SMSI

Good day, and welcome to the Smith Micro First Quarter 2026 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask question. To ask a question you may press star then one on your touchtone phone. To withdraw a question, please press star then two. Please note this event is being recorded. I would now like to hand the conference over to Charles Messman. Please go ahead.

Thank you, operator. We appreciate you joining us today to discuss Smith Micro Software's financial results for the first quarter of 2026. By now, you should have received a copy of the press release with the financial results. If you do not have a copy and would like one, please visit the investor relations section of our website at www.smithmicro.com. On today's call, we have Bill Smith, our Executive Chairman of the Board, Tim Huffmyer, our President and CEO, and Bethany Braund, our Chief Financial Officer. Please note that some of the information you'll hear during today's discussion consists of forward-looking statements, including without limitations, those regarding the company's future revenue and profitability, our plans and expectations, development and availability, new and expanded market opportunities, future product deployments, growth by new and existing customers, operating expenses, and company cash reserves.

Forward-looking statements involve risks and uncertainties, which could cause actual results or trends to differ materially from those expressed or implied by our forward-looking statements. For more information, please refer to the risk factors included in our most recently filed Form 10-K. Smith Micro assumes no obligation to update any forward-looking statement, which speak of management's beliefs and assumption only as the date they are made. I want to point out in our forthcoming prepared remarks, we will refer to specific non-GAAP financial measures. Please refer to our press release disseminated earlier today for reconciliation of these non-GAAP financial measures. With that said, I'll turn the call over to Bill. Bill?

Thanks, Charlie, and thank you for joining us today for our first quarter 2026 conference call. We accomplished several key initiatives during the first quarter, positioning us for a solid fiscal 2026. First, we signed a contract with the first of the two new carrier customers I mentioned on our last call. Second, we completed the implementation of our executive succession plan, with Tim now serving as CEO, Bethany as CFO, and me as Executive Chairman. This transition has been seamless, and we are optimistic as ever about the company's future with a great team leading the charge. Third, we made great progress on the sales front as our pipeline now shows exponential growth with both new carrier customers that are yet to be announced, as well as expansion with current customers.

I truly believe we have now turned the corner and are set for a return to growth and profitability. As such, I want to reiterate our Q2 outlook from our last call. We believe that we are looking for strong top-line growth in Q2, which will in turn result in a non-GAAP black number on the bottom line. Furthermore, we believe we will continue to deliver strong revenue growth and growing profitability for the remainder of fiscal 2026. This revenue growth in 2026 should lead to renewed cash generation. Success in 2026 should lead to a very strong 2027. In addition to growing revenues, we have continued to reduce both our cost of goods sold as well as our overall operating expenses, and we believe this trend will continue throughout 2026.

We have been able to achieve these reductions through enhanced operational efficiency, streamlined operations, and better aligned resources to accelerate innovation and bring our solutions to market more quickly. Overall, I am extremely excited about the changes we have made across the organization and now have positioned Smith Micro for success. Our strategic shift to focus beyond traditional value-added services is working. Across our customer base, the family market has become a much higher priority from the top down, creating what we believe to be significant expanded opportunities for Smith Micro around the world. With that said, and before Tim provides the business update, let's turn the call over to Bethany for the financial update. Bethany?

Thanks, Bill. Good afternoon, everyone. It is an honor to be speaking with you today as CFO amongst the incredible team that we have here at Smith Micro. Initially, I want to cover a few transactions since last year-end. As was mentioned in our last earnings call, in March, Bill and Dieva Smith entered into notes transactions through their trust, which provided the company with $4 million of new funding. Additionally, alongside the Smiths' investments in the March convertible note transaction, most of our other outstanding notes, which were due to mature at the end of March, were also rolled into new convertible notes with three-year terms. We are also continuing to see benefits from the strategic cost reductions we announced in October 2025. We are still executing on these changes and will continue to see their longer-term benefits as we remove certain costs.

Our focus remains on achieving maintainable profitability through a thoughtful and systematic approach to both revenue growth and cost optimization. Now, let's cover the financial results of the first quarter of 2026. For the first quarter, we recognized revenue of $4.2 million compared to $4.6 million for the same quarter of 2025, a decrease of 9%. When compared to the fourth quarter of 2025, revenue increased by $247,000 or 6%. During the first quarter of 2026, family safety revenue was $3.4 million, which decreased by $367,000 or 10% compared to the first quarter of last year. Family safety revenues increased by $244,000 or 8% compared to the fourth quarter of 2025.

During the first quarter of 2026, CommSuite revenue was $800,000, which increased by $66,000 compared to the first quarter of 2025. Revenue from CommSuite also grew by $3,000 as compared to the fourth quarter of 2025. As previously indicated, we sold our ViewSpot product for $1.3 million in June 2025, and we will no longer have any future revenue from this product. ViewSpot revenue was $99,000 in the first quarter of 2025. For the second quarter of 2026, we expect historically contracted revenues of approximately $4.2 million.

