Last10K.com

Smith Micro Software, Inc. (SMSI) SEC Filing 8-K Material Event for the period ending Thursday, March 10, 2022

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 Fourth Quarter and Fiscal Year 2021 Financial Results

 

 

PITTSBURGH, PA, March 10, 2022 – Smith Micro Software, Inc. (NASDAQ: SMSI) (“Smith Micro” or the “Company”) today reported financial results for its fourth quarter and fiscal year ended December 31, 2021.

“This past year’s momentum, spurred by the largest acquisition in our history, was truly transformational for Smith Micro, positioning us for success in 2022 and beyond,” said William W. Smith, Jr., President and CEO of Smith Micro Software. “During 2021, we accomplished several key milestones across the entire organization building a stronger foundation for ongoing success. In 2021, we added several Tier 1 carriers to our global digital family safety customer base, expanding our leadership by delivering our Family Digital Lifestyle vision to a large and growing marketplace.

“We have gained valuable experience and learned critical lessons over the past year that will pave the way for a smooth migration of carriers to the SafePath® platform, offering a seamless transition for the consumers using these family safety solutions,” Smith continued. “Our exciting transformation will carry on through 2022 as we continue to strengthen both our market growth and our partnerships with our valuable carrier customers.”

Fourth Quarter 2021 Financial Results

Smith Micro reported revenue of $14.7 million for the fourth quarter ended December 31, 2021, compared to $12.4 million reported in the fourth quarter ended December 31, 2020.

Fourth quarter 2021 gross profit was $10.6 million compared to $11.0 million reported in the fourth quarter of 2020.

 

 

 


Smith Micro Software Fourth Quarter 2021 Financial Results

Page 2

 

 

Gross profit as a percentage of revenue was 72 percent for the fourth quarter of 2021 compared to 89 percent for the fourth quarter of 2020.

Generally accepted accounting principles in the United States (“GAAP”) net loss for the fourth quarter of 2021 was $4.0 million, or $0.07 loss per share, compared to GAAP net income of $0.6 million, or $0.01 diluted earnings per share, for the fourth quarter of 2020.

Non-GAAP net loss (which excludes stock-based compensation, amortization of intangibles, CFO transition costs, gain on sale of software product, and acquisition costs) for the fourth quarter of 2021 was $2.4 million, or $0.04 loss on a per share basis, compared to non-GAAP net income of $1.4 million, or $0.03 diluted earnings per share, for the fourth quarter of 2020.

Fiscal Year 2021 Financial Results

Smith Micro reported revenue of $58.4 million for the year ended December 31, 2021, compared to $51.3 million reported in the year ended December 31, 2020.

Gross profit for the year ended December 31, 2021 was $45.7 million, compared to $46.1 million for the year ended December 31, 2020.

Gross profit as a percentage of revenue was 78 percent for the year ended December 31, 2021 compared to 90 percent for the year ended December 31, 2020.

GAAP net loss for the year ended December 31, 2021 was $31.0 million, or $0.61 loss per share, compared to GAAP net income of $4.2 million, or $0.10 diluted earnings per share, for the same period in 2020.

Non-GAAP net loss (which excludes stock-based compensation, amortization of intangibles, CFO transition costs, acquisition costs which include changes in fair value of contingent consideration, costs related to the acquisition of certain non-development intellectual property, and gain on sale of software product) for the year ended December 31, 2021 was $2.2 million, or $0.04 loss per share, compared to non-GAAP net income of $10.4 million, or $0.24 diluted earnings per share, for the year ended December 31, 2020.

Total cash and cash equivalents as of December 31, 2021 were $16.1 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 and a non-GAAP

 


Smith Micro Software Fourth Quarter 2021 Financial Results

Page 3

 

reconciliation from GAAP gross profit, net (loss) income before taxes, and net (loss) income to the following non-GAAP metrics: non-GAAP net income (loss), and non-GAAP diluted 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 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, costs related to the acquisition of certain non-development intellectual property, and gain on sale of software product. 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, March 10, 2021 at 4:30 p.m. ET, to discuss the Company’s fourth quarter and fiscal 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 Fourth 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 Fourth Quarter 2021 Financial Results

Page 5

 

 

Smith Micro Software, Inc.

