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Smith Micro Software, Inc (SMSI) SEC Filing 8-K Material Event for the period ending Wednesday, October 24, 2018

Smith Micro Software Inc

CIK: 948708 Ticker: SMSI

Exhibit 99.1

 

 

 

IR INQUIRIES:

Charles Messman

Investor Relations

949-362-5800

IR@smithmicro.com

 

 

Smith Micro Reports Third Quarter 2018 Financial Results

Company Achieves Non-GAAP Profitability During the Quarter

 

 

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

“I am overall pleased with the quarter that came in line with our expectations,” said William W. Smith Jr., President and CEO of Smith Micro Software. “Revenues increased over the prior year, and we again achieved operating profitability during the quarter.”

“During the first nine months of this fiscal year, we have made tremendous strides throughout the organization, particularly with the product enhancements that we plan to launch in the fourth quarter. We remain focused on optimizing performance and driving revenue on our core product platforms, SafePath® and CommSuite®, so that we can finish the year strong and maximize 2019 opportunities.”

Fiscal Third Quarter 2018 Financial Results:

Smith Micro Software reported revenue of $6.5 million for the third quarter ended September 30, 2018, compared to $5.8 million reported in the third quarter ended September 30, 2017.

Third quarter 2018 gross profit was $5.5 million, compared to $4.6 million reported in the third quarter of 2017.

Gross profit as a percentage of revenue was 85 percent for the third quarter of 2018, compared to 80 percent for the third quarter of 2017.

 


Smith Micro Software Third Quarter 2018 Financial Results

Page 2 of 7

 

Generally accepted accounting principles in the United States (“GAAP”) net loss available to common stockholders for the third quarter of 2018 was $1.0 million, or $0.04 loss per share, compared to a GAAP net loss available to common stockholders of $1.7 million, or $0.12 loss per share, for the third 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, loss on debt extinguishment, preferred stock dividends, and a normalized tax expense) for the third quarter of 2018 was $0.2 million, or $0.01 per share, compared to a non-GAAP net loss of $0.6 million, or $0.04 loss per share, for the third quarter of 2017.

Fiscal September Year-to-Date 2018 Financial Results:

Smith Micro Software reported revenue of $18.9 million for the nine months ended September 30, 2018, compared to $17.2 million reported for the nine months ended September 30, 2017.

Gross profit for the nine months ended September 30, 2018 was $15.5 million, compared to $13.5 million reported for the same period in 2017.

Gross profit as a percentage of revenue was 82 percent for the nine months ended September 30, 2018, compared to 78 percent for the nine months ended September 30, 2017.

GAAP net loss available to common stockholders for the nine months ended September 30, 2018 was $5.9 million, or $0.28 loss per share, compared to a GAAP net loss available to common stockholders of $6.5 million, or $0.49 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, loss on debt extinguishment, preferred stock dividends, and a normalized tax benefit) for the nine months ended September 30, 2018 was $1.0 million, or $0.05 loss per share, compared to a non-GAAP net loss of $2.8 million, or $0.21 loss per share, for the nine months ended September 30, 2017.

Total cash and cash equivalents at September 30, 2018 were $8.4 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

 


Smith Micro Software Third Quarter 2018 Financial Results

Page 3 of 7

 

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, October 24, 2018 at 4:30 p.m. EDT, to discuss the Company’s third 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 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. 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 www.smithmicro.com.

 


Smith Micro Software Third 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. Third-party trademarks mentioned are the property of their respective owners.

 


Smith Micro Software Third 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

 

 

Loss on Debt Extinguishment

 

 

Preferred Stock Dividends

 

 

Taxes

 

 

Non-

GAAP

 

Three Months Ended 9/30/18:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  Gross profit

$

5,546

 

 

$

-

 

 

$

-

 

 

$

-

 

 

$

-

 

 

$

-

 

 

$

-

 

 

$

-

 

 

$

5,546

 

  Income (loss) before provision for

    income taxes

 

(976

)

 

 

264

 

 

 

61

 

 

 

66

 

 

 

902

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

317

 

  Net income (loss) available to

     common stockholders

 

(1,026

)

 

 

264

 

 

 

61

 

 

 

66

 

 

 

902

 

 

 

-

 

 

 

43

 

 

 

(69

)

 

