Good day, everyone and welcome to the Synchronoss Fourth Quarter and Full Year 2020 Financial Results Conference Call. Today's call is being recorded. At this time, I'd like to turn the conference over to Todd Kehrli of MKR Investor Relations. Please go ahead..

Thank you, operator. Good afternoon, and welcome to Synchronoss's fourth quarter and full year 2020 earnings conference call. With me on today's call are Synchronoss' President and CEO, Jeff Miller; and CFO, David Clark. Before I turn the call over to Jeff and David, I'd like to cover a few quick items.

This afternoon, Synchronoss issued a press release announcing its financial results. That release is available on the company's website at synchronoss.com. This call is being broadcast live over the Internet for all interested parties and the webcast will be archived on the Investor Relations page of the company's website.

I want to remind everyone that on today's call, management will discuss certain factors that are likely to influence the business going forward. Any factors discussed today that are not historical facts, particularly comments regarding our long-term prospects and market opportunities should be considered forward-looking statements.

These forward-looking statements may include comments about the company's plans and expectations of future performance. Forward-looking statements are subject to a number of risks and uncertainties, which could cause actual results to differ materially.

We encourage all of our listeners to review our SEC filings, including our most recent 10-K and 10-Q for a complete description of these risks.

Our statements on this call are made as of today, March 8, 2021, and the company undertakes no obligation to revise or publicly update any of the forward-looking statements contains herein, whether as a result of new information, future events, changes and expectations or otherwise.

Additionally, throughout this call, we'll be discussing certain non-GAAP financial measures such as adjusted EBITDA. Adjusted EBITDA does not necessarily equate to cash generated by operations as it does not account for such items as deferred revenue or the capitalization of software development.

Today's earnings release and the related current report on Form 8-K, describe the differences between our non-GAAP and GAAP reporting and present the reconciliation between the two for the periods reported in the release. With that said, I’ll now turn the call over to Jeff..

Thanks, Todd and good afternoon, everyone. Thank you for joining us today. As Todd mentioned, also joining us on the call is the Synchronoss' CFO, David Clark, who will be providing a financial update on our results for fourth quarter and full year 2020, as well as information pertaining to our 2021 outlook.

Prior to discussing operating results, I would like to say that I'm honored and delighted be the next President and CEO of Synchronoss Technologies, as announced earlier today.

It's been my pleasure to serve as the Interim President and CEO, and I'm grateful for the support of our Board of Directors and the Synchronoss team who have enabled us to make forward progress over the past six months on refining our strategy and delivering on our operating results, which we'll discuss further on today's call.

I'm excited to continue to work closely with our customers, our team, and our Board to write the next chapter of the Synchronoss narrative, as we focus on driving profitable growth and delivering trusted cloud, messaging, and digital solutions that consumers and enterprises count on every day.

I'm pleased to report that Synchronoss delivered solid fiscal fourth quarter and full year 2020 operating results, driven by delivering an execution for our customers, disciplined cost containment, and continued product innovation.

Our fourth quarter revenue of $69.4 million met our internal expectations and included improvements in gross and contribution margins, as well as significant reductions in operating expenses from the prior year.

Again, this quarter, recurring revenue represented more than 80% of our total revenues as an indication of a strong foundation established from our existing customers and multiyear contracts. For the full year, revenue was $279 million -- or $291.7 million, also consistent with internal expectations.

In the quarter, we delivered $6.4 million in adjusted EBITDA, resulting in full year adjusted EBITDA of $27.8 million, exceeding our guidance range of $23 million to $26 million and providing stronger evidence of our commitment to improving operational efficiency and our focus on improved profitability.

I would like to thank the employees of Synchronoss for their outstanding contributions in the wake of the challenges brought on by COVID-19 throughout 2020, and I want them to know that because of their efforts we have built the foundation for success in 2021 and beyond.

In the quarter, Synchronoss’ collaborated with Verizon to deliver enhancements, which support the Verizon unlimited cloud plan that extends cloud into the 5G Home.

This industry-leading approach offers unlimited shared storage for photos, videos, and documents along with protection profiles, automatic backup for mobile, both iOS and Android, and computers. We are truly excited to participate in this launch and extending the Verizon cloud products beyond wireless.

