Smith Micro Software(US:SMSI)2024-11-14 00:28Financial 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]