Cover Page
Cover Page - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Mar. 15, 2023 | Jun. 30, 2022 | |
Cover [Abstract] | |||
Document Type | 10-K | ||
Document Annual Report | true | ||
Current Fiscal Year End Date | --12-31 | ||
Document Period End Date | Dec. 31, 2022 | ||
Document Transition Report | false | ||
Entity File Number | 01-35525 | ||
Entity Registrant Name | SMITH MICRO SOFTWARE, INC. | ||
Entity Incorporation, State or Country Code | DE | ||
Entity Tax Identification Number | 33-0029027 | ||
Entity Address, Address Line One | 5800 Corporate Drive | ||
Entity Address, City or Town | Pittsburgh | ||
Entity Address, State or Province | PA | ||
Entity Address, Postal Zip Code | 15237 | ||
City Area Code | 412 | ||
Local Phone Number | 837-5300 | ||
Title of 12(b) Security | Common Stock, par value $0.001 per share | ||
Trading Symbol | SMSI | ||
Security Exchange Name | NASDAQ | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Small Business | true | ||
Entity Emerging Growth Company | false | ||
ICFR Auditor Attestation Flag | false | ||
Entity Shell Company | false | ||
Entity Public Float | $ 120,823,459 | ||
Entity Common Stock, Shares Outstanding | 58,676,684 | ||
Documents Incorporated by Reference | DOCUMENTS INCORPORATED BY REFERENCE Portions of the registrant’s Proxy Statement for the 2023 Annual Meeting of Stockholders to be filed under the Securities Exchange Act of 1934 are incorporated by reference in Part III of this report. | ||
Entity Central Index Key | 0000948708 | ||
Document Fiscal Year Focus | 2022 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false |
Audit Information
Audit Information | 12 Months Ended |
Dec. 31, 2022 | |
Audit Information [Abstract] | |
Auditor Firm ID | 367 |
Auditor Name | SingerLewak LLP |
Auditor Location | Los Angeles, California |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Current assets: | ||
Cash and cash equivalents | $ 14,026 | $ 16,078 |
Accounts receivable, net of allowance for doubtful accounts of $3 and $2 at December 31, 2022 and 2021, respectively | 10,501 | 10,590 |
Prepaid expenses and other current assets | 1,983 | 1,988 |
Total current assets | 26,510 | 28,656 |
Equipment and improvements, net | 1,498 | 2,698 |
Right-of-use assets | 3,722 | 4,866 |
Other assets | 490 | 620 |
Intangible assets, net | 36,320 | 42,631 |
Goodwill | 35,041 | 35,041 |
Total assets | 103,581 | 114,512 |
Current liabilities: | ||
Accounts payable | 3,236 | 3,301 |
Accrued payroll and benefits | 3,883 | 4,055 |
Current operating lease liabilities | 1,441 | 1,400 |
Other current liabilities | 1,589 | 612 |
Current portion of convertible notes payable | 9,007 | 0 |
Derivative liabilities | 1,575 | 0 |
Total current liabilities | 20,731 | 9,368 |
Non-current liabilities: | ||
Warrant liabilities | 3,317 | 0 |
Operating lease liabilities | 2,976 | 4,467 |
Deferred tax liabilities, net | 178 | 117 |
Total non-current liabilities | 6,471 | 4,584 |
Commitments and contingencies | ||
Stockholders' equity: | ||
Common stock, par value $0.001 per share; 100,000,000 shares authorized; 56,197,910 and 54,259,390 shares issued and outstanding at December 31, 2022 and 2021, respectively | 56 | 54 |
Additional paid-in capital | 357,875 | 352,779 |
Accumulated comprehensive deficit | (281,552) | (252,273) |
Total stockholders’ equity | 76,379 | 100,560 |
Total liabilities and stockholders' equity | $ 103,581 | $ 114,512 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts receivable | $ 3 | $ 2 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized (in shares) | 100,000,000 | 100,000,000 |
Common stock, shares issued (in shares) | 56,197,910 | 54,259,390 |
Common stock, shares outstanding (in shares) | 56,197,910 | 54,259,390 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Income Statement [Abstract] | ||
Revenues | $ 48,513 | $ 58,422 |
Cost of revenues | 14,210 | 12,698 |
Gross profit | 34,303 | 45,724 |
Operating expenses: | ||
Selling and marketing | 12,887 | 11,581 |
Research and development | 29,870 | 26,197 |
General and administrative | 16,161 | 17,920 |
Change in fair value of contingent consideration | 0 | 12,864 |
Amortization of intangible assets | 6,312 | 8,100 |
Total operating expenses | 65,230 | 76,662 |
Operating loss | (30,927) | (30,938) |
Other income (expense): | ||
Change in fair value of warrant and derivative liabilities | 4,669 | 0 |
Interest (expense) income, net | (2,680) | 34 |
Other (expense) income, net | (115) | 76 |
Loss before provision for income taxes | (29,053) | (30,828) |
Provision for income tax expense | 226 | 215 |
Net loss | $ (29,279) | $ (31,043) |
Loss per share: | ||
Basic (in dollars per share) | $ (0.53) | $ (0.61) |
Diluted (in dollars per share) | $ (0.53) | $ (0.61) |
Weighted average shares outstanding: | ||
Basic (in shares) | 55,422 | 51,232 |
Diluted (in shares) | 55,422 | 51,232 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands | Total | Common Stock | Additional Paid-in Capital | Accumulated Comprehensive Deficit |
BALANCE, at beginning of period (in shares) at Dec. 31, 2020 | 41,233,000 | |||
BALANCE, at beginning of period at Dec. 31, 2020 | $ 58,716 | $ 41 | $ 279,905 | $ (221,230) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Non-cash compensation recognized on stock options and ESPP | 83 | 83 | ||
Restricted stock grants, net of cancellations (in shares) | 991,000 | |||
Restricted stock grants, net of cancellations | 4,765 | $ 1 | 4,764 | |
Cancellation of shares for payment of withholding tax (in shares) | (385,000) | |||
Cancellation of shares for payment of withholding tax | (2,220) | (2,220) | ||
Employee stock purchase plan (in shares) | 10,000 | |||
Employee stock purchase plan | 37 | 37 | ||
Exercise of stock options (in shares) | 21,000 | |||
Exercise of stock options | 65 | 65 | ||
Common shares issued in stock offering, net offering costs (in shares) | 9,521,000 | |||
Common shares in stock offering, net of offering costs | 59,711 | $ 10 | 59,701 | |
Common shares issued in connection with Avast acquisition, net (in shares) | 1,460,000 | |||
Common shares issued in connection with Avast Family Safety Mobile acquisition, net | 8,381 | $ 1 | 8,380 | |
Exercise of common stock warrants (in shares) | 1,408,000 | |||
Exercise of common stock warrants | 2,065 | $ 1 | 2,064 | |
Net loss | $ (31,043) | (31,043) | ||
BALANCE, at end of period (in shares) at Dec. 31, 2021 | 54,259,390 | 54,259,000 | ||
BALANCE, at end of period at Dec. 31, 2021 | $ 100,560 | $ 54 | 352,779 | (252,273) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Non-cash compensation recognized on stock options and ESPP | 86 | 86 | ||
Restricted stock grants, net of cancellations (in shares) | 1,187,000 | |||
Restricted stock grants, net of cancellations | 4,862 | $ 1 | 4,861 | |
Cancellation of shares for payment of withholding tax (in shares) | (406,000) | |||
Cancellation of shares for payment of withholding tax | (1,218) | (1,218) | ||
Employee stock purchase plan (in shares) | 17,000 | |||
Employee stock purchase plan | $ 40 | 40 | ||
Exercise of stock options (in shares) | 9,000 | 9,000 | ||
Exercise of stock options | $ 19 | 19 | ||
Common shares issued in stock offering, net offering costs (in shares) | 1,132,000 | |||
Common shares in stock offering, net of offering costs | 1,309 | $ 1 | 1,308 | |
Net loss | $ (29,279) | (29,279) | ||
BALANCE, at end of period (in shares) at Dec. 31, 2022 | 56,197,910 | 56,198,000 | ||
BALANCE, at end of period at Dec. 31, 2022 | $ 76,379 | $ 56 | $ 357,875 | $ (281,552) |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Operating activities: | ||
Net loss | $ (29,279) | $ (31,043) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 7,556 | 9,338 |
Non-cash lease expense | 1,144 | 1,160 |
Non-cash transaction costs including amortization | 3,324 | 0 |
Change in fair value | (4,669) | 12,864 |
Provision for doubtful accounts | 0 | 5 |
Provision for excess and obsolete inventory | 0 | (97) |
Stock based compensation | 4,948 | 4,848 |
Deferred income taxes | 61 | 58 |
Gain (loss) on disposal of assets | 4 | (14) |
Changes in operating accounts: | ||
Accounts receivable | 85 | 7,938 |
Prepaid expenses and other assets | (25) | (268) |
Accounts payable and accrued liabilities | (2,570) | (16,309) |
Other liabilities | 160 | (1,396) |
Net cash used in operating activities | (19,261) | (12,916) |
Investing activities: | ||
Acquisitions, net | 0 | (56,865) |
Capital expenditures, net | (49) | (830) |
Other investing activities | 164 | 192 |
Net cash provided by (used in) investing activities | 115 | (57,503) |
Financing activities: | ||
Proceeds from notes and warrants offering | 15,000 | 0 |
Proceeds from stock and warrants offering | 3,000 | 59,711 |
Stock, notes, and warrants offering costs | (1,227) | 0 |
Payments related to contingent consideration | 0 | (1,136) |
Proceeds from exercise of common stock warrants | 0 | 2,066 |
Proceeds from financing arrangements | 1,541 | 0 |
Repayments of financing arrangements | (1,278) | 0 |
Other financing activities | 58 | 102 |
Net cash provided by financing activities | 17,094 | 60,743 |
Net decrease in cash and cash equivalents | (2,052) | (9,676) |
Cash and cash equivalents, beginning of year | 16,078 | 25,754 |
Cash and cash equivalents, end of year | 14,026 | 16,078 |
Supplemental disclosures of cash flow information: | ||
Cash paid for income taxes | 253 | 84 |
Non-cash investing and financing activities: | ||
Issuance of common stock in connection with acquisition | 0 | 8,381 |
Derivative and warrants in connection with notes and stock offerings | $ 9,561 | $ 0 |
Organization, Basis of Presenta
Organization, Basis of Presentation and Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization, Basis of Presentation and Summary of Significant Accounting Policies | Organization, Basis of Presentation and Summary of Significant Accounting Policies The Company Smith Micro Software, Inc. (“Smith Micro” or “the Company”) develops software to simplify and enhance the mobile experience, providing solutions to some of the leading wireless and cable service providers around the world. From enabling the family digital lifestyle to providing powerful voice messaging capabilities, the Company strives to enrich today’s connected lifestyles while creating new opportunities to engage consumers via smartphones and consumer Internet of Things (“IoT”) devices. Smith Micro’s portfolio includes a wide range of products for creating, sharing, and monetizing rich content, such as visual voice messaging, retail content display optimization and performance analytics. Smith Micro’s solution portfolio is comprised of proven products that enable its customers to provide: • In-demand digital services that connect today’s digital lifestyle, including family location services, parental controls, and consumer IoT devices to mobile consumers worldwide; • Easy visual access to voice messages on mobile devices through visual voicemail and voice-to-text transcription functionality; and • Strategic, consistent, and measurable digital demonstration experiences that educate retail shoppers, create awareness of products and services, and drive in-store sales, and optimize retail experiences with actionable analytics derived from in-store customer behavior. Basis of Presentation The accompanying consolidated financial statements reflect the operating results and financial position of Smith Micro and its wholly owned subsidiaries in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). All intercompany amounts have been eliminated in consolidation. Use of Estimates The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates. Reclassifications Certain reclassifications have been made to the prior year financial statements to conform to the current presentation. Foreign Currency Transactions The countries in which the Company has a subsidiary or branch office are Serbia, Sweden, Portugal, Czech Republic, and Slovakia. The functional currency for all of these foreign entities is the U.S. dollar in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic No. 830. Foreign currency transactions that increase or decrease expected functional currency cash flows is a foreign currency transaction gain or loss that are included in determining net income for the period in which the exchange rate changes. Likewise, a transaction gain or loss (measured from the transaction date or the most recent intervening balance sheet date, whichever is later) realized upon settlement of a foreign currency transaction is included in determining net income for the period in which the transaction is settled. Business Combinations The Company applies the provisions of FASB ASC Topic No. 805, Business Combinations , in the accounting for its acquisitions, which requires recognition of the assets acquired and the liabilities assumed at their acquisition date fair values, separately from goodwill. Goodwill as of the acquisition date is measured as the excess of consideration transferred over the net of the acquisition date fair values of the tangible and identifiable intangible assets acquired and liabilities assumed. While the Company uses its best estimates and assumptions to accurately value assets acquired and liabilities assumed at the acquisition date as well as contingent consideration, where applicable, its estimates are inherently uncertain and subject to refinement. As a result, during the measurement period that exists up to twelve months from the acquisition date, the Company may record adjustments to the tangible and specifically identifiable intangible assets acquired and liabilities assumed with a corresponding adjustment to goodwill in the reporting period in which the adjusted amounts are determined. Upon the conclusion of the measurement period or final determination of the values of assets acquired and liabilities assumed, whichever comes first, the impact of any subsequent adjustments is included in the consolidated statements of operations. Costs to exit or restructure certain activities of an acquired company or the Company’s internal operations are accounted for as a one-time termination and exit cost pursuant to FASB ASC Topic No. 420, Exit or Disposal Cost Obligations , and are accounted for separately from the business combination. A liability for costs associated with an exit or disposal activity is recognized and measured at its fair value in the Company’s consolidated statement of operations in the period in which the liability is incurred. Uncertain income tax positions and tax-related valuation allowances that are acquired in connection with a business combination are initially estimated as of the acquisition date. The Company reevaluates these items quarterly based upon facts and circumstances that existed as of the acquisition date, with any adjustments to the preliminary estimates being recorded to goodwill if such adjustments occur within the 12-month measurement period. Subsequent to the end of the measurement period or the Company’s final determination of the value of the tax allowance or contingency, whichever comes first, changes to these uncertain tax positions and tax-related valuation allowances will affect the provision for income taxes in the consolidated statement of operations and could have a material impact on results of operations and financial position. Cash and Cash Equivalents Cash and cash equivalents generally consist of cash and money market funds. The carrying amount of cash and cash equivalents approximates fair value due to the short-term maturities of these instruments. Accounts Receivable and Allowance for Doubtful Accounts Smith Micro sells its products worldwide. The Company performs ongoing credit evaluations of its customers and adjusts credit limits based upon payment history, the customer’s current credit worthiness and various other factors, as determined by review of their current credit information. The Company continuously monitors collections and payments from its customers. The Company estimates credit losses and maintains an allowance for doubtful accounts based upon these estimates. While such credit losses have historically been within its estimated reserves, the Company cannot guarantee that it will continue to experience the same credit loss rates that it has in the past. If not, this could have an adverse effect on Smith Micro’s consolidated financial statements. Equipment and Improvements Equipment and improvements are stated at cost. Depreciation is computed using the straight-line method based on the estimated useful lives of the assets, generally ranging from three Internal Software Development Costs Development costs incurred in the research and development of new software products and enhancements to existing software products are expensed as incurred until technological feasibility has been established. The Company considers technological feasibility to be established when all planning, designing, coding, and testing has been completed according to design specifications. After technological feasibility is established, any additional costs are capitalized. Through December 31, 2022 , software has been substantially completed concurrently with the establishment of technological feasibility; accordingly, no costs have been capitalized to date. Impairment or Disposal of Long-Lived Assets Long-lived assets to be held are reviewed for events or changes in circumstances which indicate their carrying value may not be recoverable. They are tested for recoverability using undiscounted cash flows to determine whether or not impairment to such value has occurred. Goodwill and Intangible Assets Goodwill represents purchase consideration from a business combination that exceeds the value assigned to the net assets of the acquired businesses. Smith Micro is required to periodically assess the recoverability of the carrying value of its goodwill at least annually during the fourth quarter of the fiscal year or whenever events or circumstances indicate a potential impairment. If the carrying amount of the Company’s single reporting unit exceeds its fair value, an impairment loss equal to the excess of carrying value over fair value is recorded. The Company’s 2022 fourth quarter annual test included the assessment of qualitative factors to determine whether or not it was more likely than not that the fair value of Smith Micro’s single reporting unit was less than its carrying value. The qualitative assessment considered factors such as macroeconomic conditions, industry and market trends, cost factors, and overall financial performance, among others. In consideration of the totality of the qualitative factors assessed, based on the