Smith Micro Software (NASDAQ:SMSI) reported its third consecutive quarter of sequential revenue growth in the third quarter of 2026, as new carrier agreements and cost reductions helped narrow its losses.
Revenue rose 15% from a year earlier to $5.0 million and increased 16% from the second quarter, Chief Financial Officer Bethany Braund said on the company’s earnings call. Gross margin reached 81.6%, a five-year high, while the GAAP net loss attributable to common stockholders narrowed to $1.7 million from $5.2 million a year earlier.
For the fourth quarter, Braund forecast revenue of $5.4 million to $5.6 million, supported by expected contributions from new contracts. President and CEO Bill Smith said the company expects double-digit sequential revenue growth in the quarter.
Carrier agreements drive growth
Smith Micro’s family safety revenue rose 18% year over year to $4.2 million and also increased 18% sequentially. CommSuite revenue was $857,000, up from $792,000 a year earlier.
Braund said an expanded multiyear agreement with one of the company’s largest Tier 1 customers generated nonrecurring engineering fees and began contributing to increased recurring revenue during the quarter. Smith said the agreement includes expanded features, functionality and deployment options intended to reach a larger share of the customer’s users.
The company also began recognizing revenue from two other carrier agreements. Consumer Cellular launched a connected-care offering for older adults and their families under its SpeakEasy brand, using Smith Micro’s SafePath OS for Senior Phone platform. Smith said the deployment is in its first stage, with more features planned in coming quarters.
In Europe, Orange Belgium launched an offering using SafePath Connect, which Smith said allows partners to distribute family safety services through app stores without complex integration or development. He said the launch expands Smith Micro’s presence within the Orange Group.
Smith also said a Tier 1 partner launched the first premium upgrade for SafePath Drive during the quarter. The feature is already generating revenue growth and produces higher revenue for both the carrier and Smith Micro, he said.
Margins improve as expenses decline
Third-quarter gross profit increased to $4.1 million from $3.2 million a year earlier. Gross margin rose from 73.9% in the prior-year quarter and from 81.3% in the second quarter of 2026. Braund attributed the year-over-year improvement in gross profit to higher revenue and strategic cost reductions.
GAAP operating expenses fell 28% year over year to $5.6 million and declined 5.8% sequentially. Braund said the reductions reflected cost optimization efforts, including measures announced in the fourth quarter of the prior year.
The quarterly GAAP loss attributable to common stockholders was $0.30 per share, compared with $1.23 per share a year earlier. On a non-GAAP basis, the company reported a quarterly net loss attributable to common stockholders of $281,000, or $0.05 per share.
Smith Micro ended September with $2.4 million in cash and cash equivalents. For the fourth quarter, Braund forecast gross margin of 81% to 83% and relatively flat non-GAAP operating expenses compared with the third quarter.
Management looks to 2027 launches
Smith said the company sees opportunities across standalone applications, phone-based offerings and software development kits and application programming interfaces that allow carriers to embed family safety features in their own apps.
Responding to a question from Roth Capital analyst Scott Searle, Smith said the first contract for an embedded offering has been signed and that he expects a launch in the first half of 2027. He also said he expects additional contracts in that area and further customer wins in Europe and North America during 2027.
Those expectations remain forward-looking. Smith said the company’s pipeline includes opportunities with both new and existing customers, while Braund said management remains focused on achieving sustainable profitability through revenue growth and cost discipline.
About Smith Micro Software (NASDAQ:SMSI)
Smith Micro Software, Inc. develops software solutions for wireless service providers and other communications companies. Its products are designed to help carriers offer value-added services to consumers, including family safety, mobile security, location sharing and communications management. The company’s principal product portfolio has included the SafePath platform, which provides tools such as parental controls, family location services, digital safety features and related mobile security capabilities.
