Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2020 | Nov. 05, 2020 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Sep. 30, 2020 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q3 | |
Trading Symbol | SMSI | |
Entity Registrant Name | SMITH MICRO SOFTWARE, INC. | |
Entity Central Index Key | 0000948708 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Common Stock, Shares Outstanding | 41,295,351 | |
Entity Current Reporting Status | Yes | |
Entity Shell Company | false | |
Entity File Number | 00-135525 | |
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 | |
Entity Interactive Data Current | Yes | |
Title of 12(b) Security | Common Stock, par value $0.001 per share | |
Security Exchange Name | NASDAQ | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Entity Incorporation, State or Country Code | DE |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Current assets: | ||
Cash and cash equivalents | $ 25,872 | $ 28,268 |
Accounts receivable, net of allowance for doubtful accounts and other adjustments of $84 (2020) and $253 (2019) | 9,797 | 10,894 |
Prepaid expenses and other current assets | 1,329 | 802 |
Total current assets | 36,998 | 39,964 |
Equipment and improvements, net | 2,250 | 2,109 |
Right-of-use assets | 6,090 | 6,464 |
Deferred tax assets, net | 94 | 94 |
Other assets | 441 | 234 |
Intangible assets, net | 14,186 | 4,535 |
Goodwill | 11,493 | 7,797 |
Total assets | 71,552 | 61,197 |
Current liabilities: | ||
Accounts payable | 1,855 | 2,050 |
Accrued payroll and benefits | 2,705 | 2,107 |
Current operating lease liabilities | 1,407 | 1,221 |
Other accrued liabilities | 260 | 244 |
Deferred revenue | 1,561 | 98 |
Total current liabilities | 7,788 | 5,720 |
Non-current liabilities: | ||
Operating lease liabilities | 5,121 | 5,774 |
Deferred rent | 928 | 885 |
Other long term liabilities | 83 | 134 |
Total non-current liabilities | 6,132 | 6,793 |
Commitments and contingencies | ||
Stockholders' equity: | ||
Common stock, par value $0.001 per share; 100,000,000 shares authorized; 41,295,351 and 38,475,084 shares issued and outstanding (2020 and 2019, respectively) | 41 | 38 |
Additional paid-in capital | 279,401 | 274,041 |
Accumulated comprehensive deficit | (221,810) | (225,395) |
Total stockholders’ equity | 57,632 | 48,684 |
Total liabilities and stockholders' equity | $ 71,552 | $ 61,197 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Statement Of Financial Position [Abstract] | ||
Allowance for doubtful accounts receivable | $ 84 | $ 253 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 41,295,351 | 38,475,084 |
Common stock, shares outstanding | 41,295,351 | 38,475,084 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Income Statement [Abstract] | ||||
Revenues | $ 12,629 | $ 11,782 | $ 38,883 | $ 31,068 |
Cost of revenues | 1,326 | 1,011 | 3,767 | 2,902 |
Gross profit | 11,303 | 10,771 | 35,116 | 28,166 |
Operating expenses: | ||||
Selling and marketing | 2,655 | 1,793 | 8,049 | 5,529 |
Research and development | 5,446 | 3,063 | 13,774 | 8,487 |
General and administrative | 2,997 | 2,396 | 9,741 | 7,522 |
Restructuring expense | 9 | 39 | 19 | 154 |
Total operating expenses | 11,107 | 7,291 | 31,583 | 21,692 |
Operating income | 196 | 3,480 | 3,533 | 6,474 |
Other income (expense): | ||||
Interest income, net | 7 | 87 | 94 | 117 |
Gain on sale of software product | 483 | |||
Other expense | 3 | 3 | (15) | |
Income before provision for income taxes | 206 | 3,567 | 3,630 | 7,059 |
Provision for income tax expense | 45 | 0 | 45 | 8 |
Net income | $ 161 | $ 3,567 | $ 3,585 | $ 7,051 |
Earnings per share: | ||||
Basic | $ 0 | $ 0.10 | $ 0.09 | $ 0.21 |
Diluted | $ 0 | $ 0.09 | $ 0.08 | $ 0.20 |
Weighted average shares outstanding: | ||||
Basic | 41,351 | 36,094 | 40,656 | 33,170 |
Diluted | 43,026 | 39,472 | 42,577 | 35,287 |
Preferred dividends per share | $ 70.50 | $ 104.58 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands | Total | Preferred Stock [Member]Series B Preferred Stock [Member] | Common Stock [Member] | Additional Paid-in Capital [Member] | Accumulated Comprehensive Deficit [Member] |
BALANCE at Dec. 31, 2018 | $ 20,563 | $ 28 | $ 256,626 | $ (236,091) | |
BALANCE, Shares at Dec. 31, 2018 | 1,000 | ||||
BALANCE, Shares at Dec. 31, 2018 | 28,242,000 | ||||
Non-cash compensation recognized on stock options and ESPP | 30 | 30 | |||
Restricted stock grants, net of cancellations | 1,109 | $ 1 | 1,108 | ||
Restricted stock grants, net of cancellations, shares | 1,225,000 | ||||
Cancellation of shares for payment of withholding tax | (506) | (506) | |||
Cancellation of shares for payment of withholding tax, shares | (176,000) | ||||
Common shares issued in stock offering, net of offering costs | (14) | (14) | |||
Common shares issued in connection with Smart Retail acquisition, net | 5,129 | $ 3 | 5,126 | ||
Common shares issued in connection, with Smart Retail acquisition, net, shares | 2,699,000 | ||||
Employee stock purchase plan | 10 | 10 | |||
Employee stock purchase plan, shares | 4,000 | ||||
Exercise of warrants | 11,403 | $ 5 | 11,398 | ||
Exercise of warrants, shares | 5,304,000 | ||||
Exercise of stock options | 38 | 38 | |||
Exercise of stock options, shares | 10,000 | ||||
Conversion of preferred stock to common stock | $ 1 | (1) | |||
Conversion of preferred stock to common stock, shares | (1,000) | 1,180,000 | |||
Preferred stock dividends | (119) | (119) | |||
Cumulative effect of adoption of ASC | ASC 842 [Member] | 93 | 93 | |||
Net income | 7,051 | 7,051 | |||
BALANCE at Sep. 30, 2019 | 44,787 | $ 38 | 273,815 | (229,066) | |
BALANCE, Shares at Sep. 30, 2019 | 38,488,000 | ||||
BALANCE at Jun. 30, 2019 | 29,666 | $ 32 | 262,215 | (232,581) | |
BALANCE, Shares at Jun. 30, 2019 | 1,000 | ||||
BALANCE, Shares at Jun. 30, 2019 | 32,042,000 | ||||
Non-cash compensation recognized on stock options and ESPP | 10 | 10 | |||
Restricted stock grants, net of cancellations | 340 | 340 | |||
Cancellation of shares for payment of withholding tax | (191) | (191) | |||
Cancellation of shares for payment of withholding tax, shares | (38,000) | ||||
Employee stock purchase plan | 6 | 6 | |||
Employee stock purchase plan, shares | 2,000 | ||||
Exercise of warrants | 11,403 | $ 5 | 11,398 | ||
Exercise of warrants, shares | 5,301,000 | ||||
Exercise of stock options | 38 | 38 | |||
Exercise of stock options, shares | 10,000 | ||||
Conversion of preferred stock to common stock | $ 1 | (1) | |||
Conversion of preferred stock to common stock, shares | (1,000) | 1,171,000 | |||
Preferred stock dividends | (52) | (52) | |||
Net income | 3,567 | 3,567 | |||
BALANCE at Sep. 30, 2019 | 44,787 | $ 38 | 273,815 | (229,066) | |
BALANCE, Shares at Sep. 30, 2019 | 38,488,000 | ||||
BALANCE at Dec. 31, 2019 | $ 48,684 | $ 38 | 274,041 | (225,395) | |
BALANCE, Shares at Dec. 31, 2019 | 38,475,084 | 38,475,000 | |||
Non-cash compensation recognized on stock options and ESPP | $ 48 | 48 | |||
Restricted stock grants, net of cancellations | 2,204 | $ 1 | 2,203 | ||
Restricted stock grants, net of cancellations, shares | 1,000,000 | ||||
Cancellation of shares for payment of withholding tax | (1,122) | (1,122) | |||
Cancellation of shares for payment of withholding tax, shares | (242,000) | ||||
Employee stock purchase plan | 19 | 19 | |||
Employee stock purchase plan, shares | 6,000 | ||||
Exercise of warrants | 4,196 | $ 2 | 4,194 | ||
Exercise of warrants, shares | 2,047,000 | ||||
Exercise of stock options | 18 | 18 | |||
Exercise of stock options, shares | 9,000 | ||||
Net income | 3,585 | 3,585 | |||
BALANCE at Sep. 30, 2020 | $ 57,632 | $ 41 | 279,401 | (221,810) | |
BALANCE, Shares at Sep. 30, 2020 | 41,295,351 | 41,295,000 | |||
BALANCE at Jun. 30, 2020 | $ 56,898 | $ 41 | 278,828 | (221,971) | |
BALANCE, Shares at Jun. 30, 2020 | 41,356,000 | ||||
Non-cash compensation recognized on stock options and ESPP | 19 | 19 | |||
Restricted stock grants, net of cancellations | 792 | 792 | |||
Cancellation of shares for payment of withholding tax | (254) | (254) | |||
Cancellation of shares for payment of withholding tax, shares | (66,000) | ||||
Employee stock purchase plan | 13 | 13 | |||
