Earnings call transcript: Smith Micro Software reports Q4 2024 revenue drop

Published 11/03/2025, 22:32
Earnings call transcript: Smith Micro Software reports Q4 2024 revenue drop

Smith Micro Software reported a significant decline in its financial performance for the fourth quarter of 2024, with revenue falling by 42% compared to the same period last year. The company’s stock reacted negatively, dropping 5.7% to a closing price of $1.14, with further declines in aftermarket trading. According to InvestingPro data, the stock has shown high volatility but maintains a strong 91.28% return over the past six months. Despite these challenges, Smith Micro remains focused on expanding its family safety solutions and exploring new market opportunities.

Key Takeaways

  • Q4 2024 revenue decreased by 42% year-over-year.
  • Full-year 2024 revenue fell by 50% compared to 2023.
  • Net loss for Q4 2024 was $4.4 million, or $0.25 per share.
  • The company is focusing on family safety solutions and expects growth in the latter half of 2025.
  • Stock price fell 5.7% post-earnings, with an additional 2.33% drop in aftermarket trading.

Company Performance

Smith Micro Software’s performance in Q4 2024 was marked by a substantial revenue decline, reflecting broader challenges in the tech sector. The company’s focus on family safety solutions, however, positions it strategically in a growing market segment. The senior market, in particular, presents significant opportunities, with a rapidly growing demographic showing strong interest in mobile solutions.

Financial Highlights

  • Revenue: $5.0 million for Q4 2024, a 42% decrease from Q4 2023.
  • Full Year 2024 Revenue: $20.6 million, down 50% from 2023.
  • Gross Profit: $3.8 million in Q4 2024, with a gross margin of 76%.
  • GAAP Net Loss: $4.4 million or $0.25 per share.
  • Cash and Cash Equivalents: $2.8 million as of December 31, 2024.

Outlook & Guidance

Smith Micro forecasts Q1 2025 revenue between $4.6 million and $5.0 million, with expectations for growth in the latter half of the year. The company is targeting new product launches with carriers by summer 2025, which could significantly boost revenue.

Executive Commentary

CEO Bill Smith highlighted the potential of new carrier partnerships, stating, "Just one new win with SafePath OS offerings would be a game changer for our entire company." He emphasized the company’s focus on capitalizing on market opportunities, noting, "We believe the opportunity is immense. We are laser-focused to capitalize on it now."

Risks and Challenges

  • Continued revenue decline poses a risk to financial stability.
  • Competition in the mobile solutions market is intense.
  • Economic uncertainties could impact consumer spending.
  • Dependence on successful product launches and carrier partnerships.
  • Cash reserves are relatively low, limiting financial flexibility.

Q&A

During the earnings call, analysts inquired about the company’s strategy to regain market share and the potential impact of new product launches. Management emphasized ongoing discussions with carriers and the importance of aligning product offerings with customer needs to drive subscriber growth.

Full transcript - Smith Micro Software Inc (SMSI) Q4 2024:

Conference Operator: Good day, and welcome to the Smith Micro Fourth Quarter twenty twenty four Earnings Conference Call. All participants should be in a listen only mode. After today’s presentation, there will be an opportunity to ask questions. Please note this event is being recorded. Would now like to turn the conference over to Mr.

Charles Messman, Vice President and Marketing. Please go ahead, sir.

Charles Messman, Vice President of Marketing, Smith Micro Software: Thank you, operator, and good afternoon to everyone. We appreciate you joining us today to discuss Smith Micro Software’s financial results for the fourth quarter and year ended 12/31/2024. By now, you should have received a copy of the press release with Heitner Krzyzolski. If you do not have a copy or would like one, please visit the Investor Relations section of our website at www.smithmicro.com. On today’s call, we have Bill Smith, our Chairman of the Board President and Chief Executive Officer and Jim Kempton, our Chief Financial Officer.