Based on the new contract that Bill mentioned, additional contracts that we are actively working on and projects scheduled for delivery during the quarter, total revenue recognized for 2026 second quarter is expected to increase and could reach approximately $5.2 million or a 24% growth as compared to the first quarter of 2026. Our development teams are already fully engaged on these projects and execution is well underway. As I noted, this outlook includes revenue associated with the launch of the solution under the recently executed new contract that Bill mentioned, which we believe marks the beginning of a new trajectory of meaningful continued revenue growth in 2026.

While our expectation for the quarter includes some non-recurring engineering revenue from this and other projects, we anticipate that following these launch activities, the underlying revenue streams will drive sustained upward momentum and support the continued execution of additional contracts. For the first quarter of 2026, gross profit was $3.3 million compared to $3.4 million during the same period of the prior year, a decrease of $53,000 primarily due to the period-over-period decline in revenues. However, gross margin was at 78.4% for the quarter. Quite an improvement as compared to the 72.8% realized in the first quarter of 2025.

The gross profit of $3.3 million in the first quarter of 2026 increased by $275,000 compared to the gross profit realized in the fourth quarter of 2025. In the second quarter of 2026, we expect continued improvements and for gross margin to be in the range of 81%-83%. We believe we are making our way toward what Tim has previously indicated is our longer term goal for gross margin at 85%. GAAP operating expenses for the first quarter of 2026 were $6.7 million, a decrease of $1.9 million or a 22% decline as compared to the first quarter of 2025.

The reduction was a result of our cost optimization activities that we have executed, inclusive of personnel and organizational cost reduction activities as well as lower stock compensation costs. Non-GAAP operating expenses for the first quarter of 2026 were $4.7 million compared to $6.1 million in the first quarter of 2025, a decrease of approximately $1.4 million or 23%. Sequentially, non-GAAP operating expenses were essentially flat compared to the fourth quarter of 2025. We anticipate a further decline in non-GAAP operating expenses of 8%-11% in the second quarter of 2026 as compared to the first quarter of 2026, as we continue to realize the further positive impact of our reorganization efforts.

The GAAP net loss for the first quarter of 2026 was $3.9 million, or a $0.15 loss per share, compared to the loss of $5.2 million, or a $0.28 loss per share in the first quarter of 2025. The non-GAAP net loss for the first quarter of 2026 was $1.5 million, or a $0.06 loss per share, compared to the non-GAAP net loss of $2.9 million, or a $0.16 loss per share in the first quarter of 2025. Within today's press release, we have provided a reconciliation of our non-GAAP metrics to the most comparable GAAP metric.

For the first quarter of 2026, the reconciliation primarily includes adjustments for intangible asset amortization of $1.2 million, stock compensation expense of $586,000, depreciation expense of $69,000, amortization of debt discount and financing issuance costs of $431,000, and personnel and reorganization costs of $126,000. Due to our cumulative net losses over the past few years, our GAAP tax expense is primarily due to certain state and foreign income taxes. For non-GAAP purposes, we utilized a 0% tax rate for 2026 and 2025. The resulting non-GAAP tax expense reflects the actual income taxes expensed during each period. On the balance sheet, we reported $1.7 million of cash and cash equivalents as of March 31, 2026. This concludes my financial review.

Now I'll pass it over to Tim.

Thanks, Bethany. Thank you, Bill, for leading us off on the call. We appreciate everyone joining us for the call today. It's been a very busy quarter as we've continued building on the realignment and organizational changes made throughout last year and into the current year. Those efforts are beginning to show results as we look ahead to fiscal 2026 with a clear focus on growing revenue, increasing operational leverage, and delivering profitability. During the first quarter, I had the opportunity to dive deeper into the business, working across teams to further optimize our output while enhancing our internal technology capabilities to drive productivity and execution. Overall, I'm pleased with the progress we're making, while also recognizing that we're still early in the process and committed to continuous improvement as we move forward. I also enjoyed engaging with existing and prospective customers during the quarter.

These conversations have strengthened our relationships and given us a clear understanding of customer priorities, allowing us to evolve and focus our go-to-market strategies while looking to maximize the value of offerings we have in market today. We have strong partners and strong relationships, and I see meaningful opportunity to build on that foundation. Now, I want to spend a few minutes talking about some market trends we're seeing and how they directly align with the expansion of our portfolio to serve a broader addressable market. Our SafePath OS solution for phones tailored to kids and seniors continues to resonate with carriers among both current customers and new prospects. You'll recall from our previous calls that SafePath OS is our software solution that enables carriers to offer an otherwise standard phone as a device specifically tailored to kids and seniors right out of the box.

SafePath OS provides carriers with a tool to grow their subscriber base with the highest quality subscribers available in the market, the family sub. One of the most notable trends is the focus on super apps being developed by mobile operators around the world. These initiatives are becoming a higher priority across large MNO organizations as they look to deepen customer engagement and deliver more value through a single integrated experience. We believe this creates a very strong opportunity for Smith Micro as it aligns well with both the flexibility of our SafePath solutions and our long-standing expertise on delivering carrier-grade solutions. This is core to who we are and what we do best. This unique strength positions us well as we expand the way we deliver our solutions, whether as an out-of-the-box solution for senior and child-tailored phones through SDK and APIs, or as an over-the-top application.

