Thank you, operator. I'd like to welcome everyone to Mobivity’s first quarter 2021 earnings call.

Posting the call today are Dennis Becker, Founder and Chairman Chief Executive Officer; Lisa Brennan, Chief Financial Officer. Before I turn the call over to management, I'd like to call everyone's attention to the company's Safe Harbor policy.

Please note that certain statements made on this call are forward-looking statements which are subject to considerable risks and uncertainty. We caution you that such statements reflect management's best judgment based on factors currently known, and that the actual events or results could differ materially.

Please refer to the documents filed by the company from time to time with the SEC and in particular, its most recently filed Annual Report on its Form 10-K. These documents contain and identify important risk factors and other information that may cause actual results are different from those contained in forward looking statements.

Any forward-looking statements made during this call are being made today. And this call is replayed or reviewed after today, the information presented during this call may not contain current or accurate information.

Set as required by law, the company assumes no obligation to update these forward-looking statements publicly, or to update the reason. Actual results could differ materially from those anticipated in the forward-looking statements, even if the new information becomes available in the future.

Today's call may include non-GAAP financial measures, which require reconciliation to the most directly comparable financial measures, which are calculated and presented in accordance with GAAP which we filed in today's press release along with our recent corporate presentation which is also available on mobivity.com. With all that said, I'd like to now turn the call over Dennis Becker.

Dennis, the call is yours.

Thanks, Brett. And I appreciate everyone on the phone for taking the time to join us on our call today.

First, I'd like to congratulate our team at Mobivity for innovating and growing through the height of COVID. We dealt with some headwinds in the first quarter as our customers also persevered through continued closures and stay at home orders.

And we supported our customers with creativity, innovation and support as they work through the financial uncertainty at the peak of the pandemic in January. Through these challenges, we first saw significant developments on the horizon.

And we began ramping up our sales and marketing operations in preparation for what we predicted would be a significant increase in demand for our products and services. And we were right.

Our sales pipeline has grown more than 500% in just the past few months. We predicted two key developments that we believe are certain to drive outperforming demand, growth for Mobivity’s digital loyalty and text message marketing solutions.

First, a Supreme Court decision on April 1 has significantly reduced the legal risk and operating SMS marketing programs and expanded the addressable universe. Second, major moves by Apple and others to protect consumer’s privacy from third party advertisers increases the need to engage consumers directly and need perfectly served by our targeted opted and text messaging programs, where consumers subscribe for targeted promotions and offers versus having their privacy pirated by third party websites, apps and social networks.

I'm excited to dive further into why we believe we're well positioned to capitalize on the key market trends and are still pursuing a record year despite a start impacted by the pandemics peak. I'd like to start off by talking about the landmark decision by the Supreme Court in the Facebook versus Duguid's case.

The SMS text marketing industry has historically been hampered by a 30-year-old law called the Telephone Consumer Protection Act or the TCPA. On April 1 of this year, the Supreme Court released its highly anticipated and unanimous decision, which greatly reduce the liability risk for companies operating SMS text marketing programs.

Before this ruling, TCPA litigation had become a multibillion-dollar industry that we believe had kept some of our addressable market from pursuing SMS marketing programs. With reduced legal risk relating to SMS, our addressable market has expanded drastically.

And we're already seeing demand accelerate from brands that had formerly stayed on the sidelines. We also believe that this ruling will incentivize our existing customers to accelerate growth of their own programs through Mobivity, which could lead to increasing revenues.

Just as importantly, the privacy decisions of some of the largest tech companies have turned marketing and advertising on its head. Businesses will need programs like SMS text messaging, to have direct relationships with their consumers versus relying on third party media advertising to promote their products and services.

Apple recently rolled out its highly anticipated App Tracking transparency feature with iOS 14.5, which lets users decide whether apps track your activity for targeted advertising. Overwhelmingly, users seem happy to disable App Tracking.

Only 4% of all iPhone users in the U.S., have agreed to App Tracking after updating their device. According to the latest data from Verizon owned analytics firm Flurry, Forrester’s Prediction 2021 B2C Marketing Report explains that in unprecedented pandemic rendered B2C marketers existing plans and strategies mood and new announcements from Apple and Google put data deprecation on a fast track.

But these trends aren't a flash in the pan, the Report says. In 2021, marketers must prepare for an ecosystem without third party cookies and device identifiers, all while navigating an unpredictable economy and reduced budgets and headcount.

