Company Achieves Growth and Profitability
During the Quarter
Smith Micro Software, Inc. (NASDAQ: SMSI) today reported
financial results for its fourth quarter and fiscal year ended
December 31, 2018.
“Our fiscal 2018 was a solid year for the Company, achieving
several significant milestones across all facets of the
organization,” said William W. Smith Jr., President and CEO of
Smith Micro Software. “We entered 2018 with a concentrated focus of
returning the company to growth, profitability, and positive cash
flow. I am pleased to report that we achieved success on all three
fronts, while continuing to streamline our operations and
rationalize our product lineup.”
“During the year, we significantly strengthened our balance
sheet, paid down substantially all our debt obligations, and
strategically acquired a third leg to our wireless product stool
with the acquisition of the Smart Retail product suite that we have
branded as ViewSpot.”
Mr. Smith concluded, “We enter 2019 with strong momentum,
focused on maintaining our technology leadership position, adding
new customers, and accelerating growth.”
Fourth Quarter 2018 Financial Results:
Smith Micro Software reported revenue of $7.4 million for the
fourth quarter ended December 31, 2018, compared to $5.7 million
reported in the fourth quarter ended December 31, 2017.
Fourth quarter 2018 gross profit was $6.4 million, compared to
$4.4 million reported in the fourth quarter of 2017.
Gross profit as a percentage of revenue was 87 percent for the
fourth quarter of 2018, compared to 76 percent for the fourth
quarter of 2017.
Generally accepted accounting principles in the United States
(“GAAP”) net income available to common stockholders for the fourth
quarter of 2018 was $2.8 million, or $0.10 earnings per share,
compared to a GAAP net loss available to common stockholders of
$0.2 million, or $0.01 loss per share, for the fourth quarter of
2017.
Non-GAAP net income (which excludes stock-based compensation,
amortization of intangibles, debt issuance and discount costs, fair
value adjustments, loss on debt extinguishment, restructuring
adjustments, acquisitions costs, preferred stock dividends, and a
normalized tax expense) for the fourth quarter of 2018 was $0.9
million, or $0.03 earnings per share, compared to a non-GAAP net
loss of $0.7 million, or $0.05 loss per share, for the fourth
quarter of 2017.
Year Ended 2018 Financial Results:
Smith Micro Software reported revenue of $26.3 million for the
year ended December 31, 2018, compared to $23.0 million reported
for the year ended December 31, 2017.
Gross profit for the year ended December 31, 2018 was $22.0
million, compared to $17.9 million reported for the same period in
2017.
Gross profit as a percentage of revenue was 84 percent for the
year ended December 31, 2018, compared to 78 percent for the year
ended December 31, 2017.
GAAP net loss available to common stockholders for the year
ended December 31, 2018 was $3.1 million, or $0.14 loss per share,
compared to a GAAP net loss available to common stockholders of
$6.7 million, or $0.49 loss per share, for the same period in
2017.
Non-GAAP net loss (which excludes stock-based compensation,
amortization of intangibles, debt issuance and discount costs, fair
value adjustments, loss on debt extinguishment, restructuring
adjustments, acquisitions costs, preferred stock dividends, and a
normalized tax expense) for the year ended December 31, 2018 was
less than $0.1 million, or break-even earnings per share, compared
to a non-GAAP net loss of $3.5 million, or $0.26 loss per share,
for the year ended December 31, 2017.
Total cash and cash equivalents at December 31, 2018 were $12.2
million.
To supplement our financial information presented in accordance
with GAAP, the Company considers and has included in this press
release certain non-GAAP financial measures, including a non-GAAP
reconciliation of gross profit, income (loss) before taxes, net
income (loss) available to common stockholders, and earnings (loss)
per share in the presentation of financial results in this press
release. Management believes this non-GAAP presentation may be more
meaningful in analyzing our income generation and has therefore
excluded the following items from GAAP earnings calculations:
stock-based compensation, amortization of intangibles, debt
issuance and discount costs, fair value adjustments, loss on debt
extinguishment, restructuring adjustments, acquisitions costs, and
preferred stock dividends. Additionally, since we are in a
cumulative loss position, a non-GAAP income tax expense (benefit)
was computed using a 24 percent and 38 percent tax rate for 2018
and 2017, respectively, using the Company’s normalized combined
U.S. federal, state, and foreign statutory tax rates less various
tax adjustments. This presentation may be considered more
indicative of our ongoing operational performance. The table below
presents the differences between non-GAAP net income (loss) and net
loss on an absolute and per-share basis. Non-GAAP financial
measures should not be considered in isolation from, or as a
substitute for, financial information presented in compliance with
GAAP, and the non-financial measures as reported by Smith Micro
Software may not be comparable to similarly titled amounts reported
by other companies.
