Smith Micro Software Reports Second Quarter Financial Results

Smith Micro Software Reports Second Quarter Financial Results 
ALISO VIEJO, CA -- (Marketwired) -- 07/31/13 --  Smith Micro
Software, Inc. (NASDAQ: SMSI), a leading provider of wireless and
mobility solutions, today reported financial results for the second
quarter ended June 30, 2013.  
"Revenues for the second quarter of 2013 were up 3.1 percent versus
the same quarter last year primarily due to our successful launch of
Poser 10 and Poser Pro 2014," said William W. Smith, Jr., President
and CEO of Smith Micro Software. "Second quarter revenues were down
9.6 percent sequentially versus the first quarter due to the
maturation of the initial deployment of our NetWise Director(TM)
solution, delays in the launch of new NetWise and CommSuite
initiatives, and continued softness in our legacy connection manager
business."  
"As a result of our lower revenues, the Board of Directors has
approved a Restructuring Plan that will reduce expenses by closing
and consolidating certain facilities, and reducing our worldwide
headcount by approximately 25-30 percent. We believe the cost savings
from these actions will streamline our organization and put us in a
better position to achieve our goal of returning to profitability by
the end of this year. The cost of this Restructuring Plan will result
in a one-time charge to expense of between $5.0 - $6.8 million to be
recorded in the fiscal third quarter ending September 30, 2013," Mr.
Smith concluded.  
Smith Micro reported revenues of $10.5 million for the second quarter
ended June 30, 2013, compared to $10.2 million reported in the second
quarter ended June 30, 2012. 
Second quarter 2013 gross profit on both a GAAP and non-GAAP basis
(which excludes stock compensation) was $8.1 million compared to $8.4
million reported in the second quarter of 2012. 
GAAP gross profit as a percentage of revenue was 77.1 percent for the
second quarter of 2013 compared to 82.3 percent for the second
quarter of 2012. Non-GAAP gross profit as a percentage of revenue was
77.2 percent for the second quarter of 2013 compared to 82.4 percent
for the same quarter last year.  
GAAP net loss for the second quarter of 2013 was $7.2 million, or
$0.19 loss per diluted share compared to a GAAP net loss of $6.8
million, or $0.19 loss per diluted share for the second quarter of
2012. 
Non-GAAP net loss (which excludes stock compensation and non-cash tax
expense) for the second quarter of 2013 was $3.8 million, or $0.10
loss per diluted share compared to a non-GAAP net loss of $3.6
million, or $0.10 loss per diluted share, for the second quarter of
2012. 
For the six months ended June 30, 2013, the Company reported revenues
of $22.1 million, compared to $20.3 million for the six months ended
June 30, 2012. 
GAAP gross profit was $17.2 million for the six months ended June 30,
2013, compared to $16.3 million for the six months ended June 30,
2012. Non-GAAP gross profit (which excludes stock compensation) was
$17.3 million for the six months ended June 30, 2013, compared to
$16.3 million for the same period last year. 
GAAP gross profit as a percentage of revenues was 78.1 percent for
the six months ended June 30, 2013, compared to 80.3 percent for the
same period last year. Non-GAAP gross profit as a percentage of
revenues was 78.1 percent for the six months ended June 30, 2013
compared to 80.4 percent for same period last year.  
GAAP net loss for the six months ended June 30, 2013 was $13.4
million, or a loss of $0.36 per diluted share, compared to a GAAP net
loss for the six months ended June 30, 2012 of $16.5 million, or
$0.46 loss per diluted share. Non-GAAP net loss for the six months
ended June 30, 2013 was $6.9 million, or a loss of $0.19 per diluted
share, compared to a non-GAAP net loss of $8.8 million, or $0.25 loss
per diluted share, for the six months ended June 30, 2012. 
Total cash and cash equivalents and short-term investments at June
30, 2013 were $23.5 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 June 30, 2013 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 second quarter 2013
results at 4:30 p.m. ET, July 31, 2013. To access the call, dial
(877) 941-1465 and when prompted provide the pass code "SMSI."
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 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
financial prospects and other projections of its performance, 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 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. All other trademarks and
product names are the property of their respective companies. 


 
                                                                            
Smith Micro Software, Inc.                                                  
Reconciliation of GAAP to Non-GAAP Results                                  
(in thousands, except per share amounts) - unaudited                        
                                                                            
                                            Stock                   Non-    
                               GAAP     Compensation    Taxes       GAAP    
                           -----------  ------------ ----------- ---------- 
Three Months Ended                                                          
 6/30/13:                                                                   
--------------------------                                                  
  Gross profit             $     8,083  $          6 $         - $    8,089 
  Loss before provision                                                     
   for income taxes        $    (7,240) $      1,102 $         - $   (6,138)
  Net loss                 $    (7,244) $      1,102 $     2,336 $   (3,806)
  EPS-diluted              $     (0.19) $       0.03 $      0.06 $    (0.10)
                                                                            
Three Months Ended                                                          
 6/30/12:                                                                   
--------------------------                                                  
  Gross profit             $     8,375  $          2 $         - $    8,377 
  Loss before provision                                                     
   for income taxes        $    (6,793) $      1,077 $         - $   (5,716)
  Net loss                 $    (6,825) $      1,077 $     2,187 $   (3,561)
  EPS-diluted              $     (0.19) $       0.03 $      0.06 $    (0.10)
                                                                            
Six Months Ended 6/30/13:                                                   
--------------------------                                                  
  Gross profit             $    17,241  $         11 $         - $   17,252 
  Loss before provision                                                     
   for income taxes        $   (13,329) $      2,174 $         - $  (11,155)
  Net loss                 $   (13,402) $      2,174 $     4,311 $   (6,917)
  EPS-diluted              $     (0.36) $       0.06 $      0.11 $    (0.19)
                                                                            
