Smith Micro Software, Inc. (Nasdaq: SMSI) (“Smith Micro” or the
“Company”) today reported financial results for its first quarter
ended March 31, 2024.
“In the first quarter, we have made progress in several key
areas that we believe position us for growth in the back half of
this fiscal year,” said William W. Smith, Jr., president, chief
executive officer, and chairman of the board of Smith Micro. “We
are pleased to announce that in the near term, we plan to launch
our first customer on SafePath Global™, a new rapid-deployment
model of our SafePath® solution. Additionally, we have introduced
our affiliate/influencer and retail store ambassador marketing
programs to help drive subscriber growth of mobile operators'
SafePath-based solutions, and we expect our previously announced
Tier 1 MNO customer in Europe to launch in the second half of this
year delivering a unique product approach to a family safety
solution that has yet to be seen in the market.”
“We are keenly focused on returning the Company to growth and
profitability in the near term,” Smith continued. “With our new
product development initiatives, including SafePath Global,
SafePath Premium™ and SafePath OS™, and our new wave of marketing
activities, we believe that the Company is poised for growth over
the coming quarters. To accelerate our return to non-GAAP
profitability and positive cash flow, we also plan to take steps to
further reduce our cost structure. The team at Smith Micro is
extremely dedicated and motivated to the mission of bringing new,
innovative solutions to the market and delivering the technology
necessary to keep families safe in the world we live in today, and
to provide premium service, innovation, and ingenuity for our
customers.”
First Quarter 2024 Financial Results
Smith Micro reported revenue of $5.8 million for the quarter
ended March 31, 2024, compared to $10.9 million reported in the
quarter ended March 31, 2023.
Gross profit for the quarter ended March 31, 2024 was $3.8
million, compared to $7.6 million for the quarter ended March 31,
2023.
Gross profit as a percentage of revenue was 65.7 percent for the
quarter ended March 31, 2024, compared to 70.0 percent for the
quarter ended March 31, 2023.
GAAP net loss for the quarter ended March 31, 2024 was $31.0
million, or $3.28 loss per share, compared to GAAP net loss of $6.9
million, or $0.97 loss per share, for the quarter ended March 31,
2023.
Non-GAAP net loss for the quarter ended March 31, 2024 was $4.2
million, or $0.45 loss per share, compared to non-GAAP net loss of
$3.6 million, or $0.51 loss per share, for the quarter ended March
31, 2023. Non-GAAP net income and net loss excludes the items noted
below under "Non-GAAP Measures."
All share and per share amounts for common stock herein have
been retroactively adjusted for all periods presented to give
effect to the one-for-eight reverse stock split (the "Reverse Stock
Split") of our common stock, which became effective April 10, 2024
at 11:59 pm Eastern time.
Total cash and cash equivalents as of March 31, 2024 were $6.2
million.
Non-GAAP Measures
To supplement our financial information presented in accordance
with GAAP, the Company considers, and has included in this press
release, the following non-GAAP financial measures and a non-GAAP
reconciliation from the equivalent GAAP metric: non-GAAP net (loss)
income, non-GAAP gross profit, and non-GAAP basic and diluted
(loss) earnings per share in the presentation of financial results
in this press release. Management believes this non-GAAP
presentation may be more meaningful in analyzing the Company's
income generation and has therefore excluded the following items
from GAAP earnings calculations: stock compensation, intangibles
amortization, depreciation, fair value adjustments, amortization of
debt issuance costs and discount, goodwill
impairment, and adjustments for non-recurring items.
Additionally, since the Company currently has federal and state net
operating loss carryforwards that can be utilized to reduce future
cash payments for income taxes, these non-GAAP adjustments have not
been tax effected, and the resulting income tax expense reflects
actual taxes paid or accrued during each period. This presentation
may be considered more indicative of the Company's ongoing
operational performance. The table below presents the differences
between non-GAAP net 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-GAAP 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, May 8,
2024, at 4:30 p.m. ET, to discuss the Company’s first quarter 2024
financial results. To access the call, dial 1-844-701-1164;
international participants can call 1-412-317-5492. 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. An internet webcast is available at
https://event.choruscall.com/mediaframe/webcast.html?webcastid=diAQPqLJ.