Much of the SafePath 8 development supporting these solutions has been completed, which we believe positions us to deliver solutions and produce revenue more rapidly. These deployment models also support meaningful upselling and add-on opportunities like IoT and other capabilities that can be configured to meet the specific needs of our partners and significantly expand the overall market we can address. Taken together, I believe this approach is opening new windows of opportunities for Smith Micro as we look ahead. In addition, we are seeing momentum within the MVNO market. As these operators look to differentiate themselves and attract new subscribers, enhanced family solutions are increasingly becoming a priority within their offering. We view this as a growing opportunity and one that plays directly to our strengths. In parallel, we are also taking a broader view of how and where we bring our solutions to market.

While mobile operators remain central to our core strategy, this year we are exploring new ways to extend our technology beyond the traditional carrier ecosystem and unlock potential new revenue opportunities while leveraging the same core capability, domain expertise, and carrier-grade standards that have long differentiated Smith Micro. While these initiatives are still exploratory and evolving, we are encouraged by early activity and engagement, and we believe this approach positions us well as we look ahead. I look forward to providing updates on this initiative in the coming quarters. Now let's focus on the short term, the second quarter. During Q2, we expect our current contracts to perform consistent with the first quarter. However, we have also guided on revenue growth related to the deployment and launch of multiple solutions.

As Bill mentioned in his opening comments, we've signed a new contract with a new carrier customer and expect to deliver our solution by the end of Q2. This solution is based on our existing SafePath OS solution, and although it contains some customization, the additional development time can be measured in months and not quarters. We are pursuing multiple other opportunities with new carrier customers, including the second expected new customer mentioned on our last call, all of which we anticipate will result in new solution deployments late in the second quarter and beyond in 2026. We are in active discussions with existing customers to expand their current offerings. This expansion is centered around SafePath 8 functionality, allowing us to deploy sooner and with less development requirements than historically realized.

The team is extremely motivated and focused on this inflection point, which will further support margin growth and non-GAAP profitability within the quarter. In closing, our organizational changes have allowed our teams to be more focused than ever on the near-term delivery schedule and providing the operational leverage needed to produce profitable revenue growth. At the same time, we are driving to secure other carrier customer opportunities to help us achieve sustainable revenue growth. Lastly, we are investing in further development of our solution that can meet the demands of the market we now serve and can be applied to adjacent markets outside of our normal carrier footprint. This is an exciting time. We expect top-line growth in the second quarter. We believe we will see consistent revenue growth resulting in sustainable non-GAAP profitability and free cash flow.

We are confident that we are at a turning point for the company and are excited for the opportunities that lie ahead. Operator, please open the line for questions.

Thank you. We will now begin the question-and-answer session. To ask a question, you may press star then one on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. The first question comes from Scott Searle with Roth Capital Partners.

Hey, good afternoon. Thanks for taking my questions, and congrats on moving back into growth mode. Bill, Tim, and Bethany, also congrats on your new roles.

Thanks, Scott.

Maybe just to start off, Tim, I want to clarify the guidance. You're basically saying the core business is flat, so it's nice to see stabilization on that front. Is the formal guidance then $5.2 million with the expectation that you're going to have definitely these two additional carriers and opportunities going live? As part of that, it sounds like there's some customization and development. Is that one time NRE that we would expect it should be transitioning into recurring revenues as we go forward into future quarters?

Yeah, great question. The guidance on the upper end of the range is the $5.2, Scott. That would be hitting on all cylinders as we see it today. We offered it that range, you know, just to provide the full scope of what we're staring at as we think about the second quarter. You know, you can kind of set the guidance, you know, from there. That is the range that we're providing, and there is stability in the core business. You picked up on all that correctly. As far as, you know, engineering and non-recurring engineering type activities, there is a certain percentage that would flow into this quarter.

You know, generally speaking, Scott, you know, you could look at any one project might have 25%-75% type NRE type activity. A good portion of that growth could come from that non-engineering activity and, as you stated, then convert into recurring revenue. You're thinking about our revenue correctly, and just wanted to reiterate that.

Very helpful. Just to follow up, in terms of looking forward then into the second half of this year, it sounds like you're expecting sequential growth notwithstanding some of that possible NRE as you have carriers converting into commercial deployments in full quarter of contribution. Is that correct as well? Maybe if you could provide a little bit more color in terms of the application where you're winning. You've referenced SafePath OS, but that supports both kids as well as elder care opportunities. I'm wondering where you're seeing more of the movement and the near-term adoption as we think about, you know, 2026.

You know, timing is important here, right? We have delivery schedules. We're working towards deadlines here in the quarter. Some things may slip into next quarter, right? Within that range, we expect to be on top of first quarter numbers. We do expect, you know, to be on top of those numbers as well. Some of its timing, Scott, you know, there's a little bit of art to how that might play out. We are looking for revenue growth here consistently, you know, through the rest of the year, based on how we're viewing our opportunities and pipeline. Related to your second part of your question, could you repeat the second part of the question?

Yeah. Tim, just in terms of the breakdown of the application, focus more on kids-

Yeah.

... and family safety or more elder care-

Yes. Thank you

... opportunities.

