Last10K.com

Smith Micro Software, Inc. (SMSI) SEC Filing 8-K Material Event for the period ending Wednesday, November 10, 2021

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 2021 Financial Results

 

 

PITTSBURGH, PA, November 10, 2021 – Smith Micro Software, Inc. (NASDAQ: SMSI) (“Smith Micro” or the “Company”) today reported financial results for its third quarter ended September 30, 2021.

“I am pleased with the important milestones the Company achieved since we last reported earnings,” said William W. Smith, Jr., President and CEO of Smith Micro Software. “We made significant progress with all three of our U.S.-based Tier 1 carrier customers, including finalizing the commercial agreement for one carrier’s next-generation family safety service, which will be powered by our SafePath® 7 platform.  We are now strategically positioned to offer our market-leading family safety platform to the majority of U.S. mobile subscribers for the foreseeable future.

“Consumer demand for digital lifestyle services continues to grow, the total addressable market for our core product line is massive, and our working relationships with our major customers have never been more productive,” Smith continued. “The next chapter of the Smith Micro growth story is just beginning.”

Third Quarter 2021 Financial Results

Smith Micro reported revenue of $16.4 million for the third quarter ended September 30, 2021, compared to $12.6 million reported in the third quarter ended September 30, 2020.

Third quarter 2021 gross profit was $12.8 million compared to $11.3 million reported in the third quarter of 2020.

Gross profit as a percentage of revenue was 78 percent for the third quarter of 2021 compared to 90 percent for the third quarter of 2020.

 


Smith Micro Software Third Quarter 2021 Financial Results

Page 2

 

Generally accepted accounting principles in the United States (“GAAP”) net loss for the third quarter of 2021 was $18.6 million, or $0.34 loss per share, compared to GAAP net income of $161 thousand, or break even on a diluted earnings per share basis, for the third quarter of 2020.

Non-GAAP net loss (which excludes stock-based compensation, amortization of intangibles, CFO transition costs, acquisition costs including changes in fair value of contingent consideration, and costs related to the acquisition of certain non-development intellectual property) for the third quarter of 2021 was $258 thousand, or break even on an earnings per share basis, compared to non-GAAP net income of $1.8 million, or $0.04 diluted earnings per share, for the third quarter of 2020.

Third Quarter Year-to-Date 2021 Financial Results

Smith Micro reported revenue of $43.7 million for the nine months ended September 30, 2021, compared to $38.9 million reported in the nine months ended September 30, 2020.

Gross profit for the nine months ended September 30, 2021 and 2020 was $35.1 million.

Gross profit as a percentage of revenue was 80 percent for the nine months ended September 30, 2021 compared to 90 percent for the nine months ended September 30, 2020.

GAAP net loss for the nine months ended September 30, 2021 was $27.0 million, or $0.54 loss per share, compared to GAAP net income of $3.6 million, or $0.08 diluted earnings per share, for the same period in 2020.

Non-GAAP net income (which excludes stock-based compensation, amortization of intangibles, CFO transition costs, acquisition costs including changes in fair value of contingent consideration, and costs related to the acquisition of certain non-development intellectual property) for the nine months ended September 30, 2021 was $139 thousand, or break even on an earnings per share basis, compared to non-GAAP net income of $9.0 million, or $0.21 diluted earnings per share, for the nine months ended September 30, 2020.

Total cash and cash equivalents as of September 30, 2021 were $32.4 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 free cash flow, and 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 has

 


Smith Micro Software Third Quarter 2021 Financial Results

Page 3

 

therefore excluded the following items from GAAP earnings calculations: stock-based compensation, amortization of intangibles, CFO transition costs, acquisition costs including changes in fair value of contingent consideration, and costs related to the acquisition of certain non-development intellectual property. 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 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, November 10, 2021 at 4:30 p.m. ET, to discuss the Company’s third quarter 2021 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. 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 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 Third Quarter 2021 Financial Results

Page 4

 

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 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 customer concentration, given that the majority of our sales depend on a few large customer relationships, the impact of the COVID-19 pandemic on our business and financial results, delays in adoption of our products and services by our customers and their end users, 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, 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 Third Quarter 2021 Financial Results

Page 5

 

 

Smith Micro Software, Inc.

