Smith Micro Software Reports Record Fourth Quarter and Fiscal 2006 Results
2 March 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 2006 fourth quarter and 2006 financial results.
Fourth Quarter 2006 Key Financial Results:
* Revenue increased to a record $17.2 million, up 115% year-over-year.
* Pro Forma Net Income was a record $7.0 million, compared to pro forma net
income of $2.6 million in the fourth quarter of 2005.
* Pro Forma earnings were a record $0.26 per diluted share on 26.7 million
shares, compared to pro forma earnings of $0.11 per diluted share in the
fourth quarter of 2005 on 23.9 million shares.
Fiscal Year 2006 Key Financial Results:
* Revenue increased to a record $54.5 million, up 169% year-over-year.
* Pro Forma Net Income was a record $17.5 million, compared to pro forma
net income of $5.5 million for fiscal 2005.
* Pro Forma earnings were a record $0.69 per diluted share on 25.3 million
shares, compared to pro forma earnings of $0.24 per diluted share in
Fiscal 2005 on 22.8 million shares.
* Cash Flow from operations was $14.8 million, up $12.3 million from Fiscal
2005, or 499%.
Financial Discussion:
"We are very pleased with the fourth quarter and year-end 2006 financial results," said William W. Smith, Jr., President and CEO of Smith Micro Software, Inc. "During the fiscal year we achieved several milestones as we continue to position the Company as the leader in the wireless software marketplace. Not only did we achieve record financials results on both the top and bottom line for the seventh quarter in a row, we also significantly expanded our product solutions both internally and through acquisitions. On the acquisitions front we acquired PhoTags, Inc. in April 2006, which expanded our multimedia platform. We also announced two additional acquisitions, Ecutel Systems Inc., and Insignia Solutions, plc. Ecutel, whose product line adds significant technology of persistent IP roaming for our connectivity products, provides additional security and device management features for our enterprise solutions. On February 11th we also announced an agreement to acquire the assets of Insignia Solutions plc, which will bring additional wireless data services to our product offerings such as firmware update over the air and device management. Another significant synergy is Insignia's strong worldwide customer base which provides attractive cross-selling opportunities. As a whole, these acquisitions bring us instant international expansion, an expanded sales force presence, and several new development teams to drive product development."
Mr. Smith continued, "As well as acquiring new technologies and products solutions, we also launched several new products which have driven our sales growth. In September 2006, we launched our flagship product "Quicklink(R) Music," which has been a significant revenue generator for the company. To date we have signed on two carriers, and we will continue to work hard to sign additional carriers both domestically and internationally in the coming year. We also expanded our StuffIt(R) Wireless solution and continue to make progress with our sales efforts with major handset manufacturers."
Mr. Smith concluded, "Although we have made significant strides with our business case in 2006, I believe we have only begun to touch the surface of the opportunity that lies ahead of us. We look to 2007 and expect to see a continuation of strong financial results, continued roll out of new solutions for our growing customer base, and expansion into new market opportunities as we continue to build our leadership position in the wireless software space."
Smith Micro reported record net revenue of $17.2 million for the fourth quarter ended December 31, 2006, a 115% increase when compared to the $8.0 million recorded in the fourth quarter of 2005. Fiscal year 2006 revenue was a record $54.5 million, as compared to $20.3 million for fiscal 2005.
Pro forma net income (which excludes amortization of intangible assets associated with acquisitions, stock compensation related expenses and non-cash tax expenses) for the fourth quarter of 2006 was $7.0 million, or $0.26 per diluted share, compared to pro forma net income of $2.6 million or $0.11 per diluted share in the fourth quarter of 2005. Diluted shares outstanding as of December 31, 2006 increased significantly to 26.7 million as compared to the 23.9 million shares outstanding in the fourth quarter of 2005.
Pro forma net income for fiscal 2006 was $17.5 million or $0.69 per diluted share as compared to $5.5 million or $0.24 per diluted share for fiscal 2005. Diluted shares attributed to fiscal 2006 were 25.3 million as compared to 22.8 million in fiscal 2005.
On a GAAP basis, the company earned $0.14 per diluted share for the fourth quarter of 2006 as compared to $0.09 per diluted share in the fourth quarter of 2005. GAAP diluted EPS for fiscal 2006 was $0.35 as compared to $0.21 for fiscal 2005.
Total cash and equivalents at December 31, 2006 increased significantly to $92.6 million, compared to $21.2 million at December 31, 2005. The company successfully completed a secondary offering which brought the company an additional $55.0 million in December.
The Company uses 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.
Investor Conference Call
Smith Micro will hold an investor conference call to discuss the company's fourth quarter results at 4:30 p.m. Eastern time today, February 28, 2007. The call can be accessed by dialing (800) 218-4007 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 http://www.smithmicro.com in the Investor Relations section.
