EX-99.1 2 a32448exv99w1.htm EXHIBIT 99.1 exv99w1
 

Exhibit 99.1
     
AT THE COMPANY:
Bruce T. Quigley
Vice President of Corporate Development and
Investor Relations
949-362-5800
bquigley@smithmicro.com
  IR INQUIRIES:
Charles Messman, Todd Kehrli
MKR Group
323-468-2300
ir@mkr-group.com
 
SMITH MICRO SOFTWARE REPORTS 2007 SECOND QUARTER
RESULTS
Record for First 6 Month Revenue of $33 Million and Pro Forma Earnings of $0.37
Aliso Viejo, Calif., August 1, 2007 — Smith Micro Software, Inc. (NASDAQ: SMSI), a developer and marketer of a wide range of software solutions for the wireless market, today reported its fiscal 2007 second quarter financial results ending June 30, 2007.
Second Quarter 2007 Key Financial Results:
  •   Revenue increased to $15.3 million, up 22% year-over-year
 
  •   Pro forma net income was $5.1 million, up 59% over the same period last year
 
  •   Pro forma earnings of $0.16 per diluted share on 31.4 million shares, compared to $0.13 per diluted share on 25.6 million shares for the second quarter of 2006
 
  •   Cash and cash equivalents were $80.2 million, compared to $31.3 million at June 30, 2006
First Six Months Ended June 30, 2007 Financial Results:
  •   Revenue increased to $33.0 million, up 47% year-over-year
 
  •   Pro forma net income increased to $11.4 million, up 85% over the same period last year
 
  •   Pro forma earnings of $0.37 per diluted share on 31.0 million shares, compared to $0.25 per diluted share on 24.7 million shares for the six months ended June 30, 2006
“We are pleased with the overall results for the second quarter,” said William W. Smith Jr., President and CEO of Smith Micro Software, Inc. “Our Multimedia division was impacted this quarter due to delays in the delivery of key third-party software drivers associated with the recent Microsoft Vista operating system upgrades. In a positive turn, we have corrected that situation and we have now

 

 

Smith Micro 2007 Second Quarter Financial Results   Page 2 of 10
received all the required software updates and expect to see a return to growth within this division going forward.”
Mr. Smith continued, “We are also pleased with the continued progress that we have made with our growth strategies; during the quarter we saw contributions from all four business operating units for the first time. This underscores our growing global capabilities and the value our customers place on our expanding product lines. Looking ahead we recently announced our intent to launch QuickLink Media Mobile Edition, a new product for the Windows Mobile platform in the September/October timeframe. Affordably priced, this new Smith Micro branded product will provide consumers with a robust multimedia manager to easily access music, photos, and videos from a single intuitive application on their Smartphone. QuickLink Media comes complete with a companion application on the PC making it easy to manage and sync content with any Windows Mobile device. We believe Smith Micro is uniquely positioned to truly capitalize on this large market opportunity as we leverage the strength of our customer base, technological capability, and our retail marketing expertise.”
Mr. Smith concluded, “Overall, we have reached several key milestones in the first half of fiscal 2007 as we push forward the Company’s long term strategic growth plans. In the first six months of the year we have fully integrated two acquisitions, signed several new clients, released an array of new products and upgrades, and are now gearing up for our first large scale wireless consumer product launch this fall. We continue to build upon our leadership role in the wireless software marketplace, and expect to see continued strong growth across our businesses for the remainder of the year.”
Financial Discussion:
Smith Micro reported net revenue of $15.3 million for the second quarter ended June 30, 2007, a 22% increase when compared to the $12.6 million reported in the second quarter of 2006.
Pro forma net income (which excludes amortization of intangible assets associated with acquisitions, stock compensation related expenses and non-cash tax expense) for the second quarter was $5.1 million, or $0.16 per diluted share, compared to pro forma net income of $3.2 million or $0.13 per diluted share for the second quarter of 2006. Fully diluted shares outstanding as of June 30, 2007 increased to 31.4 million as compared to 25.6 million shares outstanding as of June 30, 2006.

