Exhibit 99.1

 

 

IR INQUIRIES:

Charles Messman

Investor Relations

949-362-5800

IR@smithmicro.com

 

 

Smith Micro Reports Fourth Quarter and Fiscal Year 2017 Financial Results

 

ALISO VIEJO, CA, March 14, 2018 – Smith Micro Software, Inc. (NASDAQ: SMSI), today reported financial results for its fourth quarter and year ended December 31, 2017.

“I’m encouraged by the positive strides we made as a company in Fiscal 2017,” said William W. Smith, Jr., President and CEO of Smith Micro Software. “Building off our 2016 restructuring, we achieved some significant milestones, which included the launch of our SafePath® Family platform with a Tier 1, U.S.-based carrier, and the implementation of significant product enhancements across our portfolio, all of which we expect to contribute to 2018 revenue growth.

“We are entering 2018 with momentum. The company is well-capitalized and ready to maximize the significant revenue opportunities that lay ahead. As such, I expect to see revenues build throughout 2018, which will return us to positive cash flow and profitability.”

Fiscal Fourth Quarter 2017 Financial Results:

Smith Micro Software reported revenue of $5.7 million for the fourth quarter ended December 31, 2017, compared to $7.1 million reported in the fourth quarter ended December 31, 2016.

Fourth quarter 2017 gross profit was $4.4 million, compared to $5.3 million reported in the fourth quarter of 2016.

Generally accepted accounting principles in the United States (“GAAP”) gross profit as a percentage of revenue was 76 percent for the fourth quarter of 2017, compared to 75 percent for the fourth quarter of 2016.    

 


Smith Micro Software Fourth Quarter 2017 Financial Results

Page 2 of 7

 

GAAP net loss for the fourth quarter of 2017 was $0.2 million, or $0.01 loss per share, compared to a GAAP net loss of $3.7 million, or $0.30 loss per share, for the fourth 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, impairment of long-lived assets, the reversal of restructuring reserves, and a normalized tax benefit) for the fourth quarter of 2017 was $0.7 million, or $0.05 loss per share, compared to a non-GAAP net loss of $1.8 million, or $0.15 loss per share, for the fourth quarter of 2016.

Year Ended 2017 Financial Results:

For the year ended December 31, 2017, the Company reported revenue of $23.0 million, compared to $28.2 million for the year ended December 31, 2016.

GAAP gross profit was $17.9 million for the year ended December 31, 2017, compared to $20.7 million for the year ended December 31, 2016.  

GAAP gross profit as a percentage of revenue was 78 percent for the year ended December 31, 2017, compared to 73 percent for the same period last year.

GAAP net loss for the year ended December 31, 2017 was $6.7 million, or $0.49 loss per share, compared to a GAAP net loss for the year ended December 31, 2016 of $15.3 million, or $1.28 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, impairment of long-lived assets, the reversal of restructuring reserves, and a normalized tax benefit) for the year ended December 31, 2017 was $3.5 million, or $0.26 loss per share, compared to a non-GAAP net loss of $8.6 million, or $0.72 loss per share, for the year ended December 31, 2016.  

Total cash and cash equivalents at December 31, 2017 were $2.2 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), 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

 


Smith Micro Software Fourth Quarter 2017 Financial Results

Page 3 of 7

 

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, March 14, 2018 at 4:30 p.m. EDT, to discuss the Company’s fourth quarter and fiscal year 2017 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, 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.

 


Smith Micro Software Fourth Quarter 2017 Financial Results

Page 4 of 7

 

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,” “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 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 Fourth Quarter 2017 Financial Results

Page 5 of 7

 

Smith Micro Software, Inc.

