8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): November 10, 2021

Smith Micro Software, Inc.

(Exact name of Registrant as Specified in Its Charter)

Delaware	001-35525	33-0029027
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)

5800 Corporate Drive Pittsburgh, PA	15237
(Address of Principal Executive Offices)	(Zip Code)

Registrant’s Telephone Number, Including Area Code: (412) 837-5300

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instructions A.2. below):

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.001 per share	SMSI	NASDAQ

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 2.02.Results of Operations and Financial Condition

On November 10, 2021, Smith Micro Software, Inc. issued a press release announcing its financial results for the three and nine months ended September 30, 2021. A copy of the press release is hereby furnished to the Securities and Exchange Commission as Exhibit 99.1 and incorporated by reference herein.

In accordance with General Instruction B.2 of Form 8-K, the information in this Item 2.02, including Exhibit 99.1, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section and will not be incorporated by reference into any filing under the Securities Act of 1933, as amended, unless specifically identified therein as being incorporated therein by reference.

Item 7.01Regulation FD

The information set forth under Item 2.02 is incorporated into this Item 7.01 by reference.

Item 9.01.Financial Statements and Exhibits.

(d) Exhibits

Exhibit	Description
99.1	Press Release issued on November 10, 2021
104	Cover Page Interactive Data File (embedded within the Inline XBRL document)

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	Smith Micro Software, Inc.
Date:  November 10, 2021	By:	/s/ James M. Kempton
		James M. Kempton
		Vice President and Chief Financial Officer

EX-99.1

EXHIBIT 99.1

IR INQUIRIES:

Charles Messman

Investor Relations

949-362-5800

IR@smithmicro.com

Smith Micro Reports Third Quarter 2021 Financial Results

PITTSBURGH, PA, November 10, 2021– Smith Micro Software, Inc. (NASDAQ: SMSI) (“Smith Micro” or the “Company”) today reported financial results for its third quarter ended September 30, 2021.

“I am pleased with the important milestones the Company achieved since we last reported earnings,” said William W. Smith, Jr., President and CEO of Smith Micro Software. “We made significant progress with all three of our U.S.-based Tier 1 carrier customers, including finalizing the commercial agreement for one carrier’s next-generation family safety service, which will be powered by our SafePath® 7 platform.  We are now strategically positioned to offer our market-leading family safety platform to the majority of U.S. mobile subscribers for the foreseeable future.

“Consumer demand for digital lifestyle services continues to grow, the total addressable market for our core product line is massive, and our working relationships with our major customers have never been more productive,” Smith continued. “The next chapter of the Smith Micro growth story is just beginning.”

Third Quarter 2021 Financial Results

Smith Micro reported revenue of $16.4 million for the third quarter ended September 30, 2021, compared to $12.6 million reported in the third quarter ended September 30, 2020.

Third quarter 2021 gross profit was $12.8 million compared to $11.3 million reported in the third quarter of 2020.

Gross profit as a percentage of revenue was 78 percent for the third quarter of 2021 compared to 90 percent for the third quarter of 2020.

Smith Micro Software Third Quarter 2021 Financial Results Page 2

Generally accepted accounting principles in the United States (“GAAP”) net loss for the third quarter of 2021 was $18.6 million, or $0.34loss per share, compared to GAAP net incomeof $161 thousand, or break even on a diluted earnings per share basis, for the third quarter of 2020.

Non-GAAP net loss (which excludes stock-based compensation, amortization of intangibles, CFO transition costs, acquisition costs including changes in fair value of contingent consideration, and costs related to the acquisition of certain non-development intellectual property) for the third quarter of 2021 was $258 thousand, or break even on an earnings per share basis, compared to non-GAAP net income of $1.8 million, or $0.04 diluted earnings per share, for the third quarter of 2020.

Third Quarter Year-to-Date 2021 Financial Results

Smith Micro reported revenue of $43.7 million for the nine months ended September 30, 2021, compared to $38.9 million reported in the nine months ended September 30, 2020.

Gross profit for the nine months ended September 30, 2021 and 2020 was $35.1 million.

