Smith Micro Software (SMSI) Q4 2020 Earnings Call Transcript

Smith Micro Software (SMSI -8.84%)
Q4 2020 Earnings Call
Mar 08, 2021, 4:30 p.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Good day, and welcome to the Smith Micro fourth-quarter 2020 earnings conference call. [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.

Charles Messman -- Vice President of Investor Relations and Corporate Communications

Thank you, operator, and good afternoon, everyone. We appreciate you joining us today to discuss Smith Micro Software's financial results for the fourth quarter and year-end for our fiscal 2020 year ended December 31, 2020. 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; 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, new market opportunities, operating expenses, company cash reserves, the announced planned acquisition of the Family Safety Mobile Business from Avast and how the acquisition may impact Smith Micro's business strategy, operations and the financial position going forward and the launch of our underwritten public offering of common stock, the proceeds of which will primarily be used to fund the acquisition from Avast. 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 recently filed 10-K and the preliminary prospectus supplement filed with respect to the 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 want to point out that in our forthcoming prepared remarks, we will refer to certain non-GAAP financial measures. Please refer back to our press release disseminated earlier today for the reconciliation of the non-GAAP financial measures. With that said, I'll now turn the call over to Bill.

Bill?

Bill Smith -- Chairman of the Board, President, and Chief Executive Officer

Thanks, Charlie. Good afternoon, everyone, and thank you for joining us today for our 2020 fourth-quarter and year-end earnings conference call. Overall, I am very pleased with what the team at Smith Micro accomplished in 2020. Let's take a look at the results, which came in line with our expectations.

For fiscal 2020, total revenue from operations increased 18% to $51.3 million, compared to $43.3 million reported in fiscal-year 2019. For the fourth quarter of 2020, revenue increased slightly to $12.4 million when compared to $12.3 million earned in the fourth quarter of 2019. Non-GAAP net income for 2020 fiscal year was $10.4 million or $0.24 per share. And for the fourth quarter, non-GAAP net income was $1.4 million or $0.03 per share.

Importantly, we achieved continued positive cash flow from operations of $7.9 million for the year. As with everyone, 2020 was a challenging year. The global economic shutdowns caused by the COVID-19 pandemic definitely had an adverse effect on our business as the month-long closure of carrier retail stores temporarily paused a strong revenue pipeline for our business. Our largest customer, Sprint, also completed its merger with T-Mobile U.S., also an important Smith Micro customer, an action which initiated the integration of two very large complex businesses.

This had an impact on our revenue growth as well. We made a strategic decision in 2020 to significantly increase R&D spend in order to accelerate the integration of the codebase gained through the Circle acquisition into our SafePath platform. This strategic investment enabled us to bring SafePath 7 to market in November of 2020. Through the integration efforts, we also launched several new significant features to the platform, including SafePath Drive and SafePath Home.

Not only did we complete this enormous undertaking in less than nine months amid the uncertainty and unique challenges posed by a global pandemic, we remain profitable and cash flow positive. This achievement saw us exit fiscal 2020 with a strong balance sheet and more than $25 million in cash, positioning the company for a fantastic 2021. But there's still more. I assume that you have seen the exciting news that we announced earlier today regarding what we believe is truly a transformational acquisition of the Family Safety Mobile Business from Avast plc, which includes Location Labs, our largest competitor in the mobile operator space.

The cost of the transaction is $66 million, which includes a combination of both stock and cash, and we expect will be immediately accretive. This acquisition adds five mobile operator contracts to our customer portfolio, including Verizon and two European carriers, along with a set of legacy products supporting T-Mobile-Sprint and AT&T. While the legacy business brings important new relationships to Smith Micro and is experiencing surprisingly low churn rates, from a valuation standpoint, we significantly discounted the legacy revenues while applying a multiple to the core business only. For 2021, the core business is expected to generate between $18 million and $19 million of recurring revenue, and we expect that to grow from there going forward.

We received very positive feedback from the new customers gained through the acquisition. This is a critical upfront accomplishment and that will pave the way for productive work relationships as we work with these carriers to deliver world-class family safety solutions to their users. The acquisition will add more than 140 employees located in both the U.S. and Europe to the Smith Micro employee base, combining what we believe to be the two most talented and experienced teams in the world when it comes to white label digital safety solutions and firmly position Smith Micro as the world's No.