 

 

 

 

 

 

 

Consolidated Balance Sheets

 

 

 

 

 

 

 

(in thousands)

 

 

 

 

 

 

 

 

unaudited

 

 

audited

 

 

September 30,

 

 

December 31,

 

 

2021

 

 

2020

 

ASSETS

 

 

 

 

 

 

 

Current Assets:

 

 

 

 

 

 

 

Cash & cash equivalents

$

32,372

 

 

$

25,754

 

Accounts receivable, net

 

12,616

 

 

 

12,347

 

Prepaid and other assets

 

1,926

 

 

 

1,189

 

  Total current assets

 

46,914

 

 

 

39,290

 

Equipment & improvements, net

 

3,212

 

 

 

2,170

 

Right-of-use assets

 

6,051

 

 

 

5,785

 

Other assets

 

700

 

 

 

694

 

Intangible assets, net

 

38,240

 

 

 

12,698

 

Goodwill

 

39,591

 

 

 

12,266

 

TOTAL ASSETS

$

134,708

 

 

$

72,903

 

 

 

 

 

 

 

 

 

LIABILITIES & STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

 

 

  Accounts payable

$

4,326

 

 

$

2,282

 

  Accrued payroll and benefits

 

3,956

 

 

 

2,867

 

  Current operating lease liabilities

 

1,440

 

 

 

1,433

 

  Other accrued liabilities

 

14,588

 

 

 

216

 

  Deferred revenue

 

701

 

 

 

1,572

 

   Total current liabilities

 

25,011

 

 

 

8,370

 

 

 

 

 

 

 

 

 

Operating lease liabilities

 

4,860

 

 

 

4,805

 

Deferred rent

 

892

 

 

 

887

 

Deferred tax liability, net

 

59

 

 

 

59

 

Other long-term liabilities

 

66

 

 

 

66

 

   Total non-current liabilities

 

5,877

 

 

 

5,817

 

 

 

 

 

 

 

 

 

Stockholders' Equity:

 

 

 

 

 

 

 

  Common stock

 

55

 

 

 

41

 

  Additional paid in capital

 

352,030

 

 

 

279,905

 

  Accumulated comprehensive deficit

 

(248,265

)

 

 

(221,230

)

   Total stockholders' equity

 

103,820

 

 

 

58,716

 

TOTAL LIABILITIES & STOCKHOLDERS' EQUITY

$

134,708

 

 

$

72,903

 

 

 

 

 

 

 

 

 

 

 


Smith Micro Software Third Quarter 2021 Financial Results

Page 6

 

 

Smith Micro Software, Inc.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated Statements of Operations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(in thousands, except per share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

unaudited

 

 

unaudited

 

 

For the Three Months

 

 

For the Nine Months

 

 

Ended September 30,

 

 

Ended September 30,

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Revenues

$

16,443

 

 

$

12,629

 

 

$

43,743

 

 

$

38,883

 

Cost of revenues

 

3,692

 

 

 

1,326

 

 

 

8,595

 

 

 

3,767

 

Gross profit

 

12,751

 

 

 

11,303

 

 

 

35,148

 

 

 

35,116

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling and marketing

 

5,046

 

 

 

2,655

 

 

 

14,131

 

 

 

8,055

 

Research and development

 

8,159

 

 

 

5,455

 

 

 

21,315

 

 

 

13,787

 

General and administrative

 

5,143

 

 

 

2,997

 

 

 

13,746

 

 

 

9,741

 

Change in fair value of contingent consideration

 

12,864

 

 

 

 

 

 

12,864

 

 

 

 

Total operating expenses

 

31,212

 

 

 

11,107

 

 

 

62,056

 

 

 

31,583

 

Operating income (loss)

 

(18,461

)

 

 

196

 

 

 

(26,908

)

 

 

3,533

 

Non-operating income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income, net

 

1

 

 

 

7

 

 

 

25

 

 

 

94

 

Other income (expense), net

 

(2

)

 

 

3

 

 

 

7

 

 

 

3

 

Income (loss) before provision for income taxes

 

(18,462

)

 

 

206

 

 

 

(26,876

)

 

 

3,630

 

Income tax expense

 

145

 

 

 

45

 