 

 

 

 

 

 

 

Consolidated Balance Sheets

 

 

 

 

 

 

 

(in thousands)

 

 

 

 

 

 

 

 

unaudited

 

 

audited

 

 

December 31,

 

 

December 31,

 

 

2021

 

 

2020

 

ASSETS

 

 

 

 

 

 

 

Current Assets:

 

 

 

 

 

 

 

Cash & cash equivalents

$

16,078

 

 

$

25,754

 

Accounts receivable, net

 

10,590

 

 

 

12,347

 

Prepaid and other assets

 

1,988

 

 

 

1,189

 

  Total current assets

 

28,656

 

 

 

39,290

 

Equipment & improvements, net

 

2,698

 

 

 

2,170

 

Right-of-use assets

 

5,710

 

 

 

5,785

 

Other assets

 

620

 

 

 

694

 

Intangible assets, net

 

42,631

 

 

 

12,698

 

Goodwill

 

35,041

 

 

 

12,266

 

TOTAL ASSETS

$

115,356

 

 

$

72,903

 

 

 

 

 

 

 

 

 

LIABILITIES & STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

 

 

  Accounts payable

$

3,301

 

 

$

2,282

 

  Accrued payroll and benefits

 

4,055

 

 

 

2,867

 

  Current operating lease liabilities

 

1,400

 

 

 

1,433

 

  Other accrued liabilities

 

436

 

 

 

216

 

  Deferred revenue

 

176

 

 

 

1,572

 

   Total current liabilities

 

9,368

 

 

 

8,370

 

Operating lease liabilities

 

4,467

 

 

 

4,805

 

Deferred rent and other long-term liabilities

 

844

 

 

 

953

 

Deferred tax liability, net

 

117

 

 

 

59

 

   Total non-current liabilities

 

5,428

 

 

 

5,817

 

Stockholders' Equity:

 

 

 

 

 

 

 

  Common stock

 

54

 

 

 

41

 

  Additional paid in capital

 

352,779

 

 

 

279,905

 

  Accumulated comprehensive deficit

 

(252,273

)

 

 

(221,230

)

   Total stockholders' equity

 

100,560

 

 

 

58,716

 

TOTAL LIABILITIES & STOCKHOLDERS' EQUITY

$

115,356

 

 

$

72,903

 

 

 

 

 

 

 

 

 

 

 


Smith Micro Software Fourth Quarter 2021 Financial Results

Page 6

 

 

Smith Micro Software, Inc.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated Statements of Operations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(in thousands, except per share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

unaudited

 

 

unaudited

 

 

audited

 

 

For the Three Months

 

 

For the Twelve Months

 

 

Ended December 31,

 

 

Ended December 31,

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Revenues

$

14,679

 

 

$

12,416

 

 

$

58,422

 

 

$

51,300

 

Cost of revenues

 

4,103

 

 

 

1,422

 

 

 

12,698

 

 

 

5,190

 

Gross profit

 

10,576

 

 

 

10,994

 

 

 

45,724

 

 

 

46,110

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling and marketing

 

3,153

 

 

 

2,266

 

 

 

11,581

 

 

 

9,096

 

Research and development

 

7,137

 

 

 

4,965

 

 

 

26,197

 

 

 

17,772

 

General and administrative

 

4,174

 

 

 

3,060

 

 

 

17,920

 

 

 

12,801

 

Amortization of intangible assets

 

142

 

 

 

715

 

 

 

8,100

 

 

 

2,920

 

Change in fair value of contingent consideration

 

 

 

 

 

 

 

12,864

 

 

 

 

Total operating expenses

 

14,606

 

 

 

11,006

 

 

 

76,662

 

 

 

42,589

 

Operating (loss) income

 

(4,030

)

 

 

(12

)

 

 

(30,938

)

 

 

3,521

 

Non-operating income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income, net

 

9

 

 

 

2

 

 

 

34

 

 

 

96

 

Gain on sale of software product

 

 

 

 

711

 

 

 

 

 

 

711

 

Other income (expense), net

 

69

 

 

 

(5

)

 

 

76

 

 

 

(3

)

(Loss) income before provision for income taxes

 

(3,952

)

 

 

696

 

 

 

(30,828

)

 

 

4,325

 

Income tax expense

 

56

 

 

 

116

 

 