Additionally, while still in their first year of AT&T's cloud introduction, we saw positive momentum in consumer adoption during the fourth quarter, which has continued in early 2021 as new devices have come to market with a streamlined onboarding experience.

I'm also pleased to share today that earlier this quarter, we signed an agreement with Allstate Protection Plans to integrate our Synchronoss Personal Cloud solution and to select device protection plan offerings for Android and iOS devices.

Along with our cloud relationship with Assurant , which was announced in 2020, today's announcement related to Allstate represents further progress in leveraging our cloud solution into the insurance device protection plan segment where digital content protection plans complement device protection offerings from Assurant, Allstate, and other insurance providers.

In messaging, we finished the year by signing the new multiyear contracts with Altice USA to provide SaaS-based email services to their base of broadband, video, and wireless customers. Altice is one of the largest broadband and video service providers in the United States, serving residential and business customers in 21 states.

This award followed a rigorous selection and evaluation process and enabled Synchronoss to displace one of our competitors. Also in the quarter, we sold additional RCS messaging licenses to our Japanese customers.

Our plus message service that includes KDDI, NTT Docomo, and SoftBank recently announced that they have now reached the milestone of 20 million RCS subscribers on the service.

Our digital business contributed revenue growth during the quarter from additional sales of our spatial licenses and maintenance plus strong performance from our financial analytics product line.

And in our last call, I referenced the signing of an agreement with AT&T for the extension of our activation services through the end of 2020, and I'm now pleased to report that we've signed a three-year extension to that relationship that began in January.

On our last call, I talked about a more – taking a more pragmatic approach to the business by focusing on those lines of business that provide the greatest potential for profitable growth and allow us to leverage our trusted, carrier grade cloud, messaging, and digital platforms.

In parallel, we’re narrowing our portfolio focuses, we're continuing to streamline the organization and associated operating expenses to deliver meaningful improvements in profitability and free cash flow.

We believe the combination of these efforts will enable us to deliver compelling products that meet the high expectations of our customers and deliver sustained top line growth over time.

I've spent a great deal of time with our customers and strategic partners, and there's no doubt that singularly they are focused on their 5G rollout in ways to monetize technology that 5G will disrupt and to be at the forefront of new opportunities that 5G will enable.

Beyond just providing the plumbing to mobile devices, we're seeing that the carriers are looking to take a larger share of the consumer home and mobile digital ecosystem, and we believe their path to realizing that goal is first and foremost through cloud and messaging.

There are a few companies that have the decades-long track record of delivering carrier grade software to the telecommunications industry and have the trust that can only accrue from years of reliable, uninterrupted service, which is why I'm so excited about the opportunities that lie ahead with Synchronoss.

We see 5G evolving our cloud platform, as we move from an archiving use case, dependent on how data is stored to use cases of collaboration, which are more about how data is used.

More specifically, as 5G allows for greater content to be pushed to the mobile devices and the edge with near zero latency, cloud will allow richer media creation and real-time content sharing and engagement. Looking at the cloud market, a recent study conducted by Arthur D.

Little has revealed that by 2025 the market opportunity from personal cloud services in the U.S. alone will reach $8.9 billion, with greater up to $15 billion of opportunities globally. At present, telecom operators only own about 1% of the U.S. personal cloud user base. And we believe 5G will be a catalyst for better carrier penetration in this market.

Over 200 million wireless and fixed lines subscribers around the world now have access to Synchronoss personal cloud.

And we believe that by building more engaging experiences, we can increase that subscriber count in 2021 and in future years with both our -- with increased penetration of our existing customers, as well as expansion of new cloud accounts. Messaging remains dominated by SMS, a data technology that is ripe for disruption.

In a time where 5G can deliver gigabit speeds to your mobile device, that's the message 160 character limitation and links to hybrid simply will not do. SMS is insufficient to power B2C commerce as it cannot deliver the interactions that consumers now expect, more deliver the engaging experiences that brands want to present to them.

They're over 5 billion global messaging users and the value of business to consumer messaging today for the operators is already greater than $20 billion per year. Preliminary results for RCS indicate that its enhanced form of messaging can drive exponential growth for carriers and results in increasing their revenue opportunities.