weight of the evidence no circumstances existed that would indicate that it was more likely than not that goodwill was impaired. There was no goodwill impairment recognized during the years ended December 31, 2022 or 2021. The Company has no indefinite-lived intangible assets. Amortization expense related to the Company’s definite-lived intangible assets resulting from acquisitions is calculated based on the pattern of economic benefit expected to be generated from the use of that asset. Intangible assets are tested for impairment if events or circumstances occur indicating that the respective asset might be impaired. Derivatives and Warrants The Company analyzes all financial instruments with features of both liabilities and equity under FASB ASC Topic No. 480, Distinguishing Liabilities from Equity and FASB ASC Topic No. 815, Derivatives and Hedginig . Derivative and warrant liabilities are adjusted to reflect fair value at each period end, with any increase or decrease in the fair value being recorded in results of operations as adjustments to fair value. Revenue Recognition In accordance with FASB ASC Topic No. 606, Revenue from Contracts with Customers , the Company recognizes the sale of goods and services based on the five-step analysis of transactions as provided in Topic 606, which requires an entity to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for such goods and services. Smith Micro primarily sell its software solutions, cloud-based services and consulting services to major wireless network and cable operators. For all contracts with customers, the Company first identifies the contract which usually is established when a contract is fully executed by each party and consideration is expected to be received. Next, the Company identifies the performance obligations in the contract. A performance obligation is a promise in a contract to transfer a distinct good or service to the customer. The Company then determines the transaction price in the arrangement and allocates the transaction price, if necessary, to each performance obligation identified in the contract. The allocation of the transaction price to the performance obligations are based on the relative standalone selling prices for the goods and services contained in a particular performance obligation. The transaction price is adjusted for the Company’s estimate of variable consideration. The Company evaluates the total amount of variable consideration expected to be earned by using the expected value method, as the Company believes this method represents the most appropriate estimate for this consideration, based on historical service trends, the individual contract considerations, and its best judgment at the time. The Company includes estimates of variable consideration in revenues only to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. The Company also generates the majority of its revenue on usage-based fees which are variable and depend entirely on customers’ use of perpetual licenses, transactions processed on the Company’s hosted environment, advertisement placements on the Company’s service platform, and activity on the Company’s cloud-based service platform. Smith Micro grants certain software licenses to its customers on a royalty free, non-exclusive, non-transferable, limited use basis during the term of the agreement. In some instances, the Company performs integration services to ensure the software operates within its customer’s operating platforms as well as the operating platforms of the mobile devices used by their end customers, before transferring the license. Revenue related to these services is recognized at a point in time upon acceptance of the licensed software by the customer. The Company also earns usage-based revenue on its platforms. The Company’s contracts with the certain customers may include promises to transfer multiple products and services. Smith Micro’s cloud-based service includes a software solution license integrated with cloud-based services. Judgment is required to determine whether the software license is considered distinct and accounted for separately, or not distinct and accounted for together with the cloud service and recognized over time. Smith Micro does not allow its customers to take possession of the software solution, and since the utility of the license comes from the cloud-based services that are provided, the Company considers the software license and the cloud-based services to be a single performance obligation. Usage based revenue is generated based on licenses used by Smith Micro’s customer’s active subscribers’ access and usage of Smith Micro’s software licenses and cloud-based services on Smith Micro’s platforms, the provision of hosting services, and revenue share based on media placements on Smith Micro’s platform. Smith Micro recognizes usage-based revenue when the Company has completed its performance obligation and has the right to invoice the customer. This revenue is generally recognized monthly or quarterly. Finally, the Company ratably recognizes usage-based revenue over the contract period when customers pay in advance of service delivery. Smith Micro also provides consulting services to develop customer-specified functionality that are generally not on its software development roadmap. The Company recognizes revenue from its consulting services upon delivery and acceptance by the customer of its software enhancements and upgrades. For certain customers the Company provides maintenance and technology support services for which the customer either pays upfront or as the Company provides the services. When the customer pays upfront, the payments are recorded as contract liabilities and revenue is recognized ratably over the contract period as this is the Company’s stand ready performance obligation that is satisfied ratably over the maintenance and technology services period. The Company receives upfront payments from customers from services to be provided under its ViewSpot® contracts. The advance receipts are deferred and subsequently recognized ratably over the contract period. Smith Micro also provides consulting services to configure ad hoc targeted promotional content for its customers upon request. These requests are driven by customers’ marketing initiatives and tend to be short term “bursts” of activity. These revenues are recognized upon delivery of the configured promotional content to the cloud platform. Smith Micro has made accounting policy elections to exclude all taxes by governmental authorities from the measurement of the transaction price, and since the Company’s standard payment terms are less than one year, the Company has elected the practical expedient not to assess whether a contract has a significant financing component. Principal and Agent Considerations Smith Micro owns the Intellectual Property and retains ownership when the Company licenses its customized software solutions for use by its customers. The Company is a principal in these transactions and as such revenue is recognized with respect thereto on a gross basis. Stock-Based Compensation The Company accounts for all stock-based payment awards made to employees and directors based on their fair values and recognizes such awards as compensation expense over the vesting period using the straight-line method over the requisite service period for each award as required by FASB ASC Topic No. 718, Compensation-Stock Compensation . Income Taxes The Company accounts for income taxes as required by FASB ASC Topic No. 740 , Income Taxes . This Topic clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The Topic also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. The Topic requires an entity to recognize the financial statement impact of a tax position when it is more likely than not that the position will be sustained upon examination. The amount recognized is measured as the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement. In addition, the Topic permits an entity to recognize interest and penalties related to tax uncertainties either as income tax expense or operating expenses. The Company has chosen to recognize interest and penalties related to tax uncertainties as income tax expense. The Company assesses whether a valuation allowance should be recorded against its deferred tax assets based on the consideration of all available evidence, using a “more likely than not” realization standard. The four sources of taxable income that must be considered in determining whether deferred tax assets will be realized are: (1) future reversals of existing taxable temporary differences (i.e., offset of gross deferred tax liabilities against gross deferred tax assets); (2) taxable income in prior carryback years, if carryback is permitted under the applicable tax law; (3) tax planning strategies; and (4) future taxable income exclusive of reversing temporary differences and carryforwards. Recently Issued Accounting Pronouncements In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326) – Measurement of Credit Losses on Financial Instruments , which replaces the “incurred loss” credit losses framework with a new accounting standard that requires management’s measurement of the allowance for credit losses to be based on a broader range of reasonable and supportable information for lifetime credit loss estimates. This guidance is effective for fiscal years beginning after December 15, 2022, and the adoption of this standard is not expected to have a material impact on the Company’s consolidated financial statements. In August 2020, the FASB issued ASU 2020-06, Debt with Conversion and Other Options and Derivatives and Hedging: Accounting for Convertible Instruments and Contracts in an Entity's Own Equity |
Acquisitions
Acquisitions | 12 Months Ended |
Dec. 31, 2022 | |
Business Combination and Asset Acquisition [Abstract] | |
Acquisitions | Acquisitions Avast Family Safety Mobile Business On April 16, 2021, the Company acquired the Family Safety Mobile Business from Avast pursuant to a Membership Interest and Asset Purchase Agreement (the “Purchase Agreement”). The following table summarizes the consideration paid for the Family Safety Mobile Business in 2021 (in thousands): Fair value of assets acquired $ 74,818 Fair value of liabilities assumed 2,085 Total purchase price $ 72,733 Components of purchase price: Cash $ 63,216 Common stock 8,381 Contingent consideration 1,136 Total purchase price $ 72,733 The Company’s allocation of the purchase price is summarized as follows (in thousands): Assets: Cash $ 6,351 Accounts receivable 6,225 Prepaid expenses 513 Fixed assets 921 Intangible assets 38,033 Goodwill 22,775 Total assets $ 74,818 Liabilities: Accounts payable $ 392 Accrued payroll and benefits 1,662 Accrued expenses 31 Total liabilities $ 2,085 Total purchase price $ 72,733 The Purchase Agreement included an earn-out provision that provided for additional future payments to Avast aggregating up to $14.0 million. Approximately $1.1 million of the earn-out consideration was included in the original purchase price allocation and valued based upon a percentage of the projected revenue stream from a specified contract utilizing a discounted cash flow method. During the third quarter of 2021, the Company recorded the remaining $12.9 million as a charge to operating expenses due to a contract extension becoming probable with a given customer designated in the earn-out provision, resulting in an increase in the contingent consideration due to Avast. In November 2021, the remainder of the earn-out was paid in full and no further earn-out payments will be due in the future. The goodwill recognized was attributable primarily to expected synergies and the assembled workforce of the Family Safety Mobile Business. The goodwill is deductible for income tax purposes. |
Equipment and Improvements
Equipment and Improvements | 12 Months Ended |
Dec. 31, 2022 | |
Property, Plant and Equipment [Abstract] | |
Equipment and Improvements | Equipment and Improvements Equipment and improvements consist of the following (in thousands): December 31, 2022 2021 Computer hardware, software, and equipment $ 10,347 $ 10,535 Leasehold improvements 3,381 3,378 Office furniture and fixtures 828 803 14,556 14,725 Less accumulated depreciation and amortization (13,058) (12,027) Equipment and improvements, net $ 1,498 $ 2,698 Depreciation and amortization expense on equipment and improvements was $1.2 million for each of the years ended December 31, 2022 and 2021. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 12 Months Ended |
Dec. 31, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets | Goodwill and Intangible Assets The following table sets forth the Company’s acquired intangible assets by major asset class as of December 31, 2022 and 2021, respectively (in thousands, except for useful life data): December 31, 2022 Weighted Average Gross Accumulated Net Book Value Purchased technology 7 $ 13,529 $ (5,835) $ 7,694 Customer relationships 12 27,548 (4,490) 23,058 Customer contracts 1 7,000 (5,673) 1,327 Software license 7 5,419 (1,552) 3,867 Non-compete 0 283 (273) 10 Patents 5 600 (236) 364 Total $ 54,379 $ (18,059) $ 36,320 December 31, 2021 Weighted Average Gross Accumulated Net Book Value Purchased technology 8 $ 13,529 $ (3,764) $ 9,765 Customer relationships 13 27,549 (2,405) 25,144 Customer contracts 2 7,000 (4,441) 2,559 Software license 9 5,419 (793) 4,626 Non-compete 1 283 (196) 87 Patents 5 600 (150) 450 Total $ 54,380 $ (11,749) $ 42,631 Intangible assets amortization expense was $6.3 million and $8.1 million for the years ended December 31, 2022 and 2021, respectively. Future amortization expense related to intangible assets as of December 31, 2022 are as follows (in thousands): Year Ending December 31, 2023 $ 5,874 2024 5,635 2025 5,402 2026 5,007 2027 and thereafter 14,402 Total $ 36,320 During the first quarter of 2021, the Company received a customer contract termination notice related to a customer contract acquired in the acquisition of Circle’s operator business in February 2020, which was otherwise set to expire in the second quarter of 2024. The contract was terminated effective April 15, 2021; however, in accordance with its terms, Smith Micro continues to deliver wind-down services under the contract. The terms of the contract allow for a wind-down period of up to two years post termination and the Company continued services under this contract throughout 2022. The Company determined the customer contract should be accounted for under the contract modification guidance in Topic 606. As a result, the Company recognized deferred revenue of $0.6 million in 2021 which was being amortized over the customer contract term and amortized the remaining $0.3 million throughout 2022. Additionally, the Company reviewed its customer contract intangible asset associated with this customer contract and determined that the carrying value was in excess of its fair value. Accordingly, the Company recorded a $1.5 million impairment charge within “ amortization of intangible assets December 31, 2021 and amortized the remaining $0.4 million in 2022 over the estimated remaining service period. Smith Micro reviews the recoverability of the carrying value of the Company's single reporting unit goodwill at least annually or whenever events or circumstances indicate a potential impairment. The annual impairment testing date is December 31, 2022 . Recoverability of goodwill is determined by comparing the estimated fair value of reporting units to the carrying value of the underlying net assets in the reporting units. If the estimated fair value of a reporting unit is determined to be less than the fair value of its net assets, goodwill is deemed impaired, and an impairment loss is recognized to the extent that the carrying value of goodwill exceeds the difference between the estimated fair value of the reporting unit and the fair value of its other assets and liabilities. Smith Micro determined that there was not any impairment of the Company’s goodwill at December 31, 2022 and 2021. |
Debt and Warrants Transactions
Debt and Warrants Transactions | 12 Months Ended |
Dec. 31, 2022 | |
Debt Disclosure [Abstract] | |