 

241

 

  Income (loss) per share: basic and

     diluted

 

(0.04

)

 

 

0.01

 

 

 

0.00

 

 

 

0.00

 

 

 

0.04

 

 

 

-

 

 

 

0.00

 

 

 

(0.00

)

 

 

0.01

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended 9/30/17:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  Gross profit

$

4,645

 

 

$

-

 

 

$

-

 

 

$

-

 

 

$

-

 

 

$

-

 

 

$

-

 

 

$

-

 

 

$

4,645

 

  Loss before provision for

    income taxes

 

(1,664

)

 

 

167

 

 

 

65

 

 

 

133

 

 

 

-

 

 

 

405

 

 

 

-

 

 

 

-

 

 

 

(894

)

  Net loss available to common

     stockholders

 

(1,670

)

 

 

167

 

 

 

65

 

 

 

133

 

 

 

-

 

 

 

405

 

 

 

-

 

 

 

346

 

 

 

(554

)

  Loss per share: basic and

     diluted

 

(0.12

)

 

 

0.01

 

 

 

0.00

 

 

 

0.01

 

 

 

-

 

 

 

0.03

 

 

 

-

 

 

 

0.02

 

 

 

(0.04

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended 9/30/18:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  Gross profit

$

15,529

 

 

$

-

 

 

$

-

 

 

$

-

 

 

$

-

 

 

$

-

 

 

$

-

 

 

$

-

 

 

$

15,529

 

  Loss before provision for

    income taxes

 

(5,511

)

 

 

674

 

 

 

189

 

 

 

197

 

 

 

3,126

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(1,325

)

  Net loss available to common

     stockholders

 

(5,911

)

 

 

674

 

 

 

189

 

 

 

197

 

 

 

3,126

 

 

 

-

 

 

 

370

 

 

 

348

 

 

 

(1,007

)

  Loss per share: basic and

     diluted

 

(0.28

)

 

 

0.03

 

 

 

0.01

 

 

 

0.01

 

 

 

0.15

 

 

 

-

 

 

 

0.02

 

 

 

0.02

 

 

 

(0.05

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended 9/30/17:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  Gross profit

$

13,515

 

 

$

-

 

 

$

-

 

 

$

-

 

 

$

-

 

 

$

-

 

 

$

-

 

 

$

-

 

 

$

13,515

 

  Loss before provision for

    income taxes

 

(6,482

)

 

 

1,001

 

 

 

195

 

 

 

394

 

 

 

-

 

 

 

405

 

 

 

-

 

 

 

-

 

 

 

(4,487

)

  Net loss available to common

     stockholders

 

(6,501

)

 

 

1,001

 

 

 

195

 

 

 

394

 

 

 

-

 

 

 

405

 

 

 

-

 

 

 

1,724

 

 

 

(2,782

)

  Loss per share: basic and

     diluted

 

(0.49

)

 

 

0.08

 

 

 

0.01

 

 

 

0.03

 

 

 

-

 

 

 

0.03

 

 

 

-

 

 

 

0.13

 

 

 

(0.21

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 


Smith Micro Software Third 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 Nine Months

 

 

Ended September 30,

 

 

Ended September 30,

 

 

2018

 

 

2017

 

 

2018

 

 

2017

 

Revenues

$

6,525

 

 

$

5,804

 

 

$

18,933

 

 

$

17,242

 

Cost of revenues

 

979

 

 

 

1,159

 

 

 

3,404

 

 

 

3,727

 

Gross profit

 

5,546

 

 

 

4,645

 

 

 

15,529

 

 

 

13,515

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling and marketing

 

1,311

 

 

 

1,413

 

 

 

4,488

 

 

 

4,667

 

Research and development

 

2,049

 

 

 

2,100

 

 

 

6,499

 

 

 

6,771

 

General and administrative

 

2,048

 

 

 

2,220

 

 

 

6,299

 

 

 

6,648

 

Restructuring expense

 

83

 

 

 

(146

)

 

 

135

 

 

 

568

 

Total operating expenses

 

5,491

 

 

 

5,587

 

 

 

17,421

 

 

 

18,654

 

Operating income (loss)

 

55

 

 

 

(942

)

 

 

(1,892

)

 

 

(5,139

)

Non-operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense, net

 

