Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2022 | Apr. 27, 2022 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Mar. 31, 2022 | |
Document Fiscal Year Focus | 2022 | |
Document Fiscal Period Focus | Q1 | |
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 | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Common Stock, Shares Outstanding | 55,164,084 | |
Entity Current Reporting Status | Yes | |
Entity Shell Company | false | |
Entity File Number | 001-35525 | |
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 | Mar. 31, 2022 | Dec. 31, 2021 |
Current assets: | ||
Cash and cash equivalents | $ 9,831 | $ 16,078 |
Accounts receivable, net of allowance for doubtful accounts and other adjustments of $3 and $2 (2022 and 2021, respectively) | 12,058 | 10,590 |
Prepaid expenses and other current assets | 2,197 | 1,988 |
Total current assets | 24,086 | 28,656 |
Equipment and improvements, net | 2,407 | 2,698 |
Right-of-use assets | 5,372 | 5,710 |
Other assets | 616 | 620 |
Intangible assets, net | 40,987 | 42,631 |
Goodwill | 35,041 | 35,041 |
Total assets | 108,509 | 115,356 |
Current liabilities: | ||
Accounts payable | 3,148 | 3,301 |
Accrued payroll and benefits | 4,026 | 4,055 |
Current operating lease liabilities | 1,401 | 1,400 |
Other accrued liabilities | 722 | 436 |
Deferred revenue | 45 | 176 |
Total current liabilities | 9,342 | 9,368 |
Non-current liabilities: | ||
Operating lease liabilities | 4,072 | 4,467 |
Deferred rent | 795 | 844 |
Deferred tax liabilities, net | 117 | 117 |
Total non-current liabilities | 4,984 | 5,428 |
Commitments and contingencies | ||
Stockholders' equity: | ||
Common stock, par value $0.001 per share; 100,000,000 shares authorized; 55,155,755 and 54,259,390 shares issued and outstanding (2022 and 2021, respectively) | 55 | 54 |
Additional paid-in capital | 353,403 | 352,779 |
Accumulated comprehensive deficit | (259,275) | (252,273) |
Total stockholders’ equity | 94,183 | 100,560 |
Total liabilities and stockholders' equity | $ 108,509 | $ 115,356 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
Statement Of Financial Position [Abstract] | ||
Allowance for doubtful accounts receivable | $ 3 | $ 2 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 55,155,755 | 54,259,390 |
Common stock, shares outstanding | 55,155,755 | 54,259,390 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Income Statement [Abstract] | ||
Revenues | $ 12,735 | $ 11,381 |
Cost of revenues | 3,637 | 1,545 |
Gross profit | 9,098 | 9,836 |
Operating expenses: | ||
Selling and marketing | 2,985 | 2,244 |
Research and development | 7,402 | 4,873 |
General and administrative | 4,045 | 3,658 |
Amortization of intangible assets | 1,645 | 2,298 |
Total operating expenses | 16,077 | 13,073 |
Operating loss | (6,979) | (3,237) |
Other income (expense): | ||
Interest (expense) income, net | (4) | 8 |
Other income, net | 4 | |
Loss before provision for income taxes | (6,983) | (3,225) |
Provision for income tax expense | 19 | |
Net loss | $ (7,002) | $ (3,225) |
Loss per share: | ||
Basic and diluted | $ (0.13) | $ (0.07) |
Weighted average shares outstanding: | ||
Basic and diluted | 54,501 | 43,368 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands | Total | Common Stock [Member] | Additional Paid-in Capital [Member] | Accumulated Comprehensive Deficit [Member] |
BALANCE at Dec. 31, 2020 | $ 58,716 | $ 41 | $ 279,905 | $ (221,230) |
BALANCE, Shares at Dec. 31, 2020 | 41,233,000 | |||
Non-cash compensation recognized on stock options and ESPP | 18 | 18 | ||
Restricted stock grants, net of cancellations | 998 | $ 1 | 997 | |
Restricted stock grants, net of cancellations, shares | 970,000 | |||
Cancellation of shares for payment of withholding tax | (824) | (824) | ||
Cancellation of shares for payment of withholding tax, shares | (121,000) | |||
Employee stock purchase plan | 15 | 15 | ||
Employee stock purchase plan, shares | 4,000 | |||
Common shares issued in stock offering,net of offering costs | 59,898 | $ 10 | 59,888 | |
Common shares issued in stock offering, net offering costs, shares | 9,521,000 | |||
Exercise of common stock warrants | 40 | 40 | ||
Exercise of common stock warrants, shares | 33,000 | |||
Exercise of stock options | 19 | 19 | ||
Exercise of stock options, shares | 6,000 | |||
Net income (loss) | (3,225) | (3,225) | ||
BALANCE at Mar. 31, 2021 | 115,655 | $ 52 | 340,058 | (224,455) |
BALANCE, Shares at Mar. 31, 2021 | 51,646,000 | |||
BALANCE at Dec. 31, 2021 | $ 100,560 | $ 54 | 352,779 | (252,273) |
BALANCE, Shares at Dec. 31, 2021 | 54,259,390 | 54,259,000 | ||
Non-cash compensation recognized on stock options and ESPP | $ 21 | 21 | ||
Restricted stock grants, net of cancellations | 1,045 | $ 1 | 1,044 | |
Restricted stock grants, net of cancellations, shares | 1,005,000 | |||
Cancellation of shares for payment of withholding tax | (474) | (474) | ||
Cancellation of shares for payment of withholding tax, shares | (121,000) | |||
Employee stock purchase plan | 19 | 19 | ||
Employee stock purchase plan, shares | 7,000 | |||
Exercise of stock options | 14 | 14 | ||
Exercise of stock options, shares | 6,000 | |||
