Operator: Greetings, and welcome to Mobivity Holdings Corp. Fourth Quarter and Year-End 2019 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions]. Please note this conference call is being recorded. I would now like to turn the conference over to your host, Mr. Brett Maas with Hayden IR. Thank you. You may begin.

Brett Maas: Thank you, operator. I'd like to welcome everyone to Mobivity's fiscal year-end 2019 earnings call. Hosting the call today are Dennis Becker, Founder, Chairman and Chief Executive Officer; and Lynn Tiscareno, 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 will be forward-looking statements, which are subject to considerable risks and uncertainties. We caution you that such statements reflect management's best judgment based on factors currently known and that actual events and results could differ materially. Please refer to the documents filed by the company from time-to-time with the SEC and in particular the most recently filed annual report on Form 10-K. These documents contain and identify important risk factors and other information that may cause the actual results to differ from those contained in the forward-looking statements. Any forward-looking statements made during this call are being made as of today. If this call is replayed or reviewed after today, the information presented during this call may not contain current or accurate information. Except as required by law, the company assumes no obligation to update these forward-looking statements publicly or to update the reasons 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 a reconciliation to the most directly comparable financial measures, which are calculated and presented in accordance with GAAP and can be found in today's press release, which is also available at mobivity.com. I’d like to also remind everyone the company adopted a new revenue recognition accounting standard, otherwise referred to as ASC 606, as of January 2018 on a modified retrospective basis. This means the results for reporting period beginning on or after January 1, 2018 are presented under the new revenue recognition standards or prior period amounts before January 1, 2018 are non-adjusted. With all that said, I'd like to now turn the call over to Dennis Becker. Dennis, the call is yours.

Dennis Becker: Thanks, Brett. And thanks, everyone, for joining us on our call today. First off, I hope everyone out there, including our employees, customers and friends of Mobivity are taking proper precautions in these most turbulent times. The coronavirus pandemic will create a combination of risks and opportunities different for all industries and all companies. Mobivity has been fortunate to be a software-as-a-service company that can adapt quite readily to the new shelter-at-home environment. In fact, our business is based on marketing interaction remotely. Our customers are trying to find ways to influence their customer base remotely and we've begun launching programs through brands to inform employees of important COVID-19 announcements through SMS alerts and content on time to [our pursuit]. We believe the telecom based services such as voice, video and messaging, will increasingly augment or replace in-person interaction. Traditional marketing channels such as major sports and entertainment venues have been sidelined in this environment. At present, we see marketing budgets transitioning to direct-to-consumer channels such as email, mobile messaging, and loyalty. Marketing budgets will be compelled to increase the allocation to technology like our data driven, mobile messaging, receipt and loyalty programs. It's important to note that our large quick serve restaurant customers, such as Subway have historically earned a majority of their business through takeout orders or delivery. In fact, Sonic, our second largest customer is uniquely equipped to thrive in today's environment, given they operate a drive-in and drive-through business with little to no in-store sales. Another large customer of ours, Dutch Bros Coffee, one of America's fastest growing coffee chains, is also an exclusively drive through operated brand. And other customers of ours that are poised to fare well through the coronavirus crisis include pizza brands, such as Round Table Pizza and Papa Gino’s, where a high proportion of sales are takeout and delivery. Note that major pizza brands such as Domino's and Papa John's have recently announced large hiring efforts due to the high demand of food delivery in this time of social distancing. While we can't guarantee the financial performance of our customers, we do believe that our customers are uniquely positioned to weather the downturn threatening much of the restaurant space. Beyond our focus on the restaurant space, I'm pleased to report that our foray into the grocery and convenience store verticals couldn't have been more well-timed. Recall from our last conference call that I mentioned we've begun technical due diligence with the global grocery brand. We are now in the final stages of the sales process as one of two finalists to provide dynamic receipt tap advertising solutions to thousands of locations worldwide. The opportunity could yield a seven figure annual recurring license fees, plus future expansion of our messaging, data and loyalty solution. The grocery space is red hot given the global pandemic and this opportunity is one of many we will be pursuing as we ramp up sales efforts to the grocery industry. Convenience, drug and gift store brands are also accumulating in our sales pipeline, showing strong demand from verticals that are seeing rapid growth as consumers raise the stock up on supplies for the home. In general, the economic damage inflicted by the COVID-19 crisis across all industries will add headwinds to most businesses. The new customer acquisition in the restaurant vertical will be challenging as buying decisions that delay and budgets remain in flux. However, we entered 2020 on strong footing by signing a major expansion with our largest customer, and our plan is to quickly leverage the applicability of our value proposition to pursue markets currently thriving in a socially distance world such as the grocery industry. There are also several operational adjustments we can make to unlock the leverage in our recurring revenue model and maximize cash flows should our business experience a greater impact than expected. We acknowledge the visibility through the remainder of the year is limited. However, with vigilant cash flow management, we're poised to capitalize on new vertical market opportunities and potentially achieve a solid growth year in spite of the macro economic situation that confronts all of us. I will now turn the call over to Lynn for a more detailed view of our financial results. And then I will come back for a few summary comments. Lynn?