We're not at liberty to say what we're gonna launch just because we wanna keep that confidential for our new carrier customer. We did purposely call it the OS system and didn't focus on kids or seniors. I will say just generally, not necessarily related to the launch, we are seeing the senior market be maybe more attractive to our carrier conversations. As I think we've mentioned on other calls, it's a bigger market, we believe are a bigger portion of the carrier's subscribers. That's where a lot of the focus is. We do have conversations on both kids and seniors at this point, but there's probably a heavier focus on the senior side.

Tim, one last clarification.

Okay

One follow-up, and I'll move on. Just in terms of the two potential deployments this quarter, are both of them new customers? I think you definitely referenced that one was. Just wanna clarify that. Just in terms of the opportunity pipeline today, is there some color that you could provide around it in terms of end market applications, geographies, existing carriers versus new carriers? Thanks.

Related to the new activity this quarter, one is the new contract that we've highlighted several times. The rest would be most likely. The revenue growth will most likely come from existing opportunities. We have several customer activities in process with existing. There could be another new one slip in there, just depends on how things fall there. The good news is we have multiple irons in the fire right now, and it could play out a number of different ways. There's a little bit of color on that. From a geography standpoint, most of this is U.S. activity, and maybe with a little bit of, you know, Europe opportunities sprinkled in there.

Most of the majority of what we're discussing right now, Scott, is coming from the U.S.

Great. Thanks so much. Good luck.

Bill, did you wanna add anything? Thanks, Scott. Bill, did you wanna add anything to either of those questions?

I guess, you know, one thing is that we have a number of opportunities where carriers wanna launch both, and so we're talking to them about, you know, kids OS as well as senior OS, and that's very doable. It runs with the same servers in the background. I'm sorry?

Oh, sorry. No, there's just some interference on my line.

Okay. Did you hear my answer?

Yeah. Yeah, I did. I did. Thank you, Bill.

Okay. Good deal. Yeah. Look, I think there's a lot of growth, you know, on both types of OS as well as the rest of our product offerings. I think you're gonna see a number of new customers throughout 2026, whether they start in Q2 or Q3 or Q4, you're gonna see a number of them, and I think it's gonna be a very exciting time.

Great. Thanks so much.

Thanks, Scott.

Thank you. The next question comes from Matthew Harrigan with Benchmark.

Thank you. Two questions. I guess I'll do them individually to give you some scope on the answers. Well, you obviously have a really active queue now. You probably have some full demand without a tremendous amount of marketing, given the compelling need on family safety and especially including seniors now. How is the monetization for, like, given opportunities looking compared to what you would have anticipated, you know, 12 or 18 months ago, when you're mostly dealing with the large U.S. guys? It sounds like you're still dealing with. Obviously, you're still dealing with some of the large U.S. guys and just, you know, the simplified, faster process with SafePath OS.

Is that maybe not quite as meaningful revenue opportunity, you know, for carriers you might have liked, you know, a few years ago? Or do you think that the, you know, the customer value is probably, you know, roughly comparable to what you would have aspired to a few years ago?

Yeah. Thanks for the question. Generally speaking, the opportunities are the same, if not greater, is what we're staring at. We're pretty happy with the traction that OS is getting and what we see from, you know, revenue potential there in our new opportunities or in our pipeline opportunities. We're very pleased, you know, with that. Part of the faster concept too is the fact that, you know, our development teams have, you know, sort of finished the core product, and then it's just a matter of some customization to get launched, which is a little bit simpler than maybe we've seen in the past.

We're pretty pleased with that, and that's what's driving this, which links back to some of our org changes that we did in late 2025. That's, that's how we're seeing that. You know, the RPUs in Europe can be a little bit lower than the U.S. here, so maybe a little bit lower unit cost in Europe than we see in the U.S. Generally speaking, we're pretty pleased with the opportunities compared to the past, and then we see upside opportunities as we think about the future.

Then you kinda segued into my answering my second question already, so you're pretty agile. I was gonna ask, I mean, you've ripped out a tremendous amount of costs on the R&D side, and then clearly some of that is having the primary template done and then the customization. You alluded to, you know, new opportunities. I mean, do you feel like you're gonna have to restore some of the R&D spending over a period of time, or you're getting more. I don't know whether you're using AI to do programming. I think you're probably doing things at a modest scale. It feels like you're pretty confident on sustaining that really trim cost structure and still having some incremental growth avenues.

Yeah. We're pretty pleased with the structure and the capacity that our teams can give. They're working hard, no doubt. We're very happy with that. Depending on the pace, you know, there may be a need to add costs, but I don't think it would be significant. As we grow, we'll have some costs drifting up, but it shouldn't be significant at the end of the day on the R&D side of things. We're pretty pleased with that capacity level. For the foreseeable future, we think, you know, we can hold that line for a while. Again, the teams are extremely focused and working very hard right now.

Our investments, right, we're looking for our investments to pay off that they've done over the last couple of years too. Capitalizing on that is super important for us.

I guess I'll sneak in another question. Are you seeing anything new in terms of competition? You've got a large U.S. carrier that's, I guess is bumbling around with doing things internally. Are they making any progress with their alternative or do you think that, you know, if they were smart, they would've just stayed with you?