Please note that some of the information you will hear during today’s discussion consist of forward looking statements, including without limitations, those regarding the company’s future revenue and profitability, our plans and expectations, new product development and availability, new and expanded market opportunities, future product deployments, migration and or growth by new and existing customers, operating expenses and the company’s cash reserves. Forward looking statements involve risks and uncertainties, which could cause actual results or trends to differ materially from those expressed or implied by our forward looking statements. For more information, please refer to risk factors included in our most recent filing Form 10 K. Smith Micro assumes no obligation to update any forward looking statements, which speak to the management’s belief and assumptions only as the date they are made. I want to point out that in our forthcoming prepared remarks, we will refer to specific non GAAP financial measures.

Please refer to our press release disseminated earlier today for a reconciliation of these non GAAP financial measures. With that said, I’ll turn the call over to Bill.

Bill Smith, Chairman, President and CEO, Smith Micro Software: Thanks, Charlie. Good afternoon and thank you for joining us today for our fourth quarter and fiscal year twenty twenty four conference call. We appreciate your interest. Let me begin by looking back at 2024 and reviewing some of the significant changes we made to position the company to return to a state of growth and profitability. I’ll also speak a little about the substantial shift in focus we are making as a company to move us even further ahead.

Throughout the history of Smith Micro, the company has been recognized as a leading business partner with mobile operators around the world. We have distinguished ourselves by offering white label over the top applications with our SafePath and CommSuite platforms, which we have traditionally sold as value added services through our mobile partners. More recently, our latest innovations in the SafePath platform focus instead on aligning with mobile operators’ core business, meeting them with solutions that support what they sell best. With our latest innovations in SafePath Kids and SafePath OS, carriers can now leverage the strength of our SafePath solutions to offer devices and rate plans aimed at creating a safer mobile experience. That is value added services, but is an integral component of the carrier’s core offerings.

When we launched SafePath Kids with Orange Spain’s TuYo solution during the fourth quarter, we made our first significant deployment under this renewed focus. SafePath Kids is a new and innovative SafePath solution. The first of its kind to launch that aligns extremely well with our customers’ vision of offering a rate plan just for kids aimed at a safer first mobile user experience. With this deployment, SafePath is not offered as a value added service, but is integrated directly into the carrier’s offering. Every device on the TuYo rate plan is sold with our built in SafePath powered protections.

With SafePath Kids and Twilio, the strength of SafePath is fully aligned with the carrier’s key strengths and core business, selling new rate plans and supports their vision of offering a safer solution to kids for their first phone experience. With SafePath Kids, Orange can offer parents the peace of mind that comes with starting a child’s mobile journey the correct way by keeping them safer online, limiting screen time, teaching healthy online habits from the get go. We believe that this will prove to be a recipe for success. The launch is in its early stages and while we can’t reveal too much, we do note the SafeMath Kids and its unique ability to support a child focused rate plan has enough appeal to attract subscribers from other carriers. Parents want a safer mobile experience for their kids and they will change carriers to get it.

Our experience thus far is completely aligned with our hypothesis of what could happen by offering this type of solution. More notable, however, is that we continue to demonstrate our ability to innovate and adapt our SafePath platform to align with our mobile operators’ core strengths and principal business objectives, selling new rate plans and devices and adding new subscribers. On our last earnings call, I spoke about our new solution SafePath OS, another new and innovative expansion of our platform, which enables mobile operators to offer an otherwise standard mobile device as a kid’s phone or tablet with built in limits aimed at a safer mobile experience that kids cannot bypass. I also mentioned that we plan to accelerate the development of our schedule for SafePath OS deployments due to the strong interest we saw in the market. I am excited to see that interest continues to broaden.

In fact, we are in in-depth discussions with several partners throughout the world. Later in the call, I will provide a bit more detail around how we plan to maximize this growing interest. I will also introduce you to the newest addition to our SafePath platform, which builds on the same themes of aligning our strategy with the strengths and objectives of our mobile operator partners. But now, let’s turn the call over to Jim to discuss the results. Jim?

Jim Kempton, Chief Financial Officer, Smith Micro Software: Thanks, Bill, and good afternoon, everyone. I’ll now be covering the 2024 financial results for the fourth quarter and full year. During the fourth quarter, we recognized revenue of $5,000,000 compared to $8,600,000 for the same quarter of 2023, a decrease of approximately 42%. When compared to the third quarter of twenty twenty four, revenue increased by approximately $300,000 or 7%. Revenues for 2024 were $20,600,000 versus $40,900,000 in 2023.