Net income (loss) | (7,002) | (7,002) | ||
BALANCE at Mar. 31, 2022 | $ 94,183 | $ 55 | $ 353,403 | $ (259,275) |
BALANCE, Shares at Mar. 31, 2022 | 55,155,755 | 55,156,000 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Operating activities: | ||
Net loss | $ (7,002) | $ (3,225) |
Adjustments to reconcile net loss to net cash (used in) provided by operating activities: | ||
Depreciation and amortization | 1,998 | 2,497 |
Non-cash lease expense | 338 | 307 |
Provision for doubtful accounts and other adjustments to accounts receivable | 5 | (3) |
Provision for excess and obsolete inventory | (97) | |
Stock based compensation | 1,065 | 1,016 |
Changes in operating accounts: | ||
Accounts receivable | (1,472) | 4,018 |
Prepaid expenses and other assets | (218) | 381 |
Accounts payable and accrued liabilities | (1,172) | (649) |
Deferred revenue | (131) | (545) |
Net cash (used in) provided by operating activities | (6,589) | 3,700 |
Investing activities: | ||
Capital expenditures | (63) | (190) |
Other investing activities | 12 | 11 |
Net cash used in investing activities | (51) | (179) |
Financing activities: | ||
Proceeds from common stock offering, net of offering expenses | 59,898 | |
Proceeds from exercise of common stock warrants | 40 | |
Proceeds from financing arrangements | 541 | |
Repayments of financing arrangements | (181) | |
Other financing activities | 33 | 34 |
Net cash provided by financing activities | 393 | 59,972 |
Net (decrease) increase in cash and cash equivalents | (6,247) | 63,493 |
Cash and cash equivalents, beginning of period | 16,078 | 25,754 |
Cash and cash equivalents, end of period | 9,831 | 89,247 |
Supplemental disclosures of cash flow information: | ||
Cash paid for income taxes | $ 41 | $ 23 |
The Company
The Company | 3 Months Ended |
Mar. 31, 2022 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
The Company | 1. The Company Smith Micro Software, Inc. (“Smith Micro” or “the Company”) 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, the Company strives to enrich today’s connected lifestyles while creating new opportunities to engage consumers via smartphones and consumer Internet of Things (“IoT”) devices. Smith Micro’s 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. Smith Micro’s solution portfolio is comprised of proven products that enable its customers to provide: • In-demand digital services that connect today’s digital lifestyle, including family location services, parental controls, and consumer IoT devices to mobile consumers worldwide; • Easy visual access to voice messages on mobile devices through visual voicemail and voice-to-text transcription functionality; and • Strategic, consistent, and measurable digital demonstration experiences that educate retail shoppers, create awareness of products and services, and drive in-store sales, and optimize retail experiences with actionable analytics derived from in-store customer behavior. |
Accounting Policies
Accounting Policies | 3 Months Ended |
Mar. 31, 2022 | |
Accounting Policies [Abstract] | |
Accounting Policies | 2. Accounting Policies Basis of Presentation The accompanying interim consolidated balance sheet as of March 31, 2022, and the related consolidated statements of operations, stockholders’ equity, and cash flows for the three months ended March 31, 2022 and 2021, 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 of America (“US 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 the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021 filed with the SEC on March 11, 2022. Intercompany balances and transactions have been eliminated in consolidation. Certain amounts in the prior period consolidated financial statements have been reclassified for comparative purposes principally to conform to the presentation of the current year period. Operating results for the three months ended March 31, 2022 are not necessarily indicative of the results that may be expected for any other interim period or for the fiscal year ending December 31, 2022. |
Credit Facility
Credit Facility | 3 Months Ended |
Mar. 31, 2022 | |
Line Of Credit Facility [Abstract] | |
Credit Facility | 3. Credit Facility On March 31, 2022, the Company and its wholly-owned subsidiary, Smith Micro Software, LLC, as co-borrowers entered into a credit agreement with Wells Fargo Bank, National Association providing for a $7.0 million secured revolving credit facility (the “Credit Facility”) that can be utilized to finance the Company’s working capital requirements and other general corporate purposes, and of which up to $0.5 million is available for letters of credit. The Credit Facility will mature on March 31, 2023. The loans under the Credit Facility bear interest at the secured overnight financing rate plus 2%. The Credit Facility allows voluntary repayment of outstanding loans at any time without premium or penalty. The Credit Facility is secured by substantially all of The Credit Facility contains representations and warranties, affirmative and negative covenants and events of default customary for financings of this type, including negative covenants