Smith Micro Software, Inc. Q2 2010 Earnings Call Transcript

Smith Micro Software, Inc. Q2 2010 Earnings Call Transcript
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Smith Micro Software, Inc. (SMSI)

Q2 2010 Earnings Call Transcript

August 4, 2010 4:30 pm ET

Executives

Charles Messman – IR, MKR Group Inc.

Bill Smith – Chairman, President & CEO

Andy Schmidt – CFO

Tom Matthews – Chief Strategy Officer

Analysts

Larry Harris – C.L. King

Lauren Ye – JPMorgan

Chad Bennett – Northland Capital Markets

Scott Sutherland – Wedbush Securities

Presentation

Operator

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Previous Statements by SMSI
» Smith Micro Software, Inc. Q1 2010 Earnings Call Transcript
» Smith Micro Software Inc. Q4 2009 Earnings Call Transcript
» Smith Micro Software Inc. Q3 2009 Earnings Call Transcript

Ladies and gentlemen, thank you for standing by. Welcome to the Smith Micro fiscal second quarter 2010 conference call. During today’s presentation all parties will be in a listen-only mode. Following the presentation, the conference will be opened for questions. (Operator instructions) This conference is being recorded today, Wednesday, August 4th, 2010. I would now like to turn the conference over to Mr. Charles Messman. Please go ahead.

Charles Messman

Good afternoon. Thank you for joining us today to discuss Smith Micro Software’s financial results for our second quarter ended June 30th, 2010. By now you should have received a copy of the press release discussing our quarterly results. If you do not have one and would like one, please visit us at www.smithmicro.com, or call us at 949-362-5800, and we will email you one immediately.

With me on today’s call are Bill Smith, Chairman, President and Chief Executive Officer; Andy Schmidt, Chief Financial Officer; and Tom Matthews, Chief Strategy Officer.

Before we begin the call, I want to caution that on this call, the Company may make forward-looking statements that involve risks and uncertainties, including, without limitation, forward-looking statements relating to the Company’s revenue guidance for fiscal 2010, its financial prospects and other projections of its performance, the Company’s ability to increase its business and anticipated timing and financial performance of its new products and potential acquisitions.

Among the important factors that could cause actual results to differ materially from those expressed or implied in the forward-looking statements are changes in demand for the Company’s products from its customers and their end-users, new and changing technologies, customer acceptance of those technologies, new and continuing adverse economic conditions, and the Company’s ability to compete effectively with other software companies.

These and other factors discussed in the Company’s filings with the Securities and Exchange Commission, including its filings on Forms 10-K and 10-Q, could cause actual results to differ materially from those expressed or implied in any forward-looking statement. The forward-looking statements contained in this conference call are made on the basis of views and assumptions of management regarding future events and business performance as of the date of this call, and the Company does not undertake any obligation to update these statements to reflect events or circumstances occurring after the date of this call.

With that said, I’d now like to turn the call over to Bill Smith. Bill?

Bill Smith

Thank you, Charles. Good afternoon, everyone, and welcome to our second quarter ending June 30

th

, 2010 earnings conference call. We are pleased to report another solid quarterly financial performance. We have posted our fifth consecutive quarter of revenue growth, generating the highest quarterly revenue results in our company’s history of $31.4 million. This represents an improvement of $5.4 million over Q2 2009 or 20.7% increase in revenue over the same period last year.

In addition to our strong top line growth in the quarter, non-GAAP net income was up nicely, posting $6.8 million, or $0.20 per share versus $5.6 million and $0.17 per share that we reported in the second quarter of last year.

We’ve recently announced Jim Straight as a new member of our Board of Directors. I want to thank Jim for agreeing to join our board. Jim brings to us a strong grounding in wireless marketing, gained from his years of experience at Verizon Wireless. And yes Jim, I can hear you now.

All in all, we are very pleased with our second quarter and first half financial results along with the quality of the operating fundamentals within our business. In the face of continued challenges provided by a difficult economic environment, we delivered very solid performance and have made further strides in the evolution of our product lines. We look forward to the continued deployment of more ubiquitous and faster broadband mobile services with the coming of LTE and the continuation of the rollout of WiMAX over the course of the next several quarters and in the years ahead.

Our wireless and mobility unit continue to deliver as the growth engine for Smith Micro. Revenues within our wireless and mobility software unit were $28.3 million in Q2, up 32.5% year-over-year. We remain energized by our prospects for future adoption of our Smart Mobility platform within this business segment. We are also committed to enhancing our offerings to enable new solutions that will deliver a smarter mobility experience for our customers and their end users.

Revenues from our productivity and graphics business totaled $2.9 million for the quarter or $0.09 of total sales, which was down 33% from the $4.3 million in Q2 2009. The product lines within our productivity and graphics business have been undergoing transformation to support a more Software-as-a-Service model for our offerings in the future.

This shift is well underway and I will discuss our vision for this unit later in the call after Andy completes his review of the numbers. Andy?

Andy Schmidt

Thank you, Bill. Okay, first, let me go over our customary introductory items. As we have in past quarters, we have provided non-GAAP results, and a reconciliation of non-GAAP and GAAP results. The non-GAAP results discussed in this call net out amortization of intangibles associated with acquisitions, stock compensation related expenses, and non-cash tax expense to provide comparable operating results. Accordingly, all results today referred to in my prepared remarks for both 2010 and 2009 are non-GAAP amounts. Our earnings release, which will be furnished to the SEC in form 8-K contains a presentation of the most directly comparable GAAP financial measures and a reconciliation of the differences between each non-GAAP financial measure provided in the press release and the most directly comparable GAAP financial measure. The earnings release can also be found in our Investor Relations section of our website at smithmicro.com.

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