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    SMSI
    Earnings call· Jun 2026(Q2 FY26)

    SMITH MICRO SOFTWARE Q2 FY26 earnings call SMSI

    Aug 13, 2026 Source

    Executive summary

    Smith Micro Q2 FY26 — Sequential Revenue Growth and New Customer Launches

    Smith Micro reported a second consecutive quarter of sequential revenue growth, driven by strategic initiatives and new customer engagements. The company is poised for further expansion with upcoming product launches and a significant contract extension, leveraging its SafePath platform and new deployment options to tap into broader market opportunities beyond traditional carriers. Management expressed high confidence in accelerating financial growth through the second half of FY26 and into FY27.

    Highlights

    5

    • Delivered second consecutive quarter of sequential revenue growth, up 3% QoQ to $4.3 million.

    • Gross margin significantly improved to 81.3% in Q2 FY26, up from 73.5% in Q2 FY25.

    • Secured two new customer launches for SafePath OS and SafePath Connect, expected in the coming month.

    • Finalizing a significant multi-year contract extension with an existing Tier 1 customer, expected to drive Q3 revenue growth.

    • Non-GAAP operating expenses decreased by 26% YoY to $4.4 million.

    Concerns

    4

    • Q2 FY26 revenue of $4.3 million decreased 2% YoY from $4.4 million in Q2 FY25.

    • New customer launches and a contract extension were delayed from Q2 to Q3 FY26, pushing forecasted revenue.

    • GAAP net loss attributable to common stockholders was $2.7 million, or $0.52 per share.

    • Non-GAAP net loss attributable to common stockholders was $989,000, or $0.19 per share.

    Guidance & targets

    3
    CategoryTargetConfidence
    Total revenue
    $5.0 million to $5.4 million
    high materiality
    High
    Gross margin
    81% to 83%
    medium materiality
    High
    Non-GAAP operating expense increase
    up to 6%
    medium materiality
    Medium

    Segment performance

    2
    SegmentRevenueYoYQoQMargin
    Family Safety
    Revenue decreased by $111,000 YoY but increased by $94,000 QoQ.
    		$3.5 million-3%3%—
    CommSuite
    Revenue increased by $49,000 YoY and grew by $26,000 QoQ.
    		$826,000increased by $49,0003%—

    Operational metrics

    25
    Total revenue
    $4.3 millionup 3% QoQ; down 2% YoY
    Q2 FY26

    Compared to $4.4 million in Q2 FY25 and increased by $120,000 QoQ.

    Total revenue
    $8.6 milliondown 5% YoY
    YTD FY26

    Compared to $9.0 million for the year-to-date period through June 30, 2025.

    Gross profit
    $3.5 millionup 9% YoY
    Q2 FY26

    Compared to $3.2 million in Q2 FY25, an increase of $281,000. Also increased by $219,000 compared to Q1 FY26.

    Gross profit
    $6.8 millionvs $6.6 million YTD FY25
    YTD FY26

    For the year-to-date period ended June 30, 2026.

    Gross margin
    81.3%up from 73.5% in Q2 FY25
    Q2 FY26

    First time over 80% in five years.

    Gross margin
    80%
    YTD FY26

    For the year-to-date period ended June 30, 2026.

    GAAP operating expenses
    $5.9 milliondown 68% YoY
    Q2 FY26

    Compared to Q2 FY25, a decrease of $12.3 million. Excluding one-time events, decreased by $2.5 million or 30%.

    GAAP operating expenses
    $12.6 milliondown $14.2 million YoY
    YTD FY26

    Compared to $26.8 million in the prior year-to-date period.

    Non-GAAP operating expenses
    $4.4 milliondown 26% YoY; down 8% QoQ
    Q2 FY26

    Compared to $5.9 million in Q2 FY25 (decrease of $1.6 million) and decreased by $377,000 QoQ.

    Non-GAAP operating expenses
    $9.1 milliondown 25% YoY
    YTD FY26

    Compared to $12.1 million for the year-to-date period ended June 30, 2025 (decrease of $3 million).

    GAAP net loss attributable to common stockholders
    $2.7 millionvs $15.1 million Q1 FY26
    Q2 FY26

    Loss per share of $0.52. Compared to $15.1 million or $3.88 loss per share in Q1 FY26.

    GAAP net loss attributable to common stockholders
    $6.6 millionvs $20.2 million YTD FY25
    YTD FY26

    Loss per share of $1.28. Compared to $20.2 million or $5.38 loss per share for the six months ended June 30, 2025.

    Non-GAAP net loss attributable to common stockholders
    $989,000vs $2.8 million Q1 FY26
    Q2 FY26

    Loss per share of $0.19. Compared to $2.8 million or $0.71 loss per share in Q1 FY26.

    Non-GAAP net loss attributable to common stockholders
    $2.5 millionvs $5.6 million YTD FY25
    YTD FY26

    Loss per share of $0.48. Compared to $5.6 million or $1.49 loss per share for the six months ended June 30, 2025.

    Cash and cash equivalents balance
    $2.8 million
    as of June 30, 2026

    Balance sheet item.

    Warrant inducement transaction proceeds
    $1.6 million
    Q2 FY26

    To help fund working capital requirements, new five-year warrants issued for the same number of shares.

    Goodwill impairment
    $11.1 million
    Q2 FY25

    One-time event, excluded from non-GAAP operating expenses for comparison.

    Gain on sale of ViewSpot
    $1.3 million
    Q2 FY25

    One-time event, excluded from non-GAAP operating expenses for comparison.

