Smith Micro Software, Inc. reported significant financial challenges in its 10-Q filing for the third quarter of 2024, reflecting a substantial decline in revenue and increased net losses compared to the same period in the previous year. For the three months ended September 30, 2024, the company generated revenues of $4.6 million, a decrease of 58% from $11.0 million in Q3 2023. This decline was primarily driven by a $5.2 million loss from a Family Safety product line contract that ended in Q4 2023 and a $1.0 million decrease in ViewSpot revenues due to the conclusion of two contracts.

Gross profit for the third quarter of 2024 was reported at $3.3 million, down from $8.5 million in the same quarter of 2023, resulting in a gross profit margin of 71.6%, compared to 77.0% the previous year. Operating expenses decreased slightly to $9.8 million from $10.7 million, attributed to reductions in sales and marketing expenses and general administrative costs. However, the operating loss widened to $(6.5) million from $(2.2) million in Q3 2023, leading to a net loss of $(6.4) million, or $(0.54) per share, compared to a net loss of $(5.1) million, or $(0.61) per share, in the prior year.

For the nine months ended September 30, 2024, total revenues were $15.6 million, down 52% from $32.3 million in 2023. The gross profit for this period was $10.7 million, a decrease of $13.2 million year-over-year. The company reported a net loss of $(44.3) million for the nine months, which included a significant goodwill impairment charge of $24.0 million.

In terms of liquidity, cash and cash equivalents decreased to $1.5 million as of September 30, 2024, down from $7.1 million at the end of 2023. The company has been actively seeking to improve its financial position, having raised approximately $6.5 million through a registered direct offering and private placement in May 2024.

Strategically, Smith Micro has executed new multi-year Family Safety agreements with Tier 1 carriers in both the U.S. and Europe, and launched a new Family Safety solution on the SafePath Global platform. However, the company continues to face challenges, including a reliance on subscriber growth and revenue generation to stabilize its financial condition. The company’s management has expressed concerns regarding its ability to continue as a going concern within the next year, highlighting the need for improved operational performance and cash flow.