how the acquisition may impact Smith Micro's business strategy, operations and financial position going forward. 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 included in our recent filed Form 10-K and the preliminary prospective supplement filed with respect to our recent public offering. Smith Micro assumes no obligation to update any forward-looking statements, which speak to our management's beliefs and assumptions only as of the date they are made. I'd like to point out that in our forthcoming prepared remarks, we will refer to certain non-GAAP financial measures. Please refer to our press release disseminated earlier today for a reconciliation of non-GAAP financial measures. With that said, I'll turn the call over to Bill. Bill?

Thanks, Charlie. Good afternoon, everyone, and thank you for joining us today for our 2021 second quarter conference call. Overall, the results for the second quarter came in line with our expectations. We continue to make great strides with the integration of the people, customers and technology gained through the acquisition of Avast Family Safety Mobile Business in April of this year. Our team completed a detailed audit of Avast Family Safety platform during the second quarter, and they identified areas where this technology will bolster the SafePath platform to further accelerate our product road map. I'm especially pleased to share that we now have a solid integration plan in place to combine both platforms into a best-of-breed Family Safety solution in the coming quarters. We expect to have all of our customers running on a single platform by the end of '22. On the sales and marketing front, we have active and productive conversations underway with each of the customers gained through the acquisition. I am extremely optimistic with regard to the untapped potential of the Verizon Safe Family deployment. I am also very encouraged with the potential of the new relationships we are building with the other carrier customers that came with the acquisition. Although the updated commercial agreement with T-Mobile U.S. is still pending, I believe we will come to a conclusion on terms and have a fully executed amendment soon. Later in the call, I will provide a little bit more color on this evolving situation. Lastly, I am also delighted to announce that we have won back AT&T as a customer, which means we will continue to support the carrier's Secure Family Mobile app going forward. While I can't provide any details at this time, I would like to say that this is a great accomplishment for our team, and it will have a positive impact on the potential of our Family Safety business line in future quarters. Now let's look at the second quarter financial results. Revenue for the quarter came in at $15.9 million compared to $12.9 million reported in the same quarter of last year, an increase of 23%. Furthermore, our Q2 revenue is up 40% from Q1 of this year, and Family Safety revenue for Q2 is up 77% from Q1. Gross profit as a percentage of revenues was 79% for the quarter. Non-GAAP net loss was $300,000 or a loss of $0.01 per share. Our cash balance at the end of the quarter was very strong, just under $30 million, and we carry no debt other than trade payables on our balance sheet. In addition, my wife and I intend to exercise this quarter our 850,000 warrants and if successful, adding over $2 million to the company cash balance, while also increasing our shareholders. Okay. Now let's turn the call over to Tim for a more detailed analysis of the second quarter financials. Tim?

