EX-99.1 2 a24700exv99w1.htm EXHIBIT 99.1 exv99w1
 

Exhibit 99.1
(SmithMicro Logo)
     
AT THE COMPANY:
Bruce T. Quigley
Vice President of Business Development and
Investor Relations
949-362-5800
bquigley@smithmicro.com
  IR INQUIRIES:
Charles Messman, Todd Kehrli
MKR Group
818-556-3700
ir@mkr-group.com
 
FOR IMMEDIATE RELEASE
SMITH MICRO SOFTWARE REPORTS RECORD THIRD QUARTER REVENUE
Third Quarter Revenue Increased 115% To $14.8 Million;
Pro Forma Net Income Increased to a Record $4.3 million;
Aliso Viejo, Calif., November 1, 2006 — Smith Micro Software, Inc. (NASDAQ: SMSI), a developer and marketer of a wide range of software solutions for the wireless market, today reported its 2006 third quarter financial results.
Third Quarter 2006 Key Financial Results:
  •   Revenue increased to a record $14.8 million, up 18% sequentially and 115% year-over-year.
 
  •   Pro Forma Net Income was a record $4.3 million, compared to pro forma net income of $2.9 million in the first quarter of 2006, pro forma net income of $3.2 million in the second quarter of 2006, and pro forma net income of $2.3 million in the third quarter of 2005.
 
  •   Pro Forma earnings were a record $0.17 per fully diluted share on 25.8 million shares, compared to pro forma earnings of $0.13 per fully diluted share in the second quarter of 2006 and compared to pro forma earnings of $0.10 per fully diluted share in the third quarter of 2005.
 
  •   Pro Forma Gross Profit increased to $9.0 million, up 18.4% sequentially and 49.6% over Pro Forma third quarter 2005.
 
  •   Cash and cash equivalents increase significantly to $34.9 million, compared to $21.2 million at year-end in 2005.

 

 

Smith Micro 2006 Third Quarter Financial Results   Page 2 of 11
Third Quarter Financial Discussion:
“We are very please to report our sixth consecutive quarter of record top line and bottom line results,” said William W. Smith, Jr., President and Chief Executive Officer of Smith Micro Software. “Our business continues to prosper across all of our platforms and in our OEM business division we saw a return to a more normalized growth trend for our broadband QuickLink Mobile connectivity product, which helped drive the increase in gross margins for the quarter. We also experienced significant growth with our Music Essential kit, specifically with Verizon Wireless, where we benefited from a strong marketing push and launch of the LG VX8500 Chocolate phone.”
Mr. Smith continued, “We launched our QuickLink Music product during the quarter, our new music suite which offers a robust experience allowing wireless carriers the ability to brand their multimedia service offerings from online stores to mobile handsets. It also gives the end users a streamlined installation process, and the seamless operability to integrate music capable phones with a PC. We believe this is a strong launching pad, as we look to expand our wireless carrier customer base with this product in the coming months.”
“Our StuffIt Wireless program continues progress on track, with several ongoing prototypes in testing with large handset manufacturers, and a wireless carrier. We see this solution becoming more relevant to the market place as the market continues to evolve every day, with more data moving through the spectrum including music, video, and photos. Specifically, we anticipate video becoming more prominent player as we look to 2007.” Mr. Smith continued, “We believe we have positioned the Company very well to benefit from these additional services being offered by the wireless carriers.”
Mr. Smith concluded, “In conclusion we remain optimistic about our business outlook, we expect to see a continuation of growth, and believe our recent music success can continue to grow with the launch of QuickLink Music. We believe the company is positioned well as we strive to be a leader in the wireless software space.”

 

 

Smith Micro 2006 Third Quarter Financial Results   Page 3 of 11
Smith Micro reported record net revenue of $14.8 million for the third quarter ended September 30, 2006, an 18% increase over revenue of $12.5 million in the second quarter of 2006 and an increase of 115% when compared to the $6.9 million recorded in the third quarter of 2005.
Pro forma net income (which excludes amortization of intangible assets associated with acquisitions and stock compensation related expenses) for the third quarter was $4.3 million, or $0.17 per fully diluted share, compared to pro forma net income of $2.3 million or $0.10 per fully diluted share in the third quarter of 2005. Fully diluted shares outstanding as of September 30, 2006 were 25.8 million versus the 23.2 million shares outstanding in the third quarter of 2005.
On a GAAP basis, the company earned $0.09 per fully diluted share for the third quarter of 2006 that compared to $0.08 per fully diluted share in the third quarter of 2005.
For the nine months ended September 30, 2005, the company reported record net revenues of $37.2 million, a 204% increase over the $12.3 million reported for the nine months ended September 30, 2005. Proforma net income for the nine months ended was $10.5 million, or $0.42 per diluted share, an increase of 261% when compared to the proforma net income of $2.9 million or $0.13 per fully diluted share reported for the nine months ended September 30, 2005.
Investor Conference Call
Smith Micro will hold an investor conference call to discuss the company’s third quarter results at 4:30 p.m. Eastern time today, November 1, 2006. The call can be accessed by dialing (800) 218-9073 and giving 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 over the Internet at www.smithmicro.com in the Investor Relations section.