Lynn Tiscareno: Thanks, Dennis. Since our financial results are overviewed in the press release that we issued earlier today and further detailed in our annual report on the 10-K form also released today, I'm going to focus on a few key financial points from our 2019 results during this call. I'd like to start with addressing our balance sheet. While we ended 2019 with $274,000 in cash and we have recently brought in $1.2 million over the past few months through a non-convertible loan, including another $234,000 in exercised common stock warrants. The loan is structured as a two year note bearing 15% interest with no amortized payment requirements and isn't due until February 2021. We are actively seeking a new credit facility with more favorable terms than we currently have in some of our existing debt structures. And believe that our growing recurring revenue base of some of the main brand clients will support our ability to obtain such a facility to help fund our operations going forward. Our revenue for the second half of 2019 was $5.2 million compared to $4.85 million in the first half of 2019, reflecting an improvement of 7%. However, we did execute an expanded license with our largest customer which added another $2.5 million in annual recurring revenue as we entered 2020. This puts our recurring annual revenue run rate at just under $13 million to begin 2020. Total operating expenses for 2019 decreased from $14.6 million in 2018 down to $12.5 million. While our gross margin declined year-over-year from 66% to 41%, I would like to point out that in the fourth quarter we saw a year-over-year increase from 30% in Q4 of 2018 to 43% in the fourth quarter of 2019. We expect gross margins to continue climbing as we transition higher cost multimedia messaging trials to paid services going forward, where we're no longer subsidizing the high costs of multimedia messages during trials. Finally, I'd like to point out the operational costs for 2019 included a one-time non-recurring expense of approximately $1 million. I will now turn the call back over to Dennis for his closing remarks. Dennis?

Dennis Becker : Thanks, Lynn. This historic coronavirus pandemic has undoubtedly increased risk across just about every industry on the planet. While we can't predict the full duration and extent of the crisis, we will remain focused on executing our business plan and adjusting to rapidly evolving market opportunities. We are confident that our customers are uniquely positioned to weather the storm and are pursuing every angle where our solutions and technology can help brands not only survive, but thrive. Many thanks to our team at Mobivity for working tirelessly to support our customers and focus on delivering growth through these trying times. Thank you for joining our call today and we hope everyone stays safe and healthy out there.

Operator: At this time, we'll be conducting a question-and-answer session. [Operator instructions]. Our first question comes from Greg Berlacher with Emerging Growth Equities. Please proceed with your question.

Greg Berlacher : Hey, Dennis. Hey, Lynn. One of the things that I'm studying on a number of different fronts and I was wondering if you guys have had a chance to figure out how or if it may affect you guys from a cash flow perspective. The CARES bill, is there any -- have you had a chance to even go through it, all 900 pages of it and have you had a chance to think through how it might help, and/or you guys could participate in it?

