Smith Micro Software (SMSI) 8-K Smith Micro Software Reports Record Third Quarter Revenue

Exhibit 99.1

AT THE COMPANY:
Bruce T. Quigley
Vice President of Business Development and
Investor Relations
949-362-5800
bquigley@smithmicro.com IR INQUIRIES:
Charles Messman, Todd Kehrli
MKR Group
818-556-3700
ir@mkr-group.com

FOR IMMEDIATE RELEASE

SMITH MICRO SOFTWARE REPORTS RECORD THIRD QUARTER REVENUE

Third Quarter Revenue Increased 115% To $14.8 Million;
Pro Forma Net Income Increased to a Record $4.3 million;

Aliso Viejo, Calif., November 1, 2006— Smith Micro Software, Inc. (NASDAQ: SMSI), a developer and marketer of a wide range of software solutions for the wireless market, today reported its 2006 third quarter financial results.

Third Quarter 2006 Key Financial Results:

• Revenue increased to a record $14.8 million, up 18% sequentially and 115% year-over-year.

• Pro Forma Net Income was a record $4.3 million, compared to pro forma net income of $2.9 million in the first quarter of 2006, pro forma net income of $3.2 million in the second quarter of 2006, and pro forma net income of $2.3 million in the third quarter of 2005.

• Pro Forma earnings were a record $0.17 per fully diluted share on 25.8 million shares, compared to pro forma earnings of $0.13 per fully diluted share in the second quarter of 2006 and compared to pro forma earnings of $0.10 per fully diluted share in the third quarter of 2005.

• Pro Forma Gross Profit increased to $9.0 million, up 18.4% sequentially and 49.6% over Pro Forma third quarter 2005.

• Cash and cash equivalents increase significantly to $34.9 million, compared to $21.2 million at year-end in 2005.

Smith Micro 2006 Third Quarter Financial Results Page 2 of 11

Third Quarter Financial Discussion:

“We are very please to report our sixth consecutive quarter of record top line and bottom line results,” said William W. Smith, Jr., President and Chief Executive Officer of Smith Micro Software. “Our business continues to prosper across all of our platforms and in our OEM business division we saw a return to a more normalized growth trend for our broadband QuickLink Mobile connectivity product, which helped drive the increase in gross margins for the quarter. We also experienced significant growth with our Music Essential kit, specifically with Verizon Wireless, where we benefited from a strong marketing push and launch of the LG VX8500 Chocolate phone.”

Mr. Smith continued, “We launched our QuickLink Music product during the quarter, our new music suite which offers a robust experience allowing wireless carriers the ability to brand their multimedia service offerings from online stores to mobile handsets. It also gives the end users a streamlined installation process, and the seamless operability to integrate music capable phones with a PC. We believe this is a strong launching pad, as we look to expand our wireless carrier customer base with this product in the coming months.”

“Our StuffIt Wireless program continues progress on track, with several ongoing prototypes in testing with large handset manufacturers, and a wireless carrier. We see this solution becoming more relevant to the market place as the market continues to evolve every day, with more data moving through the spectrum including music, video, and photos. Specifically, we anticipate video becoming more prominent player as we look to 2007.” Mr. Smith continued, “We believe we have positioned the Company very well to benefit from these additional services being offered by the wireless carriers.”

Mr. Smith concluded, “In conclusion we remain optimistic about our business outlook, we expect to see a continuation of growth, and believe our recent music success can continue to grow with the launch of QuickLink Music. We believe the company is positioned well as we strive to be a leader in the wireless software space.”

Smith Micro 2006 Third Quarter Financial Results Page 3 of 11

Smith Micro reported record net revenue of $14.8 million for the third quarter ended September 30, 2006, an 18% increase over revenue of $12.5 million in the second quarter of 2006 and an increase of 115% when compared to the $6.9 million recorded in the third quarter of 2005.

Pro forma net income (which excludes amortization of intangible assets associated with acquisitions and stock compensation related expenses) for the third quarter was $4.3 million, or $0.17 per fully diluted share, compared to pro forma net income of $2.3 million or $0.10 per fully diluted share in the third quarter of 2005. Fully diluted shares outstanding as of September 30, 2006 were 25.8 million versus the 23.2 million shares outstanding in the third quarter of 2005.