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(R), StuffIt(R), CheckIt(R), Internet Cleanup(TM) and Spring Cleaning(R). 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 Global Market(R) 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, the Smith Micro logo, QuickLink and StuffIt are trademarks or registered trademarks of Smith Micro Software, Inc. All other trademarks and product names are the property of their respective companies.
Smith Micro Software, Inc.
Pro-forma Statement of Operations for the Three Months
Ended December 31, 2006
(results exclude amortization of intangibles associated
with the acquisitions of Allume Systems, Inc. and PhoTags, Inc., stock
compensation and non-cash income tax expenses)
(in thousands, except per share amounts)
Per GAAP Adjustments Proforma
NET REVENUE
Products $17,082 $-- $17,082
Services 146 -- 146
Total Net Revenues 17,228 -- 17,228
COST OF SALES
Products 5,504 (260) 5,244
Services 60 0 60
Total Cost of Sales 5,564 (260) 5,304
GROSS PROFIT
Products 11,578 260 11,838
Services 86 - 86
Total Gross Profit 11,664 260 11,924
OPERATING EXPENSES
Selling & Marketing 2,517 (684) 1,833
Research & Development 2,274 (295) 1,979
General & Administrative 2,701 (1,022) 1,679
Total Operating Expenses 7,492 (2,001) 5,491
Operating Income 4,172 2,261 6,433
Interest Income 532 532
Income Before Income Taxes 4,704 2,261 6,965
Income Tax Expense 1,094 (1,094) --
Net Income $3,610 $3,355 $6,965
Income Per Share, Basic $0.14 $0.28
Weighted Average Shares
Outstanding, Basic 24,930 24,930
Income Per Share, Diluted $0.14 $0.26
Weighted Average Shares
Outstanding, Diluted 26,687 26,691
Smith Micro Software, Inc.
Pro-forma Statement of Operations for the Three Months
Ended December 31, 2005
(results exclude amortization of intangibles associated with the
acquisitions of Allume Systems, Inc.)
(in thousands, except per share amounts)
Per GAAP Adjustments Proforma
NET REVENUE
Products $7,856 $-- $7,856
Services 146 -- 146
Total Net Revenues 8,002 -- 8,002
COST OF SALES
Products 1,983 (267) 1,716
Services 65 0 65
Total Cost of Sales 2,048 (267) 1,781
GROSS PROFIT
Products 5,873 267 6,140
Services 81 -- 81
Total Gross Profit 5,954 267 6,221
OPERATING EXPENSES
Selling & Marketing 1,307 (118) 1,189
Research & Development 1,325 1,325
General & Administrative 1,254 1,254
Total Operating Expenses 3,886 (118) 3,768
Operating Income 2,068 385 2,453
Interest Income 192 192
Income Before Income Taxes 2,260 385 2,645
Income Tax Expense 49 49
Net Income $2,211 $385 $2,596
Income Per Share, Basic $0.10 $0.12
Weighted Average Shares
Outstanding, Basic 22,106 22,106
Income Per Share, Diluted $0.09 $0.11
Weighted Average Shares
Outstanding, Diluted 23,900 23,900
Smith Micro Software, Inc.
Pro-forma Statement of Operations for the Twelve Months Ended
December 31, 2006
(results exclude amortization of intangibles associated with the
acquisitions of Allume Systems, Inc. and PhoTags, Inc., stock compensation
and non-cash income tax expenses)
(in thousands, except per share amounts)
Per GAAP Adjustments Proforma
NET REVENUE
Products $53,773 $-- $53,773
Services 696 -- 696
Total Net Revenues 54,469 -- 54,469
COST OF SALES
Products 19,989 (1,119) 18,870
Services 270 0 270
Total Cost of Sales 20,259 (1,119) 19,140
GROSS PROFIT
Products 33,784 1,119 34,903
Services 426 -- 426
Total Gross Profit 34,210 1,119 35,329
OPERATING EXPENSES
Selling & Marketing 9,057 (2,560) 6,497
Research & Development 7,899 (1,088) 6,811
General & Administrative 8,467 (2,605) 5,862
Total Operating Expenses 25,423 (6,253) 19,170
Operating Income 8,787 7,372 16,159
Interest Income 1,403 1,403
Income Before Income Taxes 10,190 7,372 17,562
Income Tax Expense 1,234 (1,182) 52
Net Income $8,956 $8,554 $17,510
Income Per Share, Basic $0.38 $0.74
Weighted Average Shares
Outstanding, Basic 23,753 23,753
Income Per Share, Diluted $0.35 $0.69
Weighted Average Shares
Outstanding, Diluted 25,330 25,330
Smith Micro Software, Inc.
