Smith Micro Software, Inc. revenue jumped on 14.4% and EBITDA Margin surged on 19.0 pp from -20.7% to -1.7%
03/13/2019 • About Smith Micro Software, Inc. (
$SMSI) • By InTwits
Smith Micro Software, Inc. reported 2018 financial results today. Here are the key drivers of the company's long term financial model:
- The company operates at negative EBITDA Margin: -1.7%
- Smith Micro Software, Inc. spends a lot for Stock Based Compensation (SBC): average SBC/Revenue for 2014-2018 is 0.0%. Average EBITDA Margin for the same period was -18.9%
- Smith Micro Software, Inc. has low CAPEX intensity: 5 year average CAPEX/Revenue was 0.7%.
- The company has unprofitable business model: ROIC is -8.5%
- It operates with medium-size leverage: Net Debt/EBITDA is 3.3x while industry average is -2.2x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
Smith Micro Software, Inc.'s Revenue surged on 14.4%. Revenue growth showed acceleration in 18Q4 - it increased 28.3% YoY. Despite revenue decline the EBITDA margin expanded. EBITDA Margin jumped on 14.0 pp from 10.7% to 24.7% in 2018.
Gross Margin increased on 5.6 pp from 77.9% to 83.5% in 2018. SG&A as a % of Revenue decreased on 9.4 pp from 64.1% to 54.7% in 2018.
Net Income margin jumped on 18.6 pp from -29.0% to -10.4% in 2018.
Investments (CAPEX, working capital and M&A)
The company's CAPEX/Revenue was 0.66% in 2018. Smith Micro Software, Inc. showed almost no change in CAPEX/Revenue from 2015 to 2018. It's average CAPEX/Revenue for the last three years was 0.92%.
Return on investment
The company operates at negative ROIC (-8.5%) and ROE (-21.8%). ROIC surged on 71.6 pp from -80.1% to -8.5% in 2018. ROE jumped on 153 pp from -175% to -21.8% in 2018.
Leverage (Debt)
The company paid down all the debt in 2018. Cash surged on 451%.
Management team
William W Smith Jr is a the company's CEO. William W Smith Jr is a founder and has spent 37 years with the company. The company's CFO Timothy C Huffmyer "Tim" has spent 2 years with the company.
Financial and operational results
FY ended 12/31/2018
Smith Micro Software, Inc. ($SMSI) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 36.979 | 39.507 | 28.235 | 22.974 | 26.285 | 14.4% |
| Gross Profit | 27.662 | 31.355 | 20.671 | 17.892 | 21.952 | 22.7% |
| SG&A | 22.777 | 20.030 | 19.956 | 14.737 | 14.391 | -2.3% |
| EBITDA | -8.811 | -0.634 | -14.524 | -4.752 | -0.435 | |
| Net Income | -11.799 | -2.602 | -15.343 | -6.661 | -2.740 | |
Balance Sheet
|
|---|
| Cash | 10.165 | 8.819 | 2.229 | 2.205 | 12.159 | 451.4% |
| Short Term Debt | 0.000 | 0.000 | 0.000 | 1.000 | 0.000 | -100.0% |
| Long Term Debt | 0.000 | 0.000 | 2.590 | 2.758 | 0.000 | -100.0% |
Cash flow
|
|---|
| Capex | 0.216 | 0.124 | 0.500 | 0.077 | 0.173 | 124.7% |
Ratios
|
|---|
| Revenue growth | -13.3% | 6.8% | -28.5% | -18.6% | 14.4% | |
| EBITDA growth | -63.0% | -92.8% | 2,190.9% | -67.3% | -90.8% | |
|
|---|
| Gross Margin | 74.8% | 79.4% | 73.2% | 77.9% | 83.5% | 5.6% |
| EBITDA Margin | -23.8% | -1.6% | -51.4% | -20.7% | -1.7% | 19.0% |
| SG&A, % of revenue | 61.6% | 50.7% | 70.7% | 64.1% | 54.7% | -9.4% |
| Net Income Margin | -31.9% | -6.6% | -54.3% | -29.0% | -10.4% | 18.6% |
| CAPEX, % of revenue | 0.6% | 0.3% | 1.8% | 0.3% | 0.7% | 0.3% |
|
|---|
| ROIC | -68.3% | -17.0% | -157.1% | -80.1% | -8.5% | 71.6% |
| ROE | -71.4% | -18.0% | -179.6% | -174.7% | -21.8% | 152.9% |
Smith Micro Software, Inc. ($SMSI) key quoterly financial indicators
| mln. $ | 18Q1 | 18Q2 | 18Q3 | 18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 5 | 7 | 7 | 7 | | -2.0% | 18.5% | 12.4% | 28.3% |
| EBITDA | -2 | 0 | 0 | 1 | | | | | |
| Net Income | -2 | -2 | -1 | 3 | | | | | |
Balance Sheet
|
|---|
| Cash | 4 | 9 | 8 | 12 | | 45.9% | 267.9% | 112.9% | 451.4% |
| Short Term Debt | 0 | 0 | 0 | 0 | | -100.0% | -100.0% | -100.0% | -100.0% |
| Long Term Debt | 2 | 3 | 2 | 0 | | 52.8% | 24.7% | 17.6% | -100.0% |
Ratios
|
|---|
| Gross Margin | 76.0% | 83.9% | 85.0% | 87.4% | | -1.0% | 5.9% | 5.0% | 11.0% |
| EBITDA Margin | -33.2% | 3.9% | 4.6% | 11.0% | | 8.8% | 27.7% | 16.8% | 16.3% |
| Net Income Margin | -43.6% | -31.3% | -15.1% | 38.1% | | 8.1% | 12.6% | 13.7% | 40.9% |
Peers in Application Software
Below you can find Smith Micro Software, Inc. benchmarking vs. other companies in Application Software industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.