The 50% decline compared to the prior year is primarily due to the conclusion of the Verizon Family Safety contract in the fourth quarter of twenty twenty three coupled with a decline in safe and found Family Safety revenue related to the continued attrition of legacy Sprint subscribers driven by T Mobile’s acquisition of Sprint. During the fourth quarter of twenty twenty four, family safety revenues were $3,800,000 which decreased by approximately $3,700,000 or 49% compared to the fourth quarter of the prior year, primarily due to the conclusion of the Verizon Family Safety contract in the fourth quarter of twenty twenty three, coupled with the continued decline in legacy Sprint Safe and Found revenue as was expected. Family safety revenues decreased by approximately $100,000 or 3% compared to the third quarter of twenty twenty four. During the fourth quarter of twenty twenty four, ConSuite revenues were $1,100,000 which increased by approximately $600,000 compared to the fourth quarter of twenty twenty three. Revenue from CommSuite increased by approximately $500,000 compared to the third quarter of twenty twenty four due to a favorable adjustment to revenue recognized during the fourth quarter coupled with continued subscriber growth on the Boost CommSuite premium visual voicemail platform.

ViewSpot revenue was nominal for the fourth quarter of twenty twenty four and declined by approximately $500,000 compared to the fourth quarter of the prior year. The decline in ViewSpot revenues compared to the fourth quarter of twenty twenty three was primarily due to the end of one of our ViewSpot contracts earlier this year. ViewSpot revenues decreased nominally compared to the third quarter of twenty twenty four. In the first quarter of twenty twenty five, we are expecting consolidated revenues to be in a range of approximately $4,600,000 to $5,000,000 This revenue range is driven in part by the expected timing of revenue associated with the opportunities that Bill touched on in his opening remarks, offset by an anticipated decline in CommSuite revenues as compared with the fourth quarter due to a favorable adjustment to revenues recognized in the fourth quarter. In a few minutes, Bill is going to give you more color on the opportunities that we’re pursuing, but the level of engagement in activity that we’re currently seeing is very encouraging.

For the fourth quarter of twenty twenty four, gross profit was approximately $3,800,000 compared to approximately $6,400,000 during the same period of the prior year, a decrease of approximately $2,700,000 primarily due to the period over period decline in revenues. Gross margin was at 76% for the quarter compared to the 75% realized in the fourth quarter of twenty twenty three. The gross profit of $3,800,000 in the fourth quarter of twenty twenty four increased by approximately $400,000 compared to the gross profit produced in the third quarter of twenty twenty four, driven by the sequential increase in revenues quarter over quarter coupled with the decline in cost of sales. In the first quarter of twenty twenty five, we expect gross margin to be in the range of 72% to 75%. For the year ended 12/31/2024, gross profit was $14,400,000 compared to the $30,300,000 during the prior year period.

Gross margin was 70% for 2024 compared to 74 for the twelve months ended 12/31/2023. GAAP operating expenses for the fourth quarter of twenty twenty four were $8,200,000 a decrease of $3,900,000 or 32% compared to the fourth quarter of twenty twenty three, primarily attributable to the cost reduction activities that we executed earlier this year and a decline in amortization costs associated with our intangible assets. GAAP operating expenses for the year ended 12/31/2024 were $63,800,000 compared to $48,400,000 in 2023, an increase of $15,500,000 This year over year increase was driven by the non cash goodwill impairment charge of $24,000,000 incurred in the first quarter of twenty twenty four, which was partially offset by approximately 7,500,000 in cost reductions, primarily related to reductions in personnel costs and decreases in marketing related expenses, coupled with a $1,100,000 decline in depreciation and amortization costs. Non GAAP operating expenses for the fourth quarter of twenty twenty four were 5,800,000 compared to $8,000,000 in the fourth quarter of twenty twenty three, a decrease of approximately $2,200,000 or 27%. Sequentially, non GAAP operating expenses decreased by approximately $1,000,000 or 15% from the third quarter of twenty twenty four.