Thank you, Bill. As Bill just mentioned, we are excited to refocus efforts to further support the acquired contract with AT&T. This revenue stream was originally classified as legacy revenue with the Avast Family Safety Mobile acquisition. We will continue to work with the customer on expanding the platform in the future and then separately evaluate earnout implications based on the terms and conditions of the asset purchase agreement, which could result in additional cash payments to the seller. Now let's cover the financial details of the second quarter. For the second quarter, we posted revenue of $15.9 million compared to $12.9 million for the same quarter last year, as Bill indicated, an increase of 23%. When compared to the first quarter of 2021, revenue was up 40%, which was better than our expectations communicated last quarter. For the second quarter year-to-date, revenue was $27.3 million compared to $26.3 million last year, an increase of 4%. During the second quarter of 2021, our Family Safety revenue, inclusive of SafePath and the Avast Family Safety Mobile Business, increased 51% to $11.1 million compared to the second quarter of last year and an increase of 77% sequentially compared to the first quarter of 2021. This increase exceeded our expectations communicated last quarter. The increase in Family Safety revenue was primarily related to the Avast Family Safety Mobile Business acquisition completed on April 16, for which we received additional revenue compared to the first quarter of 2021. This was offset in part by the expected reduction of SafePath platform revenue related to lower legacy Sprint subscribers. As a reminder, all current T-Mobile marketing initiatives are only focused on T-Mobile branded products and not the Sprint branded products. In the coming quarter, based on the current subscriber trends through July and our newly acquired Family Safety products, we expect Family Safety revenue to increase by 9% to 14% compared to the second quarter. This guidance assumes the current subscriber trends continue through the third quarter of 2021. During the second quarter of 2021, CommSuite platform revenue was $3.9 million, which was down 9% from the second quarter of last year. Revenue from the CommSuite platform decreased 4% sequentially compared to the first quarter of 2021 and was better than expected as communicated last quarter. This decrease was due to an expected subscribers, offset by better-than-expected advertising revenues. We continue to navigate the T-Mobile Sprint merger as subscribers now have an option to move from Sprint to the T-Mobile network for voice services. As these subscribers transition from the Sprint network, we expect a continued decline in the Sprint CommSuite subscribers. As a reminder, Boost Mobile, formerly owned by Sprint, is now part of DISH and comprised approximately 25% of the CommSuite platform revenue. We look forward to expanding our relationship with DISH in the future, including the goal to increase Boost Mobile CompSuite subscribers. During the third quarter of 2021, we expect CommSuite platform revenue to be down 5% to 10% compared to the second quarter. ViewSpot revenue was approximately $817,000 for the second quarter of 2021, down 16% compared to the second quarter of last year and down 12% compared to the first quarter of 2021. This decrease was higher than expectations communicated last quarter and was primarily related to a lower volume of variable revenue with our Tier 1 U.S. customer. Based on current outlook, we expect ViewSpot revenues in the third quarter to be higher by 5% to 10% compared to the second quarter. This increase is primarily related to our near-term visibility of variable revenue activity, the near-term pipeline of new customers, which has slowed due to continued global COVID-19 challenges. For the third quarter of 2021, we expect consolidated revenue, including the newly acquired Family Safety products, to be higher by approximately 5% to 10% compared to the second quarter of 2021. For the second quarter, gross profit was $12.6 million compared to $11.7 million during the same period last year. Gross margin was 79% for the second quarter compared to 90% last year. Our longer-term goal for gross margin continues to be 90%. To achieve this goal, we will continue to work through the newly purchased Avast Family Safety Mobile Business fixed third-party application and service contracts. Until that process is complete within the next few quarters, we expect gross margin to be near this current run rate. For the second quarter year-to-date, gross profit was $22.4 million compared to $23.8 million during the same period last year. Gross margin was 82% for the second quarter year-to-date compared to 91% last year. GAAP operating expense for the second quarter was $17.8 million, an increase of $7.5 million or 73% compared to last year. GAAP operating expense for the second quarter year-to-date was $30.8 million, an increase of $10.4 million or 51% compared to last year. Non-GAAP operating expense for the second quarter was $12.9 million, an increase of $4.2 million or 49% compared to last year, and non-GAAP operating expense for the second quarter year-to-date was $22 million, an increase of $5.3 million or 31% compared to last year. Now the increase in non-GAAP operating expense last year is primarily related to an increase of $3.7 million for compensation and employee-related expenses, as our headcount has increased 69 -- excuse me, 68% year-over-year, resulting in 402 employees at the end of the second quarter. Also an increase of approximately $400,000 in marketing and advertising-related expenses to support our Family Safety revenues. This increase was offset by lower third-party contract development costs. The second quarter non-GAAP operating expense of $12.9 million was $3.7 million higher in the first quarter of 2021 or 41%, matching the expectations communicated last quarter. For the third quarter of 2021, we expect consolidated non-GAAP operating expense to be approximately 1% to 3% higher than the second quarter. This increase is mostly related to a full quarter run rate for the newly acquired business and additional sales and marketing expenses as we support Family Safety revenue and prepare for product launches. The non-GAAP net loss for the second quarter was $300,000 or $0.01 loss per share compared to a non-GAAP net loss net income of $3 million or $0.07 diluted earnings per share last year. The non-GAAP net income for the second quarter year-to-date was $400,000 or $0.01 diluted earnings per share compared to a non-GAAP net income of $7.1 million or $0.17 diluted earnings per share last year. Within the recently issued press release, we have provided a reconciliation of our non-GAAP metrics to the most comparable GAAP metric. For the second quarter, the reconciliation includes the following adjustments: stock compensation expense of $1.3; million intangible amortization of $2.6 million; and acquisition costs of $1 million, some of which are noncash items. For the second quarter year-to-date, the reconciliation includes the following adjustments: stock compensation expense of $2.3 million; intangible amortization of $4.9 million; and acquisition costs of $1.6 million, some of which are noncash items. The company is working on the formal Avast Family Safety Mobile Business purchase price allocation. For the second quarter, we made estimates to allocate purchase price among tangible assets, goodwill and estimated amortization expense. In the second half of 2021, these amounts will be adjusted to match the final purchase price allocation. The GAAP tax expense is due to certain state and foreign income taxes. For non-GAAP purposes, we utilize a 0% tax rate for 2021 and 2020. Any resulting non-GAAP tax expense reflects the actual income taxes expensed during each period. This concludes my financial review. Now back to you, Bill.

