Note 4 - Goodwill and Intangible Assets

12 Months Ended

Dec. 31, 2025

Notes to Financial Statements

Goodwill and Intangible Assets Disclosure [Text Block]

4. Goodwill and Intangible Assets

Goodwill

The carrying amount of goodwill and the impairment losses are as follows (in thousands):

	Goodwill
December 31, 2023	$	35,041
Impairment losses		(23,989	)
December 31, 2024		11,052
Impairment losses		(11,052	)
December 31, 2025	$	—

In accordance with FASB ASC Topic No. 350, Intangibles-Goodwill and Other, 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 of each year. Recoverability of goodwill is determined by comparing the estimated fair value of the reporting unit to the carrying value of the underlying net assets in the reporting unit. If the estimated fair value of a reporting unit is determined to be less than the carrying value, goodwill is deemed impaired, and an impairment loss is recognized to the extent that the carrying value of goodwill exceeds the fair value.

During the three months ended March 31, 2024, the Company performed an interim quantitative impairment test on its goodwill as of February 29, 2024 and as a result of this interim assessment, the Company recorded a goodwill impairment charge totaling $24 million. The fair value of the reporting unit was determined based on a combination of the income approach using estimated discounted cash flows and a market-based valuation methodology utilizing market multiples. The assessment utilized Level 3 inputs including estimates of revenue growth, EBITDA contribution and discount rates.

In connection with the preparation of its quarterly financial statements for the second quarter of 2025, the Company assessed changes in circumstances to determine whether it was more likely than not that the fair value of its single reporting unit was below its carrying amount. While there was no single determinative event or factor, considerations including recent financial performance compared to expected forecasts, trends in stock valuation, pricing of the most recent equity raise, and the receipt of the Nasdaq minimum bid price requirement notice on June 24, 2025 led the Company to conclude that when considering the events and factors in totality it was necessary to perform an interim quantitative valuation assessment.  The fair value of the reporting unit was determined based on a combination of the income approach using estimated discounted cash flows and a market-based valuation methodology utilizing market multiples. The assessment utilized Level 3 inputs including estimates of revenue growth, EBITDA contribution and discount rates. Based on the results of the assessment, a full goodwill impairment charge of $11.1 million was recorded. 

Intangible Assets

The following table sets forth the Company’s acquired intangible assets by major asset class as of  December 31, 2025 and 2024, respectively (in thousands, except for useful life data):

	December 31, 2025
	Weighted Average Remaining Useful Life (in Years)		Gross Carrying Amount		Accumulated Amortization			Net Book Value
Purchased technology		3	$	11,076	$	(7,945	)	$	3,131
Customer relationships		9		24,573		(11,000	)		13,573
Customer contracts		—		7,000		(6,895	)		105
Software license		4		5,419		(3,843	)		1,576
Patents		2		600		(493	)		107
Total			$	48,668	$	(30,176	)	$	18,492

	December 31, 2024
	Weighted Average Remaining Useful Life (in Years)	Gross Carrying Amount		Accumulated Amortization			Net Book Value
Purchased technology	4	$	13,330	$	(8,762	)	$	4,568
Customer relationships	9		27,548		(11,280	)		16,268
Customer contracts	—		7,000		(6,725	)		275
Software license	4		5,419		(3,126	)		2,293
Patents	2		600		(407	)		193
Total		$	53,897	$	(30,300	)	$	23,597

The Company recorded amortization expense of $5.1 million and $5.9 million on intangible assets for the years ended  December 31, 2025 and 2024, respectively.

Future amortization expense related to intangible assets as of  December 31, 2025 is as follows (in thousands):

Year Ended December 31,
2026	$	4,709
2027		3,834
2028		2,790
2029		2,095
2030 and thereafter		5,064
Total	$	18,492