Gross profit as a percentage of revenue was 80 percent for the nine months ended September 30, 2021 compared to 90 percent for the nine months ended September 30, 2020.

GAAP net loss for the nine months ended September 30, 2021 was $27.0 million, or $0.54 loss per share, compared to GAAP net income of $3.6 million, or $0.08 diluted earnings per share, for the same period in 2020.

Non-GAAP net income (which excludes stock-based compensation, amortization of intangibles, CFO transition costs, acquisition costs including changes in fair value of contingent consideration, and costs related to the acquisition of certain non-development intellectual property) for the nine months ended September 30, 2021 was $139 thousand, or break even on an earnings per share basis, compared to non-GAAP net income of $9.0 million, or $0.21 diluted earnings per share, for the nine months ended September 30, 2020.

Total cash and cash equivalents as of September 30, 2021 were $32.4 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 free cash flow, and a non-GAAP reconciliation of gross profit, income (loss) before taxes, net income (loss), 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

Smith Micro Software Third Quarter 2021 Financial Results Page 3

therefore excluded the following items from GAAP earnings calculations: stock-based compensation, amortization of intangibles, CFO transition costs, acquisition costs including changes in fair value of contingent consideration, and costs related to the acquisition of certain non-development intellectual property. 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 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, November 10, 2021 at 4:30 p.m. ET, to discuss the Company’s third quarter 2021 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.

Smith Micro Software Third Quarter 2021 Financial Results Page 4

Forward-Looking Statements

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, the impact of the COVID-19 pandemic on our business and financial results, delays in adoption of our products and services by our customers and their end users, 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, 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.

Smith Micro Software Third Quarter 2021 Financial Results Page 5

Smith Micro Software, Inc.
Consolidated Balance Sheets
(in thousands)
	unaudited			audited
	September 30,			December 31,
	2021			2020
ASSETS
Current Assets:
Cash & cash equivalents	$	32,372		$	25,754
Accounts receivable, net		12,616			12,347
Prepaid and other assets		1,926			1,189
Total current assets		46,914			39,290
Equipment & improvements, net		3,212			2,170
Right-of-use assets		6,051			5,785
Other assets		700			694
Intangible assets, net		38,240			12,698
Goodwill		39,591			12,266
TOTAL ASSETS	$	134,708		$	72,903
LIABILITIES & STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable	$	4,326		$	2,282
Accrued payroll and benefits		3,956			2,867
Current operating lease liabilities		1,440			1,433
Other accrued liabilities		14,588			216
Deferred revenue		701			1,572
Total current liabilities		25,011			8,370
Operating lease liabilities		4,860			4,805
Deferred rent		892			887
Deferred tax liability, net		59			59
Other long-term liabilities		66			66
Total non-current liabilities		5,877			5,817
Stockholders' Equity:
Common stock		55			41
Additional paid in capital		352,030			279,905
Accumulated comprehensive deficit		(248,265	)		(221,230	)
Total stockholders' equity		103,820			58,716
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY	$	134,708		$	72,903

Smith Micro Software Third Quarter 2021 Financial Results Page 6

Smith Micro Software, Inc.
Consolidated Statements of Operations
(in thousands, except per share data)
	unaudited					unaudited
	For the Three Months					For the Nine Months
	Ended September 30,					Ended September 30,
	2021			2020		2021			2020
Revenues	$	16,443		$	12,629	$	43,743		$	38,883
Cost of revenues		3,692			1,326		8,595			3,767
Gross profit		12,751			11,303		35,148			35,116
Operating expenses:
Selling and marketing		5,046			2,655		14,131			8,055
Research and development		8,159			5,455		21,315			13,787
General and administrative		5,143			2,997		13,746			9,741
Change in fair value of contingent consideration		12,864			—		12,864			—
Total operating expenses		31,212			11,107		62,056			31,583
Operating income (loss)		(18,461	)		196		(26,908	)		3,533
Non-operating income (expense):
Interest income, net		1			7		25			94
Other income (expense), net		(2	)		3		7			3
Income (loss) before provision for income taxes		(18,462	)		206		(26,876	)		3,630
Income tax expense		145			45		159			45
Net income (loss)	$	(18,607	)	$	161	$	(27,035	)	$	3,585
Earnings (loss) per share:
Basic	$	(0.34	)	$	0.00	$	(0.54	)	$	0.09
Diluted	$	(0.34	)	$	0.00	$	(0.54	)	$	0.08
Weighted average shares outstanding:
Basic		53,939			41,351		50,147			40,656
Diluted		53,939			43,026		50,147			42,577