We're biased. We stand behind our product. We think we produce a quality product. You know, given the economics of this situation, we think we can drive the most value for our carriers, customers and their subscribers. We're definitely biased when we think about that. From a competition standpoint, that is probably one of the, you know, the most competitive threats that we have out there, is just if the carrier decides to do something themselves. Every day there is new technology popping up. We feel that we have a great reputation. We have been doing this for a number of years.

We got a very talented team that can deliver quality product at the carrier grade status, and we're confident in that.

Great. Thanks, Tim. Congratulations, everybody. Bill.

Thanks for the questions.

Thank you. Once again, if you have a question, please press star then one. This concludes our question-and-answer session. I would like to turn the conference back over to Charles Messman for any closing remarks.

Thanks, everybody. We do truly appreciate you joining us today. Fun to have Tim, Bethany, and Bill all on. If you guys have any further questions, please feel free to reach out to us directly. Have an awesome day. Thank you.

Thank you. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect. Thank you.

Good day, and welcome to the Smith Micro Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions] Please note, today's event is being recorded. I would now like to turn the conference over to Charles Messman, Vice President of Marketing. Please go ahead.

Thank you, operator. We appreciate you joining us today to discuss Smith Micro Software's financial results for the fourth quarter and year ended December 31, 2025. By now, you should have received a copy of our press release with the financial results. If you do not have a copy and would like one, please visit the Investor Relations section of our website at www.smithmicro.com. On today's call, we have Bill Smith, our Chairman of the Board, President and Chief Executive Officer; and Tim Huffmyer, our Chief Operating Officer and Chief Financial Officer. Please note that some of the information you will hear during today's discussion consist of forward-looking statements, including, without limitations, those regarding the company's future revenue and profitability, our plans and expectations, new products, development and availability, new and expanded market opportunities, future product deployments, growth by new and existing customers, operating expenses and company cash reserves. Forward-looking statements involve risks and uncertainties, which could cause actual results or trends to differ materially from those expressed or implied by our forward-looking statements. For more information, please refer to the risk factors included in our most recently filed Form 10-K. Smith Micro assumes no obligation to update any forward-looking statements, which speak to the management's beliefs and assumptions only as of the date they are made. I want to point out that in our forthcoming prepared remarks, we will refer to specific non-GAAP financial measures. Please refer to our press release disseminated earlier today for a reconciliation of these non-GAAP financial measures. With that said, I'll turn the call over to Bill. Bill?

Thanks, Charlie. Thank you for joining us today for our fourth quarter and year-end 2025 conference call. As we move 2025 to the history books, I believe the company continues to make great strides on our return path to growth and profitability. Much of the work completed in 2025 has contributed to our progress. We have strengthened our product lineup with a strategic focus on phones in our SafePath OS solutions for kids and seniors. The senior-focused solution alone more than doubles our total addressable market. SafePath OS provides carriers with a tool to grow the subscriber base with the highest quality subscribers available in the market, the family subs. While we redirected our product strategy, we also continue to rationalize our cost structure. As we said during our last call, we are building a culture of continuous improvement and operational efficiency. We will continue to assess and optimize our spending while we continue to invest in strategic areas that support innovation. Our substantially reduced cost structure results in a reduced loss in the fourth quarter of 2025. And we believe it will support an even further reduced loss in Q1 of 2026 and most importantly, non-GAAP profit in Q2 and beyond. To reinforce this outlook, we plan to bring two new carrier customers to the market by midyear 2026. Both customer wins are the result of our SafePath OS product offerings. Our new product strategy is working and will drive the growth that we believe is ahead for Smith Micro. Our existing customer base is also showing signs of growth as recruiting new family subs has become an important topic of discussion. Beyond all of this positivity, we are seeing a strong sales pipeline that should provide even more new opportunities in the back half of 2026. In other exciting news, I am sure many of you have seen our press release issued earlier today that announced the implementation of our executive succession plan for Smith Micro. After 44 years at the helm, I will step down from the CEO role and will move to a new role as Executive Chairman for Smith Micro Software. This transition has been in the works for some time, and I believe that the timing is ideal. I am also pleased to announce that Tim Huffmyer, will be taking over as our new President and CEO at the close of the quarter on March 31. Tim is a proven leader with the experience and judgment to guide the company forward, and I am confident in his ability to lead the company through the exciting return to profitability and growth ahead. I look forward to working alongside Tim to ensure a seamless transition and continued momentum as Smith Micro returns to a role of leadership in providing cutting-edge software for wireless carriers. As you can see, I am very bullish about the future of this company that I cofounded so many years ago. And as a result, my wife, Dieva, and I have decided to provide an additional $4 million in funding. This will provide Smith Micro the time needed to return to profitability and the organic creation of cash to fund and grow the business going forward. Later in the call, I will provide more details around the status of our customer base and additional thoughts about our path forward in 2026. Let me turn the call over to Tim to discuss further the results of the fourth quarter and fiscal 2025. Tim?