As we noted in our last earnings call, we had anticipated recognizing quarterly savings in the range of $2,400,000 to $2,800,000 in the fourth quarter of twenty twenty four as compared to the first quarter of twenty twenty four. And we exceeded this goal with a decrease in total non GAAP expenses of approximately $3,100,000 In other words, we have decreased our total quarterly non GAAP operating expenses and cost of sales by $3,100,000 when comparing first quarter twenty twenty four cost to the fourth quarter of twenty twenty four based on cost reduction activities executed this year. We did recognize a one time benefit to occupancy costs of approximately $100,000 in the fourth quarter, which helped us to exceed our goal. We expect first quarter twenty twenty five non GAAP operating expenses to increase by 4% to 7% compared to the fourth quarter of twenty twenty four, driven in part by the aforementioned benefit to occupancy recognized in the fourth quarter, coupled with an increase in costs associated with a couple of major trade shows that we attend in the first quarter of the year, Mobile World Congress and CES, as well as an increase in payroll benefit costs in the first quarter due to the annual reset of the four zero one match and payroll taxes.

Non GAAP operating expenses for the year ended 12/31/2024 were approximately $28,300,000 compared to approximately $35,300,000 for the year ended 12/31/2023, a decrease of approximately $7,000,000 or 20% compared to last year. The GAAP net loss for the fourth quarter of twenty twenty four was $4,400,000 or $0.25 loss per share compared to a GAAP net loss of $6,700,000 or $0.74 loss per share in the fourth quarter of twenty twenty three. GAAP net loss for the twelve months ended 12/31/2024 was $48,700,000 or $3.94 loss per share compared to a GAAP net loss of $24,400,000 dollars or $3.01 loss per share for the twelve months ended 12/31/2023. The non GAAP net loss for the fourth quarter of twenty twenty four was $1,900,000 or $0.11 loss per share compared to a non GAAP net loss of approximately $1,700,000 or $0.18 loss per share in the fourth quarter of twenty twenty three. Non GAAP net loss for the twelve months ended 12/31/2024 was $13,700,000 or $1.11 loss per share compared to a non GAAP net loss of $5,300,000 or $0.65 loss per share for the twelve months ended 12/31/2023.

Within today’s press release, we have provided reconciliation of our non GAAP metrics to the most comparable GAAP metric. For the fourth quarter of twenty twenty four, the reconciliation includes adjustments for intangible asset amortization of $1,300,000 stock compensation expense of $1,000,000 depreciation expense of $100,000 and changes to fair value of warrants of 100,000 For the year ended 12/31/2024, the non GAAP reconciliation includes adjustments for goodwill impairment of $24,000,000 intangible asset amortization of $5,900,000 dollars stock compensation expense of $4,500,000 depreciation of $400,000 and adjustments for non recurring expenses including severance of $800,000 partially offset by $400,000 in changes to the fair value of warrant and $200,000 in proceeds from licenses of patents. Due to our cumulative net losses over the past few years, our GAAP tax expense is primarily due to certain state and foreign income taxes. For non GAAP purposes, we utilized a 0% tax rate for the fourth quarter of twenty twenty four and 2023. The resulting non GAAP tax expense reflects the actual income taxes expense during each period.

We reported $2,800,000 of cash and cash equivalents as of 12/31/2024. I would note that in the fourth quarter, we had payment delays from our largest customers due to a change in the payment platform for that client. We successfully transitioned to a new payment platform in early January, resulting in cash receipts of approximately $2,500,000 from this customer by mid January that we had anticipated collecting in 2024. This issue drove our accounts receivable balance from approximately 3,400,000 as of 09/30/2024 to $5,700,000 as of 12/31/2024. As we are now fully transitioned to the new platform, we do not anticipate any further issues with the timely collection of our receivables from this customer.

This concludes my financial review. Now back to Bill.

Bill Smith, Chairman, President and CEO, Smith Micro Software: Thanks, Jim. Our path forward is clear. We will focus a significant portion of our sales efforts on three family safety offerings. First, we will focus on SafePath Kids, our unique deployment model that enables carriers to offer child focused rate plans, which has already been successfully launched at Orange Spain. Second, we will devote significant effort to the marketing of SafePath OS for kids phones.