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 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 and SafePath 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 within the meaning of
the Private Securities Litigation Reform Act, including statements
related to our financial prospects, goals and other projections of
our outlook or performance our cost reduction plans and other
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 customer concentration, given
that the majority of our sales depend on a few large customer
relationships and the loss of any of them could materially and
negatively affect our business, delay or failure of our customers
to accept and deploy our products and services or new or upgraded
versions thereof, delay or failure of our customers’ end users to
adopt our products and services or new or upgraded versions
thereof, our reliance on third party operating systems for the
proper operation and delivery of our solutions and any barriers to
our use of such third party technology, our reliance on third party
application stores for the distribution of our software
applications to users and any barriers to such distribution,
including any delay or failure of such third party to approve new
versions of our applications or their implementation and/or
application of policies that may be harmful to our business,
unanticipated delays or obstacles in our development and release
cycles, the degree to which competing business needs may affect our
allocation of resources to planned projects, delays in our ability
to fully execute on our cost reduction plans due to statutory and
other requirements, the risk of harm to our business resulting from
our recent and any future cost reduction efforts, our ability to
attract and retain key technical personnel that are essential to
our product development and support efforts, changes in demand for
our products from our customers and their end users, 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 and 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.
Consolidated Balance Sheets
(in thousands except share and par value
data)
March 31, 2024
December 31,
2023
(unaudited)
(audited)
Assets
Current assets:
Cash and cash equivalents
$
6,155
$
7,125
Accounts receivable, net of related
allowances of $3 and $3 at 2024 and 2023, respectively
4,301
7,912
Prepaid expenses and other current
assets
1,800
1,843
Total current assets
12,256
16,880
Equipment and improvements, net
790
883
Right-of-use assets
3,147
2,759
Other assets
480
482
Intangible assets, net
27,715
29,532
Goodwill
11,052
35,041
Total assets
$
55,440
$
85,577
Liabilities and Stockholders'
Equity
Current liabilities:
Accounts payable
$
2,218
$
2,522
Accrued payroll and benefits
2,653
2,500
Current operating lease liabilities
1,272
1,483
Other current liabilities
1,048
1,137
Total current liabilities
7,191
7,642
Non-current liabilities:
Warrant liabilities
411
597
Operating lease liabilities
2,228
1,780
Deferred tax liabilities, net
168
168
Total non-current liabilities
2,807
2,545
Commitments and contingencies
Stockholders' equity:
Common stock, par value $0.001 per share;
100,000,000 shares authorized; 9,601,504 and 9,347,979 shares
issued and outstanding 2024 and 2023, respectively
10
9
Additional paid-in capital
382,387
381,329
Accumulated comprehensive deficit
(336,955
)
(305,948
)
Total stockholders’ equity
45,442
75,390
Total liabilities and stockholders'
equity
$
55,440
$
85,577
Smith Micro Software, Inc.
Consolidated Statements of
Operations
(in thousands except share data)
For the Three Months Ended
March 31,
2024
2023
(unaudited)
(unaudited)
Revenues
$
5,798
$
10,930
Cost of revenues (including depreciation
of $6 and $14 in the three months ended March 31, 2024 and 2023,
respectively)
1,988
3,282
Gross profit
3,810
7,648
Operating expenses:
Selling and marketing
2,614
3,554
Research and development
3,989
5,868
General and administrative
2,756
3,475
Depreciation and amortization
1,908
1,686
Goodwill impairment
23,989
—
Total operating expenses
35,256
14,583
Operating loss
(31,446
)
(6,935
)
Other income (expense):
Change in fair value of warrant and
derivative liabilities
185
2,984
Loss on derecognition of debt
—
(627
)
Interest income (expense), net
74
(2,260
)
Other income (expense), net
219
(40
)
Loss before provision for income taxes
(30,968
)
(6,878
)
Provision for income tax expense
39
9
Net loss
$
(31,007
)
$
(6,887
)
Loss per share:
Basic and diluted
$
(3.28
)
$
(0.97
)
Weighted average shares outstanding:
Basic and diluted
9,466
7,121
Smith Micro Software, Inc.