1 family safety SaaS provider to wireless carriers globally. We are also very excited about the go-forward collaboration agreement with Avast. It is a partnership that will enable both businesses to penetrate the operator-focused IoT security and family safety markets on a global scale. Needless to say, reaching an agreement with Avast on this strategic collaboration was a critical component for both parties to get this deal done.

I can truly say both companies went above and beyond to bring this complex multifaceted deal to fruition in a very short period of time. I am sincerely grateful for these contributions and see this deal as transformational for Smith Micro's future business case and revenue potential. Lastly, before I turn the call over to Tim, I must mention, we also put out a third press release today at the close of market announcing the launch of a follow-on public offering for $62 million. We believe this is a great opportunity for existing and new shareholders to be a part of the next chapter in Smith Micro's success story.

Frankly, we may have set a record for the number of filings made in one day. It certainly is for us. With that said, I'm going to turn the call over to Tim now to review the 2020 financial results and provide more details on the acquisition. Afterwards, I will talk more about our go-forward plans for the newco that unite Smith Micro with the Avast Family Safety.

Tim?

Tim Huffmyer -- Chief Financial Officer

Thank you, Bill. Before we review the results for the fourth quarter and fiscal-year 2020, let's review some further details on the recently announced acquisition. We entered into a definitive agreement with Avast and certain of its subsidiaries to acquire substantially all the assets of their Family Safety Mobile Software Business, including certain liabilities, along with all of the membership interest of Location Labs, LLC, a U.S.-based subsidiary. Further to Bill's comments, the Family Safety Mobile Software Business will include the purchase of application source code, license rights to shared source code, and both ownership and licenses to a patent portfolio.

The acquisition includes five mobile operator contracts, which are mostly U.S. Tier 1 contracts, and an Avast partnership to join forces and further service current and potential customers together. The U.S. Tier 1 contracts are comprised of one large, recently renewed contract and several legacy product contracts with declining revenue as those customers are phasing out Location Labs with some carriers moving onto the SafePath platform.

In order to service these new customers and the separate product offerings, we will acquire approximately 140 employees from Avast. Those employees are located in the United States and Serbia, which are existing locations for Smith Micro; and the Czech Republic and Slovakia, which will now become two new strategic European locations. All of these markets provide an impressive talent pool necessary to continue Smith Micro's product development and growth. Total consideration for the acquisition will be $66 million, which can be satisfied in cash and company-issued stock.

We currently expect the stock consideration to Avast to be approximately $10 million. There will also be an escrow funded from purchase price to secure indemnification and other post-closing obligations. Additionally, there is an earn-out, which will be paid based on revenue performance of one particular U.S. Tier 1 contract that is near end of life and if renewed within the next year.

Also announced this afternoon was the launch of a $62 million public offering to fund the cash portion of the consideration and for general corporate purposes. Pro forma for the offering, Smith Micro will continue to operate with a strong balance sheet with an estimated $25 million or more of cash and no debt. The acquisition is expected to close early next quarter. Today, within the public offering launch, the abbreviated financial statements for the Family Safety Mobile Software Business was filed, which includes a historical view of the revenues and assets acquired, liabilities assumed, and direct expenses.

As you will see, this business has experienced an 18% revenue decline from 2019 to 2020 partially due to the previously mentioned legacy relationships where Smith Micro is currently replacing the Location Labs installations. As Bill mentioned, our evaluation of the business significantly discounts the legacy revenue streams. While the non-legacy portion of the business is expected to grow nicely post-closing, legacy revenue should continue to trend down into 2021. The direct expenses do not include any facility or administrative support costs.

These costs will be evaluated and added as needed to support the new operations. Smith Micro is thrilled to have this opportunity to work with the Family Safety Mobile Software team from Avast and increase our customer portfolio. Now, let's cover the financial details of the fourth quarter and fiscal-year 2020. For the fourth quarter, we posted revenue of $12.4 million, compared to $12.3 million for the same quarter last year, an increase of 1%.

When compared to the third quarter of this year, revenue was down 2%, which was within the guidance provided. For the fiscal year, revenue was $51.3 million, compared to $43.3 million last year, an increase of 18%. The increase in revenue compared to last year was a result of the SafePath platform growth, some of which related to the Circle acquisition earlier in 2020. CommSuite and ViewSpot were relatively consistent year to year.

During the fourth quarter of 2020, SafePath decreased 9% to $6.1 million compared to the fourth quarter of last year and decreased 10% sequentially compared to the third quarter of this year. This decrease was within the guidance range provided. For the fiscal-year 2020, SafePath increased 58% from $17.8 million in 2019 to $28.1 million in 2020. The primary reason for the sequential decrease in SafePath revenue was related to a reduction of in-store marketing initiatives for SafePath, reducing the number of new subscribers.

