Financial Data and Key Metrics Changes - The company recognized revenue of $4.6 million for Q1 2025, a decrease of approximately 20% compared to $5.8 million in Q1 2024 [8] - Family Safety revenues were $3.8 million, down 15% year-over-year, primarily due to the decline in legacy Sprint safe and found revenue [9] - Gross profit for Q1 2025 was approximately $3.4 million, a decrease of $400,000 from the same period last year, with a gross margin of 73% compared to 66% in Q1 2024 [10] - GAAP net loss for Q1 2025 was $5.2 million, or $0.28 loss per share, compared to a GAAP net loss of $31 million, or $3.28 loss per share in Q1 2024 [11] Business Line Data and Key Metrics Changes - CommSuite revenue was approximately $700,000, an increase of $100,000 compared to Q1 2024, but decreased by $400,000 from Q4 2024 [9] - ViewSpot revenue was approximately $100,000, down $600,000 year-over-year, primarily due to the end of a contract last year [9] Market Data and Key Metrics Changes - The company expects consolidated revenues for Q2 2025 to be in the range of approximately $4.4 million to $4.8 million [10] Company Strategy and Development Direction - The company is focusing on SafePath OS for kids and senior phones, and SafePath Kids rate plan solutions, which align with mobile operators' core business strengths [5] - The upcoming release of SafePath eight will introduce AI-centric features aimed at enhancing family safety solutions [7][15] - The company is optimistic about closing new customer deals and expanding agreements with current customers [5][26] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strong global demand for digital family safety solutions, viewing it as an immense opportunity for growth [6] - The company is optimistic about returning to growth and profitability, particularly with the upcoming product innovations [26] Other Important Information - The company filed a new shelf registration to replace the expiring one, maintaining a capacity of $75 million [13][14] Q&A Session Summary Question: Metrics on SafePath 2.0 performance - Management indicated that SafePath 2.0 is off to a strong start with good adoption expected to improve during the summer and back-to-school period [28][30] Question: Engagements and pilots for SafePath Kids - Management confirmed expectations for meaningful launches in Q3, aligning with back-to-school opportunities [31][32] Question: Visibility on SafePath Seniors pilots and pricing thoughts on SafePath eight - Management stated that the first trial for SafePath Seniors has already occurred, with a potential launch in Q4 [34][36] Question: Relevance of tablets and competitive landscape - Management noted that their OS solution is compatible with existing devices, including tablets, and emphasized the importance of family safety features in attracting loyal customers [42][48]

[Business and Operational Highlights](index=1&type=section&id=Business%20and%20Operational%20Highlights) Smith Micro focused on advancing product development in Q1 2025, expanding mobile operator engagement and preparing for the launch of its next-generation family safety platform - The company is executing initiatives with a sharpened focus on its latest product developments: SafePath OS™ for kids and senior phones, and SafePath Kids™ for child-friendly rate plans[2](index=2&type=chunk) - Extensive discussions with current and prospective mobile operators, combined with product innovations, have expanded the company's reach and opened new sales opportunities[2](index=2&type=chunk) - The upcoming launch of SafePath 8 is expected to deliver the next generation of features and functionality for digital family safety[3](index=3&type=chunk) [First Quarter 2025 Financial Performance](index=1&type=section&id=First%20Quarter%202025%20Financial%20Performance) Q1 2025 revenue decreased to **$4.6 million** from **$5.8 million** year-over-year, while GAAP net loss significantly narrowed to **$5.2 million** due to the absence of a goodwill impairment charge Q1 2025 vs Q1 2024 Key Financial Metrics (in thousands) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Revenue | $4,621 | $5,798 | | Gross Profit | $3,363 | $3,810 | | Gross Margin | 72.8% | 65.7% | | GAAP Net Loss | $(5,178) | $(31,007) | | GAAP Loss per Share | $(0.28) | $(3.28) | | Non-GAAP Net Loss | $(2,863) | $(4,200) | | Non-GAAP Loss per Share | $(0.16) | $(0.45) | - All share and per-share amounts have been retroactively adjusted to reflect a one-for-eight reverse stock split, effective April 10, 2024[5](index=5&type=chunk) [Financial Statements](index=4&type=section&id=Financial%20Statements) The consolidated financial statements for Q1 2025 show total assets of **$43.4 million**, a net loss of **$5.2 million**, and an ending cash balance of **$2.3 million** [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) As of March 31, 2025, total assets decreased to **$43.4 million** from **$48.0 million**, driven by lower cash and accounts receivable, with total stockholders' equity declining to **$36.6 million** Key Balance Sheet Items (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $2,288 | $2,808 | | Accounts receivable, net | $3,238 | $5,721 | | Total Assets | $43,364 | $48,046 | | Total Liabilities | $6,802 | $7,290 | | Total Stockholders' Equity | $36,562 | $40,756 | [Consolidated Statements of Operations](index=5&type=section&id=Consolidated%20Statements%20of%20Operations) Q1 2025 revenues were **$4.6 million**, with significantly lower operating expenses of **$8.6 million** due to the absence of a goodwill impairment charge, resulting in a net loss of **$5.2 million** Q1 Statement of Operations Highlights (in thousands) | Line Item | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Revenues | $4,621 | $5,798 | | Gross Profit | $3,363 | $3,810 | | Total operating expenses | $8,573 | $35,256 | | Goodwill impairment | $0 | $23,989 | | Operating loss | $(5,210) | $(31,446) | | Net loss | $(5,178) | $(31,007) | | Loss per share | $(0.28) | $(3.28) | [Consolidated Statements of Cash Flows](index=6&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Net cash used in operating activities improved to **$0.6 million** in Q1 2025, resulting in a **$0.5 million** decrease in cash and cash equivalents, ending the period at **$2.3 million** Q1 Cash Flow Summary (in thousands) | Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(602) | $(1,345) | | Net cash (used in) provided by investing activities | $(4) | $194 | | Net cash provided by financing activities | $86 | $181 | | **Net decrease in cash and cash equivalents** | **$(520)** | **$(970)** | | **Cash and cash equivalents, end of period** | **$2,288** | **$6,155** | [Reconciliation of GAAP to Non-GAAP Measures](index=2&type=section&id=Reconciliation%20of%20GAAP%20to%20Non-GAAP%20Measures) Smith Micro provides non-GAAP measures, excluding items like stock compensation and amortization, to offer a more meaningful analysis of ongoing operations, transforming a GAAP net loss of **$5.2 million** into a non-GAAP net loss of **$2.9 million** in Q1 2025 - Management believes non-GAAP measures are more indicative of ongoing operational performance by excluding items such as stock compensation, intangibles amortization, depreciation, fair value adjustments, and goodwill impairment[6](index=6&type=chunk) Q1 2025 GAAP to Non-GAAP Net Loss Reconciliation (in thousands) | Item | Amount | | :--- | :--- | | GAAP Net Loss | $(5,178) | | Stock Compensation | $1,088 | | Intangibles Amortization | $1,276 | | Depreciation | $74 | | Fair Value Adjustments | $(123) | | **Non-GAAP Net Loss** | **$(2,863)** | - The Q1 2024 non-GAAP calculation notably excluded a **$23.989 million** goodwill impairment charge[15](index=15&type=chunk) [Other Information](index=2&type=section&id=Other%20Information) This section provides logistical details for investors, including conference call information, a company business overview, and standard legal disclaimers regarding forward-looking statements and risks [Investor Conference Call](index=2&type=section&id=Investor%20Conference%20Call) An investor conference call was scheduled for May 7, 2025, at 4:30 p.m. ET to discuss the Q1 2025 financial results - An investor conference call was scheduled for May 7, 2025, at 4:30 p.m. ET to discuss the Q1 2025 financial results[7](index=7&type=chunk) [About Smith Micro Software, Inc.](index=3&type=section&id=About%20Smith%20Micro%20Software,%20Inc.) Smith Micro develops software to simplify and enhance the mobile experience for wireless service providers, focusing on family digital lifestyle, voice messaging, and content monetization - The company's business is to develop software for wireless service providers that simplifies the mobile experience, focusing on the family digital lifestyle and voice messaging capabilities[8](index=8&type=chunk) [Forward-Looking Statements](index=3&type=section&id=Forward-Looking%20Statements) The press release contains forward-looking statements subject to risks and uncertainties, including customer concentration, deployment delays, and reliance on third-party technology - The company identifies significant risks that could affect future results, including dependency on a few large customers, delays in product deployment, and reliance on third-party operating systems and application stores[10](index=10&type=chunk)

Part I [Business Overview](index=7&type=section&id=Item%201.%20BUSINESS) Smith Micro provides software solutions to wireless service providers, focusing on Digital Family Lifestyle, visual voice messaging, and retail display management - The company's core product portfolio includes SafePath® for family safety, ViewSpot® for retail display management, and CommSuite® for premium messaging[26](index=26&type=chunk)[27](index=27&type=chunk)[28](index=28&type=chunk) - A major U.S. Tier 1 carrier contract, which represented approximately **36% of total revenues for 2023**, was terminated effective June 30, 2023, with no revenue generated from this contract in 2024[32](index=32&type=chunk) - The company's business is concentrated with a limited number of large MNOs and MSOs, though it plans to expand its reach to smaller operators with SafePath Global™[31](index=31&type=chunk) - As of December 31, 2024, the company had **164 employees**, with the majority (**117**) in engineering and operations[41](index=41&type=chunk) [Risk Factors](index=10&type=section&id=Item%201A.%20RISK%20FACTORS) The company faces substantial risks, primarily from high customer concentration and significant doubt about its ability to continue as a going concern - The company's financial situation raises substantial doubt about its ability to continue as a going concern without securing additional capital[58](index=58&type=chunk)[59](index=59&type=chunk) - Significant customer concentration risk exists, as sales to the three largest customers comprised **58%**, **20%**, and **14% of revenues for the year ended December 31, 2024**[43](index=43&type=chunk) - The company has a history of net losses, partially driven by the loss of a U.S. Tier 1 customer in 2023, and may incur substantial net losses in the future[64](index=64&type=chunk) - As of March 10, 2025, outstanding warrants to purchase up to **8,382,048 shares of common stock** could dilute the ownership interest of existing stockholders upon exercise[68](index=68&type=chunk) - The company faces risks from intense competition, rapid technological change, and dependence on third-party technologies and distribution channels like mobile application stores[53](index=53&type=chunk)[55](index=55&type=chunk)[71](index=71&type=chunk) [Unresolved Staff Comments](index=20&type=section&id=Item%201B.