Smith Micro Software(US:SMSI)2024-02-26 21:35Revenue Performance - In 2023, the company's revenues declined by 16% to $40.9 million, primarily due to a $5.3 million decrease in Family Safety revenues and a $2.0 million decline in CommSuite revenues [129]. - The termination of a Family Safety contract with a Tier 1 customer resulted in a loss of approximately 36% of total revenues for 2023, with no further revenues expected from this contract in 2024 [128]. - The ViewSpot product line's revenues decreased by approximately $0.4 million due to a decrease in device launches in 2023 [140]. Financial Results - The net loss for 2023 was $24.4 million, equating to a net loss of $0.38 per basic and diluted share [129]. - Gross profit for 2023 was $30.3 million, representing 74.2% of revenues, compared to $34.3 million or 70.7% of revenues in 2022 [142]. Operating Expenses and Cash Flow - Operating expenses decreased by 26% in 2023 compared to 2022, primarily due to a $12.2 million reduction in Research and Development expenses [128]. - Cash and cash equivalents as of December 31, 2023, were approximately $7.1 million, with cash flow used in operations amounting to $7.0 million for the year [151]. - Net cash used in operating activities was $7.0 million for the year ended December 31, 2023, compared to $19.3 million in 2022, indicating a decrease in cash outflow [154][155]. - The primary use of operating cash in 2023 included a net loss of $24.4 million, offset by non-cash expenses of $17.8 million and a decrease in accounts receivable of $2.6 million [154]. Debt and Interest Expenses - Interest expense increased to $6.4 million in 2023 from $2.7 million in 2022, primarily due to the amortization of debt issuance costs related to the August 2022 Notes and Warrants Offering [149]. Restructuring and Workforce - The company undertook restructuring efforts that resulted in the elimination of approximately 26% of its global workforce [128]. Investments and Financing Activities - Net cash provided by investing activities remained stable at $0.1 million for both 2023 and 2022 [156]. - Net cash used by financing activities was $0.1 million in 2023, a significant decrease from $17.1 million provided in 2022, which was primarily due to proceeds from Notes and Warrants Offering [157][158]. Commitments and Financial Position - The company has made various indemnities and commitments, which may not provide limitations on future payment obligations, indicating potential financial exposure [159]. - The company has no off-balance sheet arrangements as of December 31, 2023, indicating a straightforward financial position [162]. Revenue Recognition and Compensation - Revenue recognition follows FASB ASC Topic No. 606, with various revenue streams including software licenses, consulting services, and usage-based revenue [176][177]. - Stock-based compensation is accounted for based on fair values and recognized as compensation expense over the vesting period [180]. Corporate Structure - The corporate headquarters is located in Pittsburgh, Pennsylvania, with a lease expiring on April 30, 2026, and additional leases in California, Serbia, Sweden, and Portugal [160]. Future Agreements - The company executed a new multi-year Family Safety agreement with a major Tier 1 carrier in Europe, anticipated to launch in 2024 [130].