SOURCE: Smith Micro Software, Inc.

Smith Micro Software, Inc.

November 07, 2013 16:05 ET

Smith Micro Software Reports Third Quarter 2013 Financial Results

Restructure Complete; Expects Improved Financial Performance in Q4

ALISO VIEJO, CA--(Marketwired - Nov 7, 2013) - Smith Micro Software, Inc. (NASDAQ: SMSI), a leading provider of wireless and mobility solutions, today reported financial results for the third quarter ended September 30, 2013.

"The restructuring plan to reduce expenses that we announced last quarter has been completed through the closing and consolidating of certain facilities, and reducing our worldwide headcount by approximately 26 percent, which will help our efforts to return to profitability in the fourth quarter," said William W. Smith, Jr., President and CEO of Smith Micro Software. "The cost of this restructuring plan resulted in a one-time charge to expense of $5.6 million that was recorded in the third fiscal quarter."

"Revenues for the third quarter of 2013 were down sequentially and year over year primarily due to the decline of our legacy connection manager products that are tied to USB modem sales. However, our CommSuite solution for premium visual messaging continued to show strong growth during the quarter and increased 58.5 percent over the same quarter last year and 14.5 percent sequentially over the second quarter of this year." 

"As we look to our fourth quarter, we will benefit from a lower cost structure and we will see revenues improve as we have closed new deals which will bring new revenue to our Q4," concluded Mr. Smith. 

Smith Micro reported revenues of $8.7 million for the third quarter ended September 30, 2013, compared to $11.0 million reported in the third quarter ended September 30, 2012.

Third quarter 2013 gross profit on both a GAAP and non-GAAP basis (which excludes stock compensation) was $6.3 million, compared to $8.9 million reported in the third quarter of 2012.

GAAP gross profit as a percentage of revenue was 71.5 percent for the third quarter of 2013, compared to 80.7 percent for the third quarter of 2012. Non-GAAP gross profit as a percentage of revenue was 71.6 percent for the third quarter of 2013, compared to 80.8 percent for the same quarter last year. The gross profit decrease was a result of the lower revenues and product mix. 

GAAP net loss for the third quarter of 2013 was $13.0 million, or $0.35 loss per diluted share, compared to a GAAP net loss of $4.8 million, or $0.13 loss per diluted share, for the third quarter of 2012. 

Non-GAAP net loss (which excludes stock compensation and non-cash tax expense) for the third quarter of 2013 was $7.5 million, or $0.20 loss per diluted share, compared to a non-GAAP net loss of $2.4 million, or $0.07 loss per diluted share, for the third quarter of 2012. Excluding the restructuring charge, the non-GAAP net loss for the third quarter of 2013 would have been $4.0 million, or $0.11 loss per diluted share.

For the nine months ended September 30, 2013, the Company reported revenues of $30.8 million, compared to $31.3 million for the nine months ended September 30, 2012.

Gross profit on both a GAAP and non-GAAP basis (which excludes stock compensation) was $23.5 million for the nine months ended September 30, 2013, compared to $25.2 million for the nine months ended September 30, 2012.

GAAP gross profit as a percentage of revenues was 76.2 percent for the nine months ended September 30, 2013, compared to 80.5 percent for the same period last year. Non-GAAP gross profit as a percentage of revenues was 76.3 percent for the nine months ended September 30, 2013, compared to 80.5 percent for same period last year. 

GAAP net loss for the nine months ended September 30, 2013 was $26.5 million, or a loss of $0.72 per diluted share, compared to a GAAP net loss for the nine months ended September 30, 2012 of $21.3 million, or $0.59 loss per diluted share.

Non-GAAP net loss for the nine months ended September 30, 2013 was $14.4 million, or a loss of $0.39 per diluted share, compared to a non-GAAP net loss of $11.2 million, or $0.31 loss per diluted share, for the nine months ended September 30, 2012. Excluding the restructuring charge, the non-GAAP net loss for the nine months ended September 30, 2013 would have been $10.9 million, or $0.30 loss per diluted share.