    Intangible asset amortization
    $1.2 million
    Q2 FY26

    Primary adjustment for non-GAAP reconciliation.

    Stock compensation expense
    $171,000
    Q2 FY26

    Adjustment for non-GAAP reconciliation.

    Depreciation expense
    $120,000
    Q2 FY26

    Adjustment for non-GAAP reconciliation.

    Amortization of debt discount and financing issuance cost
    $95,000
    Q2 FY26

    Adjustment for non-GAAP reconciliation.

    Deemed dividend
    $86,000
    Q2 FY26

    Adjustment for non-GAAP reconciliation.

    Reverse stock split cost
    $84,000
    Q2 FY26

    Associated with the shareholder-approved reverse stock split.

    Breakeven revenue estimate
    $5.5 million to $6.0 million
    per quarter

    Analyst estimate for breakeven, implicitly confirmed by management's Q3 guidance and commentary.

    Industry KPIs

    2
    MetricValueDetails
    Revenue growth$4.3 millionUSD
    Operating FCF margin rule of 4081.3%%

    Product announcements

    1
    ProductTypeDetails
    SafePath Connectlaunch

    Deals & partnerships

    6
    Existing Tier 1 customerSignificant multi-year contract extensionmulti-year

    The contract extension was planned for Q2 but delayed.

    U.S. carrierNew agreement for SafePath OS deployment

    This is one of two new customers mentioned. Specifics on target demographic (senior/kids) to be disclosed with marketing activity.

    European customerNew agreement to provide SafePath Connect

    This is the second new customer mentioned, located in Europe. More information will be released in coordination with customer's marketing activity.

    Existing Tier 1 carrierIncrease feature set for family safety application

    Deployment of new feature set with one of the existing family safety applications.

    Existing Tier 1 carrierExpand SafePath platform capabilities, including new deployment options

    Includes introduction of new deployment options.

    Existing European customerAdvanced development for application with additional functionality

    Currently offers Android phones; expanding to iOS.

    Risks & headwinds

    2
    Delayed customer launches and contract extensionQ2 FY26 to Q3 FY26

    Forecasted Q2 FY26 revenue pushed to Q3 FY26

    Mitigation: Launches and signing expected in Q3 FY26, driving Q3 revenue growth.

    Increased non-GAAP operating expensesQ3 FY26

    Up to 6% increase in Q3 FY26 compared to Q2 FY26

    Mitigation: Planned increase to add resource capacity, primarily in engineering, to support pipeline growth.

    What to watch in Q3 FY26

    5

    Launch of SafePath OS with US carrier

    Next month
    CurrentLaunch ready
    TargetSuccessful launch and market reception

    Why it matters

    This is the first SafePath OS deployment and is expected to attract additional customer activity.

    During our last conference call, we discussed the signing of a new agreement for SafePath OS with a U.S. carrier. That launch is ready to go and is one of the two new customers I mentioned earlier.

    Q&A highlights

    6

    When will the two new customers launch, what applications are they deploying (kid/elder phones), and when will the revenue impact start?

    Two new customers (one SafePath OS, one SafePath Connect in Europe) are expected to launch within the next month. The specific target demographic for SafePath OS will be disclosed with marketing activity. Revenue from an expanded product offering with a Tier 1 carrier is expected to start in Q3.

    “both of them are expected to launch in the coming month or so. One of them is a SafePath OS device... Secondly, the other one is the SafePath Connect platform in Europe... And we do expect the revenue from that to start in the third quarter, Scott.”

    asked by Scott Searle · answered by Unknown Executive

    2 min read5 chapters

    Detailed Narrative

    01

    Strategic Priorities & Market Expansion

    Smith Micro is actively executing on strategic priorities, reporting the strongest pipeline activity in years. This includes expanding the SafePath platform with new deployment options such as SDKs and APIs, which are opening new channels and significantly increasing the addressable market beyond traditional wireless carriers. This strategy aligns with current market trends and is expected to drive new revenue streams in the coming quarters⏳.

    02

    New Customer & Contract Momentum

    The company anticipates two new customer launches by month-end: one for SafePath OS with a U.S. carrier and another for SafePath Connect with a European customer. Additionally, a significant multi-year contract extension with an existing Tier 1 customer is days from signing, projected to generate substantial revenue growth starting in Q3 FY26. These initiatives were initially planned for Q2 but were delayed, pushing forecasted revenue to Q3.

    03

    SafePath Connect Launch & Market Reach

    The launch of SafePath Connect represents a key expansion of the family safety strategy. Distributed as a Smith Micro branded product via App Stores, it allows a broader range of partners to quickly offer family safety solutions to their customers, bypassing the lengthy white-label approach. This strategic shift evolves the company from serving a defined carrier market to participating in a much larger family safety opportunity across multiple channels and business models.

    04

    SDK/API Opportunity & Competitive Advantage

    The SDK and API offerings are gaining significant traction, enabling large Tier 1s and MVNOs to integrate Smith Micro's comprehensive family safety features into their 'super apps.' This approach, built on a robust and unparalleled code base, allows for higher volumes and potentially enormous revenue with high margins. Management believes this provides a strong competitive advantage, making it difficult for competitors to match the breadth of features.

    05

    Focus on Senior Market & Resource Allocation

    Smith Micro continues to see strong interest and pipeline activity in the senior safety market, noting it is currently a stronger segment than the kids OS side. To support this growth and the overall pipeline, the company plans to increase non-GAAP operating expenses by up to 6% in Q3 FY26, primarily focused on enhancing engineering resources, including potential investments in AI.

    AI-generated summary of the company’s earnings call. Not investment advice.