that, among other things, limit the ability of the borrowers to incur liens, limit the ability of the borrowers to make certain fundamental changes and limit the ability of the borrowers to incur other indebtedness, in each case subject to exceptions and qualifications. The Credit Facility also contains a current asset coverage ratio covenant for any quarter in which the Credit Facility has an outstanding balance. This covenant requires the ratio of (i) the sum of cash plus marketable securities, plus accounts receivable to (ii) the principal balance outstanding of the Credit Facility to not be less than 2.0 to 1.0. As of March 31, 2022 , there were no borrowings outstanding under the Credit Facility . |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 3 Months Ended |
Mar. 31, 2022 | |
Goodwill And Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets | In accordance with FASB ASC Topic No. 350, Intangibles-Goodwill and Other The components of the Company’s intangible assets were as follows for the periods presented: March 31, 2022 December 31, 2021 (unaudited, in thousands, except for useful life data) (audited, in thousands, except for useful life data) Weighted Average Remaining Useful Life (in Years) Gross Accumulated Amortization Net Book Value Weighted Average Remaining Useful Life (in Years) Gross Accumulated Amortization Net Book Value Purchased technology 7 $ 13,529 $ (4,288 ) $ 9,241 8 $ 13,529 $ (3,764 ) $ 9,765 Customer relationships 13 27,960 (3,337 ) 24,623 13 27,960 (2,816 ) 25,144 Customer contracts 2 7,000 (4,810 ) 2,190 2 7,000 (4,441 ) 2,559 Software license 8 5,419 (983 ) 4,436 9 5,419 (793 ) 4,626 Non-compete 1 283 (215 ) 68 1 283 (196 ) 87 Patents 5 600 (171 ) 429 5 600 (150 ) 450 Total $ 54,791 $ (13,804 ) $ 40,987 $ 54,791 $ (12,160 ) $ 42,631 The Company amortizes intangible assets over the pattern of economic benefit expected to be generated from the use of the assets, with a total weighted average amortization period of approximately 10 years As of March 31, 2022, estimated amortization expense for the remainder of 2022 and thereafter was as follows: Year Ending December 31, Amortization Expense (unaudited, in thousands) 2022 $ 4,666 2023 5,874 2024 5,635 2025 5,402 2026 5,007 2027 and thereafter 14,403 Total $ 40,987 |
Earnings Per Share
Earnings Per Share | 3 Months Ended |
Mar. 31, 2022 | |
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 dilutive common stock equivalents outstanding for the period determined using the treasury-stock method. For periods with a net loss, the dilutive common stock equivalents are excluded from the diluted EPS calculation. For purposes of this calculation, common stock subject to repurchase by the Company, options, and warrants are considered to be common stock equivalents and are only included in the calculation of diluted earnings per share when their effect is dilutive. The following table sets forth the details of basic and diluted earnings per share: For the Three Months Ended March 31, 2022 2021 (unaudited, in thousands, except per share amounts) Numerator: Net loss $ (7,002 ) $ (3,225 ) Denominator: Weighted average shares outstanding – basic 54,501 43,368 Potential common shares – options / warrants (treasury stock method) — — Weighted average shares outstanding – diluted 54,501 43,368 Shares excluded (anti-dilutive) 1,024 2,559 Net loss per common share: Basic $ (0.13 ) $ (0.07 ) Diluted $ (0.13 ) $ (0.07 ) |
Stock-Based Compensation
Stock-Based Compensation | 3 Months Ended |
Mar. 31, 2022 | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | |
Stock-Based Compensation | 6. Stock-Based Compensation Stock Plans During the three months ended March 31, 2022, the Company granted 1.2 million shares of restricted stock under the Company’s 2015 Omnibus Equity Incentive Plan, as amended (the “2015 Plan”). As of March 31, 2022, there were approximately 2.6 million shares available for future grants under the Company’s 2015 Plan. |
Revenues
Revenues | 3 Months Ended |
Mar. 31, 2022 | |
Revenue From Contract With Customer [Abstract] | |
Revenues | 7. Revenues Revenue Recognition In accordance with FASB ASC Topic No. 606, Revenue from Contracts with Customers The Company recognizes sales of goods and services based on the five-step analysis of transactions as provided in Topic 606. For all contracts with customers, the Company first identifies the contract which usually is established when a contract is fully executed by each party and consideration is expected to be received. Next, the Company identifies 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. The Company then determines the transaction price in the arrangement and allocates 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. The Company evaluates the total amount of variable consideration expected to be earned by using the expected value method, as the Company believes this method represents the most appropriate estimate for this consideration, based on historical service trends, the individual contract considerations, and its best judgment at the time. The Company includes 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. The