Exhibit 99.1

 

 

IR INQUIRIES:

Charles Messman

Investor Relations

949-362-5800

IR@smithmicro.com

 

 

Smith Micro Reports Second Quarter 2018 Financial Results

Company Achieves Non-GAAP Profitability During the Quarter

 

 

ALISO VIEJO, CA, July 24, 2018 – Smith Micro Software, Inc. (NASDAQ: SMSI), today reported financial results for its second quarter ended June 30, 2018.

“I am encouraged by our second quarter results as we look to build upon our positive momentum in the second half of fiscal 2018,” said William W. Smith, Jr., President and CEO of Smith Micro Software. “We achieved operating profitability and saw continued revenue growth from our wireless business unit, driven by our two core products, SafePath® and CommSuite®.”

“While there is still plenty of hard work ahead, I am proud of what we have achieved with the turnaround journey that we began 18 months ago. The company is well capitalized and positioned to build upon the momentum achieved in the first half of the year. We will remain diligent and focused on our strategic initiatives, expanding our revenues and continuing our march to consistent profitability in the coming quarters.”

Fiscal Second Quarter 2018 Financial Results:

Smith Micro Software reported revenue of $6.9 million for the second quarter ended June 30, 2018, compared to $5.9 million reported in the second quarter ended June 30, 2017.

Second quarter 2018 gross profit was $5.8 million, compared to $4.6 million reported in the second quarter of 2017.

 


Smith Micro Software Second Quarter 2018 Financial Results

Page 2 of 7

 

Gross profit as a percentage of revenue was 84 percent for the second quarter of 2018, compared to 78 percent for the second quarter of 2017.

Generally accepted accounting principles in the United States (“GAAP”) net loss available to common stockholders for the second quarter of 2018 was $2.4 million, or $0.11 loss per share, compared to a GAAP net loss available to common stockholders of $2.0 million, or $0.15 loss per share, for the second quarter of 2017.

Non-GAAP net income (which excludes non-cash stock-based compensation, amortization of intangibles, debt issuance and discount costs, fair value adjustments, preferred stock dividends, and a normalized tax expense) for the second quarter of 2018 was $0.2 million, or $0.01 per share, compared to a non-GAAP net loss of $0.8 million, or $0.06 loss per share, for the second quarter of 2017.

Fiscal June Year-to-Date 2018 Financial Results:

Smith Micro Software reported revenue of $12.4 million for the six months ended June 30, 2018, compared to $11.4 million reported for the six months ended June 30, 2017.

Gross profit for the six months ended June 30, 2018 was $10.0 million, compared to $8.9 million reported for the same period in 2017.

Gross profit as a percentage of revenue was 81 percent for the six months ended June 30, 2018, compared to 78 percent for the six months ended June 30, 2017.    

GAAP net loss available to common stockholders for the six months ended June 30, 2018 was $4.9 million, or $0.26 loss per share, compared to a GAAP net loss available to common stockholders of $4.8 million, or $0.38 loss per share, for the same period in 2017.

Non-GAAP net loss (which excludes non-cash stock-based compensation, amortization of intangibles, debt issuance and discount costs, fair value adjustments, preferred stock dividends, and a normalized tax benefit) for the six months ended June 30, 2018 was $1.2 million, or $0.07 loss per share, compared to a non-GAAP net loss of $2.2 million, or $0.18 loss per share, for the six months ended June 30, 2017.

Total cash and cash equivalents at June 30, 2018 were $8.7 million.

 


Smith Micro Software Second Quarter 2018 Financial Results

Page 3 of 7

 

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 therefore has excluded the following non-cash items from GAAP earnings calculations: stock-based compensation, amortization of intangible assets, debt issuance and discount costs, fair value adjustments, 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, July 24, 2018 at 4:30 p.m. EDT, to discuss the Company’s second quarter 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, 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 Second Quarter 2018 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 and our future business plans, 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 Second Quarter 2018 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

 

 

Note

Issue/

Discount

 

 

Fair Value Adjustments

 

 

Preferred Stock Dividends

 

 

Taxes

 

 

Non-

GAAP

 

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

 

  Income (loss) per share: basic and

     diluted

 

(0.11

)

 

 

0.01

 

 

 

0.00

 

 

 

0.00

 

 

 

0.10

 

 

 

0.01

 

 

 

(0.00

)

 

 

0.01

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended 6/30/17:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  Gross profit

$

4,577

 

 

$

-

 

 

$

-

 

 

$

-

 

 

$

-

 

 

$

-

 

 

$

-

 

 

$

4,577

 

  Loss before provision for

    income taxes

 

(1,947

)

 

 

388

 

 

 

65

 

 

 

131

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(1,363

)

  Net loss available to common

     stockholders

 

(1,952

)

 

 

388

 

 

 

65

 

 

 

131

 

 

 

-

 

 

 

-

 

 

 

523

 

 

 

(845

)

  Loss per share: basic and

     diluted

 

(0.15

)

 

 

0.03

 

 

 

0.00

 

 

 

0.01

 

 

 

-

 

 

 

-

 

 

 

0.04

 

 

 

(0.06

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended 6/30/17:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  Gross profit

$

8,870

 

 

$

-

 

 

$

-

 

 

$

-

 

 

$

-

 

 

$

-

 

 

$

-

 

 

$

8,870

 

  Loss before provision for

    income taxes

 