 

 

Smith Micro 2006 Third Quarter Financial Results   Page 4 of 11
About Smith Micro Software:
Smith Micro Software, Inc., headquartered in Aliso Viejo, CA, is a developer and marketer of wireless communications and utility software products for multiple OS platforms. The company designs easy-to-use software for personal computing and business solutions around the world. With a focus on wireless and broadband technologies and the Internet, the company’s products and services enable wireless communications, file and image compression, digital image and music management. In addition, Smith Micro develops and publishes award-winning software solutions for Windows and Macintosh, empowering users in the areas of information access, removal, recovery, security, and Internet distribution. Smith Micro’s leading brands are QuickLink®, StuffIt®, CheckIt®, Internet Cleanup™ and Spring Cleaning®. Smith Micro’s complete line of products is available through retail stores, Value-Added Resellers (VARs), Smith Micro’s consumer, enterprise, wireless OEM sales groups and the company’s websites. Smith Micro’s common stock trades on The NASDAQ Stock Market® under the symbol SMSI.
This release may contain forward-looking statements that involve risks and uncertainties, including without limitation risks and uncertainties relating to the company’s financial prospects and projections, the company’s plans for returning to sustained profitability and the company’s ability to increase its business in segments of the company. Among the important factors that could cause actual results to differ materially from those in the forward-looking statements are new and changing technologies, customer acceptance of those technologies, fluctuations or cancellations in orders from distribution customers, new and continuing adverse economic conditions, and the company’s ability to compete effectively with other software companies. These and other factors could cause actual results to differ materially from those presented in any forward-looking statement and are discussed in the company’s filings with the Securities and Exchange Commission including its recent filings on Forms 10-K and 10-Q.
Smith Micro, the Smith Micro logo are trademarks or registered trademarks of Smith Micro Software, Inc. All other trademarks and product names are the property of their respective companies.
Note: Financial Schedules Attached

 

 

Smith Micro 2006 Third Quarter Financial Results   Page 5 of 11
Smith Micro Software, Inc.
Pro-forma Statement of Operations for the Three Months Ended September 30, 2006
(results exclude amortization of intangibles associated with the acquisitions of
Allume Systems, Inc. and PhoTags, Inc. as well as
stock based compensation)
(in thousands, except per share amounts)
                         
            Unaudited        
    Per GAAP     Adjustments     Proforma  
NET REVENUE
                        
Products
   $ 14,619     $ —     $ 14,619  
Services
     182       —       182  
 
                  
Total Net Revenues
     14,801       —       14,801  
COST OF SALES
                        
Products
     6,030       (259 )     5,771  
Services
     60       0       60  
 
                  
Total Cost of Sales
     6,090       (259 )     5,831  
GROSS PROFIT
                        
Products
     8,589       259       8,848  
Services
     122       —       122  
 
                  
Total Gross Profit
     8,711       259       8,970  
OPERATING EXPENSES
                        
Selling & Marketing
     2,374       (723 )     1,651  
Research & Development
     1,871       (141 )     1,730  
General & Administrative
     2,329       (741 )     1,588  
 
                  
Total Operating Expenses
     6,574       (1,605 )     4,969  
 
                  
Operating Income
     2,137       1,864       4,001  
Interest Income
     381               381  
 
                  
Income Before Income Taxes
     2,518       1,864       4,382  
Income Tax Expense
     68               68  
 
                  
Net Income
   $ 2,450     $ 1,864     $ 4,314  
 
                  
Income Per Share, Basic
   $ 0.10             $ 0.18  
 
                    
Weighted Average Shares Outstanding, Basic
     24,123               24,123  
 
                    
Income Per Share, Fully Diluted
   $ 0.09             $ 0.17  
 
                    
Weighted Average Shares Outstanding, Fully Diluted
     25,794               25,794  
 
                    

 

 

Smith Micro 2006 Third Quarter Financial Results   Page 6 of 11
Smith Micro Software, Inc.
Pro-forma Statement of Operations for the Three Months Ended September 30, 2005
(results exclude amortization of intangibles associated with the acquisition of
Allume Systems, Inc.)
(in thousands, except per share amounts)
                         
