Aliso Viejo, CA, October 29, 2014 – Smith Micro Software, Inc. (NASDAQ:SMSI), a leading provider of wireless and mobility solutions, today reported improved financial results for its third quarter ended September 30, 2014.
“The third quarter was very positive for Smith Micro,” stated William W. Smith Jr., President and CEO of Smith Micro Software. “Revenues for the quarter were $9.4 million, which is up 11 percent sequentially from last quarter and up 8 percent year-over-year. Non-GAAP operating expenses for Q3 improved to $7.8 million, which is $2.0 million lower than Q2 expenses, and resulted in a non-GAAP operating loss of $584,000 for the third quarter (excluding stock-based compensation), compared to a non-GAAP operating loss of $3.8 million for the second quarter. The positive effects of our recent restructuring and our laser focus on operational execution are starting to show in our improved financial performance.
“We are also pleased with our improved cash position. We ended the quarter with $12.7 million in cash and short-term investments. Excluding the $5.3 million net we raised from the sale of our stock in a private placement, our cash increased $1.1 million for the quarter, which is a significant turnaround,” Mr. Smith concluded.
Smith Micro Software reported revenues of $9.4 million for the third quarter ended September 30, 2014, compared to $8.7 million reported in the third quarter ended September 30, 2013.
Third quarter 2014 gross profit on both a GAAP and non-GAAP basis (which excludes stock compensation) was $7.2 million, compared to $6.3 million reported in the third quarter of 2013.
GAAP gross profit as a percentage of revenue was 76.7 percent for the third quarter of 2014, compared to 71.5 percent for the third quarter of 2013. Non-GAAP gross profit as a percentage of revenue was 76.7 percent for the third quarter of 2014, compared to 71.6 percent for the same quarter last year.
GAAP net loss for the third quarter of 2014 was $1.1 million, or $0.03 loss per diluted share, compared to a GAAP net loss of $13.0 million, or $0.35 loss per diluted share, for the third quarter of 2013.
Non-GAAP net loss (which excludes stock-based compensation and non-cash tax expense) for the third quarter of 2014 was $364,000 or $0.01 loss per diluted share, compared to a non-GAAP net loss of $7.5 million, or $0.20 loss per diluted share, for the third quarter of 2013.
For the nine months ended September 30, 2014, the Company reported revenues of $26.4 million, compared to $30.8 million for the nine months ended September 30, 2013.
GAAP and non-GAAP (which excludes stock-based compensation) gross profit was $19.4 million for the nine months ended September 30, 2014, compared to $23.5 million for the nine months ended September 30, 2013.
GAAP gross profit as a percentage of revenues was 73.2 percent for the nine months ended September 30, 2014, compared to 76.2 percent for the same period last year. Non-GAAP gross profit as a percentage of revenues was 73.3 percent for the nine months ended September 30, 2014, compared to 76.3 percent for same period last year.
GAAP net loss for the nine months ended September 30, 2014 was $12.0 million, or a loss of $0.31 per diluted share, compared to a GAAP net loss for the nine months ended September 30, 2013 of $26.5 million, or $0.72 loss per diluted share.
Non-GAAP net loss for the nine months ended September 30, 2014 was $5.4 million, or a loss of $0.14 per diluted share, compared to a non-GAAP net loss of $14.4 million, or $0.39 loss per diluted share, for the nine months ended September 30, 2013.
Total cash and cash equivalents and short-term investments at September 30, 2014 were $12.7 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, 2014 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 2014 results at 4:30 p.m. ET, October 29, 2014. To access the call, dial (888) 299-7209 and when prompted provide the participant pass code 7731893. 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 at www.smithmicro.com.
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 ability to maintain its compliance with the NASDAQ listing requirements, its financial prospects and other projections of its performance, the execution of our recently announced restructuring, our ability to halt the decline of our cash reserves in light of our continued losses, 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 the possibility that we may not maintain our NASDAQ listing (or listing on the Global Select Market of NASDAQ) due to, among other things, a future decline in stockholders equity or failure to maintain a minimum bid price of $1.00 per share, and the potential for disruption and loss of customers and business from the transfer of duties and responsibilities in our recently announced restructuring, the risk that we will continue to incur losses and not regain profitability, the risk that we may need to raise additional capital to fund our operations and such capital may not be available to us at commercially reasonable terms or at all, 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. Third-party trademarks mentioned are the property of their respective owners. The use of the word partner does not imply a partnership relationship between Smith Micro and any other company.
Note: Financial Schedules Attached