 

 

Smith Micro 2007 Second Quarter Financial Results   Page 3 of 10
On a GAAP basis, which includes amortization of acquisition intangibles, stock compensation and non-cash tax expense, the Company earned $0.01 per diluted share for the second quarter of 2007, compared to $0.04 per diluted share for the second quarter of 2006.
Total cash and equivalents at June 30, 2007 increased to $80.2 million, compared to $31.3 million for the 2006 second quarter ended June 30, 2006.
The Company uses a pro forma reconciliation of its condensed consolidated statements of income in the presentation of financial results in this press release. Management believes that this presentation may be more meaningful in analyzing our results of operations and income generation, since amortization of intangibles from acquisitions, amortization of deferred stock-based compensation and impairment gains and losses on investments, and non-cash tax expense are excluded from the pro forma earnings calculation. This presentation may be considered more indicative of our ongoing operational performance. The tables below present the differences between pro forma earnings and net 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-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 will hold an investor conference call to discuss the company’s second quarter results at 4:30 p.m. Eastern time today, August 1, 2007. The call can be accessed by dialing (800) 366-7640 and providing 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.
About Smith Micro Software:
Smith Micro Software, Inc., headquartered in Aliso Viejo, California, with offices in Europe and Asia, develops and markets wireless multimedia and communications solutions, mobile device management products, image and data compression solutions and many award winning software products. Smith Micro’s complete line of products is available through Smith Micro’s Enterprise,

 

 

Smith Micro 2007 Second Quarter Financial Results   Page 4 of 10
Channel and OEM Sales Groups, and direct from our websites, retail and value-added resellers (VARs) partners. Smith Micro’s common stock trades on the NASDAQ Global Market under the symbol SMSI.
Safe Harbor Statement: This release may contain forward-looking statements that involve risks and uncertainties including, without limitation, forward-looking statements relating to the company’s financial prospects and projections, the company’s ability to increase its business, and the anticipated timing and financial performance of new products and potential acquisitions. 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 customers, 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 presented in any forward-looking statements. Smith Micro assumes no obligation to update any forward-looking statements to reflect events or circumstances occurring after the date of this press release.
Smith Micro and 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 2007 Second Quarter Financial Results   Page 5 of 10
Smith Micro Software, Inc.
Pro-forma Statement of Operations for the Three Months Ended June 30, 2007
(results exclude amortization of intangibles associated with the acquisitions of
Allume Systems, Inc., PhoTags, Inc., Ecutel Systems, Inc. and Insignia
Solutions, pc as well as stock based compensation and non-cash income tax expense)
(in thousands, except per share amounts)
                         
            Unaudited        
    Per GAAP     Adjustments     Proforma  
Net Revenues
   $ 15,346     $ —     $ 15,346  
 
                        
Cost of Revenues
     3,981       (543 )     3,438  
 
                  
 
                        
Gross Profit
     11,365       543       11,908  
OPERATING EXPENSES
                        
Selling & Marketing
     4,437       (1,772 )     2,665  
Research & Development
     3,483       (692 )     2,791  
General & Administrative
     3,702       (1,637 )     2,065  
 
                  
Total Operating Expenses
     11,622       (4,101 )     7,521  
 
                  
Operating Income
     (257 )     4,644       4,387  
Interest Income
     1,042               1,042  
 
                  
Income Before Income Taxes
     785       4,644       5,429  
Income Tax Expense
     591       (307 )     284  
 
                  
Net Income
   $ 194     $ 4,951     $ 5,145  
 
                  
 
                        
Income Per Share, Basic
   $ 0.01             $ 0.17  
 
                    
 
                        
Weighted Average Shares Outstanding, Basic
     29,739               29,739  
 
                    
 
                        
Income Per Share, Diluted
   $ 0.01             $ 0.16  
 
                    
 
                        
Weighted Average Shares Outstanding, Diluted
     31,434               31,434  
 
                    

 

 

Smith Micro 2007 Second Quarter Financial Results   Page 6 of 10
Smith Micro Software, Inc.
Pro-forma Statement of Operations for the Three Months Ended June 30, 2006
(results exclude amortization of intangibles associated with the acquisitions of
Allume Systems, Inc. and PhoTags, Inc. as well as stock based compensation expenses)
(in thousands, except per share amounts)
                         
