Smith Micro Software (NASDAQ:SMSI) Posts Earnings Results, Beats Estimates By $0.31 EPS

Smith Micro Software (NASDAQ:SMSI) released its quarterly earnings results on Thursday. The software maker reported ($0.19) EPS for the quarter, topping the consensus estimate of ($0.50) by $0.31, FiscalAI reports. Smith Micro Software had a negative return on equity of 55.78% and a negative net margin of 165.35%.The company had revenue of $4.34 million during the quarter, compared to analyst estimates of $4.85 million.

Here are the key takeaways from Smith Micro Software’s conference call:

• Management expects continued sequential revenue growth, forecasting third-quarter revenue of $5.0 million–$5.4 million after revenue increased 3% sequentially in Q2.
• Two new customers are expected to launch within roughly a month—one using SafePath OS and another using the new European SafePath Connect product—while a significant Tier 1 contract extension is expected to begin contributing revenue in Q3.
• Gross margin improved to 81.3% from 73.5% a year ago, while non-GAAP operating expenses fell 26% year over year due to cost reductions; management is targeting 81%–83% gross margin in Q3 and eventually 85%.
• The company reported strong interest in its SafePath SDKs and APIs, which could expand distribution beyond traditional carrier deployments into carrier “super apps,” MVNOs, membership organizations, and other channels.
• Despite sequential improvement, Q2 revenue declined 2% year over year to $4.3 million, the company remained unprofitable with a $989,000 non-GAAP net loss, and cash was $2.8 million at quarter-end; a warrant inducement raised $1.6 million but also issued new five-year warrants.

Smith Micro Software Trading Down 1.0%

SMSI traded down $0.03 during trading hours on Friday, reaching $2.86. 64,932 shares of the company’s stock traded hands, compared to its average volume of 95,219. The company has a quick ratio of 1.37, a current ratio of 1.37 and a debt-to-equity ratio of 0.10. The firm has a 50-day moving average price of $2.83 and a 200 day moving average price of $3.26. Smith Micro Software has a 52-week low of $2.05 and a 52-week high of $4.64. The firm has a market capitalization of $15.99 million, a PE ratio of -0.41 and a beta of 0.69.

Institutional Inflows and Outflows

Several institutional investors have recently added to or reduced their stakes in the stock. Susquehanna International Group LLP boosted its position in Smith Micro Software by 109.2% in the 3rd quarter. Susquehanna International Group LLP now owns 42,780 shares of the software maker’s stock valued at $31,000 after buying an additional 22,335 shares during the period. DRW Securities LLC bought a new position in Smith Micro Software in the fourth quarter worth approximately $40,000. Renaissance Technologies LLC increased its holdings in Smith Micro Software by 41.7% during the 4th quarter. Renaissance Technologies LLC now owns 110,745 shares of the software maker’s stock worth $60,000 after purchasing an additional 32,604 shares during the period. Finally, Geode Capital Management LLC increased its holdings in Smith Micro Software by 16.7% during the 4th quarter. Geode Capital Management LLC now owns 212,813 shares of the software maker’s stock worth $115,000 after purchasing an additional 30,410 shares during the period. Hedge funds and other institutional investors own 20.80% of the company’s stock.

Wall Street Analysts Forecast Growth

Several equities research analysts have recently issued reports on SMSI shares. Weiss Ratings raised Smith Micro Software from a “sell (e+)” rating to a “sell (d-)” rating in a research note on Wednesday. Benchmark boosted their target price on Smith Micro Software from $10.00 to $12.50 and gave the company a “buy” rating in a research report on Friday, May 1st. One investment analyst has rated the stock with a Buy rating and one has issued a Sell rating to the company. According to MarketBeat.com, Smith Micro Software presently has an average rating of “Hold” and a consensus price target of $12.50.

Smith Micro Software Company Profile

Smith Micro Software, Inc, headquartered in Aliso Viejo, California, is a global provider of enterprise software solutions specializing in mobility management, device security and digital content distribution. Since its founding in 1982, Smith Micro has focused on delivering tools that enable wireless network operators, enterprises and software publishers to optimize performance, secure assets and manage licensing and distribution of digital media and applications.

Within its mobility and security segment, Smith Micro offers platforms for network offload, application acceleration, secure Wi-Fi connectivity and device management.