The reduction of in-store marketing is mostly due to merger activities between T-Mobile and Sprint. Earlier this year, COVID-19 caused most Sprint stores to shut down. And when those stores reopened post-merger, the marketing initiatives did not focus on the Sprint products. In the coming quarter, based on the current status of the marketing initiatives and the current subscriber activity through February, we expect SafePath to be down 7% to 12% compared to the fourth quarter.

This guidance assumes the current subscriber trending continues through the first quarter of 2021. We remain excited about the new SafePath opportunities and are encouraged by continued progress on the launch of a new T-Mobile offering expected in the coming quarters. During the fourth quarter of 2020, CommSuite platform revenue was $4.8 million, which was consistent with the fourth quarter of last year. Revenue from the CommSuite platform increased 5% sequentially compared to the third quarter of this year.

This increase was higher than expected and outperformed the guidance provided. For the fiscal-year 2020, CommSuite platform revenue decreased 3% from $18.7 million in 2019 to $18.2 million in 2020. The current quarter increase was due to better-than-expected performance in seasonal advertising revenue, resulting in ad revenue of approximately $500,000, offset by an expected Sprint subscriber decline. We continue to navigate the T-Mobile-Sprint merger as subscribers now have an option to move from Sprint to T-Mobile network for voice services.

As these subscribers transition from the Sprint network, we expect a natural decrease in Sprint CommSuite subscribers to continue. As a reminder, Boost, formerly owned by Sprint, is now part of DISH and comprise 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 CommSuite subscribers. During the first quarter of 2021, we expect CommSuite platform revenue to be down 5% to 10% compared to the fourth quarter.

This range includes an increase in the Boost subscribers, a decrease in the Sprint subscribers and assumes advertising revenue returns to a normal run rate of approximately $200,000. ViewSpot revenue was approximately $1.4 million for the fourth quarter of 2020, up 146% compared to the fourth quarter of last year and up 18% compared to the third quarter of this year. This increase was higher than expected and outperformed the guidance provided primarily due to higher volume of variable revenue with our Tier 1 U.S. customer.

For fiscal-year 2020, ViewSpot revenue was $4.2 million and was consistent with 2019. As we released last week, during the first quarter of 2021, we launched a new ViewSpot customer in Europe. Offsetting this new customer, unfortunately, we were notified that AT&T Mexico has chosen to not renew the ViewSpot platform as a result of continued store closures due to COVID. We look forward to supporting this customer in the future as in-store activity returns.

As a reminder, we separate ViewSpot revenue into two categories: fixed and variable. The fixed portion of the revenue is related to license fees and is generally the recurring component of the revenue. The variable portion of the revenue is related to device and promotional campaigns, which are short bursts of activity resulting in revenue, and the volume is less predictable. Based on our current outlook, we expect ViewSpot revenues in the first quarter to be lower by 25% compared to the fourth quarter.

This decrease is primarily related to our near-term visibility of variable revenue. For all of the reasons discussed with our three products, we expect total revenue for the first quarter of 2021 to be lower by approximately 9% to 14% compared to the fourth quarter of 2020. For the fourth quarter, gross profit was $11 million, compared to $11.3 million during the same period last year. Gross margin was 89% for the fourth quarter compared to 92% last year.

For the fiscal year, gross profit was $46.1 million, compared to $39.4 million during the same period last year. Gross margin was 90% for the fourth-quarter year-to-date compared to 91% last year. GAAP operating expense for the fourth quarter was $11 million, an increase to $3.4 million or 44% compared to last year. GAAP operating expense for the fiscal year was $42.6 million, an increase of $13.3 million or 45% compared to last year.

Non-GAAP operating expense for the fourth quarter was $9.5 million, an increase of $2.5 million or 36% compared to last year. And non-GAAP operating expenses for the fiscal year was $35.7 million, an increase of $9 million compared to last year. The increase in the fourth-quarter non-GAAP operating expense compared to last year is primarily related to an increase of $1.9 million for compensation and employee-related expenses as headcount increased 29% year over year, resulting in 255 employees at the end of the fourth quarter, and an increase of $600,000 for third-party contract development costs. These costs are variable and allow us flexibility to increase or decrease the number of engaged resources.

