Smith Micro Reports Fourth Quarter and Fiscal Year 2019 Financial Results
Total Annual Revenue Grew to $43.3 million, a 65% Increase over Fiscal 2018
Total Fourth Quarter Revenue Grew to $12.3 million, a 67% Increase over Fourth Quarter 2018
PITTSBURGH, PA, March 5, 2020 – 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, 2019.
“The Company’s fiscal 2019 was an extremely positive year and exciting time for us, as we delivered strong revenue growth, profits, and cash flow from operations throughout the year,” said William W. Smith, Jr., President and CEO of Smith Micro. “We begin 2020 with a strong tailwind, a more diversified customer base, and overall enhanced product portfolio for our flagship SafePath platform, as we look to expand our leadership in the value-added services market within the mobile operators space.”
Fourth Quarter 2019 Financial Results
Smith Micro reported revenue of $12.3 million for the fourth quarter ended December 31, 2019, compared to $7.4 million reported in the fourth quarter ended December 31, 2018.
Fourth quarter 2019 gross profit was $11.3 million compared to $6.4 million reported in the fourth quarter of 2018.
Gross profit as a percentage of revenue was 92 percent for the fourth quarter of 2019 compared to 87 percent for the fourth quarter of 2018.
Generally accepted accounting principles in the United States (“GAAP”) net income available to common stockholders for the fourth quarter of 2019 was $3.7 million, or $0.09 diluted earnings per share, compared to a GAAP net income available to common stockholders of $2.8 million, or $0.10 diluted earnings per share, for the fourth quarter of 2018.
Non-GAAP net income (which excludes stock-based compensation, amortization of intangibles, debt issuance and discount costs, fair value adjustments, loss on debt extinguishment, acquisitions costs, preferred stock dividends, and a normalized tax expense) for the fourth quarter of 2019 was $3.3 million, or $0.08 diluted earnings per share, compared to a non-GAAP net income of $939 thousand, or $0.03 diluted earnings per share, for the fourth quarter of 2018.
Fiscal Year 2019 Financial Results
Smith Micro reported revenue of $43.3 million for the year ended December 31, 2019, compared to $26.3 million reported for the year ended December 31, 2018.
Gross profit for the year ended December 31, 2019 was $39.4 million compared to $22.0 million reported for the same period in 2018.
Gross profit as a percentage of revenue was 91 percent for the year ended December 31, 2019 compared to 84 percent for the year ended December 31, 2018.
GAAP net income available to common stockholders for the year ended December 31, 2019 was $10.6 million, or $0.29 diluted earnings per share, compared to a GAAP net loss available to common stockholders of $3.1 million, or $0.14 diluted loss per share, for the same period in 2018.
Non-GAAP net income (which excludes stock-based compensation, amortization of intangibles, debt issuance and discount costs, fair value adjustments, loss on debt extinguishment, transaction gains, acquisition costs, preferred stock dividends, and a normalized tax expense) for the year ended December 31, 2019 was $9.8 million, or $0.26 diluted earnings per share, compared to a non-GAAP net loss of $67 thousand, or $0.00 diluted loss per share, for the year ended December 31, 2018.
Total cash and cash equivalents at December 31, 2019 were $28.3 million. Cash flow for the quarter is primarily a result of free cash flow from operations of $4.3 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, transaction gains, acquisition 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 tax rate for 2019 and 2018 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 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 5, 2020 at 4:30 p.m. EDT, to discuss the Company’s fourth quarter and fiscal year 2019 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.
Forward-Looking StatementsCertain 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 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, 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 fourth 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.