Company also generates the majority of its revenue on usage-based fees which are variable and depend entirely on customers’ use of perpetual licenses, transactions processed on the Company’s hosted environment, advertisement placements on the Company’s service platform, and activity on the Company’s cloud-based service platform. The Company’s contracts with the mobile network operator (“MNO”) 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. Smith Micro’s cloud-based service includes a software solution license integrated with cloud-based services. Since the Company does not allow its customers to take possession of the software solution, and since the utility of the license comes from the cloud-based services that the Company provides, Smith Micro considers the software license and the cloud services to be a single performance obligation. The Company provides the license to the software solution that it acquired from Circle Media Labs Inc. in 2020 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, Smith Micro consider the license and the consulting services to be a single performance obligation. The Company recognizes revenue associated with its MNO customers based on their active subscribers’ access and usage of Smith Micro’s software licenses and cloud-based services on Smith Micro’s platforms. Smith Micro has made accounting policy elections to exclude all taxes by governmental authorities from the measurement of the transaction price, and since the Company’s standard payment terms are less than one year, the Company has elected the practical expedient not to assess whether a contract has a significant financing component. Disaggregation of Revenues Revenues on a disaggregated basis are as follows: For the Three Months Ended March 31, 2022 2021 (unaudited, in thousands) License and service fees $ 828 $ 1,587 Hosted environment usage fees 1,429 4,141 Cloud based usage fees 9,878 4,963 Consulting services and other 600 690 Total revenues $ 12,735 $ 11,381 |
Segment, Customer Concentration
Segment, Customer Concentration and Geographical Information | 3 Months Ended |
Mar. 31, 2022 | |
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 product lines, nor does it allocate specific assets. Therefore, product line information reported includes only revenues. The following table presents the Wireless revenues by product line: For the Three Months Ended March 31, 2022 2021 (unaudited, in thousands) SafePath 10,366 6,267 CommSuite 1,429 4,128 ViewSpot 935 930 Other 5 56 Total wireless revenues $ 12,735 $ 11,381 Customer Concentration Information The Company has certain customers whose revenues individually represented 10% or more of the Company’s total revenues, or whose accounts receivable balances individually represented 10% or more of the Company’s total accounts receivable. For the three months ended March 31, 2022 three customers with over 10% of revenues made up 40%, 37%, and 10% of revenues. For the three months ended March 31, 2021, three customers with over 10% of revenues made up 71%, 10%, and 10% of revenues. As of March 31, 2022, four customers accounted for 36%, 35%, 12%, and 11% of accounts receivable, and as of March 31, 2021, two customers accounted for 61% and 19% of accounts receivable. Geographical Information During the three months ended March 31, 2022 and 2021, the Company operated in two geographic locations: the Americas and Europe, Middle East and Africa (EMEA). Revenues attributed to the geographic location of the customers’ bill-to address were as follows: For the Three Months Ended March 31, 2022 2021 (unaudited, in thousands) Americas $ 12,193 $ 10,144 EMEA 542 1,237 Total revenues $ 12,735 $ 11,381 The Company does not separately allocate specific assets to these geographic locations. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2022 | |
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: indemnities to the Company’s customers pursuant to contracts for the Company’s products and services, including indemnities with respect to intellectual property, confidentiality and data privacy; 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 | 3 Months Ended |
Mar. 31, 2022 | |
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: For the Three Months Ended March 31, 2022 2021 (unaudited, in thousands) Lease cost $ 434 $ 558 Sublease income (18 ) (151 ) Total lease cost $ 416 $ 407 The maturity of operating lease liabilities is presented in the following table: As of March 31, 2022 (unaudited, in thousands) 2022 $ 1,261 2023 1,687 2024 1,526 2025 1,168 2026 481 Total lease payments 6,123 Less imputed interest (650 ) Present value of lease liabilities $ 5,473 Additional information relating to the Company’s operating leases follows: As of March 31, 2022 (unaudited) Weighted average remaining lease term (years) 3.8 Weighted average discount rate 6.2 % |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2022 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 11. Income Taxes The Company accounts for income taxes as required by FASB ASC Topic No. 740, Income Taxes measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The Topic also provides guidance on derecognition, classification, interest and penalties, accounting in interim period s, disclosure, and transition. The Topic requires an entity to recognize the financial statement impact of a tax position when it is more likely than not that the position will be sustained upon examination. The amount recognized is measured as the largest amount of benefit that is greater than fifty percent likely of being real ized upon ultimate settlement. In addition, the Topic permits an entity to recognize interest and penalties related to tax uncertainties as either income tax expense or operating expenses. The Company has chosen to recognize interest and penalties related to tax uncertainties as income tax expense. 