Achieved Revenue of $10.9 Million And Non-GAAP
Earnings per Share of $0.08
Smith Micro Software, Inc. (NASDAQ: SMSI) (“Smith Micro” or the
“Company”) today reported financial results for its second quarter
ended June 30, 2019.
“I am very pleased with the continued growth and profitability
we delivered in the second quarter of 2019,” said William W. Smith,
Jr., President and CEO of Smith Micro. “We saw growth across all
three wireless solutions, again mostly driven by our SafePath®
platform. We also achieved another consecutive quarter of
subscriber revenue growth from the CommSuite® platform, as well as
continued growth with ViewSpot™, our recent Smart Retail
acquisition that closed in the first quarter.”
Mr. Smith concluded, “The outlook for the second half of 2019 is
very strong. Our sales pipeline continues to grow across all three
wireless solutions and, with the successful launch of our first
SafePath IOT device, our product offering has strengthened and
we’ve now entered a new market.”
Second Quarter 2019 Financial Results:
Smith Micro reported revenue of $10.9 million for the second
quarter ended June 30, 2019, compared to $6.9 million reported in
the second quarter ended June 30, 2018.
Second quarter 2019 gross profit was $9.9 million compared to
$5.8 million reported in the second quarter of 2018.
Gross profit as a percentage of revenue was 91 percent for the
second quarter of 2019 compared to 84 percent for the second
quarter of 2018.
Generally accepted accounting principles in the United States
(“GAAP”) net income available to common stockholders for the second
quarter of 2019 was $3.4 million, or $0.11 basic earnings per share
and $0.10 diluted earnings per share, compared to a GAAP net loss
available to common stockholders of $2.4 million, or $0.11 loss per
share, for the second quarter of 2018.
Non-GAAP net income (which excludes stock-based compensation,
amortization of intangibles, debt issuance and discount costs, fair
value adjustments, transaction gains, acquisition costs, preferred
stock dividends, and a normalized tax expense) for the second
quarter of 2019 was $2.7 million, or $0.08 earnings per share,
compared to a non-GAAP net income of $226 thousand, or $0.01
earnings per share, for the second quarter of 2018.
Second Quarter Year-to-Date 2019 Financial Results:
Smith Micro reported revenue of $19.3 million for the six months
ended June 30, 2019, compared to $12.4 million reported in the six
months ended June 30, 2018.
Gross profit for the six months ended June 30, 2019 was $17.4
million compared to $10.0 million reported for the same period in
2018.
Gross profit as a percentage of revenue was 90 percent for the
six months ended June 30, 2019 compared to 81 percent for the six
months ended June 30, 2018.
GAAP net income available to common stockholders for the six
months ended June 30, 2019 was $3.4 million, or $0.11 basic
earnings per share and $0.10 diluted earnings per share, compared
to a GAAP net loss available to common stockholders of $4.9
million, or $0.26 loss per share, for the same period in 2018.
Non-GAAP net income (which excludes stock-based compensation,
amortization of intangibles, debt issuance and discount costs, fair
value adjustments, transaction gains, acquisition costs, preferred
stock dividends, and a normalized tax expense) for the six months
ended June 30, 2019 was $3.3 million, or $0.10 earnings per share,
compared to a non-GAAP net loss of $1.2 million, or $0.07 loss per
share, for the six months ended June 30, 2018.
Total cash and cash equivalents at June 30, 2019 were $6.6
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, transaction
gains, acquisition 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 tax rate for 2019 and 2018 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
income (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 may not be comparable to similarly titled amounts reported by
other companies.
Investor Conference Call:
Smith Micro will hold an investor conference call today, July
25, 2019 at 4:30 p.m. EDT, to discuss the Company’s second quarter
2019 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 and performing analytics on any product set.
For more information, visit www.smithmicro.com.