(128

)

 

 

(315

)

 

 

(445

)

 

 

(928

)

Change in fair value of warrant liability

 

(902

)

 

 

-

 

 

 

(3,126

)

 

 

-

 

Loss on debt extinguishment

 

-

 

 

 

(405

)

 

 

-

 

 

 

(405

)

Other expense, net

 

(1

)

 

 

(2

)

 

 

(48

)

 

 

(10

)

Loss before provision for income taxes

 

(976

)

 

 

(1,664

)

 

 

(5,511

)

 

 

(6,482

)

Provision for income tax expense

 

7

 

 

 

6

 

 

 

30

 

 

 

19

 

Net loss

 

(983

)

 

 

(1,670

)

 

 

(5,541

)

 

 

(6,501

)

Less preferred stock dividends

 

(43

)

 

 

-

 

 

 

(370

)

 

 

-

 

Net loss available to common stockholders

$

(1,026

)

 

$

(1,670

)

 

$

(5,911

)

 

$

(6,501

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  Basic and diluted

$

(0.04

)

 

$

(0.12

)

 

$

(0.28

)

 

$

(0.49

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  Basic and diluted

 

25,020

 

 

 

14,297

 

 

 

20,771

 

 

 

13,221

 

 

 


Smith Micro Software Third Quarter 2018 Financial Results

Page 7 of 7

 

Smith Micro Software, Inc.

Consolidated Balance Sheets

(in thousands)

 

September 30,

 

 

December 31,

 

 

2018

 

 

2017

 

ASSETS

 

 

 

 

 

 

 

Current Assets:

 

 

 

 

 

 

 

Cash & cash equivalents

$

8,387

 

 

$

2,205

 

Accounts receivable, net

 

6,328

 

 

 

5,145

 

Prepaid and other assets

 

745

 

 

 

576

 

  Total current assets

 

15,460

 

 

 

7,926

 

Equipment & improvements, net

 

940

 

 

 

1,229

 

Deferred tax asset, net

 

404

 

 

 

404

 

Other assets

 

140

 

 

 

146

 

Intangible assets, net

 

297

 

 

 

487

 

Goodwill

 

3,685

 

 

 

3,685

 

TOTAL ASSETS

$

20,926

 

 

$

13,877

 

 

 

 

 

 

 

 

 

LIABILITIES & STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

 

 

  Accounts payable

$

1,139

 

 

$

1,333

 

  Accrued payroll and benefits

 

1,843

 

 

 

1,994

 

  Related-party notes payable

 

-

 

 

 

1,000

 

  Other accrued liabilities

 

438

 

 

 

416

 

  Deferred revenue

 

120

 

 

 

73

 

   Total current liabilities

 

3,540

 

 

 

4,816

 

 

 

 

 

 

 

 

 

Related-party notes payable, net

 

1,200

 

 

 

1,200

 

Notes payable, net

 

1,755

 

 

 

1,558

 

Warrant liability

 

9,918

 

 

 

-

 

Deferred rent

 

784

 

 

 

970

 

Other long-term liabilities

 

591

 

 

 

766

 

   Total non-current liabilities

 

14,248

 

 

 

4,494

 

 

 

 

 

 

 

 

 

Stockholders' Equity:

 

 

 

 

 

 

 

  Preferred stock

 

-

 

 

 

-

 

  Common stock

 

25

 

 

 

14

 

  Additional paid in capital

 

241,970

 

 

 

237,486

 

  Accumulated comprehensive deficit

 

(238,857

)

 

 

(232,933

)

   Total stockholders' equity

 

3,138

 

 

 

4,567

 

TOTAL LIABILITIES & STOCKHOLDERS' EQUITY

$

20,926

 

 

$

13,877

 

 

 

 

 

 

 

 

 

 

 

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Smith Micro Software Inc provided additional information to their SEC Filing as exhibits

Ticker: SMSI
CIK: 948708
Form Type: 8-K Corporate News
Accession Number: 0001564590-18-024891
Submitted to the SEC: Wed Oct 24 2018 4:05:19 PM EST
Accepted by the SEC: Wed Oct 24 2018
Period: Wednesday, October 24, 2018
Industry: Prepackaged Software
Events:
  1. Earnings Release
  2. Financial Exhibit

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