Smith Micro Software Third Quarter 2021 Financial Results Page 7

Smith Micro Software, Inc.
Consolidated Statements of Cash Flows
(in thousands)
	unaudited						unaudited
	For the Three Months						For the Nine Months
	Ended September 30,						Ended September 30,
	2021			2020			2021			2020
Operating activities:
Net income (loss)	$	(18,607	)	$	161		$	(27,035	)	$	3,585
Adjustments to reconcile net income (loss) to net cash    provided by operating activities:
Depreciation and amortization		3,391			1,014			8,872			2,676
Non-cash lease expense		201			294			819			805
Change in fair value of contingent consideration		12,864			—			12,864			—
Provision for doubtful accounts and other adjustments    to accounts receivable		—			(50	)		(3	)		(59	)
Provision for excess and obsolete inventory		—			—			(97	)		—
Stock based compensation		1,327			811			3,622			2,252
Changes in operating accounts:
Accounts receivable		2,311			2,796			5,951			1,159
Prepaid expenses and other assets		26			103			(199	)		(530	)
Accounts payable and accrued liabilities		(571	)		(1,099	)		(1,648	)		(1,785	)
Deferred revenue		(163	)		(89	)		(871	)		173
Net cash provided by operating activities		779			3,941			2,275			8,276
Investing activities:
Acquisitions, net		—			(1,350	)		(56,865	)		(13,500	)
Capital expenditures		(402	)		(360	)		(738	)		(1,212	)
Other investing activities		5			11			74			(193	)
Net cash used in investing activities		(397	)		(1,699	)		(57,529	)		(14,905	)
Financing activities:
Proceeds from common stock offering, net		—			—			59,711			—
Proceeds from exercise of common stock warrants		2,026			—			2,066			4,196
Other financing activities		28			16			95			37
Net cash provided by financing activities		2,054			16			61,872			4,233
Net increase (decrease) in cash and cash equivalents		2,436			2,258			6,618			(2,396	)
Cash and cash equivalents, beginning of period		29,936			23,614			25,754			28,268
Cash and cash equivalents, end of period	$	32,372		$	25,872		$	32,372		$	25,872
Free cash flow:
Net cash provided by operating activities	$	779		$	3,941		$	2,275		$	8,276
Capital expenditures		(402	)		(360	)		(738	)		(1,212	)
Free cash flow (1)	$	377		$	3,581		$	1,537		$	7,064
(1) Free cash flow, which is a non-GAAP financial measure, is calculated as net cash provided by operating activities reduced by capital expenditures.