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 three-year After a review of the four sources of taxable income as of December 31, 2021, and after consideration of the Company’s cumulative loss position as of December 31, 2021, the Company will continue to reserve its U.S.-based deferred tax amounts, which total $57.3 million as of March 31, 2022. 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. The Company is no longer subject to examination for U.S. federal income tax returns for years before December 31, 2018 and for state income tax returns, the Company is no longer subject to examination for years before December 31, 2017. As of December 31, 2021, 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. Smith Micro 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 the consolidated financial results of the Company. 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. |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2022 | |
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) | 3 Months Ended |
Mar. 31, 2022 | |
Accounting Policies [Abstract] | |
The Company | The Company Smith Micro Software, Inc. (“Smith Micro” or “the Company”) 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, the Company strives to enrich today’s connected lifestyles while creating new opportunities to engage consumers via smartphones and consumer Internet of Things (“IoT”) devices. Smith Micro’s 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. Smith Micro’s solution portfolio is comprised of proven products that enable its customers to provide: • In-demand digital services that connect today’s digital lifestyle, including family location services, parental controls, and consumer IoT devices to mobile consumers worldwide; • Easy visual access to voice messages on mobile devices through visual voicemail and voice-to-text transcription functionality; and • Strategic, consistent, and measurable digital demonstration experiences that educate retail shoppers, create awareness of products and services, and drive in-store sales, and optimize retail experiences with actionable analytics derived from in-store customer behavior. |
Basis of Presentation | Basis of Presentation The accompanying interim consolidated balance sheet as of March 31, 2022, and the related consolidated statements of operations, stockholders’ equity, and cash flows for the three months ended March 31, 2022 and 2021, 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 of America (“US 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 the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021 filed with the SEC on March 11, 2022. Intercompany balances and transactions have been eliminated in consolidation. Certain amounts in the prior period consolidated financial statements have been reclassified for comparative purposes principally to conform to the presentation of the current year period. Operating results for the three months ended March 31, 2022 are not necessarily indicative of the results that may be expected for any other interim period or for the fiscal year ending December 31, 2022. |
Earnings Per Share | Earnings Per Share The Company calculates earnings per share (“EPS”) as required by FASB ASC Topic No. 260, Earnings Per Share dilutive common stock equivalents outstanding for the period determined using the treasury-stock method. For periods with a net loss, the dilutive common stock equivalents are excluded from the diluted EPS calculation. For purposes of this calculation, common stock subject to repurchase by the Company, options, and warrants are considered to be common stock equivalents and are only included in the calculation of diluted earnings per share when their effect is dilutive. The following table sets forth the details of basic and diluted earnings per share: For the Three Months Ended March 31, 2022 2021 (unaudited, in thousands, except per share amounts) Numerator: Net loss $ (7,002 ) $ (3,225 ) Denominator: Weighted average shares outstanding – basic 54,501 43,368 Potential common shares – options / warrants (treasury stock method) — — Weighted average shares outstanding – diluted 54,501 43,368 Shares excluded (anti-dilutive) 1,024 2,559 Net loss per common share: Basic $ (0.13 ) $ (0.07 ) Diluted $ (0.13 ) $ (0.07 ) |