Employee stock purchase plan, shares | 4,000 | ||||
Exercise of stock options | 3 | 3 | |||
Exercise of stock options, shares | 1,000 | ||||
Net income | 161 | 161 | |||
BALANCE at Sep. 30, 2020 | $ 57,632 | $ 41 | $ 279,401 | $ (221,810) | |
BALANCE, Shares at Sep. 30, 2020 | 41,295,351 | 41,295,000 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Operating activities: | ||
Net income | $ 3,585 | $ 7,051 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 2,676 | 997 |
Non-cash lease expense | 805 | 730 |
Restructuring costs | 19 | 154 |
Provision for doubtful accounts and other adjustments to accounts receivable | (59) | 127 |
Provision for excess and obsolete inventory | 1 | |
Loss on disposal of fixed assets | 6 | |
Stock based compensation | 2,252 | 1,139 |
Gain in sale of software product | (483) | |
Changes in operating accounts: | ||
Accounts receivable | 1,159 | (4,031) |
Prepaid expenses and other assets | (530) | 52 |
Accounts payable and accrued liabilities | (1,804) | (701) |
Deferred revenue | 173 | (214) |
Net cash provided by operating activities | 8,276 | 4,828 |
Investing activities: | ||
Proceeds from sale of software product | 363 | |
Capital expenditures | (1,212) | (824) |
Other investing activities | (193) | |
Net cash used in investing activities | (14,905) | (4,435) |
Financing activities: | ||
Proceeds from exercise of common stock warrants | 4,196 | 11,403 |
Dividends paid on preferred stock | (119) | |
Other financing activities | 37 | 34 |
Net cash provided by financing activities | 4,233 | 11,318 |
Net increase (decrease) in cash and cash equivalents | (2,396) | 11,711 |
Cash and cash equivalents, beginning of period | 28,268 | 12,159 |
Cash and cash equivalents, end of period | 25,872 | 23,870 |
Supplemental disclosures of cash flow information: | ||
Cash paid for income taxes | 82 | 60 |
Supplemental disclosures of non-cash activities: | ||
Issuance of common stock in connection with Smart Retail acquisition | 5,129 | |
Smart Retail [Member] | ||
Investing activities: | ||
Acquisition of Smart Retail business and Circle operator business, net | $ (3,974) | |
Circle Operator [Member] | ||
Investing activities: | ||
Acquisition of Smart Retail business and Circle operator business, net | $ (13,500) |
The Company
The Company | 9 Months Ended |
Sep. 30, 2020 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
The Company | 1. The Company Smith Micro Software, Inc. (“Smith Micro”, the “Company”, “we”, “us”, or “our”) develops software to simplify and enhance the mobile experience, providing solutions to some of the leading wireless and cable service providers around the world. From enabling the family digital lifestyle to providing powerful voice messaging capabilities, we strive to enrich today’s connected lifestyles while creating new opportunities to engage consumers via smartphones and consumer IoT devices. Our portfolio includes a wide range of products for creating, sharing and monetizing rich content, such as visual voice messaging, retail content display optimization and performance analytics on any product set. |
Accounting Policies
Accounting Policies | 9 Months Ended |
Sep. 30, 2020 | |
Accounting Policies [Abstract] | |
Accounting Policies | 2. Accounting Policies Basis of Presentation The accompanying interim consolidated balance sheet as of September 30, 2020, and the related consolidated statements of operations, stockholders’ equity and cash flows for each of the three and nine months ended September 30, 2020 and 2019, are unaudited. The unaudited consolidated financial statements have been prepared according to the rules and regulations of the Securities and Exchange Commission (“SEC”) and, therefore, certain information and disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) have been omitted. In the opinion of management, the accompanying unaudited consolidated financial statements for the periods presented reflect all adjustments which are normal and recurring, and necessary to fairly state the financial position, results of operations, and cash flows of the Company. These unaudited consolidated financial statements should be read in conjunction with the audited financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019 filed with the SEC on March 13, 2020. Intercompany balances and transactions have been eliminated in consolidation. Operating results for the three and nine months ended September 30, 2020 are not necessarily indicative of the results that may be expected for any other interim period or for the fiscal year ending December 31, 2020. Impact of COVID-19 In March 2020, the World Health Organization categorized coronavirus disease 2019 (COVID-19) as a pandemic, and the President of the United States declared the COVID-19 outbreak a national emergency. COVID-19 continues to spread throughout the United States and other countries across the world, and the duration and severity of its effects are currently unknown. While the response to the COVID-19 outbreak continues to rapidly evolve, it has led to stay-at-home orders and social distancing guidelines that have seriously disrupted activities in large segments of the economy. During the second and third quarters of 2020, we saw a reduction in the number of SafePath ® The severity of the impact of the COVID-19 pandemic on the Company’s business will depend on a number of factors, including, but not limited to, the duration and severity of the pandemic and the extent and severity of the impact on the Company’s customers, all of which are uncertain and cannot be predicted. As the impact of the COVID-19 pandemic on the economy and the Company’s operations continues to evolve, we will continue to monitor the impact on the Company’s operations and, if needed, postpone non-essential capital expenditures, reduce operating costs, and substantially reduce discretionary spending. Revenue Recognition The Company adopted FASB ASC Topic No. 606, Revenue from Contracts with Customers, In our Wireless segment, we transfer software licenses to our customers on a royalty free, non-exclusive, non-transferrable, limited use basis during the term of the agreement. In some instances, we perform customization services to ensure the software operates within our customer’s operating platforms as well as the operating platforms of the mobile devices used by their end customers , before transferring the license. Revenue related to these services is recognized at a point in time upon acceptance of the software license by the customer. We also earn usage based revenue on our platforms. Usage based revenue is generated based on active licenses used by our customer’s end customers, the provision of hosting services, revenue share based on media placements o n our platform, and use of our cloud b ased services. We recognize our usage based revenue when we have completed our performance obligation and have the right to invoice the customer. This revenue is generally recognized monthly or quarterly. Finally, in this segment, we ratably recognize revenue over the contract period when customers pay in advance of our service delivery. On February 12, 2020, we acquired certain assets from Circle (as defined in Note 3 below), including a source code license to Circle’s parental control software solution and two customer contracts. Pursuant to these contracts, the customer parties thereto license the parental control software solution for distribution to their respective subscribers in designated markets. In each case, the contracts allow the customer to take possession of the software solution and to host it on their platform or with an independent third party hosting service provider without significant cost. We also provide significant services that are required by the customer to ensure they have the utility of the license. As the license to the software solution and the services we provide are highly interrelated, we have concluded that the license and our services are a single performance obligation. The license fee is earned and recognized on a pro-rata basis over the contract term based on our customer’s continued use of the license and