            Unaudited        
    Per GAAP     Adjustments     Proforma  
Net Revenues
   $ 12,555     $ —     $ 12,555  
 
                        
Cost of Revenues
     5,305       (327 )     4,978  
 
                  
 
                        
Gross Profit
     7,250       327       7,577  
OPERATING EXPENSES
                        
Selling & Marketing
     2,293       (804 )     1,489  
Research & Development
     2,077       (401 )     1,676  
General & Administrative
     2,029       (618 )     1,411  
 
                  
Total Operating Expenses
     6,399       (1,823 )     4,576  
 
                  
Operating Income
     851       2,150       3,001  
Interest Income
     265               265  
 
                  
Income Before Income Taxes
     1,116       2,150       3,266  
Income Tax Expense
     33               33  
 
                  
Net Income
   $ 1,083     $ 2,150     $ 3,233  
 
                  
 
                        
Income Per Share, Basic
   $ 0.05             $ 0.14  
 
                    
 
                        
Weighted Average Shares Outstanding, Basic
     23,635               23,635  
 
                    
 
                        
Income Per Share, Diluted
   $ 0.04             $ 0.13  
 
                    
 
                        
Weighted Average Shares Outstanding, Diluted
     25,598               25,598  
 
                    

 

 

Smith Micro 2007 Second Quarter Financial Results   Page 7 of 10
Smith Micro Software, Inc.
Pro-forma Statement of Operations for the Six Months Ended June 30, 2007
(results exclude amortization of intangibles associated with the acquisitions of
Allume Systems, Inc., PhoTags, Inc., Ecutel Systems, Inc. and Insignia
Solutions, pc as well as stock based compensation and non-cash income tax expense)
(in thousands, except per share amounts)
                         
            Unaudited        
    Per GAAP     Adjustments     Proforma  
Net Revenues
   $ 33,013     $ —     $ 33,013  
 
                        
Cost of Revenues
     9,660       (855 )     8,805  
 
                  
 
                        
Gross Profit
     23,353       855       24,208  
OPERATING EXPENSES
                        
Selling & Marketing
     7,896       (2,901 )     4,995  
Research & Development
     6,206       (1,146 )     5,060  
General & Administrative
     7,297       (2,836 )     4,461  
 
                  
Total Operating Expenses
     21,399       (6,883 )     14,516  
 
                  
Operating Income
     1,954       7,738       9,692  
Interest Income
     2,268               2,268  
 
                  
Income Before Income Taxes
     4,222       7,738       11,960  
Income Tax Expense
     2,186       (1,576 )     610  
 
                  
Net Income
   $ 2,036     $ 9,314     $ 11,350  
 
                  
 
                        
Income Per Share, Basic
   $ 0.07             $ 0.39  
 
                    
 
                        
Weighted Average Shares Outstanding, Basic
     29,397               29,397  
 
                    
 
                        
Income Per Share, Diluted
   $ 0.07             $ 0.37  
 
                    
 
                        
Weighted Average Shares Outstanding, Diluted
     31,004               31,004  
 
                    

 

 

Smith Micro 2007 Second Quarter Financial Results   Page 8 of 10
Smith Micro Software, Inc.
Pro-forma Statement of Operations for the Six Months Ended June 30, 2006
(results exclude amortization of intangibles associated with the acquisitions of
Allume Systems, Inc. and PhoTags, Inc. as well as stock based compensation expenses)
(in thousands, except per share amounts)
                         
            Unaudited        
    Per GAAP     Adjustments     Proforma  
Net Revenues
   $ 22,440     $ —     $ 22,440  
 
                        
Cost of Revenues
     8,605       (600 )     8,005  
 
                  
 
                        
Gross Profit
     13,835       600       14,435  
OPERATING EXPENSES
                        
Selling & Marketing
     4,166       (1,153 )     3,013  
Research & Development
     3,754       (652 )     3,102  
General & Administrative
     3,438       (842 )     2,596  
 