On a GAAP basis, the company earned $0.09 per fully diluted share for the third quarter of 2006 that compared to $0.08 per fully diluted share in the third quarter of 2005.

For the nine months ended September 30, 2005, the company reported record net revenues of $37.2 million, a 204% increase over the $12.3 million reported for the nine months ended September 30, 2005. Proforma net income for the nine months ended was $10.5 million, or $0.42 per diluted share, an increase of 261% when compared to the proforma net income of $2.9 million or $0.13 per fully diluted share reported for the nine months ended September 30, 2005.

Investor Conference Call
Smith Micro will hold an investor conference call to discuss the company’s third quarter results at 4:30 p.m. Eastern time today, November 1, 2006. The call can be accessed by dialing(800) 218-9073 and giving the pass code “SMSI.” Participants are asked to call the assigned number approximately 10 minutes before the conference call begins. In addition, the conference call will be available over the Internet at www.smithmicro.com in the Investor Relations section.

Smith Micro 2006 Third Quarter Financial Results Page 4 of 11

About Smith Micro Software:

Smith Micro Software, Inc., headquartered in Aliso Viejo, CA, is a developer and marketer of wireless communications and utility software products for multiple OS platforms. The company designs easy-to-use software for personal computing and business solutions around the world. With a focus on wireless and broadband technologies and the Internet, the company’s products and services enable wireless communications, file and image compression, digital image and music management. In addition, Smith Micro develops and publishes award-winning software solutions for Windows and Macintosh, empowering users in the areas of information access, removal, recovery, security, and Internet distribution. Smith Micro’s leading brands are QuickLink^®, StuffIt^®, CheckIt^®, Internet Cleanup™ and Spring Cleaning^®. Smith Micro’s complete line of products is available through retail stores, Value-Added Resellers (VARs), Smith Micro’s consumer, enterprise, wireless OEM sales groups and the company’s websites. Smith Micro’s common stock trades on The NASDAQ Stock Market^® under the symbol SMSI.

This release may contain forward-looking statements that involve risks and uncertainties, including without limitation risks and uncertainties relating to the company’s financial prospects and projections, the company’s plans for returning to sustained profitability and the company’s ability to increase its business in segments of the company. Among the important factors that could cause actual results to differ materially from those in the forward-looking statements are new and changing technologies, customer acceptance of those technologies, fluctuations or cancellations in orders from distribution customers, new and continuing adverse economic conditions, and the company’s ability to compete effectively with other software companies. These and other factors could cause actual results to differ materially from those presented in any forward-looking statement and are discussed in the company’s filings with the Securities and Exchange Commission including its recent filings on Forms 10-K and 10-Q.

Smith Micro, the Smith Micro logo are trademarks or registered trademarks of Smith Micro Software, Inc. All other trademarks and product names are the property of their respective companies.

Note: Financial Schedules Attached

Smith Micro 2006 Third Quarter Financial Results Page 5 of 11

Smith Micro Software, Inc.
Pro-forma Statement of Operations for the Three Months Ended September 30, 2006
(results exclude amortization of intangibles associated with the acquisitions of
Allume Systems, Inc. and PhoTags, Inc. as well as
stock based compensation)
(in thousands, except per share amounts)

			Unaudited
	Per GAAP		Adjustments			Proforma
NET REVENUE
Products	$	14,619	$	—		$	14,619
Services		182		—			182
Total Net Revenues		14,801		—			14,801
COST OF SALES
Products		6,030		(259	)		5,771
Services		60		0			60
Total Cost of Sales		6,090		(259	)		5,831
GROSS PROFIT
Products		8,589		259			8,848
Services		122		—			122
Total Gross Profit		8,711		259			8,970
OPERATING EXPENSES
Selling & Marketing		2,374		(723	)		1,651
Research & Development		1,871		(141	)		1,730
General & Administrative		2,329		(741	)		1,588
Total Operating Expenses		6,574		(1,605	)		4,969
Operating Income		2,137		1,864			4,001
Interest Income		381					381
Income Before Income Taxes		2,518		1,864			4,382
Income Tax Expense		68					68
Net Income	$	2,450	$	1,864		$	4,314
Income Per Share, Basic	$	0.10				$	0.18
Weighted Average Shares Outstanding, Basic		24,123					24,123
Income Per Share, Fully Diluted	$	0.09				$	0.17
Weighted Average Shares Outstanding, Fully Diluted		25,794					25,794