Total cash and cash equivalents and short-term investments at September 30, 2013 were $18.1 million.

The Company uses a non-GAAP reconciliation of gross profit, loss before taxes, net loss and loss per share in the presentation of financial results in this press release. Management believes that this presentation may be more meaningful in analyzing our income generation, since stock-based compensation and non-cash tax expense are excluded from the non-GAAP earnings calculation. Since we are in a loss position, the non-GAAP income tax benefit for the period ended September 30, 2013 was computed by using a tax rate of 38 percent 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 tables below present 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 to discuss the Company's third quarter 2013 results at 4:30 p.m. ET, November 7, 2013. To access the call, dial (877) 941-1465 and when prompted provide the pass code "SMSI." 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 Software provides solutions that simplify, secure and enhance the mobile experience. Our portfolio includes a wide range of applications that manage broadband connectivity, data traffic, devices, voice and video communications over wireless networks. With 30 years of experience developing world-class client and server software, Smith Micro helps the leading mobile network operators, device manufacturers and enterprises increase efficiency and capitalize on the growth of mobile-connected consumers and workforces. For more information, visit smithmicro.com. (NASDAQ: SMSI)

Safe Harbor Statement:
This release contains forward-looking statements that involve risks and uncertainties, including without limitation, forward-looking statements relating to the Company's financial prospects and other projections of its performance, the existence of new market opportunities and interest in the Company's products and solutions, and the Company's ability to increase its revenue and regain profitability by capitalizing on these new market opportunities and interest and introducing new products and solutions. Among the important factors that could cause actual results to differ materially from those expressed or implied in the forward-looking statements are changes in demand for the Company's products from its customers and their end-users, customer concentration given that the majority of our sales depend on a few large client relationships, including Sprint, new and changing technologies, customer acceptance and timing of deployment of those technologies, new and continuing adverse economic conditions, and the Company's ability to compete effectively with other software companies. These and other factors discussed in the Company's filings with the Securities and Exchange Commission, including its 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 regarding future events and business performance as of the date of this release, and the Company does 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 companies.

   
Smith Micro Software, Inc.  
Reconciliation of GAAP to Non-GAAP Results  
(in thousands, except per share amounts) -
unaudited
 
                     
   
GAAP
    Stock
Compensation
 
Taxes
  Non-
GAAP
 
Three Months Ended 9/30/13:                            
  Gross profit   $ 6,254     $ 6   $ -   $ 6,260  
  Loss before provision for income taxes   $ (12,973 )   $ 872   $ -   $ (12,101 )
  Net loss   $ (13,049 )   $ 872   $ 4,674   $ (7,503 )
  EPS-diluted   $ (0.35 )   $ 0.02   $ 0.13   $ (0.20 )
                             
Three Months Ended 9/30/12:                            
  Gross profit   $ 8,892     $ 3   $ -   $ 8,895  
  Loss before provision for income taxes   $ (4,767 )   $ 980   $ -   $ (3,787 )
  Net loss   $ (4,813 )   $ 980   $ 1,474   $ (2,359 )
  EPS-diluted   $ (0.13 )   $ 0.02   $ 0.04   $ (0.07 )
                             
Nine Months Ended 9/30/13:                            
  Gross profit   $ 23,495     $ 17   $ -   $ 23,512  
  Loss before provision for income taxes   $ (26,302 )   $ 3,046   $ -   $ (23,256 )
  Net loss   $ (26,451 )   $ 3,046   $ 8,985   $ (14,420 )
  EPS-diluted   $ (0.72 )   $ 0.08   $ 0.25   $ (0.39 )
                             
Nine Months Ended 9/30/12:                            
  Gross profit   $ 25,186     $ 9   $ -   $ 25,195  
  Loss before provision for income taxes   $ (21,152 )   $ 3,198   $ -   $ (17,954 )
  Net loss   $ (21,320 )   $ 3,198   $ 6,937   $ (11,185 )
  EPS-diluted   $ (0.59 )   $ 0.09   $ 0.19   $ (0.31 )
                               