For example, during Vodafone U.K. trials, open rates for RCS message campaign were 80% versus only 1% for SMS, response rates were 25% versus just over 1% for SMS. Synchronoss is the leading provider with cross market cross carrier scale for RCS based messaging implementations.

And in addition, you have another leg in this door as the preferred provider of over 250 million active email boxes globally.

While we are belt tightening overall, we plan to strategically increase investments in our cloud and messaging platforms and introduce new features and capabilities that keep our platforms at the leading edge of these evolving and growing markets.

Our products must not only work well and scale to carrier demand, but also deliver engaging experiences to our customers and their subscribers, such that they, the carriers, can monetize an increasing share of their subscriber base.

I would also note that these investments into our cloud and messaging platforms can be leveraged across our existing as well as new customers globally. And we believe these actions will add significantly to the leverage in our business model.

We've also made changes to our digital business to help tighten the value proposition by combining our financial analytics, spatial and iNOW portfolio into what we call our total network management suite of products.

While technically a legacy business, we believe this portfolio still offers significant value to our customers, contributes profitable revenue, and its tightened value proposition has the potential to contribute to growth in the top line. Over the past six months, we've taken definitive steps to improve our operational efficiency as we enter 2021.

This includes a global restructuring of our sales organization by reducing a layer of management, thereby improving our customer intimacy and accelerating the speed of decision-making.

Additionally, we renegotiated key contracts with third-party suppliers and made reductions in our global real estate footprint through a combination of consolidating and closing office space. All of these actions have contributed to reducing our ongoing operating expenses.

In addition, I'm also announcing that we will no longer be investing resources into build out our IoT practice. While it was no doubt, a large and growing market, my goal is to refine our product line focus to where we have a market leading position. And we did not see the same level of synergies in our IoT business as the rest of our platforms.

That said, we will continue to support the customers that we serve today. Before I turn it over to David, I wanted to report that we continue to work on delivering a sustainable capital structure to our shareholders.

We understand that the preferred is a significant overhang to the value of our company, and we are actively pursuing a number of more favorable options to refinance. Now, I will turn the call over to our CFO, David Clark.

David?.

Thanks, Jeff and thank you everyone for joining us. I'll review our fourth quarter and full year 2020 results and provide guidance for 2021.

Before I start, I'd like to remind listeners that because of the five-year extension of our cloud contract with Verizon in July of 2020, we had to extend the recognition of approximately $10 million of non-cash deferred revenue across the term in the new contract as required by ASC 606, which also had a direct impact on EBITDA for the second half of 2020.

I'll be referring to results that correct for this accounting treatments throughout this call, as we believe it does not accurately reflect the true progress we've made year-over-year. Now onto the results.

Total revenue for the fourth quarter was $69.4 million, up from $68.6 million last quarter, but down 23% from $90.6 million reported in the fourth quarter of 2019. Recall that last year's fourth quarter revenue benefited from the large initial purchase by CCMI of RCS messaging licenses.

As mentioned adjusting for the recognition of approximately $5 million in deferred revenue associated with a rising cloud contract new under ASC 606, fourth quarter revenue would have been $74.6 million.

For fiscal 2020, total revenue was $291.7 million, down 5% from $308.7 million in 2019, or adjusting for the previously mentioned ASC 606 revenue adjustment $301.7 million, down 2% from the prior year. Recurring revenue was 82.3% in the fourth quarter compared to 80.4% in the third quarter and 62.4% in the fourth quarter last year.

For the full year 2020, recurring revenue was 78.1%, up 700 basis points over 71.1% for the full year of 2019. This metric combined with the fact that approximately 85% of our revenue is under multiyear contracts brings significant predictability and stability to our business model.

Cloud revenue of $39.2 million was comparable to the third quarters' $49.5 million, but down from last year's $41.1 million or 5% in reported dollars. Cloud revenue would have been $44.2 million or up 7.5% adjusting for the aforementioned ASC 606 adjustment.

Also worthwhile noting is that while fourth quarter revenue was comparable to the third quarter, the recurring component continued decline as cloud subscriber adoption grew across our carrier partners.

Recall, there was an elevated professional services revenue last quarter from work on Verizon's unlimited cloud initiative, which successfully launched in the fourth quarter. For 2020 cloud revenue was $162.2 million comparable to the $162.7 million in 2019.

