Smith Micro Software, Inc. Net Income dropped on 61.2% while Revenue jumped on 18.4%
03/08/2021 • About Smith Micro Software, Inc. (
$SMSI) • By InTwits
Smith Micro Software, Inc. reported 2020 financial results today. Here are the key drivers of the company's long term financial model:
- Smith Micro Software, Inc. has low CAPEX intensity: 5 year average CAPEX/Revenue was 1.8%. At the same time it's a lot of higher than industry average of 3.2%.
- CAPEX is quite volatile: $1m in 2020, $2m in 2019, $0m in 2018, $0m in 2017, $1m in 2016
- The company has potentially unprofitable business model: ROIC is 6.7%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
The company's Revenue jumped on 18.4%. Revenue growth showed slowdown in 20Q4 - it was 1.1% YoY. During 2016-2020 Revenue growth topped in 2019 at 64.9%. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin jumped on 11.5 pp from -13.4% to -1.9% in 2020. EBITDA Margin stuck to a growing trend at 18.7 pp per annum in 2016-2020.
Gross Margin decreased slightly on 1.1 pp from 90.9% to 89.9% in 2020. Gross Margin stuck to a growing trend at 4.6 pp per annum in the last 5 years. SG&A as a % of Revenue increased on 5.6 pp from 40.2% to 45.8% in 2020. SG&A as a % of Revenue declined at -7.4 pp per annum in 2016-2020.
Net Income margin dropped on 16.6 pp from 24.7% to 8.1% in 2020. Net Income margin followed a growing trend at 17.9 pp per annum in the last 5 years.
Investments (CAPEX, working capital and M&A)
The company's CAPEX/Revenue was 2.6% in 2020. Smith Micro Software, Inc.'s CAPEX/Revenue increased on 2.2 pp from 0.34% in 2017 to 2.6% in 2020. For the last three years the average CAPEX/Revenue was 2.4%.
Return on investment
The company operates at low ROIC (6.7%) and ROE (7.8%). ROIC dropped on 19.8 pp from 26.5% to 6.7% in 2020. ROE dropped on 23.2 pp from 31.0% to 7.8% in 2020. ROIC followed a growing trend at 43.4 pp per annum in 2016-2020. ROE followed a growing trend at 58.0 pp per annum in the last 5 years.
Leverage (Debt)
Company's Net Debt / EBITDA is -2.2x and Debt / EBITDA is 0.7x. Debt dropped on 10.8% while cash decreased on 8.9%.
Smith Micro Software, Inc. has no short term refinancing risk: cash is higher than short term debt (1,797.2%).
Valuation and dividends
The company's trades at EV/EBITDA 35.6x and P/E 79.6x.
Management team
The company's CEO William W Smith Jr "Bill" has spent 39 years with the company. Timothy C Huffmyer "Tim" is a the company's CFO. Timothy C Huffmyer "Tim" has spent 3 years at the company.