%20UNRESOLVED%20STAFF%20COMMENTS) The company reports that it has no unresolved staff comments from the Securities and Exchange Commission - None[103](index=103&type=chunk) [Cybersecurity](index=20&type=section&id=Item%201C.%20CYBERSECURITY) The company manages cybersecurity risk using the NIST Cybersecurity Framework, with Board oversight and no material incidents to date - The company's cybersecurity strategy is guided by the **NIST Cybersecurity Framework (NIST CSF)**[104](index=104&type=chunk) - Governance is handled by the audit committee of the Board of Directors, which oversees management's risk assessment and mitigation processes[109](index=109&type=chunk) - To date, there have been no cybersecurity incidents that have materially affected, or are reasonably likely to materially affect, the Company[108](index=108&type=chunk) [Properties](index=21&type=section&id=Item%202.%20PROPERTIES) The company leases all its office spaces, with headquarters in Pittsburgh and international locations supporting its Wireless segment - The company's corporate headquarters is a leased space of approximately **35,621 square feet** in Pittsburgh, Pennsylvania[111](index=111&type=chunk) - International leased properties are located in Belgrade, Serbia; Stockholm, Sweden; and Braga, Portugal[111](index=111&type=chunk) [Legal Proceedings](index=21&type=section&id=Item%203.%20LEGAL%20PROCEEDINGS) The company may be involved in various legal proceedings, but management does not expect a material adverse impact - Management does not currently believe that the disposition of any ongoing legal matters will have a material adverse impact on the Company's consolidated financial position[112](index=112&type=chunk) [Mine Safety Disclosures](index=22&type=section&id=Item%204.%20MINE%20SAFETY%20DISCLOSURES) This item is not applicable to the company's business - Not Applicable[113](index=113&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=23&type=section&id=Item%205.%20MARKET%20FOR%20REGISTRANT%27S%20COMMON%20EQUITY%2C%20RELATED%20STOCKHOLDER%20MATTERS%20AND%20ISSUER%20PURCHASES%20OF%20EQUITY%20SECURITIES) The company's common stock trades on Nasdaq, has approximately 70 holders, and has never paid cash dividends - The company's common stock trades on the Nasdaq Capital Market under the symbol "**SMSI**"[115](index=115&type=chunk) - The company has never declared or paid cash dividends and does not expect to in the foreseeable future[117](index=117&type=chunk) Issuer Purchases of Equity Securities | Period | Total Number of Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | October 1 - 31, 2024 | 17,514 | $1.02 | | November 1 - 30, 2024 | 54,315 | $0.90 | | December 1 - 31, 2024 | 2,659 | $0.77 | | **Total** | **74,488** | **$0.92** | [Reserved](index=23&type=section&id=Item%206.%20RESERVED) This item is reserved and contains no information [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=24&type=section&id=Item%207.%20MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) In 2024, revenues declined 50% to $20.6 million, leading to a $48.7 million net loss and significant restructuring efforts [Introduction and Overview](index=24&type=section&id=7.1%20Introduction%20and%20Overview) In 2024, revenues fell 50% to $20.6 million due to a lost Tier 1 contract, resulting in a $48.7 million net loss and significant workforce reductions Financial Overview | Metric | 2024 | 2023 | | :--- | :--- | :--- | | Revenues | $20.6 million | $40.9 million | | Gross Profit | $14.4 million | $30.3 million | | Net Loss | ($48.7 million) | ($24.4 million) | | Goodwill Impairment | $24.0 million | $0 | - The primary driver of the revenue decline was the loss of a Tier 1 Family Safety contract, which concluded in November 2023 and accounted for **36% of 2023 total revenues**[124](index=124&type=chunk) - The company undertook multiple restructuring efforts, resulting in the elimination of approximately **48% of its global workforce** to reduce operating costs[124](index=124&type=chunk) [Results of Operations](index=25&type=section&id=7.2%20Results%20of%20Operations) Revenues decreased by $20.3 million (50%) in 2024 due to contract losses, leading to a widened net loss of $48.7 million Operating Performance | Line Item | 2024 (in millions) | 2023 (in millions) | Change (%) | | :--- | :--- | :--- | :--- | | Revenues | $20.6 | $40.9 | -50% | | Gross Profit | $14.4 | $30.3 | -52% | | Selling and marketing | $8.9 | $11.1 | -20% | | Research and development | $14.1 | $17.1 | -18% | | General and administrative | $10.6 | $12.8 | -17% | | Goodwill impairment | $24.0 | $0.0 | N/A | | Operating loss | $(49.4) | $(18.1) | -173% | - The decrease in core operating expenses was primarily due to reductions in personnel-related costs resulting from workforce reduction efforts[138](index=138&type=chunk)[139](index=139&type=chunk)[140](index=140&type=chunk) - A goodwill impairment charge of **$24.0 million** was recorded in the first quarter of 2024, significantly impacting the operating loss[142](index=142&type=chunk) [Liquidity and Capital Resources](index=27&type=section&id=7.3%20Liquidity%20and%20Capital%20Resources) The company's liquidity is severely constrained, raising substantial doubt about its going concern ability, with cash dropping to $2.8 million - The company's financial condition raises substantial doubt about its ability to continue as a going concern within one year[149](index=149&type=chunk)[271](index=271&type=chunk) Cash