And finally, we will leverage SafePath OS to enable carriers to deploy a senior safety phone aimed at capturing another expansive market opportunity for Smith Micro. Let’s discuss the opportunity provided by SafePath OS to deliver a senior safety phone in more detail. Over the coming months, we plan on launching SafePath OS for seniors, which will target a largely untapped, underserved market and which we believe promises great upside. Our research today clearly indicates the senior safety market is one of the fastest growing segments as the population aged 65 is growing up to four times faster than the younger population growth, both here in The U. S.

And across Europe. We also see rapid paradigm shifts in the senior market as their preferences move from purchasing traditional flip phones to upgrading to smartphones. With increases in new seniors purchasing smartphones up to 90% of the time, it is apparent that flip phones are far less desired as a phone of choice today. We believe flip phones will gradually become a micro niche product. Personally, I don’t believe the term elderly properly defines the targeted market of 65 nor do I believe current phones on the market named elderly phones align with the current market demands.

And it is a diverse market that ranges from very active independent seniors to those who want a little extra support to those who want or need assistance from a caregiver. We recently conducted a survey in which we interview seniors in this target market and found that they all want the capabilities of smartphones and tablets bring to the table. Things like watching videos or linking to their favorite social media sites such as Facebook or having the ability to video chat with their grandkids or friends. While the experience on the senior phone will be different when compared to SafePath OS for kids, it will deliver many of the same important safety tools on the SafePath OS platform that seniors need and want as they age in place. Some key features that will be part of the senior launch will include easy to use interface with larger fonts, family safety net, location sharing and geofence, drive and crash protection, online safety suite, check-in and family SOS options and compatibility with voice assistance.

But this is just the beginning as we have a very robust roadmap in place for future updates. SafePath OS powered senior safety phones will be preloaded and preconfigured to fit the needs of the senior market. We already have received meaningful interest from the carrier market for this offering. As a matter of fact, we are receiving unbelievable interest from carriers, both in North America and Europe for all three of our primary go to market SafePath products, SafePath Kids, SafePath OS for kids and SafePath OS for seniors. The number of active sales efforts underway is challenging, but it is a challenge we certainly welcome.

Carriers are even calling us. We believe that our pivot away from offering just value added services and now focusing our innovation efforts on products that carriers can leverage to add new subscribers and sell more devices as the hallmark of being a resounding success. I believe that our SafePath OS offerings also have other competitive advantages. SafePath OS is unique as it allows mobile operators to leverage existing phone inventory from popular handset manufacturers such as Samsung to deliver a phone powered by SafePath OS out of the box. We also can go to market more quickly as this does not entail a backend integration.

Beyond that, our many years of experience in working with OEMs on behalf of our carrier partners is a critical strength that we believe can translate into a more rapid go to market timeline. This pivot and new focus of our company, while still supporting our existing customer base, opens what we believe to be the largest opportunity we have seen in the last fifteen years. Our sales pivot is generating an extraordinary level of interest and excitement and we believe that the market is telling us that the right time for this solution is now. Let’s drive deeper into Orange Spain’s launch of Twillio. The new rate plan was first made available in late November and Orange launched its multimedia marketing campaigns for the new offering in January.

Overall, I am quite pleased with the first wave of marketing campaigns, which included TV commercial advertisements, several digital and social media campaigns, and importantly, in house promotions throughout their retail network. As a company, they have done a fantastic job of integrating the Twilio experience throughout their retail presence in Spain, where in addition to prominent signage and strategic placements throughout their stores, they have made the purchase of a child’s first phone a memorable event. Orange Spain has done a great job training their staff on how to set up the phone and ensure all the feature functionality is available at the point of purchase. As with every customer deployment, we work closely with the customer to arm them with training support, resources and recommendations, sharpening our own ability to support future launches. We believe we are still very early in the launch and we look forward to continued growth from this innovative new deployment.

Before I move on, I’d also like to update you on Mobile World Congress, the largest and most influential trade show in the industry, which was just held last week in Barcelona, Spain. Twilio was showcased and demonstrated not only in our Smith Micro meeting suite, but also prominently at the Orange Spain’s booth. These demos ignited considerable new interest in SafeMath Kits, not only with other Orange properties that we met with, but also with several other mobile operators. We saw tremendous interest across the board, which we believe heightens our credibility as the market leader in the space. In addition, our team had a great week packed with meetings with 30 companies, providing us with significant opportunity to introduce the SafePath platform to a broad array of potential customers.