Debt and Warrants Transactions | Debt and Warrants Transactions Notes and Warrants Offering On August 11, 2022, the Company entered into a Securities Purchase Agreement ("SPA") with certain accredited investors, and, pursuant to the SPA, sold a new series of senior secured convertible notes (the "Notes") with an aggregate original principal amount of $15.0 million and an initial conversion price of $3.35 per share, subject to adjustment as described in the Notes, and warrants to acquire up to an aggregate amount of 2,238,806 additional shares of the Company’s common stock (the "Warrants" and together with the Notes, the "Notes and Warrants Offering"). The Warrants are exercisable immediately at an exercise price of $3.35 per share and expire 5 years from the date of issuance on August 11, 2027. There is no established public trading market for the Warrants and the Company does not intend to list the Warrants on any national securities exchange or nationally recognized trading system. The closing of the Notes and Warrants Offering occurred on August 11, 2022. The Notes accrue compounding interest at the rate of 6.0% per annum, which is payable in cash or shares of the Company's common stock at the Company's option, in arrears quarterly in accordance with the terms of the Notes. Upon the occurrence and during the continuance of an Event of Default (as defined in the Notes), the Notes will accrue interest at the rate of 15.0% per annum. Upon conversion and other designated events, holders of the Notes are also entitled to receive an interest make-whole payment. Upon a redemption due to a Change in Control (as defined in the Notes), holders of the Notes are entitled to cash settlement. The Notes mature on December 31, 2023, with amortization payments being made monthly from April 2023 through December 2023, and the balance at maturity. The Warrants were assessed and concluded to be liability instruments due to certain cash settlement provisions, and as a result all changes in the fair value of warrants will be recognized in the Company's consolidated statements of operations until they are either exercised or expire. The Warrants are not traded in an active securities market and, as such, the estimated fair value at inception was $3.8 million, determined utilizing a Black-Scholes option pricing model and is reflected on the balance sheet line "Warrant liabilities" and as a discount on the Notes. The Notes contain a make-whole feature and a redemption right payable in cash upon change in control feature, as well as certain other conversion and redemption features. These features are viewed as a compound embedded derivative that meets the criteria to be bifurcated and carried at fair value. This is classified as in the balance sheet line "Derivative liabilities" and as a discount on the Notes, with subsequent adjustments to fair value each reporting period with a charge to earnings. The derivative was initially recognized at a fair value of $4.2 million and was subsequently adjusted to $1.6 million at December 31, 2022, with the following assumptions being utilized: Convertibles Notes Derivative August 11, 2022 December 31, 2022 Common stock market price $ 3.04 $ 2.10 Risk-free interest rate 3.28 % 4.68 % Expected dividend yield — — Expected term (in years) 1.39 1.00 Expected volatility 56.32 % 61.59 % Given that the warrants and the derivatives are liability instruments that are measured at fair value, the transaction proceeds were allocated first to the Warrants and derivative, with the residual to the Notes. Transaction issuance costs for the Notes and Warrants Offering were allocated in the same manner, with $0.5 million relating to the Warrants and derivative being expensed immediately within "General and administrative expenses." Deferred financing costs for the Notes and Warrant Offering totaled $0.5 million and are reported net of accumulated amortization as a deduction from the face amount of the debt. Amortization of the deferred financing costs and discount is reported as a component of interest expense and is computed using the effective interest method over the expected term of the debt. In the Notes and Warrant Offering, the Company raised net cash proceeds of $14.0 million. During the year ended December 31, 2022, the Company recognized interest expense of $2.8 million on the Notes and related instruments utilizing the effective interest rate of 155%, which includes amortization of debt issuance costs of $0.1 million, amortization of discount of $2.3 million, and contractual interest of $0.4 million. The balance of the Notes as of December 31, 2022 is as follows (unaudited, in thousands): Current Long term Total Gross Balance as of December 31, 2022 $ 15,000 $ — $ 15,000 Unamortized Discount (5,656) — $ (5,656) Unamortized Issuance Costs (337) — $ (337) Net Balance as of December 31, 2022 $ 9,007 $ — $ 9,007 The Notes contain certain customary affirmative and negative covenants regarding the incurrence of indebtedness, acquisition and investment transactions, the existence of liens, the repayment of indebtedness, the payment of cash in respect of dividends, distributions or redemptions, and the transfer of assets, among other matters. As of December 31, 2022, the Company was in compliance with all covenants. Warrant Liabilities As further discussed above, on August 11, 2022, Warrants to purchase 2,238,806 shares of common stock were issued with an exercise price of $3.35 per share in conjunction with the Notes and Warrants Offering, at an initial fair value of $3.8 million. Additional Warrants (as defined in Note 5 above) to purchase 1,132,075 shares of common stock were issued with an exercise price of $2.65 per share in conjunction with the Stock and Additional Warrants Offering. All changes in the fair value of these warrant liabilities are recognized in the Company's consolidated statements of operations until they are either exercised or expire. The Warrants are not traded in an active securities market and, as such, the estimated fair value at inception and again at December 31, 2022 was determined by using a Black-Scholes option pricing model that utilizes assumptions noted in the following table. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant. Expected volatility is based on the historical volatility over the expected term of the Warrants. The Company has no reason to believe future volatility over the expected remaining life of the Warrants is likely to differ materially from historical volatility. Expected life is based on the contractual term of the Warrants. Below are the specific assumptions utilized: Warrants Additional Warrants August 11, 2022 December 31, 2022 August 12, 2022 December 31, 2022 Common stock market price $ 3.04 $ 2.10 $ 2.34 $ 2.10 Risk-free interest rate 3.03 % 3.76 % 3.03 % 3.76 % Expected dividend yield — — — — Expected term (in years) 5.00 4.61 5.50 5.12 Expected volatility 66.85 % 64.16 % 70.55 % 65.52 % Credit Facility On March 31, 2022, the Company and its wholly-owned subsidiary, Smith Micro Software, LLC, as co-borrowers entered into a credit agreement with Wells Fargo Bank, National Association providing for a $7.0 million secured revolving credit facility (the “Credit Facility”) that was able be utilized to finance the Company’s working capital requirements and other general corporate purposes. In connection with the Notes and Warrants Offering described in Note 6 the Credit Facility was terminated on August 11, 2022. There were borrowings and repayments of $0.3 million for the year 2022. |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 12 Months Ended |
Dec. 31, 2022 | |
Fair Value Disclosures [Abstract] | |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The Company measures and discloses fair value measurements as required by FASB ASC Topic No. 820, Fair Value Measurements and Disclosures . Fair value is an exit price, representing the amount that would be received upon the sale of an asset or the amount that would be paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that is determined based on assumptions that market participants would use in pricing an asset or a liability. As a basis for considering such assumptions, the FASB establishes a three-tier value hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value: • Level 1 – Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets. • Level 2 – Include other inputs that are directly or indirectly observable in the marketplace. • Level 3 – Unobservable inputs which are supported by little or no market activity. The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The following table presents information about the financial liabilities that are measured at fair value on a recurring basis at December 31, 2022 and 2021 (in thousands): Level 1 Level 2 Level 3 Total Total at December 31, 2021 — — $ — $ — Notes and Warrants Offering Derivative $ — $ — $ 1,575 $ 1,575 Notes and Warrants Offering Warrants — — 2,052 2,052 Stock and Additional Warrants Offering Warrants — — 1,265 1,265 Total at December 31, 2022 $ — $ — $ 4,892 $ 4,892 The following table presents the changes in the fair value of Level 3 instruments for the years ended December 31, 2022 and 2021 (in thousands): Contingent Consideration Notes and Warrants Offering Derivative Notes and Warrants Offering Warrants Stock and Additional Warrants Offering Warrants Total Measurement at December 31, 2020 $ — $ — $ — $ — $ — Additions 1,136 — — — 1,136 Change in fair value 12,864 — — — 12,864 Payments (14,000) — — — (14,000) Measurement at December 31, 2021 $ — $ — $ — $ — $ — Additions — 4,178 3,793 1,590 9,561 Change in Fair Value — (2,603) (1,741) (325) (4,669) Measurement at December 31, 2022 $ — $ 1,575 $ 2,052 $ 1,265 $ 4,892 The carrying values for all other financial assets and liabilities approximated fair value for the years ended December 31, 2022 and 2021 |
Equity Transactions
Equity Transactions | 12 Months Ended |
Dec. 31, 2022 | |
Equity [Abstract] | |
Equity Transactions | Equity Transactions 2022 Common Stock Offering In a registered direct offering concurrent with the Notes and Warrants Offering referred to in Note 6 , on August 11, 2022, the Company entered into a Securities Purchase Agreement (the “Additional Purchase Agreement” and together with the Securities Purchase Agreement further discussed in Note 6, the “Purchase Agreements”) with certain accredited investors to sell at a purchase price of $2.65 per share, an aggregate of 1,132,075 shares of the Company’s common stock with warrants to purchase up to an aggregate of 1,132,075 shares of the Company’s common stock (the “Additional Warrants”) (the “Stock and Additional Warrants Offering”). Each Additional Warrant is exercisable on the sixth month anniversary of the date of its issuance at an exercise price of $2.65 per share and expires on February 14, 2028. The issuance of the shares of common stock and the Additional Warrants were conducted as a registered direct offering pursuant to the Company’s currently effective Registration Statement on Form S-3, previously filed with and declared effective by the Securities and Exchange Commission, and prospectus supplements thereunder. The Stock and Additional Warrants Offering closed on August 12, 2022, and the Company raised net cash proceeds of $2.8 million. The Additional Warrants were assessed and concluded to be liability instruments due to certain cash purchase settlement provisions and as a result all changes in the fair value of the Additional Warrants will be recognized in the Company's consolidated statements of operations until they are either exercised or expire. The Additional Warrants for the Company's stock are not traded in an active securities market and, as such, the estimated fair value at inception was $1.6 million determined utilizing a Black-Scholes option pricing model, and is reflected on the balance sheet line "Warrant Liabilities" and as an adjustment to "Additional Paid in Capital." Given that the Additional Warrants are liability instruments that are measured at fair value, the transaction proceeds were first allocated among the Additional Warrants, with the residual of $1.4 million to equity and transaction issuance costs allocated in the same manner, with $0.1 million relating to the Additional Warrants being expensed immediately within "General and Administrative Expenses," and $0.1 million as an offset to "Additional Paid in Capital." 2021 Common Stock Offering On March 15, 2021, the Company completed a registered public offering (“Offering”), wherein a total of 9,520,787 shares of the Company’s common stock were issued at a purchase price of $6.85 per share, for a total purchase price of $65.2 million. The Offering raised net cash proceeds of approximately $59.7 million after deducting the underwriting discount and fees and expenses of the Offering. The Company used the net cash proceeds from the Offering to fund, in part, the acquisition of the Family Safety Mobile Business completed on April 16, 2021 (see Note 2 for additional information). |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2022 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes Loss before provision for income taxes was generated from the following sources (in thousands): Year Ended December 31, 2022 2021 Domestic $ (29,539) $ (31,301) Foreign 486 473 Total loss before provision for income taxes $ (29,053) $ (30,828) A summary of the income tax expense is as follows (in thousands): Year Ended December 31, 2022 2021 Current: Federal $ — $ — State 8 5 Foreign 157 152 Total current 165 157 Deferred: Federal 24 24 State 37 35 Foreign — (1) Total deferred 61 58 Total income tax expense $ 226 $ 215 A reconciliation of the provision for income taxes to the amount of income tax expense that would result from applying the federal statutory rate to the loss before income taxes is as follows: Year Ended December 31, 2022 2021 Federal statutory rate 21.0 % 21.0 % State tax, net of federal benefit 4.1 4.3 Equity compensation (1.5) 0.4 International tax items (3.9) 0.1 Foreign taxes (0.5) (0.5) State NOL true-up (1.2) 1.2 Miscellaneous 1.8 (0.4) Effect of change in rate 0.7 0.8 Change in valuation allowance (21.1) (27.6) (0.8) % (0.7) % The major components of the Company’s deferred tax assets and liabilities are as follows (in thousands): Year Ended December 31, 2022 2021 Deferred income tax assets Net operating loss carry forwards $ 48,317 $ 47,204 Research and development expenses 5,100 — Intangibles 4,907 6,259 Credit carry forwards 3,028 3,027 Nondeductible accruals 453 532 163j Limitation 333 — Fixed assets 289 84 Equity-based compensation 188 208 Deferred rent 15 33 Other 3 7 Total deferred income taxes - net 62,633 57,354 Deferred income tax liabilities Prepaid expenses (92) (80) Unrealized translation gain/loss (21) (45) Total deferred income liabilities- net (113) (125) Valuation allowance (62,698) (57,346) Net deferred income tax liabilities $ (178) $ (117) The Company has federal and state net operating loss (“NOL”) carryforwards of approximately $185.4 million and $150.8 million, respectively, at December 31, 2022 , to reduce future cash payments for income taxes. The federal NOL carryforwards generated prior to 2018 will expire from 2031 through 2037 and state NOL carryforwards will expire 2023 through 2041. Federal NOL carryforwards generated in 2018 and thereafter have no expiration date. The Company has federal and state tax credit carryforwards of approximately $2.5 million and $0.7 million, respectively, at December 31, 2022 . These tax credits will begin to expire in 2028. To the extent that an ownership change has occurred under Internal Revenue Code Sections 382 and 383, the Company’s use of its loss carryforwards and credit carryforwards to offset future taxable income may be limited. At December 31, 2022 and 2021, the Company had unrecognized tax benefits, including interest and penalties, of approximately $0.4 million. The Company’s gross unrecognized tax benefits as of December 31, 2022 and 2021 and the changes in those balances are as follows (in thousands): Year Ended December 31, 2022 2021 Beginning balance $ 412 $ 428 Other — (16) Gross unrecognized tax benefits, ending balance $ 412 $ 412 The Company recognizes interest and penalties accrued related to unrecognized tax benefits in income tax expense, however during 2022 and 2021, the Company did not recognize any interest or penalties. There were no cumulative interest and penalties at December 31, 2022 and 2021. The Company does not anticipate any material changes to unrecognized tax benefits within the next twelve months that will affect the effective tax rate. In assessing whether a valuation allowance is required, significant weight is given to evidence that can be objectively verified. A significant factor in the Company’s assessment is that the Company was in a three-year historical cumulative loss as of the end of fiscal 2022. In addition, the Company was also in a loss for fiscal year 2017 and 2018 These facts, combined with uncertain near-term market and economic conditions, reduced the Company’s ability to rely on projections of future taxable income in assessing the realizability of its deferred tax assets. After a review of the four sources of taxable income as of December 31, 2022 (as described in Note 1), and after consideration of the Company’s continuing cumulative loss position as of December 31, 2022 , the Company recorded a valuation allowance related to its U.S.-based deferred tax assets of $62.7 million at December 31, 2022 . The valuation allowance on deferred tax assets increased by $5.4 million and $7.9 million in 2022 and 2021, respectively. The Company is subject to U.S. federal income tax as well as to income tax of multiple state jurisdictions. Currently there are no audits in process or pending from Federal or state tax authorities. The Company is no longer subject to examination for U.S. federal income tax returns for years before December 31, 2018 and for state income tax returns, the Company is no longer subject to examination for years before December 31, 2017. As of December 31, 2022 , the Company had no outstanding tax audits. The outcome of tax audits cannot be predicted with certainty. If any issues addressed in the Company’s tax audits are resolved in a manner not consistent with management’s expectations, the Company could be required to adjust its provision for income tax in the period such resolution occurs. As of December 31, 2022 , a current estimate of the range of changes that may occur within the next twelve months cannot be made due to the uncertainty regarding the timing of these events. For financial reporting purposes, income before provision for income taxes for the Company’s foreign subsidiaries was $0.5 million for both years ended December 31, 2022 and 2021. Smith Micro does not provide for U.S. taxes on its unremitted earnings of foreign subsidiaries that have not been previously taxed since the Company intends to invest such undistributed earnings indefinitely outside of the U.S. The 2017 US Tax Cuts and Jobs Act subjects a U.S. shareholder to current tax on global intangible low-taxed income (“GILTI”) earned by certain foreign subsidiaries. The Company's accounting policy is to recognize the tax on GILTI as a period expense in the period the tax is incurred. The current income related to the GILTI inclusion in 2022 is $5.9 million. |
Earnings Per Share
Earnings Per Share | 12 Months Ended |
Dec. 31, 2022 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Earnings Per Share The Company calculates earnings per share (“EPS”) as required by FASB ASC Topic No. 260, Earnings Per Share . Basic EPS is calculated by dividing the net income available to common stockholders by the weighted average number of common shares outstanding for the period, excluding common stock equivalents. Diluted EPS is computed by dividing the net income available to common stockholders by the weighted average number of common shares outstanding for the period, plus the weighted average number of dilutive common stock equivalents outstanding for the period determined using the treasury-stock method. For periods with a net loss, the dilutive common stock equivalents are excluded from the diluted EPS calculation. For purposes of this calculation, common stock subject to repurchase by the Company, options, warrants, and convertible notes are considered to be common stock equivalents, and are only included in the calculation of diluted earnings per share when their effect is dilutive. The following table sets forth the details of basic and diluted earnings per share (unaudited, in thousands, except per share amounts): Year Ended December 31, 2022 2021 (in thousands, except per share amounts) Numerator: Net loss $ (29,279) $ (31,043) Denominator: Weighted average shares outstanding – basic 55,422 51,232 Potential common shares – options / warrants (treasury stock method) and convertible notes (as if converted method) — — Weighted average shares outstanding – diluted 55,422 51,232 Shares excluded (anti-dilutive) 3,662 1,324 Net loss per common share: Basic $ (0.53) $ (0.61) Diluted $ (0.53) $ (0.61) |