Flow Summary | Cash Flow Metric (in thousands) | 2024 | 2023 | | :--- | :--- | :--- | | Net cash used in operating activities | $(14,295) | $(6,973) | | Net cash provided by investing activities | $178 | $132 | | Net cash provided by (used in) financing activities | $9,800 | $(60) | - As of December 31, 2024, cash and cash equivalents were **$2.8 million**, and the company had no outstanding debt[147](index=147&type=chunk) - A delay in cash receipts from the largest customer was a primary driver of the increase in accounts receivable to **$5.7 million** as of December 31, 2024[147](index=147&type=chunk) [Critical Accounting Policies and Estimates](index=28&type=section&id=7.5%20Critical%20Accounting%20Policies%20and%20Estimates) Management identifies several critical accounting policies requiring significant estimates, including Revenue Recognition, Goodwill Impairment, and Going Concern evaluation - Key critical accounting policies include Revenue Recognition, Goodwill and Intangible Assets, Fair Value of Financial Instruments, Business Combinations, and Going Concern evaluation[161](index=161&type=chunk) - Goodwill is tested for impairment at least annually or when triggering events occur, with an impairment loss recorded if the carrying amount of the reporting unit exceeds its fair value[169](index=169&type=chunk) - Revenue is recognized based on a five-step analysis under ASC 606, with significant judgment applied to usage-based revenue and contracts with multiple performance obligations[172](index=172&type=chunk)[173](index=173&type=chunk) [Financial Statements and Supplementary Data](index=31&type=section&id=Item%208.%20FINANCIAL%20STATEMENTS%20AND%20SUPPLEMENTARY%20DATA) This section refers to the full consolidated financial statements, which begin on page F-1, and the independent auditor's report - The company's consolidated financial statements and related notes begin on page F-1 of the report[177](index=177&type=chunk)[201](index=201&type=chunk) [Report of Independent Registered Public Accounting Firm](index=39&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) The auditor's report expresses substantial doubt about the company's going concern ability and identifies Revenue Recognition and Goodwill Impairment as Critical Audit Matters - The auditor's report includes a paragraph expressing "**substantial doubt about the Company's ability to continue as a going concern**" due to recurring losses and future cash needs[215](index=215&type=chunk) - Revenue Recognition was identified as a Critical Audit Matter because of significant judgments required by management regarding performance obligations, pricing, and timing[221](index=221&type=chunk) - Goodwill Impairment Analysis was identified as a Critical Audit Matter due to significant assumptions used in valuation models, including forecasts for revenue, expenses, and the discount rate[223](index=223&type=chunk) [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=31&type=section&id=Item%209.%20CHANGES%20IN%20AND%20DISAGREEMENTS%20WITH%20ACCOUNTANTS%20ON%20ACCOUNTING%20AND%20FINANCIAL%20DISCLOSURE) The company reports no changes in or disagreements with its accountants on any accounting or financial disclosure matters - None[178](index=178&type=chunk) [Controls and Procedures](index=31&type=section&id=Item%209A.%20CONTROLS%20AND%20PROCEDURES) Management concluded that disclosure controls and internal control over financial reporting were effective as of December 31, 2024 - Management concluded that disclosure controls and procedures were effective as of December 31, 2024[179](index=179&type=chunk) - Management determined that the company maintained effective internal control over financial reporting as of December 31, 2024[184](index=184&type=chunk) - No changes in internal controls over financial reporting occurred during the quarter ended December 31, 2024, that have materially affected, or are reasonably likely to materially affect, internal controls[182](index=182&type=chunk) [Other Information](index=31&type=section&id=Item%209B.%20OTHER%20INFORMATION) This section discloses the company's insider trading policy and confirms no Rule 10b5-1 trading arrangement changes in Q4 2024 - The company's insider trading policy prohibits directors, officers, and employees from engaging in short sales, hedging transactions, and holding company stock in margin accounts[188](index=188&type=chunk) - During the fiscal quarter ended December 31, 2024, no director or officer adopted or terminated a Rule 10b5-1 trading arrangement[190](index=190&type=chunk) [Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](index=32&type=section&id=Item%209C.%20DISCLOSURE%20REGARDING%20FOREIGN%20JURISDICTIONS%20THAT%20PREVENT%20INSPECTIONS) This item is not applicable to the company - None[190](index=190&type=chunk) Part III [Directors, Executive Officers and Corporate Governance](index=33&type=section&id=Item%2010.%20DIRECTORS%2C%20EXECUTIVE%20OFFICERS%20AND%20CORPORATE%20GOVERNANCE) Information on directors, executive officers, and corporate governance is incorporated by reference from the 2025 Proxy Statement - Required information is incorporated by reference from the Company's 2025 Proxy Statement[193](index=193&type=chunk) [Executive Compensation](index=33&type=section&id=Item%2011.%20EXECUTIVE%20COMPENSATION) Information regarding executive and director compensation is incorporated by reference from the 2025 Proxy Statement - Required information is incorporated by reference from the Company's 2025 Proxy Statement[194](index=194&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=33&type=section&id=Item%2012.