Pro-forma Statement of Operations for the Twelve Months Ended
December 31, 2005
(results exclude amortization of intangibles associated with the
acquisitions of Allume Systems, Inc.)
(in thousands, except per share amounts)
Per GAAP Adjustments Proforma
NET REVENUE
Products $19,637 $-- $19,637
Services 621 -- 621
Total Net Revenues 20,258 -- 20,258
COST OF SALES
Products 3,818 (534) 3,284
Services 285 0 285
Total Cost of Sales 4,103 (534) 3,569
GROSS PROFIT
Products 15,819 534 16,353
Services 336 -- 336
Total Gross Profit 16,155 534 16,689
OPERATING EXPENSES
Selling & Marketing 3,410 (236) 3,174
Research & Development 3,963 3,963
General & Administrative 4,621 4,621
Total Operating Expenses 11,994 (236) 11,758
Operating Income 4,161 770 4,931
Interest Income 667 667
Income Before Income Taxes 4,828 770 5,598
Income Tax Expense 104 104
Net Income $4,724 $770 $5,494
Income Per Share, Basic $0.22 $0.26
Weighted Average Shares
Outstanding, Basic 21,351 21,351
Income Per Share, Diluted $0.21 $0.24
Weighted Average Shares
Outstanding, Diluted 22,806 22,806
Smith Micro Software, Inc.
Statement of Operations for the Three Months Ended
December 31, 2006 and 2005
(in thousands, except per share amounts)
2006 2005
NET REVENUE
Products $17,082 $7,856
Services 146 146
Total Net Revenues 17,228 8,002
COST OF SALES
Products 5,504 1,983
Services 60 65
Total Cost of Sales 5,564 2,048
GROSS PROFIT
Products 11,578 5,873
Services 86 81
Total Gross Profit 11,664 5,954
OPERATING EXPENSES
Selling & Marketing 2,517 1,307
Research & Development 2,274 1,325
General & Administrative 2,701 1,254
Total Operating Expenses 7,492 3,886
Operating Income 4,172 2,068
Interest Income 532 192
Income Before Income Taxes 4,704 2,260
Income Tax Expense 1,094 49
Net Income $3,610 $2,211
Income Per Share, Basic $0.14 $0.10
Weighted Average Shares
Outstanding, Basic 24,930 22,106
Income Per Share, Diluted $0.14 $0.09
Weighted Average Shares
Outstanding, Diluted 26,687 23,900
Smith Micro Software, Inc.
Statement of Operations for the Twelve Months Ended
December 31, 2006 and 2005
(in thousands, except per share amounts)
2006 2005
NET REVENUE
Products $53,773 $19,637
Services 696 621
Total Net Revenues 54,469 20,258
COST OF SALES
Products 19,989 3,818
Services 270 285
Total Cost of Sales 20,259 4,103
GROSS PROFIT
Products 33,784 15,819
Services 426 336
Total Gross Profit 34,210 16,155
OPERATING EXPENSES
Selling & Marketing 9,057 3,410
Research & Development 7,899 3,963
General & Administrative 8,467 4,621
Total Operating Expenses 25,423 11,994
Operating Income 8,787 4,161
Interest Income 1,403 667
Income Before Income Taxes 10,190 4,828
Income Tax Expense 1,234 104
Net Income $8,956 $4,724
Income Per Share, Basic $0.38 $0.22
Weighted Average Shares
Outstanding, Basic 23,753 21,351
Income Per Share, Diluted $0.35 $0.21
Weighted Average Shares
Outstanding, Diluted 25,330 22,806
Smith Micro Software, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
December 31, December 31,
2006 2005
ASSETS
Current Assets:
Cash & Cash
Equivalents $92,564 $21,215
Accounts Receivable, (Net) 9,828 6,786
Income Taxes Receivable 122 --
Deferred Tax Asset - Current 90 --
Inventory 857 530
Prepaid & Other Assets 308 556
Total Current Assets 103,769 29,087
Equipment & Improvements, Net 417 241
Deferred Tax Asset - Long Term 7,786 --
Goodwill 15,266 9,288
Intangible Assets, Net 3,788 4,093
Other Assets -- 7
TOTAL ASSETS $131,026 $42,716
LIABILITIES & STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts Payable $2,941 $2,383
Accrued Liabilities 2,028 1,376
Total Current Liabilities 4,969 3,759
Common Stock 28 22
Additional Paid In Capital 129,018 50,880
Accumulated Deficit (2,989) (11,945)
Total Stockholders' Equity 126,057 38,957
TOTAL LIABILITIES & EQUITY $131,026 $42,716
Source: prnewswire
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