Smith Micro Software, Inc. (NASDAQ: SMSI), today reported
financial results for its third quarter ended September 30,
2017.
“The launch of our SafePath® Family platform by a Tier 1
wireless operator in the U.S. announced earlier this month marked a
significant milestone on our path back to growth and
profitability,” said William W. Smith, Jr., President and CEO of
Smith Micro Software. “We expect to see a positive impact from this
deployment on our revenue starting in the fourth quarter and
building into fiscal 2018, as their user base converts and
scales.
“I am pleased with the current strength of the Company, which
reflects the restructuring we undertook earlier this year and our
recent financings that significantly improved our balance sheet. We
are focused on building upon this success, and remain excited and
confident as we execute on the opportunities in front of us.”
Fiscal Third Quarter 2017 Financial Results:
Smith Micro Software reported revenue of $5.8 million for the
third quarter ended September 30, 2017, compared to $6.5 million
reported in the third quarter ended September 30, 2016.
Third quarter 2017 gross profit was $4.6 million, compared to
$4.7 million reported in the third quarter of 2016.
GAAP gross profit as a percentage of revenue was 80 percent for
the third quarter of 2017, compared to 72 percent for the third
quarter of 2016.
GAAP net loss for the third quarter of 2017 was $1.7 million, or
$0.12 loss per share, compared to a GAAP net loss of $4.6 million,
or $0.38 loss per share, for the third quarter of 2016.
Non-GAAP net loss (which excludes non-cash stock-based
compensation, amortization of intangibles, loss on debt
extinguishment, debt issuance and discount costs, and a normalized
tax benefit) for the third quarter of 2017 was $0.6 million, or
$0.04 loss per share, compared to a non-GAAP net loss of $2.5
million, or $0.21 loss per share, for the third quarter of
2016.
Fiscal September Year-To-Date 2017 Financial Results:
For the nine months ended September 30, 2017, the Company
reported revenue of $17.2 million, compared to $21.2 million for
the nine months ended September 30, 2016.
GAAP gross profit was $13.5 million for the nine months ended
September 30, 2017, compared to $15.3 million for the nine months
ended September 30, 2016.
GAAP gross profit as a percentage of revenue was 78 percent for
the nine months ended September 30, 2017, compared to 73 percent
for the same period last year.
GAAP net loss for the nine months ended September 30, 2017 was
$6.5 million, or $0.49 loss per share, compared to a GAAP net loss
for the nine months ended September 30, 2016 of $11.6 million, or
$0.98 loss per share.
Non-GAAP net loss (which excludes non-cash stock-based
compensation, amortization of intangibles, loss on debt
extinguishment, debt issuance and discount costs, and a normalized
tax benefit) for the nine months ended September 30, 2017 was $2.8
million, or $0.21 loss per share, compared to a non-GAAP net loss
of $6.3 million, or $0.54 loss per share, for the nine months ended
September 30, 2016.
Total cash and cash equivalents at September 30, 2017 were $3.9
million.
To supplement our financial information presented in accordance
with generally accepted accounting principles in the United States
(“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), 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 therefore has excluded the following non-cash
items from GAAP earnings calculations: stock-based compensation,
amortization of intangible assets, fair value adjustments, and debt
issuance and discount costs. Additionally, since we are in a
cumulative loss position, a non-GAAP income tax benefit was
computed using a 38 percent tax rate 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 earnings 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
to discuss the Company’s third quarter 2017 results at 4:30 p.m.
ET, October 25, 2017. 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, device manufacturers, and enterprise businesses
around the world. From optimizing wireless networks to uncovering
customer experience insights, and from streamlining Wi-Fi access to
ensuring family safety, our solutions enrich today’s connected
lifestyles while creating new opportunities to engage consumers via
smartphones. Our portfolio also includes a wide range of products
for creating, sharing and monetizing rich content, such as visual
messaging and 2D/3D graphics applications. For more information,
visit smithmicro.com.
Forward-Looking Statements:
Certain statements in this press release are, and certain
statements on the related teleconference call may be,
forward-looking statements regarding future events or results,
including without limitation, statements relating to our financial
prospects and other projections of our performance, the existence
of new sales opportunities and interest in our products and
solutions, and our ability to increase our revenue by capitalizing
on new opportunities, and other statements using such words as
“expect,” “anticipate,” “believe,” “plan,” “intend,” “could,” 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 our ability to continue as a
going concern, our ability to raise more funds to meet our capital
needs, 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, 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 and on the related
teleconference call are made on the basis of the views and
assumptions of management regarding future events and business
performance as of the date of this release, 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 and the Smith Micro logo are registered trademarks
or trademarks of Smith Micro Software, Inc. All other trademarks
and product names are the property of their respective owners.