            Unaudited        
    Per GAAP     Adjustments     Proforma  
NET REVENUE
                        
Products
   $ 6,743     $ —     $ 6,743  
Services
     153       —       153  
 
                  
Total Net Revenues
     6,896       —       6,896  
COST OF SALES
                        
Products
     1,089       (267 )     822  
Services
     76       0       76  
 
                  
Total Cost of Sales
     1,165       (267 )     898  
GROSS PROFIT
                        
Products
     5,654       267       5,921  
Services
     77       —       77  
 
                  
Total Gross Profit
     5,731       267       5,998  
OPERATING EXPENSES
                        
Selling & Marketing
     1,294       (118 )     1,176  
Research & Development
     1,244               1,244  
General & Administrative
     1,430               1,430  
 
                  
Total Operating Expenses
     3,968       (118 )     3,850  
 
                  
Operating Income
     1,763       385       2,148  
Interest Income
     161               161  
 
                  
Income Before Income Taxes
     1,924       385       2,309  
Income Tax Expense
     47               47  
 
                  
Net Income
   $ 1,877     $ 385     $ 2,262  
 
                  
Income Per Share, Basic
   $ 0.09             $ 0.10  
 
                    
Weighted Average Shares Outstanding, Basic
     22,016               22,016  
 
                    
Income Per Share, Fully Diluted
   $ 0.08             $ 0.10  
 
                    
Weighted Average Shares Outstanding, Fully Diluted
     23,222               23,222  
 
                    

 

 

Smith Micro 2006 Third Quarter Financial Results   Page 7 of 11
Smith Micro Software, Inc.
Pro-forma Statement of Operations for the Nine Months Ended September 30, 2006
(results exclude amortization of intangibles associated with the acquisitions of
Allume Systems, Inc. and PhoTags, Inc. as well as
stock based compensation)
(in thousands, except per share amounts)
                         
            Unaudited        
    Per GAAP     Adjustments     Proforma  
NET REVENUE
                        
Products
   $ 36,691     $ —     $ 36,691  
Services
     550       —       550  
 
                  
Total Net Revenues
     37,241       —       37,241  
COST OF SALES
                        
Products
     14,485       (859 )     13,626  
Services
     210       0       210  
 
                  
Total Cost of Sales
     14,695       (859 )     13,836  
GROSS PROFIT
                        
Products
     22,206       859       23,065  
Services
     340       —       340  
 
                  
Total Gross Profit
     22,546       859       23,405  
OPERATING EXPENSES
                        
Selling & Marketing
     6,540       (1,876 )     4,664  
Research & Development
     5,625       (793 )     4,832  
General & Administrative
     5,766       (1,583 )     4,183  
 
                  
Total Operating Expenses
     17,931       (4,252 )     13,679  
 
                  
Operating Income
     4,615       5,111       9,726  
Interest Income
     871               871  
 
                  
Income Before Income Taxes
     5,486       5,111       10,597  
Income Tax Expense
     140               140  
 
                  
Net Income
   $ 5,346     $ 5,111     $ 10,457  
 
                  
Income Per Share, Basic
   $ 0.23             $ 0.45  
 
                    
Weighted Average Shares Outstanding, Basic
     23,360               23,360  
 
                    
Income Per Share, Fully Diluted
   $ 0.21             $ 0.42  
 
                    
Weighted Average Shares Outstanding, Fully Diluted
     25,184               25,184  
 
                    

 

 

Smith Micro 2006 Third Quarter Financial Results   Page 8 of 11
Smith Micro Software, Inc.
Pro-forma Statement of Operations for the Nine Months Ended September 30, 2005
(results exclude amortization of intangibles associated with the acquisition of
Allume Systems, Inc.)
(in thousands, except per share amounts)
                         
            Unaudited        
    Per GAAP     Adjustments     Proforma  
NET REVENUE
                        
Products
   $ 11,781     $ —     $ 11,781  
Services
     475       —       475  
 
                  
Total Net Revenues
     12,256       —       12,256  
COST OF SALES
                        
Products
     1,835       (267 )     1,568  
Services
     220       0       220  
 
                  
Total Cost of Sales
     2,055       (267 )     1,788  
GROSS PROFIT
                        
Products
     9,946       267       10,213  
Services
     255       —       255  
 
                  
Total Gross Profit
     10,201       267       10,468  
OPERATING EXPENSES
                        
Selling & Marketing
     2,103       (118 )     1,985  
Research & Development
     2,638               2,638  
General & Administrative
     3,367               3,367  
 
                  
Total Operating Expenses
     8,108       (118 )     7,990  
 
                  
Operating Income
     2,093       385       2,478  
Interest Income
     475               475  
 
                  
Income Before Income Taxes
     2,568       385       2,953  
Income Tax Expense
     55               55  
 