%20SECURITY%20OWNERSHIP%20OF%20CERTAIN%20BENEFICIAL%20OWNERS%20AND%20MANAGEMENT%20AND%20RELATED%20STOCKHOLDER%20MATTERS) Information on security ownership is incorporated by reference from the 2025 Proxy Statement, with 2.606 million shares available for future issuance - Information regarding security ownership is incorporated by reference from the Company's 2025 Proxy Statement[195](index=195&type=chunk) Shares Available for Future Issuance | Plan Name | Shares Remaining Available for Future Issuance (in thousands) | | :--- | :--- | | Amended and Restated Omnibus Equity Incentive Plan | 2,606 | [Certain Relationships and Related Transactions, and Director Independence](index=33&type=section&id=Item%2013.%20CERTAIN%20RELATIONSHIPS%20AND%20RELATED%20TRANSACTIONS%2C%20AND%20DIRECTOR%20INDEPENDENCE) Information regarding related party transactions and director independence is incorporated by reference from the 2025 Proxy Statement - Required information is incorporated by reference from the Company's 2025 Proxy Statement[197](index=197&type=chunk) [Principal Accountant Fees and Services](index=33&type=section&id=Item%2014.%20PRINCIPAL%20ACCOUNTANT%20FEES%20AND%20SERVICES) Information regarding principal accountant fees and services is incorporated by reference from the 2025 Proxy Statement - Required information is incorporated by reference from the Company's 2025 Proxy Statement[198](index=198&type=chunk) Part IV [Exhibits](index=34&type=section&id=Item%2015.%20EXHIBITS) This section lists all exhibits filed with the Annual Report, including financial statements, governance documents, and material contracts - This section provides a comprehensive list of all exhibits filed with the Annual Report, including financial statements, governance documents, material contracts, and required certifications[201](index=201&type=chunk)[202](index=202&type=chunk)[203](index=203&type=chunk) [Form 10-K Summary](index=37&type=section&id=Item%2016.%20FORM%2010-K%20SUMMARY) This item is not applicable, and no summary is provided - None[207](index=207&type=chunk)

Financial Data and Key Metrics Changes - In Q4 2024, revenue was $5 million, a decrease of approximately 42% compared to $8.6 million in Q4 2023, but an increase of about $300,000 or 7% from Q3 2024 [17] - For the full year 2024, revenue was $20.6 million, down 50% from $40.9 million in 2023, primarily due to the conclusion of the Verizon Family Safety Contract and a decline in Safe and Found Family Safety revenue [18] - Gross profit for Q4 2024 was approximately $3.8 million, down from $6.4 million in Q4 2023, while gross margin improved to 76% from 75% year-over-year [21] - GAAP net loss for Q4 2024 was $4.4 million or $0.25 loss per share, compared to a net loss of $6.7 million or $0.74 loss per share in Q4 2023 [25] Business Line Data and Key Metrics Changes - Family Safety revenues in Q4 2024 were $3.8 million, a decrease of approximately 49% compared to Q4 2023, primarily due to the end of the Verizon contract [18] - CommSuite revenues increased to $1.1 million in Q4 2024, up approximately $600,000 from Q4 2023, driven by subscriber growth [19] - ViewSpot revenue was nominal in Q4 2024, declining by approximately $500,000 compared to Q4 2023 due to the end of a contract [19] Market Data and Key Metrics Changes - The company is experiencing strong interest in its SafePath offerings, particularly SafePath Kids, which has shown significant appeal to parents seeking safer mobile experiences for their children [14][38] - The senior safety market is identified as a rapidly growing segment, with the population aged 65 and older growing at a rate up to four times faster than younger demographics [33] Company Strategy and Development Direction - The company is shifting focus towards three family safety offerings: SafePath Kids, SafePath OS for kids' phones, and SafePath OS for seniors, aiming to capture new market opportunities [31][32] - The strategy includes leveraging existing phone inventory from popular manufacturers to deliver SafePath OS products quickly without extensive backend integration [40] - The company aims to align its innovations with the core business objectives of mobile operators, focusing on adding new subscribers and selling more devices [41] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about returning to growth in the second half of 2025, driven by new customer offerings and a focus on profitability [73] - The company anticipates significant interest from carriers for its new offerings, indicating a positive market response and potential for growth [38][41] - Management highlighted the importance of aligning with carrier goals to enhance growth prospects, emphasizing the pivot towards mainstream offerings rather than just value-added services [82] Other Important Information - The company recognized a one-time benefit to occupancy costs of approximately $100,000 in Q4 2024, contributing to exceeding cost reduction goals [25] - Cash and cash equivalents as of December 31, 2024, were reported at $2.8 million [28] - The company faced payment delays from its largest customer due to a change in the payment platform, which has since been resolved [29] Q&A Session Summary Question: How will success be framed for the TuYo service? - Management noted that Orange Spain's sign-ups are approaching half from competitors, indicating strong market demand and potential for further growth [60] Question: What is the timeline for bringing up new carriers? - Management indicated that there is strong interest among carriers for a summer launch, with ongoing demos and trials to ensure readiness [64] Question: How far along is the product for the aging in place opportunity? - Management stated that the core SafePath OS product is ready, with strong interest from carriers focused on the senior market [70] Question: What is the outlook for sequential growth? - Management expects to see growth in the back half of the year based on new customer offerings and product launches [73]