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 | The Company accounts for income taxes as required by FASB ASC Topic No. 740, Income Taxes measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The Topic also provides guidance on derecognition, classification, interest and penalties, accounting in interim period s, disclosure, and transition. The Topic requires an entity to recognize the financial statement impact of a tax position when it is more likely than not that the position will be sustained upon examination. The amount recognized is measured as the largest amount of benefit that is greater than fifty percent likely of being real ized upon ultimate settlement. In addition, the Topic permits an entity to recognize interest and penalties related to tax uncertainties as either income tax expense or operating expenses. The Company has chosen to recognize interest and penalties related to tax uncertainties as income tax expense. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Goodwill And Intangible Assets Disclosure [Abstract] | |
Schedule of Acquired Intangible Assets by Major Asset Class | The components of the Company’s intangible assets were as follows for the periods presented: March 31, 2022 December 31, 2021 (unaudited, in thousands, except for useful life data) (audited, in thousands, except for useful life data) Weighted Average Remaining Useful Life (in Years) Gross Accumulated Amortization Net Book Value Weighted Average Remaining Useful Life (in Years) Gross Accumulated Amortization Net Book Value Purchased technology 7 $ 13,529 $ (4,288 ) $ 9,241 8 $ 13,529 $ (3,764 ) $ 9,765 Customer relationships 13 27,960 (3,337 ) 24,623 13 27,960 (2,816 ) 25,144 Customer contracts 2 7,000 (4,810 ) 2,190 2 7,000 (4,441 ) 2,559 Software license 8 5,419 (983 ) 4,436 9 5,419 (793 ) 4,626 Non-compete 1 283 (215 ) 68 1 283 (196 ) 87 Patents 5 600 (171 ) 429 5 600 (150 ) 450 Total $ 54,791 $ (13,804 ) $ 40,987 $ 54,791 $ (12,160 ) $ 42,631 |
Future Amortization Expense Related to Intangible Assets | As of March 31, 2022, estimated amortization expense for the remainder of 2022 and thereafter was as follows: Year Ending December 31, Amortization Expense (unaudited, in thousands) 2022 $ 4,666 2023 5,874 2024 5,635 2025 5,402 2026 5,007 2027 and thereafter 14,403 Total $ 40,987 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
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 March 31, 2022 2021 (unaudited, in thousands, except per share amounts) Numerator: Net loss $ (7,002 ) $ (3,225 ) Denominator: Weighted average shares outstanding – basic 54,501 43,368 Potential common shares – options / warrants (treasury stock method) — — Weighted average shares outstanding – diluted 54,501 43,368 Shares excluded (anti-dilutive) 1,024 2,559 Net loss per common share: Basic $ (0.13 ) $ (0.07 ) Diluted $ (0.13 ) $ (0.07 ) |
Revenues (Tables)
Revenues (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Revenue From Contract With Customer [Abstract] | |
Schedule of Revenues on Disaggregated Basis | Revenues on a disaggregated basis are as follows: For the Three Months Ended March 31, 2022 2021 (unaudited, in thousands) License and service fees $ 828 $ 1,587 Hosted environment usage fees 1,429 4,141 Cloud based usage fees 9,878 4,963 Consulting services and other 600 690 Total revenues $ 12,735 $ 11,381 |
Segment, Customer Concentrati_2
Segment, Customer Concentration and Geographical Information (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Segment Reporting [Abstract] | |
Wireless Revenues by Product | The following table presents the Wireless revenues by product line: For the Three Months Ended March 31, 2022 2021 (unaudited, in thousands) SafePath 10,366 6,267 CommSuite 1,429 4,128 ViewSpot 935 930 Other 5 56 Total wireless revenues $ 12,735 $ 11,381 |
Company Revenue in Different Geographic Locations | Revenues attributed to the geographic location of the customers’ bill-to address were as follows: For the Three Months Ended March 31, 2022 2021 (unaudited, in thousands) Americas $ 12,193 $ 10,144 EMEA 542 1,237 Total revenues $ 12,735 $ 11,381 |
Leases (Tables)
Leases (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Leases [Abstract] | |
Summary of Operating Lease Cost | Operating lease cost consists of the following: For the Three Months Ended March 31, 2022 2021 (unaudited, in thousands) Lease cost $ 434 $ 558 Sublease income (18 ) (151 ) Total lease cost $ 416 $ 407 |
Summary of Maturity of Operating Lease Liabilities | The maturity of operating lease liabilities is presented in the following table: As of March 31, 2022 (unaudited, in thousands) 2022 $ 1,261 2023 1,687 2024 1,526 2025 1,168 2026 481 Total lease payments 6,123 Less imputed interest (650 ) Present value of lease liabilities $ 5,473 |
Summary of Additional Information Relating to Company's Operating Leases | Additional information relating to the Company’s operating leases follows: As of March 31, 2022 (unaudited) Weighted average remaining lease term (years) 3.8 Weighted average discount rate 6.2 % |
Credit Facility - Additional In
Credit Facility - Additional Information (Details) - Wells Fargo Bank, National Association [Member] - Credit Facility [Member] | Mar. 31, 2022USD ($) | Mar. 31, 2022USD ($) |