Employee Benefit Plans
Employee Benefit Plans | 12 Months Ended |
Dec. 31, 2022 | |
Retirement Benefits [Abstract] | |
Employee Benefit Plans | Employee Benefit Plans The Company offers its US employees participation in a 401(k) plan, in which the Company matches the employee contributions at a rate of 20%, subject to a vesting schedule. Total employer contributions amounted to $0.5 million and $0.4 million for the years ended December 31, 2022 and 2021, respectively. |
Stock-Based Compensation
Stock-Based Compensation | 12 Months Ended |
Dec. 31, 2022 | |
Share-Based Payment Arrangement [Abstract] | |
Stock-Based Compensation | Stock-Based Compensation Stock Plans During the year ended December 31, 2022, the Company granted 1.4 million shares of restricted stock under the Company’s 2015 Omnibus Equity Incentive Plan, as amended ("2015 OEIP"), which was approved by Smith Micro’s stockholders on June 18, 2015. Subsequent amendments to the 2015 OEIP to increase the number of shares reserved thereunder were approved by its stockholders on June 14, 2018 and June 9, 2020. The 2015 OEIP replaced the 2005 Stock Option / Stock Issuance Plan (“2005 Plan”) which was due to expire on July 28, 2015. The outstanding options under the 2005 Plan remain outstanding, but no new grants will be made under the 2005 Plan. The maximum number of shares of the Company’s common stock available for issuance over the term of the 2015 OEIP may not exceed 9,625,000 shares. As of December 31, 2022, there were approximately 2.4 million shares available for future grants under the Company’s 2015 OEIP. The 2015 OEIP provides for the issuance of full value awards (restricted stock, performance stock, dividend equivalent right or restricted stock units) and partial value awards (stock options or stock appreciation rights) to employees, non-employee members of the board and consultants. Any full value award settled in shares will be debited as 1.2 shares, and partial value awards settled in shares will be debited as 1.0 shares against the share reserve. The exercise price per share for stock option grants is not to be less than the fair market value per share of the Company’s common stock on the date of grant. The Board of Directors has the discretion to determine the vesting schedule. Stock options may be exercisable immediately or in installments, but generally vest over a four-year period from the date of grant. In the event the holder ceases to be employed by the Company, all unvested stock options terminate, and all vested stock options may be exercised within a period of 90 days following termination. In general, stock options expire ten years from the date of grant. Restricted stock is valued using the closing stock price on the date of the grant. The total value is expensed over the vesting period of 12 to 48 months. Stock Compensation Expense The Company accounts for all stock-based payment awards made to employees and directors based on their fair values and recognized as compensation expense over the vesting period using the straight-line method over the requisite service period for each award as required by FASB ASC Topic No. 718, Compensation-Stock Compensation . Non-cash stock-based compensation expenses related to stock options, restricted stock grants and the ESPP were recorded in the financial statements as follows (in thousands): Year Ended December 31, 2022 2021 Cost of sales $ 2 $ 1 Sales and marketing 1,101 901 Research and development 1,082 965 General and administrative 2,764 2,981 Total non-cash stock compensation expense $ 4,949 $ 4,848 As of December 31, 2022 , there was approximately $7.4 million of unrecognized compensation costs related to non-vested stock options and restricted stock granted under the 2015 OEIP and the 2005 Plan. In the second quarter of 2022 there was a modification of a restricted stock award which accelerated the vesting of that award. As such an additional $0.6 million of stock compensation expense was recorded in Sales and Marketing expense in that period. Valuation of Stock Option Awards There were no options granted in 2022. The assumptions used to compute the share-based compensation costs for the stock options granted during the year ended December 31, 2021 using the Black-Scholes option pricing model, were as follows: Year Ended December 31, 2021 Weighted average grant date fair value of stock options $5.94 Assumptions Risk-free interest rate (weighted average) 0.87 % Expected dividend yield — Weighted average expected life (years) 6.2 Volatility (weighted average) 74.5 % Forfeiture rate 12.0 % The risk-free interest rate assumption was based on the United States Treasury’s rates for U.S. Treasury zero-coupon bonds with maturities similar to those of the expected term of the award being valued. The Company assumed no dividend yield because it does not expect to pay dividends for the foreseeable future. The weighted average expected life is the vesting period for those options granted during that period. The average volatility is based on the actual historical volatility of the Company’s common stock. The forfeiture rate was based on modified employee turnover. Stock Options A summary of the Company’s stock options outstanding under the 2015 OEIP and 2005 Plan as of December 31, 2022 and 2021 and the activity during the years ended herein are as follows (in thousands except per share amounts): Shares Weighted Avg. Exercise Price Wtd. Avg. Remaining Contractual Life (Yrs) Aggregate Intrinsic Value Outstanding as of December 31, 2021 194 $ 4.12 $ 218 Exercised (9) $ 2.11 $ 12 Forfeited (2) $ 4.82 $ — Expired (44) $ 5.66 $ — Outstanding as of December 31, 2022 139 $ 3.75 5.1 $ 6 Vested and expected to vest at December 31, 2022 137 $ 3.72 5.1 $ 6 Exercisable as of December 31, 2022 117 $ 3.49 4.6 $ 6 Employee Stock Purchase Plan The Company has a shareholder approved employee stock purchase plan (“ESPP”), under which substantially all employees may purchase the Company’s common stock through payroll deductions at a price equal to 85% of the lower of the fair market values of the stock as of the beginning and end of six-month offering periods. An employee’s payroll deductions under the ESPP are limited to 10% of the employee’s compensation and employees may not purchase more than the lesser of $25,000 of stock, or 250 shares, for any purchase period. Additionally, no more than 250,000 shares in the aggregate may be purchased under the ESPP. Valuation of ESPP The fair values are estimated at the beginning of each offering period using a Black-Scholes valuation model that uses the assumptions noted in the following table. The risk-free rate is based on the U.S. treasury yield curve in effect at the time of grant. Expected volatility was based on the historical volatility on the day of grant. Following is a schedule of the shares purchased, the fair value per share, and the Black-Scholes model assumptions for each offering period: Offering Period Ended September 30, March 31, September 30, March 31, Shares purchased for offering period 10,901 6,019 5,360 4,668 Fair value per share as of the beginning of the offering period $ 1.15 $ 1.61 $ 1.90 $ 1.25 Assumptions Risk-free interest rate (average) 0.86 % 0.05 % 0.05 % 0.12 % Expected dividend yield — — — — Weighted average expected life (years) 0.5 0.5 0.5 0.5 Volatility (average) 32.5 % 43.1 % 44.6 % 47.1 % Restricted Stock Awards A summary of the Company’s restricted stock awards outstanding under the 2015 OEIP and 2005 Plan as of December 31, 2022 and 2021, and the activity during years ended therein, are as follows (in thousands, except weighted average grant date fair value): Number of shares Weighted average grant date fair value Unvested at December 31, 2020 1,702 $ 4.07 Granted 1,287 $ 7.02 Vested (1,027) $ 4.47 Canceled and forfeited (295) $ 5.60 Unvested at December 31, 2021 1,667 $ 5.83 Granted 1,398 $ 3.76 Vested (1,174) $ 4.87 Canceled and forfeited (212) $ 6.06 Unvested at December 31, 2022 1,679 $ 4.75 |
Revenues
Revenues | 12 Months Ended |
Dec. 31, 2022 | |
Revenue from Contract with Customer [Abstract] | |
Revenues | Revenues Performance Obligations Family Safety Cloud Based Services Smith Micro’s Family Safety solutions, which includes the SafePath family of products, are a hybrid Software as a Service (“SaaS”) offering. The Company considers the provision of the perpetual license and the cloud-based platform as a single performance obligation. The Company provides the perpetual license on a royalty free basis and earns revenue based either on a fixed fee for usage of its cloud-based services or on a revenue share arrangement. Smith Micro recognizes the usage-based and revenue share fees when it is entitled to the consideration earned for the distinct service period based on its customer’s usage of its cloud-based services. ViewSpot Cloud Based Services Our ViewSpot product is a cloud-based platform that Smith Micro's MNO customers use to display its promotional content on mobile devices on display in their retail outlets. Using this solution, the MNOs have the ability to promote specific mobile devices in targeted geographic retail locations and monitor the efficacy of the promotions and consumer interactions with in-store display devices and the targeted promotional content. Smith Micro sells a royalty free license and cloud-based services to serve the promotional content and capture consumer interaction with the in-store display mobile device. ViewSpot services depend on a significant level of integration, interdependency, and interrelation between the on-premise applications, consulting services and the cloud services, and are accounted for together as a single performance obligation. ViewSpot services are sold on a fixed fee basis to Smith Micro’s customers based on pre-defined purchase orders. Since Smith Micro is obligated to provide the required services over the contract period, the revenue is recognized over time. From time to time, the Company also provides services to either to configure ad hoc targeted promotional content for Smith Micro’s customers or to set up new devices for optimization on the ViewSpot platform upon request. These requests are driven by the customers’ marketing initiatives and tend to be short term “bursts” of activity. Smith Micro recognizes revenues from these ad hoc services at a point in time which is upon delivery of the configured promotional content to the cloud platform. CommSuite ® Revenue For the CommSuite product, the Company may provide integration services for a fee to ensure the Company’s software solution can operate on the customer’s operating platforms and the operating platform of the mobile devices of Smith Micro’s customer’s end users. In addition, since the mobile device OEMs change their operating systems regularly, Smith Micro provides maintenance services to ensure utility of the software license is not diminished for the Company’s customers. Smith Micro considers the integration services, the software license, and maintenance services to maintain the utility of the software license for its customers as a single performance obligation. The Company provides the perpetual license on a royalty free basis. Revenue related to integration services, if charged, is recognized at a point in time upon delivery and acceptance of the licensed software by the customer. To support the CommSuite solution, Smith Micro also provides customers with its hosted environment and Application Service Provider (“ASP”) services for the duration of the license term. The Company considers the provision of these services to be a separate performance obligation. In these transactions, the total consideration expected is variable. The Company does not estimate when the variable consideration will be recognized because the License Usage Based Fees, Hosting Service Fees and ASP Advertising Fees relate specifically to the Company’s efforts to transfer the services for a specified period (month or quarter) which are distinct from the services provided in other specified periods. Smith Micro’s customer’s or the customer’s end customer’s usage occurs within the defined period, and the variability of Smith Micro’s license, hosting and ASP fees is resolved in the specified period, and such fees earned are not subject to adjustment based on the activity in other periods. Smith Micro earns revenue from these services on a fixed fee per perpetual license usage on its hosted environment and advertising revenue share for advertisements placed by its customers on the Company’s platform. The usage fees are not earned until Smith Micro transfers its software license to its customers. The Company recognizes the usage-based fees when it is entitled to the consideration earned for the distinct service period based on its customer’s usage of its licenses, hosting services, and ASP advertising platform (“hosted environment usage fees”). Consulting Services and Other Smith Micro has developed a roadmap for adding new functionality to its wireless products to extend the product lifecycle and expand its customer’s use of the product on their networks. From time to time, the Company enters into consulting services arrangements with its customers to develop incremental functionality not included on the developmental roadmap. The Company earns revenue from these consulting services that is recognized at the time of delivery of the software when the services have been completed and control has been transferred to the customers. The Company also may enter into arrangements with certain customers to provide technology support services beyond the initial warranty period. Technology support services include e-mail and telephone support and unspecified rights to bug fixes available on a when-and-if available basis. Smith Micro considers the provision of such technology support services to be a separate performance obligation which is generally billed in advance for a fixed term and recognized as revenue ratably over the contractual term as the Company performs its services. Deferred Revenue Deferred revenue represents amounts billed to customers for which revenue has not been recognized. Deferred revenue primarily consists of the unearned portion of monthly, quarterly, and annually billed service fees and prepayments made by customers for a future period. Smith Micro recognizes revenue upon transfer of control. As of December 31, 2022 and 2021, the Company’s total deferred revenue balance was $0.3 million and $0.2 million, respectively. Costs to Obtain a Customer Contract The Company generally pays sales commissions to its sales force, which are incremental and recoverable costs of acquiring contracts. In most instances, sales commissions are only paid when the Company earns usage-based fees on the contracts. The commission obligation is established each quarter based on the usage-based fees earned. The commission obligation is not adjusted by future usage-based fees earned, meaning each period is discrete from the other. As a result of the structure of the commission plan, Smith Micro records the commission expense when the commission obligation is determined, which is generally quarterly. Certain provisions of the sales commission plan incentivize and recognize the efforts of eligible participants to earn commissions on future revenue generated on new contracts, sale of a new product to an existing contract, or sale of a product to a different group within an existing customer. The sales commissions are tiered based on the opportunity size. Sales commissions paid under these provisions of the sales commission plan are incremental contract acquisition costs, and accordingly are recorded as a deferred contract asset that is amortized on a straight-line basis over the average contract life of the new, renewed, and modified contract. Costs to Fulfill a Customer Contract The Company incurs costs to fulfill obligations under a contract which are recognized as the Company fulfills its performance obligation and recognizes revenue. Where the Company provides services and earns revenue over the contract term based on usage of Smith Micro’s platforms, the associated fulfillment costs are recognized as they are incurred and as usage-based revenue is recognized. Disaggregation of Revenues Revenues on a disaggregated basis are as follows (in thousands): Year Ended December 31, 2022 2021 License and service fees $ 3,807 $ 3,730 Hosted environment usage fees 4,852 13,770 Cloud based usage fees 38,182 38,415 Consulting services and other 1,672 2,507 Total revenues $ 48,513 $ 58,422 |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Litigation The Company may become involved in various legal proceedings arising from its business activities. While management does not believe the ultimate disposition of these matters will have a material adverse impact on the Company’s consolidated results of operations, cash flows, or financial position, litigation is inherently unpredictable, and depending on the nature and timing of these proceedings, an unfavorable resolution could materially affect the Company’s future consolidated results of operations, cash flows, or financial position in a particular period. Other Contingent Contractual Obligations During its normal course of business, the Company has made certain indemnities, commitments, and guarantees under which it may be required to make payments in connection with certain transactions. These include: indemnities to the Company’s customers pursuant to contracts for the Company’s products and services, including indemnities with respect to intellectual property, confidentiality and data privacy; indemnities to various lessors in connection with facility leases for certain claims arising from use of such facility or under such lease; indemnities to vendors and service providers pertaining to claims based on the negligence or willful misconduct of the Company; indemnities involving the accuracy of representations and warranties in certain contracts; and indemnities to directors and officers of the Company to the maximum extent permitted under the laws of the State of Delaware. In addition, the Company has made or may make contractual commitments to employees providing for severance payments upon the occurrence of certain prescribed events. The Company may also issue a guarantee in the form of a standby letter of credit as security for contingent liabilities under certain customer contracts. The duration of these indemnities, commitments, and guarantees varies, and in certain cases may be indefinite. The majority of these indemnities, commitments, and guarantees may not provide for any limitation of the maximum potential for future payments the Company could be obligated to make. The Company has not recorded any liability for these indemnities, commitments, and guarantees in the accompanying consolidated balance sheets. |