Once again, adjusting to the full impact of ASC 606, our cloud revenue would have been $172.2 million, representing a 6% increase year-over-year.

As Jeff discussed earlier we expect continued growth from cloud in 2021 driven by new customer wins and subscriber expansion within existing customers, in particular AT&A should ramp in 2021 as over headwind subside.

Messaging revenue in fourth quarter was $14.5 million compared to $35.5 million in the fourth quarter of 2019, which included the large initial license purchases by CCMI. And it was down 12% from prior quarter $16.5 million.

The declined sequentially was largely results of the completion of large non-recurring professional services contract in the third quarter related to work being done to enhance the functionality for our CCMI RCS products.

We continue to receive RCS messaging license revenue from our Japanese carrier customers during the fourth quarter announced a number of plus messaging users in Japan had exceeded 20 million. As I've discussed in earlier calls Japanese license purchases may vary quarter-to-quarter as they exceed certain user levels.

For 2020 messaging revenue was $73.4 million, down from $92.3 million reported in 2019 due to the aforementioned large initial license purchase by CCMI in the fourth quarter of 2019. Digital revenue of $15.7 million was up 12% compared to the $14 million in the year ago quarter and up 24.6% from the prior quarters 12.6 million.

As Jeff mentioned, during the fourth quarter we extended our activation service for AT&T for another three years and increased financial analytics transaction volumes.

In addition, solid sales execution led to additional sales of our spatial software license and maintenance, which more than offset revenue loss due to the strategic decision not to continue our IoT business. Digital revenue was $56 million in 2020, up 4% versus $53.8 million in 2019.

The unit is profitable and despite its tightened value proposition, we believe it can continue to be a growing contributor to Synchronoss in 2021. Total costs and expenses were $71.8 million in the fourth quarter, down 34% compared to $108.8 million in the fourth quarter of last year.

For the year, total costs and expenses in 2020 were $339.8 million versus $416.5 million in 2019. The reduction in total costs and expenses in the fourth quarter and the full year of 2020 reflect the cost reduction and organizational rightsizing initiatives we executed in year.

Recall, we targeted a reduction of 55 million in annual operating costs of which we expected to realize approximately $45 million in calendar 2020. I'm pleased to report we achieved these goals and believe we can continue to reduce annual operating costs in 2021 to continue focusing on operational efficiency.

Adjusted gross profit in the fourth quarter was $41.5 million and adjusted gross profit margin was 59.8% compared with $40.8 million and 59.4% in the prior quarter, and $48.9 million and 54% in the fourth quarter of 2019. For 2020, adjusted gross profit was $172.6 million and adjusted gross margin was 59.2% versus a $187.7 million and 60.8% in 2019.

Improvements to adjusted gross profits and adjusted gross margins were driven by lower cost of goods sold and lower expenses related to the migration from company managed data centers to the public cloud. We are pleased to deliver gross margin expansion despite top line revenue pressure.

Adjusted EBITDA was $6.4 million in the fourth quarter and came in above the high-end of our guidance range and compares to $6.5 million in the fourth quarter of 2019 despite top line pressure. Adjusting for the impact of ASC 606, adjustment that would've been $11.4 million, an increase of 75% from the fourth quarter of 2019.

For 2020 adjusted EBITDA was $27.8 million relatively flat from $27.6 million in 2019. Again, adjusting for the impact of ASC 606, adjusted EBITDA would have been $37.8 million, up 37% for 2019.

Improved adjusted EBITDA comes as a result of among other things, the cost cutting measures I mentioned earlier, as well as our strategic focus on profitable business with the best near term growth potential. Cash and cash equivalents totaled $33.7 million, down $12.7 million from $46.49 in the third quarter of 2020.

Our fourth quarter ending the cash balance reflects the payment of 2019 management policies, which have been previously deferred as a result of the economic uncertainty related to COVID-19.

Regarding our preferred stock refinancing and positioning the company with a cost effective and permanent long-term capital structure is a top priority for Synchronoss. We continue to actively pursue a number of different options to achieve this goal. Turning to guidance.

As Jeff discussed earlier, we continue to look for ways to streamline operational efficiency and increased agility as we look to grow recurring revenue.

The company expects its revenues for the full year of 2021 to be in a range of $275 million to $285 million; adjusted EBITDA for the full year of 2021 to be in a range of $30 million to $35 million, and that represents a growth of 8% to 26%, respectively.