Consolidated Statements of Cash
Flows
(in thousands)
For the Three Months Ended
March 31,
2024
2023
(unaudited)
(unaudited)
Operating activities:
Net loss
$
(31,007
)
$
(6,887
)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization
1,914
1,700
Goodwill impairment charge
23,989
—
Non-cash lease expense
(151
)
(27
)
Change in fair value of warrant and
derivative liabilities
(185
)
(2,984
)
Loss on derecognition of debt
—
627
Amortization of debt discount and issuance
costs
—
2,117
Stock based compensation
1,136
945
Gain on license of patents, net
(198
)
—
Gain on disposal of assets
—
(3
)
Changes in operating accounts:
Accounts receivable
3,611
(685
)
Prepaid expenses and other assets
44
164
Accounts payable and accrued
liabilities
(469
)
(65
)
Other liabilities
(29
)
(237
)
Net cash used in operating activities
(1,345
)
(5,335
)
Investing activities:
Acquisitions, net
—
—
Capital expenditures, net
(4
)
3
Proceeds from license of patents, net
198
—
Net cash provided by investing
activities
194
3
Financing activities:
Proceeds from financing arrangements
468
442
Repayments of financing arrangements
(289
)
(420
)
Other financing activities
2
8
Net cash provided by financing
activities
181
30
Net decrease in cash and cash
equivalents
(970
)
(5,302
)
Cash and cash equivalents, beginning of
period
$
7,125
14,026
Cash and cash equivalents, end of
period
$
6,155
$
8,724
Smith Micro Software, Inc.
Reconciliation of GAAP to Non-GAAP
Results
(in thousands, except per share data) -
unaudited
GAAP
Stock Compensation
Intangibles
Amortization
Depreciation
Fair Value Adjustments
Amortization of Debt Issuance
Costs and Discount
Goodwill Impairment
Adjustments for Non- Recurring
Items
Non-GAAP
Three Months Ended March 31,
2024
Gross profit
$
3,810
$
—
$
—
$
6
$
—
$
—
$
—
$
—
$
3,816
Selling and marketing
2,614
(309
)
—
—
—
—
—
(13
)
2,292
Research and development
3,989
(264
)
—
—
—
—
—
(18
)
3,707
General and administrative
2,756
(563
)
—
—
—
—
—
(104
)
2,089
Depreciation and amortization
1,908
—
(1,816
)
(92
)
—
—
—
—
—
Goodwill impairment
23,989
—
—
—
—
—
(23,989
)
—
—
Total operating expenses
$
35,256
$
(1,136
)
$
(1,816
)
$
(92
)
$
—
$
—
$
(23,989
)
$
(135
)
$
8,088
(Loss) Income before provision for income
taxes
$
(30,968
)
$
1,136
$
1,816
$
98
$
(185
)
$
—
$
23,989
$
(63
)
$
(4,177
)
Net (Loss) Income
$
(31,007
)
$
1,136
$
1,816
$
98
$
(185
)
$
—
$
23,989
$
(63
)
$
(4,216
)
(Loss) earnings per share: basic and
diluted
$
(3.28
)
$
0.12
$
0.19
$
0.01
$
(0.02
)
$
—
$
2.53
$
(0.01
)
$
(0.45
)
Three Months Ended
March 31, 2023
Gross profit
$
7,648
$
—
$
—
$
14
$
—
$
—
$
—
$
183
$
7,845
Selling and marketing
3,554
(162
)
—
—
—
—
—
(93
)
3,299
Research and development
5,868
(224
)
—
—
—
—
—
(462
)
5,182
General and administrative
3,475
(559
)
—
—
—
—
—
(135
)
2,781
Depreciation and amortization
1,686
—
(1,474
)
(212
)
—
—
—
—
—
Total operating expenses
$
14,583
$
(945
)
$
(1,474
)
$
(212
)
$
—
$
—
$
—
$
(690
)
$
11,262
(Loss) Income before provision for income
taxes
$
(6,878
)
$
945
$
1,474
$
226
$
(2,357
)
$
2,117
$
—
$
873
$
(3,600
)
Net (Loss) Income
$
(6,887
)
$
945
$
1,474
$
226
$
(2,357
)
$
2,117
$
—
$
873
$
(3,609
)
(Loss) earnings per share: basic and
diluted
$
(0.97
)
$
0.13
$
0.21
$
0.03
$
(0.33
)
$
0.30
$
—
$
0.12
$
(0.51
)
Note: (Loss) earnings per share: basic and diluted - may be
impacted by rounding to allow rows to calculate.
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version on businesswire.com: https://www.businesswire.com/news/home/20240508287580/en/
IR INQUIRIES: Charles Messman Investor Relations
949-362-5800 IR@smithmicro.com
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