The fourth-quarter non-GAAP operating expense of $9.5 million was comparable to the third quarter and consistent with the guidance we provided. The mix of the operating expense was slightly different though. During the fourth quarter, we reduced the amount of third-party contract development costs and increased the employee run-rate costs as we continue to phase in employee costs throughout the quarter. We expect the first quarter of 2021 non-GAAP operating expenses to be less than the fourth quarter by approximately $200,000.

This expectation includes a reduction of third-party contract development costs and consistent employee run-rate costs. The increase in the fiscal-year non-GAAP operating expenses compared to last year is primarily related to an increase of $6.3 million for compensation and employee-related expenses as headcount again increased 29% and an increase of $2.3 million for third-party contract development costs. The non-GAAP net income for the fourth quarter was $1.4 million or $0.03 diluted earnings per share compared to a non-GAAP net income of $4.3 million or $0.10 diluted earnings per share last year. The non-GAAP net income for the fiscal year was $10.4 million or $0.24 diluted earnings per share compared to a non-GAAP net income of $12.8 million or $0.35 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 fourth quarter, the reconciliation includes the following adjustments: stock compensation expense of $812,000, intangible amortization of $715,000, and a gain on sale of the Moho animation software of $711,000, some of which are non-cash adjustments. For the fourth-quarter year-to-date, the reconciliation includes the following adjustments: stock compensation expense of $3.1 million, intangible amortization of $2.9 million, acquisition costs of $918,000, and a gain on the sale of the Moho animation software of $711,000, some of which are non-cash adjustments. Due to the cumulative net loss over the past few years, our GAAP tax expense is primarily due to certain state and foreign income taxes.

For non-GAAP purposes, we utilize a 0% tax rate for 2020 and 2019. The resulting non-GAAP tax expense reflects the actual income taxes paid each period. This does conclude my financial review. Now, back to you, Bill.

Bill Smith -- Chairman of the Board, President, and Chief Executive Officer

Thanks, Tim. Since Tim has provided color on our three core products, I won't spend time on them on this call. Instead, I will concentrate on the acquisition as I am sure you have many questions. Let's look at the acquisition from a 30,000-foot perspective why we did the deal and how we see it as transformational for Smith Micro.

The acquisition of the Avast Family Safety Mobile Business clearly positions Smith Micro globally as the No. 1 family safety software provider to wireless carriers. To give you some perspective on market size and where we see opportunity, we estimate that the total annual carrier revenue from digital safety solutions was approximately $1.1 billion in 2020. This value is projected to nearly double to more than $2 billion in 2023.

The transaction is immediately accretive and further diversifies our customer base. We believe that the collaboration agreement we now have in place with Avast will create significant new growth opportunities for Smith Micro as it enables us to further penetrate our carrier accounts with new IoT security offerings that complement our Family Safety portfolio. The Avast Family Safety Mobile Business has its roots in the Location Labs technology platform, which Avast acquired through its merger with AVG Technology in 2016. Location Labs pioneered mobile safety solutions for the carrier market and holds a number of patents covering various mobile technology innovations, including geolocation.

The business unit we are acquiring employs more than 140 individuals, which are based in Slovakia, Serbia, and the Czech Republic in Europe and in Emeryville, California in the U.S. When compared to our SafePath Connected Lifestyle Platform, Avast Family Safety Mobile product line has a very complementary feature set and customer base. Once the acquisition closes, it is our plan to operate SafePath and the acquired Family Safety as two separate product lines in the interest of making this consolidation easy for our customer base to digest and in the interest of putting the needs of our customers first. This approach, which is different from the full integration we completed after the Circle transaction in 2020, will enable a seamless transition in the near term as we learn more about the acquired Family Safety platform, its features, the needs of our acquired customers, and the platform's future potential.

We are confident that this is the best path forward as it will allow us to maximize revenues from existing carrier contracts while we blend both talent teams over time to optimize the future of our Family Safety portfolio. While this approach will take time, we feel it is necessary to successfully combine the experience and market presence of Avast with the knowledge, expertise, and market leadership of our SafePath team. Just as important, this acquisition will also benefit Smith Micro from a customer marketing and user acquisition perspective. As underscored by the retail closures of 2020 due to the pandemic, digital customer acquisition has never been more important.

By blending the talents, experiences, and strategic relationships of our combined teams, we will optimize the efficiency and bottom-line impact of our digital product marketing efforts. While Smith Micro has successfully completed many transactions over the years, this is our largest one to date. I couldn't be happier that both sides are benefiting so much from this acquisition. Overall, 2020 was a very successful year for Smith Micro as we remained profitable, generated cash from operations, and grew year-over-year revenue.