The Report further forecasts that marketing message volume will increase by 40% next year, as brands try to hold on to customers and drive new purchases. Mobivity’s opt and targeted SMS marketing programs are the perfect solution for marketing's new normal.

Consumers opt into the program, which removes any doubt about privacy concerns, and are connected to an ecosystem that drives efficient, effective data driven marketing. We believe this is a seismic shift in the industry that will drive demand for Mobivity solutions and drastically accelerate growth.

To capitalize on these trends, we've been hard at work ramping up our marketing operations to ensure maximum awareness of Mobivity’s products and services, as brands raised to find solutions to engage an increasingly elusive digital consumer. Along with launching a new website that more clearly positions our services around SMS text marketing, we've executed on strategic marketing events, including a very well attended webinar, featuring Greg Creed, former CEO of Yum!

brands. The result has been a material increase in lead volume, and our sales pipeline has grown more than 500% since February.

I will now turn the call over to Lisa, for more detailed view of our financial results. And then I will come back for a few summary comments.

Lisa.

Thanks, Dennis. I’d like to start off by addressing our cash position.

We ended the first quarter with approximately $1 million in cash. And our accounts receivable was approximately $1.4 million, which we believe is sufficient to support our operations for the foreseeable future.

Our decrease in cash was primarily due to slightly lower gross margins, along with lighter revenue in the quarter due to the peak of the pandemic. We also increased our sales and marketing investments during the first quarter to prepare for the expected increase in demand as Dennis described earlier.

Our revenue for the first quarter of 2021 was $2.5 million, compared to $4.5 million in the first quarter of 2020, reflecting a decrease of 44% on a year over year basis. The decrease is primarily due to $1.3 million non-recurring ASC 606 revenue in the first quarter of 2020, along with lower customer usage revenues in the first quarter of 2021 as the pandemic affected the marketing budget of our largest customer.

In turn, our gross profit decreased 54% to $1.4 million for the first quarter of 2021, compared to $3 million in the first quarter of 2020. Although please bear in mind that $1.2 million of revenue in the first quarter of 2020 was related to ASC 606 revenue treatment.

Even the first quarter of 2020 was essentially prior to the pandemic, I would like to point out that on a sequential quarter basis, comparing the first quarter of 2021 to the fourth quarter of 2020, the revenue and gross profit declines were less dramatic. First quarter 2021 revenue was only down 10% versus revenue in the fourth quarter of 2020 of $2.75 million.

Additionally, gross profit decreased from $1.75 million in the fourth quarter of 2020 to $1.4 million in the first quarter of 2021. Again, due to reductions in service fees from our largest customer as they navigated the peak of the pandemic.

Total operating expenses for the first quarter of 2021 decreased by 22% to $3.1 million compared to $3.9 million in the same period in 2020. Most of the quarter year over year operating cost savings are due to ASC 606 related expenses.

Recognized in the first quarter of 2020, partially offset by a 10% increase in sales and marketing expenses from the same period a year ago. I would like to point out that our sales and marketing expenses in the first quarter of 2021 weighed $196,000, reflecting a 55% increase over the fourth quarter of 2020.

Again, to address the accelerated demand for our services as our target markets get back to normal operations and growth. I will now turn the call back over to Dennis for his closing remarks.

Dennis.

Thanks, Lisa. We're confident that the downturn in the restaurant industry is behind us.

In February, restaurant sales were still almost 20% below pre pandemic levels. Yet in March, Famous Dave's Barbecue and Mobivity customer had same store sales skyrocket almost 44%.

All indicators point to a strong rebound in the restaurant space, while heavy use of technology throughout the pandemic is leading the market through our solutions as they map out the new future of engaging consumers in a digital first world. Beyond the restaurant space, we're seeing accelerating progress in the convenience store market, with a growing list of prospects following our successful launch and rapid growth of SMS marketing for the world's second largest C store chain.

We expect recurring revenues from this segment to grow well beyond seven figures through the year. Although we've had to endure some headwinds in our revenue performance over the past few quarters, we believe the combination of our resurging target market, changing consumer privacy dynamics, and the reduction in legal risk for SMS text messaging have created several paradigm shifting tailwinds propelling Mobivity towards another record year of growth.