Smith Micro 2006 Third Quarter Financial Results Page 6 of 11

Smith Micro Software, Inc.
Pro-forma Statement of Operations for the Three Months Ended September 30, 2005
(results exclude amortization of intangibles associated with the acquisition of
Allume Systems, Inc.)
(in thousands, except per share amounts)

			Unaudited
	Per GAAP		Adjustments			Proforma
NET REVENUE
Products	$	6,743	$	—		$	6,743
Services		153		—			153
Total Net Revenues		6,896		—			6,896
COST OF SALES
Products		1,089		(267	)		822
Services		76		0			76
Total Cost of Sales		1,165		(267	)		898
GROSS PROFIT
Products		5,654		267			5,921
Services		77		—			77
Total Gross Profit		5,731		267			5,998
OPERATING EXPENSES
Selling & Marketing		1,294		(118	)		1,176
Research & Development		1,244					1,244
General & Administrative		1,430					1,430
Total Operating Expenses		3,968		(118	)		3,850
Operating Income		1,763		385			2,148
Interest Income		161					161
Income Before Income Taxes		1,924		385			2,309
Income Tax Expense		47					47
Net Income	$	1,877	$	385		$	2,262
Income Per Share, Basic	$	0.09				$	0.10
Weighted Average Shares Outstanding, Basic		22,016					22,016
Income Per Share, Fully Diluted	$	0.08				$	0.10
Weighted Average Shares Outstanding, Fully Diluted		23,222					23,222

Smith Micro 2006 Third Quarter Financial Results Page 7 of 11

Smith Micro Software, Inc.
Pro-forma Statement of Operations for the Nine Months Ended September 30, 2006
(results exclude amortization of intangibles associated with the acquisitions of
Allume Systems, Inc. and PhoTags, Inc. as well as
stock based compensation)
(in thousands, except per share amounts)

			Unaudited
	Per GAAP		Adjustments			Proforma
NET REVENUE
Products	$	36,691	$	—		$	36,691
Services		550		—			550
Total Net Revenues		37,241		—			37,241
COST OF SALES
Products		14,485		(859	)		13,626
Services		210		0			210
Total Cost of Sales		14,695		(859	)		13,836
GROSS PROFIT
Products		22,206		859			23,065
Services		340		—			340
Total Gross Profit		22,546		859			23,405
OPERATING EXPENSES
Selling & Marketing		6,540		(1,876	)		4,664
Research & Development		5,625		(793	)		4,832
General & Administrative		5,766		(1,583	)		4,183
Total Operating Expenses		17,931		(4,252	)		13,679
Operating Income		4,615		5,111			9,726
Interest Income		871					871
Income Before Income Taxes		5,486		5,111			10,597
Income Tax Expense		140					140
Net Income	$	5,346	$	5,111		$	10,457
Income Per Share, Basic	$	0.23				$	0.45
Weighted Average Shares Outstanding, Basic		23,360					23,360
Income Per Share, Fully Diluted	$	0.21				$	0.42
Weighted Average Shares Outstanding, Fully Diluted		25,184					25,184

Smith Micro 2006 Third Quarter Financial Results Page 8 of 11

Smith Micro Software, Inc.
Pro-forma Statement of Operations for the Nine Months Ended September 30, 2005
(results exclude amortization of intangibles associated with the acquisition of
Allume Systems, Inc.)
(in thousands, except per share amounts)