We also expect margins to trend higher as the year progresses as we benefit from leverage in the business model In closing, I want to congratulate Jeff for being named new President and CEO of Synchronoss and I look forward to continuing to work with him as we focus on delivering profitable growth.

Last week on the Investor Relations front, we will be participating in the upcoming Roth Conference March 15th through the 17th. If you're interested in that event, please schedule a visit with us. And with that, I'll turn it back over to Jeff..

Thank you, David. In summary, I'm proud of the team's accomplishments during the challenging 2020 for all of us. Our efforts as an organization to spend cautiously to maintain focus on our most profitable and fastest growing businesses has resulted in our second quarter of better than expected EBITDA generation.

With our renewed focus on operational excellence across the business, we believe we can continue to improve our profitability in 2021, and also begin delivering top line growth in those areas we outlined previously.

In the coming quarters, we expect to share additional news regarding consumer adoption of our service offerings and introduce new cloud and messaging customers to the Synchronoss portfolio. And with that, I will turn the call back over to the operator for questions..

Thank you. [Operator Instructions] First, we'll go to Mike Walkley from Canaccord Genuity. Your line is open..

Great. Thanks taking my question. Hope everybody's doing well on the call and Jeff congratulations on the permanent CEO announcement today..

Thank you, Mike..

Thanks. First question for you, Jeff.

Just as you talk to your carrier customers given you've been dealing with these customers for a long time and the 5G opportunity certainly points towards the cloud and the personal cloud and the RCS messaging growth, can you talk about maybe the sales cycle with customers and embedded in your guidance, maybe any new customer additions expected again or how many customers you think we could add to each area during the year?.

What I'll say is that sales cycles for solutions that are as integrated as our cloud and messaging solutions are with their respective customers are pre-extended sales cycles. Those engagements take many months, oftentimes many quarters to cultivate and bring to market.

We do expect during the course of 2021 that we will add additional messaging as well as cloud customers, certainly starting off on the right foot with Altice’s introduction in messaging and the Allstate relationship here in Q1 for cloud.

In in terms of an exact number, I'm not in a position to provide that level of detail at this time, but I expect expansion in both of those categories..

Thank you.

And just building on that, as you look at your guidance for the year or your pipeline, what areas are you most excited about driving growth? Is it just getting AT&T up and running? Is that the biggest opportunity for growth drivers in calendar 2021?.

Well, we certainly are excited about AT&T, and you heard our comments about that not only because we would like to expect that, but we're seeing tangible results related to it.

But beyond AT&T, we do expect to see expansion in cloud adoption from our existing customers, which would be the largest or one of the largest contributors to our growth potential on a year-over-year basis, and because of the opportunity in the year to contribute revenue in new customers while they will be additive we believe to our growth, they will not have the largest impact not as big as expansion of subscribers, if you will, to the existing customer base..

Great. Thanks. And then, for both of you in terms of the guidance on the OpEx side, really good execution there and nice upside to our estimates for Q4 on the adjusted EBITDA line.

As we think about the year, what's embedded in the guidance on OpEx? Is the current run rate how we should think about it? Are you building in any increase in OpEx later in the years, maybe work travel returns or do you think it continues to maybe come down a little more with some of your streamlined comments?.

I think implied in the guidance itself is continued streamlining, maybe not on the scale that we've done in the past couple of years, Mike.

We are consciously investing in the businesses we think have the highest growth potential, cloud being the most obvious, but also you've heard on the call today we've exited a couple of businesses, or at least one in IoT. And so, we've got the opportunity to even with investing in the businesses that we want to move forward with.

We've got the opportunity we think it takes some expenses out as well as the year progresses..

Okay. And last question for me, and I'll pass the line.

Just in your comments with more leverage as the year progresses, is that kind of how we should think about seasonality or just things recovering and look at AT&T putting on new subscribers, just think about kind of slow, steady growth throughout the year on the top line?.

Yeah. I think suffice it to say, so we've returned now where we're getting our annual guidance for both revenue and EBITDA. But I think suffice it to say, we think the slope of the line for the year will be higher in the second half as some of these programs that Jeff described gets tracking on the second half of the year.