Smith Micro
Software, Inc. Reconciliation of GAAP to Non-GAAP
Results (in thousands, except per share amounts) - unaudited
Loss on Note Stock Intangibles Debt Issue/ Non-
GAAP
Compensation Amortization
Extinguishment* Discount *
Taxes GAAP Three Months Ended 9/30/17:
Gross profit $4,645 $- $- $- $- $- $4,645 Loss before provision for
income taxes ($1,664 ) $167 $65 $405 $133 $- ($894 ) Net loss
($1,670 ) $167 $65 $405 $133 $345 ($554 ) Loss per share: basic and
diluted ($0.12 ) $0.01 $0.00 $0.03 $0.01 $0.02 ($0.04 )
Three Months Ended 9/30/16: Gross profit $4,680 $1 $- $- $- $-
$4,681 Loss before provision for income taxes ($4,621 ) $408 $85 $-
$52 $- ($4,076 ) Net loss ($4,632 ) $408 $85 $- $52 $1,560 ($2,527
) Loss per share: basic and diluted ($0.38 ) $0.03 $0.01 $0.00
$0.00 $0.13 ($0.21 ) Nine Months Ended 9/30/17: Gross profit
$13,515 $- $- $- $- $- $13,515 Loss before provision for income
taxes ($6,482 ) $1,001 $195 $405 $394 $- ($4,487 ) Net loss ($6,501
) $1,001 $195 $405 $394 $1,724 ($2,782 ) Loss per share: basic and
diluted ($0.49 ) $0.08 $0.01 $0.03 $0.03 $0.13 ($0.21 ) Nine
Months Ended 9/30/16: Gross profit $15,327 $3 $- $- $- $- $15,330
Loss before provision for income taxes ($11,570 ) $1,175 $112 $-
$52 $- ($10,231 ) Net loss ($11,618 ) $1,175 $112 $- $52 $3,936
($6,343 ) Loss per share: basic and diluted ($0.98 ) $0.10 $0.01
$0.00 $0.00 $0.33 ($0.54 ) Note: Loss per share: basic and
diluted - may be impacted by rounding to allow rows to calculate.
* - Includes impact of current and
retrospective adjustment for the adoption of ASU 2017-11 for
periods presented
Smith Micro Software, Inc. Statements of
Operations and Comprehensive Loss for the Three and Nine Months
Ended September 30, 2017 and 2016 (in thousands, except per
share amounts) - unaudited For the Three
Months For the Nine Months Ended September 30, Ended September 30,
2017 2016
2017 2016
Revenues $ 5,804 $ 6,478 $ 17,242 $ 21,151 Cost of revenues
1,159 1,798 3,727 5,824
Gross profit 4,645 4,680 13,515 15,327 Operating
expenses: Selling and marketing 1,413 2,541 4,667 7,389 Research
and development 2,100 4,174 6,771 12,204 General and administrative
2,220 2,522 6,648 7,878 Restructuring expense (146 )
- 568 - Total operating expenses
5,587 9,237 18,654
27,471 Operating loss (942 ) (4,557 ) (5,139 ) (12,144 )
Non-operating income: Change in carrying value of contingent
liability - 11 - 668 Loss on extinguishment of debt * (405 ) - (405
) - Interest income (expense), net * (315 ) (66 ) (928 ) (68 )
Other income (expense), net (2 ) (9 ) (10 )
(26 ) Loss before provision for income taxes (1,664 )
(4,621 ) (6,482 ) (11,570 ) Provision for
income tax expense 6 11 19
48 Net loss $ (1,670 ) $ (4,632 ) $ (6,501 ) $
(11,618 ) Other comprehensive income, before tax: Unrealized
holding gains on available-for-sale securities -
- - 2 Other comprehensive
income, net of tax - - -
2 Comprehensive loss $ (1,670 ) $ (4,632 ) $ (6,501 )
$ (11,616 ) Loss per share: Basic and diluted $ (0.12 ) $
(0.38 ) $ (0.49 ) $ (0.98 ) Weighted average shares
outstanding: Basic and diluted 14,397 12,209 13,221 11,826
* - Includes impact of current and
retrospective adjustment for the adoption of ASU 2017-11 for
periods presented
Smith Micro Software, Inc. Consolidated
Balance Sheets (in thousands) - unaudited September 30,
December 31,
2017
2016 ASSETS Current Assets: Cash & cash
equivalents $ 3,939 $ 2,229 Accounts receivable, net 5,209 4,962
Income tax receivable 1 1 Inventory, net 16 12 Prepaid and other
assets 706 713 Total current assets
9,871 7,917 Equipment & improvements, net 1,381 1,811 Other
assets 146 149 Intangible assets, net 551 745 Goodwill 3,685
3,686 TOTAL ASSETS $ 15,634 $ 14,308
LIABILITIES & STOCKHOLDERS' EQUITY Current
Liabilities: Accounts payable $ 1,318 $ 1,907 Accrued liabilities
3,182 3,503 Related-party notes payable 2,200 - Deferred revenue
367 98 Total current liabilities 7,067
5,508 Related-party notes payable, net * - 1,295 Notes
payable, net * 1,492 1,295 Warrant liability * - - Other long-term
liabilities 2,332 2,970 Deferred tax liability 181
181 Total non-current liabilities 4,005 5,741
Stockholders' Equity: Preferred stock - - Common stock 14 12
Additional paid in capital * 237,321 229,275 Accumulated
comprehensive deficit * (232,773 ) (226,228 ) Total
stockholders' equity 4,562 3,059 TOTAL
LIABILITIES & STOCKHOLDERS' EQUITY $ 15,634 $ 14,308
* - Includes impact of current and
retrospective adjustment for the adoption of ASU 2017-11 for
periods presented
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version on businesswire.com: http://www.businesswire.com/news/home/20171025006220/en/
IR INQUIRIES:Smith Micro Software, Inc.Charles
MessmanInvestor Relations949-362-5800IR@smithmicro.com
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