On top of these achievements, we diversified our carrier customer base by signing multiple new greenfield contracts for both SafePath and ViewSpot, opportunities that are loaded with expansion potential. We acquired Circle's operator business, a deal that strengthened our competitive position in the family safety market, accelerated our SafePath road maps, and generated more than $4 million in revenue during the fiscal year. By successfully integrating Circle's parental controls into SafePath, we made good on our vision to bring a full-featured family safety solution to market. We also greatly expanded the utility and total addressable market for our ViewSpot platform, an investment that enables us to sell diverse flavors of the platform based on the specific needs of the carrier.

As you can imagine, I am very confident regarding our business case and competitive position as we move into 2021, which has been significantly expanded with the acquisition of the Avast Family Safety Mobile Business. Once the deal is complete, we will have added Verizon to our Family Safety customer list, positioning us as the dominant player in the United States. The acquisition will also accelerate our vision of European expansion, a region that signifies great upside for Smith Micro as we broaden our operator-focused Family Safety business on a global scale. Armed with an impressive customer portfolio, extensive financial resources and a diverse sales pipeline, and a talented global staff of professionals, Smith Micro is poised to soar to even greater heights in 2021.

With that said, I will open the call for questions. Operator?

Questions & Answers:

Operator

We will now begin the question-and-answer session. [Operator instructions] Our first question comes from Josh Nichols with B. Riley. Please go ahead.

Josh Nichols -- B. Riley Securities -- Analyst

Hi, Bill. Well, first off, congratulations on the accretive Location Labs announcement coming out this afternoon. I did want to ask because I think you hit on it briefly, could you provide us also with a little bit of an update on T-Mobile and the opportunity that represents for the company as we think about the back half of this year and really longer term in 2022 as well?

Bill Smith -- Chairman of the Board, President, and Chief Executive Officer

Sure, Josh. Things are going really well with T-Mobile. A lot of planning going on, lots of joint meetings between our team and the T-Mobile team. We continue to look for a launch of the new SafePath 7 offering, which will be called FamilyMode, and that product will launch midyear as planned.

We are quite excited about it. We think that this will allow T-Mobile to really start to focus on a single-family safety offering going forward. I think the fact that we have now just announced the acquisition of the Avast product as well will make it even simpler from the T-Mobile standpoint to get all their various offerings unified with the new SafePath 7. I think this is going to be just a great opportunity.

We look for super growth out of T-Mobile as we head into the back half of '21, and we expect some really big outcomes going forward. Clearly, T-Mobile is a carrier with a lot of energy, a lot of excitement, a lot of growth. And we're really pleased to be part of it. And we think that the FamilyMode 3.0 is just going to be a fabulous offering.

Josh Nichols -- B. Riley Securities -- Analyst

Thanks for providing some additional color on that. Good to hear things are on track there. Also, you did mention a really interesting collaboration agreement here with the strategic partnership. Could you talk a little bit about, really, the opportunities that that could create for Smith Micro, particularly since Avast has a lot of carrier relationships and a really strong presence, particularly in Europe?

Bill Smith -- Chairman of the Board, President, and Chief Executive Officer

Yes. We're really excited about this as well. Early on in the conversations with Avast, some of the early talks were between myself and my counterpart there. And one of the Ondrej's final questions that we got into was, you guys are in the IoT space, do we compete? And I explained to him what we did, that we viewed the digital family lifestyles have been not only family safety but bringing in all the new wearable consumer IoT devices.

And then from a single app, you could run the whole thing. And he goes, wow, OK, you're taking a totally different approach than we are. What we're looking at from a consumer IoT standpoint is the safety or the security and in keeping the home network secure. And I said to him, I said I think we have just identified an area where we can partner, not compete.

And we both really thought this was a great idea. We had expanded that through the process. And I think that we look forward to joining hands as we really look at how to service the wireless carriers and the cable MSOs going forward. They need both family safety and device and security, whether that's device or network.

And we lead family safety, they lead security. Joined hands and working together, we can create amazing products, and we think this really will work out very well for us.

Josh Nichols -- B. Riley Securities -- Analyst

Thanks, Bill. Congrats again. I'll pass the baton and let someone else ask some questions. Thank you.