                  
Net Income
   $ 2,513     $ 385     $ 2,898  
 
                  
Income Per Share, Basic
   $ 0.12             $ 0.14  
 
                    
Weighted Average Shares Outstanding, Basic
     21,097               21,097  
 
                    
Income Per Share, Fully Diluted
   $ 0.11             $ 0.13  
 
                    
Weighted Average Shares Outstanding, Fully Diluted
     22,454               22,454  
 
                    

 

 

Smith Micro 2006 Third Quarter Financial Results   Page 9 of 11
Smith Micro Software, Inc.
Statement of Operations for the Three Months Ended September 30, 2006 and 2005
(in thousands, except per share amounts)
                 
    Unaudited  
    2006     2005  
NET REVENUE
                
Products
   $ 14,619     $ 6,743  
Services
     182       153  
 
            
Total Net Revenues
     14,801       6,896  
COST OF SALES
                
Products
     6,030       1,089  
Services
     60       76  
 
            
Total Cost of Sales
     6,090       1,165  
GROSS PROFIT
                
Products
     8,589       5,654  
Services
     122       77  
 
            
Total Gross Profit
     8,711       5,731  
OPERATING EXPENSES
                
Selling & Marketing
     2,374       1,294  
Research & Development
     1,871       1,244  
General & Administrative
     2,329       1,430  
 
            
Total Operating Expenses
     6,574       3,968  
 
            
Operating Income
     2,137       1,763  
Interest Income
     381       161  
 
            
Income Before Income Taxes
     2,518       1,924  
Income Tax Expense
     68       47  
 
            
Net Income
   $ 2,450     $ 1,877  
 
            
Income Per Share, Basic
   $ 0.10     $ 0.09  
 
            
Weighted Average Shares Outstanding, Basic
     24,123       22,016  
 
            
Income Per Share, Fully Diluted
   $ 0.09     $ 0.08  
 
            
Weighted Average Shares Outstanding, Fully Diluted
     25,794       23,222  
 
            

 

 

Smith Micro 2006 Third Quarter Financial Results   Page 10 of 11
Smith Micro Software, Inc.
Statement of Operations for the Nine Months Ended September 30, 2006 and 2005
(in thousands, except per share amounts)
                 
    Unaudited  
    2006     2005  
NET REVENUE
                
Products
   $ 36,691     $ 11,781  
Services
     550       475  
 
            
Total Net Revenues
     37,241       12,256  
COST OF SALES
                
Products
     14,485       1,835  
Services
     210       220  
 
            
Total Cost of Sales
     14,695       2,055  
GROSS PROFIT
                
Products
     22,206       9,946  
Services
     340       255  
 
            
Total Gross Profit
     22,546       10,201  
OPERATING EXPENSES
                
Selling & Marketing
     6,540       2,103  
Research & Development
     5,625       2,638  
General & Administrative
     5,766       3,367  
 
            
Total Operating Expenses
     17,931       8,108  
 
            
Operating Income
     4,615       2,093  
Interest Income
     871       475  
 
            
Income Before Income Taxes
     5,486       2,568  
Income Tax Expense
     140       55  
 
            
Net Income
   $ 5,346     $ 2,513  
 
            
Income Per Share, Basic
   $ 0.23     $ 0.12  
 
            
Weighted Average Shares Outstanding, Basic
     23,360       21,097  
 
            
Income Per Share, Fully Diluted
   $ 0.21     $ 0.11  
 
            
Weighted Average Shares Outstanding, Fully Diluted
     25,184       22,454  
 
            

 

 

Smith Micro 2006 Third Quarter Financial Results   Page 11 of 11
Smith Micro Software, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
                 
    September 30,     December 31,  
    2006     2005  
    (unaudited)          
ASSETS
                
Current Assets:
                
Cash & Cash Equivalents
   $ 34,898     $ 21,215  
Accounts Receivable, (Net)
     6,943       6,786  
Inventory
     1,373       530  
Prepaid & Other Assets
     243       556  
 
            
Total Current Assets
     43,457       29,087  
Equipment & Improvements, Net
     376       241  
Goodwill
     15,098       9,288  
Intangible Assets, Net
     4,156       4,093  
Other Assets
     —       7  
 
            
TOTAL ASSETS
   $ 63,087     $ 42,716  
 
            
LIABILITIES & STOCKHOLDERS’ EQUITY
                
Current Liabilities:
                
Accounts Payable
   $ 4,942     $ 2,383  
Accrued Liabilities
     1,881       1,376  
 
            
Total Current Liabilities
     6,823       3,759  
 
            
Common Stock
     24       22  
Additional Paid In Capital
     62,839       50,880  
Accumulated Deficit
     (6,599 )     (11,945 )
 
            
Total Stockholders’ Equity
     56,264       38,957  
 
            
TOTAL LIABILITIES & EQUITY
   $ 63,087     $ 42,716  
 
            
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