Current Report Filing (8-k)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of report (Date of earliest event reported): FEBRUARY 10, 2016

Mattersight Corporation

(Exact Name of Registrant as Specified in Charter)

Delaware

(State or Other Jurisdiction of Incorporation)

0-27975		36-4304577
(Commission File Number)		(IRS Employer Identification No.)

200 W. Madison Street, Suite 3100, Chicago, Illinois		60606
(Address of Principal Executive Offices)		(Zip Code)

Registrant’s telephone number, including area code: (877) 235-6925

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02. Results of Operations and Financial Condition.

The following information, including the exhibits described below, are provided pursuant to Items 2.02 and 7.01 of Form 8-K and shall not be deemed “filed” hereunder for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

On February 10, 2016, Mattersight Corporation (“Mattersight”) announced its results of operations for the fourth quarter of 2015. A copy of the press release announcing Mattersight’s fourth quarter 2015 results is included as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated by reference.

On February 10, 2016, Mattersight will host a conference call regarding its fourth quarter 2015 results of operations. The presentation materials relating to that conference call are available on Mattersight’s website, www.mattersight.com, and are attached as Exhibit 99.2 to this Current Report on Form 8-K and are incorporated by reference.

Item 7.01. Regulation FD Disclosure.

See “Item 2.02 Results of Operations and Financial Condition” above.

Item 9.01. Financial Statements and Exhibits.

(a), (b), and (c) not applicable.

(d) Exhibits:

99.1		Press Release, dated February 10, 2016, announcing Mattersight’s fourth quarter 2015 results of operations (furnished herewith).

99.2		PowerPoint presentation relating to Mattersight’s fourth quarter 2015 results of operations conference call presented on February 10, 2016 (furnished herewith).

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	MATTERSIGHT CORPORATION

Date: February 10, 2016	By:	/s/ SHEAU-MING K. ROSS
		Sheau-ming K. Ross
		Vice President and Chief Financial Officer

Exhibit 99.1

Mattersight Announces Fourth Quarter 2015 Results

Chicago, IL – (Marketwired – February 10, 2016) – Mattersight Corporation (NASDAQ: MATR), the pioneer in personality-based software applications, today announced financial results for the fourth quarter ending December 31, 2015.

“In the fourth quarter, we sustained the strong across-the-board momentum that marked this record-breaking year,” said President and CEO Kelly Conway. “Routing continued to drive new logo growth and we saw significant expansion in several existing client relationships. The market for software applications that help companies deliver more emotionally-connected customer experiences is growing in 2016 and we are scaling our sales, service and delivery teams to meet this demand.”

Fourth Quarter 2015 Financial Highlights

Record Bookings: Annual Contract Value (ACV) bookings for the fourth quarter were $7.0 million. ACV bookings for the last four quarters were $22.7 million, a 30% year-over-year increase.

Record Book of Business: Annualized Book of Business was $56.6 million for the fourth quarter, up 32% on a year-over-year basis.

Record Subscription Revenues: Total subscription revenues were a record $9.6 million, up 30% on a year-over-year basis.

Revenues: Total revenues for the fourth quarter were $10.4 million, representing a 25% increase on a year-over-year basis.

Record Revenue in Deployment: Annualized revenue in deployment was a record $15.1 million, a 55% increase on a year-over-year basis.

Gross Margin: Gross margin was 72.1% in the fourth quarter and 73.3% for the last four quarters.

Fourth Quarter 2015 Business Highlights

Record Routing Performance: Drove ~70% of fourth quarter bookings with Predictive Behavioral Routing, coming from three new logos and totaling in excess of 5,000 new seats sold.

Record Bookings from New Customers: Generated 50% of bookings from new customers over the last four quarters.

First Third-Party Cloud Deal: Signed the first deal to implement Predictive Behavioral Routing with a third-party cloud telephony provider.

Call to Loyalty: Hosted Call to Loyalty, Mattersight’s first annual customer summit, which was attended by over 150 customers and prospects from 60 unique companies.

Expanded Sales Engine: Expanded the reach and effectiveness of the sales and customer delivery organizations with the addition of three quota carriers, a VP of Product Marketing, SVP of Sales for the Eastern Region and Chief Customer Officer.

New Routing Algorithm: Launched Version 3.3 of Mattersight’s flagship Predictive Behavioral Routing algorithm, the fourth new version of the routing algorithm released in 2015.

Patents: Added two new patents, bringing Mattersight’s total U.S. patent portfolio to 22 and bolstering the protection of Mattersight’s innovative solutions.

Workplace Recognition: Named one of the nation’s Best and Brightest Companies to Work For^®by the National Association of Business Resources.