Leases
Leases | 12 Months Ended |
Dec. 31, 2022 | |
Leases [Abstract] | |
Leases | LeasesThe Company leases office space and equipment, and certain office space was subleased. Management determines if a contract is a lease at the inception of the arrangement and reviews all options to extend, terminate, or purchase its right-of-use assets at the inception of the lease and accounts for these options when they are reasonably certain of being exercised. Leases with an initial term of greater than twelve months are recorded on the consolidated balance sheet. Lease expense is recognized on a straight-line basis over the lease term. The Company’s lease contracts generally do not provide a readily determinable implicit rate. For these contracts, the estimated incremental borrowing rate is based on information available at the inception of the lease. Operating lease cost consists of the following (in thousands): Year Ended December 31, 2022 2021 Lease cost $ 1,654 $ 2,297 Sublease income (18) (603) Total lease cost $ 1,636 $ 1,694 Operating lease assets and liabilities are summarized as follows (in thousands): Year Ended December 31, 2022 2021 Right-of-use assets $ 3,722 $ 4,866 Current lease liabilities $ 1,441 $ 1,400 Long-term lease liabilities 2,976 4,467 Total lease liabilities $ 4,417 $ 5,867 The maturity of operating lease liabilities is presented in the following table (in thousands): As of December 31, 2022 2023 $ 1,664 2024 1,514 2025 1,158 2026 476 Total lease payments 4,812 Less imputed interest 395 Present value of lease liabilities 4,417 |
Segment, Concentration and Geog
Segment, Concentration and Geographical Information | 12 Months Ended |
Dec. 31, 2022 | |
Segment Reporting [Abstract] | |
Segment, Concentration and Geographical Information | Segment, Concentration and Geographical Information Segment Information Public companies are required to report financial and descriptive information about their reportable operating segments as required by FASB ASC Topic No. 280, Segment Reporting . The Company has one primary business unit based on how management internally evaluates separate financial information, business activities and management responsibility: Wireless. The Wireless segment includes the Family Safety (which includes SafePath), CommSuite, and ViewSpot families of products. The Company does not separately allocate operating expenses to these product lines, nor does it allocate specific assets. Therefore, product line information reported includes only revenues. The following table presents the Wireless revenues by product line (in thousands): Year Ended December 31, 2022 2021 Family Safety $ 39,798 $ 41,019 CommSuite 4,846 13,717 ViewSpot 3,869 3,569 Other — 117 Total Wireless revenues $ 48,513 $ 58,422 Concentration Information The Company has certain customers whose revenues individually represented greater than 10% of the Company’s total revenues, or whose accounts receivable balances individually represented greater than 10% of the Company’s total accounts receivable. For the year ended December 31, 2022, two customers made up 40% and 38% of revenues. For the year ended December 31, 2021, two customers made up 56% and 24% of revenues. As of December 31, 2022 three customers accounted for 40%, 26%, and 17% of accounts receivable, and as of December 31, 2021, four customers accounted for 42%, 27%, 14%, and 12% of accounts receivable. For the year ended December 31, 2022 , one service provider with more than 10% of purchases accounted for 36% of purchases in the year, totaling 19% of accounts payable as of December 31, 2022. For the year ended December 31, 2021, two service providers with more than 10% of purchases accounted for 36% and 13% of purchases in the year, totaling 15% and 0% of accounts payable as of December 31, 2021, respectively. The Company’s major customers could reduce their orders of the Company’s products in favor of a competitor's product or for any reason. The loss of these major customers or decisions by a significant customer to substantially reduce purchases could have a material adverse effect on Smith Micro’s business. Geographical Information During the years ended December 31, 2022 and 2021, the Company operated in two geographic locations: the Americas and Europe, Middle East and Africa (EMEA). Revenues attributed to the geographic location of the customers’ bill-to address were as follows (unaudited, in thousands): Year Ended December 31, 2022 2021 Americas $ 46,621 $ 55,398 EMEA 1,892 3,024 Total revenues $ 48,513 $ 58,422 The Company does not separately allocate specific assets to these geographic locations. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2022 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events The Company evaluates and discloses subsequent events as required by ASC Topic No. 855, Subsequent Events . The Topic establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before the financial statements are issued or are available to be issued. On February 21, 2023, the Company received written notice of termination of a U.S. Tier 1 customer agreement for the Company’s family safety solution, effective June 30, 2023. Thereafter, the Company is obligated to deliver service under the agreement for a transition period of up to 180 days at the election of the customer. The agreement accounted for approximately 33% of the revenues of the Company for the year ended December 31, 2022. Prior to the date of the termination notice, the Company had received no written indication from this customer that they were contemplating terminating this agreement. The Company is currently evaluating its goodwill and intangible assets for impairment in the first quarter of 2023 due to this event but cannot make a reasonable estimate of any potential impairment as of the date of this Report. In response to this notification, the |
Organization, Basis of Presen_2
Organization, Basis of Presentation and Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
The Company | The Company Smith Micro Software, Inc. (“Smith Micro” or “the Company”) develops software to simplify and enhance the mobile experience, providing solutions to some of the leading wireless and cable service providers around the world. From enabling the family digital lifestyle to providing powerful voice messaging capabilities, the Company strives to enrich today’s connected lifestyles while creating new opportunities to engage consumers via smartphones and consumer Internet of Things (“IoT”) devices. Smith Micro’s portfolio includes a wide range of products for creating, sharing, and monetizing rich content, such as visual voice messaging, retail content display optimization and performance analytics. Smith Micro’s solution portfolio is comprised of proven products that enable its customers to provide: • In-demand digital services that connect today’s digital lifestyle, including family location services, parental controls, and consumer IoT devices to mobile consumers worldwide; • Easy visual access to voice messages on mobile devices through visual voicemail and voice-to-text transcription functionality; and • Strategic, consistent, and measurable digital demonstration experiences that educate retail shoppers, create awareness of products and services, and drive in-store sales, and optimize retail experiences with actionable analytics derived from in-store customer behavior. |
Basis of Presentation | Basis of Presentation The accompanying consolidated financial statements reflect the operating results and financial position of Smith Micro and its wholly owned subsidiaries in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). All intercompany amounts have been eliminated in consolidation. |
Use of Estimates | Use of Estimates The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates. |
Reclassifications | ReclassificationsCertain reclassifications have been made to the prior year financial statements to conform to the current presentation. |
Foreign Currency Transactions | Foreign Currency Transactions The countries in which the Company has a subsidiary or branch office are Serbia, Sweden, Portugal, Czech Republic, and Slovakia. The functional currency for all of these foreign entities is the U.S. dollar in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic No. 830. Foreign currency transactions that increase or decrease expected functional currency cash flows is a foreign currency transaction gain or loss that are included in determining net income for the period in which the exchange rate changes. Likewise, a transaction gain or loss (measured from the transaction date or the most recent intervening balance sheet date, whichever is later) realized upon settlement of a foreign currency transaction is included in determining net income for the period in which the transaction is settled. |
Business Combinations | Business Combinations The Company applies the provisions of FASB ASC Topic No. 805, Business Combinations , in the accounting for its acquisitions, which requires recognition of the assets acquired and the liabilities assumed at their acquisition date fair values, separately from goodwill. Goodwill as of the acquisition date is measured as the excess of consideration transferred over the net of the acquisition date fair values of the tangible and identifiable intangible assets acquired and liabilities assumed. While the Company uses its best estimates and assumptions to accurately value assets acquired and liabilities assumed at the acquisition date as well as contingent consideration, where applicable, its estimates are inherently uncertain and subject to refinement. As a result, during the measurement period that exists up to twelve months from the acquisition date, the Company may record adjustments to the tangible and specifically identifiable intangible assets acquired and liabilities assumed with a corresponding adjustment to goodwill in the reporting period in which the adjusted amounts are determined. Upon the conclusion of the measurement period or final determination of the values of assets acquired and liabilities assumed, whichever comes first, the impact of any subsequent adjustments is included in the consolidated statements of operations. Costs to exit or restructure certain activities of an acquired company or the Company’s internal operations are accounted for as a one-time termination and exit cost pursuant to FASB ASC Topic No. 420, Exit or Disposal Cost Obligations , and are accounted for separately from the business combination. A liability for costs associated with an exit or disposal activity is recognized and measured at its fair value in the Company’s consolidated statement of operations in the period in which the liability is incurred. Uncertain income tax positions and tax-related valuation allowances that are acquired in connection with a business combination are initially estimated as of the acquisition date. The Company reevaluates these items quarterly based upon facts and circumstances that existed as of the acquisition date, with any adjustments to the preliminary estimates being recorded to goodwill if such adjustments occur within the 12-month measurement period. Subsequent to the end of the measurement period or the Company’s final determination of the value of the tax allowance or contingency, whichever comes first, changes to these uncertain tax positions and tax-related valuation allowances will affect the provision for income taxes in the consolidated statement of operations and could have a material impact on results of operations and financial position. |
Cash and Cash Equivalents | Cash and Cash EquivalentsCash and cash equivalents generally consist of cash and money market funds. The carrying amount of cash and cash equivalents approximates fair value due to the short-term maturities of these instruments. |
Accounts Receivable and Allowance for Doubtful Accounts | Accounts Receivable and Allowance for Doubtful AccountsSmith Micro sells its products worldwide. The Company performs ongoing credit evaluations of its customers and adjusts credit limits based upon payment history, the customer’s current credit worthiness and various other factors, as determined by review of their current credit information. The Company continuously monitors collections and payments from its customers. The Company estimates credit losses and maintains an allowance for doubtful accounts based upon these estimates. While such credit losses have historically been within its estimated reserves, the Company cannot guarantee that it will continue to experience the same credit loss rates that it has in the past. If not, this could have an adverse effect on Smith Micro’s consolidated financial statements. |
Equipment and Improvements | Equipment and Improvements Equipment and improvements are stated at cost. Depreciation is computed using the straight-line method based on the estimated useful lives of the assets, generally ranging from three |
Internal Software Development Costs | Internal Software Development Costs Development costs incurred in the research and development of new software products and enhancements to existing software products are expensed as incurred until technological feasibility has been established. The Company considers technological feasibility to be established when all planning, designing, coding, and testing has been completed according to design specifications. After technological feasibility is established, any additional costs are capitalized. Through December 31, 2022 , software has been substantially completed concurrently with the establishment of technological feasibility; accordingly, no costs have been capitalized to date. |
Impairment or Disposal of Long-Lived Assets | Impairment or Disposal of Long-Lived Assets Long-lived assets to be held are reviewed for events or changes in circumstances which indicate their carrying value may not be recoverable. They are tested for recoverability using undiscounted cash flows to determine whether or not impairment to such value has occurred. |
Goodwill and Intangible Assets | Goodwill and Intangible Assets Goodwill represents purchase consideration from a business combination that exceeds the value assigned to the net assets of the acquired businesses. Smith Micro is required to periodically assess the recoverability of the carrying value of its goodwill at least annually during the fourth quarter of the fiscal year or whenever events or circumstances indicate a potential impairment. If the carrying amount of the Company’s single reporting unit exceeds its fair value, an impairment loss equal to the excess of carrying value over fair value is recorded. The Company’s 2022 fourth quarter annual test included the assessment of qualitative factors to determine whether or not it was more likely than not that the fair value of Smith Micro’s single reporting unit was less than its carrying value. The qualitative assessment considered factors such as macroeconomic conditions, industry and market trends, cost factors, and overall financial performance, among others. In consideration of the totality of the qualitative factors assessed, based on the weight of the evidence no circumstances existed that would indicate that it was more likely than not that goodwill was impaired. There was no goodwill impairment recognized during the years ended December 31, 2022 or 2021. The Company has no indefinite-lived intangible assets. Amortization expense related to the Company’s definite-lived intangible assets resulting from acquisitions is calculated based on the pattern of economic benefit expected to be generated from the use of that asset. Intangible assets are tested for impairment if events or circumstances occur indicating that the respective asset might be impaired. |
Derivatives and Warrants | Derivatives and Warrants The Company analyzes all financial instruments with features of both liabilities and equity under FASB ASC Topic No. 480, Distinguishing Liabilities from Equity and FASB ASC Topic No. 815, Derivatives and Hedginig |