our services. We also provide consulting services to develop customer-specified functionality that are generally not on our software development roadmap. We recognize revenue from our consulting services upon delivery and acceptance by the customer of our software enhancements and upgrades. For certain Wireless segment customers we provide maintenance and technology support services for which the customer either pays upfront or as we provide the services. When the customer pays upfront, we record the payments as contract liabilities and recognize revenue ratably over the contract period as this is our stand ready performance obligation that is satisfied ratably over the maintenance and technology services period. We receive upfront payments from customers from services to be provided under our ViewSpot® contracts. The advance receipts are deferred and subsequently recognized ratably over the contract period. We also provide consulting services to configure ad hoc targeted promotional content for our customers upon request. These requests are driven by our customers’ marketing initiatives and tend to be short term “bursts” of activity. We recognize these revenues upon delivery of the configured promotional content to the cloud platform. For our Graphics products where we sell off-the-shelf software products with no customization or post sale technology support services, we recognize revenue at the time we transfer control of the product to the customer. This occurs upon shipment of the product or when the customer downloads the software from our website or website of our resellers. We offer a 30 day return option to our customers; a return reserve is established at the time revenue is recorded and the reserve is monitored and adjusted based on actual experience. Historically, returns have been insignificant. Fair Value Measurements The Company measures and discloses fair value measurements as required by FASB ASC Topic No. 820, Fair Value Measurements and Disclosures Fair value is an exit price, representing the amount that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants. As such, fair value is a market-based measurement that is determined based on assumptions that market participants would use in pricing an asset or a liability. As a basis for considering such assumptions, the FASB establishes a three-tier value hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value: • Level 1 - Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets • Level 2 - Include other inputs that are directly or indirectly observable in the marketplace • Level 3 - Unobservable inputs which are supported by little or no market activity The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. As required by FASB ASC Topic No. 820, we measure our cash and cash equivalents at fair value. Our cash equivalents are classified within Level 1 by using quoted market prices utilizing market observable inputs. As required by FASB ASC Topic No. 350, for goodwill and other intangibles impairment analysis, we utilize fair value measurements which are categorized within Level 3 of the fair value hierarchy . |
Acquisitions
Acquisitions | 9 Months Ended |
Sep. 30, 2020 | |
Business Combinations [Abstract] | |
Acquisitions | 3. Acquisitions On February 12, 2020, the Company acquired the operator business of Circle Media Labs Inc. (“Circle”) pursuant to a certain Asset Purchase Agreement by and between the Company and Circle. The following table summarizes the consideration paid for the Circle acquisition in 2020 (unaudited, in thousands): Fair value of assets acquired $ 14,966 Fair value of liabilities assumed 1,466 Total purchase price $ 13,500 Components of purchase price: Cash $ 12,150 Cash holdback 1,350 Total purchase price $ 13,500 The Company’s preliminary allocation of the purchase price is summarized as follows (unaudited, in thousands): Assets: Inventory, net $ 14 Intangible assets 11,256 Goodwill 3,696 Total assets $ 14,966 Liabilities: Deferred revenue $ 1,290 Amounts due to seller 176 Total liabilities 1,466 Total purchase price $ 13,500 Pursuant to the transaction, Smith Micro acquired certain assets related to the Circle operator business, including two new customer contracts and a source code license to Circle’s then deployed parental control software and related technology. Unaudited pro forma results of operations for the three and nine months ended September 30, 2020 and 2019 are included below as if the Circle acquisition occurred on January 1, 2019. This summary of the unaudited pro forma results of operations is not necessarily indicative of what the Company’s results of operations would have been had the operator business of Circle been acquired at the beginning of 2019, nor does it purport to represent results of operations for any future periods. For the Three Months Ended September 30, For the Nine Months Ended September 30, 2020 2019 2020 2019 (unaudited, in thousands, except per share amounts) (unaudited, in thousands, except per share amounts) Revenues $ 12,629 $ 12,909 $ 39,350 $ 33,860 Net income 161 3,821 3,645 6,211 Earnings per share: Basic $ 0.00 $ 0.10 $ 0.09 $ 0.19 Diluted $ 0.00 $ 0.10 $ 0.09 $ 0.18 |
Goodwill
Goodwill | 9 Months Ended |
Sep. 30, 2020 | |
Goodwill And Intangible Assets Disclosure [Abstract] | |
Goodwill | 4. Goodwill In accordance with FASB ASC Topic No. 350, Intangibles-Goodwill and Other |
Earnings Per Share
Earnings Per Share | 9 Months Ended |
Sep. 30, 2020 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | 5. Earnings Per Share The Company calculates earnings per share (“EPS”) as required by FASB ASC Topic No. 260, Earnings Per Share The following table sets forth the details of basic and diluted earnings per share: For the Three Months Ended September 30, For the Nine Months Ended September 30, 2020 2019 2020 2019 (unaudited, in thousands, except per share amounts) (unaudited, in thousands, except per share amounts) Numerator: Net income $ 161 $ 3,567 $ 3,585 $ 7,051 Dividends paid to preferred stockholders — (52 ) — (119 ) Net income available to common stockholders $ 161 $ 3,515 $ 3,585 $ 6,932 Denominator: Weighted average shares outstanding – basic 41,351 36,094 40,656 33,170 Potential common shares – options / warrants (treasury stock method) 1,675 3,378 1,921 2,117 Weighted average shares outstanding – diluted 43,026 39,472 42,577 35,287 Shares excluded (anti-dilutive) 101 67 101 131 Net earnings per common share: Basic $ 0.00 $ 0.10 $ 0.09 $ 0.21 Diluted $ 0.00 $ 0.09 $ 0.08 $ 0.20 |
Stock-Based Compensation
Stock-Based Compensation | 9 Months Ended |
Sep. 30, 2020 | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | |
Stock-Based Compensation | 6. Stock-Based Compensation Stock Plans During the three and nine months ended September 30, 2020, the Company granted 0 and 1,000,000 shares of restricted stock, respectively, and incentive stock options exercisable for 0 and 22,000 shares, respectively, under the Company’s 2015 Omnibus Equity Incentive Plan, as amended (the “2015 Plan”). As of September 30, 2020, there were approximately 5.1 million shares available for future grants under the Company’s 2015 Plan. |
Revenues
Revenues | 9 Months Ended |
Sep. 30, 2020 | |
Revenue From Contract With Customer [Abstract] | |