Reconciliation of GAAP to Non-GAAP Results

(in thousands, except per share amounts) – unaudited

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP

 

 

Stock

Compensation

 

 

Intangibles

Amortization

 

 

Loss on Debt Extinguishment

 

 

Impairment

 

 

Note

Issue/

Discount

 

 

Other

Adjustments

 

 

Taxes

 

 

Non-

GAAP

 

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

 

(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

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended 12/31/16:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  Gross profit

$

5,344

 

 

$

1

 

 

$

-

 

 

$

-

 

 

$

-

 

 

$

-

 

 

$

-

 

 

$

-

 

 

$

5,345

 

  Loss before provision for

    income taxes

 

(4,002

)

 

 

353

 

 

 

84

 

 

 

-

 

 

 

411

 

 

 

195

 

 

 

-

 

 

 

-

 

 

 

(2,959

)

  Net loss

 

(3,725

)

 

 

353

 

 

 

84

 

 

 

-

 

 

 

411

 

 

 

195

 

 

 

-

 

 

 

847

 

 

 

(1,835

)

  Loss per share: basic and diluted

 

(0.30

)

 

 

0.03

 

 

 

0.01

 

 

 

-

 

 

 

0.03

 

 

 

0.02

 

 

 

-

 

 

 

0.07

 

 

 

(0.15

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year Ended 12/31/17:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  Gross profit

$

17,892

 

 

$

-

 

 

$

-

 

 

$

-

 

 

$

-

 

 

$

-

 

 

$

-

 

 

$

-

 

 

$

17,892

 

  Loss before provision for

    income taxes

 

(7,207

)

 

 

1,170

 

 

 

258

 

 

 

405

 

 

 

-

 

 

 

460

 

 

 

(691

)

 

 

-

 

 

 

(5,605

)

  Net loss

 

(6,661

)

 

 

1,170

 

 

 

258

 

 

 

405

 

 

 

-

 

 

 

460

 

 

 

(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

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year Ended 12/31/16:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  Gross profit

$

20,671

 

 

$

3

 

 

$

-

 

 

$

-

 

 

$

-

 

 

$

-

 

 

$

-

 

 

$

-

 

 

$

20,674

 

  Loss before provision for

    income taxes

 

(15,572

)

 

 

1,528

 

 

 

196

 

 

 

-

 

 

 

411

 

 

 

247

 

 

 

(668

)

 

 

-

 

 

 

(13,858

)

  Net loss

 

(15,343

)

 

 

1,528

 

 

 

196

 

 

 

-

 

 

 

411

 

 

 

247

 

 

 

(668

)

 

 

5,037

 

 

 

(8,592

)

  Loss per share: basic and diluted

 

(1.28

)

 

 

0.13

 

 

 

0.02

 

 

 

-

 

 

 

0.03

 

 

 

0.02

 

 

 

(0.06

)

 

 

0.42

 

 

 

(0.72

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Note: Loss per share: basic and diluted - may be impacted by rounding to allow rows to calculate.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


Smith Micro Software Fourth Quarter 2017 Financial Results

Page 6 of 7

 

Smith Micro Software, Inc.

Statements of Operations and Comprehensive Loss

(in thousands, except per share amounts) - unaudited

 

For the Three Months

 

 

For the Twelve Months

 

 

Ended December 31,

 

 

Ended December 31,

 

 

2017

 

 

2016

 

 

2017

 

 

2016

 

Revenues

$

5,732

 

 

$

7,084

 

 

$

22,974

 

 

$

28,235

 

Cost of revenues

 

1,355

 

 

 

1,740

 

 

 

5,082

 

 

 

7,564

 

Gross profit

 

4,377

 

 

 

5,344

 

 

 

17,892

 

 

 

20,671

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  Selling and marketing

 

1,519

 

 

 

2,226

 

 

 

6,186

 

 

 

9,615

 

  Research and development

 

2,181

 

 

 

3,702

 

 

 

8,952

 

 

 

15,906

 

  General and administrative

 

1,903

 

 

 

2,463

 

 

 

8,551

 

 

 

10,341

 

  Restructuring expense

 

(691

)

 

 

303

 

 

 

(123

)

 

 

303

 

  Long-lived asset impairment

 

-

 

 

 

411

 

 

 

-

 

 

 

411

 

Total operating expenses

 

4,912

 

 

 

9,105

 

 

 

23,566

 

 

 

36,576

 

Operating loss

 

(535

)

 

 

(3,761

)