Thanks, Tim. I'm quite bullish about the prospects with our largest customers, so let's start with an update on the two largest Family Safety customers, T-Mobile U.S. and Verizon. As I mentioned earlier, although we continue to progress on the ongoing commercial discussions with T-Mobile, our progress has been slower than expected due to organizational changes within the carrier. While I am not concerned about getting the deal over the finish line with a positive outcome for Smith Micro, we must continue to be patient as we work through negotiations with our largest customer. On a good note, we've had positive engagement with the new leadership in place at T-Mobile U.S. I had a very productive initial meeting with them, and I am confident we will conclude contract negotiations very soon. We've also made great progress with T-Mobile regarding plans to integrate the 4 different legacy Family Safety apps we have with them on to the SafePath platform. We expect that once this initiative is completed, the subscribers who currently use the legacy services would be consolidated onto one platform powered by SafePath apps. Now let's talk a bit about Verizon Family Safety, our other large family safety deployment. Since acquiring the business from Avast last April, we've made significant strides in a variety of areas with Verizon and will continue to strengthen strategic relationships within the carrier. Happy to report the initial discussions regarding the migration of Smart Family users from Avast platform to SafePath is going very well and is frankly ahead of our original expectations. We have also seen early success on the product marketing front with Verizon. The Verizon team has been very open to collaboration on future marketing and user acquisition plans for the Smart Family service. Thanks to our strong relationships with Verizon and past success growing the user base at Sprint, we believe this joint product marketing approach will help to grow the Verizon user base and tap into additional revenue for Smith Micro. In addition to Verizon, we also made good initial progress with the other new customers gained through the acquisition. Clearly, I'm very excited to see AT&T revisit their prior decision and continue to offer our Family Safety solution. We plan to work with AT&T to grow their user base by promoting proven marketing initiatives. We see significant opportunity for growth in the coming year. A transition to SafePath will also allow AT&T to offer a feature-rich platform to their family customers, which will aid in customer acquisition. Now with all 3 U.S. Tier 1 carriers as customers, I see an encrusted growth opportunity for the Smith Micro business case going forward. Additionally, the two European carriers, Vodafone in the Czech Republic and Wind Tre in Italy, are demonstrating strong willingness to work closely with us. These carriers have been impressed by the robust functionality that our SafePath platform provides. I look forward to providing additional updates on the progress with these new customers on future calls. Now let's talk a bit about the progress we've made in the integration of the Avast Family Safety technology with SafePath. After a detailed comparative analysis, our team has identified the strengths of each platform and assess how the Avast technology can be used to add functionality and features to SafePath. I must say that I am pleased with the proposal, and I am confident it will produce the desired result for Smith Micro of having the most comprehensive white label Family Safety platform on the market. In addition to our overall product leadership, another way we maintain our competitive advantage in the Family Safety space is by providing unique and actionable consumer intelligence to our carrier customers. To help carriers better understand market demand for SafePath drive technology, we shared the results of our recent survey of 2,000 American parents regarding the impact smartphones have had on the safety of their team drivers. This research initiative generated dozens of useful insights and provided powerful market validation of our SafePath drive. Here are a few highlights to give you an idea of how parents feel. 98% of parents who expressed interest in this type of technology said they would be willing to pay a monthly subscription fee for a driver safety app. Two-thirds of these parents said they'd be willing to pay at least $15 a month, while 36% said they would pay $20 a month or more. If you would like to learn more about this research, I encourage you to watch the webinar we hosted last month. It's available on our website. Now let's talk a bit about our other two service platforms, ViewSpot and CommSuite. We continue to streamline existing deployments of our Smart Retail Technology with ViewSpot Studio, the self-service back-end management console we launched last year. Carriers value the operational agility that ViewSpot Studio provides as it enables them to create, deploy and edit in-store promotions in near realtime. This flexibility will only continue to grow in importance for mobile operators as in-store promotional activities continue to rebound. On the CommSuite front, we continue to make progress with DISH on contract negotiations and are exploring ways for our premium visual voice mail offerings to be bundled with other services to reach a wider audience. I am pleased with the amount of work that is being done to ensure a strong rollout of our messaging platform, as DISH continues its overall expansion of their 5G network. Needless to say, we have been extremely busy on many fronts, laying the groundwork for a strong back half of the year and a phenomenal 2022 at Smith Micro. I remain confident that news of our SafePath deployment at T-Mobile will come shortly. The news from Verizon is all positive, and I'm overjoyed to see AT&T back in the fold. All three Tier 1 carriers in the U.S. are actively part of the Smith Micro future, a future that should provide both significant top and bottom line growth. Lastly, I want to thank Tim Huffmyer for his many contributions to Smith Micro over his tenure as CFO, as this will be his last earnings call with us. Together, we have come a long way over the past 4 years. Tim has helped us build a very solid company that is poised for even greater things in the future. Thanks, Tim, and we wish you the best in your future endeavors. With that, I will open the call to questions. Operator?