(4,819

)

 

 

834

 

 

 

130

 

 

 

261

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(3,594

)

  Net loss available to common

     stockholders

 

(4,832

)

 

 

834

 

 

 

130

 

 

 

261

 

 

 

-

 

 

 

-

 

 

 

1,379

 

 

 

(2,228

)

  Loss per share: basic and

     diluted

 

(0.38

)

 

 

0.07

 

 

 

0.01

 

 

 

0.02

 

 

 

-

 

 

 

-

 

 

 

0.11

 

 

 

(0.18

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 


Smith Micro Software Second Quarter 2018 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 Six Months

 

 

Ended June 30,

 

 

Ended June 30,

 

 

2018

 

 

2017

 

 

2018

 

 

2017

 

Revenues

$

6,945

 

 

$

5,862

 

 

$

12,408

 

 

$

11,438

 

Cost of revenues

 

1,116

 

 

 

1,285

 

 

 

2,425

 

 

 

2,568

 

Gross profit

 

5,829

 

 

 

4,577

 

 

 

9,983

 

 

 

8,870

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling and marketing

 

1,447

 

 

 

1,461

 

 

 

3,177

 

 

 

3,254

 

Research and development

 

2,195

 

 

 

2,174

 

 

 

4,450

 

 

 

4,671

 

General and administrative

 

2,061

 

 

 

2,239

 

 

 

4,251

 

 

 

4,428

 

Restructuring expense

 

52

 

 

 

322

 

 

 

52

 

 

 

714

 

Total operating expenses

 

5,755

 

 

 

6,196

 

 

 

11,930

 

 

 

13,067

 

Operating income (loss)

 

74

 

 

 

(1,619

)

 

 

(1,947

)

 

 

(4,197

)

Non-operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense, net

 

(143

)

 

 

(329

)

 

 

(314

)

 

 

(613

)

Change in fair value of warrant liability

 

(2,085

)

 

 

-

 

 

 

(2,224

)

 

 

-

 

Other income (expense), net

 

(10

)

 

 

1

 

 

 

(50

)

 

 

(9

)

Loss before provision for income taxes

 

(2,164

)

 

 

(1,947

)

 

 

(4,535

)

 

 

(4,819

)

Provision for income tax expense

 

13

 

 

 

5

 

 

 

23

 

 

 

13

 

Net loss

 

(2,177

)

 

 

(1,952

)

 

 

(4,558

)

 

 

(4,832

)

Less preferred stock dividends

 

(185

)

 

 

-

 

 

 

(326

)

 

 

-

 

Net loss available to common stockholders

$

(2,362

)

 

$

(1,952

)

 

$

(4,884

)

 

$

(4,832

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  Basic and diluted

$

(0.11

)

 

$

(0.15

)

 

$

(0.26

)

 

$

(0.38

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  Basic and diluted

 

21,888

 

 

 

13,179

 

 

 

18,612

 

 

 

12,674

 

 

 


Smith Micro Software, Inc.

Consolidated Balance Sheets

(in thousands)

 

June 30,

 

 

December 31,

 

 

2018

 

 

2017

 

ASSETS

 

 

 

 

 

 

 

Current Assets:

 

 

 

 

 

 

 

Cash & cash equivalents

$

8,745

 

 

$

2,205

 

Accounts receivable, net

 

6,182

 

 

 

5,145

 

Prepaid and other assets

 

774

 

 

 

576

 

  Total current assets

 

15,701

 

 

 

7,926

 

Equipment & improvements, net

 

1,060

 

 

 

1,229

 

Deferred tax asset, net

 

404

 

 

 

404

 

Other assets

 

148

 

 

 

146

 

Intangible assets, net

 

359

 

 

 

487

 

Goodwill

 

3,685

 

 

 

3,685

 

TOTAL ASSETS

$

21,357

 

 

$

13,877

 

 

 

 

 

 

 

 

 

LIABILITIES & STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

 

 

  Accounts payable

$

1,315

 

 

$

1,333

 

  Accrued payroll and benefits

 

1,998

 

 

 

1,994

 

  Related-party notes payable

 

-

 

 

 

1,000

 

  Other accrued liabilities

 

411

 

 

 

416

 

  Deferred revenue

 

261

 

 

 

73

 

   Total current liabilities

 

3,985

 

 

 

4,816

 

 

 

 

 

 

 

 

 

Related-party notes payable, net

 

1,200

 

 

 

1,200

 

Notes payable, net

 

1,689

 

 

 

1,558

 

Warrant liability

 

9,004

 

 

 

-

 

Deferred rent

 

846

 

 

 

970

 

Other long-term liabilities

 

649

 

 

 

766

 

   Total non-current liabilities

 

13,388

 

 

 

4,494

 

 

 

 

 

 

 

 

 

Stockholders' Equity:

 

 

 

 

 

 

 

  Preferred stock

 

-

 

 

 

-

 

  Common stock

 

25

 

 

 

14

 

  Additional paid in capital

 

241,790

 

 

 

237,486

 

  Accumulated comprehensive deficit

 

(237,831

)

 

 

(232,933

)

   Total stockholders' equity

 

3,984

 

 

 

4,567

 

TOTAL LIABILITIES & STOCKHOLDERS' EQUITY

$

21,357

 

 

$

13,877

 

 

 

 

 

 

 

 

 

 

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