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Smith Micro Reports Fourth Quarter and Fiscal Year 2021 Financial Results

PITTSBURGH, March 10, 2022--(BUSINESS WIRE)--Smith Micro Software, Inc. (NASDAQ: SMSI) ("Smith Micro" or the "Company") today reported financial results for its fourth quarter and fiscal year ended December 31, 2021.

"This past year’s momentum, spurred by the largest acquisition in our history, was truly transformational for Smith Micro, positioning us for success in 2022 and beyond," said William W. Smith, Jr., President and CEO of Smith Micro Software. "During 2021, we accomplished several key milestones across the entire organization building a stronger foundation for ongoing success. In 2021, we added several Tier 1 carriers to our global digital family safety customer base, expanding our leadership by delivering our Family Digital Lifestyle vision to a large and growing marketplace.

"We have gained valuable experience and learned critical lessons over the past year that will pave the way for a smooth migration of carriers to the SafePath® platform, offering a seamless transition for the consumers using these family safety solutions," Smith continued. "Our exciting transformation will carry on through 2022 as we continue to strengthen both our market growth and our partnerships with our valuable carrier customers."

Fourth Quarter 2021 Financial Results

Smith Micro reported revenue of $14.7 million for the fourth quarter ended December 31, 2021, compared to $12.4 million reported in the fourth quarter ended December 31, 2020.

Fourth quarter 2021 gross profit was $10.6 million compared to $11.0 million reported in the fourth quarter of 2020.

Gross profit as a percentage of revenue was 72 percent for the fourth quarter of 2021 compared to 89 percent for the fourth quarter of 2020.

Generally accepted accounting principles in the United States ("GAAP") net loss for the fourth quarter of 2021 was $4.0 million, or $0.07 loss per share, compared to GAAP net income of $0.6 million, or $0.01 diluted earnings per share, for the fourth quarter of 2020.

Non-GAAP net loss (which excludes stock-based compensation, amortization of intangibles, CFO transition costs, gain on sale of software product, and acquisition costs) for the fourth quarter of 2021 was $2.4 million, or $0.04 loss on a per share basis, compared to non-GAAP net income of $1.4 million, or $0.03 diluted earnings per share, for the fourth quarter of 2020.

Fiscal Year 2021 Financial Results

Smith Micro reported revenue of $58.4 million for the year ended December 31, 2021, compared to $51.3 million reported in the year ended December 31, 2020.

Gross profit for the year ended December 31, 2021 was $45.7 million, compared to $46.1 million for the year ended December 31, 2020.

Gross profit as a percentage of revenue was 78 percent for the year ended December 31, 2021 compared to 90 percent for the year ended December 31, 2020.

GAAP net loss for the year ended December 31, 2021 was $31.0 million, or $0.61 loss per share, compared to GAAP net income of $4.2 million, or $0.10 diluted earnings per share, for the same period in 2020.

Non-GAAP net loss (which excludes stock-based compensation, amortization of intangibles, CFO transition costs, acquisition costs which include changes in fair value of contingent consideration, costs related to the acquisition of certain non-development intellectual property, and gain on sale of software product) for the year ended December 31, 2021 was $2.2 million, or $0.04 loss per share, compared to non-GAAP net income of $10.4 million, or $0.24 diluted earnings per share, for the year ended December 31, 2020.

Total cash and cash equivalents as of December 31, 2021 were $16.1 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 and a non-GAAP reconciliation from GAAP gross profit, net (loss) income before taxes, and net (loss) income to the following non-GAAP metrics: non-GAAP net income (loss), and non-GAAP diluted 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 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, costs related to the acquisition of certain non-development intellectual property, and gain on sale of software product. 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, March 10, 2021 at 4:30 p.m. ET, to discuss the Company’s fourth quarter and fiscal 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.

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, Inc.

Consolidated Balance Sheets

(in thousands)

unaudited

audited

December 31,

December 31,

2021

2020

ASSETS

Current Assets:

Cash & cash equivalents

$

16,078

$

25,754

Accounts receivable, net

10,590

12,347

Prepaid and other assets

1,988

1,189

Total current assets

28,656

39,290

Equipment & improvements, net

2,698

2,170

Right-of-use assets

5,710

5,785

Other assets

620

694

Intangible assets, net

42,631

12,698

Goodwill

35,041

12,266

TOTAL ASSETS

$

115,356

$

72,903

LIABILITIES & STOCKHOLDERS' EQUITY

Current Liabilities:

Accounts payable

$

3,301

$

2,282

Accrued payroll and benefits

4,055

2,867

Current operating lease liabilities

1,400

1,433

Other accrued liabilities

436

216

Deferred revenue

176

1,572

Total current liabilities

9,368

8,370

Operating lease liabilities

4,467

4,805

Deferred rent and other long-term liabilities

844

953

Deferred tax liability, net

117

59

Total non-current liabilities

5,428

5,817

Stockholders' Equity:

Common stock

54

41

Additional paid in capital

352,779

279,905

Accumulated comprehensive deficit

(252,273

)

(221,230

)

Total stockholders' equity

100,560

58,716

TOTAL LIABILITIES & STOCKHOLDERS' EQUITY

$

115,356

$

72,903

Smith Micro Software, Inc.

Consolidated Statements of Operations

(in thousands, except per share data)

unaudited

unaudited

audited

For the Three Months

For the Twelve Months

Ended December 31,

Ended December 31,

2021

2020

2021

2020

Revenues

$

14,679

$

12,416

$

58,422

$

51,300

Cost of revenues

4,103

1,422

12,698

5,190

Gross profit

10,576

10,994

45,724

46,110

Operating expenses:

Selling and marketing

3,153

2,266

11,581

9,096

Research and development

7,137

4,965

26,197

17,772

General and administrative

4,174

3,060

17,920

12,801

Amortization of intangible assets

142

715

8,100

2,920

Change in fair value of contingent consideration

12,864

Total operating expenses

14,606

11,006

76,662

42,589

Operating (loss) income

(4,030

)

(12

)

(30,938

)

3,521

Non-operating income (expense):

Interest income, net

9

2

34

96

Gain on sale of software product

711

711

Other income (expense), net

69

(5

)

76

(3

)

(Loss) income before provision for income taxes

(3,952

)

696

(30,828

)

4,325

Income tax expense

56

116

215

160

Net (loss) income

$

(4,008

)

$

580

$

(31,043

)

$

4,165

Net (loss) earnings per share:

Basic

$

(0.07

)

$

0.01

$

(0.61

)

$

0.10

Diluted

$

(0.07

)

$

0.01

$

(0.61

)

$

0.10

Weighted average shares outstanding:

Basic

54,454

41,262

51,232

40,808

Diluted

54,454

43,305

51,232

42,764

Smith Micro Software, Inc.

Consolidated Statements of Cash Flows

(in thousands)

unaudited

unaudited

audited

For the Three Months

For the Twelve Months

Ended December 30,

Ended December 30,

2021

2020

2021

2020

Operating activities:

Net (loss) income

$

(4,008

)

$

580

$

(31,043

)

$

4,165

Adjustments to reconcile net (loss) income to net cash

provided by operating activities: