Smith Micro Software Inc SMSI reported a third-quarter 2024 non-GAAP loss of 30 cents per share against earnings of 8 cents in the prior-year quarter. The bottom line was narrower than the Zacks Consensus Estimate of a loss of 31 cents. 

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Revenues in the quarter totaled $4.6 million, which missed the Zacks Consensus Estimate by 3.2%. Despite innovative product launch strategy and cost-cutting initiatives, revenues plunged 58% year over year due to continued downtrends across various revenue segments. 

Smith Micro Software, Inc. Price, Consensus and EPS Surprise

Smith Micro Software, Inc. price-consensus-eps-surprise-chart | Smith Micro Software, Inc. Quote

In the reported quarter, the Family Safety segment’s revenues declined nearly $5.2 million or 57% to $3.9 million from the prior-year level. This downside resulted from the conclusion of the Verizon Family Safety contract in the fourth quarter of 2023, due to which no revenues were generated from this segment. Also, persistent weakness in Sprint Safe & Found revenues had an adverse impact. 

CommSuite segment’s revenues decreased roughly 14.3% year over year to $0.6 million. On a sequential basis, CommSuite sales increased $0.1 million, driven by healthy subscriber engagement on the Boost CommSuite premium visual voicemail platform. This is likely to benefit the fourth quarter as well, added SMSI. 

Revenues from the ViewSpot segment fell $1 million year over year to $0.1 million, mainly due to the termination announcement of the ViewSpot deals. 

Following the announcement, shares are down 12.2% in the premarket trading session today. In the past year, shares have lost 86.3% against the subindustry’s growth of 21.7%.

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SMSI’s Margin Details

Gross margin for the September quarter fell to 71.6% from 77% of the prior-year quarter, owing to top-line contraction year over year.

Non-GAAP operating expenses for the third quarter were $6.8 million, down nearly 12% year over year.

Total operating expenses were $9.8 million, down 8% year over year.

Balance Sheet of SMSI

As of Sept. 30, 2024, SMSI had total cash and cash equivalents of $1.5 million compared with $5.6 million as of June 30, 2024.

For the nine months ended Sept. 30, 2024, SMSI used $9.4 billion of cash from operating activities compared with $6 billion in the previous-year period.

SMSI’s Q4 Outlook

SMSI estimates revenues in the band of $5-$5.2 million.

Gross margin is expected in the range of 72-75%.

Management now expects to achieve cost savings of at least $2.4 million to $2.8 million by the fourth quarter of 2024. For the fourth quarter, non-GAAP operating expenses are forecasted to decrease 7% to 12% compared with the third quarter of 2024.

SMSI’s Zacks Rank

SMSI currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Companies in the Broader Tech Space

Seagate Technology Holdings plc STX reported first-quarter fiscal 2025 non-GAAP earnings of $1.58 per share, beating the Zacks Consensus Estimate by 6.8%. The company reported a non-GAAP loss of 22 cents per share in the year-ago quarter. This improvement in the bottom line was driven by a favorable mix shift to mass-capacity products and a better pricing environment. Non-GAAP revenues of $2.168 billion beat the Zacks Consensus Estimate by 2.4%. The figure increased 49% on a year-over-year basis and 15% sequentially. Shares of STX have gained 31.7% in the past year.

Badger Meter, Inc BMI reported EPS of $1.08 for the third quarter of 2024, beating the Zacks Consensus Estimate by 5.9%. Quarterly net sales were $208.4 million, up 12% from $186.2 million in the year-ago quarter. This uptick resulted from continued strong yet normalizing demand for its tailorable water management solutions. Shares of BMI have gained 50.9% in the past year. 

Iridium Communications IRDM reported EPS of 21 cents for the third quarter of 2024, beating the Zacks Consensus Estimate by 5%. The company incurred a loss of a cent per share in the prior-year quarter. Quarterly revenues were $212.8 million, up 8% from the year-ago level, driven by strength across all three segments. The Zacks Consensus Estimate was pegged at $205.7 million. Shares of IRDM have lost 23% in the past year.

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