Investor Conference Call:
Smith Micro Software will hold an investor conference call
today, March 13, 2019 at 4:30 p.m. EDT, to discuss the Company’s
fourth quarter and year ended 2018 financial results. To access the
call, dial 1-877-270-2148; international participants can call
1-412-902-6510. A passcode is not required to join the call; ask
the operator to be placed into the Smith Micro conference.
Participants are asked to call the assigned number approximately 10
minutes before the conference call begins. In addition, the
conference call will be available on the Smith Micro website in the
Investor Relations section.
About Smith Micro Software, Inc.:
Smith Micro develops software to simplify and enhance the mobile
experience, providing solutions to some of the leading wireless
service providers and Cable MSOs around the world. From
enabling the family digital lifestyle to providing powerful voice
messaging capabilities, our solutions enrich today’s connected
lifestyles while creating new opportunities to engage consumers via
smartphones and consumer IoT devices. The Smith Micro portfolio
also includes a wide range of products for creating, sharing and
monetizing rich content, such as visual voice messaging, optimizing
retail content display, performing analytics on any product set,
and 2D/3D graphics applications. For more information,
visit www.smithmicro.com.
Smith Micro and the Smith Micro logo are registered trademarks
or trademarks of Smith Micro Software, Inc. Third-party trademarks
mentioned are the property of their respective owners.
Forward-Looking Statements:
Certain statements in this press release are, and certain
statements on the related conference call may be, forward-looking
statements regarding future events or results, including statements
related to our financial prospects and other projections of our
performance and our future business plans, and statements using
such words as “expect,” “anticipate,” “believe,” “plan,” “intend,”
“could,” “will” and other similar expressions. Forward-looking
statements involve risks and uncertainties, which could cause
actual results to differ materially from those expressed or implied
in the forward-looking statements. Among the important factors that
could cause or contribute to such differences are changes in demand
for our products from our customers and their end-users, customer
concentration, given that the majority of our sales depend on a few
large customer relationships, our ability to effectively integrate,
market and sell acquired product lines, new and changing
technologies, customer acceptance and timing of deployment of those
technologies, and our ability to compete effectively with other
software and technology companies. These and other factors
discussed in our filings with the Securities and Exchange
Commission, including our filings on Forms 10-K and 10-Q, could
cause actual results to differ materially from those expressed or
implied in any forward-looking statements. The forward-looking
statements contained in this release are made on the basis of the
views and assumptions of management, and we do not undertake any
obligation to update these statements to reflect events or
circumstances occurring after the date of this release.
Smith Micro Software, Inc.
Reconciliation of GAAP to Non-GAAP
Results
(in thousands, except per share amounts) –
unaudited
GAAP Stock
Compensation
Intangibles
Amortization
Note
Issue/
Discount
Fair Value Adjustments Loss on Debt Extinguishment
Restructuring Adjustments Acquisition Costs
Preferred Stock Dividends Taxes
Non-
GAAP
Three Months Ended 12/31/18: Gross profit $ 6,424 $ - $ - $
- $ - $ - $ - $ - $ - $ - $ 6,424 Income before provision for
income taxes
2,783 261 60 42 (2,314 ) 203 - 201 - - 1,236 Net income available
to
common stockholders
2,767 261 60 42 (2,314 ) 203 - 201 34 (315 ) 939 Earnings per
share: basic 0.10 0.01 0.00 0.00 (0.09 ) 0.01 - 0.01 0.00 (0.01 )
0.03 Earnings per share: diluted 0.10 0.01 0.00 0.00 (0.08 ) 0.01 -
0.01 0.00 (0.01 ) 0.03
Three Months Ended 12/31/17:
Gross profit $ 4,377 $ - $ - $ - $ - $ - $ - $ - $ - $ - $ 4,377
Loss before provision for
income taxes
(725 ) 169 63 66 - - (691 ) - - - (1,118 ) Net loss available to
common
stockholders
(160 ) 169 63 66 - - (691 ) - - (140 ) (693 ) Loss per share: basic
and
diluted
(0.01 ) 0.01 0.00 0.00 - - (0.05 ) - - (0.01 ) (0.05 )
Year Ended 12/31/18: Gross profit $ 21,952 $ - $ - $ - $ - $
- $ - $ - $ - $ - $ 21,952 Loss before provision for
income taxes
(2,727 ) 935 249 239 812 203 - 201 - - (88 ) Net loss available to
common
stockholders
(3,144 ) 935 249 239 812 203 - 201 404 34 (67 ) Loss per share:
basic and
diluted
(0.14 ) 0.04 0.01 0.01 0.04 0.01 - 0.01 0.02 0.00 (0.00 )
Year Ended 12/31/17: Gross profit $ 17,892 $ - $ - $ - $ - $
- $ - $ - $ - $ - $ 17,892 Loss before provision for
income taxes
(7,207 ) 1,170 258 460 - 405 (691 ) - - - (5,605 ) Net loss
available to common
stockholders
(6,661 ) 1,170 258 460 - 405 (691 ) - - 1,584 (3,475 ) Loss per
share: basic and
diluted
(0.49 ) 0.09 0.02 0.03 - 0.03 (0.05 ) - - 0.12 (0.26 ) Note:
Loss per share: basic and diluted - may be impacted by rounding to
allow rows to calculate.
