Company Achieves Growth and Profitability During the Quarter
ALISO VIEJO, CA, March 13, 2019 – Smith Micro Software, Inc. (NASDAQ: SMSI) today reported financial results for its fourth quarter and fiscal year ended December 31, 2018.
“Our fiscal 2018 was a solid year for the Company, achieving several significant milestones across all facets of the organization,” said William W. Smith Jr., President and CEO of Smith Micro Software. “We entered 2018 with a concentrated focus of returning the company to growth, profitability, and positive cash flow. I am pleased to report that we achieved success on all three fronts, while continuing to streamline our operations and rationalize our product lineup.”
“During the year, we significantly strengthened our balance sheet, paid down substantially all our debt obligations, and strategically acquired a third leg to our wireless product stool with the acquisition of the Smart Retail product suite that we have branded as ViewSpot.”
Mr. Smith concluded, “We enter 2019 with strong momentum, focused on maintaining our technology leadership position, adding new customers, and accelerating growth.”
Fourth Quarter 2018 Financial Results:
Smith Micro Software reported revenue of $7.4 million for the fourth quarter ended December 31, 2018, compared to $5.7 million reported in the fourth quarter ended December 31, 2017.
Fourth quarter 2018 gross profit was $6.4 million, compared to $4.4 million reported in the fourth quarter of 2017.
Gross profit as a percentage of revenue was 87 percent for the fourth quarter of 2018, compared to 76 percent for the fourth quarter of 2017.
Generally accepted accounting principles in the United States (“GAAP”) net income available to common stockholders for the fourth quarter of 2018 was $2.8 million, or $0.10 earnings per share, compared to a GAAP net loss available to common stockholders of $0.2 million, or $0.01 loss per share, for the fourth quarter of 2017.
Non-GAAP net income (which excludes stock-based compensation, amortization of intangibles, debt issuance and discount costs, fair value adjustments, loss on debt extinguishment, restructuring adjustments, acquisitions costs, preferred stock dividends, and a normalized tax expense) for the fourth quarter of 2018 was $0.9 million, or $0.03 earnings per share, compared to a non-GAAP net loss of $0.7 million, or $0.05 loss per share, for the fourth quarter of 2017.
Year Ended 2018 Financial Results:
Smith Micro Software reported revenue of $26.3 million for the year ended December 31, 2018, compared to $23.0 million reported for the year ended December 31, 2017.
Gross profit for the year ended December 31, 2018 was $22.0 million, compared to $17.9 million reported for the same period in 2017.
Gross profit as a percentage of revenue was 84 percent for the year ended December 31, 2018, compared to 78 percent for the year ended December 31, 2017.
GAAP net loss available to common stockholders for the year ended December 31, 2018 was $3.1 million, or $0.14 loss per share, compared to a GAAP net loss available to common stockholders of $6.7 million, or $0.49 loss per share, for the same period in 2017.
Non-GAAP net loss (which excludes stock-based compensation, amortization of intangibles, debt issuance and discount costs, fair value adjustments, loss on debt extinguishment, restructuring adjustments, acquisitions costs, preferred stock dividends, and a normalized tax expense) for the year ended December 31, 2018 was less than $0.1 million, or break-even earnings per share, compared to a non-GAAP net loss of $3.5 million, or $0.26 loss per share, for the year ended December 31, 2017.
Total cash and cash equivalents at December 31, 2018 were $12.2 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 a non-GAAP reconciliation of gross profit, income (loss) before taxes, net income (loss) available to common stockholders, 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 therefore excluded the following items from GAAP earnings calculations: stock-based compensation, amortization of intangibles, debt issuance and discount costs, fair value adjustments, loss on debt extinguishment, restructuring adjustments, acquisitions costs, and preferred stock dividends. Additionally, since we are in a cumulative loss position, a non-GAAP income tax expense (benefit) was computed using a 24 percent and 38 percent tax rate for 2018 and 2017, respectively, 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 table below presents the differences between non-GAAP net income (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-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, March 13, 2019 at 4:30 p.m. EDT, to discuss the Company’s fourth quarter and year ended 2018 financial results. To access the call, dial 1-877-270-2148; international participants can call 1-412-902-6510. 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, performing analytics on any product set, and 2D/3D graphics applications. For more information, visit www.smithmicro.com.
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.
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, including statements related to our financial prospects and other projections of our 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 changes in demand for our products from our customers and their end-users, customer concentration, given that the majority of our sales depend on a few large customer relationships, 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.