Revenue Recognition | Revenue Recognition In accordance with FASB ASC Topic No. 606, Revenue from Contracts with Customers , the Company recognizes the sale of goods and services based on the five-step analysis of transactions as provided in Topic 606, which requires an entity to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for such goods and services. Smith Micro primarily sell its software solutions, cloud-based services and consulting services to major wireless network and cable operators. For all contracts with customers, the Company first identifies the contract which usually is established when a contract is fully executed by each party and consideration is expected to be received. Next, the Company identifies the performance obligations in the contract. A performance obligation is a promise in a contract to transfer a distinct good or service to the customer. The Company then determines the transaction price in the arrangement and allocates the transaction price, if necessary, to each performance obligation identified in the contract. The allocation of the transaction price to the performance obligations are based on the relative standalone selling prices for the goods and services contained in a particular performance obligation. The transaction price is adjusted for the Company’s estimate of variable consideration. The Company evaluates the total amount of variable consideration expected to be earned by using the expected value method, as the Company believes this method represents the most appropriate estimate for this consideration, based on historical service trends, the individual contract considerations, and its best judgment at the time. The Company includes estimates of variable consideration in revenues only to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. The Company also generates the majority of its revenue on usage-based fees which are variable and depend entirely on customers’ use of perpetual licenses, transactions processed on the Company’s hosted environment, advertisement placements on the Company’s service platform, and activity on the Company’s cloud-based service platform. Smith Micro grants certain software licenses to its customers on a royalty free, non-exclusive, non-transferable, limited use basis during the term of the agreement. In some instances, the Company performs integration services to ensure the software operates within its customer’s operating platforms as well as the operating platforms of the mobile devices used by their end customers, before transferring the license. Revenue related to these services is recognized at a point in time upon acceptance of the licensed software by the customer. The Company also earns usage-based revenue on its platforms. The Company’s contracts with the certain customers may include promises to transfer multiple products and services. Smith Micro’s cloud-based service includes a software solution license integrated with cloud-based services. Judgment is required to determine whether the software license is considered distinct and accounted for separately, or not distinct and accounted for together with the cloud service and recognized over time. Smith Micro does not allow its customers to take possession of the software solution, and since the utility of the license comes from the cloud-based services that are provided, the Company considers the software license and the cloud-based services to be a single performance obligation. Usage based revenue is generated based on licenses used by Smith Micro’s customer’s active subscribers’ access and usage of Smith Micro’s software licenses and cloud-based services on Smith Micro’s platforms, the provision of hosting services, and revenue share based on media placements on Smith Micro’s platform. Smith Micro recognizes usage-based revenue when the Company has completed its performance obligation and has the right to invoice the customer. This revenue is generally recognized monthly or quarterly. Finally, the Company ratably recognizes usage-based revenue over the contract period when customers pay in advance of service delivery. Smith Micro also provides consulting services to develop customer-specified functionality that are generally not on its software development roadmap. The Company recognizes revenue from its consulting services upon delivery and acceptance by the customer of its software enhancements and upgrades. For certain customers the Company provides maintenance and technology support services for which the customer either pays upfront or as the Company provides the services. When the customer pays upfront, the payments are recorded as contract liabilities and revenue is recognized ratably over the contract period as this is the Company’s stand ready performance obligation that is satisfied ratably over the maintenance and technology services period. The Company receives upfront payments from customers from services to be provided under its ViewSpot® contracts. The advance receipts are deferred and subsequently recognized ratably over the contract period. Smith Micro also provides consulting services to configure ad hoc targeted promotional content for its customers upon request. These requests are driven by customers’ marketing initiatives and tend to be short term “bursts” of activity. These revenues are recognized upon delivery of the configured promotional content to the cloud platform. Smith Micro has made accounting policy elections to exclude all taxes by governmental authorities from the measurement of the transaction price, and since the Company’s standard payment terms are less than one year, the Company has elected the practical expedient not to assess whether a contract has a significant financing component. |
Principal and Agent Considerations | Principal and Agent ConsiderationsSmith Micro owns the Intellectual Property and retains ownership when the Company licenses its customized software solutions for use by its customers. The Company is a principal in these transactions and as such revenue is recognized with respect thereto on a gross basis. |
Stock-Based Compensation | Stock-Based Compensation The Company accounts for all stock-based payment awards made to employees and directors based on their fair values and recognizes such awards as compensation expense over the vesting period using the straight-line method over the requisite service period for each award as required by FASB ASC Topic No. 718, Compensation-Stock Compensation . |
Income Taxes | Income Taxes The Company accounts for income taxes as required by FASB ASC Topic No. 740 , Income Taxes . This Topic clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The Topic also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. The Topic requires an entity to recognize the financial statement impact of a tax position when it is more likely than not that the position will be sustained upon examination. The amount recognized is measured as the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement. In addition, the Topic permits an entity to recognize interest and penalties related to tax uncertainties either as income tax expense or operating expenses. The Company has chosen to recognize interest and penalties related to tax uncertainties as income tax expense. The Company assesses whether a valuation allowance should be recorded against its deferred tax assets based on the consideration of all available evidence, using a “more likely than not” realization standard. The four sources of taxable income that must be considered in determining whether deferred tax assets will be realized are: (1) future reversals of existing taxable temporary differences (i.e., offset of gross deferred tax liabilities against gross deferred tax assets); (2) taxable income in prior carryback years, if carryback is permitted under the applicable tax law; (3) tax planning strategies; and (4) future taxable income exclusive of reversing temporary differences and carryforwards. |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326) – Measurement of Credit Losses on Financial Instruments , which replaces the “incurred loss” credit losses framework with a new accounting standard that requires management’s measurement of the allowance for credit losses to be based on a broader range of reasonable and supportable information for lifetime credit loss estimates. This guidance is effective for fiscal years beginning after December 15, 2022, and the adoption of this standard is not expected to have a material impact on the Company’s consolidated financial statements. In August 2020, the FASB issued ASU 2020-06, Debt with Conversion and Other Options and Derivatives and Hedging: Accounting for Convertible Instruments and Contracts in an Entity's Own Equity |
Fair Value of Financial Instruments | The Company measures and discloses fair value measurements as required by FASB ASC Topic No. 820, Fair Value Measurements and Disclosures . Fair value is an exit price, representing the amount that would be received upon the sale of an asset or the amount that would be paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that is determined based on assumptions that market participants would use in pricing an asset or a liability. As a basis for considering such assumptions, the FASB establishes a three-tier value hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value: • Level 1 – Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets. • Level 2 – Include other inputs that are directly or indirectly observable in the marketplace. • Level 3 – Unobservable inputs which are supported by little or no market activity. The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. |
Acquisitions (Tables)
Acquisitions (Tables) - Avast PLC Family Safety Mobile Software Business | 12 Months Ended |
Dec. 31, 2022 | |
Business Acquisition [Line Items] | |
Summary of Consideration Paid for Acquisitions | The following table summarizes the consideration paid for the Family Safety Mobile Business in 2021 (in thousands): Fair value of assets acquired $ 74,818 Fair value of liabilities assumed 2,085 Total purchase price $ 72,733 Components of purchase price: Cash $ 63,216 Common stock 8,381 Contingent consideration 1,136 Total purchase price $ 72,733 |
Summary of Allocation of Purchase Price | The Company’s allocation of the purchase price is summarized as follows (in thousands): Assets: Cash $ 6,351 Accounts receivable 6,225 Prepaid expenses 513 Fixed assets 921 Intangible assets 38,033 Goodwill 22,775 Total assets $ 74,818 Liabilities: Accounts payable $ 392 Accrued payroll and benefits 1,662 Accrued expenses 31 Total liabilities $ 2,085 Total purchase price $ 72,733 |
Equipment and Improvements (Tab
Equipment and Improvements (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Property, Plant and Equipment [Abstract] | |
Summary of Equipment and Improvements | Equipment and improvements consist of the following (in thousands): December 31, 2022 2021 Computer hardware, software, and equipment $ 10,347 $ 10,535 Leasehold improvements 3,381 3,378 Office furniture and fixtures 828 803 14,556 14,725 Less accumulated depreciation and amortization (13,058) (12,027) Equipment and improvements, net $ 1,498 $ 2,698 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Acquired Intangible Assets by Major Asset Class | The following table sets forth the Company’s acquired intangible assets by major asset class as of December 31, 2022 and 2021, respectively (in thousands, except for useful life data): December 31, 2022 Weighted Average Gross Accumulated Net Book Value Purchased technology 7 $ 13,529 $ (5,835) $ 7,694 Customer relationships 12 27,548 (4,490) 23,058 Customer contracts 1 7,000 (5,673) 1,327 Software license 7 5,419 (1,552) 3,867 Non-compete 0 283 (273) 10 Patents 5 600 (236) 364 Total $ 54,379 $ (18,059) $ 36,320 December 31, 2021 Weighted Average Gross Accumulated Net Book Value Purchased technology 8 $ 13,529 $ (3,764) $ 9,765 Customer relationships 13 27,549 (2,405) 25,144 Customer contracts 2 7,000 (4,441) 2,559 Software license 9 5,419 (793) 4,626 Non-compete 1 283 (196) 87 Patents 5 600 (150) 450 Total $ 54,380 $ (11,749) $ 42,631 |
Future Amortization Expense Related to Intangible Assets | Future amortization expense related to intangible assets as of December 31, 2022 are as follows (in thousands): Year Ending December 31, 2023 $ 5,874 2024 5,635 2025 5,402 2026 5,007 2027 and thereafter 14,402 Total $ 36,320 |
Debt and Warrants Transactions
Debt and Warrants Transactions (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Debt Disclosure [Abstract] | |
Summary of Assumptions Utilized | The derivative was initially recognized at a fair value of $4.2 million and was subsequently adjusted to $1.6 million at December 31, 2022, with the following assumptions being utilized: Convertibles Notes Derivative August 11, 2022 December 31, 2022 Common stock market price $ 3.04 $ 2.10 Risk-free interest rate 3.28 % 4.68 % Expected dividend yield — — Expected term (in years) 1.39 1.00 Expected volatility 56.32 % 61.59 % Warrants Additional Warrants August 11, 2022 December 31, 2022 August 12, 2022 December 31, 2022 Common stock market price $ 3.04 $ 2.10 $ 2.34 $ 2.10 Risk-free interest rate 3.03 % 3.76 % 3.03 % 3.76 % Expected dividend yield — — — — Expected term (in years) 5.00 4.61 5.50 5.12 Expected volatility 66.85 % 64.16 % 70.55 % 65.52 % |
Balance of the Notes | The balance of the Notes as of December 31, 2022 is as follows (unaudited, in thousands): Current Long term Total Gross Balance as of December 31, 2022 $ 15,000 $ — $ 15,000 Unamortized Discount (5,656) — $ (5,656) Unamortized Issuance Costs (337) — $ (337) Net Balance as of December 31, 2022 $ 9,007 $ — $ 9,007 |
Fair Value of Financial Instr_2
Fair Value of Financial Instruments (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Fair Value Disclosures [Abstract] | |
Summary of Financial Liabilities Measured at Fair Value on a Recurring Basis | The following table presents information about the financial liabilities that are measured at fair value on a recurring basis at December 31, 2022 and 2021 (in thousands): Level 1 Level 2 Level 3 Total Total at December 31, 2021 — — $ — $ — Notes and Warrants Offering Derivative $ — $ — $ 1,575 $ 1,575 Notes and Warrants Offering Warrants — — 2,052 2,052 Stock and Additional Warrants Offering Warrants — — 1,265 1,265 Total at December 31, 2022 $ — $ — $ 4,892 $ 4,892 |
Schedule of Changes in Fair Value | The following table presents the changes in the fair value of Level 3 instruments for the years ended December 31, 2022 and 2021 (in thousands): Contingent Consideration Notes and Warrants Offering Derivative Notes and Warrants Offering Warrants Stock and Additional Warrants Offering Warrants Total Measurement at December 31, 2020 $ — $ — $ — $ — $ — Additions 1,136 — — — 1,136 Change in fair value 12,864 — — — 12,864 Payments (14,000) — — — (14,000) Measurement at December 31, 2021 $ — $ — $ — $ — $ — Additions — 4,178 3,793 1,590 9,561 Change in Fair Value — (2,603) (1,741) (325) (4,669) Measurement at December 31, 2022 $ — $ 1,575 $ 2,052 $ 1,265 $ 4,892 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Income Tax Disclosure [Abstract] | |
Schedule of (Loss) Income before Provision for Income Taxes | Loss before provision for income taxes was generated from the following sources (in thousands): Year Ended December 31, 2022 2021 Domestic $ (29,539) $ (31,301) Foreign 486 473 Total loss before provision for income taxes $ (29,053) $ (30,828) |
Summary of Income Tax Expense (Benefit) | A summary of the income tax expense is as follows (in thousands): Year Ended December 31, 2022 2021 Current: Federal $ — $ — State 8 5 Foreign 157 152 Total current 165 157 Deferred: Federal 24 24 State 37 35 Foreign — (1) Total deferred 61 58 Total income tax expense $ 226 $ 215 |
Federal Statutory Rate to Loss Before Income Taxes | A reconciliation of the provision for income taxes to the amount of income tax expense that would result from applying the federal statutory rate to the loss before income taxes is as follows: Year Ended December 31, 2022 2021 Federal statutory rate 21.0 % 21.0 % State tax, net of federal benefit 4.1 4.3 Equity compensation (1.5) 0.4 International tax items (3.9) 0.1 Foreign taxes (0.5) (0.5) State NOL true-up (1.2) 1.2 Miscellaneous 1.8 (0.4) Effect of change in rate 0.7 0.8 Change in valuation allowance (21.1) (27.6) (0.8) % (0.7) % |
Components of Deferred Tax Assets and Liabilities | The major components of the Company’s deferred tax assets and liabilities are as follows (in thousands): Year Ended December 31, 2022 2021 Deferred income tax assets Net operating loss carry forwards $ 48,317 $ 47,204 Research and development expenses 5,100 — Intangibles 4,907 6,259 Credit carry forwards 3,028 3,027 Nondeductible accruals 453 532 163j Limitation 333 — Fixed assets 289 84 Equity-based compensation 188 208 Deferred rent 15 33 Other 3 7 Total deferred income taxes - net 62,633 57,354 Deferred income tax liabilities Prepaid expenses (92) (80) Unrealized translation gain/loss (21) (45) Total deferred income liabilities- net (113) (125) Valuation allowance (62,698) (57,346) Net deferred income tax liabilities $ (178) $ (117) |
Gross Unrecognized Tax Benefits Changes in Balances | The Company’s gross unrecognized tax benefits as of December 31, 2022 and 2021 and the changes in those balances are as follows (in thousands): Year Ended December 31, 2022 2021 Beginning balance $ 412 $ 428 Other — (16) Gross unrecognized tax benefits, ending balance $ 412 $ 412 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Earnings Per Share [Abstract] | |
Details of Basic and Diluted Earnings Per Share | Year Ended December 31, 2022 2021 (in thousands, except per share amounts) Numerator: Net loss $ (29,279) $ (31,043) Denominator: Weighted average shares outstanding – basic 55,422 51,232 Potential common shares – options / warrants (treasury stock method) and convertible notes (as if converted method) — — Weighted average shares outstanding – diluted 55,422 51,232 Shares excluded (anti-dilutive) 3,662 1,324 Net loss per common share: Basic $ (0.53) $ (0.61) Diluted $ (0.53) $ (0.61) |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Share-Based Payment Arrangement [Abstract] | |
Non-Cash Stock-Based Compensation Expenses | Non-cash stock-based compensation expenses related to stock options, restricted stock grants and the ESPP were recorded in the financial statements as follows (in thousands): Year Ended December 31, 2022 2021 Cost of sales $ 2 $ 1 Sales and marketing 1,101 901 Research and development 1,082 965 General and administrative 2,764 2,981 Total non-cash stock compensation expense $ 4,949 $ 4,848 |
Assumptions Used to Compute Share-Based Compensation Costs for Stock Options Granted | The assumptions used to compute the share-based compensation costs for the stock options granted during the year ended December 31, 2021 using the Black-Scholes option pricing model, were as follows: Year Ended December 31, 2021 Weighted average grant date fair value of stock options $5.94 Assumptions Risk-free interest rate (weighted average) 0.87 % Expected dividend yield — Weighted average expected life (years) 6.2 Volatility (weighted average) 74.5 % Forfeiture rate 12.0 % |
Summary of Outstanding Stock Options and Related Activity | A summary of the Company’s stock options outstanding under the 2015 OEIP and 2005 Plan as of December 31, 2022 and 2021 and the activity during the years ended herein are as follows (in thousands except per share amounts): Shares Weighted Avg. Exercise Price Wtd. Avg. Remaining Contractual Life (Yrs) Aggregate Intrinsic Value Outstanding as of December 31, 2021 194 $ 4.12 $ 218 Exercised (9) $ 2.11 $ 12 Forfeited (2) $ 4.82 $ — Expired (44) $ 5.66 $ — Outstanding as of December 31, 2022 139 $ 3.75 5.1 $ 6 Vested and expected to vest at December 31, 2022 137 $ 3.72 5.1 $ 6 Exercisable as of December 31, 2022 117 $ 3.49 4.6 $ 6 |
Assumptions Used Estimate Fair Value of Employee Stock Purchase Plans | Following is a schedule of the shares purchased, the fair value per share, and the Black-Scholes model assumptions for each offering period: Offering Period Ended September 30, March 31, September 30, March 31, Shares purchased for offering period 10,901 6,019 5,360 4,668 Fair value per share as of the beginning of the offering period $ 1.15 $ 1.61 $ 1.90 $ 1.25 Assumptions Risk-free interest rate (average) 0.86 % 0.05 % 0.05 % 0.12 % Expected dividend yield — — — — Weighted average expected life (years) 0.5 0.5 0.5 0.5 Volatility (average) 32.5 % 43.1 % 44.6 % 47.1 % |
Summary of Outstanding Restricted Stock Awards and Related Activity | A summary of the Company’s restricted stock awards outstanding under the 2015 OEIP and 2005 Plan as of December 31, 2022 and 2021, and the activity during years ended therein, are as follows (in thousands, except weighted average grant date fair value): Number of shares Weighted average grant date fair value Unvested at December 31, 2020 1,702 $ 4.07 Granted 1,287 $ 7.02 Vested (1,027) $ 4.47 Canceled and forfeited (295) $ 5.60 Unvested at December 31, 2021 1,667 $ 5.83 Granted 1,398 $ 3.76 Vested (1,174) $ 4.87 Canceled and forfeited (212) $ 6.06 Unvested at December 31, 2022 1,679 $ 4.75 |