Financial and operational results
FY ended 12/31/2020
Smith Micro Software, Inc. ($SMSI) key annual financial indicators| mln. $ | 2016 | 2017 | 2018 | 2019 | 2020 | 2020/2019 |
|---|
P&L
|
|---|
| Revenue | 28.235 | 22.974 | 26.285 | 43.346 | 51.300 | 18.4% |
| Gross Profit | 20.671 | 17.892 | 21.952 | 39.419 | 46.110 | 17.0% |
| SG&A | 19.956 | 14.737 | 14.391 | 17.438 | 23.499 | 34.8% |
| EBITDA | -14.524 | -4.752 | -0.435 | 12.919 | 8.754 | -32.2% |
| Net Income | -15.343 | -6.661 | -2.740 | 10.722 | 4.165 | -61.2% |
Balance Sheet
|
|---|
| Cash | 2.229 | 2.205 | 12.159 | 28.268 | 25.754 | -8.9% |
| Short Term Debt | 0.000 | 1.000 | 0.000 | 1.221 | 1.433 | 17.4% |
| Long Term Debt | 2.590 | 2.758 | 0.000 | 5.774 | 4.805 | -16.8% |
Cash flow
|
|---|
| Capex | 0.500 | 0.077 | 0.173 | 1.659 | 1.323 | -20.3% |
Ratios
|
|---|
| Revenue growth | -28.5% | -18.6% | 14.4% | 64.9% | 18.4% | |
| EBITDA growth | 2,190.9% | -67.3% | -90.8% | -3,069.9% | -32.2% | |
|
|---|
| Gross Margin | 73.2% | 77.9% | 83.5% | 90.9% | 89.9% | -1.1% |
| EBITDA Margin | -51.4% | -20.7% | -1.7% | 29.8% | 17.1% | -12.7% |
| SG&A, % of revenue | 70.7% | 64.1% | 54.7% | 40.2% | 45.8% | 5.6% |
| Net Income Margin | -54.3% | -29.0% | -10.4% | 24.7% | 8.1% | -16.6% |
| CAPEX, % of revenue | 1.8% | 0.3% | 0.7% | 3.8% | 2.6% | -1.2% |
|
|---|
| ROIC | -157.1% | -80.1% | -8.5% | 26.5% | 6.7% | -19.8% |
| ROE | -179.6% | -174.7% | -21.8% | 31.0% | 7.8% | -23.2% |
| Net Debt/EBITDA | | | | -1.6x | -2.2x | -0.6x |
Smith Micro Software, Inc. ($SMSI) key quoterly financial indicators
| mln. $ | 20Q1 | 20Q2 | 20Q3 | 20Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 13 | 13 | 13 | 12 | | 58.0% | 19.2% | 7.2% | 1.1% |
| EBITDA | 3 | 3 | 2 | 1 | | 373.6% | -22.4% | -61.2% | -69.5% |
| Net Income | 2 | 1 | 0 | 1 | | 4,160.4% | -59.9% | -95.5% | -84.2% |
Balance Sheet
|
|---|
| Cash | 19 | 24 | 26 | 26 | | 163.7% | 257.2% | 8.4% | -8.9% |
| Short Term Debt | 1 | 1 | 1 | 1 | | 29.0% | 30.7% | 21.9% | 17.4% |
| Long Term Debt | 6 | 5 | 5 | 5 | | 195.7% | -11.2% | -11.8% | -16.8% |
Ratios
|
|---|
| Gross Margin | 91.2% | 90.2% | 89.5% | 88.5% | | 2.1% | -0.8% | -1.9% | -3.1% |
| EBITDA Margin | 22.4% | 21.5% | 12.8% | 10.7% | | 14.9% | -11.5% | -22.5% | -24.7% |
| Net Income Margin | 15.4% | 10.7% | 1.3% | 4.7% | | 14.8% | -21.0% | -29.0% | -25.2% |
Peers in Application Software
Below we provide Smith Micro Software, Inc. benchmarking against other companies in Application Software industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.
Top companies by Revenue growth, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| VirnetX Holding Corp ($VHC) | - | -0.2% | -95.9% | 34.9% | 355,942.4% |
| AudioEye, Inc. ($AEYE) | - | 175.5% | 106.6% | 90.2% | 90.2% |
| Cloudera, Inc. ($CLDR) | - | 57.2% | 42.6% | 28.9% | 65.5% |
| Integrated Ventures Inc ($INTV) | - | - | - | -8.9% | 62.7% |
| Smartsheet Inc. ($SMAR) | - | 64.3% | 66.1% | 59.7% | 52.4% |
| |
|---|
| Median (92 companies) | 12.0% | 15.7% | 15.2% | 19.4% | 14.5% |