Thank you, Bill. Good afternoon, everyone. First, I'd like to thank you, Bill, for your leadership over the last 4 decades as President and CEO of Smith Micro. We all know how much you've sacrificed over this time during all the peaks and valleys of Smith Micro's success. I look forward to our continued strong partnership as we continue the transition and both of us settle into our new roles. Next, I'd like to thank Bill and the Board for the trust that they have instilled in me during the succession discussions. I'm honored and truly excited to lead the dedicated Smith Micro team as we continue our turnaround to profitability. Our employees are just amazing and extremely dedicated to building the best family safety application for our customers. Last quarter, I had an opportunity to travel to our offices and spend time with most of our employees. This dedication is unique and provides me with significant motivation to lead with purpose and intention. As Bill and I continue to work on the transition activity over this month, I'd like to also announce my plan for the Chief Financial Officer role. Coinciding with the changes to the Chief Executive role at the end of this month, I'm pleased to share with great confidence that Bethany Braund will serve as our new Chief Financial Officer. Bethany has been with Smith Micro for over 4 years as our Senior Director of Financial Reporting, where she has spearheaded all company SEC reporting obligations, all advanced technical accounting matters in support of numerous financing transactions, all financial audit and internal control activities plus many other visible projects. She has provided steady support and leadership to the Chief Financial Officer role and the executive team over her tenure here. Prior to joining Smith Micro, she spent 11 years at EY, serving in advancing roles within the Assurance team. She is a CPA and very well qualified for this role. I'm excited to partner with Bethany as we lead Smith Micro on the next phase. I look forward to sharing more information around our vision and strategy as we complete these transitions. Now let's turn to the financial overview. We have recently completed several funding transactions. During the fourth quarter, the company received approximately $2.7 million of cash from a registered direct offering and private placement transaction. As Bill indicated, we have signed an agreement for a convertible note transaction with Bill and Dieva Smith and other investors. In this new transaction, the Smiths will invest approximately $4 million and will also roll $585,000 of their previously outstanding notes originally due on March 31, 2026, into this same convertible note. Additionally, we had an additional $485,000 of short-term notes due on March 31, 2026. Of that amount, approximately half will be repaid on the due date and the other half will roll into this new convertible note transaction along the Smiths. The new convertible note issued in this transaction will be due in March of 2029. We expect to close this transaction in the next few days. As a reminder and to provide an update, in October of last year, we announced strategic cost reductions, primarily comprised of workforce reorganization, which resulted in cost savings of approximately $1.8 million per quarter as compared to the second quarter of 2025, or a $7.2 million reduction in the cost run rate, excluding employee separation costs of approximately $600,000. We are generally on track to achieve these savings in 2026. These efforts are part of our broader initiative to realign the company's cost structure with long-term business goals, strengthen the company's financial foundation and accelerate our path to profitability. Now let's cover the financial results of the fourth quarter of 2025. For the fourth quarter, we posted revenue of $4 million compared to $5 million for the same quarter of 2024, a decrease of 20%. When compared to the third quarter of 2025, revenue decreased by $300,000 or 7%. We were just short of our expectations for the quarter as a result of a couple of assumptions that did not materialize. First, a new feature launch did not occur as we expected. And second, we experienced a one-time event with one of our existing deployments that resulted in an unanticipated decrease in Q4 revenue from that customer. All revenue associated with this event has resumed to normal levels during the first quarter of 2026, and I am proud of the way that our team worked together to support our customer during this time. Fiscal 2025 revenue was $17.4 million compared to $20.6 million for 2024, a decrease of $3.2 million or 16%. During the fourth quarter of 2025, Family Safety revenue was $3.2 million, which decreased by $600,000 or 16% compared to the fourth quarter of the prior year. Family Safety revenue decreased by approximately $400,000 or 11% compared to the third quarter of 2025. This revenue reduction was primarily due to the one-time event I just described. During the fourth quarter of 2025, CommSuite revenue was $800,000, which decreased by approximately $300,000 compared to the fourth quarter of 2024. Revenue from CommSuite was flat compared to the third quarter of 2025. As previously mentioned, we sold our ViewSpot product for $1.3 million on June 3, and we will no longer have any future revenue from this product. ViewSpot revenue was nominal for the fourth quarter of 2024. In the first quarter of 2026, we are expecting consolidated revenues to be in the range of approximately $4.2 million to $4.5 million. For the fourth quarter of 2025, gross profit was $3 million compared to $3.8 million during the same period of the prior year, a decrease of $800,000, primarily due to the period-over-period decline in revenue, combined with our emphasis on continued cost optimization. Gross margin was 76.4% for the quarter, which was within the guidance range previously provided, compared to 75.6% realized in the fourth quarter of 2024. The gross profit of $3 million in the fourth quarter of 2025 declined by $200,000 compared to the gross profit realized in the third quarter of 2025. In the first quarter of 2026, we expect gross margin to be in the range of 76% to 78%. Once we realize a full quarter of the previously announced cost benefits in 2026, we expect our margin percentage to be between 78% to 80%. Our long-term gross margin target is 85%, which we will continue to work towards. For the year ended December 31, 2025, gross profit was $12.9 million compared to $14.4 million for the year ended December 31, 2024. Gross margin was 74.1% for fiscal 2025 as compared to the 70.2% for 2024. GAAP operating expenses for the fourth quarter of 2025 were $7.4 million, a decrease of $800,000 or 10% compared to the fourth quarter of 2024. The difference was a result of changes in personnel, stock compensation costs and other cost reduction activities. GAAP operating expenses for the full year of 2025 were $41.9 million compared to $63.8 million in 2024, a decrease of $21.9 million or 34%. This period-over-period decrease was primarily attributable to the goodwill impairment charge of $24 million recorded in 2024 as compared to the goodwill impairment charge of $11.1 million in 2025, coupled with the cost reduction activities, which have exceeded $10 million annually. Non-GAAP operating expense for the fourth quarter of 2025 were $4.7 million compared to $5.8 million in the fourth quarter of 2024, a decrease of approximately $1.1 million or 19%. Sequentially, non-GAAP operating expenses decreased by approximately $1 million or 17% from the third quarter of 2025, which exceeded the guidance previously provided. We anticipate a further decline in non-GAAP operating expenses of 5% in the first quarter of 2026 as compared to the fourth quarter of 2025 as we continue to realize the impact of our most recent workforce reorganization and cost rationalization, which Bill has mentioned, is based on our focus of continuous improvement and operational efficiency. Non-GAAP operating expenses for fiscal 2025 were $22.5 million compared to $28.3 million in 2024, a decrease of $5.8 million or 20% compared to last year. The GAAP net loss attributable to common stockholders for the fourth quarter of 2025 was $4.7 million or $0.20 loss per share, compared to the loss of $4.4 million or $0.25 loss per share in the fourth quarter of 2024. GAAP net loss attributable to common stockholders for the year ended December 31, 2025, was $30 million or $1.46 loss per share, compared to a loss of $48.7 million or $3.94 loss per share for 2024. The non-GAAP net loss attributable to common stockholders for the fourth quarter of 2025 was $2.1 million or $0.09 loss per share, compared to the non-GAAP net loss of $1.9 million or $0.11 loss per share in the fourth quarter of 2024. Non-GAAP net loss attributable to common stockholders for the year ended December 31, 2025, was $10.9 million or $0.53 loss per share, compared to the non-GAAP net loss of $13.7 million or $1.11 loss per share for the prior year. Within today's press release, we have provided a reconciliation of our non-GAAP metrics to the most comparable GAAP metric. For the fourth quarter of 2025, the reconciliation includes adjustments for intangible asset amortization of $1.3 million, stock compensation expense of $800,000, restructuring costs of $500,000, depreciation expense of $77,000, changes to fair value of warrants of $43,000 and deemed dividends of $133,000. For the full year of 2025, the non-GAAP reconciliation includes adjustments for intangible asset amortization of $5.1 million, stock compensation expense of $3.6 million, goodwill impairment of $11.1 million, restructuring costs of $600,000, depreciation expense of $300,000, changes to fair value of warrants of $200,000, deemed dividends of $800,000, partially offset by the ViewSpot sale of $1.3 million. Due to our accumulated net losses over the past few years, our GAAP tax expense is primarily due to certain state and foreign income taxes. For non-GAAP purposes, we utilize a 0% tax rate for 2025 and 2024. The resulting non-GAAP tax expense reflects the actual income tax expense during each period. From a balance sheet perspective, we reported $1.5 million of cash and cash equivalents as of December 31, 2025. This now concludes my financial review. Back to you, Bill.

