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Smith Micro Software Reports Third Quarter Financial Results and Announces Completion of Core Mobility Acquisition

Posted by Dana in November 5th 2009

Smith Micro Software, Inc. (NASDAQ:SMSI), a leading developer and marketer of software solutions and services for the mobility market, reported financial results for its 2009 third quarter ended September 30, 2009.

Smith Micro reported revenues of $27.8 million for the third quarter ended September 30, 2009; a 4% increase over the $26.6 million reported in the third quarter ended September 30, 2008 and revenues of $77.6 million for the first nine months of 2009 as compared to $72.0 million for the first nine months of 2008. Both quarterly and year to date revenue performance for 2009 are Company records.

Third quarter gross profit on a GAAP basis of $24.3 million increased $2.8 million, or 13%, from the third quarter ended September 30, 2008. On a non-GAAP basis (which excludes amortization of intangibles, stock compensation and non-cash tax expense), third quarter gross profit was $25.5 million, an increase of $3.1 million, or 14%, from the same quarter last year.

GAAP gross profit, as a percentage of revenues was 87.3% for the third quarter of 2009, compared with 80.5% for the same quarter last year. Non-GAAP gross profit as a percentage of revenues was 91.6% for the third quarter of 2009, compared to 84.2% for the same quarter last year.

GAAP net income for the third quarter of 2009 increased to $2.0 million or $0.06 per diluted share, compared to a GAAP net loss for the third quarter of 2008 of $1.6 million, or a $0.05 loss per diluted share.

Non-GAAP net income for the third quarter of 2009 increased to $6.6 million, or $0.20 per diluted share, which compared to $6.0 million, or $0.19 per diluted share for the third quarter of 2008.

Total cash and cash equivalents and short-term investments increased $11.9 million during the first nine months of 2009 to $48.5 million, up from $36.6 million at December 31, 2008.

For the nine-months ended September 30, 2009, the Company reported revenues of $77.6 million, an 8% increase from $72.0 million for the nine months ended September 30, 2008.

GAAP gross profit of $65.6 million increased $9.4 million, or 17%, for the nine months ended September 30, 2009 compared to $56.2 million for the nine months ended September 30, 2008.

Non-GAAP gross profit (which excludes amortization of intangibles, stock compensation and non-cash tax expense) was $69.3 million for the nine months ended September 30, 2009, an increase of $10.1 million, or 17%, from the same period last year.

GAAP net income for the nine months ended September 30, 2009 was $3.5 million, or $0.11 per diluted share, compared to a GAAP net loss for the nine months ended September 30, 2008 of $2.1 million, or a $0.07 loss per diluted share. Non-GAAP net income for the nine months ended September 30, 2009 increased 27% to $16.2 million, or $0.50 per diluted share, as compared to $12.7 million, or $0.41 per diluted share, for the nine months ended September 30, 2008.

The Company uses a non-GAAP reconciliation of gross profit, net income and earnings per share in the presentation of financial results in this press release. Management believes that this presentation may be more meaningful in analyzing our income generation, since amortization of intangibles from acquisitions, stock-based compensation, and non-cash tax expense are excluded from the non-GAAP earnings calculation. This presentation may be considered more indicative of our ongoing operational performance. The tables below present the differences between non-GAAP earnings and net income on an absolute and per-share basis. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information presented in compliance with GAAP, and the non-financial measures as reported by Smith Micro Software may not be comparable to similarly titled amounts reported by other companies.

Financial Guidance:

Although our third quarter revenues set a record for a fiscal quarter, the continuing negative economic environment has reduced our actual third quarter revenues relative to our expectations and has created uncertainty and limited visibility in our ability to forecast fourth quarter 2009 revenues. Accordingly, we are lowering our guidance for full fiscal year 2009 revenues to $105-110 million from $110-115 million.