|---|
| Smith Micro Software, Inc. ($SMSI) | - | -18.6% | 14.4% | 64.9% | 18.4% |
Top companies by Gross margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Aware, Inc. ($AWRE) | 90.3% | 94.6% | 92.3% | 89.7% | 92.8% |
| Alteryx, Inc. ($AYX) | 81.3% | 83.4% | 91.0% | 90.6% | 91.1% |
| Autodesk, Inc. ($ADSK) | 85.2% | 83.2% | 85.2% | 88.9% | 90.1% |
| Cadence Design Systems, Inc. ($CDNS) | 85.9% | 87.8% | 87.9% | 88.6% | 88.6% |
| Mitek Systems, Inc. ($MITK) | 90.2% | 91.1% | 86.3% | 85.5% | 87.0% |
| |
|---|
| Median (89 companies) | 63.8% | 64.4% | 65.3% | 67.9% | 69.4% |
|---|
| Smith Micro Software, Inc. ($SMSI) | 73.2% | 77.9% | 83.5% | 90.9% | 89.9% |
Top companies by EBITDA margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| VirnetX Holding Corp ($VHC) | -1,837.2% | -1,118.0% | -40,379.4% | -23,127.1% | 52.2% |
| j2 Global, Inc. ($JCOM) | 41.7% | 36.5% | 35.7% | 38.6% | 40.5% |
| Intelligent Systems Corporation ($INS) | -5.4% | -12.8% | 33.6% | 43.6% | 40.4% |
| Adobe Inc. ($ADBE) | 31.2% | 34.2% | 35.3% | 35.8% | 39.7% |
| SS&C Technologies Holdings, Inc. ($SSNC) | 34.9% | 37.9% | 27.7% | 38.2% | 38.3% |
| |
|---|
| Median (89 companies) | -4.7% | -3.3% | -3.3% | 2.7% | 6.8% |
|---|
| Smith Micro Software, Inc. ($SMSI) | -51.4% | -20.7% | -1.7% | 29.8% | 17.1% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| MicroStrategy Incorporated ($MSTR) | 0.5% | 0.8% | 1.4% | 2.1% | 234.8% |
| Integrated Ventures Inc ($INTV) | - | - | 199.9% | 15.2% | 27.2% |
| Intelligent Systems Corporation ($INS) | 3.8% | 9.7% | 4.3% | 4.9% | 19.2% |
| LivePerson, Inc. ($LPSN) | 5.5% | 7.9% | 8.8% | 16.3% | 11.4% |
| PROS Holdings, Inc. ($PRO) | 4.7% | 0.8% | 0.7% | 2.1% | 11.3% |
| |
|---|
| Median (87 companies) | 3.0% | 2.3% | 2.4% | 2.9% | 2.5% |
|---|
| Smith Micro Software, Inc. ($SMSI) | 1.8% | 0.3% | 0.7% | 3.8% | 2.6% |
Top companies by ROIC, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| VirnetX Holding Corp ($VHC) | -210.9% | -256.8% | -416.3% | -247.2% | 137.3% |
| Manhattan Associates, Inc. ($MANH) | 99.3% | 102.5% | 80.9% | 71.7% | 53.4% |
| Citrix Systems, Inc. ($CTXS) | 16.1% | 16.7% | 25.2% | 29.8% | 33.5% |
| Sonic Foundry, Inc. ($SOFO) | -18.1% | -50.6% | -786.4% | - | 31.3% |
| Paycom Software, Inc. ($PAYC) | 75.4% | 51.1% | 47.5% | 47.5% | 28.7% |
| |
|---|
| Median (92 companies) | -9.2% | -10.2% | -10.6% | -4.5% | -2.2% |
|---|
| Smith Micro Software, Inc. ($SMSI) | -157.1% | -80.1% | -8.5% | 26.5% | 6.7% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Dropbox, Inc. ($DBX) | - | -3.8x | - | 2.4x | 1,341.0x |
| Avaya Holdings Corp. ($AVYA) | - | - | 7.4x | - | 77.9x |
| Alteryx, Inc. ($AYX) | - | - | 2.5x | 6.1x | 32.2x |
| Five9, Inc. ($FIVN) | -6.7x | -8.6x | 7.3x | 5.3x | 17.6x |
| Synchronoss Technologies, Inc. ($SNCR) | - | - | - | - | 11.6x |
| |
|---|
| Median (53 companies) | -0.9x | -0.8x | -0.7x | 0.4x | 0.3x |
|---|
| Smith Micro Software, Inc. ($SMSI) | - | - | - | -1.6x | -2.2x |
