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SMITH MICRO SOFTWARE, INC. (SMSI)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 revenue was $4.621M and primary EPS was $(0.16); vs S&P Global consensus of $4.85M revenue and $(0.25) EPS, SMSI delivered a modest EPS beat but a slight revenue miss. Gross margin expanded 710 bps YoY to 72.8% on a leaner cost structure. Non‑GAAP net loss improved YoY to $(2.863)M from $(4.215)M. (estimates marked with asterisks below; see S&P disclaimer)
  • Sequentially, revenue declined ~7% (driven by a Q4 CommSuite revenue adjustment unwind), while gross margin remained strong; GAAP net loss was $(5.178)M (vs $(4.391)M in Q4).
  • Management guided Q2 2025 revenue to $4.4–$4.8M, gross margin 72–75%, and a 1–4% sequential reduction in non‑GAAP OpEx—implying continued cost discipline and stable unit economics.
  • Product catalysts: launch of AI‑enabled SafePath 8, continued momentum with Orange Spain’s TúYo (SafePath Kids), and expanding carrier dialogues (AT&T, T‑Mobile, Boost; new European prospects). ViewSpot divestiture post‑quarter tightens focus on Family Safety.
  • Liquidity/corporate actions: $2.288M cash at quarter‑end; company filed a new $75M shelf to replace an expiring one, and later appointed a combined COO/CFO to drive operations and finance execution.

What Went Well and What Went Wrong

  • What Went Well
    • Gross margin improved to 72.8% (from 65.7% YoY) on a leaner model; non‑GAAP net loss narrowed YoY to $(2.863)M ($(0.16) per share).
    • Strategic pipeline expanded: “I am optimistic about closing new customer deals and expanding agreements…in the coming weeks and months,” with SafePath 8 introducing AI‑powered features (social media intelligence, dynamic age‑awareness, AI blocking, Family AI assistant).
    • Early traction and broader interest: Orange Spain TúYo “off to a strong start,” with expanded trials and EU operator interest post‑MWC; deepening engagement with AT&T/T‑Mobile/Boost.
  • What Went Wrong
    • Topline pressure: Revenue fell ~20% YoY and ~7% QoQ, with ViewSpot legacy declines and a Q4 CommSuite adjustment reversing; Family Safety was essentially flat QoQ.
    • Cash remains tight at $2.288M, necessitating shelf registration renewal to preserve financing flexibility.
    • Customer concentration and legacy product attrition (e.g., Sprint Safe & Found) continued to weigh on YoY comparisons; GAAP net loss was $(5.178)M.

Financial Results

Table A. Headline P&L vs prior year and prior quarter

MetricQ1 2024Q4 2024Q1 2025
Revenue ($M)$5.798 $4.969 $4.621
Gross Margin (%)65.7% 75.6% 72.8%
GAAP Net Loss ($M)$(31.007) $(4.391) $(5.178)
GAAP EPS ($)$(3.28) $(0.25) $(0.28)
Non‑GAAP Net Loss ($M)$(4.215) $(1.918) $(2.863)
Non‑GAAP EPS ($)$(0.45) $(0.11) $(0.16)

Table B. Quarterly trend (last three quarters)

MetricQ3 2024Q4 2024Q1 2025
Revenue ($M)$4.648 $4.969 $4.621
Gross Margin (%)71.6% 75.6% 72.8%

Table C. Segment revenue detail

SegmentQ4 2024Q1 2025Notes
Family Safety ($M)$3.8 $3.8 Q1 roughly flat QoQ; down ~$0.7M YoY due to legacy Sprint attrition
CommSuite ($M)$1.1 ~$0.7 QoQ decline reflects reversal of Q4 favorable adjustment
ViewSpot ($M)Nominal ~$0.1 YoY down ~$0.6M on contract end

Table D. Liquidity/KPIs

KPIQ3 2024Q4 2024Q1 2025
Cash & Cash Equivalents ($M)$1.509 $2.808 $2.288

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($M)Q1 2025$4.6–$5.0 (given Mar 11, 2025) Actual: $4.621 Achieved within range
Revenue ($M)Q2 2025N/A$4.4–$4.8 Initiated
Gross Margin (%)Q2 2025N/A72–75% Initiated
Non‑GAAP OpEx (seq.)Q2 2025N/ADown 1–4% vs Q1 Initiated