[Operator Instructions] Our first question comes from Scott Searle with ROTH Capital. Please go ahead.

Tim, congratulations. Best of luck. Sorry to see you go. Maybe just to dig in on the SafePath front, I wanted to confirm. I heard the sequential guidance correctly in terms of SafePath location, 9% to 14% growth sequentially. And I'm wondering, what are you building in, in terms of T-Mobile, your expectation for T-Mobile? Is that you signed the deal and you see contribution during the quarter, at the end of the quarter? How are you thinking about that?

Scott, thanks for those kind words. And basically, we're expecting that we sign and close that in the quarter, but we haven't assumed a lot of upside on that just to be conservative in that guidance.

And maybe then to dive in a little bit on T-Mobile. It sounds like, initially, you're going to convert over the Circle Media Labs base. I was wondering if there's any color on that in terms of the detail and how big that is at the current time. And then on the Verizon front, it sounds like you're making progress there. I was wondering if you could frame that a little bit in terms of commitment, in terms of marketing dollars, pricing, et cetera. How we should be thinking about Verizon and SafePath as we go into 2022?

Yes. Scott, let me try to take both those questions. I think on the first one on the T-Mobile side, yes, we'll start with the old Circle base first and then start rolling the others in an orderly fashion. As far as the actual size of that base, it's -- that's something that you really need to get from to T-Mobile. Like I can't comment on that. I can say that I feel very, very positive about getting this transition done and done in an orderly fashion and getting them over to [SafePath], so I'm not worried about that. Reorgs happen within carriers and when they do, they cause things to slow down at times. On the Verizon front, I am really excited about Verizon. They have a very strong team in place. They are heavily focused on growing their Family Safety business, and they have a lot of initiatives planned for the balance of this year. I won't go into those. That's up to them to tell people when they're ready to. But I think it's exciting, and I think it will result in nice growth. So I'm really tickled to have the Verizon business there, and they're real joy to work with. So it's all positive.

And last, if I could. Congratulations on AT&T. That's big news. Could you frame that a little bit in terms of how that trend occurs? They're currently, I guess, on the Location Labs platform, and so do they continue to operate? Do you manage this much like you're approaching the Verizon relationship where you manage 2 platforms and integrate and then transition over? And how quickly do they get behind this? How quickly would you expect to start to see some growth on that platform? Because I think the initial expectation was, hey, look, we'll take this out of our numbers and our expectations because we don't have a contract with them. Now that you've got that relationship in place, how does this -- how quickly does this turn to and go in the other direction?

That's a great question, Scott. It just happened, and we don't have all the answers to your questions yet. I think in the next month or so, we'll probably be able to really dig in with it. We have expressed our interest in first, number one, servicing AT&T. I think that's a great opportunity for us. But number two, we also said that we'd really like to see this business grow. And that as we undertake this effort, we're really looking for some very strong signs that AT&T buys into that. I think initial conversations give us confidence that we're going to have some more. And maybe in a month or so, we can answer better the questions you're asking.