Revenues | 7. Revenues Revenue Recognition We primarily sell our software solutions, cloud-based services and consulting services to major wireless network and cable operators. We sell our off-the-shelf Graphics software products directly to end users as well as through our distribution and reseller channel partners. We recognize sales of goods and services based on the five-step analysis of transactions as provided in Topic 606. For all contracts with customers, we first identify the contract which usually is established when a contract is fully executed by each party and consideration is expected to be received. Next, we identify the performance obligations in the contract. A performance obligation is a promise in a contract to transfer a distinct good or service to the customer. We then determine the transaction price in the arrangement and allocate the transaction price, if necessary, to each performance obligation identified in the contract. The allocation of the transaction price to the performance obligations are based on the relative standalone selling prices for the goods and services contained in a particular performance obligation. The transaction price is adjusted for the Company’s estimate of variable consideration which may include certain incentives and discounts, product returns, distributor fees, and storage fees. We evaluate the total amount of variable consideration expected to be earned by using the expected value method, as we believe this method represents the most appropriate estimate for this consideration, based on historical service trends, the individual contract considerations and our best judgment at the time. We include estimates of variable consideration in revenues only to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. We also generate the majority of our revenue on usage based fees which are variable and depend entirely on our customers use of perpetual licenses, transactions processed on our hosted environment, advertisement placements on our service platform, and activity on our cloud based service platform. As discussed in Note 3, on February 12, 2020, we purchased two customer contracts from Circle. Under these contracts, we provide our customers with licenses to software solutions and related services, for which we earn license fees, managed and hosting service fees, and consulting services which are provided throughout the life of the licensing arrangement. Our contracts with the Tier 1 customers include promises to transfer multiple products and services. Determining whether products and services are considered distinct performance obligations that should be accounted for separately versus together may require significant judgment. Our cloud-based service includes a software solution license integrated with cloud-based services. Judgment is required to determine whether the software license is considered distinct and accounted for separately, or not distinct and accounted for together with the cloud service and recognized over time. Since we do not allow our customers to take possession of the software solution, and since the utility of the license comes from the could-based services that we provide, we consider the software license and the cloud services to be single performance obligation. We provide the Circle software solution license together with highly integrated consulting services to generate the utility of the license to the customers. Since the software solution and consulting services provided are highly interrelated, we consider the license and the consulting services to be a single performance obligation. We also provide consulting services to configure ad hoc targeted promotional content to be presented on our solutions as well as consulting services to provide additional functionality for our software solutions based on our customer’s request. These requests are driven by our customer’s marketing initiatives and tend to be short term “bursts” of activity or specific incremental functionality to existing software solutions. We recognize these revenues upon delivery and acceptance of the configured promotional content or additional functionality to the software solution. We have made accounting policy elections to exclude all taxes by governmental authorities from the measurement of the transaction price, and since our standard payment terms are less than one year, we have elected the practical expedient not to assess whether a contract has a significant financing component. Deferred Revenue Deferred revenue represents amounts billed to customers for which revenue has not been recognized. Deferred revenue primarily consists of the unearned portion of monthly, quarterly and annually billed service fees and prepayments made by customers for a future period. We recognize revenue upon transfer of control. As of September 30, 2020, our total deferred revenue balance was $1.6 million, of which $1.5 million was related to the acquisition of the Circle operator business. Disaggregation of Revenues We disaggregate revenue by our Wireless and Graphics products. Revenues on a disaggregated basis are as follows (in thousands): For the Three Months Ended September 30, For the Nine Months Ended September 30, 2020 2019 2020 2019 (unaudited) (unaudited) Wireless: License and service fees $ 1,006 $ — $ 2,569 $ — Hosted environment usage fees 4,555 4,916 13,444 14,863 Cloud based usage fees 6,068 5,650 20,420 13,079 Consulting services and other 880 1,048 1,991 2,480 Total wireless $ 12,509 $ 11,614 $ 38,424 $ 30,422 Graphics: Software 120 168 459 646 Total revenues $ 12,629 $ 11,782 $ 38,883 $ 31,068 |
Segment, Customer Concentration
Segment, Customer Concentration and Geographical Information | 9 Months Ended |
Sep. 30, 2020 | |
Segment Reporting [Abstract] | |
Segment, Customer Concentration and Geographical Information | 8. Segment, Customer Concentration and Geographical Information Segment Information Public companies are required to report financial and descriptive information about their reportable operating segments as required by FASB ASC Topic No. 280, Segment Reporting The Company does not separately allocate operating expenses to these business units, nor does it allocate specific assets. Therefore, business unit information reported includes only revenues. The following table presents the Wireless revenues by product (in thousands): For the Three Months Ended September 30, For the Nine Months Ended September 30, 2020 2019 2020 2019 (unaudited) (unaudited) SafePath $ 6,755 $ 5,200 $ 21,948 $ 11,108 CommSuite 4,542 4,602 13,411 13,957 ViewSpot 1,157 1,260 2,873 3,673 Netwise 33 493 118 1,492 Other 22 59 74 192 Total wireless revenues $ 12,509 $ 11,614 $ 38,424 $ 30,422 Customer Concentration Information Revenues generated from our sales to Sprint and, subsequent to its April 2020 merger with Sprint, the combined T-Mobile, and their respective affiliates in the Wireless business segment accounted for 76% and 83% of the Company’s total revenues for the three months ended September 30, 2020 and 2019, respectively, and 85% and 81% for the nine months ended September 30, 2020 and 2019, respectively. T-Mobile comprised 70% and Sprint comprised 80% Geographical Information During the nine months ended September 30, 2020 and 2019, the Company operated in three geographic locations; the Americas, EMEA (Europe, the Middle East, and Africa), and Asia Pacific. Revenues attributed to the geographic location of the customers’ bill-to address were as follows (in thousands): For the Three Months Ended September 30, For the Nine Months Ended September 30, 2020 2019 2020 2019 (unaudited) (unaudited) Americas $ 12,045 $ 11,755 $ 37,451 $ 30,978 EMEA 581 18 1,411 56 Asia Pacific 3 9 21 34 Total revenues $ 12,629 $ 11,782 $ 38,883 $ 31,068 The Company does not separately allocate specific assets to these geographic locations. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2020 | |
