Smith Micro Software, Inc. (Nasdaq:
SMSI) (“Smith Micro” or the “Company”) today reported
financial results for its third quarter ended September 30,
2024.
“We believe that the actions that we’ve taken to rationalize our
costs over the past several months, coupled with the expansion of
our revenue opportunities, have positioned us for a return to
profitability on a non-GAAP basis and free cash flow during 2025,”
said William W. Smith Jr., president, chief executive officer, and
chairman of the board of Smith Micro. “With the pending launch of
our Tier One carrier in Europe, new product innovations that align
with our customers' strengths, and new prospects on the horizon, we
are confident that the Company is positioned for growth over the
coming quarters.”
“We had targeted eliminating at least $2 million in quarterly
expenses from our cost structure by the fourth quarter of this
year. As compared with the first quarter of this year, we have
already achieved $1.9 million in cost reductions during the third
quarter and we have yet to see the full benefit of the actions that
we have taken,” Smith continued. “I’m very confident in our outlook
for 2025, as evidenced by the recent $3 million investment I made
into the Company last month as part of our combined $6.9 million
capital raise.”
Third Quarter 2024 Financial Results
Smith Micro reported revenue of $4.6 million for the quarter
ended September 30, 2024, compared to $11.0 million reported in the
quarter ended September 30, 2023.
Gross profit for the quarter ended September 30, 2024 was $3.3
million, compared to $8.5 million for the quarter ended September
30, 2023.
Gross profit as a percentage of revenue was 71.6 percent for the
quarter ended September 30, 2024, compared to 77.0 percent for the
quarter ended September 30, 2023.
GAAP net loss for the quarter ended September 30, 2024 was $6.4
million, or $0.54 loss per share, compared to GAAP net loss of $5.1
million, or $0.61 loss per share, for the quarter ended September
30, 2023.
Non-GAAP net loss for the quarter ended September 30, 2024 was
$3.6 million, or $0.30 loss per share, compared to non-GAAP net
gain of $0.6 million, or $0.08 earnings per share, for the quarter
ended September 30, 2023. Non-GAAP net loss excludes the items
noted below under "Non-GAAP Measures."
All share and per share amounts for common stock herein have
been retroactively adjusted for all periods presented to give
effect to the one-for-eight reverse stock split of our common
stock, which became effective April 10, 2024 at 11:59 pm Eastern
time.
Third Quarter Year-to-Date 2024 Financial Results
Smith Micro reported revenue of $15.6 million for the nine
months ended September 30, 2024, compared to $32.3 million reported
in the nine months ended September 30, 2023.
Gross profit for the nine months ended September 30, 2024 was
$10.7 million compared to $23.9 million reported for the same
period in 2023.
Gross profit as a percentage of revenue was 68.5 percent for the
nine months ended September 30, 2024 compared to 74.0 percent for
the nine months ended September 30, 2023.
GAAP net loss for the nine months ended September 30, 2024 was
$44.3 million, or $4.17 loss per share, compared to GAAP net loss
of $17.7 million, or $2.27 loss per share, for the nine months
ended September 30, 2023.
Non-GAAP net loss for the nine months ended September 30, 2024
was $11.8 million, or $1.11 loss per share, compared to non-GAAP
net loss of $3.6 million, or $0.46 loss per share, for the nine
months ended September 30, 2023. Non-GAAP net loss excludes the
items noted below under "Non-GAAP Measures."
Total cash and cash equivalents as of September 30, 2024 were
$1.5 million.
Non-GAAP Measures
To supplement our financial information presented in accordance
with GAAP, the Company considers, and has included in this press
release, the following non-GAAP financial measures and a non-GAAP
reconciliation from the equivalent GAAP metric: non-GAAP net (loss)
income, non-GAAP gross profit, and non-GAAP basic and diluted
(loss) earnings per share in the presentation of financial results
in this press release. Management believes this non-GAAP
presentation may be more meaningful in analyzing the Company's
income generation and has therefore excluded the following items
from GAAP earnings calculations: stock compensation, intangibles
amortization, depreciation, fair value adjustments, amortization of
debt issuance costs and discount, goodwill impairment, personnel
severance and reorganization activities, and adjustment for
non-recurring items. 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
the Company's ongoing operational performance. The table below
presents the differences between non-GAAP net 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-GAAP 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 13, 2024, at 4:30 p.m. ET, to discuss the Company’s third
quarter 2024 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. An internet webcast is available at
https://event.choruscall.com/mediaframe/webcast.html?webcastid=wslPnih5.