Smith Micro Software Third Quarter 2021 Financial Results Page 8

Smith Micro Software, Inc.
Reconciliation of GAAP to Non-GAAP Results
(in thousands, except per share data) - unaudited
	GAAP			Stock Compensation			Intangibles Amortization			CFO Transition Costs			Acquisition Costs			Non-Development Intellectual Property			Non- GAAP
Three Months Ended 9/30/2021
Gross profit	$	12,751		$	-		$	-		$	-		$	-		$	-		$	12,751
Selling and marketing expenses		5,046			(238	)		(1,979	)		-			-			-			2,829
Research and development expenses		8,159			(270	)		(1,036	)		-			-			-			6,853
General and administrative expenses		5,143			(819	)		-			(143	)		-			(1,000	)		3,181
Change in fair value of contingent consideration		12,864			-			-			-			(12,864	)		-			-
Total operating expenses		31,212			(1,327	)		(3,015	)		(143	)		(12,864	)		(1,000	)		12,863
Loss before provision for income taxes		(18,462	)		1,327			3,015			143			12,864			1,000			(113	)
Net loss		(18,607	)		1,327			3,015			143			12,864			1,000			(258	)
Earnings (loss) per share: basic		(0.34	)		0.02			0.06			0.00			0.24			0.02			(0.00	)
Earnings (loss) per share: diluted		(0.34	)		0.02			0.06			0.00			0.24			0.02			(0.00	)
Three Months Ended 9/30/2020
Gross profit	$	11,303		$	-		$	-		$	-		$	-		$	-		$	11,303
Selling and marketing expenses		2,655			(146	)		(475	)		-			-			-			2,034
Research and development expenses		5,455			(147	)		(366	)		-			-			-			4,942
General and administrative expenses		2,997			(518	)		-			-			-			-			2,479
Total operating expenses		11,107			(811	)		(841	)		-			-			-			9,455
Income before provision for income taxes		206			811			841			-			-			-			1,858
Net income		161			811			841			-			-			-			1,813
Earnings per share: basic		0.00			0.02			0.02			-			-			-			0.04
Earnings per share: diluted		0.00			0.02			0.02			-			-			-			0.04
Nine Months Ended 9/30/2021
Gross profit	$	35,148		$	1		$	-		$	-		$	-		$	-		$	35,149
Selling and marketing expenses		14,131			(663	)		(5,703	)		-			-			-			7,765
Research and development expenses		21,315			(704	)		(2,255	)		-			-			-			18,356
General and administrative expenses		13,746			(2,254	)		-			(143	)		(1,587	)		(1,000	)		8,762
Change in fair value of contingent consideration		12,864			-			-			-			(12,864	)		-			-
Total operating expenses		62,056			(3,621	)		(7,958	)		(143	)		(14,451	)		(1,000	)		34,883
Income (loss) before provision for income taxes		(26,876	)		3,622			7,958			143			14,451			1,000			298
Net income (loss)		(27,035	)		3,622			7,958			143			14,451			1,000			139
Earnings (loss) per share: basic		(0.54	)		0.07			0.16			0.00			0.29			0.02			0.00
Earnings (loss) per share: diluted		(0.54	)		0.07			0.16			0.00			0.29			0.02			0.00
Nine Months Ended 9/30/2020
Gross profit	$	35,116		$	-		$	-		$	-		$	-		$	-		$	35,116
Selling and marketing expenses		8,055			(404	)		(1,225	)		-			-			-			6,426
Research and development expenses		13,787			(412	)		(980	)		-			-			-			12,395
General and administrative expenses		9,741			(1,436	)		-			-			(918	)		-			7,387
Total operating expenses		31,583			(2,252	)		(2,205	)		-			(918	)		-			26,208
Income before provision for income taxes		3,630			2,252			2,205			-			918			-			9,005
Net income		3,585			2,252			2,205			-			918			-			8,960
Earnings per share: basic		0.09			0.06			0.05			-			0.02			-			0.22
Earnings per share: diluted		0.08			0.05			0.05			-			0.02			-			0.21
Note: Earnings (loss) per share: basic and diluted - may be impacted by rounding to allow rows to calculate.

XML

Document and Entity Information	Nov. 10, 2021
Cover [Abstract]
Document Type	8-K
Amendment Flag	false
Document Period End Date	Nov. 10, 2021
Entity Registrant Name	Smith Micro Software, Inc.
Entity Central Index Key	0000948708
Entity Emerging Growth Company	false
Entity File Number	001-35525
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	33-0029027
Entity Address, Address Line One	5800 Corporate Drive
Entity Address, City or Town	Pittsburgh
Entity Address, State or Province	PA
Entity Address, Postal Zip Code	15237
City Area Code	412
Local Phone Number	837-5300
Written Communications	false
Soliciting Material	false
Pre Commencement Tender Offer	false
Pre Commencement Issuer Tender Offer	false
Security 12b Title	Common Stock, par value $0.001 per share
Trading Symbol	SMSI
Security Exchange Name	NASDAQ