So, yeah, as we're thinking about the business, we're really expecting it to ramp in the second half of the year as opposed to the first half..

Great. I'll jump back into queue and best of luck for success this year..

Thank you, Mike..

And next we will go to Mike Latimore from Northland Capital Markets. Your line is open..

Thanks. Yeah. Thanks a lot. And congratulations, Jeff. Great to hear..

Thank you..

So, I guess, just starting on with the cloud business, can you give a little more detail around AT&T, what did you see? I think you talked about new onboarding features in the fourth quarter helping, I guess, maybe just sort of qualitatively what you saw post that? And then are there any other initiatives this year that are important to AT&T's growth, whether it's your own sort of technology initiatives or kind of specific promotions that might occur there?.

Yeah. What I'll say on the AT&T, and this is true for many of our cloud customers, as we implement a new program, it's an iterative process of working with the carrier and the way that their systems work and integrate to the -- and interact with their consumers.

And what we are starting to see that has provided encouragement for us is that we have changed and streamlined the number of steps required for a consumer to participate in an active trial, or to sign up for the system -- the service itself for AT&T cloud, and that is absolutely impacting our trajectory of growth.

We're also seeing the launch of new devices that now have an absolute preload of the AT&T cloud solution, and we only saw that intermittently in 2020; and as a result, we feel like we now have a solid foundation as well as an execution platform that will be applied to future devices, both Android and iOS as they're launched within the AT&T portfolio..

Great.

And then, I guess, on Verizon, can you give any color on the subscriber growth you're seeing there? And then maybe whether it's specifically Verizon or just generally the prepaid category, how important might that be this year?.

Well, a couple of things I'll say there. First off, we do anticipate continued growth of the subscriber base within Verizon, as we have seen in years past, including certainly 2020.

Having said that, there is a muted effect on our revenue growth as it pertains, or as it correlates to subscriber growth, specifically in the Verizon circumstance due to the nature of the accounting approach that we have for that contract.

It essentially contemplates the expectation of growth over the life of the contract and flattens the revenue impact of that over time.

So, we expect for subscriber growth, we see an additional catalyst for growth coming from the unlimited offer, which truly is an industry-leading offer that they provided to the marketplace that is just coming to market. So, we're optimistic and bullish on that.

And as it pertains to prepaid, as you well know, Verizon is in the midst of acquiring TracFone, the transaction not yet complete. And as I've said in the past, we're bullish on the opportunity for Verizon, our largest cloud customer to bring the TracFone business, as well as the cloud business within their umbrella.

And at this point, it's too early to comment on that since that transaction is not yet complete..

Got it. And then you mentioned potential for more, I think you said cloud customers specifically, but maybe there's messaging as well in the mix there.

Are those generally in the kind of a tier one service provider category?.

Well, as you see, we're going to see them in a variety of shapes, sizes and scales. The circumstance that we just introduced with Allstate is a beginning of a new penetration or a step further in the direction of the insurance industry. And we don't anticipate that they would represent the volume or the potential of a tier one carrier.

But there are tier one carriers around the globe that have yet to adopt their own personal couch cloud strategy, and we're certainly pursuing those opportunities in the market.

It's also true in the messaging arena where globally there are a number of opportunities, both in core email, as well as advanced messaging or RCS based messaging that we're in discussion with. And we hope and expect that we will introduce new clients throughout the course of 2021..

All right. Thanks a lot guys. Good luck this year..

Thank you, Mike..

And next we will go to Richard Baldry from Roth Capital. Your line is open..

Thanks. Can you talk about sort of the challenges or how you're working around the challenges of loss of major marketing events like Mobile World Congress? I think people take work-from-home for granted that people can do that, but marketing, I think is a bit different.

So, how are you -- I know that the number of carriers is pretty well known, but how are you feeling about getting to them with messages, new offerings, things like that? Is that something that's working well now that this is sort of a few quarters into a change status? Thanks..

Yeah. Rich. I would comment to say that it's still a learning process, but it's something that we pivoted well into 2020 to not expect that we would be back in Barcelona for Mobile World Congress or at CES in Las Vegas.

And as such, we've created a whole series of campaigns and programs to help place our products and value propositions in front of the right customers and targets that we believe will find value in our solutions.