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 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.
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, goals and other projections of
our outlook or performance our cost reduction plans and other
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 and the loss of any of them could materially and
negatively affect our business, delay or failure of our customers
to accept and deploy our products and services or new or upgraded
versions thereof, delay or failure of our customers’ end users to
adopt our products and services or new or upgraded versions
thereof, our reliance on third party operating systems and other
technology for the proper operation and delivery of our solutions
and any barriers to our use of such third party technology, our
reliance on third party application stores for the distribution of
our software applications to users and any barriers to such
distribution, including any delay or failure of such third party to
approve new versions of our applications or their implementation
and/or application of policies that may be harmful to our business,
unanticipated delays or obstacles in our development and release
cycles, the degree to which competing business needs may affect our
allocation of resources to planned projects, the risk of harm to
our business resulting from our recent and any future cost
reduction efforts, our ability to attract and retain key technical
personnel that are essential to our product development and support
efforts, 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,
hardware and/or platforms that we use or operate with, our ability
to effectively integrate, market and sell acquired product lines,
new and changing technologies and 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, Inc.
Consolidated Balance Sheets
(in thousands except share and par value
data)
September 30,
2024
December 31,
2023
(unaudited)
(audited)
Assets
Current assets:
Cash and cash equivalents
$
1,509
$
7,125
Accounts receivable, net of related
allowances of $3 and $3 at 2024 and 2023, respectively
3,406
7,912
Prepaid expenses and other current
assets
1,505
1,843
Total current assets
6,420
16,880
Equipment and improvements, net
615
883
Right-of-use assets
2,657
2,759
Other assets
504
482
Intangible assets, net
24,931
29,532
Goodwill
11,052
35,041
Total assets
$
46,179
$
85,577
Liabilities and Stockholders'
Equity
Current liabilities:
Accounts payable
$
2,050
$
2,522
Accrued payroll and benefits
2,121
2,500
Current operating lease liabilities
1,228
1,483
Other current liabilities
1,011
1,137
Total current liabilities
6,410
7,642
Non-current liabilities:
Warrant liabilities
149
597
Operating lease liabilities
1,706
1,780
Deferred tax liabilities, net
168
168
Total non-current liabilities
2,023
2,545
Commitments and contingencies
Stockholders' equity:
Common stock, par value $0.001 per share;
100,000,000 shares authorized; 11,857,234 and 9,347,979 shares
issued and outstanding 2024 and 2023, respectively
12
9
Additional paid-in capital
387,988
381,329
Accumulated comprehensive deficit
(350,254
)
(305,948
)
Total stockholders’ equity
37,746
75,390
Total liabilities and stockholders'
equity
$
46,179
$
85,577
Smith Micro Software, Inc.
Consolidated Statements of
Operations
(in thousands except share data)
For the Three Months Ended
September 30,
For the Nine Months Ended
September 30,
2024
2023
2024
2023
(unaudited)
(unaudited)
(unaudited)
(unaudited)
Revenues
$
4,648
$
11,001
$
15,585
$
32,269
Cost of revenues (including depreciation
of $3, $12, $14, and $40 in the three and nine months ended
September 30, 2024 and 2023, respectively)
1,321
2,528
4,915
8,400
Gross profit
3,327
8,473
10,670
23,869
Operating expenses:
Selling and marketing
2,060
2,449
7,202
8,631
Research and development
3,637
3,704
11,328
13,276
General and administrative
2,715
2,934
8,213
9,448
Depreciation and amortization
1,422
1,567
4,872
4,872
Goodwill impairment
—
—
23,989
—
Total operating expenses
9,834
10,654
55,604
36,227
Operating loss
(6,507
)
(2,181
)
(44,934
)
(12,358
)
Other income (expense):
Change in fair value of warrant and
derivative liabilities
221
73
448
3,486
Loss on derecognition of debt
—
(1,583
)
—
(2,985
)
Interest (expense) income, net
(12
)
(1,443
)
89
(5,740
)
Other (expense) income, net
(71
)
15
130
(62
)
Loss before provision for income taxes
(6,369
)
(5,119
)
(44,267
)
(17,659
)
Provision for income tax expense
—
14
39
25
Net loss
$
(6,369
)
$
(5,133
)
$
(44,306
)
$
(17,684
)
Loss per share:
Basic and diluted
$
(0.54
)
$
(0.61
)
$
(4.17
)
$
(2.27
)
Weighted average shares outstanding:
Basic and diluted
11,832
8,419
10,626
7,787
Smith Micro Software, Inc.