Bill Smith -- Chairman of the Board, President, and Chief Executive Officer

Thanks, Josh.

Operator

The next question is from Scott Searle with ROTH Capital. Please go ahead.

Scott Searle -- ROTH Capital Partners -- Analyst

Congratulations on the deal, Bill.

Bill Smith -- Chairman of the Board, President, and Chief Executive Officer

Thanks, Scott.

Scott Searle -- ROTH Capital Partners -- Analyst

Real quickly, in terms of the Avast model, I just want to clarify, unlike Circle, Avast is a subscription or per user-driven model. Is that correct? And then I think you referenced as well that Avast has, there are some European relationships that come along with it. I don't think you've named the carriers, but could you give us an idea in terms of the size of some of these carriers? Are these pan-European carriers or how should we be thinking about that?

Bill Smith -- Chairman of the Board, President, and Chief Executive Officer

Yes. OK. Let's take the first part of your question there, Scott. Yes, Avast marketed in a mode that's very compatible with us.

It was all a subscriber monthly fee. So it's a SaaS model. It's recurring. It is just very consistent with how we do business.

So that works very, very well. Yes. There are a couple of carriers that will be joining our lineup as a result of this transaction. First off, there'll be the Vodafone Czech group will be offering family safety and then be using our software going forward, as well as Wind Tre, part of the Hutchison Group, is based in Italy, and they also will be working with us.

So that's a nice add to our lineup of carriers. And we look for many, many more in the European market. And even beyond that, I mean, we're also very heavily focused on the Middle East. And a few weeks ago, we announced the launch at Ooredoo of our SafePath product.

And it's off and running, and I think there's a lot of energy there. We think there's a lot more opportunities in the Middle East as well. So when you combine the Middle East with the European markets, we just see some really significant growth going forward, and we think this transaction helped us quite a bit.

Scott Searle -- ROTH Capital Partners -- Analyst

Hey, Bill, just to quickly follow up, and then I'll get back in the queue. But just in terms of the pipeline, you referenced a little bit off of that with Ooredoo, which you announced, I think, a couple of weeks ago. You've had TELUS. You've got DISH now starting to ramp up as well.

I'm wondering if you could talk a little bit about the pipeline, how broad it is. And I know it's early. But looking at the competitive landscape now, you've consolidated the North American landscape. What does the rest of the European continent look like in terms of the competition out there? Is it going to be mostly greenfield opportunities that you're chasing as it relates to the SafePath family of products? Thanks.

Bill Smith -- Chairman of the Board, President, and Chief Executive Officer

Sure. Look, I think we will find many greenfield opportunities, but we also think we can find some where they've had some efforts under way. So we're looking at both. We talked in the last call that we had signed four new carrier contracts, one in the ViewSpot area.

We've put a release out talking about it. We weren't able to name names out and still can't really because that's the wishes of our customer. It's off and running. And we think it's just the first country in a very large European carrier.

So we look for growth off of that. We also talked about the fact that we have signed deals with three new SafePath customers. Ooredoo is now named and out there. The others are in process.

I'm not convinced yet that we're going to be able to give you the names. We hope we can, and you'll just have to stay tuned. But things are going quite well. We're pretty excited about where we are in general.

And clearly, adding the Avast business, Location Labs is the company that started all these years ago, and they owned all of the U.S. carriers at one point. We now, as a result, have control of all of them in our side. So I'm pretty excited about the whole thing.

Operator

The next question is from Eric Martinuzzi with Lake Street. Please go ahead.

Eric Martinuzzi -- Lake Street Capital Markets -- Analyst

Yes. I had a question about the revenue. I think you said $18 million to $19 million. Is that a 2021 full 12 months year, or is that the remainder, assuming an early Q2 close?

Bill Smith -- Chairman of the Board, President, and Chief Executive Officer

Yes, Eric. $18 million to $19 million reflects the forecast that Avast had given us for the entire year. Obviously, we will have a portion of that year, not all of it. We do expect to close in the next 30 to 45 days.

So it's kind of looking like sometime in April. And so we'll have to prorate that. And that's the go-forward revenue that is recurring. There will be still some legacy revenue, and we will hope to maximize that.

Clearly, from a valuation standpoint, the valuation of the business was solely based upon the recurring revenue going forward. The legacy revenue was completely discounted out.

Eric Martinuzzi -- Lake Street Capital Markets -- Analyst

OK. So just kind of blunt instrument on EV to revs, we're talking $66 million over that $18 million to $19 million. Is that the point you're making?