Earnings Call Themes & Trends

TopicQ3 2024 (Q‑2)Q4 2024 (Q‑1)Q1 2025 (Current)Trend
AI/Tech initiativesIntroduced SafePath OS and SafePath Kids Plan alignment with device/plan sales Reinforced SafePath OS/Kids and pivot; laid path to profitability Detailed SafePath 8 AI features (social media intelligence, age‑awareness, AI blocking, Family AI assistant) Accelerating product vision
Product performanceCommSuite growth at Boost; cost cuts tracking Q4 CommSuite uplift from favorable adj.; TúYo launch driving interest CommSuite down QoQ due to Q4 adj.; Family Safety flat QoQ Mixed near‑term, setup for H2
Regional momentum (EU)Expected Tier‑1 EU launch; strong pipeline TúYo launched; showcased at MWC; broad EU interest Trials with multiple EU operators; back‑to‑school initiatives with Orange Spain Broadening
U.S. carriers (AT&T/T‑Mobile/Boost)AT&T influencer/CTV campaigns; Boost cross‑promotions; T‑Mobile broadening Continued campaigns and product updates; broader T‑Mobile engagement AT&T updates to expand audience; bundling opps at Boost; T‑Mobile engagement continues Steady to improving
Cost structure/OpExTargeted $2.4–$2.8M quarterly savings by Q4 Achieved >$3.1M decrease vs Q1’24; Q1’25 OpEx to rise on seasonality Q2’25 non‑GAAP OpEx to decline 1–4% seq. Discipline sustained
Capital/financingRaised ~$6.9M in Oct’24; CEO invested $3M Cash $2.8M YE; AR timing resolved New $75M shelf registration filed Bolstering flexibility

Management Commentary

  • “I am optimistic about closing new customer deals and expanding agreements with our current customer base in the coming weeks and months for our new and expanded offerings.” — CEO William W. Smith Jr.
  • “With SafePath 8, we will bring the power of AI to every member of the family…including social media intelligence…dynamic age‑aware platform…AI blocking…[and] Family AI assistant.” — CEO
  • “In the second quarter of 2025, we are expecting consolidated revenues to be in a range of approximately $4.4 million to $4.8 million…[and] gross margin…72% to 75%.” — CFO James Kempton
  • “We filed a new shelf registration…including $75 million of capacity.” — CFO

Q&A Highlights

  • Orange Spain TúYo traction: “Off to a strong start…expect better adoption as we get into the summer and the back‑to‑school period.” — CEO
  • SafePath Kids pipeline/timing: Expect “meaningful launches in the third quarter” around back‑to‑school; AI well‑received by operators. — CEO
  • SafePath OS for seniors: First trial completed; targeting fall availability with potential 4Q holiday launch; SafePath 8 to be a premium offering. — CEO
  • Platform coverage: Solutions extend beyond smartphones to tablets; OS leverages mainstream Android OEM devices already in carrier channels. — CEO
  • Competitive dynamics: Carriers attempting in‑house builds face quality hurdles; SMSI emphasizes carrier‑grade, high‑rated apps and OS‑level solutions. — CEO

Estimates Context

MetricQ1 2025 ConsensusQ1 2025 ActualNotes
Revenue ($M)$4.850*$4.621 Slight miss vs consensus; 2 estimates*
Primary EPS ($)$(0.25)*$(0.16)*Beat vs consensus; 2 estimates*

Values marked with * retrieved from S&P Global.

Key Takeaways for Investors

  • Execution vs estimates: Slight top‑line miss but EPS beat; gross margin resilience supports the path to breakeven as OpEx declines.
  • Near‑term guide implies stable demand and disciplined costs (Q2 revenue $4.4–$4.8M; GM 72–75%; non‑GAAP OpEx down 1–4%), limiting downside while management pursues H2 catalysts.
  • Product catalysts (SafePath 8 AI, SafePath OS for seniors/kids, SafePath Kids rate plans) align with carrier core motions (devices/rate plans) and may unlock faster adoption vs legacy OTT.
  • Commercial momentum building with Orange Spain and broader EU interest; multiple U.S. carrier engagements continue (AT&T/T‑Mobile/Boost). Back‑to‑school (Q3) is a key watch point.
  • Balance sheet/financing optionality: New $75M shelf in place; focus has shifted to Family Safety with ViewSpot divested, concentrating resources on growth vectors.
  • Risk factors: Customer concentration and legacy attrition remain headwinds; maintaining liquidity and converting pipeline to launch‑driven revenue ramps are critical in H2.
  • Trading setup: Narrative likely driven by concrete launch announcements (kids/seniors devices, rate‑plan deployments), SafePath 8 release milestones, and sequential revenue traction into H2.

Supporting Details and Additional Press Releases

  • Q1 2025 press release: full P&L, cash flow, and non‑GAAP reconciliations.
  • SafePath 8 AI feature set and ecosystem coverage (Kids plans, OTT apps, SafePath OS).
  • Q4 2024 and Q3 2024 earnings materials for trend context.
  • Corporate updates post‑quarter: New COO/CFO appointment (June 9, 2025 start) and ViewSpot divestiture (June 3, 2025).