Revenues (Tables)
Revenues (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of Revenues on Disaggregated Basis | Revenues on a disaggregated basis are as follows (in thousands): Year Ended December 31, 2022 2021 License and service fees $ 3,807 $ 3,730 Hosted environment usage fees 4,852 13,770 Cloud based usage fees 38,182 38,415 Consulting services and other 1,672 2,507 Total revenues $ 48,513 $ 58,422 |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Leases [Abstract] | |
Summary of Operating Lease Cost | Operating lease cost consists of the following (in thousands): Year Ended December 31, 2022 2021 Lease cost $ 1,654 $ 2,297 Sublease income (18) (603) Total lease cost $ 1,636 $ 1,694 |
Summary of Operating Lease Assets and Liabilities | Operating lease assets and liabilities are summarized as follows (in thousands): Year Ended December 31, 2022 2021 Right-of-use assets $ 3,722 $ 4,866 Current lease liabilities $ 1,441 $ 1,400 Long-term lease liabilities 2,976 4,467 Total lease liabilities $ 4,417 $ 5,867 |
Summary of Maturity of Operating Lease Liabilities | The maturity of operating lease liabilities is presented in the following table (in thousands): As of December 31, 2022 2023 $ 1,664 2024 1,514 2025 1,158 2026 476 Total lease payments 4,812 Less imputed interest 395 Present value of lease liabilities 4,417 |
Segment, Concentration and Ge_2
Segment, Concentration and Geographical Information (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Segment Reporting [Abstract] | |
Wireless Revenues by Product Line and Quarterly Revenues Generated by the Wireless Segment | The following table presents the Wireless revenues by product line (in thousands): Year Ended December 31, 2022 2021 Family Safety $ 39,798 $ 41,019 CommSuite 4,846 13,717 ViewSpot 3,869 3,569 Other — 117 Total Wireless revenues $ 48,513 $ 58,422 |
Company Revenue in Different Geographic Locations | Year Ended December 31, 2022 2021 Americas $ 46,621 $ 55,398 EMEA 1,892 3,024 Total revenues $ 48,513 $ 58,422 |
Organization, Basis of Presen_3
Organization, Basis of Presentation and Summary of Significant Accounting Policies - Additional Information (Detail) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Organization Basis Of Presentation And Summary Of Significant Accounting Policies [Line Items] | ||
Costs capitalized | $ 0 | |
Goodwill impairment | 0 | $ 0 |
Indefinite-lived intangible assets | $ 0 | |
Minimum | ||
Organization Basis Of Presentation And Summary Of Significant Accounting Policies [Line Items] | ||
Estimated useful lives of the assets | 3 years | |
Maximum | ||
Organization Basis Of Presentation And Summary Of Significant Accounting Policies [Line Items] | ||
Estimated useful lives of the assets | 7 years |
Acquisitions - Additional Infor
Acquisitions - Additional Information (Detail) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 | Apr. 16, 2021 | Dec. 31, 2020 |
Business Acquisition [Line Items] | ||||
Total at December 31, 2020 | $ 0 | $ 0 | $ 0 | |
Avast PLC Family Safety Mobile Software Business | Operating Expense | ||||
Business Acquisition [Line Items] | ||||
Total at December 31, 2020 | $ 12,900,000 | |||
Avast PLC Family Safety Mobile Software Business | Purchase Price Allocation | ||||
Business Acquisition [Line Items] | ||||
Total at December 31, 2020 | 1,100,000 | |||
Avast PLC Family Safety Mobile Software Business | Maximum | ||||
Business Acquisition [Line Items] | ||||
Total at December 31, 2020 | $ 14,000,000 |
Acquisitions - Summary of Consi
Acquisitions - Summary of Consideration Paid for Acquisitions (Detail) - Avast PLC Family Safety Mobile Software Business $ in Thousands | Apr. 16, 2021 USD ($) |
Business Acquisition [Line Items] | |
Fair value of assets acquired | $ 74,818 |
Fair value of liabilities assumed | 2,085 |
Total purchase price | 72,733 |
Components of purchase price: | |
Cash | 63,216 |
Common stock | 8,381 |
Payments | 1,136 |
Total purchase price | $ 72,733 |
Acquisitions - Summary of Alloc
Acquisitions - Summary of Allocation of Purchase Price (Detail) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 | Apr. 16, 2021 |
Assets | |||
Goodwill | $ 35,041 | $ 35,041 | |
Avast PLC Family Safety Mobile Software Business | |||
Assets | |||
Cash | $ 6,351 | ||
Accounts receivable | 6,225 | ||
Prepaid expenses | 513 | ||
Fixed assets | 921 | ||
Intangible assets | 38,033 | ||
Goodwill | 22,775 | ||
Total assets | 74,818 | ||
Liabilities: | |||
Accounts payable | 392 | ||
Accrued payroll and benefits | 1,662 | ||
Accrued expenses | 31 | ||
Total liabilities | 2,085 | ||
Total purchase price | $ 72,733 |
Equipment and Improvements - Su
Equipment and Improvements - Summary of Equipment and Improvements (Detail) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Property, Plant and Equipment [Line Items] | ||
Equipment and improvements, gross | $ 14,556 | $ 14,725 |
Less accumulated depreciation and amortization | (13,058) | (12,027) |
Equipment and improvements, net | 1,498 | 2,698 |
Computer hardware, software, and equipment | ||
Property, Plant and Equipment [Line Items] | ||
Equipment and improvements, gross | 10,347 | 10,535 |
Leasehold improvements | ||
Property, Plant and Equipment [Line Items] | ||
Equipment and improvements, gross | 3,381 | 3,378 |
Office furniture and fixtures | ||
Property, Plant and Equipment [Line Items] | ||
Equipment and improvements, gross | $ 828 | $ 803 |
Equipment and Improvements - Ad
Equipment and Improvements - Additional Information (Detail) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation and amortization expense on equipment and improvements | $ 1.2 | $ 1.2 |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets - Schedule of Acquired Intangible Assets by Major Asset Class (Detail) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Finite-Lived Intangible Assets [Line Items] | ||
Gross | $ 54,379 | $ 54,380 |
Accumulated Amortization | (18,059) | (11,749) |
Total | $ 36,320 | $ 42,631 |
Purchased technology | ||
Finite-Lived Intangible Assets [Line Items] | ||
Weighted Average Remaining Useful Life (in Years) | 7 years | 8 years |
Gross | $ 13,529 | $ 13,529 |
Accumulated Amortization | (5,835) | (3,764) |
Total | $ 7,694 | $ 9,765 |
Customer relationships | ||
Finite-Lived Intangible Assets [Line Items] | ||
Weighted Average Remaining Useful Life (in Years) | 12 years | 13 years |
Gross | $ 27,548 | $ 27,549 |
Accumulated Amortization | (4,490) | (2,405) |
Total | $ 23,058 | $ 25,144 |
Customer contracts | ||
Finite-Lived Intangible Assets [Line Items] | ||
Weighted Average Remaining Useful Life (in Years) | 1 year | 2 years |
Gross | $ 7,000 | $ 7,000 |
Accumulated Amortization | (5,673) | (4,441) |
Total | $ 1,327 | $ 2,559 |
Software license | ||
Finite-Lived Intangible Assets [Line Items] | ||
Weighted Average Remaining Useful Life (in Years) | 7 years | 9 years |
Gross | $ 5,419 | $ 5,419 |
Accumulated Amortization | (1,552) | (793) |
Total | $ 3,867 | $ 4,626 |
Non-compete | ||
Finite-Lived Intangible Assets [Line Items] | ||
Weighted Average Remaining Useful Life (in Years) | 0 years | 1 year |
Gross | $ 283 | $ 283 |
Accumulated Amortization | (273) | (196) |
Total | $ 10 | $ 87 |
Patents | ||
Finite-Lived Intangible Assets [Line Items] | ||
Weighted Average Remaining Useful Life (in Years) | 5 years | 5 years |
Gross | $ 600 | $ 600 |
Accumulated Amortization | (236) | (150) |
Total | $ 364 | $ 450 |
Goodwill and Intangible Asset_3
Goodwill and Intangible Assets - Additional Information (Detail) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Goodwill [Line Items] | ||
Amortization of intangible assets | $ 6,312,000 | $ 8,100,000 |
Impairment of goodwill | 0 | $ 0 |
Impairment, Intangible Asset, Finite-Lived, Statement of Income or Comprehensive Income [Extensible Enumeration] | Amortization of intangible assets | |
Circle | ||
Goodwill [Line Items] | ||
Amortization of intangible assets | 300,000 | |
Deferred revenue, recognized | $ 600,000 | |
Impairment charge within "amortization of intangible assets" | $ 1,500,000 | |
Finite lived intangible assets remaining amortization | $ 400,000 |
Goodwill and Intangible Asset_4
Goodwill and Intangible Assets - Future Amortization Expense Related to Intangible Assets (Detail) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Finite-Lived Intangible Assets, Net [Abstract] | ||
2023 | $ 5,874 | |
2024 | 5,635 | |
2025 | 5,402 | |
2026 | 5,007 | |
2027 and thereafter | 14,402 | |
Total | $ 36,320 | $ 42,631 |
Debt and Warrants Transaction_2
Debt and Warrants Transactions - Additional Information (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||||
Aug. 12, 2022 | Aug. 11, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | Mar. 31, 2022 | |
Line Of Credit Facility [Line Items] | |||||
Aggregate original principal amount of convertible notes | $ 15,000 | ||||
Fair value of warrants at inception | 3,317 | $ 0 | |||
Non-cash transaction costs including amortization | 3,324 | 0 | |||
Deferred financing costs | 337 | ||||
Net cash proceeds from stock and warrants offering | 15,000 | $ 0 | |||
Credit Facility | Wells Fargo Bank, National Association | |||||
Line Of Credit Facility [Line Items] | |||||
Secured revolving credit facility | $ 7,000 | ||||
Repayments of secured debt | (300) | ||||
Embedded Derivative Financial Instruments | |||||
Line Of Credit Facility [Line Items] | |||||
Derivative liability | $ 4,200 | 1,575 | |||
Notes and Warrants Offering Warrants | |||||
Line Of Credit Facility [Line Items] | |||||
Non-cash transaction costs including amortization | 500 | ||||
Deferred financing costs | 500 | ||||
Net cash proceeds from stock and warrants offering | $ 14,000 | ||||
Interest expense | $ 2,800 | ||||
Effective interest rate | 155% | ||||
Amortization of debt issuance costs | $ 100 | ||||
Amortization of discount | 2,300 | ||||
Stated interest | $ 400 | ||||
Stock and Additional Warrants Offering Warrants | |||||
Line Of Credit Facility [Line Items] | |||||
Non-cash transaction costs including amortization | 1,400 | ||||
Net cash proceeds from stock and warrants offering | 2,800 | ||||
Warrants | |||||
Line Of Credit Facility [Line Items] | |||||
Fair value of warrants at inception | $ 3,800 | ||||
Warrants | Notes and Warrants Offering Warrants | |||||
Line Of Credit Facility [Line Items] | |||||
Warrant outstanding (in shares) | 2,238,806 | ||||
Common stock exercise price (in dollars per share) | $ 3.35 | ||||
Warrant expiration, term | 5 years | ||||
Additional Warrants | |||||
Line Of Credit Facility [Line Items] | |||||
Fair value of warrants at inception | $ 1,600 | ||||
Additional Warrants | Stock and Additional Warrants Offering Warrants | |||||
Line Of Credit Facility [Line Items] | |||||
Warrant outstanding (in shares) | 1,132,075 | ||||
Common stock exercise price (in dollars per share) | $ 2.65 | ||||
Senior Secured Convertible Notes | |||||
Line Of Credit Facility [Line Items] | |||||
Aggregate original principal amount of convertible notes | $ 15,000 | ||||
Senior Secured Convertible Notes | Convertible Debt | |||||
Line Of Credit Facility [Line Items] | |||||
Stated interest rate | 6% | ||||
Default interest rate | 15% | ||||
Senior Secured Convertible Notes | Convertible Debt | Notes and Warrants Offering Warrants | |||||
Line Of Credit Facility [Line Items] | |||||
Initial conversion price (in dollars per share) | $ 3.35 |
Debt and Warrants Transaction_3
Debt and Warrants Transactions - Assumptions (Details) | Dec. 31, 2022 $ / shares yr | Aug. 12, 2022 $ / shares yr | Aug. 11, 2022 $ / shares yr |
Common stock market price | Embedded Derivative Financial Instruments | |||
Line Of Credit Facility [Line Items] | |||
Measurement input | $ / shares | 2.10 | 3.04 | |
Common stock market price | Warrants | |||
Line Of Credit Facility [Line Items] | |||
Measurement input | $ / shares | 2.10 | 3.04 | |
Common stock market price | Additional Warrants | |||
Line Of Credit Facility [Line Items] | |||
Measurement input | $ / shares | 2.10 | 2.34 | |
Risk-free interest rate | Embedded Derivative Financial Instruments | |||
Line Of Credit Facility [Line Items] | |||
Measurement input | 0.0468 | 0.0328 | |
Risk-free interest rate | Warrants | |||
Line Of Credit Facility [Line Items] | |||
Measurement input | 0.0376 | 0.0303 | |
Risk-free interest rate | Additional Warrants | |||
Line Of Credit Facility [Line Items] | |||
Measurement input | 0.0376 | 0.0303 | |
Expected dividend yield | Embedded Derivative Financial Instruments | |||
Line Of Credit Facility [Line Items] | |||
Measurement input | 0 | 0 | |
Expected dividend yield | Warrants | |||
Line Of Credit Facility [Line Items] | |||
Measurement input | 0 | 0 | |
Expected dividend yield | Additional Warrants | |||
Line Of Credit Facility [Line Items] | |||
Measurement input | 0 | 0 | |
Expected term (in years) | Embedded Derivative Financial Instruments | |||
Line Of Credit Facility [Line Items] | |||
Measurement input | yr | 1 | 1.39 | |
Expected term (in years) | Warrants | |||
Line Of Credit Facility [Line Items] | |||
Measurement input | yr | 4.61 | 5 | |
Expected term (in years) | Additional Warrants | |||
Line Of Credit Facility [Line Items] | |||
Measurement input | yr | 5.12 | 5.50 | |
Expected volatility | Embedded Derivative Financial Instruments | |||
Line Of Credit Facility [Line Items] | |||
Measurement input | 0.6159 | 0.5632 | |
Expected volatility | Warrants | |||
Line Of Credit Facility [Line Items] | |||
Measurement input | 0.6416 | 0.6685 | |
Expected volatility | Additional Warrants | |||
Line Of Credit Facility [Line Items] | |||
Measurement input | 0.6552 | 0.7055 |
Debt and Warrants Transaction_4
Debt and Warrants Transactions - Balance of the Notes (Details) $ in Thousands | Dec. 31, 2022 USD ($) |
Current | |
Gross Balance as of December 31, 2022 | $ 15,000 |
Unamortized Discount | (5,656) |
Unamortized Issuance Costs | (337) |
Net Balance as of December 31, 2022 | 9,007 |
Long term | |
Gross Balance as of December 31, 2022 | 0 |
Unamortized Discount | 0 |
Unamortized Issuance Costs | 0 |
Net Balance as of December 31, 2022 | 0 |
Total | |
Gross Balance as of December 31, 2022 | 15,000 |
Unamortized Discount | (5,656) |
Unamortized Issuance Costs | (337) |
Net Balance as of December 31, 2022 | $ 9,007 |
Fair Value of Financial Instr_3
Fair Value of Financial Instruments - Liabilities Measured at Fair Value on a Recurring Basis (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Aug. 11, 2022 | Dec. 31, 2021 |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |||
Total at December 31, 2022 | $ 4,892 | $ 0 | |
Notes and Warrants Offering Warrants | |||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |||
Warrants | 2,052 | ||
Stock and Additional Warrants Offering Warrants | |||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |||
Warrants | 1,265 | ||
Embedded Derivative Financial Instruments | |||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |||
Derivatives | 1,575 | $ 4,200 | |
Level 1 | |||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |||
Total at December 31, 2022 | 0 | 0 | |
Level 1 | Notes and Warrants Offering Warrants | |||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |||
Warrants | 0 | ||
Level 1 | Stock and Additional Warrants Offering Warrants | |||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |||
Warrants | 0 | ||
Level 1 | Embedded Derivative Financial Instruments | |||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |||
Derivatives | 0 | ||
Level 2 | |||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |||
Total at December 31, 2022 | 0 | 0 | |
Level 2 | Notes and Warrants Offering Warrants | |||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |||
Warrants | 0 | ||
Level 2 | Stock and Additional Warrants Offering Warrants | |||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |||
Warrants | 0 | ||
Level 2 | Embedded Derivative Financial Instruments | |||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |||
Derivatives | 0 | ||
Level 3 | |||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |||
Total at December 31, 2022 | 4,892 | $ 0 | |
Level 3 | Notes and Warrants Offering Warrants | |||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |||
Warrants | 2,052 | ||
Level 3 | Stock and Additional Warrants Offering Warrants | |||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |||
Warrants | 1,265 | ||
Level 3 | Embedded Derivative Financial Instruments | |||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |||
Derivatives | $ 1,575 |
Fair Value of Financial Instr_4
Fair Value of Financial Instruments - Rollforward (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Contingent Consideration | ||
Balance at beginning of period | $ 0 | $ 0 |
Change in fair value of contingent consideration | 0 | 12,864 |
Balance at end of period | 0 | 0 |
Notes and Warrants Offering Derivatives | ||
Balance at beginning of period | 0 | 0 |
Additions | 4,178 | 0 |
Change in Fair Value | (2,603) | 0 |
Payments | 0 | |
Balance at end of period | 1,575 | 0 |
Total | ||
Balance at beginning of period | 0 | 0 |
Additions | 9,561 | 1,136 |
Change in Fair Value | (4,669) | 12,864 |
Balance at end of period | $ 4,892 | 0 |
Fair Value, Liability, Recurring Basis, Unobservable Input Reconciliation, Gain (Loss), Statement of Income or Comprehensive Income [Extensible Enumeration] | Fair Value Adjustment Of Warrants And Derivative Liabilites | |
Fair Value, Net Derivative Asset (Liability), Recurring Basis, Unobservable Input Reconciliation, Gain (Loss), Statement of Income or Comprehensive Income [Extensible Enumeration] | Fair Value Adjustment Of Warrants And Derivative Liabilites | |
Level 3 | ||
Total | ||
Payments | 14,000 | |
Purchase Price Allocation | Level 3 | ||
Contingent Consideration | ||
Additions | $ 0 | 1,136 |
Change in fair value of contingent consideration | 0 | 12,864 |
Payments | 14,000 | |
Notes and Warrants Offering Warrants | ||
Warrants | ||
Balance at beginning of period | 0 | 0 |
Additions | 3,793 | 0 |
Change in Fair Value | (1,741) | 0 |
Payments | 0 | |
Balance at end of period | 2,052 | 0 |
Stock and Additional Warrants Offering Warrants | ||
Warrants | ||
Balance at beginning of period | 0 | 0 |
Additions | 1,590 | 0 |
Change in Fair Value | (325) | 0 |
Payments | 0 | |
Balance at end of period | $ 1,265 | $ 0 |
Equity Transactions - Additiona
Equity Transactions - Additional Information (Detail) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||||
