Smith Micro Software (SMSI) Q3 2024 earnings summary

Executive summary

• Q3 2024 revenue declined 58% year-over-year to $4.6 million, mainly due to the loss of major Family Safety and ViewSpot contracts and Sprint subscriber attrition.

• Cost reductions achieved $1.9 million in quarterly savings by Q3 2024, with further reductions targeted.

• Management is focused on returning to profitability and generating free cash flow in 2025, supported by new product launches and a European Tier 1 carrier partnership.

• A $6.9 million capital raise, including $3 million from the CEO, was completed to strengthen liquidity.

• Expansion of Family Safety offerings and new multi-year agreements in the US and Europe are underway.

Financial highlights

• Q3 2024 revenue was $4.6 million (down from $11.0 million in Q3 2023); nine months ended September 30, 2024: $15.6 million (down from $32.3 million in 2023).

• Q3 2024 gross profit was $3.3 million (71.6% margin), down from $8.5 million (77.0%) in Q3 2023.

• GAAP net loss for Q3 2024 was $6.4 million ($0.54/share); non-GAAP net loss was $3.6 million ($0.30/share).

• Year-to-date GAAP net loss was $44.3 million, including a $24 million goodwill impairment.

• Cash and equivalents at September 30, 2024: $1.5 million, with $6.9 million raised in October.

Outlook and guidance

• Q4 2024 revenue expected to be $5.0–$5.2 million, driven by Family Safety growth and new customer activity.

• Gross margin for Q4 2024 projected at 72%–75%.

• Break-even revenue level estimated in the mid-$7 million range per quarter.

• Management expects cost reductions and new revenue streams to drive a return to non-GAAP profitability and free cash flow in 2025.

• Liquidity remains a concern; additional capital or improved subscriber growth may be needed to fund operations over the next 12 months.