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1. Company Snapshot

1.a. Company Description

Smith Micro Software, Inc.develops and sells software to enhance the mobile experience to wireless and cable service providers worldwide.It offers SafePath Family, SafePath IoT, and SafePath Home product suite, which provides tools to protect digital lifestyles and manage connected devices inside and outside the home; and CommSuite, a messaging platform that helps mobile service providers deliver a next-generation voicemail experience to mobile subscribers, as well as enables multi-language Voice-to-Text transcription messaging.


It also offers ViewSpot, a retail display management platform that provides on-screen and interactive demos to wireless carriers and retailers; and technical support and customer services.The company was founded in 1982 and is headquartered in Pittsburgh, Pennsylvania.

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1.b. Last Insights on SMSI

Smith Micro Software's recent performance was negatively impacted by a Q4 loss of $0.11 per share, in line with estimates, and a decline in revenues year-over-year. The company's fourth-quarter revenues were affected by the conclusion of various contracts and weakness in Sprint Safe & Found revenues. Additionally, the company's Q4 results were influenced by the transition to new business models and the impact of declining legacy products.

1.c. Company Highlights

2. Smith Micro Software's Q3 2025 Earnings: A Mixed Bag

Smith Micro Software reported Q3 2025 revenue of $4.3 million, a 6% decline from Q3 2024 and a 2% decline from Q2 2025. The company's GAAP net loss was $5.2 million, or $0.25 loss per share, while the non-GAAP net loss was $2.6 million, or $0.12 loss per share, beating analyst estimates of a $0.13 loss per share. Gross margin was 74%, and the company expects it to reach 78-80% in 2026. Revenue was impacted by delayed revenue recognition from a feature launch with an existing carrier customer.

Publication Date: Nov -23

📋 Highlights
  • Revenue Decline:: Q3 2025 revenue fell 6% YoY to $4.3M, attributed to delayed revenue recognition from a carrier customer feature launch.
  • Segment Performance:: Family Safety revenue dropped 10% YoY to $3.5M, while CommSuite rose 22% YoY to $792K.
  • Gross Margin Target:: Gross margin at 74%, with a goal to reach 78-80% by 2026 through operational improvements.
  • Cost Reduction:: Annualized cost savings of $7.2M achieved, aligning with breakeven expectations by mid-2026.
  • Financing and Growth:: Raised $2.7M in financing, with SafePath expansion trials underway in North America and Europe to drive future growth.

Segment Performance

Family Safety revenue was $3.5 million, down 10% from Q3 2024, while CommSuite revenue was $792,000, up 22% from Q3 2024. The decline in Family Safety revenue was a significant contributor to the overall revenue decline. However, the company is optimistic about its growth prospects, citing a strong pipeline and a renewed focus on family subscribers in the carrier market.

Cost Reduction and Cash Position

The company implemented cost reduction measures, saving $7.2 million in annualized costs, and expects to be close to breakeven in mid-2026. A strategic financing round raised approximately $2.7 million, bolstering the company's cash position. Cash and cash equivalents stood at $1.4 million as of September 30, 2025.

Outlook and Valuation

The company expects Q4 2025 revenue to be $4.2-4.5 million and gross margin to be 74-76%. Analysts estimate next year's revenue growth at 15.8%. With a P/S Ratio of 0.68, the market appears to have tempered expectations, potentially leaving room for upside if the company executes on its growth initiatives. Additionally, the EV/EBITDA ratio of -0.86 suggests that the market is pricing in significant losses, but the company's efforts to reduce costs and reach breakeven in mid-2026 could lead to a revaluation.

3. NewsRoom

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Smith Micro Congratulates MasOrange on SERES Foundation Award

Dec -02

Source: businesswire.com

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Smith Micro Software, Inc. (SMSI) Q3 2025 Earnings Call Transcript

Nov -06

Source: seekingalpha.com

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Smith Micro Software, Inc. (SMSI) Reports Q3 Loss, Lags Revenue Estimates

Nov -05

Source: zacks.com

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Smith Micro Founder and CEO Bill Smith to Invest $1.5 Million in Financing

Nov -05

Source: businesswire.com

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Smith Micro Reports Third Quarter 2025 Financial Results

Nov -05

Source: businesswire.com

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Smith Micro Announces Strategic Cost Reductions and Leadership Changes

Oct -15

Source: businesswire.com

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Smith Micro Software, Inc. (SMSI) Q2 2025 Earnings Call Transcript

Aug -07

Source: seekingalpha.com

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Smith Micro (SMSI) Q2 Loss Narrows 63%

Aug -07

Source: fool.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (10.27%)

6. Segments

Family Safety

Expected Growth: 10.27%

Family Safety's 10.27% growth is driven by increasing demand for online protection, rising cyberbullying concerns, and growing adoption of mobile devices among children. Additionally, the need for parental control and monitoring features, as well as the company's strategic partnerships and innovative product offerings, contribute to its growth momentum.

ViewSpot

Expected Growth: 10.27%

ViewSpot's 10.27% growth is driven by increasing demand for 5G-enabled wireless networks, rising adoption of IoT devices, and growing need for network optimization and analytics. Additionally, Smith Micro's strategic partnerships and expanding presence in key markets, such as Asia-Pacific, contribute to the segment's growth.

CommSuite

Expected Growth: 10.27%

CommSuite's 10.27% growth is driven by increasing demand for wireless network management, rising adoption of 5G and IoT devices, and growing need for secure and efficient network optimization solutions. Additionally, Smith Micro's strategic partnerships and expanding customer base in the telecommunications industry contribute to the segment's growth.

7. Detailed Products

Poser

A 3D rendering and animation software that enables users to create 3D characters, scenes, and animations

Moho

A 2D animation software that provides a comprehensive set of tools for creating traditional animation, cut-out animation, and rigging

MotionArtist

A 2D animation software that enables users to create interactive comics, animations, and presentations

StuffIt

A file compression and encryption software that enables users to compress, encrypt, and send large files

CheckIt

A diagnostic and repair software that enables users to diagnose and fix common computer problems

8. Smith Micro Software, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for Smith Micro Software, Inc. is medium due to the availability of alternative software solutions in the market.

Bargaining Power Of Customers

The bargaining power of customers for Smith Micro Software, Inc. is low due to the company's strong brand presence and customer loyalty.

Bargaining Power Of Suppliers

The bargaining power of suppliers for Smith Micro Software, Inc. is medium due to the presence of multiple suppliers in the market.

Threat Of New Entrants

The threat of new entrants for Smith Micro Software, Inc. is high due to the low barriers to entry in the software industry.

Intensity Of Rivalry

The intensity of rivalry for Smith Micro Software, Inc. is high due to the presence of strong competitors in the market.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 4.15%
Debt Cost 7.34%
Equity Weight 95.85%
Equity Cost 7.34%
WACC 7.34%
Leverage 4.33%

11. Quality Control: Smith Micro Software, Inc. passed 3 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Growth: 6.0

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Momentum: 0.0

Volatility: 3.7

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Quality: 3.9

Yield: 0.0

Momentum: 2.5

Volatility: 2.3

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Smith Micro Software

A-Score: 3.1/10

Value: 9.4

Growth: 2.6

Quality: 4.5

Yield: 0.0

Momentum: 1.0

Volatility: 1.0

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A-Score: 2.9/10

Value: 9.3

Growth: 2.3

Quality: 3.8

Yield: 0.0

Momentum: 1.5

Volatility: 0.3

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

0.62$

Current Price

0.62$

Potential

-0.00%

Expected Cash-Flows