Line Of Credit Facility [Line Items] | ||
Secured revolving credit facility | $ 7,000,000 | $ 7,000,000 |
Maturity date | Mar. 31, 2023 | |
Ratio of sum of cash plus marketable securities, plus accounts receivable to principal balance outstanding of Credit Facility | 2 | |
Borrowings outstanding | $ 0 | $ 0 |
Secured Overnight Financing Rate [Member] | ||
Line Of Credit Facility [Line Items] | ||
Interest rate description | secured overnight financing rate plus 2% | |
Basis spread on variable rate | 2.00% | |
Available for Letters of Credit [Member] | ||
Line Of Credit Facility [Line Items] | ||
Secured revolving credit facility | $ 500,000 | $ 500,000 |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets - Additional Information (Detail) - USD ($) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2022 | Dec. 31, 2021 | |
Goodwill And Intangible Assets Disclosure [Abstract] | ||
Goodwill impairment | $ 0 | $ 0 |
Weighted average useful life | 10 years | 10 years |
Goodwill and Intangible Asset_3
Goodwill and Intangible Assets - Schedule of Acquired Intangible Assets by Major Asset Class (Detail) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended |
Mar. 31, 2022 | Dec. 31, 2021 | |
Finite Lived Intangible Assets [Line Items] | ||
Gross | $ 54,791 | $ 54,791 |
Accumulated amortization | (13,804) | (12,160) |
Net book value | $ 40,987 | $ 42,631 |
Purchased Technology [Member] | ||
Finite Lived Intangible Assets [Line Items] | ||
Weighted average remaining useful life | 7 years | 8 years |
Gross | $ 13,529 | $ 13,529 |
Accumulated amortization | (4,288) | (3,764) |
Net book value | $ 9,241 | $ 9,765 |
Customer Relationships [Member] | ||
Finite Lived Intangible Assets [Line Items] | ||
Weighted average remaining useful life | 13 years | 13 years |
Gross | $ 27,960 | $ 27,960 |
Accumulated amortization | (3,337) | (2,816) |
Net book value | $ 24,623 | $ 25,144 |
Customer Contracts [Member] | ||
Finite Lived Intangible Assets [Line Items] | ||
Weighted average remaining useful life | 2 years | 2 years |
Gross | $ 7,000 | $ 7,000 |
Accumulated amortization | (4,810) | (4,441) |
Net book value | $ 2,190 | $ 2,559 |
Software License [Member] | ||
Finite Lived Intangible Assets [Line Items] | ||
Weighted average remaining useful life | 8 years | 9 years |
Gross | $ 5,419 | $ 5,419 |
Accumulated amortization | (983) | (793) |
Net book value | $ 4,436 | $ 4,626 |
Non-Compete [Member] | ||
Finite Lived Intangible Assets [Line Items] | ||
Weighted average remaining useful life | 1 year | 1 year |
Gross | $ 283 | $ 283 |
Accumulated amortization | (215) | (196) |
Net book value | $ 68 | $ 87 |
Patents [Member] | ||
Finite Lived Intangible Assets [Line Items] | ||
Weighted average remaining useful life | 5 years | 5 years |
Gross | $ 600 | $ 600 |
Accumulated amortization | (171) | (150) |
Net book value | $ 429 | $ 450 |
Goodwill and Intangible Asset_4
Goodwill and Intangible Assets - Future Amortization Expense Related to Intangible Assets (Detail) - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
Finite Lived Intangible Assets Net [Abstract] | ||
2022 | $ 4,666 | |
2023 | 5,874 | |
2024 | 5,635 | |
2025 | 5,402 | |
2026 | 5,007 | |
2027 and thereafter | 14,403 | |
Total | $ 40,987 | $ 42,631 |
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 | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Numerator: | ||
Net loss | $ (7,002) | $ (3,225) |
Denominator: | ||
Weighted average shares outstanding – basic | 54,501 | 43,368 |
Weighted average shares outstanding – diluted | 54,501 | 43,368 |
Shares excluded (anti-dilutive) | 1,024 | 2,559 |
Net loss per common share: | ||
Basic | $ (0.13) | $ (0.07) |
Diluted | $ (0.13) | $ (0.07) |
Stock-Based Compensation - Addi
Stock-Based Compensation - Additional Information (Detail) - 2015 Omnibus Equity Incentive Plan [Member] shares in Millions | 3 Months Ended |
Mar. 31, 2022shares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Number of shares available for future grants | 2.6 |
Restricted Stock [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Restricted stock, granted | 1.2 |
Revenues - Schedule of Revenues
Revenues - Schedule of Revenues on Disaggregated Basis (Detail) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Disaggregation Of Revenue [Line Items] | ||
Revenues | $ 12,735 | $ 11,381 |
Wireless [Member] | ||
Disaggregation Of Revenue [Line Items] | ||
Revenues | 12,735 | 11,381 |
Wireless [Member] | License and Service Fees [Member] | ||
Disaggregation Of Revenue [Line Items] | ||
Revenues | 828 | 1,587 |
Wireless [Member] | Hosted Environment Usage Fees [Member] | ||
Disaggregation Of Revenue [Line Items] | ||
Revenues | 1,429 | 4,141 |
Wireless [Member] | Cloud Based Usage Fees [Member] | ||
Disaggregation Of Revenue [Line Items] | ||
Revenues | 9,878 | 4,963 |
Wireless [Member] | Consulting Services and Other [Member] | ||
Disaggregation Of Revenue [Line Items] | ||
Revenues | $ 600 | $ 690 |
Segment, Customer Concentrati_3
Segment, Customer Concentration and Geographical Information - Additional Information (Detail) | 3 Months Ended | |