That started with solutions that we have, uh, promoted for our spatialSUITE of products, and our initial campaigns there have generated new opportunities and new closed business. We've taken similar approaches to our core messaging, our advanced messaging into our cloud offering.

So, it becomes a multi-faceted marketing campaign and outreach to attract new prospects and customers that might've otherwise been accomplished at a trade show. It is a different set of tools, a different set of skills, but we have a great marketing organization who's made that digital pivot quite quickly. Yeah. Yet, we're still learning.

And customers are still responding in a different way. But we all know that you no longer have to educate anybody on how to hop on a Zoom call or a Microsoft Teams call. And they're all quite used to having interactions, dialogues, and now even potentially negotiations through those mediums.

And we've embraced them as well and have never missed a beat through to our IT infrastructure to be ready to interact with our customers online..

Thanks.

And sort of curious if you're going to continue to support your existing IoT customers, partners over some intermediate term or anything, do you think there's an ability to maybe spin that group out into a different entity, more focused there to sort of monetize it? Or do you feel like that'll just be orphaned inside the business long-term?.

I would say the scale of the implementations and the customers we're serving today in the IoT arena never reached anything that was significantly material. And as such, we, by and large, anticipate just supporting those clients as they are in place.

If new opportunities create themselves or reveal themselves to help monetize the assets and the relationships we have in place, we'll certainly entertain that. But again, the scale of that business is something that we never reached a certain level that it was particularly material..

Great. And lastly would be, 2020 was obviously a pretty chaotic year for your end customers and the carrier side, sort of curious if you have any -- sort of 30,000 foot view of their marketing efforts going into 2021 versus 2020. I think about it is -- they have to drive the subscriber side, right? So, they had a pretty challenging on 2020 of them.

So, I'm curious if you see greater initiative, better focus, sort of a thought process around their ability to create demand generation improving in 2020 versus 2021 from a high level..

Well, at the highest level, and what I mentioned in my comments is that they are very focused on 5G and making that message clear to the consumer as to what new capabilities and what new features are available to consumers by virtue of being in a 5G economy and having 5G speeds available to them.

Things like unlimited cloud are clearly an example of that brought to market by Verizon, but we're also seeing them attack other segments of the marketplace more aggressively.

You've seen plenty of articles recently about the attacks after the enterprise market segment by a number of the players in the United States marketplace, as well as those in Europe and in Asia. And I do think that the subscribers are renewing their focus on growth, because subscriber retention has not been a problem, per se.

And I think that it will largely be on trying to differentiate their 5G service from their competitors..

Great. Thanks..

You bet. Thank you..

And next we'll go to Jon Hickman from Ladenburg. Your line is open..

Hi.

Jeff, I might have missed this, but can you talk about what's going on with CCMI and Verizon and AT&T? Are they starting to like market this to consumers yet?.

There haven't been no announcements actually by CCMI, which has been the case for some time, as it relates to their go-to-market plans for the RCS based messaging network. What I can tell you is that we have continued to make great progress on preparing in RCS base network to be introduced in the United States.

And we continue to hear from all the carriers in the U.S. on their commitment and their prioritization of RCS as the next-generation of messaging within the U.S. I'll have to leave it to them. However, tells you what the plans are and go-to-market..

So, is it available anywhere to consumers from the United States, Jeff?.

It’s not been publicly launched? No. There has been no public launch at this point..

Okay. Do you have any -- you don't have any visibility into when that might happen..

That's really up to the participants of today's joint venture, and we have not taken a lead position to communicate anything with regard to that. And it really is up to them to help share with the marketplace what their plans are..

Okay. And then an accounting question.

Now that you're no longer like focusing on IOT, what was the revenue number that got -- that's going to not generate from last year into 2021 to 2022?.

IoT was a pretty small number in 2020, and probably would not have -- a little higher, but still been single digit, I would guess, be single digit millions in 2021 at present, how we kept in the business..

So, like less than 5 million?.

Yes..

Okay. Thanks. That's it for me..

Right, Jon..

Thank you..

And now, I'll turn it back to the company for closing remarks..

Thank you, operator and thank you everyone for joining us today. We look forward to updating you again next quarter. Our call has concluded. Have a wonderful day..

Thank you. This does conclude our call for today. Thank you for your participation. You may now disconnect..