Thanks, Tim. As you can see from my introduction and Tim's report, we have been fully engaged in a strategic redesign to maximize our talent and resources. Our strategy to focus on phones with SafePath OS for kids and seniors is working as evidenced by new customer wins and a strong growing pipeline. With that, let's look at where we are with our customers. AT&T was a strong contributor this quarter and continues to be an important strategic partner for Smith Micro. The fourth quarter 2025 marked the first full quarter in which AT&T expanded the addressable market for Secure Family, enabling AT&T to deliver a more compelling marketing message for the holiday season and setting the stage to strengthen their overall security offering. To help drive visibility, stronger alignment and improved engagement during the key selling period, we took advantage of cross-promotion opportunities across their broader security portfolio, further reinforcing Secure Family as part of an integrated digital safety experience for families. Looking ahead to 2026, we are encouraged by emerging strategic opportunities that extend beyond the Secure Family over-the-top application. AT&T's increased focus on the family space is creating innovative opportunities to further enhance and deliver our core solutions to reach a significantly larger audience. Boost continues to be a solid and collaborative partner for us. We are working closely with them to expand our SafePath solution, including progress on new platform capabilities. These initiatives are aimed at strengthening SafePath's role within Boost's broader value proposition and positioning the platform to support future growth and innovation in the family safety space. In addition, our Visual Voicemail solution delivered encouraging results with a positive trend in new subscriber additions during the quarter. Looking ahead, we are aligned with Boost on opportunities to enhance the product through future upgrades and refresh customer messaging, which we believe can further improve engagement and growth. I am encouraged by our ongoing collaboration as we look to build on this momentum in future quarters. Looking ahead, we see more opportunity with T-Mobile. We are aligned on plans for enhanced product features and are exploring new revenue opportunities as these capabilities come to market. I believe this momentum positions our T-Mobile partnership well and creates a strong foundation for growth as T-Mobile continues to invest in serving the family segment. We continue to work closely with Orange, both at the group level as well as in Spain to deepen our partnership and to maximize our joint potential in the family safety market. Our most recent engagement confirms our belief that we are on the cusp of meaningful growth with their customer base. Elsewhere in Europe, we remain in talks with several carriers, and we anticipate deeper dive in-person meetings with a number of prospects in Europe later this month. Additionally, we have a full calendar of meetings at Mobile World Congress as we continue to seek viable opportunities to expand our presence through other carriers around the globe. In conclusion, I am more than excited and extremely confident as I look ahead to 2026 and beyond. Everyone at Smith Micro is embracing transformative change and ready to conquer new horizons. I am as bullish as I have ever been about our future. Throughout these past 44 years at Smith Micro, we have experienced many different technology cycles as well as ongoing changes in the market, where timing is extremely important and having the right solutions at the right time is paramount. I believe that is exactly where we are right now, and we plan to capitalize on that fact. With that said, operator, we can open the call for questions.