 

 

(5,674

)

 

 

(15,905

)

Non-operating income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  Change in carrying value of contingent liability

 

-

 

 

 

-

 

 

 

-

 

 

 

668

 

  Loss on extinguishment of debt

 

-

 

 

 

-

 

 

 

(405

)

 

 

-

 

  Interest income (expense), net

 

(192

)

 

 

(246

)

 

 

(1,120

)

 

 

(313

)

  Other income (expense), net

 

2

 

 

 

5

 

 

 

(8

)

 

 

(22

)

Loss before provision for income taxes

 

(725

)

 

 

(4,002

)

 

 

(7,207

)

 

 

(15,572

)

Provision for income tax expense

 

(565

)

 

 

(277

)

 

 

(546

)

 

 

(229

)

Net loss

 

(160

)

 

 

(3,725

)

 

 

(6,661

)

 

 

(15,343

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive income, before tax:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  Unrealized holding gains on available-for-sale securities

 

-

 

 

 

-

 

 

 

-

 

 

 

2

 

  Other comprehensive income, net of tax

 

-

 

 

 

-

 

 

 

-

 

 

 

2

 

Comprehensive loss

$

(160

)

 

$

(3,725

)

 

$

(6,661

)

 

$

(15,341

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  Basic and diluted

$

(0.01

)

 

$

(0.30

)

 

$

(0.49

)

 

$

(1.28

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  Basic and diluted

 

14,281

 

 

 

12,323

 

 

 

13,489

 

 

 

11,951

 

 

 


Smith Micro Software Fourth Quarter 2017 Financial Results

Page 7 of 7

 

Smith Micro Software, Inc.

Consolidated Balance Sheets

(in thousands)

 

December 31,

 

 

December 31,

 

 

2017

 

 

2016

 

ASSETS

 

 

 

 

 

 

 

Current Assets:

 

 

 

 

 

 

 

Cash & cash equivalents

$

2,205

 

 

$

2,229

 

Accounts receivable, net

 

5,145

 

 

 

4,962

 

Prepaid and other assets

 

576

 

 

 

726

 

  Total current assets

 

7,926

 

 

 

7,917

 

Equipment & improvements, net

 

1,229

 

 

 

1,811

 

Deferred tax asset, net

 

404

 

 

 

-

 

Other assets

 

146

 

 

 

149

 

Intangible assets, net

 

487

 

 

 

745

 

Goodwill

 

3,685

 

 

 

3,686

 

TOTAL ASSETS

$

13,877

 

 

$

14,308

 

 

 

 

 

 

 

 

 

LIABILITIES & STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

 

 

  Accounts payable

$

1,333

 

 

$

1,907

 

  Accrued payroll and benefits

 

1,994

 

 

 

2,391

 

  Related-party notes payable

 

1,000

 

 

 

-

 

  Other accrued liabilities

 

416

 

 

 

1,112

 

  Deferred revenue

 

73

 

 

 

98

 

   Total current liabilities

 

4,816

 

 

 

5,508

 

 

 

 

 

 

 

 

 

Related-party notes payable, net

 

1,200

 

 

 

1,295

 

Notes payable, net

 

1,558

 

 

 

1,295

 

Deferred rent

 

970

 

 

 

1,162

 

Other long-term liabilities

 

766

 

 

 

1,808

 

Deferred tax liability, net

 

-

 

 

 

181

 

   Total non-current liabilities

 

4,494

 

 

 

5,741

 

 

 

 

 

 

 

 

 

Stockholders' Equity:

 

 

 

 

 

 

 

  Preferred stock

 

-

 

 

 

-

 

  Common stock

 

14

 

 

 

12

 

  Additional paid in capital

 

237,486

 

 

 

229,275

 

  Accumulated comprehensive deficit

 

(232,933

)

 

 

(226,228

)

   Total stockholders' equity

 

4,567

 

 

 

3,059

 

TOTAL LIABILITIES & STOCKHOLDERS' EQUITY

$

13,877

 

 

$

14,308

 

 

 

 

 

 

 

 

 

 

 

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