Financial Data and Key Metrics Changes - For Q4 2024, revenue was $5 million, a decrease of approximately 42% from $8.6 million in Q4 2023, but an increase of about $300,000 or 7% compared to Q3 2024 [17] - Total revenue for 2024 was $20.6 million, down 50% from $40.9 million in 2023, primarily due to the conclusion of the Verizon Family Safety Contract and a decline in Safe and Found Family Safety revenue [18] - Gross profit for Q4 2024 was approximately $3.8 million, down from $6.4 million in Q4 2023, while gross margin improved to 76% from 75% [21] - GAAP net loss for Q4 2024 was $4.4 million or $0.25 loss per share, compared to a net loss of $6.7 million or $0.74 loss per share in Q4 2023 [25] Business Line Data and Key Metrics Changes - Family Safety revenues in Q4 2024 were $3.8 million, a decrease of approximately 49% compared to Q4 2023, primarily due to the end of the Verizon Family Safety Contract [18] - CommSuite revenues for Q4 2024 were $1.1 million, an increase of approximately $600,000 compared to Q4 2023, driven by subscriber growth [19] - ViewSpot revenue was nominal in Q4 2024, declining by approximately $500,000 compared to Q4 2023 due to the end of a contract [19] Market Data and Key Metrics Changes - The company is experiencing strong interest in its SafePath offerings, particularly SafePath Kids, which has shown significant appeal to parents seeking safer mobile experiences for their children [14][38] - The senior safety market is identified as a rapidly growing segment, with the population aged 65 and older growing at a rate up to four times faster than younger populations [33] Company Strategy and Development Direction - The company is shifting focus towards three family safety offerings: SafePath Kids, SafePath OS for kids' phones, and SafePath OS for seniors [31] - The strategy includes leveraging existing phone inventory from popular manufacturers to deliver SafePath OS products quickly to market [40] - The company aims to align its innovations with the core business objectives of mobile operators, focusing on adding new subscribers and selling more devices [41] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about returning to growth and profitability in the second half of 2025, driven by new customer offerings and market demand [73] - The company is confident in its ability to capitalize on the growing interest in its SafePath products, indicating a strong pipeline of opportunities [41][52] Other Important Information - The company reported cash and cash equivalents of $2.8 million as of December 31, 2024 [28] - There were payment delays from a major customer due to a change in their payment platform, but this issue has been resolved [29] Q&A Session Summary Question: How will success be framed for the TuYo service? - Management noted that Orange Spain's success with TuYo is attracting interest from other carriers, with a significant portion of sign-ups coming from competitors [60] Question: What is the timeline for bringing new carriers on board? - Management indicated that there is strong interest among carriers for a summer launch, with ongoing demos and trials [64] Question: What is the status of the senior safety phone product? - Management confirmed that the core SafePath OS product is ready, and there is strong interest from carriers for launching this offering [70] Question: What are the expectations for sequential growth in 2025? - Management anticipates a return to growth and profitability in the back half of the year, driven by new customer offerings [73]

Financial Data and Key Metrics Changes - In Q4 2024, revenue was $5 million, down approximately 42% from $8.6 million in Q4 2023, but up 7% from Q3 2024 [10][11] - Total revenue for 2024 was $20.6 million, a 50% decline from $40.9 million in 2023 [10][11] - Gross profit for Q4 2024 was approximately $3.8 million, down from $6.4 million in Q4 2023, with a gross margin of 76% compared to 75% in the prior year [14][15] - GAAP net loss for Q4 2024 was $4.4 million or $0.25 loss per share, compared to a loss of $6.7 million or $0.74 loss per share in Q4 2023 [17] Business Line Data and Key Metrics Changes - Family safety revenues in Q4 2024 were $3.8 million, a decrease of 49% compared to the same quarter last year, primarily due to the end of the Verizon Family Safety contract [11] - CommSuite revenues increased to $1.1 million in Q4 2024, up approximately $600,000 from Q4 2023, driven by subscriber growth [11] - ViewSpot revenue was nominal in Q4 2024, declining by approximately $500,000 compared to the prior year due to the end of a contract [12] Market Data and Key Metrics Changes - The company is focusing on the family safety market, particularly with the launch of SafePath Kids and SafePath OS, targeting both children and seniors [21][22] - The senior safety market is identified as a fast-growing segment, with the population aged 65 and older growing significantly [22][23] Company Strategy and Development Direction - The company is shifting its focus to align its offerings with mobile operators' core business, emphasizing integrated solutions rather than just value-added services [6][26] - Plans to launch SafePath OS for seniors, targeting an underserved market, are underway, with features tailored to senior users [22][24] - The company aims to leverage existing phone inventory from manufacturers to expedite market entry [26] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about returning to growth and profitability in the second half of 