Smith Micro Software (SMSI) Q2 2024 earnings summary

Executive summary

• Q2 2024 revenue declined 50% year-over-year to $5.1M, mainly due to contract losses and lower ViewSpot revenues.

• Launched Boost Family Guard (SafePath Global) at Dish and advanced a SafePath-based solution with a European Tier 1 carrier, both expected to drive future growth.

• Implemented cost reduction initiatives totaling $2M–$2.5M per quarter to support a return to profitability and free cash flow.

• Raised $4.1M in equity during Q2, ending with $5.6M in cash and equivalents.

• Introduced plans for SafePath Live, a new premium family location control product, and expanded marketing and sales initiatives with major carriers.

Financial highlights

• Q2 2024 revenue was $5.1M, down 50% year-over-year and 11% sequentially; YTD revenue was $10.9M, down 48% from the prior year.

• Q2 2024 gross profit was $3.5M (68.7%–69% margin), down from $7.7M (75% margin) YoY; YTD gross profit was $7.3M (67%–67.1% margin).

• Q2 2024 GAAP net loss was $6.9M ($0.66/share); non-GAAP net loss was $4M ($0.38/share), compared to $600K ($0.08/share) non-GAAP net loss in Q2 2023.

• Q2 2024 operating loss was $7M (vs. $3.2M loss in Q2 2023); YTD operating loss was $38.4M, including a $24M goodwill impairment.

• Cash and cash equivalents as of June 30, 2024, were $5.6M; net cash used in operating activities for the first six months was $5.6M.

Outlook and guidance

• Q3 2024 revenue expected to be $4.5M–$5M, reflecting further ViewSpot declines.

• Gross margin for Q3 projected at 70%–73%.

• Non-GAAP operating expenses and cost of sales expected to decrease by $1M–$1.3M in Q3 versus Q1, with further reductions in Q4.

• Management anticipates meaningful SafePath revenue growth in Q4 2024 following European Tier 1 carrier launch and continued Dish ramp, but timing remains uncertain.

• Substantial doubt remains about the company’s ability to continue as a going concern within one year without additional capital or improved cash generation.