 

 

159

 

 

 

45

 

Net income (loss)

$

(18,607

)

 

$

161

 

 

$

(27,035

)

 

$

3,585

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings (loss) per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  Basic

$

(0.34

)

 

$

0.00

 

 

$

(0.54

)

 

$

0.09

 

  Diluted

$

(0.34

)

 

$

0.00

 

 

$

(0.54

)

 

$

0.08

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  Basic

 

53,939

 

 

 

41,351

 

 

 

50,147

 

 

 

40,656

 

  Diluted

 

53,939

 

 

 

43,026

 

 

 

50,147

 

 

 

42,577

 

 

 


 


Smith Micro Software Third Quarter 2021 Financial Results

Page 7

 

 

Smith Micro Software, Inc.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated Statements of Cash Flows

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

unaudited

 

 

unaudited

 

 

 

For the Three Months

 

 

For the Nine Months

 

 

 

Ended September 30,

 

 

Ended September 30,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Operating activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

(18,607

)

 

$

161

 

 

$

(27,035

)

 

$

3,585

 

Adjustments to reconcile net income (loss) to net cash

   provided by operating activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

3,391

 

 

 

1,014

 

 

 

8,872

 

 

 

2,676

 

Non-cash lease expense

 

 

201

 

 

 

294

 

 

 

819

 

 

 

805

 

Change in fair value of contingent consideration

 

 

12,864

 

 

 

 

 

 

12,864

 

 

 

 

Provision for doubtful accounts and other adjustments

   to accounts receivable

 

 

 

 

 

(50

)

 

 

(3

)

 

 

(59

)

Provision for excess and obsolete inventory

 

 

 

 

 

 

 

 

(97

)

 

 

 

Stock based compensation

 

 

1,327

 

 

 

811

 

 

 

3,622

 

 

 

2,252

 

Changes in operating accounts:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accounts receivable

 

 

2,311

 

 

 

2,796

 

 

 

5,951

 

 

 

1,159

 

Prepaid expenses and other assets

 

 

26

 

 

 

103

 

 

 

(199

)

 

 

(530

)

Accounts payable and accrued liabilities

 

 

(571

)

 

 

(1,099

)

 

 

(1,648

)

 

 

(1,785

)

Deferred revenue

 

 

(163

)

 

 

(89

)

 

 

(871

)

 

 

173

 

Net cash provided by operating activities

 

 

779

 

 

 

3,941

 

 

 

2,275

 

 

 

8,276

 

Investing activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquisitions, net

 

 

 

 

 

(1,350

)

 

 

(56,865

)

 

 

(13,500

)

Capital expenditures

 

 

(402

)

 

 

(360

)

 

 

(738

)

 

 

(1,212

)

Other investing activities

 

 

5

 

 

 

11

 

 

 

74

 

 

 

(193

)

Net cash used in investing activities

 

 

(397

)

 

 

(1,699

)

 

 

(57,529

)

 

 

(14,905

)

Financing activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Proceeds from common stock offering, net

 

 

 

 

 

 

 

 

59,711

 

 

 

 

Proceeds from exercise of common stock warrants

 

 

2,026

 

 

 

 

 

 

2,066

 

 

 

4,196

 

Other financing activities

 

 

28

 

 

 

16

 

 

 

95

 

 

 

37

 

Net cash provided by financing activities

 

 

2,054

 

 

 

16

 

 

 

61,872

 

 

 

4,233

 

Net increase (decrease) in cash and cash equivalents

 

 

2,436

 

 

 

2,258

 

 

 

6,618

 

 

 

(2,396

)

Cash and cash equivalents, beginning of period

 

 

29,936

 

 

 

23,614

 

 

 

25,754

 

 

 

28,268

 

Cash and cash equivalents, end of period

 

$

32,372

 

 

$

25,872

 

 

$

32,372

 

 

$

25,872

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Free cash flow:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net cash provided by operating activities

 

$

779

 

 

$

3,941

 

 

$

2,275

 

 

$

8,276

 

Capital expenditures

 

 

(402

)

 

 

(360

)

 

 

(738

)

 

 

(1,212

)

Free cash flow (1)

 

$

377

 

 

$

3,581

 

 

$

1,537

 

 

$

7,064

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Free cash flow, which is a non-GAAP financial measure, is calculated as net cash provided by operating activities reduced by capital expenditures.

