Smith Micro Software(US:SMSI)2024-08-05 20:13Financial Performance - For the three months ended June 30, 2024, revenues were $5.14 million, a decrease of 50.3% compared to $10.34 million for the same period in 2023[8]. - Gross profit for the three months ended June 30, 2024, was $3.53 million, down 54.5% from $7.75 million in the prior year[8]. - Operating loss for the three months ended June 30, 2024, was $(6.98) million, compared to $(3.24) million for the same period in 2023, reflecting a 115.4% increase in losses[8]. - Net loss for the six months ended June 30, 2024, was $(37.94) million, significantly higher than $(12.55) million for the same period in 2023[8]. - Total revenues for the three months ended June 30, 2024, were $5.14 million, a decrease of 50.3% compared to $10.34 million for the same period in 2023[55]. - For the six months ended June 30, 2024, total revenues were $10.94 million, down 48.6% from $21.27 million for the same period in 2023[55]. - The net loss for Q2 2024 was $6.9 million, resulting in a net loss of $0.66 per basic and diluted share[71]. - Revenues decreased by $10.3 million, or 49%, to $10.9 million for the six months ended June 30, 2024, compared to $21.3 million in 2023, primarily due to the loss of a Family Safety contract[76]. Assets and Equity - Total assets as of June 30, 2024, were $52.99 million, a decrease of 38.1% from $85.58 million at the end of 2023[5]. - Cash and cash equivalents decreased to $5.63 million as of June 30, 2024, down from $7.13 million at the end of 2023[5]. - Total stockholders' equity as of June 30, 2024, was $42.90 million, down from $75.39 million at the end of 2023, indicating a decline of 43.3%[5]. - As of June 30, 2024, the total stockholders' equity was $42,902,000, with a common stock balance of 10,625 shares[11]. - The company had approximately 9,000 stock options outstanding with a weighted average exercise price of $26.89 per share as of June 30, 2024[50]. Cash Flow and Financing - Cash and cash equivalents at the end of the period were $5,628,000, down from $7,125,000 at the beginning of the period[16]. - The company raised $3.4 million in net cash proceeds from a registered direct offering of 1,065,000 shares at $2.15 per share and pre-funded warrants for 845,000 shares[28][29]. - Net cash used in operating activities was $5.6 million for the six months ended June 30, 2024, compared to $7.5 million in 2023, with a net loss of $37.9 million[81]. - Net cash provided by financing activities was $3.9 million for the six months ended June 30, 2024, primarily from a Registered Direct Offering and Private Placement[83]. Stock and Shareholder Information - The company had 11,035,130 shares of common stock outstanding as of August 2, 2024[2]. - The company executed a one-for-eight reverse stock split effective April 10, 2024, reducing outstanding shares from approximately 76.8 million to 9.6 million[18]. - The Company received a notice from Nasdaq regarding non-compliance with the $1.00 minimum bid price requirement, leading to a Reverse Stock Split effective April 10, 2024, which allowed the Company to regain compliance by April 29, 2024[27]. - The company repurchased a total of 41,115 shares during the three months ended June 30, 2024, at an average price of $2.41 per share[93]. Impairment and Goodwill - The company recognized a goodwill impairment charge of $23,989,000 during the six months ended June 30, 2024[16]. - The company recorded a goodwill impairment charge of $24.0 million for the three months ended March 31, 2024, due to a decrease in its common stock share price[38]. - The impairment charge for goodwill was $24.0 million for the six months ended June 30, 2024, due to a sustained decrease in the company's stock price[77]. Operational Challenges and Future Outlook - The Company is facing substantial doubt about its ability to continue as a going concern within one year due to recurring operating losses and negative cash flows, despite having no outstanding debt[24][26]. - The Company plans to implement dynamic marketing campaigns to expand subscriber growth and generate increased revenues, while also considering additional restructuring and cost reductions[24][26]. - The company anticipates revenue growth from marketing efforts with existing Tier 1 carrier customers and new launches in the U.S. and Europe, despite the loss of the Family Safety contract[79]. - The company may need to take additional actions to meet future cash needs, as uncertainties remain regarding its ability to continue as a going concern[80]. Expenses and Cost Management - Operating expenses decreased by approximately $0.5 million in Q2 2024 compared to Q2 2023, primarily due to reductions in general and administrative costs[71]. - Selling and marketing expenses were $2.5 million in Q2 2024, slightly down from $2.6 million in Q2 2023[75]. - Research and development expenses remained flat at $3.7 million for both Q2 2024 and Q2 2023[75]. - General and administrative expenses decreased to $2.7 million in Q2 2024 from $3.0 million in Q2 2023[75]. - Selling and marketing expenses decreased by approximately $1.0 million to $5.1 million for the six months ended June 30, 2024, primarily due to reductions in personnel-related costs and marketing expenses[77]. - Research and development expenses decreased by approximately $1.9 million to $7.7 million for the six months ended June 30, 2024, driven by declines in personnel-related costs and contractor costs[77]. Revenue Sources and Customer Concentration - Cloud-based usage fees for the three months ended June 30, 2024, were $3.65 million, a decline of 57.0% from $8.51 million in the same period of 2023[55]. - The company generated 59% and 20% of its revenues from two customers for the three months ended June 30, 2024[58]. - Revenues from the Americas for the three months ended June 30, 2024, were $4.94 million, compared to $10.08 million for the same period in 2023, reflecting a decrease of 51.0%[59].