Consolidated Statements of Cash
Flows
(in thousands)
For the Nine Months Ended
September 30,
2024
2023
(unaudited)
(unaudited)
Operating activities:
Net loss
$
(44,306
)
$
(17,684
)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization
4,886
4,912
Goodwill impairment charge
23,989
—
Non-cash lease expense
(227
)
(160
)
Change in fair value of warrant and
derivative liabilities
(448
)
(3,486
)
Loss on derecognition of debt
—
2,985
Amortization of debt discount and issuance
costs
—
5,398
Stock based compensation
3,520
3,316
Gain on license of patents, net
(198
)
—
Loss on disposal of assets
—
12
Changes in operating accounts:
Accounts receivable
4,506
208
Prepaid expenses and other assets
315
220
Accounts payable and accrued
liabilities
(1,375
)
(2,224
)
Other liabilities
(30
)
553
Net cash used in operating activities
(9,368
)
(5,950
)
Investing activities:
Capital expenditures, net
(17
)
(5
)
Proceeds from license of patents, net
198
—
Other investing activities, net
—
71
Net cash provided by investing
activities
181
66
Financing activities:
Proceeds from Common Stock, Warrants, and
Pre-Funded Warrants Offering, net
3,351
—
Proceeds from financing arrangements
1,044
981
Repayments of financing arrangements
(829
)
(1,156
)
Other financing activities
5
15
Net cash provided by (used in) financing
activities
3,571
(160
)
Net decrease in cash and cash
equivalents
(5,616
)
(6,044
)
Cash and cash equivalents, beginning of
period
7,125
14,026
Cash and cash equivalents, end of
period
$
1,509
$
7,982
Smith Micro Software, Inc.
Reconciliation of GAAP to Non-GAAP
Results
(in thousands, except per share data) -
unaudited
GAAP
Stock Compensation
Intangibles
Amortization
Depreciation
Fair Value Adjustments
Amortization of Debt Issuance
Costs and Discount
Personnel Severance and
Reorganization Activities
Adjustment for Non- Recurring
Items
Non- GAAP
Three Months Ended September 30,
2024
Gross profit
$
3,327
$
—
$
—
$
3
$
—
$
—
$
—
$
—
$
3,330
Selling and marketing
2,060
(315
)
—
—
—
—
(20
)
—
1,725
Research and development
3,637
(318
)
—
—
—
—
(227
)
(6
)
3,086
General and administrative
2,715
(616
)
—
—
—
—
(37
)
(58
)
2,004
Depreciation and amortization
1,422
—
(1,334
)
(88
)
—
—
—
—
—
Total operating expenses
$
9,834
$
(1,249
)
$
(1,334
)
$
(88
)
$
—
$
—
(284
)
(64
)
$
6,815
(Loss) Income before provision for income
taxes
$
(6,369
)
$
1,249
$
1,334
$
91
$
(221
)
$
—
284
64
$
(3,568
)
Net (Loss) Income
$
(6,369
)
$
1,249
$
1,334
$
91
$
(221
)
$
—
284
64
$
(3,568
)
(Loss) earnings per share: basic and
diluted
$
(0.54
)
$
0.11
$
0.11
$
0.01
$
(0.02
)
$
—
0.02
$
0.01
$
(0.30
)
Three Months Ended
September 30, 2023
Gross profit
$
8,473
$
—
$
—
$
12
$
—
$
—
$
—
$
—
$
8,485
Selling and marketing
2,449
(300
)
—
—
—
—
—
—
2,149
Research and development
3,704
(290
)
—
—
—
—
—
—
3,414
General and administrative
2,934
(749
)
—
—
—
—
—
—
2,185
Depreciation and amortization
1,567
—
(1,454
)
(113
)
—
—
—
—
—
Total operating expenses
$
10,654
$
(1,339
)
$
(1,454
)
$
(113
)
$
—
$
—
$
—
$
—
$
7,748
(Loss) Income before provision for income
taxes
$
(5,119
)
$
1,339
$
1,454
$
125
$
1,510
$
1,343
$
—
$
—
$
652
Net (Loss) Income
$
(5,133
)
$
1,339
$
1,454
$
125
$
1,510
$
1,343
$
—
$
—
$
638
(Loss) earnings per share: basic and
diluted
$
(0.61
)
$
0.16
$
0.17
$
0.01
$
0.18
$
0.16
$
—
$
—
$
0.08
Note: (Loss) earnings per share: basic and
diluted - may be impacted by rounding to allow rows to
calculate.