I continue to be amazed by our team's valiant efforts to serve and innovate for customers and markets most affected by the pandemic. It's truly energizing to see our customers finally emerge from a historic crisis poised for a strong rebound.

And I've never been more optimistic for the future of Mobivity in the markets we serve. Thank you for tuning in and for your continued interest in Mobivity.

We’ll now open up the call for Q&A.

Dennis, hey, how are you?

I'm good. Brad, how have you been?

Pretty good. Thanks.

I was just wondering whether you might be able to put a little meat on the bones and talk about rather than percentages, talk about the number of accounts that you're potentially having the pipeline, potential size of the accounts and some indication of how much time that you think it takes to turn these accounts around me from coming into the pipeline to whether you actually are going to be signing deals? And I guess the last question would be you say it's a record year of growth, can you expand on that a little bit more?

Yeah, and I think the latter is related to the first part of your question. So, we have, no guarantees, but we have bigger sales pipeline than we've had before.

I think one of the things that might be confusing about the first quarter, that's not obvious, I'd like to point out is that, our services are typically paid for out of the marketing budgets of these brands, particular franchise brands, like the subways of the world and whatnot. So, they usually form those budgets as a percentage of sales, that's usually done the year prior.

So, in other words throughout, say, 2019, they're accumulating their marketing budget for execution in 2020. And so, we were able to defend against some of the initial impacts of the pandemic in the middle of 2020, because we were still being paid for out of budgets from 2019, arguably.

So, then as those budgets waned, because sales were down for so many brands in the thick of the pandemic, you see a lag time kind of there in Q4 Q1 and so that impact our -- the performance of a number of customers. At the same time, February is when things started rebounding, and brands started formulating their plans to bounce back quickly.

So, we've got right now about a dozen brands that are all six figure to seven figure ARR upside brands. We're seeing sales cycles I would use the example the major convenience store chain that we won in the fourth quarter.

That's a seven-figure customer now, in terms of ARR, that was about a 90-day sales cycle. So, we think the sales cycles are going to contract.

We think that with the new legislature -- the Supreme Court ruling, de-risking SMS text marketing, coupled with the clear and obvious benefits of digital engagement that were made throughout the pandemic, brands are going to move much more quickly. And our ability to then also get them revenue bearing can be much faster than it's been in the past as well, because, again, for example, that convenience store chain 1000s and 1000s of store locations.

And we grew their program close to 500%, in just the three or four months kicking off this year since we signed them in November, and launched them late December, early January. So, I think that that's why we're optimistic that a record year is still achievable.

Because the size of the brands that are pipeline right now are still very large. We just finished off a convenience store chain launch that went from essentially zero to seven figures of ARR in a few months.

So, it's only going to take a handful of winning those deals, to build a revenue base above what we did last year.

Okay, so that all sounds great. So, you're saying record your growth, you're talking about not number of clients, you're talking about revenue growth?

Right, the majority of our revenue growth this year will come from new client acquisition. We did have a bit of a downturn in revenues from existing clients just because we accommodated decreasing their usage when budgets were tight, December through February.

So, we expect that existing customer run rate to rebound. But, of course, that would just get us back to kind of par on what we did last year.

Our goal this year is to continue the strong growth rate. Again, no guarantees.

But what we do see, with just the market situation from the TCPA, Supreme Court ruling to the issues that digital advertising is having now that the 100 and some odd billion-dollar, digital advertising markets under threat with all of new privacy rules, that the markets really coming our way, our pipeline is accelerated in the last 60 days a lot faster than I've ever seen. It's still heavily slanted towards larger brands.

And so, to your direct question about customer count, we're still talking in the, say, a couple dozen customer wins this year, with large ARR profiles being the current targets that are the dominant portion of our sales pipeline. But, of course, we expect that to expand as well kind of towards the end of the year.

But in terms of getting done, achieving our goal for this year, which is to beat last year's performance, it's really about the couple of dozen brands that have all gotten into our pipeline over the last 60 days, seeing sales cycles 60 to 90 days, and sale to revenue timelines of 30 to 60 days there. So, if we can get that done, and we can win a reasonable proportion of that pipeline, we should be able to get to our goal.

Okay, sounds good. Thank you.

Appreciate it, Brad. Thanks.

All right. Very good.

I appreciate everyone joining us on our call today. Appreciate the questions and we're looking forward to a strong year here.