Okay. Now, let’s talk about AT and T. Overall, we have continued our ongoing advertising campaigns with all the different channels that I mentioned on our last call. We will be adding some new twists in the coming months, particularly around new updates to AT and T Secure Family, including a significantly improved sign up flow that enables subscribers to get up and running much faster. We are working with AT and T on changes that we expect would expand the total addressable market for the solution, while also expanding our reach with broader, more diverse marketing campaigns such as cross promotions with other services that AT and T offers today.

In addition, we are in discussion with about other new initiatives and upgrades of our SafePath solutions. I look forward to sharing more of these developments with you in the coming quarters. Let’s turn now to Boost Mobile. We continue to work closely together with Boost Mobile in the retail channel to cross promote Boost Family Gard to assist in attracting more family plans and postpaid subscribers onto their new network. The timing is good as Boost is undergoing a significant upgrade in their retail footprint with remodels highlighting a theme of postpaid and family plans.

Boost premium visual voicemail powered by our CommSly platform continues to do well adding new subscribers and we expect this trend to continue going forward. They have been conducting several different ongoing promotional activities to drive continued growth to the platform and we believe there may be some opportunities for additional growth by bundling the service along with other cross promotion activities. We have very meaningful discussions and progress on how to expand our reach throughout the organization and have been working diligently on several different potential opportunities beyond Boost Familyguard and Visual Voicemail. We are also engaged in discussions related to our newer offerings that I spoke of earlier in this call. I am pleased with the direction of these discussions and confident that we will get to the finish line for one or more of our new offerings.

Our partnership with T Mobile continues to broaden. We have recently made great strides with the introduction of our newest SafePath offerings with key stakeholders throughout the organization whose objectives align very well with the focus and go to market strategies of these innovative family safety products. I am quite excited with the headway we have made to date and believe that we are on the correct path forward as we look to 2025 and beyond. In conclusion, we are bringing enhanced and powerful new portfolio of our family safety solutions to market. I have already tried to put in perspective just how large an opportunity this is.

Just one new win with SafePath OS offerings would be a game changer for our entire company. And impressively, we had many opportunities which should lead you to think about a lot more than just one customer win. Now these are mobile operators and of course, we must be mindful of how things can take longer or some of their processes in corporate structures. Heck, We know better than most. But when aligned together with a purpose and a timeline, we know things can get done more quickly.

We have proven throughout our history that things can quickly change for the better and that is our mission. I really can’t give justice to how excited I am and the company truly is about the path we are on. We believe the opportunity is immense. We are laser focused to capitalize on it now. Timing and alignment of goals is always critical for success.

And I truly believe the pivot we have made position us to the tipping point needed for profitability and considerable growth. With that operator, I’ll open the call for questions.

Conference Operator: Thank you. We will now begin the question and answer session. And the first question will come from Scott Searle with Roth Capital. Please go ahead.

Scott Searle, Analyst, Roth Capital: Hey, good afternoon. Thanks for taking the questions. It seems like you had a lot of good things going on as we enter 2025, Bill. Maybe to start on Twill, I had the opportunity to see the booth and the level of activity there. I’m wondering, while it’s still early, if you could help us kind of frame how you guys are going to think about success as we look out towards the end of this year into ’26.

I think in the first eighteen months of the initial launch at Sprint, you got to 7% penetration. Is this the same type of magnitude of opportunity? And in terms of other customers, I’m wondering if you could help us understand the number of carriers maybe that you’re talking to. It sounds like Orange is going to roll it out into additional markets, but I’m wondering how quickly you can bring up new customers on a two year type service?

Bill Smith, Chairman, President and CEO, Smith Micro Software: Okay. Let me try to tackle that. First off, there was a lot of positive interest throughout Europe now that is being driven by Twiyo. I mean, all the other carriers are watching what’s going on. And there’s some numbers that I think are really compelling.