Mar. 31, 2022Business_UnitCustomerLocation | Mar. 31, 2021CustomerLocation | |
Revenue, Major Customer [Line Items] | ||
Number of primary business units | Business_Unit | 1 | |
Number of geographic locations | Location | 2 | 2 |
Customer Concentration Risk | Accounts Receivable [Member] | ||
Revenue, Major Customer [Line Items] | ||
Number of customers concentrated | 4 | 2 |
Customer Concentration Risk | Accounts Receivable [Member] | One Customer [Member] | ||
Revenue, Major Customer [Line Items] | ||
Concentration percentage | 36.00% | 61.00% |
Customer Concentration Risk | Accounts Receivable [Member] | Two Customer [Member] | ||
Revenue, Major Customer [Line Items] | ||
Concentration percentage | 35.00% | 19.00% |
Customer Concentration Risk | Accounts Receivable [Member] | Three Customer [Member] | ||
Revenue, Major Customer [Line Items] | ||
Concentration percentage | 12.00% | |
Customer Concentration Risk | Accounts Receivable [Member] | Four Customer [Member] | ||
Revenue, Major Customer [Line Items] | ||
Concentration percentage | 11.00% | |
Customer Concentration Risk | Revenues [Member] | ||
Revenue, Major Customer [Line Items] | ||
Number of customers concentrated | 3 | 3 |
Customer Concentration Risk | Revenues [Member] | One Customer [Member] | ||
Revenue, Major Customer [Line Items] | ||
Concentration percentage | 40.00% | 71.00% |
Customer Concentration Risk | Revenues [Member] | Two Customer [Member] | ||
Revenue, Major Customer [Line Items] | ||
Concentration percentage | 37.00% | 10.00% |
Customer Concentration Risk | Revenues [Member] | Three Customer [Member] | ||
Revenue, Major Customer [Line Items] | ||
Concentration percentage | 10.00% | 10.00% |
Customer Concentration Risk | Minimum [Member] | Accounts Receivable [Member] | ||
Revenue, Major Customer [Line Items] | ||
Concentration percentage | 10.00% | |
Customer Concentration Risk | Minimum [Member] | Revenues [Member] | ||
Revenue, Major Customer [Line Items] | ||
Concentration percentage | 10.00% | 10.00% |
Segment, Customer Concentrati_4
Segment, Customer Concentration and Geographical Information - Wireless Revenues by Product (Detail) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Revenue from External Customer [Line Items] | ||
Total revenues | $ 12,735 | $ 11,381 |
Wireless [Member] | ||
Revenue from External Customer [Line Items] | ||
Total revenues | 12,735 | 11,381 |
Wireless [Member] | SafePath [Member] | ||
Revenue from External Customer [Line Items] | ||
Total revenues | 10,366 | 6,267 |
Wireless [Member] | CommSuite [Member] | ||
Revenue from External Customer [Line Items] | ||
Total revenues | 1,429 | 4,128 |
Wireless [Member] | ViewSpot [Member] | ||
Revenue from External Customer [Line Items] | ||
Total revenues | 935 | 930 |
Wireless [Member] | Other [Member] | ||
Revenue from External Customer [Line Items] | ||
Total revenues | $ 5 | $ 56 |
Segment, Customer Concentrati_5
Segment, Customer Concentration and Geographical Information - Company Revenue in Different Geographic Locations (Detail) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Revenue from External Customer [Line Items] | ||
Total revenues | $ 12,735 | $ 11,381 |
Americas [Member] | Reportable Geographical Components [Member] | ||
Revenue from External Customer [Line Items] | ||
Total revenues | 12,193 | 10,144 |
EMEA [Member] | Reportable Geographical Components [Member] | ||
Revenue from External Customer [Line Items] | ||
Total revenues | $ 542 | $ 1,237 |
Leases - Additional Information
Leases - Additional Information (Detail) | 3 Months Ended |
Mar. 31, 2022 | |
Leases [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 | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Lease Cost [Abstract] | ||
Lease cost | $ 434 | $ 558 |
Sublease income | (18) | (151) |
Total lease cost | $ 416 | $ 407 |
Leases - Summary of Maturity of
Leases - Summary of Maturity of Operating Lease Liabilities (Detail) $ in Thousands | Mar. 31, 2022USD ($) |
Operating Lease Liabilities Payments Due [Abstract] | |
2022 | $ 1,261 |
2023 | 1,687 |
2024 | 1,526 |
2025 | 1,168 |
2026 | 481 |
Total lease payments | 6,123 |
Less imputed interest | (650) |
Present value of lease liabilities | $ 5,473 |
Leases - Summary of Additional
Leases - Summary of Additional Information Relating to Company's Operating Leases (Detail) | Mar. 31, 2022 |
Leases [Abstract] | |
Weighted average remaining lease term (years) | 3 years 9 months 18 days |
Weighted average discount rate | 6.20% |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Detail) - USD ($) | 3 Months Ended | |
Mar. 31, 2022 | Dec. 31, 2021 | |
Operating Loss Carryforwards [Line Items] | ||
Cumulative loss period | 3 years | |
Valuation allowance | $ 57,300,000 | |
Outstanding tax audit | $ 0 | |
State [Member] | ||
Operating Loss Carryforwards [Line Items] | ||
Federal income tax returns subject to examination description | The Company is no longer subject to examination for U.S. federal income tax returns for years before December 31, 2018 and for state income tax returns, the Company is no longer subject to examination for years before December 31, 2017. |