Smith Micro Software, Inc.
Statements of Operations
(in thousands, except per share amounts) -
unaudited
For the Three Months For the Year Ended
Ended December 31, December 31, 2018
2017 2018 2017 Revenues $ 7,352 $ 5,732
$ 26,285 $ 22,974 Cost of revenues 928 1,355
4,333 5,082 Gross profit 6,424 4,377 21,952 17,892
Operating expenses: Selling and marketing 1,296 1,519 5,784 6,186
Research and development 2,103 2,181 8,602 8,952 General and
administrative 2,308 1,903 8,607 8,551 Restructuring expense
38 (691 ) 173 (123 ) Total operating expenses
5,745 4,912 23,166 23,566 Operating
income (loss) 679 (535 ) (1,214 ) (5,674 ) Non-operating expenses:
Interest expense, net (29 ) (192 ) (472 ) (1,120 ) Change in fair
value of warrant liability 2,314 - (812 ) - Loss on debt
extinguishment (203 ) - (203 ) (405 ) Other income (expense), net
22 2 (26 ) (8 ) Income (loss) before
provision for income taxes 2,783 (725 ) (2,727 ) (7,207 ) Provision
for income tax expense (benefit) (18 ) (565 )
13 (546 ) Net income (loss) 2,801 (160 ) (2,740 ) (6,661 )
Less preferred stock dividends (34 ) - (404 )
- Net income (loss) available to common stockholders $ 2,767
$ (160 ) $ (3,144 ) $ (6,661 ) Earnings (loss) per share:
Basic $ 0.10 $ (0.01 ) $ (0.14 ) $ (0.49 ) Diluted $ 0.10 $ (0.01 )
$ (0.14 ) $ (0.49 ) Weighted average shares outstanding:
Basic 26,925 14,281 22,322 13,489 Diluted 27,395 14,281 22,322
13,489
Smith Micro Software, Inc.
Consolidated Balance Sheets
(in thousands)
December 31, December 31, 2018
2017 ASSETS Current Assets: Cash & cash equivalents $
12,159 $ 2,205 Accounts receivable, net 7,130 5,145 Prepaid and
other assets 795 576 Total current assets 20,084
7,926 Equipment & improvements, net 865 1,229 Deferred tax
asset, net 191 404 Other assets 140 146 Intangible assets, net 238
487 Goodwill 3,685 3,685 TOTAL ASSETS $ 25,203 $
13,877 LIABILITIES & STOCKHOLDERS' EQUITY Current
Liabilities: Accounts payable $ 1,160 $ 1,333 Accrued payroll and
benefits 1,745 1,994 Related-party notes payable - 1,000 Other
accrued liabilities 450 416 Deferred revenue 28 73
Total current liabilities 3,383 4,816 Related-party notes
payable, net - 1,200 Notes payable, net - 1,558 Deferred rent 723
970 Other long-term liabilities 534 766 Total
non-current liabilities 1,257 4,494 Stockholders' Equity:
Preferred stock - - Common stock 28 14 Additional paid in capital
256,626 237,486 Accumulated comprehensive deficit (236,091 )
(232,933 ) Total stockholders' equity 20,563
4,567 TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 25,203 $
13,877
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version on businesswire.com: https://www.businesswire.com/news/home/20190313005739/en/
IR INQUIRIES:Charles MessmanInvestor
Relations949-362-5800IR@smithmicro.com
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