Commitments And Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 9. Commitments and Contingencies Litigation The Company may become involved in various legal proceedings arising from its business activities. While management does not believe the ultimate disposition of these matters will have a material adverse impact on the Company’s consolidated results of operations, cash flows, or financial position, litigation is inherently unpredictable, and depending on the nature and timing of these proceedings, an unfavorable resolution could materially affect the Company’s future consolidated results of operations, cash flows, or financial position in a particular period. Other Contingent Contractual Obligations During its normal course of business, the Company has made certain indemnities, commitments, and guarantees under which it may be required to make payments in connection with certain transactions. These include: intellectual property indemnities to the Company’s customers and licensees in connection with the use, sale, and/or license of Company products; indemnities to various lessors in connection with facility leases for certain claims arising from use of such facility or under such lease; indemnities to vendors and service providers pertaining to claims based on the negligence or willful misconduct of the Company; indemnities involving the accuracy of representations and warranties in certain contracts; and indemnities to directors and officers of the Company to the maximum extent permitted under the laws of the State of Delaware. In addition, the Company has made contractual commitments to employees providing for severance payments upon the occurrence of certain prescribed events. The Company may also issue a guarantee in the form of a standby letter of credit as security for contingent liabilities under certain customer contracts. The duration of these indemnities, commitments, and guarantees varies, and in certain cases may be indefinite. The majority of these indemnities, commitments, and guarantees may not provide for any limitation of the maximum potential for future payments the Company could be obligated to make. The Company has not recorded any liability for these indemnities, commitments, and guarantees in the accompanying consolidated balance sheets. |
Leases
Leases | 9 Months Ended |
Sep. 30, 2020 | |
Leases [Abstract] | |
Leases | 10. Leases The Company leases office space and equipment, and certain office space is subleased. Management determines if a contract is a lease at the inception of the arrangement and reviews all options to extend, terminate, or purchase its right-of-use assets at the inception of the lease and accounts for these options when they are reasonably certain of being exercised. Leases with an initial term of greater than twelve months are recorded on the consolidated balance sheet. Lease expense is recognized on a straight-line basis over the lease term. The Company’s lease contracts generally do not provide a readily determinable implicit rate. For these contracts, the estimated incremental borrowing rate is based on information available at the inception of the lease. Operating lease cost consists of the following (in thousands): For the Three Months Ended September 30, For the Nine Months Ended September 30, 2020 2019 2020 2019 (unaudited) Lease cost $ 558 $ 518 $ 1,673 $ 1,553 Sublease income (151 ) (151 ) (452 ) (452 ) Total lease cost $ 407 $ 367 $ 1,221 $ 1,101 The maturity of operating lease liabilities is presented in the following table (in thousands): As of September 30, 2020 (unaudited) 2020 $ 450 2021 1,785 2022 1,535 2023 1,522 2024 1,182 Thereafter 1,158 Total lease payments 7,632 Less imputed interest (1,104 ) Present value of lease liabilities $ 6,528 Additional information relating to the Company’s operating leases follows: As of September 30, 2020 (unaudited) Weighted average remaining lease term (years) 4.70 Weighted average discount rate 6.85 % |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 11. Income Taxes We account for income taxes as required by FASB ASC Topic No. 740, Income Taxes The Company assesses whether a valuation allowance should be recorded against its deferred tax assets based on the consideration of all available evidence, using a “more likely than not” realization standard. The four sources of taxable income that must be considered in determining whether deferred tax assets will be realized are: (1) future reversals of existing taxable temporary differences (i.e., offset of gross deferred tax liabilities against gross deferred tax assets); (2) taxable income in prior carryback years, if carryback is permitted under the applicable tax law; (3) tax planning strategies; and (4) future taxable income exclusive of reversing temporary differences and carryforwards. In assessing whether a valuation allowance is required, significant weight is to be given to evidence that can be objectively verified. A significant factor in the Company’s assessment is that the Company was in a five-year After a review of the four sources of taxable income as of December 31, 2019, and after consideration of the Company’s cumulative loss position as of December 31, 2019, the Company will continue to reserve its U.S.-based deferred tax amounts, which total $50.4 million as of September 30, 2020. The Company is subject to U.S. federal income tax as well as income tax of multiple state jurisdictions. Currently there are no audits in process or pending from Federal or state tax authorities. State income tax returns are subject to examination for a period of three to four years after filing. As of December 31, 2019, the company had no outstanding tax audits. The outcome of tax audits cannot be predicted with certainty. If any issues addressed in the Company’s tax audits are resolved in a manner not consistent with management’s expectations, the Company could be required to adjust its provision for income tax in the period such resolution occurs. We may from time to time be assessed interest or penalties by major tax jurisdictions, although any such assessments historically have been minimal and immaterial to our consolidated financial results. It is the Company’s policy to classify any interest and/or penalties in the consolidated financial statements as a component of income tax expense. On March 27, 2020, President Trump signed into U.S. federal law the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), which is aimed at providing emergency assistance and health care for individuals, families and businesses affected by the COVID-19 pandemic and generally supporting the U.S. economy. The CARES Act, among other things, includes provisions relating to refundable payroll tax credits, deferment of employer side social security payments, net operating loss carryback periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitations and technical corrections to tax depreciation methods for qualified improvement property. In particular, under the CARES Act, (i) for taxable years beginning before 2021, net operating loss carryforwards and carrybacks may offset 100% of taxable income, (ii) NOLs arising in 2018, 2019 and 2020 taxable years may be carried back to each of the preceding five years to generate a refund and (iii) for taxable years beginning in 2019 and 2020, the base for interest deductibility is increased from 30% to 50% of EBITDA. We continue to analyze the different aspects of the CARES Act to determine whether any specific provisions may impact us. |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Events | 12. Subsequent Events The Company evaluates and discloses subsequent events as required by FASB ASC Topic No. 855, Subsequent Events |
Accounting Policies (Policies)
Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2020 | |
Accounting Policies [Abstract] | |
The Company | The Company Smith Micro Software, Inc. (“Smith Micro”, the “Company”, “we”, “us”, or “our”) develops software to simplify and enhance the mobile experience, providing solutions to some of the leading wireless and cable service providers around the world. From enabling the family digital lifestyle to providing powerful voice messaging capabilities, we strive to enrich today’s connected lifestyles while creating new opportunities to engage consumers via smartphones and consumer IoT devices. Our portfolio includes a wide range of products for creating, sharing and monetizing rich content, such as visual voice messaging, retail content display optimization and performance analytics on any product set. |
Basis of Presentation | Basis of Presentation The accompanying interim consolidated balance sheet as of September 30, 2020, and the related consolidated statements of operations, stockholders’ equity and cash flows for each of the three and nine months ended September 30, 2020 and 2019, are unaudited. The unaudited consolidated financial statements have been prepared according to the rules and regulations of the Securities and Exchange Commission (“SEC”) and, therefore, certain information and disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) have been omitted. In the opinion of management, the accompanying unaudited consolidated financial statements for the periods presented reflect all adjustments which are normal and recurring, and necessary to fairly state the financial position, results of operations, and cash flows of the Company. These unaudited consolidated financial statements should be read in conjunction with the audited financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019 filed with the SEC on March 13, 2020. Intercompany balances and transactions have been eliminated in consolidation. Operating results for the three and nine months ended September 30, 2020 are not necessarily indicative of the results that may be expected for any other interim period or for the fiscal year ending December 31, 2020. |