2025, driven by new customer offerings and market demand [56] - The company is experiencing strong interest from carriers for its new SafePath products, indicating a positive market reception [25][30] Other Important Information - Cash and cash equivalents as of December 31, 2024, were $2.8 million, with payment delays from a major customer affecting accounts receivable [20] - The company expects first-quarter 2025 revenues to range from $4.6 million to $5 million, influenced by new opportunities and anticipated declines in CommSuite revenues [13] Q&A Session Summary Question: How will the company measure success with Twilio and the timeline for new carrier launches? - Management noted strong interest from carriers and significant sign-ups from competitors, indicating a positive market response [41][42] - The goal is to have new launches ready for the summer, with ongoing demos and trials being conducted [46][48] Question: What is the timeline for commercialization of the senior safety phone? - The core SafePath OS product is ready, and there is strong interest from carriers, with discussions ongoing for simultaneous launches of both kids' and seniors' offerings [50][52] Question: What are the expectations for sequential growth in the upcoming quarters? - Management anticipates a return to growth in the back half of the year, driven by new customer offerings and resolution of product issues [56]

Financial Performance - Smith Micro reported Q4 2024 revenue of $5.0 million, a decrease of 41.9% from $8.6 million in Q4 2023[3] - For the fiscal year 2024, Smith Micro reported total revenue of $20.6 million, a decline of 49.7% from $40.9 million in 2023[6] - Revenues for Q4 2024 were $4,969,000, a decrease of 42.5% compared to $8,593,000 in Q4 2023[16] - Gross profit for Q4 2024 was $3.8 million, down from $6.4 million in Q4 2023, with a gross profit margin of 75.6% compared to 74.9% in the prior year[3] - Gross profit for the year ended December 31, 2024, was $14,429,000, down from $30,303,000 in 2023, representing a decline of 52.3%[16] - The net loss for the year ended December 31, 2024, was $48,697,000, compared to a net loss of $24,396,000 in 2023, reflecting a 99.4% increase in losses[17] - GAAP net loss for Q4 2024 was $4.4 million, or $0.25 loss per share, an improvement from a net loss of $6.7 million, or $0.74 loss per share, in Q4 2023[4] - The fiscal year 2024 GAAP net loss was $48.7 million, or $3.94 loss per share, compared to a net loss of $24.4 million, or $3.01 loss per share, in 2023[7] - Non-GAAP net loss for Q4 2024 was $1.9 million, or $0.11 loss per share, compared to a non-GAAP net loss of $1.7 million, or $0.18 loss per share, in Q4 2023[4] - Non-GAAP net loss for the year was $13,677,000, compared to a net loss of $24,396,000 under GAAP[20] Cash and Assets - Total cash and cash equivalents as of December 31, 2024, were $2.8 million, down from $7.1 million at the end of 2023[8] - Cash and cash equivalents at the end of Q4 2024 were $2,808,000, down from $7,125,000 at the beginning of the period, a decrease of 60.5%[17] - Total assets decreased to $48.0 million as of December 31, 2024, from $85.6 million in 2023[15] Operating Expenses - Total operating expenses for the year increased to $63,819,000 from $48,358,000 in 2023, an increase of 32.0%[16] - The company incurred total operating expenses of $8,215,000 in Q4 2024, which included $2,757,000 in research and development expenses[16] Goodwill and Adjustments - The company reported a goodwill impairment charge of $23,989,000 for the year 2024[17] - The adjustments for non-recurring items included costs related to corporate actions and professional fees associated with office closures[22] Strategic Initiatives - Smith Micro launched SafePath Kids with Orange Spain, generating significant interest and aligning with mobile operators' core offerings[2] - The company aims to capture significant market opportunities and return to profitability through enhanced family safety solutions[2] Research and Development - Research and development expenses were $17,145 million, with adjustments resulting in $15,618 million[21]

Core Insights - Smith Micro Software Inc (SMSI) reported a non-GAAP loss of 30 cents per share for Q3 2024, compared to earnings of 8 cents in the same quarter last year, which was slightly better than the Zacks Consensus Estimate of a loss of 31 cents [1][2] - Revenues for the quarter were $4.6 million, missing the Zacks Consensus Estimate by 3.2%, and reflecting a significant year-over-year decline of 58% due to downturns across various revenue segments [2][3] Revenue Segments - The Family Safety segment saw revenues decline by nearly $5.2 million or 57% to $3.9 million, primarily due to the end of the Verizon Family Safety contract and ongoing weakness in Sprint Safe & Found revenues [3] - CommSuite segment revenues decreased approximately 14.3% year over year to $0.6 million, although there was a sequential increase of $0.1 million due to strong subscriber engagement on the Boost CommSuite platform [4] - Revenues from the ViewSpot segment fell by $1 million year over year to $0.1 million, mainly due to the termination of ViewSpot deals [4] Financial Performance - Gross margin for the September quarter decreased to 71.6% from 77% in the prior-year quarter, attributed to top-line contraction [5] - Non-GAAP operating expenses for Q3 were $6.8 million, down nearly 12% year over year, while total operating expenses were $9.8 million, down 8% year over year [5][6] Balance Sheet and Cash Flow - As of September 30, 2024, SMSI had total cash and cash equivalents of $1.5 million, a decrease from $5.6 million as of June 30, 2024 [7] - For the nine months ended September 30, 2024, SMSI used $9.4 million in cash from operating activities, compared to $6 million in the same period last year [8] Q4 Outlook - SMSI estimates Q4 revenues to be in the range of $5-$5.2 million, with gross margin expected between 72-75% [9] - Management anticipates achieving cost savings of at least $2.4 million to $2.8 million by Q4 2024, with non-GAAP operating expenses forecasted to decrease by 7% to 12% compared to Q3 2024 [9] Stock Performance - Following the earnings announcement, SMSI shares fell by 12.2% in premarket trading, and over the past year, shares have declined by 86.3%, contrasting with a 21.7% growth in the subindustry [5]