Dennis Becker: Yes, absolutely. We've reviewed it thoroughly. I think first and foremost, we appear to qualify for I think probably the biggest portion of it for businesses of our size, which is the payroll protection loan program, kind of a pretty optimal debt opportunity or credit facility for businesses of our size that being employee count of 500 or less. But, yes, I mean, I think that that's going to afford some stability, particularly growth companies like ourselves where we're trying to invest in equipping our customers with newer products that are going to help and in particular gaining context of how businesses might be changing given the consumer disposition with social distancing or whatnot. So, yes, I think that there is various aspects of the CARES Act that we could take advantage of, if needed. And we're definitely looking into that.

Greg Berlacher: And you mentioned grocery store revenues as a big opportunity or something that you're focusing on from kind of a new vertical, I guess, is the way I would describe it. But -- so can you just give me a little bit more detail in terms of really what your thoughts are there in terms of timing and so forth with some pressure change or opportunities?

Dennis Becker: Yes, so first and foremost, I think the real time nature of SMS text messaging that we've proven in the restaurant space can be leveraged in a lot of different use cases for groceries especially right now with supply and crowd control is top of mind; in other words, giving consumers timely information as to the availability of critical items such as toilet paper. It’s bit a largely untapped channel in the grocery space. And so from supply chain to I think velocity management et cetera in terms of traffic, there's huge opportunity for the -- for various use cases for us in the text messaging. And then the receipt tap advertising is something that's already been proven through companies like Catalina Marketing that builds I think a $700 million, $800 million annual revenue run rate business by just focusing on receipt tap advertising in the grocery vertical. But their technology platform fairly antiquated over time and what we've been able to prove with our product line in activating receipt tap marketing opportunities is just that, unlike legacy models, which required a second printer and things like that our technology doesn't require that of the grocer and it being a purely software based solution is a far more economically feasible solution. So we've got a like I said a big deal on our opportunity pipeline that we're excited about, but we think that this is just kind of the early stages of what may be a late adoption by the grocery industry to exploiting technologies that activate that receipt tap print ad. And I think that, that also points to some of the other kind of interesting issues with marketing in general right now, given the unique environment is, a lot of the kind of historical marketing channels that brands were using to get to consumers and tapping out of sports programming and events and venue, advertising is kind of on the sideline. This direct advertising model where you're getting the message onto their receipt or through a subscription-based loyalty program or text messaging is really kind of one of the few effective channels to keep the customers coming back right now in this climate. So, grocery and convenience store, I think are really interesting verticals for us and this beachhead with this global brand is great start to getting into that vertical and diversifying our customer base.

Operator: [Operator instructions]. Our next question comes from Jeff Porter with Porter Capital Management. Please proceed with your question.

Jeff Porter: You talked about it being difficult to have some visibility because of the macro environment. But if I heard right, you said you're at a recurring revenue run rate of $13 million, which is almost 30% year-over-year growth if I'm understanding it correctly and we're one quarter through the year. So, can you give any sort of range of what your visibility is or just maybe sort of what you think -- at least you've already got contracted. In previous calls, I think you gave some number of total contract volume. Do you have any of those metrics?

Dennis Becker: Yes, absolutely. So, like you pointed out that with kicking off the year and the contract expansion that we were awarded with our largest customer, that has put us right at a $13 million run rate; with the opportunities that we have in our pipeline, for example, the global grocery brand is a, call it mid single-digit annual recurring revenue contract opportunity. So, understanding we wouldn't get -- probably get into contract on that opportunity until sometime in the second quarter to middle part of this year, the revenue contribution could be a few million dollars for this year and then exiting 2020 with on a run rate of potentially $17 million to $20 million just on that deal alone. So, what we're doing right now is in the restaurant space, for example, we had a handful of opportunities that were also late stage, but understandably, they're on hold until there's better clarity with some of these new customers in the restaurant vertical, but the convenience store and grocery verticals are aggressively pursuing ways to optimize their business and better market to customers in the, call it 6 to 18 months future of; number one, heightened demand; number two, a more narrowed portfolio of marketing channels to market through, that being a lot of sports, entertainment, et cetera. So, again it's obviously very dynamic going through the remainder of the year. But we are fortunate enough to start off strong and execute a meaningful expansion with that customer to move us towards the $13 million run rate. And if we're able to win a couple of deals that are in these late stages of the pipeline, the year could be anywhere from $16 million to $20 million with a run rate of $20 million or higher kind of to finish the year. And I'll say that with some caution, because again, it's a very -- like very dynamic situation but the opportunity is there for us.