 

215

 

 

 

160

 

Net (loss) income

$

(4,008

)

 

$

580

 

 

$

(31,043

)

 

$

4,165

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net (loss) earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  Basic

$

(0.07

)

 

$

0.01

 

 

$

(0.61

)

 

$

0.10

 

  Diluted

$

(0.07

)

 

$

0.01

 

 

$

(0.61

)

 

$

0.10

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  Basic

 

54,454

 

 

 

41,262

 

 

 

51,232

 

 

 

40,808

 

  Diluted

 

54,454

 

 

 

43,305

 

 

 

51,232

 

 

 

42,764

 

 

 


 


Smith Micro Software Fourth Quarter 2021 Financial Results

Page 7

 

 

Smith Micro Software, Inc.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated Statements of Cash Flows

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

unaudited

 

 

unaudited

 

 

audited

 

 

 

For the Three Months

 

 

For the Twelve Months

 

 

 

Ended December  30,

 

 

Ended December  30,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Operating activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net (loss) income

 

$

(4,008

)

 

$

580

 

 

$

(31,043

)

 

$

4,165

 

Adjustments to reconcile net (loss) income to net cash

   provided by operating activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

$

466

 

 

$

906

 

 

 

9,338

 

 

 

3,582

 

Non-cash rent expense

 

$

341

 

 

$

305

 

 

 

1,160

 

 

 

1,110

 

Change in fair value of contingent consideration

 

$

 

 

$

 

 

 

12,864

 

 

 

 

Gain on sale of software products

 

$

 

 

$

(711

)

 

 

 

 

 

(711

)

Provision for adjustments to accounts receivable and doubtful accounts

 

$

8

 

 

$

(1

)

 

 

5

 

 

 

(60

)

Provision for excess and obsolete inventory

 

$

 

 

$

 

 

 

(97

)

 

 

 

Gain on disposal of fixed assets

 

$

(14

)

 

$

 

 

 

(14

)

 

 

 

Stock based compensation

 

$

1,226

 

 

$

812

 

 

 

4,848

 

 

 

3,064

 

Deferred income taxes

 

$

58

 

 

$

153

 

 

 

58

 

 

 

153

 

Changes in operating accounts:

 

$

 

 

$

 

 

 

 

 

 

 

 

 

Accounts receivable

 

$

1,987

 

 

$

(2,428

)

 

 

7,938

 

 

 

(1,269

)

Prepaid expenses and other assets

 

$

(69

)

 

$

142

 

 

 

(268

)

 

 

(388

)

Accounts payable and accrued liabilities

 

$

(14,661

)

 

$

(121

)

 

 

(16,309

)

 

 

(1,906

)

Deferred revenue

 

$

(525

)

 

$

11

 

 

 

(1,396

)

 

 

184

 

Net cash (used in) provided by operating activities

 

 

(15,191

)

 

 

(352

)

 

 

(12,916

)

 

 

7,924

 

Investing activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquisitions, net

 

$

 

 

$

 

 

 

(56,865

)

 

 

(13,500

)

Proceeds from sale of software products

 

$

118

 

 

$

367

 

 

 

192

 

 

 

367

 

Capital expenditures

 

$

(92

)

 

$

(111

)

 

 

(830

)

 

 

(1,323

)

Purchase of equity instrument

 

$

 

 

$

(32

)

 

 

 

 

 

(225

)

Net cash used in investing activities

 

 

26

 

 

 

224

 

 

 

(57,503

)

 

 

(14,681

)

Financing activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Proceeds from exercise of common stock warrants

 

$

 

 

$

 

 

 

2,066

 

 

 

4,196

 

Payments related to contingent consideration

 

$

(1,136

)

 

$

 

 

 

(1,136

)

 

 

 

Proceeds from stock sale for employee stock purchase plan

 

$

28

 

 

$

11

 

 

 

65

 

 

 

29

 

Proceeds from exercise of stock options

 

$

(21

)

 

$

(1

)

 

 

37

 

 

 

18

 

Proceeds from common stock offering

 

$

 

 

$

 

 

 

59,711

 

 

 

 

Net cash provided by financing activities

 

 

(1,129

)

 

 

10

 

 

 

60,743

 

 

 

4,243

 

Net (decrease) in cash and cash equivalents

 