Financial Data and Key Metrics Changes - Revenue for Q3 2024 was $4.6 million, a decrease of approximately 58% compared to $11 million in Q3 2023, and a decrease of about $500,000 or 10% from Q2 2024 [15][16] - Year-to-date revenue through September 30, 2024, was $15.6 million, down from $32.3 million in the same period last year, reflecting a 52% decline [15][16] - GAAP net loss for Q3 2024 was $6.4 million, or a $0.54 loss per share, compared to a GAAP net loss of $5.1 million, or a $0.61 loss per share in Q3 2023 [30] - Non-GAAP net loss for Q3 2024 was $3.6 million, or a $0.30 loss per share, compared to a non-GAAP net income of approximately $600,000, or $0.08 earnings per share in Q3 2023 [31] Business Line Data and Key Metrics Changes - Family Safety revenue was $3.9 million in Q3 2024, a decrease of approximately 57% compared to Q3 2023, primarily due to the conclusion of the Verizon Family Safety contract [17] - CommSuite revenue was approximately $600,000, which decreased by about $100,000 compared to Q3 2023 but increased by $100,000 compared to Q2 2024 [18] - ViewSpot revenue was approximately $100,000, down by approximately $1 million compared to Q3 2023, primarily due to the termination of two contracts [19] Market Data and Key Metrics Changes - The company expects consolidated revenues in Q4 2024 to be in the range of approximately $5 million to $5.2 million, driven by a projected increase in Family Safety revenues [20] - The gross margin for Q3 2024 was 72%, down from 77% in Q3 2023, with gross profit of $3.3 million compared to $8.5 million in the same period last year [21][22] Company Strategy and Development Direction - The primary objective is to return to profitability and generate free cash flow, with a focus on cost reduction and expanding revenue opportunities [8][14] - The company is accelerating the deployment of its SafePath OS solution, expecting to sign its first contract with a U.S.-based MVNO soon, with deployments anticipated in Q1 2025 [10] - A marketing agreement with the Competitive Carrier Association (CCA) aims to expand the SafePath Global Family Safety Solution to more families across the U.S. [12] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the upcoming launch of a European carrier and the potential for growth in both North America and Europe [55][63] - The company believes that the actions taken to rationalize costs and expand revenue opportunities position it for a return to profitability and free cash flow during 2025 [14][52] Other Important Information - The company reported $1.5 million in cash and cash equivalents as of September 30, 2024, and completed a capital raise in October, grossing approximately $6.9 million [35][36] - The company achieved $1.9 million in cost reductions in Q3 2024 and expects to realize quarterly savings of $2.4 million to $2.8 million in Q4 2024 [13][27] Q&A Session Summary Question: Expectations for the European operator launch - Management expects the European carrier to launch before the end of the year and is optimistic about growth opportunities [55] Question: Details on revenue guidance for December - Revenue growth is expected from a combination of activities with current and new customers, alongside continued expense reductions [56] Question: SafePath OS model details - SafePath OS operates on a subscription model, providing recurring revenue as long as the device is active [59] Question: Cash runway and operating cost savings - The company finished Q3 with $1.5 million in cash, plus an additional $6.4 million from the capital raise, indicating a solid cash runway [67] Question: Competitive landscape and market opportunities - Management noted that while competitors may attempt in-house solutions, their product ratings and acceptance are significantly lower than SafePath offerings [74]

Company Performance - Smith Micro Software, Inc. reported a quarterly loss of $0.30 per share, slightly better than the Zacks Consensus Estimate of a loss of $0.31, compared to earnings of $0.08 per share a year ago, indicating an earnings surprise of 3.23% [1] - The company posted revenues of $4.65 million for the quarter ended September 2024, missing the Zacks Consensus Estimate by 3.17%, and down from $11 million in the same quarter last year [2] - Over the last four quarters, the company has only surpassed consensus EPS estimates once and has not beaten consensus revenue estimates during this period [2] Stock Performance - Smith Micro Software shares have declined approximately 86.4% since the beginning of the year, contrasting with the S&P 500's gain of 25.5% [3] - The current consensus EPS estimate for the upcoming quarter is -$0.14 on revenues of $5.6 million, and for the current fiscal year, it is -$1.28 on revenues of $21.3 million [7] Industry Outlook - The Computer - Software industry, to which Smith Micro Software belongs, is currently ranked in the top 19% of over 250 Zacks industries, suggesting a favorable outlook compared to lower-ranked industries [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5]