Top companies by Revenue growth, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| nFusz Inc ($FUSZ) | | | | | 433.3% |
| CloudCommerce Inc ($CLWD) | | -38.1% | 247.6% | 40.9% | 301.1% |
| Seven Stars Cloud Group, Inc. ($SSC) | | 134.7% | 663.8% | 310.3% | 161.7% |
| Aurora Mobile Limited ($JG) | | | | 304.9% | 150.8% |
| Intelligent Systems Corporation ($INS) | | 14.2% | 71.0% | 12.2% | 119.0% |
| |
|---|
| Median (151 companies) | -43.3% | 14.0% | 14.3% | 15.7% | 15.2% |
|---|
| Smith Micro Software, Inc. ($SMSI) | | 6.8% | -28.5% | -18.6% | 14.4% |
Top companies by Gross margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Skkynet Cloud Systems Inc ($SKKY) | 99.7% | 97.4% | 98.0% | 97.6% | 96.5% |
| hopTo Inc ($HPTO) | 91.8% | 87.8% | 95.9% | 98.2% | 95.4% |
| Aware, Inc. ($AWRE) | 75.4% | 87.2% | 90.3% | 94.6% | 92.3% |
| Alteryx, Inc. ($AYX) | 77.5% | 80.5% | 81.3% | 83.4% | 91.0% |
| Aspen Technology, Inc. ($AZPN) | 86.5% | 88.7% | 89.7% | 90.2% | 89.9% |
| |
|---|
| Median (150 companies) | 62.8% | 61.7% | 63.8% | 64.4% | 65.7% |
|---|
| Smith Micro Software, Inc. ($SMSI) | 74.8% | 79.4% | 73.2% | 77.9% | 83.5% |
Top companies by EBITDA margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Aspen Technology, Inc. ($AZPN) | 34.5% | 42.2% | 46.0% | 45.2% | 43.3% |
| ANSYS, Inc. ($ANSS) | 45.9% | 45.8% | 45.1% | 41.9% | 41.4% |
| Paycom Software, Inc. ($PAYC) | 15.1% | 19.5% | 35.1% | 34.4% | 35.9% |
| j2 Global, Inc. ($JCOM) | 41.6% | 40.6% | 41.7% | 36.5% | 35.7% |
| Adobe Inc. ($ADBE) | 17.5% | 25.9% | 31.2% | 34.2% | 35.3% |
| |
|---|
| Median (152 companies) | -10.1% | -10.7% | -4.7% | -3.3% | -3.3% |
|---|
| Smith Micro Software, Inc. ($SMSI) | -23.8% | -1.6% | -51.4% | -20.7% | -1.7% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| TimefireVR Inc ($TFVR) | 0.0% | 350.5% | 4.3% | | 1,021.9% |
| MGT Capital Investments Inc ($MGTI) | 0.0% | 36.5% | 221.4% | 129.8% | 344.5% |
| Integrated Ventures Inc ($INTV) | | | | | 199.9% |
| ShotSpotter, Inc. ($SSTI) | | 18.3% | 28.9% | 27.1% | 24.3% |
| Ellie Mae, Inc. ($ELLI) | 12.3% | 20.6% | 16.7% | 21.1% | 19.4% |
| |
|---|
| Median (153 companies) | 2.8% | 2.7% | 3.0% | 2.3% | 2.4% |
|---|
| Smith Micro Software, Inc. ($SMSI) | 0.6% | 0.3% | 1.8% | 0.3% | 0.7% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| InsPro Technologies Corp ($ITCC) | -558.9% | | | | 127.4% |
| Manhattan Associates, Inc. ($MANH) | 64.8% | 78.7% | 99.3% | 102.5% | 80.9% |
| Intuit Inc. ($INTU) | 34.2% | 23.7% | 52.1% | 72.6% | 66.8% |
| Aspen Technology, Inc. ($AZPN) | 133.4% | | | | 58.1% |
| Paycom Software, Inc. ($PAYC) | 16.7% | 30.5% | 75.4% | 51.1% | 47.5% |
| |
|---|
| Median (179 companies) | -14.2% | -11.2% | -9.2% | -10.2% | -10.4% |
|---|
| Smith Micro Software, Inc. ($SMSI) | -68.3% | -17.0% | -157.1% | -80.1% | -8.5% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Upland Software, Inc. ($UPLD) | | | 16.4x | 115.6x | 16.7x |
| Nuance Communications, Inc. ($NUAN) | 7.9x | 5.7x | 5.3x | 7.1x | 15.2x |
| Asure Software Inc ($ASUR) | 3.4x | 4.5x | 3.6x | 9.5x | 14.5x |
| SS&C Technologies Holdings, Inc. ($SSNC) | 1.7x | 7.3x | 4.6x | 3.1x | 8.5x |
| Avaya Holdings Corp. ($AVYA) | | | | | 7.4x |
| |
|---|
| Median (70 companies) | -1.4x | -1.0x | -0.9x | -0.8x | -0.7x |
|---|