Charles Messman -- Vice President of Investor Relations and Corporate Communications

Yes. That's correct, Eric.

Eric Martinuzzi -- Lake Street Capital Markets -- Analyst

OK. Thanks, Charles. I wanted to dive into the customers that you picked up here. Obviously, we're getting five mobile operator contracts.

You mentioned Verizon, the two EU carriers, which you've named. You mentioned T-Mobile-Sprint and then you mentioned AT&T. You also mentioned that the revenue is in decline, with a decline in 2020 versus 2019. Can you give us any detail on where the decline was coming from? And is that expected to -- does the 2021 revenue outlook that you gave color on, does that include a further decline? When is the business kind of based? I guess there's a couple of questions in there.

Bill Smith -- Chairman of the Board, President, and Chief Executive Officer

Sure. First off, there was a decline for Avast from '19 to '20 of about 17%. That decline was really led by our efforts at T-Mobile-Sprint. T-Mobile-Sprint was basically leaving their business that they were doing with Avast.

And it was probably, it was just on a wind-down mode where ours was growing. So that negatively impacted them. One nice thing to point out is their contract with Verizon was just recently reupped. And so it's a multi-year contract, and we look forward to a long and prosperous business relationship with Verizon.

AT&T, we do also include in the legacy category. And we will be working with AT&T to try to understand better their goals going forward.

Eric Martinuzzi -- Lake Street Capital Markets -- Analyst

Does that $18 million to $19 million in '21 include some AT&T, or does that not include AT&T?

Bill Smith -- Chairman of the Board, President, and Chief Executive Officer

No. All the $18 million to $19 million are the ongoing revenue. So that's the revenues from Verizon, as well as the European carriers.

Eric Martinuzzi -- Lake Street Capital Markets -- Analyst

Gotcha. OK. And then just curious to know, from the customer's perspective, I'm assuming you reached out and touched all five of these mobile carriers, the contracts here. You mentioned that they're excited to hear about your arrival.

But obviously, that introduces some uncertainty. What can you tell me about why they are excited about the transaction?

Bill Smith -- Chairman of the Board, President, and Chief Executive Officer

I think going into this transaction, we were already recognized as the leader in the space. With this transaction being closed, we are the dominant player in the space. And from a wireless carrier to now have across the board the No. 1 player as their vendor and partner, I think, is reassuring.

I think the fact that they see us investing so heavily in the family safety space lets them know that we're here for the long haul and that we can really work with them to grow their overall subscriber base, and in doing so, increase the revenues for both us and our customers. I think that really bodes well. I think when you look at our road maps going forward that the carriers really can see how there's some real vision for this market. And I think that that's something they can get excited about now.

We've added over 140 new folks from Avast, which gives us even more depth and more capabilities than we had before. I think that's reassuring as well. So I think they were very impressed. I think that they are very pleased to see that there is now a dominant leader in the space, a dominant leader with the girth, the expertise, the well-being to actually really grow the space.

And I think that's what gets them fired up.

Eric Martinuzzi -- Lake Street Capital Markets -- Analyst

Gotcha. OK. Thanks for taking my questions, and congrats on the transaction announcement.

Bill Smith -- Chairman of the Board, President, and Chief Executive Officer

Thanks, Eric.

Operator

The next question is from Jim McIlree with Bradley Woods. Please go ahead.

Jim McIlree -- Bradley Woods -- Analyst

A little bit on -- a few questions on the other parts of the business. Tim, the CommSuite revenues continued to surprise on the upside. Is this a function of you just being conservative or is it a function of the stores not being opened and maybe less churn? Can you talk about why we've been consistently surprised there?

Bill Smith -- Chairman of the Board, President, and Chief Executive Officer

Sure.

Tim Huffmyer -- Chief Financial Officer

Yes.

Bill Smith -- Chairman of the Board, President, and Chief Executive Officer

Go ahead.

Charles Messman -- Vice President of Investor Relations and Corporate Communications

Go ahead, Tim.

Tim Huffmyer -- Chief Financial Officer

Yes, Jim. So this quarter was related to seasonal ad revenue. It's one of the best quarters we've ever had in many years anyway. So that was an unusual item that we couldn't have predicted.

We do expect that the Sprint base will continue to be on that glide path down that I've talked about throughout the year. And then we're hopeful that we'll continue to build the Boost side of the business, maybe not complete offset on the Sprint decline, but we're going to try. And those are the components really of that CommSuite revenue.