Impact of COVID-19 | Impact of COVID-19 In March 2020, the World Health Organization categorized coronavirus disease 2019 (COVID-19) as a pandemic, and the President of the United States declared the COVID-19 outbreak a national emergency. COVID-19 continues to spread throughout the United States and other countries across the world, and the duration and severity of its effects are currently unknown. While the response to the COVID-19 outbreak continues to rapidly evolve, it has led to stay-at-home orders and social distancing guidelines that have seriously disrupted activities in large segments of the economy. During the second and third quarters of 2020, we saw a reduction in the number of SafePath ® The severity of the impact of the COVID-19 pandemic on the Company’s business will depend on a number of factors, including, but not limited to, the duration and severity of the pandemic and the extent and severity of the impact on the Company’s customers, all of which are uncertain and cannot be predicted. As the impact of the COVID-19 pandemic on the economy and the Company’s operations continues to evolve, we will continue to monitor the impact on the Company’s operations and, if needed, postpone non-essential capital expenditures, reduce operating costs, and substantially reduce discretionary spending. |
Revenue Recognition | Revenue Recognition The Company adopted FASB ASC Topic No. 606, Revenue from Contracts with Customers, In our Wireless segment, we transfer software licenses to our customers on a royalty free, non-exclusive, non-transferrable, limited use basis during the term of the agreement. In some instances, we perform customization services to ensure the software operates within our customer’s operating platforms as well as the operating platforms of the mobile devices used by their end customers , before transferring the license. Revenue related to these services is recognized at a point in time upon acceptance of the software license by the customer. We also earn usage based revenue on our platforms. Usage based revenue is generated based on active licenses used by our customer’s end customers, the provision of hosting services, revenue share based on media placements o n our platform, and use of our cloud b ased services. We recognize our usage based revenue when we have completed our performance obligation and have the right to invoice the customer. This revenue is generally recognized monthly or quarterly. Finally, in this segment, we ratably recognize revenue over the contract period when customers pay in advance of our service delivery. On February 12, 2020, we acquired certain assets from Circle (as defined in Note 3 below), including a source code license to Circle’s parental control software solution and two customer contracts. Pursuant to these contracts, the customer parties thereto license the parental control software solution for distribution to their respective subscribers in designated markets. In each case, the contracts allow the customer to take possession of the software solution and to host it on their platform or with an independent third party hosting service provider without significant cost. We also provide significant services that are required by the customer to ensure they have the utility of the license. As the license to the software solution and the services we provide are highly interrelated, we have concluded that the license and our services are a single performance obligation. The license fee is earned and recognized on a pro-rata basis over the contract term based on our customer’s continued use of the license and our services. We also provide consulting services to develop customer-specified functionality that are generally not on our software development roadmap. We recognize revenue from our consulting services upon delivery and acceptance by the customer of our software enhancements and upgrades. For certain Wireless segment customers we provide maintenance and technology support services for which the customer either pays upfront or as we provide the services. When the customer pays upfront, we record the payments as contract liabilities and recognize revenue ratably over the contract period as this is our stand ready performance obligation that is satisfied ratably over the maintenance and technology services period. We receive upfront payments from customers from services to be provided under our ViewSpot® contracts. The advance receipts are deferred and subsequently recognized ratably over the contract period. We also provide consulting services to configure ad hoc targeted promotional content for our customers upon request. These requests are driven by our customers’ marketing initiatives and tend to be short term “bursts” of activity. We recognize these revenues upon delivery of the configured promotional content to the cloud platform. For our Graphics products where we sell off-the-shelf software products with no customization or post sale technology support services, we recognize revenue at the time we transfer control of the product to the customer. This occurs upon shipment of the product or when the customer downloads the software from our website or website of our resellers. We offer a 30 day return option to our customers; a return reserve is established at the time revenue is recorded and the reserve is monitored and adjusted based on actual experience. Historically, returns have been insignificant. |
Fair Value Measurements | Fair Value Measurements The Company measures and discloses fair value measurements as required by FASB ASC Topic No. 820, Fair Value Measurements and Disclosures Fair value is an exit price, representing the amount that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants. As such, fair value is a market-based measurement that is determined based on assumptions that market participants would use in pricing an asset or a liability. As a basis for considering such assumptions, the FASB establishes a three-tier value hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value: • Level 1 - Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets • Level 2 - Include other inputs that are directly or indirectly observable in the marketplace • Level 3 - Unobservable inputs which are supported by little or no market activity The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. As required by FASB ASC Topic No. 820, we measure our cash and cash equivalents at fair value. Our cash equivalents are classified within Level 1 by using quoted market prices utilizing market observable inputs. As required by FASB ASC Topic No. 350, for goodwill and other intangibles impairment analysis, we utilize fair value measurements which are categorized within Level 3 of the fair value hierarchy . |
Goodwill | Goodwill In accordance with FASB ASC Topic No. 350, Intangibles-Goodwill and Other |
Earnings Per Share | Earnings Per Share The Company calculates earnings per share (“EPS”) as required by FASB ASC Topic No. 260, Earnings Per Share The following table sets forth the details of basic and diluted earnings per share: For the Three Months Ended September 30, For the Nine Months Ended September 30, 2020 2019 2020 2019 (unaudited, in thousands, except per share amounts) (unaudited, in thousands, except per share amounts) Numerator: Net income $ 161 $ 3,567 $ 3,585 $ 7,051 Dividends paid to preferred stockholders — (52 ) — (119 ) Net income available to common stockholders $ 161 $ 3,515 $ 3,585 $ 6,932 Denominator: Weighted average shares outstanding – basic 41,351 36,094 40,656 33,170 Potential common shares – options / warrants (treasury stock method) 1,675 3,378 1,921 2,117 Weighted average shares outstanding – diluted 43,026 39,472 42,577 35,287 Shares excluded (anti-dilutive) 101 67 101 131 Net earnings per common share: Basic $ 0.00 $ 0.10 $ 0.09 $ 0.21 Diluted $ 0.00 $ 0.09 $ 0.08 $ 0.20 |