Jeff Porter: One other thing, in the release, you alluded to new -- potential new vertical in the online entertainment market. Can you just explain to me what that would look like? And sort of what's our value proposition to that sort of customer?

Dennis Becker: Yes. So, we've been very focused on brick and mortar in that, unlike online marketers that see a lot of data, our core has been to focus on unlocking the brick and mortar point-of-sale data to help the brick and mortar space that being the other 80% of our economy, work as efficiently as online. What maybe we underappreciated was how much text messaging could improve in online focused business in that. And we've actually gone through some real world test over the last six months to prove how SMS text messaging could be more effective than how online business -- businesses have marketed, which has predominately just been email. And part of kind of just awakening also outside of Mobivity was watching probably the most notable private venture garner a pretty big valuation in Attentive Mobile and then how they were able to raise $120 million in the last four months only being a three year old company. And very -- it's very simple, as online marketers have learned text messaging has multiple higher response rate and conversion rate than email. And we actually saw this with Papa Gino's pizza. We have a published case study where we had double-digit multiples, response -- higher response rate when using text messaging for their business versus email. So what we've stumbled upon is in the online streaming video market, it's highly competitive. You have Netflix, you have Google with YouTube, you have Hulu and kind of the Disney, [triumvirate] of ESPN, Disney+ and now Hulu. And you've got Amazon Prime. And, it’s a highly lucrative business that's kind of supplanting the direct TVs and the dish networks of the world with online streaming video and entertainment. And in their world, it's all about subscriber acquisition and retention. And to use an example, I was sitting at an airport and an entire wall was converted into a mural of a new show that was coming out on Hulu. And nowhere on that wall was there a way for me to respond to this mural and maybe watch a trailer or get more information on the show. And that's a perfect example where a text messaging called action could have allowed me to engage and interact while I'm sitting there in security line at the airport. So, we've got an opportunity with one of those major streaming video networks to start leveraging text messaging to replace their email marketing programs. And you kind of look at all of these different online streaming brands, Netflix has got over 100 million subscribers, I believe. And then you kind of go on down to some of the others like Hulu that has 30 million, 40 million subscribers. And you can kind of think about all that relative to how much money we're making off of say a Subway or these brick and mortars, where they have -- for example right now, I think we've publicized that we've got 12 million, 13 million subscribers that we're sending text messages to on a monthly basis, which equates to tens of millions of these messages going out on a monthly basis, and that's a key part of our revenue structure. So, we start to penetrate the online streaming markets where they've got tens of millions or north of a 100 million subscribers, that could double, triple, quadruple our SMS traffic, which could have a great impact on our top-line.

Jeff Porter: And what kind of margins do we get off of SMS text messaging in big volume?

Dennis Becker: Well, I mean, it -- really at any volume up until about a year ago, we were consistently for a number of years at a 70% gross margin rate. Now we started to implement a lot -- or deliver a lot of traffic for new multimedia messaging, which is streaming video, pictures, animations, that cost us more on a cost of goods basis. We were subsidizing that for our customers through trials just to get brands and some case study data that show that it was worth the higher price. We did that. That's causing our margins to climb again and I don't think there's any reason for us to believe we can continue to maintain 60% to 70% gross margins off of messaging traffic with all future business. So, I think that that's the same for online streaming video customers as well.

Operator: We've reached the end of the question-and-answer session. This concludes today's conference. You may disconnect your lines at this time and we thank you for your participation.