Bill Smith -- Chairman of the Board, President, and Chief Executive Officer

And actually, yes, it is Boost, but it's also going to get help, I think, from the DISH postpaid business as they start to launch that sometime this year. So we're pretty excited about partnering with DISH going forward. And let's see what we can really do with CommSuite at DISH.

Jim McIlree -- Bradley Woods -- Analyst

And the ViewSpot customer that you picked up, can you characterize the size of that customer in terms of subscribers relative to the AT&T Mexico subscriber or customer you lost?

Bill Smith -- Chairman of the Board, President, and Chief Executive Officer

Yes. I think the AT&T Mexico loss, by the way, is just a momentary problem that's caused by the fact that their stores just can't reopen. I think once they can get to some stability in Mexico with the pandemic and they can get the stores back and open, I think there's an excellent chance that they'll come back and reengage with us. But let me answer your question.

The carrier that we're doing business with in Europe is one of the very largest multinational carriers in Europe. We are launching in one of their prime target countries, one that is very often used to test new products and new technologies. It is going very well. And hopefully, that trend continues.

Because typically, if it goes really well in the first country, they will look to plan to deploy it in a broader platform. So it should be a driver for growth going forward. I also think that it's a great reference account in Europe where we see a lot of activity for ViewSpot. And we think it could lead to additional carrier wins throughout '21 and into '22.

So we think that ViewSpot, in general, has a very nice growth profile. We think it's a product as the pandemic starts to wind down, as we all get our shots and we can start to work through this, we think there's some nice growth there. I would not say it's as big as the growth potential for Family Safety. I think SafePath just has a huge total addressable market and should really drive the growth of the new Smith Micro immensely going forward.

Jim McIlree -- Bradley Woods -- Analyst

And my last one is -- I think it's similar to what Scott was trying to get at is, are there large product lines or companies out there maybe serving Europe or the Asian markets that are potential acquisitions for you, or is this going to be more of a building up the business from the ground up?

Bill Smith -- Chairman of the Board, President, and Chief Executive Officer

All right. OK. So wasn't sure, if there was other products that we might want to get into that fit our SaaS value-added service model. Is that what your question, Jim?

Jim McIlree -- Bradley Woods -- Analyst

Yes. That's fair enough. Yes, I think that's a good way to rephrase it. Sure.

Bill Smith -- Chairman of the Board, President, and Chief Executive Officer

OK. Fine. Now, I get what your question is. Yes.

Look, we have demonstrated that we have been very acquisitive. We've done two significant deals in the last 14 months now between the Circle acquisition in the first quarter of 2020 and now the Avast acquisition now. We are really trying to solidify the family safety market. But we are also always looking for other opportunities.

But there is a very careful criteria that we apply. We are looking for opportunities where we can enter market segments where we can be either the No. 1 or the No. 2 player in the marketplace.

And so we would not, for instance, just -- oh, by the way, there is a very strong noncompete between us and Avast. So we would never ever attempt to get into the security market. But it would never fit that model. If we were to enter the security market, we'd be in No.

6, 7, or 8. That is not the place you ever want to be. So we are always looking for new opportunities. We have a number that we have started conversations on.

But there's nothing that we're at a point that we really want to talk about. I think we have our hands full now. We need to digest this acquisition. It is probably the largest one in our 38 years history.

And I think it has the most incredible upside of any of the deals we've done. So I think I'll be happy getting this one done and get it done right and get a bunch of really happy customers and get a bunch of new customers. But yes, we'll be looking at other opportunities, but we do want to be at the top of the heap there. We do want to be No.

1 or No. 2.

Operator

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

Charles Messman -- Vice President of Investor Relations and Corporate Communications

OK. I want to thank everyone for joining us. I know this was a little bit of a longer of a call because we got a lot to talk about. But should you have any questions going forward, please feel free to reach out to us.

And we look forward to talking to you in the near future. Hope everyone has a great day.

Operator

[Operator signoff]

Duration: 56 minutes

Call participants:

Charles Messman -- Vice President of Investor Relations and Corporate Communications

Bill Smith -- Chairman of the Board, President, and Chief Executive Officer

Tim Huffmyer -- Chief Financial Officer

Josh Nichols -- B. Riley Securities -- Analyst

Scott Searle -- ROTH Capital Partners -- Analyst

Eric Martinuzzi -- Lake Street Capital Markets -- Analyst

Jim McIlree -- Bradley Woods -- Analyst

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