The next question is from Aman Gulani with B. Riley. Please go ahead.

I'm jumping in for Josh here. Great to hear about AT&T. I was wondering how much revenue do you think the company can expect to generate from AT&T? Or maybe if you could provide what the run rate revenue was from AT&T. And then the second part of my question is, how much do you think the cash earn-out payment will be for Avast with AT&T coming on board?

All good questions. Let me just kind of refer you back to the road show when we were raising the capital to acquire Avast. We've talked about the fact that we viewed AT&T as legacy, that they were going to terminate the contract. We also said at the time that their base was smaller than the others, and we really didn't go into much more details than that. We did also say that there was an earn-out in place, and that's something that we are evaluating right now. It's an open conversation that's going fine with the Avast side. So look, I'm really excited to get them back. I think they really want to be in the Family Safety market. I think their -- one of the things that they were pleased with was the professional way we approached them. As we started to plan for the wind down of their Family Safety offering, and they probably have some second thoughts that they have a new partner now, and we gave them more confidence to move forward. But nonetheless, they have rethought their decision and decided that they want to stay. And we're very happy to have them.

And can you maybe talk about how much Family Safety revenue in Q2 was from Avast? And what sort of assumptions we should be using when thinking about Avast revenue contribution in the third quarter and the fourth quarter?

Yes. So what we guided to last quarter was the combination of the Family Safety revenue. Rather than running SafePath and Avast separately, there was quite a review from a competitive standpoint. So that's how we -- that's why we combined into Family Safety, which is what you heard us report last quarter and also this quarter. The guidance last quarter was about 70% to 75% more in revenue in the second quarter versus the first quarter mostly because of the Avast revenue additions in the second quarter. We actually did a little better than that. We were about 77% above the first quarter of this year. So you can back in, in your models and come up with some numbers off of that. But we would rather not, for competitive purposes, break that out into the different numbers. We believe it's too revealing in the end.

And then last question for me. Nice to see that the code integration is progressing smoothly. Can you maybe talk about the profitability potential and margin profile of Smith Micro once you've got a lot of that current integration complete?

Yes. I mean, I would look back again to what we said during the roadshow for the capital raise. We said that we would have a little higher cost a period of time until we could get to a single platform. We've given you an end date of the end of '22. Clearly, we'd like to do it faster that, and we'll be working towards that goal. As we do that, we can rationalize the overall expenses we can get away from running two platforms get back to 1. And -- but I really think what's going to happen is that we'll be able to hold our expenses fairly flat and grow our revenues as our three key carriers now, that means Verizon, T-Mobile and AT&T. I really look for some nice growth in '22, and that's how I think we should be thinking about it.

The next question is from Jim McIlree with Dawson James. Please go ahead.

Yes. Can you indicate the AT&T taking up the platform, if that's going to require more operating expenses and what you had planned before, either for R&D or for marketing or customer retention or something like that?

No, Jim, I think, like I just said, our operating expenses will stay flattish, and we're fine. We're covered on the AT&T business. We'll be working hard with them to come up with a transition plan to get them over to the SafePath platform as well, and the sooner the better.

And can you clarify the direction of T-Mobile revenues in Q3 versus Q2? It's hard to tell if you've said they're flat, down, up or if you just were silent on it.

So T-Mobile consists of the four products now, Jim. And generally speaking, the legacy Sprint base based on current run rates would be down. And the other products, we believe, will be flat or slightly grow in the quarter is the general expectation there.

Okay. And as far as

Let me expand on that real quick, Jim. And the growth that I forecasted, really, we get an extra couple of weeks because the acquisition closed in the middle part of April. So we actually do get a full quarter run rate of Avast revenue also, right? So you have to factor that into your model as well. But I just wanted to point that out, too.

Right. Got that. And is the -- is AT&T's decision leading to part of the growth in Q3 revenues for Family Safety?

No. Not -- that would be too quick. I would say that we would view that AT&T would hold fairly flattish, maybe some slight growth, but that's it. I think we really need to spend time with their teams and really understand their goals and where it is. They want to grow this. We've had initial conversations. Everything sounds right and -- but we need to test that. So give us a month or so.

