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Smith Micro Software (SMSI) Q4 Earnings In Line With Estimates

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Smith Micro Software (SMSI - Free Report) reported fourth-quarter 2020 non-GAAP earnings of 3 cents per share, which met the Zacks Consensus Estimate. However, the company reported non-GAAP earnings of 10 cents in the year ago quarter.

Total revenues of $12.4 million increased 1.1% on a year-over-year basis in the fourth quarter and beat the Zacks Consensus Estimate by 2.8%.

The company also announced the buyout of Avast’s Family Safety Mobile Business for $66 million in a stock and cash deal. Subject to regulatory and customary approvals, the acquisition is expected to conclude by mid-April 2021 and will be immediately accretive to Smith Micro Software’s financials.

Smith Micro Software also announced the floating of a $62 million underwritten public offering. The company plans to utilize the net proceeds to fund the buyout of Avast’s Family Safety Mobile Business as well as for general corporate purposes.

Smith Micro Software, Inc. Price, Consensus and EPS Surprise

 

Smith Micro Software, Inc. Price, Consensus and EPS Surprise

Smith Micro Software, Inc. price-consensus-eps-surprise-chart | Smith Micro Software, Inc. Quote

 

Following the announcement of results, shares of the company are up 6.6% in premarket trading on Mar 9. In the past year, Smith Micro Software shares have returned 10.9% compared with the industry’s rally of 38.7%.

Quarter Details

SafePath revenues were $6.1 million, down 9% on a year-over-year basis and 10% on a sequential basis. This was driven primarily by lower in-store marketing efforts resulting in reduced number of new subscribers.

Revenues from CommSuite Platform came in at $4.8 million which was unchanged on a year over basis. However, sequentially, revenues increased 5% due to higher seasonal advertising revenues.

Revenue contribution from ViewSpot stood at $1.4 million that soared 146% year over year and 18% quarter over quarter. The upside was driven by increased volume of variable revenues from its Tier 1 customer in the United States.

Margins

Gross margin for the fourth quarter stood at 89% which contracted 400 basis points (bps) from the year ago quarter.

Non-GAAP operating expenses of $9.5 million, increased 36% year over year, mainly due to higher compensation and employee-related expenses.

Balance Sheet

As of Dec 31, 2020, Smith Micro Software’s cash and cash equivalents came in at $25.75 million compared with $25.87 million as of Sep 30, 2020.

In the fourth quarter, cash used in operating activities stood at $0.35 million compared with $3.94 million generated in the previous quarter.

A Look At 2020 Numbers

Smith Micro Software reported total revenues of $51.3 million in 2020, up 18% over 2019 tally.  

The company reported non-GAAP earnings of 24 cents per share in 2020 against earnings of 35 cents per share reported in 2019.

For 2020, Smith Micro Software’s gross margin contracted 100 bps to 90% while non-GAAP operating expenses surged 33.5% to $35.7 million.

In 2020, the company generated cash flow from operations of $7.92 million compared with $9.99 million in the previous year.

Guidance

The company expects total revenue to de down 9-14% on a quarter over quarter basis in the first quarter of 2021.

The Zacks Consensus Estimate for first-quarter revenues is currently pegged at $11.4 million.

For the first quarter of 2021, the company expects revenues from SafePath to decline in the range of 7-12% sequentially. Revenues from CommSuite are also expected to decline 5-10% on a quarter-over-quarter basis in the first quarter. ViewSpot revenues are anticipated to decline 25% sequentially.

Zacks Rank & Stock to Consider

Smith Micro Software currently carries a Zacks Rank #4 (Sell).

Some better-ranked stocks in the broader technology sector are Micron Technology (MU - Free Report) , Skyworks (SWKS - Free Report) and MaxLinear (MXL - Free Report) . All the stocks sport a Zacks Rank #1 (Strong Buy).

You can see the complete list of today’s Zacks #1 Rank stocks here.

The long-term earnings growth rate for Micron, Skyworks and MaxLinear is currently pegged at 12.7%, 19%, and 20%, respectively.

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