                               
   
Smith Micro Software, Inc.  
Statements of Comprehensive Loss for the Three Months and Nine Months Ended September 30, 2013 and 2012  
(in thousands, except per share amounts) - unaudited  
                         
    For the Three Months     For the Nine Months  
    Ended September 30,     Ended September 30,  
    2013     2012     2013     2012  
Revenues   $ 8,746     $ 11,012     $ 30,832     $ 31,297  
Cost of revenues     2,492       2,120       7,337       6,111  
Gross profit     6,254       8,892       23,495       25,186  
                                 
Operating expenses:                                
  Selling and marketing     3,705       4,062       12,655       12,608  
  Research and development     5,355       5,845       17,191       19,122  
  General and administrative     4,572       5,011       14,376       15,664  
  Restructuring expense (income)     5,602       (19 )     5,602       238  
Total operating expenses     19,234       14,899       49,824       47,632  
Operating loss     (12,980 )     (6,007 )     (26,329 )     (22,446 )
Non-operating income:                                
  Change in fair value of contingent liability     -       1,210       -       1,210  
  Interest and other income, net     7       30       27       84  
Loss before provision for income taxes     (12,973 )     (4,767 )     (26,302 )     (21,152 )
Provision for income tax expense     76       46       149       168  
Net loss   $ (13,049 )   $ (4,813 )   $ (26,451 )   $ (21,320 )
                                 
Other comprehensive income, before tax:                                
  Unrealized holding gains on available-for-sale securities     3       8       4       45  
  Income tax expense related to items of other comprehensive income     -       -       -       6  
  Other comprehensive income, net of tax     3       8       4       39  
Comprehensive loss   $ (13,046 )   $ (4,805 )   $ (26,447 )   $ (21,281 )
                                 
Loss per share:                                
  Basic and diluted   $ (0.35 )   $ (0.13 )   $ (0.72 )   $ (0.59 )
                                 
Weighted average shares outstanding:                                
  Basic and diluted     37,036       35,879       36,967       35,838  
                                 
                                 
             
Smith Micro Software, Inc.  
Consolidated Balance Sheets  
(in thousands)  
    September 30,
2013
    December 31,
2012
 
    (unaudited)     (audited)  
ASSETS                
Current Assets:                
Cash & cash equivalents   $ 10,863     $ 18,873  
Short term investments     7,196       13,328  
Accounts receivable, net     7,015       8,953  
Income tax receivable     680       681  
Inventory, net     162       176  
Prepaid and other assets     1,196       903  
Deferred tax asset     89       89  
  Total current assets     27,201       43,003  
Equipment & improvements, net     7,910       11,211  
Other assets     223       181  
TOTAL ASSETS   $ 35,334     $ 54,395  
                 
LIABILITIES & STOCKHOLDERS' EQUITY                
Current Liabilities:                
  Accounts payable   $ 2,396     $ 1,978  
  Accrued liabilities     9,850       4,829  
  Deferred revenue     2,029       1,436  
  Total current liabilities     14,275       8,243  
                 
Long-term liabilities     2,051       3,399  
Deferred tax liability     91       91  
  Total non-current liabilities     2,142       3,490  
                 
Stockholders' Equity:                
  Common stock     37       36  
  Additional paid in capital     213,866       211,165  
  Accumulated comprehensive deficit     (194,986 )     (168,539 )
  Total stockholders' equity     18,917       42,662  
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY   $ 35,334     $ 54,395  
                 
                 

Contact Information

  • AT THE COMPANY:
    Suzanne Runald
    Public Relations
    949-362-5800
    Email Contact

    IR INQUIRIES:
    Todd Kehrli or Jim Byers
    MKR Group, Inc.
    323-468-2300
    Email Contact