And then lastly, we've been talking about Boost and CommSuite for a number of quarters now, and I'm just wondering if there's any more specific update about how that take-up is occurring or what your thoughts are on that. I know, Bill, you expressed optimism on it, but I was just wondering if there's more to share there.

Yes. I would say this. First off, DISH announced a few weeks ago that they've cut a new deal that rather than running as an MVNO on the T-Mobile network, they will be switching to AT&T. That will also be the goal for the Boost side as well. It does mean that we will have more work to do because we will now have interface to the AT&T voice mail system, but that's okay. That will be fine. And we -- it's just part of the process. It was not totally expected, so it's a little bit of a surprise, but we will work through that. I think that the fact is that DISH continues to build out their 5G network. And so it's just part of working with them, and we embrace the opportunity. I think you can safely say all 4 Tier 1 carriers in the U.S. are working with us.

The next question is from Bruce Goldfarb with Lake Street Capital Markets. Please go ahead.

Congratulations on a great quarter. So the first one is, Tim, you're is leaving. Is there any updates you can provide on in terms of finding his replacement?

We have an active search underway. It is still fairly early. I would anticipate that we will bring on an interim CFO to give us the time to more appropriately and thoughtfully go through that search process. So you can stay tuned for that. I have nothing else at this point that I'd like to say publicly.

And then can you talk about some -- a little bit more about the pipeline outside of the U.S.? I mean, how do you feel about that just...

Yes. Look, I think we have a lot of opportunities that we're focused on in both Europe and the Middle East, and those are the two geos that we really target. I see a lot of activity around ViewSpot, but I also see a lot of activity for SafePath as well. I'm excited that both of the carriers that came through the acquisition have embraced dealing with us, and I think that should go well. Clearly, it's not the normal place that you would start a Vodafone relationship in the Czech Republic. More likely, you would start it in Spain, as we did in the case with ViewSpot. But it is a start, and we'd like to really leverage that. So we'd like to perform very, very well for Vodafone and earn the right to be in a lot of the other countries they serve as well.

And then with the new T-Mobile contract underway that you're working on, are there gating items? Or do you feel like it's just sort of bureaucratic kind of just going through the system that's just -- that you're working through?

Well, I think the big issue is that they did a very large reorganization. And while we had, had agreements in place with a number of people, those people are no longer in the leadership role. And so we had to redo that process with the new folks. That is an ongoing effort. Right now, it is going well. I do not believe there's going to be any issues. It is an unfortunate delay, and I just can't do anything about that.

The next question is from Joe Bernardo with Benchmark. Please go ahead.

This is actually Joe on for Mark Schappel. And congrats on a great quarter, and congratulations against, Tim, and good luck on future endeavors. But just to get my questions, Bill, when you had acquired Avast, I believe one of your goals is to boost the margins -- adjusted EBITDA margins to about 25%. Are you making any progress on that front?

Well, I've only owned them for 2.5 months, so you've got to give me a little bit of time. But look, we were very clear that we believe that we need to get the gross margins back up into the 90%, and we could get the EBITDA margin and it would -- this naturally fall out closer to 25 points. I still believe that, that's very, very doable, and it will be our goal. It may take a couple of quarters to try to work through some of the things that we've got to take care of just to make sure that we don't have duplicitous contracts, duplicitous cost, and we'll start squeezing some of that out. And I think all the rest takes care of itself.

And I guess the next question, with respect to CommSuite, can you comment on any of the progress that DISH's marketing efforts to increase the conversion with its free trial to obtain subscribers? Is that working out?

I think the way we would say that now is that it's an ongoing effort. I think there's just so many bigger issues that DISH is working on. Clearly, the move to switch away from T-Mobile and go with AT&T on the MVNO side is a challenge, and then you've doubled that with the fact they're trying to build out their 5G network, I just think there are some bigger issues that they're focused on. I think they're going to be a great customer. I think we have a lot of opportunity with them. And I think we'll just be fine.

And then just one more to follow up on CommSuite. Can you comment if the portion that is for Boost Mobile is growing?

I think it's fairly flat, and they are working on growing it. Yes, I think that's the way to think of it.

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

Well, we'd like to thank everyone for joining us today. Should you have any further questions, please feel free to give us a call. We'll be more than happy to chat with you, and we look forward to talking to you on our next conference call. Hope everyone has a great day. Thanks.

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