Smith Micro Software, Inc.
Reconciliation of GAAP to Non-GAAP
Results
(in thousands, except per share data) -
unaudited
GAAP
Stock Compensation
Intangibles
Amortization
Depreciation
Fair Value Adjustments
Amortization of Debt Issuance
Costs and Discount
Goodwill Impairment
Personnel Severance and
Reorganization Activities
Adjustment for Non- Recurring
Items
Non- GAAP
Nine Months Ended September 30,
2024
Gross profit
$
10,670
$
—
$
—
$
14
$
—
$
—
$
—
$
11
$
—
$
10,695
Selling and marketing
7,202
(968
)
—
—
—
—
$
—
(174
)
—
6,060
Research and development
11,328
(827
)
—
—
—
—
—
(315
)
(6
)
10,180
General and administrative
8,213
(1,725
)
—
—
—
—
—
(61
)
(230
)
6,197
Depreciation and amortization
4,872
—
(4,601
)
(271
)
—
—
—
—
—
—
Goodwill Impairment
23,989
—
—
—
—
—
(23,989
)
—
—
—
Total operating expenses
55,604
(3,520
)
(4,601
)
(271
)
—
—
(23,989
)
(550
)
(236
)
22,437
(Loss) income before provision for income
taxes
(44,267
)
3,520
4,601
285
(448
)
—
23,989
561
38
(11,721
)
Net (loss) income
(44,306
)
3,520
4,601
285
(448
)
—
23,989
561
38
(11,760
)
(Loss) earnings per share: basic and
diluted
(4.17
)
0.33
0.43
0.03
(0.04
)
—
2.26
0.05
—
(1.11
)
Nine Months Ended
September 30, 2023
Gross profit
$
23,869
$
—
$
—
$
40
$
—
$
—
$
—
$
183
$
—
$
24,092
Selling and marketing
8,631
(653
)
—
—
—
—
—
(93
)
—
7,885
Research and development
13,276
(753
)
—
—
—
—
—
(471
)
—
12,052
General and administrative
9,448
(1,907
)
—
—
—
—
—
(210
)
—
7,331
Depreciation and amortization
4,872
—
(4,419
)
(453
)
—
—
—
—
—
—
Total operating expenses
36,227
(3,313
)
(4,419
)
(453
)
—
—
—
(774
)
—
$
27,268
(Loss) income before provision for income
taxes
(17,659
)
3,313
4,419
493
(501
)
5,397
—
957
—
(3,581
)
Net (loss) income
(17,684
)
3,313
4,419
493
(501
)
5,397
—
957
—
(3,606
)
(Loss) earnings per share: basic and
diluted
(2.27
)
0.43
0.57
0.06
(0.06
)
0.69
—
0.12
—
(0.46
)
Note: (Loss) earnings per share: basic and
diluted - may be impacted by rounding to allow rows to
calculate.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20241113344961/en/
IR INQUIRIES: Charles Messman Investor Relations
949-362-5800 IR@smithmicro.com
Smith Micro Software (NASDAQ:SMSI)
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