PLEASE NOTE: On November 9, 2022 we issued our earnings release for the three and nine months ended September 30, 2022. Subsequent to the release, and upon further review of the applicable accounting treatment of certain redemption features of our Convertible Notes and Warrants Offering, it was determined that certain balances required adjustment from those set forth in the earnings release. The balances that were adjusted are Convertible notes payable, net (current and long term), Warrant and derivative liabilities, General and administrative expense, Interest expense, and Change in fair value of warrant and derivative liabilities. The net impact of these adjustments is a decrease in the reported net loss for the three and nine months ended September 30, 2022 by $1.5 million, which represented a decrease in the net loss per share (basic and diluted) previously presented in our earnings release of $0.03 per share. We have not amended, and do not intend to amend this earnings release, and all required adjustments are included in the Quarterly Report on Form 10-Q for the three and nine months ended September 30, 2022.
PITTSBURGH, PA, November 9, 2022 – Smith Micro Software, Inc. (NASDAQ: SMSI) (“Smith Micro” or the “Company”) today reported financial results for its third quarter ended September 30, 2022.
“We have been making significant progress on many fronts, not only with our customers, but also with strategic changes that capitalize on synergies from the Avast acquisition, which drove a meaningful sequential reduction in operating costs,” said William W. Smith, Jr, President, CEO and Chairman of the Board of Smith Micro. “After a long development process to migrate our Tier One carrier customers to the SafePath platform, we are finally nearing completion. Once the migration is complete, having all carriers on a feature-enhanced ‘best of both’ platform will ensure a best-in-class Digital Family Lifestyle experience for our carrier partners’ subscribers.
“We remain extremely focused on the very critical task at hand to bring the migrations to a close and turn our focus on building for the future. The next phase of the Company is more exciting and larger than any opportunity I have seen at Smith Micro in our 40-year history,” concluded Mr. Smith.
Smith Micro reported revenue of $11.7 million for the quarter ended September 30, 2022, compared to $16.4 million reported in the quarter ended September 30, 2021.
Gross profit for the quarter ended September 30, 2022 was $8.1 million, compared to $12.8 million for the quarter ended September 30, 2021.
Gross profit as a percentage of revenue was 69 percent for the quarter ended September 30, 2022, compared to 78 percent for the quarter ended September 30, 2021.
GAAP net loss for the quarter ended September 30, 2022 was $7.3 million, or $0.13 loss per share, compared to GAAP net loss of $18.6 million, or $0.34 loss per share, for the same period in 2021.
Non-GAAP net loss for the quarter ended September 30, 2022 was $5.2 million, or $0.09 loss per share, compared to non-GAAP net loss of $0.3 million, or $0.00 loss per share, for the quarter ended September 30, 2021. Non-GAAP net loss excludes the items noted below under “Non-GAAP Measures”.
Third Quarter Year-to-Date 2022 Financial Results
Smith Micro reported revenue of $37.1 for the nine months ended September 30, 2022, compared to $43.7 million reported in the nine months ended September 30, 2021.
Gross profit for the nine months ended September 30, 2022 was $26.2 million compared to $35.1 million reported for the same period in 2021.
Gross profit as a percentage of revenue was 71 percent for the nine months ended September 30, 2022 compared to 80 percent for the nine months ended September 30, 2021.
GAAP net loss for the nine months ended September 30, 2022 was $22.8 million, or $0.41 loss per share, compared to GAAP net loss of $27.0 million, or $0.54 loss per share, for the same period in 2021.
Non-GAAP net loss for the nine months ended September 30, 2022 was $14.5 million, or $0.26 diluted loss per share, compared to non-GAAP net income of $0.1 million, or $0.00 earnings per share, for the nine months ended September 30, 2021. Non-GAAP net loss excludes the items noted below under “Non-GAAP Measures”.
Total cash and cash equivalents as of September 30, 2022 were $19.0 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 and a non-GAAP reconciliation from GAAP gross profit, net (loss) income before taxes, and net (loss) income to the following non-GAAP metrics: non-GAAP net (loss) income, and non-GAAP 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 our income generation and has therefore excluded the following items from GAAP earnings calculations: stock-based compensation, amortization of intangible assets, fair value adjustments, note and stock offering fees, personnel severance and reorganization activities, CFO transition costs, acquisition costs, and non-development intellectual property costs. 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 our ongoing operational performance. The table below presents the differences between non-GAAP net (loss) income and net (loss) income 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.
Smith Micro will hold an investor conference call today, November 9, 2022, at 4:30 p.m. ET, to discuss the Company’s third quarter and year to date 2022 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=5ljkLiMb. In addition, the conference call will be available on the Smith Micro website in the Investor Relations section.
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, the Smith Micro logo and SafePath are registered trademarks or trademarks of Smith Micro Software, Inc. All other trademarks and product names 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 within the meaning of the Private Securities Litigation Reform Act, 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, 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, the impact of the COVID-19 pandemic on our business and financial results, 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 and/or platforms that we use, 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, our ability to compete effectively with other software and technology companies, and the existence and terms of our convertible notes and related agreements, including that they may restrict our ability to obtain additional financing, and adversely affect our business, financial condition and cash flows from operations in the future. 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.