Six Months Ended 6/30/12:                                                   
--------------------------                                                  
  Gross profit             $    16,294  $          6 $         - $   16,300 
  Loss before provision                                                     
   for income taxes        $   (16,385) $      2,218 $         - $  (14,167)
  Net loss                 $   (16,507) $      2,218 $     5,463 $   (8,826)
  EPS-diluted              $     (0.46) $       0.06 $      0.15 $    (0.25)
                                                                            
                                                                            
Smith Micro Software, Inc.                                                  
Statements of Comprehensive Loss for the Three Months and Six Months Ended  
 June 30, 2013 and 2012                                                     
(in thousands, except per share amounts) - unaudited                        
                                                                            
                           For the Three Months       For the Six Months    
                              Ended June 30,            Ended June 30,      
                             2013         2012         2013         2012    
                         -----------  -----------  -----------  ----------- 
Revenues                 $    10,484  $    10,171  $    22,086  $    20,285 
Cost of revenues               2,401        1,796        4,845        3,991 
                         -----------  -----------  -----------  ----------- 
Gross profit                   8,083        8,375       17,241       16,294 
                                                                            
Operating expenses:                                                         
  Selling and marketing        4,569        3,954        8,950        8,546 
  Research and                                                              
   development                 5,900        6,173       11,836       13,277 
  General and                                                               
   administrative              4,862        5,149        9,804       10,653 
  Restructuring expense                                                     
   (income)                        -          (77)           -          257 
                         -----------  -----------  -----------  ----------- 
Total operating expenses      15,331       15,199       30,590       32,733 
                         -----------  -----------  -----------  ----------- 
Operating loss                (7,248)      (6,824)     (13,349)     (16,439)
Interest and other                                                          
 income, net                       8           31           20           54 
                         -----------  -----------  -----------  ----------- 
Loss before provision                                                       
 for income taxes             (7,240)      (6,793)     (13,329)     (16,385)
                         -----------  -----------  -----------  ----------- 
Provision for income tax                                                    
 expense                           4           32           73          122 
                         -----------  -----------  -----------  ----------- 
Net loss                 $    (7,244) $    (6,825) $   (13,402) $   (16,507)
                         ===========  ===========  ===========  =========== 
                                                                            
Other comprehensive                                                         
 income (loss), before                                                      
 tax:                                                                       
  Unrealized holding                                                        
   gains (losses) on                                                        
   available-for-sale                                                       
   securities                    (17)          (3)           1           37 
  Income tax expense             
                                           
   related to items of                                                      
   other comprehensive                                                      
   income                          -            -            -            6 
                         -----------  -----------  -----------  ----------- 
  Other comprehensive                                                       
   income (loss), net of                                                    
   tax                           (17)          (3)           1           31 
                         -----------  -----------  -----------  ----------- 
Comprehensive loss       $    (7,261) $    (6,828) $   (13,401) $   (16,476)
                         ===========  ===========  ===========  =========== 
                                                                            
Loss per share:                                                             
                         -----------  -----------  -----------  ----------- 
  Basic and diluted      $     (0.19) $     (0.19) $     (0.36) $     (0.46)
                         ===========  ===========  ===========  =========== 
                                                                            
Weighted average shares                                                     
 outstanding:                                                               
  Basic and diluted           37,247       36,045       36,932       35,818 
                                                                            
                                                                            
Smith Micro Software, Inc.                                                  
Consolidated Balance Sheets                                                 
(in thousands)                                                              
                                                    June 30,   December 31, 
                                                      2013         2012     
                                                  -----------  ------------ 
                                                  (unaudited)    (audited)  
ASSETS                                                                      
Current Assets:                                                             
Cash & cash equivalents                           $     9,161  $     18,873 
Short term investments                                 14,302        13,328 
Accounts receivable, net                                8,457         8,953 
Income tax receivable                                     679           681 
Inventory, net                                            130           176 
Prepaid and other assets                                1,275           903 
Deferred tax asset                                         89            89 
                                                  -----------  ------------ 
  Total current assets                                 34,093        43,003 
Equipment & improvements, net                           9,232        11,211 
Other assets                                              184           181 
                                                  -----------  ------------ 
TOTAL ASSETS                                      $    43,509  $     54,395 
                                                  ===========  ============ 
                                                                            
LIABILITIES & STOCKHOLDERS' EQUITY                                          
Current Liabilities:                                                        
  Accounts payable                                $     1,828  $      1,978 
  Accrued liabilities                                   6,517         4,829 
  Deferred revenue                                      1,074         1,436 
                                                  -----------  ------------ 
    Total current liabilities                           9,419         8,243 
                                                                            
Long-term liabilities                                   2,839         3,399 
Deferred tax liability                                     91            91 
                                                  -----------  ------------ 
    Total non-current liabilities                       2,930         3,490 
                                                                            
Stockholders' Equity:                                                       
  Common stock                                             37            36 
  Additional paid in capital                          213,063       211,165 
  Accumulated comprehensive deficit                  (181,940)     (168,539)
                                                  -----------  ------------ 
    Total stockholders' equity                         31,160        42,662 
                                                  -----------  ------------ 
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY          $    43,509  $     54,395 
                                                  ===========  ============ 

  
AT THE COMPANY:
Suzanne Runald
Public Relations
949-362-5800
pr@smithmicro.com 
IR INQUIRIES:
Todd Kehrli or Jim Byers
MKR Group, Inc.
323-468-2300
smsi@mkr-group.com 
 
 
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