 

(16,294

)

 

 

(118

)

 

 

(9,676

)

 

 

(2,514

)

Cash and cash equivalents, beginning of period

 

 

32,372

 

 

 

25,872

 

 

 

25,754

 

 

 

28,268

 

Cash and cash equivalents, end of period

 

$

16,078

 

 

$

25,754

 

 

$

16,078

 

 

$

25,754

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 


Smith Micro Software Fourth 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

 

 

 

 

Gain on Sale of Software Product

 

 

Acquisition Costs

 

 

 

Non-

GAAP

 

Three Months Ended 12/31/2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  Gross profit

$

10,576

 

 

$

-

 

 

 

 

$

-

 

 

 

 

$

-

 

 

 

 

$

-

 

 

$

-

 

 

 

$

10,576

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  Selling and marketing expenses

 

3,153

 

 

 

(239

)

 

 

 

 

-

 

 

 

 

 

-

 

 

 

 

 

-

 

 

 

-

 

 

 

 

2,914

 

  Research and development

     expenses

 

7,137

 

 

 

(260

)

 

 

 

 

-

 

 

 

 

 

-

 

 

 

 

 

-

 

 

 

-

 

 

 

 

6,877

 

  General and administrative

     expenses

 

4,174

 

 

 

(727

)

 

 

 

 

-

 

 

 

 

 

(179

)

 

 

 

 

-

 

 

 

(81

)

 

 

 

3,187

 

  Amortization of intangible assets

 

142

 

 

 

-

 

 

 

 

 

(142

)

 

 

 

 

-

 

 

 

 

 

-

 

 

 

-

 

 

 

 

-

 

  Change in fair value of contingent

     consideration

 

-

 

 

 

-

 

 

 

 

 

-

 

 

 

 

 

-

 

 

 

 

 

-

 

 

 

-

 

 

 

 

-

 

Total operating expenses

 

14,606

 

 

 

(1,226

)

 

 

 

 

(142

)

 

 

 

 

(179

)

 

 

 

 

-

 

 

 

(81

)

 

 

 

12,978

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  (Loss) income before provision for

     income taxes

 

(3,952

)

 

 

1,226

 

 

 

 

 

142

 

 

 

 

 

179

 

 

 

 

 

-

 

 

 

81

 

 

 

 

(2,324

)

  Net (loss) income

 

(4,008

)

 

 

1,226

 

 

 

 

 

142

 

 

 

 

 

179

 

 

 

 

 

-

 

 

 

81

 

 

 

 

(2,380

)

  (Loss) earnings per share: basic

 

(0.07

)

 

 

0.02

 

 

 

 

 

0.00

 

 

 

 

 

0.00

 

 

 

 

 

-

 

 

 

0.00

 

 

 

 

(0.04

)

  (Loss) earnings per share: diluted

 

(0.07

)

 

 

0.02

 

 

 

 

 

0.00

 

 

 

 

 

0.00

 

 

 

 

 

-

 

 

 

0.00

 

 

 

 

(0.04

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended 12/31/2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  Gross profit

$

10,994

 

 

$

-

 

 

 

 

$

-

 

 

 

 

$

-

 

 

 

 

$

-

 

 

$

-

 

 

 

$

10,994

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  Selling and marketing expenses

 

2,266

 

 

 

(145

)

 

 

 

 

-

 

 

 

 

 

-

 

 

 

 

 

-

 

 

 

-

 

 

 

 

2,121

 

  Research and development

     expenses

 

4,965

 

 

 

(147

)

 

 

 

 

-

 

 

 

 

 

-

 

 

 

 

 

-

 

 

 

-

 

 

 

 

4,818

 

  General and administrative

     expenses

 

3,060

 

 

 

(520

)

 

 

 

 

-

 

 

 

 

 

-

 

 

 

 

 

-

 

 

 

-

 

 

 

 

2,540

 

  Amortization of intangible assets

 

715

 

 

 

-

 

 

 

 

 

(715

)

 

 

 

 

-

 

 

 

 

 

-

 

 

 

-

 

 

 

 

-

 

Total operating expenses

 

11,006

 

 

 

(812

)

 

 

 

 

(715

)

 

 

 

 

-

 

 

 

 

 

-

 

 

 

-