[Operator Instructions] And today's first question comes from Matthew Harrigan with Benchmark.

Do you have any thoughts on what -- kind of the annual revenues, I mean you can kind of figure out where your margin is going to lay out, but the value of a normalized revenues with a major mobile carrier in the U.S., I mean, if you perform optimally. And I know with Orange and the European carriers, it's very different because you've got a central organization, you've got different countries and all that. But what do you think the prospective revenue opportunity is, kind of brushing it with kind of a VC painting brush, if you will?

Matthew, thanks for the question. We've often guided investors on this question to think about the number of subs that are available or family subs that are available at the carrier, so depending on how large the carrier is. And then we've often guided on a fee or our revenue per unit as a couple of dollars per family unit. So for instance, at a $10 million family opportunity, if we were to get 50% or 30% of those, you would take that and multiply it by a couple of dollars per month, and you could kind of run out that from a modeling standpoint. I hope that's helpful in thinking about how we believe the addressable market is at the carriers.

And then given all you have to do is turn on CNN and you can see all the issues with family safety, both for children and for seniors right now. But you don't talk too much about competition. Clearly, a former customer of yours, a large carrier, tried to do it in-house maybe with mixed success. But I mean, given that this is a crying need, I mean, people must be doing something to -- even on a [ password ] basis to try to satisfy the situation. I mean, do you see things kind of added ad-hoc to other software solutions? Or what are people doing who aren't using you because it's hard to believe that this void on the need continues to persist as much as it does.

Yes, Matthew, I think that's really the power of SafePath OS. And why we became so active around the phones. We think that selling phones is something carriers know how to do very well. We also think it's a very easy way to bring users on to family safety solutions. From a kids point of view, one of the largest issues with family safety software are kids deleting the app. When it's on the phone like this, it's part of the OS, that can't be deleted. So I think in general, I think we have put ourselves in an excellent spot where we can really bring added value. I mean you mentioned a carrier that went out and developed their own software. Well, the market moves pretty fast. So they are -- they now have their software up and they've got a lot of the kinks out of it. And guess what, now they've got to figure out how they got to bring phones to the market, not just phones for kids standpoint, but phones for the senior standpoint as well. So this is the real advantage we have. We pushed the envelope. We're in a leadership role, and that means everybody else has to run like crazy to catch up. And that's what it's all about. I think that's why I think we're going to be very, very successful going forward. And I think that the phones are going to be the major differentiator.

And clearly, at MWC, I mean, you've got a lot of people there other than just the fairly concentrated U.S. market. Are you seeing actual pull demand from new guys who've heard about the solution? Or is it kind of checking in annually with some familiar faces. Hopefully, they finally come over. But are you seeing any better awareness of your product?

Yes. I think that, as I said, we are looking forward to launching two new carrier customers midyear. Both are being driven by SafePath OS. They will be selling phones as part of that overall offering. Part of the reason that carriers are excited about the phone is the onboarding process is so simple. And it's just a totally different animal than what we have done traditionally in the past with over-the-top applications. And I think that's opening up this market. When we look at Europe, Europe is more of a greenfield opportunity for us. There isn't a lot of history there with carriers offering family safety offerings. And with the phone now, this makes the decision process by those carriers that much easier. So I'm very, very bullish on where we're headed. I think we are in the driver's seat. And only time will tell, but I look forward to -- if I'm not on these calls, I look forward to listening to Tim talk about all the wins coming up in the future.

Congratulations to both of you, and I hope you have an enjoyable and productive MWC coming up shortly.

[Operator Instructions] And that does conclude our question-and-answer session. I'd like to turn the conference back over to Charles Messman for any closing remarks.

I just want to thank everybody for joining. Thank you, Bill. And Tim, we're really excited about having you on board. For those that are going to happen to be in town, we're going to be at the ROTH Conference in a few weeks. So please stop by and say hello, and have a great day. Thanks, everybody.

Thank you. That concludes today's conference call. We thank you all for attending today's presentation. You may now disconnect your lines, and have a wonderful day.