For instance, of the sign ups that Orange Spain has been able to track so far, It’s approaching half of those sign ups are coming from competitors. These are families that did not buy from Orange Spain. They were buying from somebody else. And this is an exciting number for carriers. And when they can see that kind of penetration, this is a very good sign for them.

I would say that overall penetration in Spain, we look to be very strong. We think that they have hit on a real need. I think parents recognize the fact that there is a need for online safety for children and that they are able to claim the opportunity to be the first one to have an answer. And I think they’re really trying to capitalize on that. I also think it was not lost on other Orange properties.

The success that Spain has had is very positive. So I think we should look to see further growth that way. Another part of your question, you want to come back, I think, on that?

Scott Searle, Analyst, Roth Capital: Just Bill, in terms of the timeline, how long does it take to bring up a new carrier?

Bill Smith, Chairman, President and CEO, Smith Micro Software: Yes. Okay. You actually asked a question, I assume one of you guys would ask, and that is, well, just how many opportunities are you working with? Well, if you use the fingers on both your hands, you wouldn’t have enough fingers. And you might borrow somebody else’s hands and you might be able to get pretty close.

So that gives you an idea of the magnitude of what we’re talking about. There is a strong interest among carriers to be able to launch a product for back to school. So that’s a summer launch. And that’s what we are really busy on. Now we have been doing a lot of demos.

We’ve done a lot of trials. We’ve in house use with a number of these carriers. And they’ve come to us with things that they would like to see added before launch, it just make it that much more of a complete offering. So we are really busy right now getting that done. But our goal is to have everything done so launches can happen this summer.

And so that should give you some sort of a crash look at how this can roll out. It is a lot of work and the team is being stressed. But you know what, we’ve had some tough years. This is good stress. And so the upside is there and the future should be very bright.

Scott Searle, Analyst, Roth Capital: Very good. That’s very helpful. And maybe if shifting to the aging in place opportunity, this is certainly a nice adjacency that makes a lot of sense. But how far along is the product? When could we expect commercialization and the first customer to go along with it?

It’s a huge market. I think the numbers are 40,000,000 to 50,000,000 that are directly addressable in The United States. So if you could frame maybe the TAM for us and then the timeline to this reaching commercialization with your first customer?

Bill Smith, Chairman, President and CEO, Smith Micro Software: Well, it is a big opportunity and the market is grossly underserved. This is a senior market that really covers a broad spectrum of people. I mean, you’ve got a lot of really active seniors that are out and about and they just are looking for ways to establish a safety network between them and their family and their friends where they can each all take care of each other. And so the core SafePath OS product does all that. It’s already there.

What you don’t need for Sage is you don’t need frontal tube controls. So we just take that out and we add in the drive and crash detection because those are the other things that the seniors I am one of those people. So I kind of know what this is all about. And this is a very exciting market. We’re getting very strong reaction from not only carriers that are primarily focused on the senior market, but also from some of the large carriers that just have no offering for seniors at the present time.

So not only are we talking to them about, okay, let’s launch SafePath OS for kids, But while you’re at it, why don’t you also launch SafePath OS for seniors. And I just think it’s an incredible opportunity for our future.

Scott Searle, Analyst, Roth Capital: Great. And maybe one last one and I’ll get back in the queue. In terms of returning to growth sequentially, we saw a little bit of that in the fourth quarter. I’m wondering if you adjusted for the guidance in the first quarter for the one time catch up in CommSuite, are we up sequentially? And then just as we look out into the second quarter, there are a lot of positive trends that are developing, whether it’s Orange2Yo or others that could be coming on shortly.

Do you expect going forward then from March to June, we should start to return to periods of sequential growth? Thanks.

Bill Smith, Chairman, President and CEO, Smith Micro Software: Yes, I think so. I think what we’re looking for is in the back half of the year showing some very nice growth based on the launching of various customer offerings as we’ve spoken about. We had to take a pause on this quarter because we can’t bring on these new users yet or new customers yet because we had to finish some of these product issues that we needed to just really address. So it’s a little bit of a slowdown, but it’s just a push out. There’s no other issues that anybody should take from this.

I think that you’ll see the growth, you’ll see the return to profitability and the generation of free cash flow in the back half of the year.