Smith Micro, the Smith Micro logo, SafePath, CommSuite and
ViewSpot are registered trademarks or trademarks of Smith Micro
Software, Inc. All other trademarks and product names 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
outlook or 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, changes in requirements for our products imposed by
our customers or by the third party providers of software and/or
platforms that we use, 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
Gain on Sale of Software
Product
Acquisition Costs
Preferred Stock
Dividends
Taxes
Non-
GAAP
Three Months Ended 6/30/19:
Gross profit
$
9,880
$
-
$
-
$
-
$
-
$
-
$
-
$
-
$
-
$
9,880
Income before provision for
income taxes
3,440
333
268
-
-
(483
)
-
-
-
3,558
Net income available to
common stockholders
3,402
333
268
-
-
(483
)
-
34
(850
)
2,704
Earnings per share: basic
0.11
0.01
0.01
-
-
(0.02
)
-
0.00
(0.03
)
0.08
Earnings per share: diluted
0.10
0.01
0.01
-
-
(0.01
)
-
0.00
(0.02
)
0.08
Three Months Ended 6/30/18:
Gross profit
$
5,829
$
-
$
-
$
-
$
-
$
-
$
-
$
-
$
-
$
5,829
Income (loss) before provision for
income taxes
(2,164
)
247
64
66
2,085
-
-
-
-
298
Net income (loss) available to common
stockholders
(2,362
)
247
64
66
2,085
-
-
185
(59
)
226
Earnings (loss) per share: basic and
diluted
(0.11
)
0.01
0.00
0.00
0.10
-
-
0.01
(0.00
)
0.01
Six Months Ended 6/30/19:
Gross profit
$
17,395
$
-
$
-
$
-
$
-
$
-
$
-
$
-
$
-
$
17,395
Income before provision for
income taxes
3,492
788
465
-
-
(483
)
76
-
-
4,338
Net income available to common
stockholders
3,417
788
465
-
-
(483
)
76
67
(1,033
)
3,297
Earnings per share: basic
0.11
0.02
0.01
-
-
(0.02
)
0.00
0.00
(0.03
)
0.10
Earnings per share: diluted
0.10
0.02
0.01
-
-
(0.00
)
0.00
0.00
(0.03
)
0.10
Six Months Ended 6/30/18:
Gross profit
$
9,983
$
-
$
-
$
-
$
-
$
-
$
-
$
-
$
-
$
9,983
Loss before provision for
income taxes
(4,535
)
410
128
131
2,224
-
-
-
-
(1,642
)
Net loss available to common
stockholders
(4,884
)
410
128
131
2,224
-
-
326
417
(1,248
)
Loss per share: basic and
diluted
(0.26
)
0.02
0.01
0.01
0.12
-
-
0.02
0.02
(0.07
)
Note: Earnings (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 Six Months
Ended June 30,
Ended June 30,
2019
2018
2019
2018
Revenues
$
10,854
$
6,945
$
19,286
$
12,408
Cost of revenues
974
1,116
1,891
2,425
Gross profit
9,880
5,829
17,395
9,983
Operating expenses:
Selling and marketing
1,768
1,447
3,735
3,177
Research and development
2,743
2,195
5,425
4,450
General and administrative
2,426
2,061
5,126
4,251
Restructuring expense
11
52
115
52
Total operating expenses
6,948
5,755
14,401
11,930
Operating income (loss)
2,932
74
2,994
(1,947
)
Non-operating income (expense):
Interest income (expense), net
31
(143
)
30
(314
)
Change in fair value of warrant
liability
-
(2,085
)
-
(2,224
)
Gain on sale of software product
483
-
483
-
Other expense, net
(6
)
(10
)
(15
)
(50
)
Income (loss) before provision for income
taxes
3,440
(2,164
)
3,492
(4,535
)
Provision for income tax expense
4
13
8
23
Net income (loss)
3,436
(2,177
)
3,484
(4,558
)
Less preferred stock dividends
(34
)
(185
)
(67
)
(326
)
Net income (loss) available to common
stockholders
$
3,402
$
(2,362
)
$
3,417
$
(4,884
)
Earnings (loss) per share:
Basic
$
0.11
$
(0.11
)
$
0.11
$
(0.26
)
Diluted
$
0.10
$
(0.11
)
$
0.10
$
(0.26
)
Weighted average shares outstanding:
Basic
32,068
21,888
31,685
18,612
Diluted
35,308
21,888
33,365
18,612
Smith Micro Software, Inc.
Consolidated Balance Sheets
(in thousands)
June 30,
December 31,
2019
2018
ASSETS
Current Assets:
Cash & cash equivalents
$
6,611
$
12,159
Accounts receivable, net
13,017
7,130
Prepaid and other assets
938
795
Total current assets
20,566
20,084
Equipment & improvements, net
930
865
Right-of-use assets
6,708
-
Deferred tax asset, net
191
191
Other assets
267
140
Intangible assets, net
5,002
238
Goodwill
7,797
3,685
TOTAL ASSETS
$
41,461
$
25,203
LIABILITIES & STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable
$
1,227
$
1,160
Accrued payroll and benefits
2,232
1,745
Current operating lease liabilities
1,057
-
Other accrued liabilities
246
450
Deferred revenue
183
28
Total current liabilities
4,945
3,383
Operating lease liabilities
6,135
-
Deferred rent
547
723
Other long-term liabilities
168
534
Total non-current liabilities
6,850
1,257
Stockholders' Equity:
Preferred stock
-
-
Common stock
32
28
Additional paid in capital
262,215
256,626
Accumulated comprehensive deficit
(232,581
)
(236,091
)
Total stockholders' equity
29,666
20,563
TOTAL LIABILITIES & STOCKHOLDERS'
EQUITY
$
41,461
$
25,203
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190725005444/en/
IR INQUIRIES: Charles Messman Investor Relations
949-362-5800 IR@smithmicro.com
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