Smith Micro Software(US:SMSI)2023-08-10 20:05Financial Performance - Revenues for Q2 2023 were $10.3 million, a decrease of 18% compared to $12.7 million in Q2 2022, primarily due to declines in the Family Safety and CommSuite product lines [94][101]. - The net loss for Q2 2023 was $5.7 million, resulting in a net loss of $0.09 per basic and diluted share [94]. - Revenues for the six months ended June 30, 2023, were $21.3 million, a decrease of $4.1 million or 16% compared to $25.4 million for the same period in 2022 [113]. - Gross profit was $15.4 million, representing 72.4% of revenues for the six months ended June 30, 2023, compared to $18.2 million or 71.5% of revenues for the same period in 2022 [115]. Cost Management - Operating expenses decreased by approximately $6.4 million in Q2 2023 compared to Q2 2022, driven by a $4.4 million reduction in Research & Development expenses [94]. - The company eliminated approximately 26% of its global workforce in response to the termination of the Family Safety contract, resulting in over $4 million of quarterly cost savings in Q2 2023 [96]. - Research and development expenses decreased by approximately $5.8 million to $9.6 million for the six months ended June 30, 2023, primarily due to a decline in personnel-related costs [117]. - Selling and marketing expenses were $6.2 million for the six months ended June 30, 2023, down from $6.7 million in 2022, reflecting a decrease in personnel-related costs [116]. - Cost of revenues decreased to $5.9 million for the six months ended June 30, 2023, from $7.3 million in 2022, due to revenue decline and cost reduction efforts [114]. Liquidity and Cash Flow - Net cash used in operating activities was $7.5 million for the six months ended June 30, 2023, compared to $11.6 million for the same period in 2022 [126][127]. - As of June 30, 2023, the company's cash and cash equivalents were approximately $6.4 million, indicating sufficient liquidity to meet financial obligations [125]. Interest and Debt - Interest expense for Q2 2023 was $2.0 million, primarily due to the amortization of the discount and debt issuance costs related to financing transactions [110]. - Interest expense was $4.3 million for the six months ended June 30, 2023, primarily related to the amortization of the discount and debt issuance costs [122]. - The loss recognized on derecognition of debt in Q2 2023 was $0.8 million, resulting from installment payments made on convertible notes [109]. - The loss recognized on derecognition of debt for the six months ended June 30, 2023, was $1.4 million, resulting from installment payments made on convertible notes [121]. Product and Market Developments - The Family Safety contract with a Tier 1 customer terminated effective June 30, 2023, accounting for approximately 34% of total revenues for the six-month period ended June 30, 2023 [95]. - The company expects to launch the SafePath platform for another U.S. Tier 1 carrier in Q3 2023, which is anticipated to improve gross margins [95]. Valuation Adjustments - The change in fair value of warrant and derivative liabilities was $0.4 million for Q2 2023, reflecting valuation impacts [108]. - Change in fair value of warrant and derivative liabilities was $3.4 million for the six months ended June 30, 2023, reflecting valuation impacts [120].