Scott Searle, Analyst, Roth Capital: Great. Thank you.

Conference Operator: Our next question will come from Matthew Harrington with Benchmark. Please go ahead.

Matthew Harrington, Analyst, Benchmark: Thank you. My questions were already largely addressed, but I had a couple, at least one dangling. The Black Sea Verizon, which caused a lot of the dislocation over the last two years, I mean, they’re I know they have kind of an institutional imperative to try to do everything in house. But what’s your sense for how they’re faring and who’s out there as far as competition? Because clearly, there’s manifestly a very nice TAM both on the youth side and then the senior side as I think is also a great opportunity.

And then do you have any I know everything’s kind of lumpy in step function, but do you have any vision for where you’d like to be five years from now in the sense of where you are on revenues without providing any guidance for 2025 or even 2026? Thank you.

Bill Smith, Chairman, President and CEO, Smith Micro Software: Okay. Well, five years is a long time, I have to say, I got to think that one through. So we’ve had some periods in our history that have just been unbelievably successful. There was a period where we did over $100,000,000 in sales in a year, well over that. We were generating free cash flow like handover fist.

I believe this business case can do that again. And I think that’s the course that we’re on. I think that it was disappointing that we weren’t able to really grow the value add service side to the level I thought we could. I think making this pivot and going more in line with how the carriers think about things and that really their whole focus is adding subs. So they want to grab these kids with their first phone.

They want to offer a piece of line offering for seniors. These are things that can really help their overall business case. It’s not like a value added service, it’s core, it’s mainstream. It’s the stuff they’re in business to do. And that way we’re more aligned with I think where the real growth is.

So I can’t overstate this. I mean, I just think there’s a bright future and we’re working diligently on it and we’re going to get it done.

Matthew Harrington, Analyst, Benchmark: And what’s your sense for how I mean clearly Verizon has to have a product in the category because as you said they’d be implied they’d be hamstrung and because what’s your sense? And is there even a I guess not Black Swan, but White Swan chance that they could come back to you? I mean, I know you can’t answer that explicitly, but just thinking about is there any real alternative that’s viable for them either what they’re doing in house on the software of the app or and in other words, who did you you almost never mess your competitors and clearly in Europe, I would assume that people are either having to do things in house or there’s someone else who’s also showing up in Barcelona trying to attract folks?

Bill Smith, Chairman, President and CEO, Smith Micro Software: Yes. Look, I think we have the strength in this servicing carriers that nobody else has. So I think if there’s somebody that’s going to win as a carrier, it’s most likely going to be us. In the case of Verizon, they built their own product. They took it in house and they created their own product.

Go look at the app ratings on all the SafePath products that are out there, whether it’s at T Mobile or with AT and T or with Boost Family Guard and now even Twilio. I mean, our app ratings are about as high as you could find. I don’t know that others that try to do it themselves are able to achieve that. There are people that build great apps and there are people that run great carriers. And maybe there’s a role for both of us.

When we talk about SafePath OS, where we’re operating at the operating system level, there’s some other carriers, but none of them are really focused on the there are some other competitors, but then they’re really focused heavily on the carrier market. So I think whether you’re talking about a kid’s phone or a senior safety phone, These are unique opportunities that we can lean on.

Matthew Harrington, Analyst, Benchmark: Great, Bill. It’s great on the apps. I look forward to particularly the second half of this year. Thanks.

Bill Smith, Chairman, President and CEO, Smith Micro Software: Thanks,

Conference Operator: Matt. And this will conclude our question and answer session. I would like to turn the conference back over to Mr. Charles Messman for any closing remarks. Please go ahead, sir.

Charles Messman, Vice President of Marketing, Smith Micro Software: Thanks, everybody, for joining us today. As always, we appreciate your interest. If anyone has any questions or comments that they’d like to chat with us about, please feel free to reach out to us. We also will be attending the ROTH Conference next week. So if anyone is there, please come say hello to us and have a great afternoon.

Thanks, everybody.

Conference Operator: The conference is now concluded. Thank you for attending today’s presentation. You may now disconnect.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers
© 2007-2025 - Fusion Media Limited. All Rights Reserved.