 

 


 


Smith Micro Software Third Quarter 2021 Financial Results

Page 8

 

 

Smith Micro Software, Inc.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of GAAP to Non-GAAP Results

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(in thousands, except per share data) - unaudited

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP

 

 

Stock

Compensation

 

 

 

 

Intangibles

Amortization

 

 

 

 

CFO Transition Costs

 

 

 

 

Acquisition Costs

 

 

Non-Development Intellectual Property

 

 

Non-

GAAP

 

Three Months Ended 9/30/2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  Gross profit

$

12,751

 

 

$

-

 

 

 

 

$

-

 

 

 

 

$

-

 

 

 

 

$

-

 

 

$

-

 

 

$

12,751

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  Selling and marketing expenses

 

5,046

 

 

 

(238

)

 

 

 

 

(1,979

)

 

 

 

 

-

 

 

 

 

 

-

 

 

 

-

 

 

 

2,829

 

  Research and development expenses

 

8,159

 

 

 

(270

)

 

 

 

 

(1,036

)

 

 

 

 

-

 

 

 

 

 

-

 

 

 

-

 

 

 

6,853

 

  General and administrative expenses

 

5,143

 

 

 

(819

)

 

 

 

 

-

 

 

 

 

 

(143

)

 

 

 

 

-

 

 

 

(1,000

)

 

 

3,181

 

  Change in fair value of contingent consideration

 

12,864

 

 

 

-

 

 

 

 

 

-

 

 

 

 

 

-

 

 

 

 

 

(12,864

)

 

 

-

 

 

 

-

 

Total operating expenses

 

31,212

 

 

 

(1,327

)

 

 

 

 

(3,015

)

 

 

 

 

(143

)

 

 

 

 

(12,864

)

 

 

(1,000

)

 

 

12,863

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  Loss before provision for income taxes

 

(18,462

)

 

 

1,327

 

 

 

 

 

3,015

 

 

 

 

 

143

 

 

 

 

 

12,864

 

 

 

1,000

 

 

 

(113

)

  Net loss

 

(18,607

)

 

 

1,327

 

 

 

 

 

3,015

 

 

 

 

 

143

 

 

 

 

 

12,864

 

 

 

1,000

 

 

 

(258

)

  Earnings (loss) per share: basic

 

(0.34

)

 

 

0.02

 

 

 

 

 

0.06

 

 

 

 

 

0.00

 

 

 

 

 

0.24

 

 

 

0.02

 

 

 

(0.00

)

  Earnings (loss) per share: diluted

 

(0.34

)

 

 

0.02

 

 

 

 

 

0.06

 

 

 

 

 

0.00

 

 

 

 

 

0.24

 

 

 

0.02

 

 

 

(0.00

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended 9/30/2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  Gross profit

$

11,303

 

 

$

-

 

 

 

 

$

-

 

 

 

 

$

-

 

 

 

 

$

-

 

 

$

-

 

 

$

11,303

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  Selling and marketing expenses

 

2,655

 

 

 

(146

)

 

 

 

 

(475

)

 

 

 

 

-

 

 

 

 

 

-

 

 

 

-

 

 

 

2,034

 

  Research and development expenses

 

5,455

 

 

 

(147

)

 

 

 

 

(366

)

 

 

 

 

-

 

 

 

 

 

-

 

 

 

-

 

 

 

4,942

 

  General and administrative expenses

 

2,997

 

 

 

(518

)

 

 

 

 

-

 

 

 

 

 

-

 

 

 

 

 

-

 

 

 

-

 

 

 

2,479

 

Total operating expenses

 

11,107

 

 

 

(811

)

 

 

 

 

(841

)

 

 

 

 

-

 

 

 

 

 

-

 

 

 

-

 

 

 

9,455

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  Income before provision for income taxes

 

206

 

 

 

811

 

 

 

 

 

841

 

 

 

 

 

-

 

 

 

 

 

-

 

 

 

-

 

 

 

1,858

 

  Net income

 

161

 

 

 

811

 

 

 

 

 

841

 

 

 

 

 

-