Aug. 12, 2022 | Aug. 11, 2022 | Mar. 15, 2021 | Dec. 31, 2022 | Dec. 31, 2021 | |
Class Of Stock [Line Items] | |||||
Proceeds from notes and warrants offering | $ 15,000 | $ 0 | |||
Warrant liabilities | 3,317 | 0 | |||
Non-cash transaction costs including amortization | 3,324 | 0 | |||
General and administrative | 16,161 | 17,920 | |||
Purchase price | $ 1,309 | $ 59,711 | |||
Additional Warrants | |||||
Class Of Stock [Line Items] | |||||
Warrant liabilities | $ 1,600 | ||||
Stock and Additional Warrants Offering Warrants | |||||
Class Of Stock [Line Items] | |||||
Number of shares issued (in shares) | 1,132,075 | ||||
Proceeds from notes and warrants offering | 2,800 | ||||
Non-cash transaction costs including amortization | 1,400 | ||||
General and administrative | 100 | ||||
Offset to additional paid in capital | $ 100 | ||||
Stock and Additional Warrants Offering Warrants | Additional Warrants | |||||
Class Of Stock [Line Items] | |||||
Purchase price (in dollars per share) | $ 2.65 | ||||
Common stock exercise price (in dollars per share) | $ 2.65 | ||||
IPO | |||||
Class Of Stock [Line Items] | |||||
Proceeds from initial public offering | $ 59,700 | ||||
IPO | Common Stock | |||||
Class Of Stock [Line Items] | |||||
Number of common shares issued (in shares) | 9,520,787 | ||||
Shares issued, price per share (in dollars per share) | $ 6.85 | ||||
Purchase price | $ 65,200 |
Income Taxes - Schedule of (Los
Income Taxes - Schedule of (Loss) Income before Provision for Income Taxes (Detail) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Income Tax Disclosure [Abstract] | ||
Domestic | $ (29,539) | $ (31,301) |
Foreign | 486 | 473 |
Loss before provision for income taxes | $ (29,053) | $ (30,828) |
Income Taxes - Summary of Incom
Income Taxes - Summary of Income Tax Expense (Benefit) (Detail) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Current: | ||
Federal | $ 0 | $ 0 |
State | 8 | 5 |
Foreign | 157 | 152 |
Total current | 165 | 157 |
Deferred: | ||
Federal | 24 | 24 |
State | 37 | 35 |
Foreign | 0 | (1) |
Total deferred | 61 | 58 |
Total income tax expense | $ 226 | $ 215 |
Income Taxes - Federal Statutor
Income Taxes - Federal Statutory Rate to Loss Before Income Taxes (Detail) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Income Tax Disclosure [Abstract] | ||
Federal statutory rate | 21% | 21% |
State tax, net of federal benefit | 4.10% | 4.30% |
Equity compensation | (1.50%) | 0.40% |
International tax items | (3.90%) | 0.10% |
Foreign taxes | (0.50%) | (0.50%) |
State NOL true-up | (1.20%) | 1.20% |
Miscellaneous | 1.80% | (0.40%) |
Effect of change in rate | 0.70% | 0.80% |
Change in valuation allowance | (21.10%) | (27.60%) |
Total | (0.80%) | (0.70%) |
Income Taxes - Components of De
Income Taxes - Components of Deferred Tax Assets and Liabilities (Detail) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Deferred income tax assets | ||
Net operating loss carry forwards | $ 48,317 | $ 47,204 |
Research and development expenses | 5,100 | 0 |
Intangibles | 4,907 | 6,259 |
Credit carry forwards | 3,028 | 3,027 |
Nondeductible accruals | 453 | 532 |
163j Limitation | 333 | 0 |
Fixed assets | 289 | 84 |
Equity-based compensation | 188 | 208 |
Deferred rent | 15 | 33 |
Other | 3 | 7 |
Total deferred income taxes - net | 62,633 | 57,354 |
Deferred income tax liabilities | ||
Prepaid expenses | (92) | (80) |
Unrealized translation gain/loss | (21) | (45) |
Total deferred income liabilities- net | (113) | (125) |
Valuation allowance | (62,698) | (57,346) |
Net deferred income tax liabilities | $ (178) | $ (117) |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Detail) - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Operating Loss Carryforwards [Line Items] | |||
Unrecognized tax benefits | $ 412,000 | $ 412,000 | $ 428,000 |
Interest and penalties | 0 | 0 | |
Cumulative interest and penalties | $ 0 | 0 | |
Cumulative loss period | 3 years | ||
Valuation allowance | $ 62,698,000 | 57,346,000 | |
Increase (decrease) in valuation allowance of deferred tax assets | (5,400,000) | 7,900,000 | |
Income before provision for income taxes for foreign subsidiaries | 486,000 | $ 473,000 | |
Income related to GILTI | 5,900,000 | ||
Federal | |||
Operating Loss Carryforwards [Line Items] | |||
Net operating loss carryforwards | 185,400,000 | ||
Tax credit carryforwards | 2,500,000 | ||
State | |||
Operating Loss Carryforwards [Line Items] | |||
Net operating loss carryforwards | 150,800,000 | ||
Tax credit carryforwards | $ 700,000 |
Income Taxes - Gross Unrecogniz
Income Taxes - Gross Unrecognized Tax Benefits Changes in Balances (Detail) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward] | ||
Beginning balance | $ 412 | $ 428 |
Other | 0 | (16) |
Gross unrecognized tax benefits, ending balance | $ 412 | $ 412 |
Earnings Per Share - Details of
Earnings Per Share - Details of Basic and Diluted Earnings Per Share (Detail) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Numerator: | ||
Net loss | $ (29,279) | $ (31,043) |
Denominator: | ||
Weighted average shares outstanding - basic (in shares) | 55,422 | 51,232 |
Potential common shares - options / warrants (treasury stock method) and convertible notes (as if converted method) (in shares) | 0 | 0 |
Weighted average shares outstanding - diluted (in shares) | 55,422 | 51,232 |
Shares excluded (anti-dilutive) (in shares) | 3,662 | 1,324 |
Net loss per common share: | ||
Basic (in dollars per share) | $ (0.53) | $ (0.61) |
Diluted (in dollars per share) | $ (0.53) | $ (0.61) |
Employee Benefit Plans - Additi
Employee Benefit Plans - Additional Information (Detail) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Retirement Benefits [Abstract] | ||
Employers matching contribution percentage to 401(k) plan | 20% | |
Total employer contributions to 401(k) plan | $ 0.5 | $ 0.4 |
Stock-Based Compensation - Addi
Stock-Based Compensation - Additional Information (Detail) - USD ($) | 3 Months Ended | 12 Months Ended | ||
Jun. 30, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | Jun. 18, 2015 | |
Restricted Stock | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Granted (in shares) | 1,398,000 | 1,287,000 | ||
Stock compensation expense related to accelerated vesting | $ 600,000 | |||
Employee Stock Purchase Plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Maximum number of shares available for issuance under plan (in shares) | 250,000 | |||
Percentage of market value | 85% | |||
Percentage of employee's payroll deductions limited to employee's compensation | 10% | |||
Maximum stock value of shares purchased by employees | $ 25,000 | |||
Maximum number of shares that employee can purchase each period (in shares) | 250 | |||
2015 Omnibus Equity Incentive Plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Maximum number of shares available for issuance under plan (in shares) | 9,625,000 | |||
Unrecognized compensation costs related to non-vested awards granted | $ 7,400,000 | |||
2015 Omnibus Equity Incentive Plan | Restricted Stock | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Granted (in shares) | 1,400,000 | |||
Number of shares available for future grants (in shares) | 2,400,000 | |||
2015 Omnibus Equity Incentive Plan | Full Value Awards | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Award settled against shares (in shares) | 1.2 | |||
2015 Omnibus Equity Incentive Plan | Partial Value Awards | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Award settled against shares (in shares) | 1 | |||
2015 Plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Restricted stock vesting period | 4 years | |||
Stock option expiration period | 10 years | |||
2015 Plan | Maximum | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Restricted stock vesting period | 48 months | |||
Vested stock options exercised period following termination | 90 days | |||
2015 Plan | Minimum | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Restricted stock vesting period | 12 months | |||
2005 Plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Unrecognized compensation costs related to non-vested awards granted | $ 7,400,000 |
Stock-Based Compensation - Non-
Stock-Based Compensation - Non-Cash Stock-Based Compensation Expenses (Detail) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||
Share-Based Payment Arrangement, Expense | $ 4,949 | $ 4,848 |
Cost of sales | ||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||
Share-Based Payment Arrangement, Expense | 2 | 1 |
Sales and marketing | ||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||
Share-Based Payment Arrangement, Expense | 1,101 | 901 |
Research and development | ||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||
Share-Based Payment Arrangement, Expense | 1,082 | 965 |
General and administrative | ||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||
Share-Based Payment Arrangement, Expense | $ 2,764 | $ 2,981 |
Stock-Based Compensation - Assu
Stock-Based Compensation - Assumptions Used to Compute Share-Based Compensation Costs for Stock Options Granted (Detail) - $ / shares | 6 Months Ended | 12 Months Ended | |||
Sep. 30, 2022 | Mar. 31, 2022 | Sep. 30, 2021 | Mar. 31, 2021 | Dec. 31, 2021 | |
Share-Based Payment Arrangement [Abstract] | |||||
Weighted average grant date fair value of stock options (in dollars per share) | $ 5.94 | ||||
Assumptions | |||||
Risk-free interest rate (weighted average) | 0.86% | 0.05% | 0.05% | 0.12% | 0.87% |
Expected dividend yield | 0% | 0% | 0% | 0% | 0% |
Weighted average expected life (years) | 6 months | 6 months | 6 months | 6 months | 6 years 2 months 12 days |
Volatility (weighted average) | 32.50% | 43.10% | 44.60% | 47.10% | 74.50% |
Forfeiture rate | 12% |
Stock-Based Compensation - Summ
Stock-Based Compensation - Summary of Outstanding Stock Options and Related Activity (Detail) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Outstanding [Roll Forward] | ||
Outstanding at beginning of period (in shares) | 194 | |
Exercised (in shares) | (9) | |
Forfeited (in shares) | (2) | |
Expired (in shares) | (44) | |
Outstanding at end of period (in shares) | 139 | 194 |
Vested and expected to vest (in shares) | 137 | |
Exercisable (in shares) | 117 | |
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Abstract] | ||
Outstanding at beginning of period (in dollars per share) | $ 4.12 | |
Exercised (in dollars per share) | 2.11 | |
Forfeited (in dollars per share) | 4.82 | |
Expired (in dollars per share) | 5.66 | |
Outstanding at end of period (in dollars per share) | 3.75 | $ 4.12 |
Vested and expected to vest (in dollars per share) | 3.72 | |
Exercisable (in dollars per share) | $ 3.49 | |
Additional disclosures | ||
Wtd. Avg. Remaining Contractual Life (Yrs), Outstanding | 5 years 1 month 6 days | |
Wtd. Avg. Remaining Contractual Life (Yrs), Vested and expected to vest | 5 years 1 month 6 days | |
Wtd. Avg. Remaining Contractual Life (Yrs), Exercisable | 4 years 7 months 6 days | |
Aggregate Intrinsic Value, Exercised | $ 12 | |
Aggregate Intrinsic Value, Forfeited | 0 | |
Aggregate Intrinsic Value, Outstanding | 6 | $ 218 |
Aggregate Intrinsic Value, Vested and expected to vest | 6 | |
Aggregate Intrinsic Value, Exercisable | $ 6 |
Stock-Based Compensation - As_2
Stock-Based Compensation - Assumptions Used Estimate Fair Value of Employee Stock Purchase Plans (Detail) - $ / shares shares in Thousands | 6 Months Ended | 12 Months Ended | |||
Sep. 30, 2022 | Mar. 31, 2022 | Sep. 30, 2021 | Mar. 31, 2021 | Dec. 31, 2021 | |
Share-Based Payment Arrangement [Abstract] | |||||
Shares purchased for offering period (in shares) | 10,901 | 6,019 | 5,360 | 4,668 | |
Fair value per share (in dollars per share) | $ 1.15 | $ 1.61 | $ 1.90 | $ 1.25 | |
Assumptions | |||||
Risk-free interest rate (average) | 0.86% | 0.05% | 0.05% | 0.12% | 0.87% |
Expected dividend yield | 0% | 0% | 0% | 0% | 0% |
Weighted average expected life (years) | 6 months | 6 months | 6 months | 6 months | 6 years 2 months 12 days |
Volatility (average) | 32.50% | 43.10% | 44.60% | 47.10% | 74.50% |
Stock-Based Compensation - Su_2
Stock-Based Compensation - Summary of Outstanding Restricted Stock Awards and Related Activity (Detail) - Restricted Stock - $ / shares shares in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Share-Based Compensation Arrangement by Share-Based Payment Award, Non-Option Equity Instruments, Outstanding [Roll Forward] | ||
Unvested at beginning of period (in shares) | 1,667 | 1,702 |
Granted (in shares) | 1,398 | 1,287 |
Vested (in shares) | (1,174) | (1,027) |
Canceled and forfeited (in shares) | (212) | (295) |
Unvested at end of period (in shares) | 1,679 | 1,667 |
Share-Based Compensation Arrangement by Share-Based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract] | ||
Unvested at beginning of period (in dollars per share) | $ 5.83 | $ 4.07 |
Granted (in dollars per share) | 3.76 | 7.02 |
Vested (in dollars per share) | 4.87 | 4.47 |
Canceled and forfeited (in dollars per share) | 6.06 | 5.60 |
Unvested at end of period (in dollars per share) | $ 4.75 | $ 5.83 |
Revenues - Additional Informati
Revenues - Additional Information (Detail) - USD ($) $ in Millions | Dec. 31, 2022 | Dec. 31, 2021 |
Revenue from Contract with Customer [Abstract] | ||
Deferred revenue | $ 0.3 | $ 0.2 |
Revenues - Schedule of Revenues
Revenues - Schedule of Revenues on Disaggregated Basis (Detail) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Disaggregation Of Revenue [Line Items] | ||
Revenues | $ 48,513 | $ 58,422 |
Wireless | ||
Disaggregation Of Revenue [Line Items] | ||
Revenues | 48,513 | 58,422 |
Wireless | License and service fees | ||
Disaggregation Of Revenue [Line Items] | ||
Revenues | 3,807 | 3,730 |
Wireless | Hosted environment usage fees | ||
Disaggregation Of Revenue [Line Items] | ||
Revenues | 4,852 | 13,770 |
Wireless | Cloud based usage fees | ||
Disaggregation Of Revenue [Line Items] | ||
Revenues | 38,182 | 38,415 |
Wireless | Consulting services and other | ||
Disaggregation Of Revenue [Line Items] | ||
Revenues | $ 1,672 | $ 2,507 |
Leases - Summary of Operating L
Leases - Summary of Operating Lease Cost (Detail) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Leases [Abstract] | ||
Lease cost | $ 1,654 | $ 2,297 |
Sublease income | (18) | (603) |
Total lease cost | $ 1,636 | $ 1,694 |
Leases - Summary of Operating_2
Leases - Summary of Operating Lease Assets and Liabilities (Detail) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Leases [Abstract] | ||
Right-of-use assets | $ 3,722 | $ 4,866 |
Current lease liabilities | 1,441 | 1,400 |
Long-term lease liabilities | 2,976 | 4,467 |
Total lease liabilities | $ 4,417 | $ 5,867 |
Leases - Summary of Maturity of
Leases - Summary of Maturity of Operating Lease Liabilities (Detail) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Leases [Abstract] | ||
2023 | $ 1,664 | |
2024 | 1,514 | |
2025 | 1,158 | |
2026 | 476 | |
Total lease payments | 4,812 | |
Less imputed interest | 395 | |
Present value of lease liabilities | $ 4,417 | $ 5,867 |
Segment, Concentration and Ge_3
Segment, Concentration and Geographical Information - Additional Information (Detail) | 12 Months Ended | |
Dec. 31, 2022 location Business_Unit | Dec. 31, 2021 location | |
Revenue, Major Customer [Line Items] | ||
Number of primary business units | Business_Unit | 1 | |
Number of geographic locations | location | 2 | 2 |
Customer Concentration Risk | Revenue | One Customer | ||
Revenue, Major Customer [Line Items] | ||
Concentration percentage | 40% | 56% |
Customer Concentration Risk | Revenue | Two Customer | ||
Revenue, Major Customer [Line Items] | ||
Concentration percentage | 38% | 24% |
Customer Concentration Risk | Accounts Receivable | One Customer | ||
Revenue, Major Customer [Line Items] | ||
Concentration percentage | 40% | 42% |
Customer Concentration Risk | Accounts Receivable | Two Customer | ||
Revenue, Major Customer [Line Items] | ||
Concentration percentage | 26% | 27% |
Customer Concentration Risk | Accounts Receivable | Three Customer | ||
Revenue, Major Customer [Line Items] | ||
Concentration percentage | 17% | 14% |
Customer Concentration Risk | Accounts Receivable | Four Customer | ||
Revenue, Major Customer [Line Items] | ||
Concentration percentage | 12% | |
Supplier Concentration Risk | Service provider one | Purchase | ||
Revenue, Major Customer [Line Items] | ||
Concentration percentage | 36% | 36% |
Supplier Concentration Risk | Service provider one | Accounts Payable | ||
Revenue, Major Customer [Line Items] | ||
Concentration percentage | 19% | 15% |
Supplier Concentration Risk | Service provider two | Purchase | ||
Revenue, Major Customer [Line Items] | ||
Concentration percentage | 13% | |
Supplier Concentration Risk | Service provider two | Accounts Payable | ||
Revenue, Major Customer [Line Items] | ||
Concentration percentage | 0% |
Segment, Concentration and Ge_4
Segment, Concentration and Geographical Information - Wireless Revenues by Product Line (Detail) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Revenue from External Customer [Line Items] | ||
Total revenues | $ 48,513 | $ 58,422 |
Wireless | ||
Revenue from External Customer [Line Items] | ||
Total revenues | 48,513 | 58,422 |
Wireless | Family Safety | ||
Revenue from External Customer [Line Items] | ||
Total revenues | 39,798 | 41,019 |
Wireless | CommSuite | ||
Revenue from External Customer [Line Items] | ||
Total revenues | 4,846 | 13,717 |
Wireless | ViewSpot | ||
Revenue from External Customer [Line Items] | ||
Total revenues | 3,869 | 3,569 |
Wireless | Other | ||
Revenue from External Customer [Line Items] | ||
Total revenues | $ 0 | $ 117 |
Segment, Concentration and Ge_5
Segment, Concentration and Geographical Information - Company Revenue in Different Geographic Locations (Detail) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Revenue from External Customer [Line Items] | ||
Total revenues | $ 48,513 | $ 58,422 |
Americas | Reportable Geographical Components | ||
Revenue from External Customer [Line Items] | ||
Total revenues | 46,621 | 55,398 |
EMEA | Reportable Geographical Components | ||
Revenue from External Customer [Line Items] | ||
Total revenues | $ 1,892 | $ 3,024 |
Subsequent Events (Details)
Subsequent Events (Details) | 12 Months Ended | ||
Mar. 13, 2023 | Feb. 21, 2023 | Dec. 31, 2022 | |
Subsequent Event | |||
Subsequent Event [Line Items] | |||
Percent of workforce expected to be eliminated | 26% | ||
Subsequent Event | Maximum | |||
Subsequent Event [Line Items] | |||
Service transition period | 180 days | ||
Family Safety Solution Customer | Revenue | Customer Concentration Risk | |||
Subsequent Event [Line Items] | |||
Concentration percentage | 33% |