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- **Revenue decline but strategic focus**: Q2 revenue $4.4M (-14% YoY), driven by legacy Sprint revenue decline, but AI-enabled SafePath 8 and senior phone solutions position for growth.
- **Product innovation**: Launch of SafePath 8 with social media AI, blocking features, and AI assistant; SafePath OS for seniors expected Q3.
- **Partnership momentum**: Orange Spain, AT&T, and T-Mobile expanding marketing and product integrations.
- **Financial stabilization**: Non-GAAP net loss $2.8M (-30% YoY), cash $1.4M + $1.5M from offering.
- **Market opportunity**: Senior phone market seen as larger than kids phones, with carriers prioritizing family safety solutions.

**【Management Opening Remarks】**
- Charles Messman welcomed participants and provided context on the press release availability.
- Noted that forward-looking statements involve risks and uncertainties, with a reminder to review Form 10-K for risk factors.
- Highlighted the use of non-GAAP financial measures, referencing the press release for reconciliations.

**【CEO Summary Section】**
- Bill Smith welcomed Tim Huffmyer back as CFO/COO, emphasizing his role in driving growth.
- Highlighted sales momentum with SafePath Kids and Senior phones, powered by SafePath OS and AI-enabled SafePath 8.
- Announced new features for SafePath OS, including no-inventory-required setup and default configuration for ease of use.
- Discussed upcoming launches: SafePath 8 (social media intelligence, AI blocking, and AI assistant) and SafePath OS for seniors by end of Q3.
- Highlighted partnerships with Orange Spain (TuYo rate plan), AT&T (expanded marketing), and T-Mobile (interest in SafePath 8).
- Expressed confidence in a turnaround, with sequential revenue growth expected in Q3 and Q4.

**【CFO Financial Commentary】**
- **Q2 2025 Financials**: Revenue $4.4M (14% YoY decline), Family Safety $3.6M (14% YoY decline), CommSuite $777K (24% YoY increase).
- **Gross Profit**: $3.2M (74% margin vs. 69% YoY), year-to-date $6.6M (73% margin).
- **Operating Expenses**: GAAP $18.2M (73% YoY increase due to $11.1M goodwill impairment), Non-GAAP $5.9M (22% YoY decrease).
- **Net Loss**: GAAP $15.1M ($0.78 per share), Non-GAAP $2.8M ($0.14 per share).
- **Q3 Guidance**: Revenue $4.5M-$4.8M, gross margin 72%-75%, modest decline in Non-GAAP expenses.
- **Cash Position**: $1.4M as of June 30, plus $1.5M from July follow-on offering.

**【Q&A Key Highlights】**
- **Question**: Market TAM and competition in family safety.
- **Answer**: Bill Smith emphasized carriers' focus on family subs (low churn, high spend) and Smith Micro's leadership in AI-driven solutions.
- Highlighted senior phones as a larger potential market than kids phones, with carriers expressing strong interest.
- Reiterated confidence in Smith Micro's unique ecosystem of family safety solutions.

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

Revenue

Sales and Services Revenue

Financing Services Revenue

Other Revenue

Cost of Revenue

Cost of Goods and Services

Cost of Financing Services

Other Cost

Gross Profit

Other Operating Income

Operating Expenses

Selling, General and Administrative Expenses

Selling and Marketing Expenses

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Research and Development Expenses

Loss on Bad Debts

Loss on Impairment of Other Assets

Loss on Disposal of Assets

Other Operating Expenses

Operating Income

Non-Operating Income (Loss)

Income (Loss) from Affiliates

Income (Loss) from Associates

Income (Loss) from Joint ventures

Gain (Loss) on Other Investment

Gain (Loss) on Change in Fair Value

Gain (Loss) on Foreign Currency Exchange

Other Non-Operating Income (Loss)

Net Interest Expense

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Interest Income

Pretax Income From Continuing Operations

Income Tax Expense

Current Income Tax

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Net Income from Continuing Operations

Income from Discontinued Operations

Other Items Before Net Income

Net Income

Net Income Attributable to Minority Interests

Net Income Attributable to Owners of the Company

Preferred Stock Dividends

Other Adjustments

Net Income Attributable to Common Stockholders

Other Comprehensive Income

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Total Comprehensive Income Attributable to Minority Interests

Total Comprehensive Income Attributable to Owners of the Company

Basic EPS

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Basic EPS from Discontinued Operations

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Diluted EPS from Continuing Operations

Diluted EPS from Discontinued Operations

SMSI

SMSI fundamentals

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