			Unaudited
	Per GAAP		Adjustments			Proforma
NET REVENUE
Products	$	11,781	$	—		$	11,781
Services		475		—			475
Total Net Revenues		12,256		—			12,256
COST OF SALES
Products		1,835		(267	)		1,568
Services		220		0			220
Total Cost of Sales		2,055		(267	)		1,788
GROSS PROFIT
Products		9,946		267			10,213
Services		255		—			255
Total Gross Profit		10,201		267			10,468
OPERATING EXPENSES
Selling & Marketing		2,103		(118	)		1,985
Research & Development		2,638					2,638
General & Administrative		3,367					3,367
Total Operating Expenses		8,108		(118	)		7,990
Operating Income		2,093		385			2,478
Interest Income		475					475
Income Before Income Taxes		2,568		385			2,953
Income Tax Expense		55					55
Net Income	$	2,513	$	385		$	2,898
Income Per Share, Basic	$	0.12				$	0.14
Weighted Average Shares Outstanding, Basic		21,097					21,097
Income Per Share, Fully Diluted	$	0.11				$	0.13
Weighted Average Shares Outstanding, Fully Diluted		22,454					22,454

Smith Micro 2006 Third Quarter Financial Results Page 9 of 11

Smith Micro Software, Inc.
Statement of Operations for the Three Months Ended September 30, 2006 and 2005
(in thousands, except per share amounts)

	Unaudited
	2006		2005
NET REVENUE
Products	$	14,619	$	6,743
Services		182		153
Total Net Revenues		14,801		6,896
COST OF SALES
Products		6,030		1,089
Services		60		76
Total Cost of Sales		6,090		1,165
GROSS PROFIT
Products		8,589		5,654
Services		122		77
Total Gross Profit		8,711		5,731
OPERATING EXPENSES
Selling & Marketing		2,374		1,294
Research & Development		1,871		1,244
General & Administrative		2,329		1,430
Total Operating Expenses		6,574		3,968
Operating Income		2,137		1,763
Interest Income		381		161
Income Before Income Taxes		2,518		1,924
Income Tax Expense		68		47
Net Income	$	2,450	$	1,877
Income Per Share, Basic	$	0.10	$	0.09
Weighted Average Shares Outstanding, Basic		24,123		22,016
Income Per Share, Fully Diluted	$	0.09	$	0.08
Weighted Average Shares Outstanding, Fully Diluted		25,794		23,222

Smith Micro 2006 Third Quarter Financial Results Page 10 of 11

Smith Micro Software, Inc.
Statement of Operations for the Nine Months Ended September 30, 2006 and 2005
(in thousands, except per share amounts)

	Unaudited
	2006		2005
NET REVENUE
Products	$	36,691	$	11,781
Services		550		475
Total Net Revenues		37,241		12,256
COST OF SALES
Products		14,485		1,835
Services		210		220
Total Cost of Sales		14,695		2,055
GROSS PROFIT
Products		22,206		9,946
Services		340		255
Total Gross Profit		22,546		10,201
OPERATING EXPENSES
Selling & Marketing		6,540		2,103
Research & Development		5,625		2,638
General & Administrative		5,766		3,367
Total Operating Expenses		17,931		8,108
Operating Income		4,615		2,093
Interest Income		871		475
Income Before Income Taxes		5,486		2,568
Income Tax Expense		140		55
Net Income	$	5,346	$	2,513
Income Per Share, Basic	$	0.23	$	0.12
Weighted Average Shares Outstanding, Basic		23,360		21,097
Income Per Share, Fully Diluted	$	0.21	$	0.11
Weighted Average Shares Outstanding, Fully Diluted		25,184		22,454

Smith Micro 2006 Third Quarter Financial Results Page 11 of 11

Smith Micro Software, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)

	September 30,			December 31,
	2006			2005
	(unaudited)
ASSETS
Current Assets:
Cash & Cash Equivalents	$	34,898		$	21,215
Accounts Receivable, (Net)		6,943			6,786
Inventory		1,373			530
Prepaid & Other Assets		243			556
Total Current Assets		43,457			29,087
Equipment & Improvements, Net		376			241
Goodwill		15,098			9,288
Intangible Assets, Net		4,156			4,093
Other Assets		—			7
TOTAL ASSETS	$	63,087		$	42,716
LIABILITIES & STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts Payable	$	4,942		$	2,383
Accrued Liabilities		1,881			1,376
Total Current Liabilities		6,823			3,759
Common Stock		24			22
Additional Paid In Capital		62,839			50,880
Accumulated Deficit		(6,599	)		(11,945	)
Total Stockholders’ Equity		56,264			38,957
TOTAL LIABILITIES & EQUITY	$	63,087		$	42,716

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