                  
Total Operating Expenses
     11,358       (2,647 )     8,711  
 
                  
Operating Income
     2,477       3,247       5,724  
Interest Income
     489               489  
 
                  
Income Before Income Taxes
     2,966       3,247       6,213  
Income Tax Expense
     72               72  
 
                  
Net Income
   $ 2,894     $ 3,247     $ 6,141  
 
                  
 
                        
Income Per Share, Basic
   $ 0.13             $ 0.27  
 
                    
 
                        
Weighted Average Shares Outstanding, Basic
     22,973               22,973  
 
                    
 
                        
Income Per Share, Diluted
   $ 0.12             $ 0.25  
 
                    
 
                        
Weighted Average Shares Outstanding, Diluted
     24,740               24,740  
 
                    

 

 

Smith Micro 2007 Second Quarter Financial Results   Page 9 of 10
Smith Micro Software, Inc.
Statement of Operations for the Three and Six Months Ended June 30, 2007 and 2006
(in thousands, except per share amounts)
                                 
    For the Three Months     For the Six Months  
    Ended June 30,     Ended June 30,  
    2007     2006     2007     2006  
    (unaudited)     (unaudited)     (unaudited)     (unaudited)  
Net Revenues
   $ 15,346     $ 12,555     $ 33,013     $ 22,440  
 
                                
Cost of Revenues
     3,981       5,305       9,660       8,605  
 
                        
 
                                
Gross Profit
     11,365       7,250       23,353       13,835  
OPERATING EXPENSES
                                
Selling & Marketing
     4,437       2,293       7,896       4,166  
Research & Development
     3,483       2,077       6,206       3,754  
General & Administrative
     3,702       2,029       7,297       3,438  
 
                        
Total Operating Expenses
     11,622       6,399       21,399       11,358  
 
                        
Operating Income
     (257 )     851       1,954       2,477  
Interest Income
     1,042       265       2,268       489  
 
                        
Income Before Income Taxes
     785       1,116       4,222       2,966  
Income Tax Expense
     591       33       2,186       72  
 
                        
Net Income
   $ 194     $ 1,083     $ 2,036     $ 2,894  
 
                        
 
                                
Income Per Share, Basic
   $ 0.01     $ 0.05     $ 0.07     $ 0.13  
 
                        
 
                                
Weighted Average Shares Outstanding, Basic
     29,739       23,635       29,397       22,973  
 
                        
 
                                
Income Per Share, Diluted
   $ 0.01     $ 0.04     $ 0.07     $ 0.12  
 
                        
 
                                
Weighted Average Shares Outstanding, Diluted
     31,434       25,598       31,004       24,740  
 
                        

 

 

Smith Micro 2007 Second Quarter Financial Results   Page 10 of 10
Smith Micro Software, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
                 
    June 30,     December 31,  
    2007     2006  
    (unaudited)          
ASSETS
                
Current Assets:
                
Cash & Cash Equivalents
   $ 80,198     $ 92,564  
Accounts Receivable, (Net)
     12,954       9,828  
Income Taxes Receivable
     122       122  
Deferred Tax Asset
     90       90  
Inventory
     1,084       857  
Prepaid & Other Assets
     426       308  
 
            
Total Current Assets
     94,874       103,769  
Equipment & Improvements, Net
     676       417  
Deferred Tax Asset
     7,762       7,786  
Goodwill
     31,639       15,266  
Intangible Assets, Net
     15,333       3,788  
 
            
TOTAL ASSETS
   $ 150,284     $ 131,026  
 
            
 
                
LIABILITIES & STOCKHOLDERS’ EQUITY
                
Current Liabilities:
                
Accounts Payable
   $ 3,519     $ $2,941  
Deferred Revenue
     712       78  
Accrued Liabilities
     2,782       1,950  
 
            
Total Current Liabilities
     7,013       4,969  
 
            
 
                
Common Stock
     30       28  
Additional Paid In Capital
     144,194       129,018  
Accumulated Deficit
     (953 )     (2,989 )
 
            
Total Stockholders’ Equity
     143,271       126,057  
 
            
TOTAL LIABILITIES & EQUITY
   $ 150,284     $ 131,026