Exhibit 99.1
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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;
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 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)
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)
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)
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)
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)
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)
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)
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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