Segment Information | Segment Information Public companies are required to report financial and descriptive information about their reportable operating segments as required by FASB ASC Topic No. 280, Segment Reporting |
Income Taxes | We account for income taxes as required by FASB ASC Topic No. 740, Income Taxes |
Acquisitions (Tables)
Acquisitions (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Business Combinations [Abstract] | |
Summary of Consideration Paid for Acquisitions | The following table summarizes the consideration paid for the Circle acquisition in 2020 (unaudited, in thousands): Fair value of assets acquired $ 14,966 Fair value of liabilities assumed 1,466 Total purchase price $ 13,500 Components of purchase price: Cash $ 12,150 Cash holdback 1,350 Total purchase price $ 13,500 |
Summary of Preliminary Allocation of Purchase Price | The Company’s preliminary allocation of the purchase price is summarized as follows (unaudited, in thousands): Assets: Inventory, net $ 14 Intangible assets 11,256 Goodwill 3,696 Total assets $ 14,966 Liabilities: Deferred revenue $ 1,290 Amounts due to seller 176 Total liabilities 1,466 Total purchase price $ 13,500 |
Summary of Unaudited Proforma Results of Operation | Unaudited pro forma results of operations for the three and nine months ended September 30, 2020 and 2019 are included below as if the Circle acquisition occurred on January 1, 2019. This summary of the unaudited pro forma results of operations is not necessarily indicative of what the Company’s results of operations would have been had the operator business of Circle been acquired at the beginning of 2019, nor does it purport to represent results of operations for any future periods. For the Three Months Ended September 30, For the Nine Months Ended September 30, 2020 2019 2020 2019 (unaudited, in thousands, except per share amounts) (unaudited, in thousands, except per share amounts) Revenues $ 12,629 $ 12,909 $ 39,350 $ 33,860 Net income 161 3,821 3,645 6,211 Earnings per share: Basic $ 0.00 $ 0.10 $ 0.09 $ 0.19 Diluted $ 0.00 $ 0.10 $ 0.09 $ 0.18 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Earnings Per Share [Abstract] | |
Details of Basic and Diluted Earnings Per Share | The following table sets forth the details of basic and diluted earnings per share: For the Three Months Ended September 30, For the Nine Months Ended September 30, 2020 2019 2020 2019 (unaudited, in thousands, except per share amounts) (unaudited, in thousands, except per share amounts) Numerator: Net income $ 161 $ 3,567 $ 3,585 $ 7,051 Dividends paid to preferred stockholders — (52 ) — (119 ) Net income available to common stockholders $ 161 $ 3,515 $ 3,585 $ 6,932 Denominator: Weighted average shares outstanding – basic 41,351 36,094 40,656 33,170 Potential common shares – options / warrants (treasury stock method) 1,675 3,378 1,921 2,117 Weighted average shares outstanding – diluted 43,026 39,472 42,577 35,287 Shares excluded (anti-dilutive) 101 67 101 131 Net earnings per common share: Basic $ 0.00 $ 0.10 $ 0.09 $ 0.21 Diluted $ 0.00 $ 0.09 $ 0.08 $ 0.20 |
Revenues (Tables)
Revenues (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Revenue From Contract With Customer [Abstract] | |
Schedule of Revenues on Disaggregated Basis | Revenues on a disaggregated basis are as follows (in thousands): For the Three Months Ended September 30, For the Nine Months Ended September 30, 2020 2019 2020 2019 (unaudited) (unaudited) Wireless: License and service fees $ 1,006 $ — $ 2,569 $ — Hosted environment usage fees 4,555 4,916 13,444 14,863 Cloud based usage fees 6,068 5,650 20,420 13,079 Consulting services and other 880 1,048 1,991 2,480 Total wireless $ 12,509 $ 11,614 $ 38,424 $ 30,422 Graphics: Software 120 168 459 646 Total revenues $ 12,629 $ 11,782 $ 38,883 $ 31,068 |
Segment, Customer Concentrati_2
Segment, Customer Concentration and Geographical Information (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Segment Reporting [Abstract] | |
Wireless Revenues by Product | The following table presents the Wireless revenues by product (in thousands): For the Three Months Ended September 30, For the Nine Months Ended September 30, 2020 2019 2020 2019 (unaudited) (unaudited) SafePath $ 6,755 $ 5,200 $ 21,948 $ 11,108 CommSuite 4,542 4,602 13,411 13,957 ViewSpot 1,157 1,260 2,873 3,673 Netwise 33 493 118 1,492 Other 22 59 74 192 Total wireless revenues $ 12,509 $ 11,614 $ 38,424 $ 30,422 |
Company Revenue in Different Geographic Locations | Revenues attributed to the geographic location of the customers’ bill-to address were as follows (in thousands): For the Three Months Ended September 30, For the Nine Months Ended September 30, 2020 2019 2020 2019 (unaudited) (unaudited) Americas $ 12,045 $ 11,755 $ 37,451 $ 30,978 EMEA 581 18 1,411 56 Asia Pacific 3 9 21 34 Total revenues $ 12,629 $ 11,782 $ 38,883 $ 31,068 |
Leases (Tables)
Leases (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Leases [Abstract] | |
Summary of Operating Lease Cost | Operating lease cost consists of the following (in thousands): For the Three Months Ended September 30, For the Nine Months Ended September 30, 2020 2019 2020 2019 (unaudited) Lease cost $ 558 $ 518 $ 1,673 $ 1,553 Sublease income (151 ) (151 ) (452 ) (452 ) Total lease cost $ 407 $ 367 $ 1,221 $ 1,101 |
Summary of Maturity of Operating Lease Liabilities | The maturity of operating lease liabilities is presented in the following table (in thousands): As of September 30, 2020 (unaudited) 2020 $ 450 2021 1,785 2022 1,535 2023 1,522 2024 1,182 Thereafter 1,158 Total lease payments 7,632 Less imputed interest (1,104 ) Present value of lease liabilities $ 6,528 |
Summary of Additional Information Relating to Company's Operating Leases | Additional information relating to the Company’s operating leases follows: As of September 30, 2020 (unaudited) Weighted average remaining lease term (years) 4.70 Weighted average discount rate 6.85 % |
Accounting Policies - Additiona
Accounting Policies - Additional Information (Details) | Feb. 12, 2020Customer |
Circle Media Labs Inc. [Member] | |
Business Acquisition [Line Items] | |
Number of customer contracts | 2 |
Acquisitions - Summary of Consi
Acquisitions - Summary of Consideration Paid for Acquisitions (Detail) - Circle Media Labs Inc. [Member] $ in Thousands | Feb. 12, 2020USD ($) |
Business Acquisition [Line Items] | |
Fair value of assets acquired | $ 14,966 |
Fair value of liabilities assumed | 1,466 |
Total purchase price | 13,500 |
Components of purchase price: | |
Cash | 12,150 |
Cash holdback | 1,350 |
Total purchase price | $ 13,500 |
Acquisitions - Summary of Preli
Acquisitions - Summary of Preliminary Allocation of Purchase Price (Detail) - USD ($) $ in Thousands | Sep. 30, 2020 | Feb. 12, 2020 | Dec. 31, 2019 |
Business Acquisition [Line Items] | |||
Goodwill | $ 11,493 | $ 7,797 | |
Circle Media Labs Inc. [Member] | |||
Business Acquisition [Line Items] | |||
Inventory, net | $ 14 | ||
Intangible assets | 11,256 | ||
Goodwill | 3,696 | ||
Total assets | 14,966 | ||
Deferred revenue | 1,290 | ||
Amounts due to seller | 176 | ||
Total liabilities | 1,466 | ||
Total purchase price | $ 13,500 |
Acquisitions - Additional Infor
Acquisitions - Additional Information (Detail) | Feb. 12, 2020Customer |
Circle Media Labs Inc. [Member] | |
Business Acquisition [Line Items] | |
Number of customer contracts | 2 |
Acquisitions - Summary of Unaud
Acquisitions - Summary of Unaudited Proforma Results of Operation (Detail) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Business Acquisition Pro Forma Information [Abstract] | ||||
Revenues | $ 12,629 | $ 12,909 | $ 39,350 | $ 33,860 |
Net income | $ 161 | $ 3,821 | $ 3,645 | $ 6,211 |
Earnings per share: | ||||
Basic | $ 0 | $ 0.10 | $ 0.09 | $ 0.19 |
Diluted | $ 0 | $ 0.10 | $ 0.09 | $ 0.18 |
Goodwill - Additional Informati
Goodwill - Additional Information (Detail) - USD ($) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2020 | Dec. 31, 2019 | |
Goodwill And Intangible Assets Disclosure [Abstract] | ||
Goodwill impairment | $ 0 | $ 0 |
Earnings Per Share - Details of
Earnings Per Share - Details of Basic and Diluted Earnings Per Share (Detail) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Numerator: | ||||
Net income | $ 161 | $ 3,567 | $ 3,585 | $ 7,051 |
Dividends paid to preferred stockholders | (52) | (119) | ||
Net income available to common stockholders | $ 161 | $ 3,515 | $ 3,585 | $ 6,932 |
Denominator: | ||||
Weighted average shares outstanding – basic | 41,351 | 36,094 | 40,656 | 33,170 |
Potential common shares – options / warrants (treasury stock method) | 1,675 | 3,378 | 1,921 | 2,117 |
Weighted average shares outstanding – diluted | 43,026 | 39,472 | 42,577 | 35,287 |
Shares excluded (anti-dilutive) | 101 | 67 | 101 | 131 |
Net earnings per common share: | ||||
Basic | $ 0 | $ 0.10 | $ 0.09 | $ 0.21 |
Diluted | $ 0 | $ 0.09 | $ 0.08 | $ 0.20 |
Stock-Based Compensation - Addi
Stock-Based Compensation - Additional Information (Detail) - 2015 Omnibus Equity Incentive Plan [Member] | 3 Months Ended | 9 Months Ended |
Sep. 30, 2020shares | Sep. 30, 2020shares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Number of shares available for future grants | 5,100,000 | 5,100,000 |
Restricted Stock [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Restricted stock, granted | 0 | 1,000,000 |
Incentive Stock Options [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Incentive stock options, exercisable | 0 | 22,000 |
Revenues - Additional Informati
Revenues - Additional Information (Detail) - USD ($) $ in Thousands | Sep. 30, 2020 | Dec. 31, 2019 |
Disaggregation Of Revenue [Line Items] | ||
Deferred revenue | $ 1,561 | $ 98 |
Circle Operator Business [Member] | ||
Disaggregation Of Revenue [Line Items] | ||
Deferred revenue | $ 1,500 |
Revenues - Schedule of Revenues
Revenues - Schedule of Revenues on Disaggregated Basis (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Disaggregation Of Revenue [Line Items] | ||||
Revenues | $ 12,629 | $ 11,782 | $ 38,883 | $ 31,068 |
Wireless [Member] | ||||
Disaggregation Of Revenue [Line Items] | ||||
Revenues | 12,509 | 11,614 | 38,424 | 30,422 |
Wireless [Member] | License and Service Fees [Member] | ||||
Disaggregation Of Revenue [Line Items] | ||||
Revenues | 1,006 | 2,569 | ||
Wireless [Member] | Hosted Environment Usage Fees [Member] | ||||
Disaggregation Of Revenue [Line Items] | ||||
Revenues | 4,555 | 4,916 | 13,444 | 14,863 |
Wireless [Member] | Cloud Based Usage Fees [Member] | ||||
Disaggregation Of Revenue [Line Items] | ||||
Revenues | 6,068 | 5,650 | 20,420 | 13,079 |
Wireless [Member] | Consulting Services and Other [Member] | ||||
Disaggregation Of Revenue [Line Items] | ||||
Revenues | 880 | 1,048 | 1,991 | 2,480 |
Graphics [Member] | Software [Member] | ||||
Disaggregation Of Revenue [Line Items] | ||||
Revenues | $ 120 | $ 168 | $ 459 | $ 646 |
Segment, Customer Concentrati_3
Segment, Customer Concentration and Geographical Information - Additional Information (Detail) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020Business_UnitLocation | Sep. 30, 2019Location | |
Revenue, Major Customer [Line Items] | ||||
Number of primary business units | Business_Unit | 1 | |||
Number of geographic locations | Location | 3 | 3 | ||
Customer Concentration Risk [Member] | Accounts Receivable [Member] | T-Mobile [Member] | ||||
Revenue, Major Customer [Line Items] | ||||
Concentration percentage | 70.00% | 70.00% | ||
Customer Concentration Risk [Member] | Accounts Receivable [Member] | Sprint [Member] | ||||
Revenue, Major Customer [Line Items] | ||||
Concentration percentage | 80.00% | 80.00% | ||
Customer Concentration Risk [Member] | Revenues [Member] | Sprint, T-Mobile and Respective Affiliates [Member] | Wireless [Member] | ||||
Revenue, Major Customer [Line Items] | ||||
Concentration percentage | 76.00% | 83.00% | 85.00% | 81.00% |
Segment, Customer Concentrati_4
Segment, Customer Concentration and Geographical Information - Wireless Revenues by Product (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Revenue from External Customer [Line Items] | ||||
Total revenues | $ 12,629 | $ 11,782 | $ 38,883 | $ 31,068 |
Wireless [Member] | ||||
Revenue from External Customer [Line Items] | ||||
Total revenues | 12,509 | 11,614 | 38,424 | 30,422 |
Wireless [Member] | SafePath [Member] | ||||
Revenue from External Customer [Line Items] | ||||
Total revenues | 6,755 | 5,200 | 21,948 | 11,108 |
Wireless [Member] | CommSuite [Member] | ||||
Revenue from External Customer [Line Items] | ||||
Total revenues | 4,542 | 4,602 | 13,411 | 13,957 |
Wireless [Member] | ViewSpot [Member] | ||||
Revenue from External Customer [Line Items] | ||||
Total revenues | 1,157 | 1,260 | 2,873 | 3,673 |
Wireless [Member] | Netwise [Member] | ||||
Revenue from External Customer [Line Items] | ||||
Total revenues | 33 | 493 | 118 | 1,492 |
Wireless [Member] | Other [Member] | ||||
Revenue from External Customer [Line Items] | ||||
Total revenues | $ 22 | $ 59 | $ 74 | $ 192 |
Segment, Customer Concentrati_5
Segment, Customer Concentration and Geographical Information - Company Revenue in Different Geographic Locations (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Revenue from External Customer [Line Items] | ||||
Total revenues | $ 12,629 | $ 11,782 | $ 38,883 | $ 31,068 |
Americas [Member] | Reportable Geographical Components [Member] | ||||
Revenue from External Customer [Line Items] | ||||
Total revenues | 12,045 | 11,755 | 37,451 | 30,978 |
EMEA [Member] | Reportable Geographical Components [Member] | ||||
Revenue from External Customer [Line Items] | ||||
Total revenues | 581 | 18 | 1,411 | 56 |
Asia Pacific [Member] | Reportable Geographical Components [Member] | ||||
Revenue from External Customer [Line Items] | ||||
Total revenues | $ 3 | $ 9 | $ 21 | $ 34 |
Leases - Additional Information
Leases - Additional Information (Detail) | 9 Months Ended |
Sep. 30, 2020 | |
Lessee Disclosure [Abstract] | |
Operating lease description | The Company leases office space and equipment, and certain office space is subleased. Management determines if a contract is a lease at the inception of the arrangement and reviews all options to extend, terminate, or purchase its right-of-use assets at the inception of the lease and accounts for these options when they are reasonably certain of being exercised. |
Leases - Summary of Operating L
Leases - Summary of Operating Lease Cost (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Lease Cost [Abstract] | ||||
Lease cost | $ 558 | $ 518 | $ 1,673 | $ 1,553 |
Sublease income | (151) | (151) | (452) | (452) |
Total lease cost | $ 407 | $ 367 | $ 1,221 | $ 1,101 |
Leases - Summary of Maturity of
Leases - Summary of Maturity of Operating Lease Liabilities (Detail) $ in Thousands | Sep. 30, 2019USD ($) |
Operating Lease Liabilities Payments Due [Abstract] | |
2020 | $ 450 |
2021 | 1,785 |
2022 | 1,535 |
2023 | 1,522 |
2024 | 1,182 |
Thereafter | 1,158 |
Total lease payments | 7,632 |
Less imputed interest | (1,104) |
Present value of lease liabilities | $ 6,528 |
Leases - Summary of Additional
Leases - Summary of Additional Information Relating to Company's Operating Leases (Detail) | Sep. 30, 2020 |
Leases [Abstract] | |
Weighted average remaining lease term (years) | 4 years 8 months 12 days |
Weighted average discount rate | 6.85% |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Detail) - USD ($) | 9 Months Ended | |
Sep. 30, 2020 | Dec. 31, 2019 | |
Operating Loss Carryforwards [Line Items] | ||
Cumulative loss period | 5 years | |
Reserve on US-based deferred tax amounts | $ 50,400,000 | |
Outstanding tax audit | $ 0 | |
State [Member] | ||
Operating Loss Carryforwards [Line Items] | ||
Federal income tax returns subject to examination description | State income tax returns are subject to examination for a period of three to four years after filing |