Non-GAAP Financial Measures

The Company realized an "Adjusted Earnings¹" loss of $1.7 million for the fourth quarter of 2015. Adjusted Earnings is a non-GAAP measure. For a reconciliation of operating loss to Adjusted Earnings, see the accompanying schedule. Mattersight's net loss was $4.4 million in the fourth quarter of 2015.

Conference Call Information

Mattersight management will host a conference call at 5:00 p.m. ET on Wednesday, February 10, 2016. The conference call and slide presentation will be available at the Investor Relations section of Mattersight's website at http://www.mattersight.com/about-us/investor-relations. To listen to the conference call via telephone, please call 800.952.4789 (domestic) or 404.665.9579 (international), conference ID: 41027725.

For those who cannot access the live broadcast, a replay of the conference call will be available beginning approximately two hours after the live call is completed until March 9, 2016, by dialing 855.859.2056 (domestic) or 404.537.3406 (international), conference ID: 41027725.

Safe Harbor for Forward-Looking Statements

Statements in this press release that are not historical facts are “forward-looking statements” that are made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements, which may be identified by use of words such as “plan,” “may,” “might,” “believe,” “expect,” “intend,” “could,” “would,” “should,” and other words and terms of similar meaning, involve risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. In addition to other factors and matters contained or incorporated in this document, important factors that could cause actual results or events to differ materially from those indicated by such forward-looking statements include, among other things, the risks detailed from time to time in Mattersight’s SEC filings. You can locate these filings on the Investor Relations page of Mattersight’s website, www.mattersight.com. Statements included or incorporated by reference into this press release are based upon information known to Mattersight as of the date of this press release, and the company assumes no obligation to publicly revise or update any forward-looking statement for any reason. In light of Regulation FD, it is our policy not to comment on earnings, financial guidance or operations other than through press releases, publicly announced conference calls, or other means that will constitute public disclosure for purposes of Regulation FD. Mattersight uses its website at www.mattersight.com as a means of disclosing material non-public information and for complying with its disclosure obligations under Regulation FD.

About Mattersight

Mattersight's mission is to help brands have more effective and effortless conversations with their customers. Using a suite of innovative personality-based software applications, Mattersight can analyze and predict customer behavior based on the language exchanged during service and sales interactions. This insight can then facilitate real-time connections between customers and the agents best capable of handling their needs. Mattersight's patented stack of SaaS applications has influenced hundreds of millions of shorter, more satisfying customer interactions. Organizations across the Financial Services, Healthcare, Technology and Telco industries rely on Mattersight to drive customer retention, employee engagement and operating efficiency. An independent research study documents the average return on investment for these organizations is 344%. To learn more about how Mattersight can help your company, please visit www.mattersight.com.

1 Mattersight presents Adjusted Earnings, a non-GAAP measure that represents cash earnings performance, excluding the impact of non-cash expenses and expense reduction activities, because management believes that Adjusted Earnings provide investors with a better understanding of the results of Mattersight's operations. Management believes that Adjusted Earnings reflect Mattersight's resources available to invest in its business and strengthen its balance sheet. In addition, expense reduction activities can vary significantly between periods on the basis of factors that management does not believe reflect current-period operating performance. Although similar adjustments for expense reduction activities may be recorded in future periods, the size and frequency of these adjustments cannot be predicted. The Adjusted Earnings measure should be considered in addition to, not as a substitute for or superior to, operating income, cash flows or other measures of financial performance prepared in accordance with GAAP.

Contact

Sheau-ming Ross

Chief Financial Officer

312.454.3594

Sheau-ming.Ross@Mattersight.com

MATTERSIGHT CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited and in thousands, except per share data)

	For the Three Months						For the Twelve Months
	Ended						Ended
	Dec. 31, 2015			Dec. 31, 2014			Dec. 31, 2015			Dec. 31, 2014
Revenue:
Subscription revenue	$	9,572		$	7,376		$	36,091		$	26,372
Other revenue		800			910			3,821			3,947
Total revenue		10,372			8,286			39,912			30,319
Operating expenses:
Cost of Subscription revenue		2,219			1,657			8,072			6,820
Cost of Other revenue		674			849			2,604			2,579
Total cost of revenue, exclusive of depreciation and amortization shown below:		2,893			2,506			10,676			9,399
Research and development		3,706			2,932			13,891			12,545
Sales and marketing		3,738			2,409			13,754			9,102
General and administrative		2,894			2,289			11,705			9,140
Depreciation and amortization		1,335			856			4,682			3,128
Total operating expenses		14,566			10,992			54,708			43,314
Operating loss		(4,194	)		(2,706	)		(14,796	)		(12,995	)
Interest and other expense, net		(160	)		(69	)		(850	)		(1,090	)
Change in fair value of warrant liability		—			(33	)		3			(124	)
Loss before income taxes		(4,354	)		(2,808	)		(15,643	)		(14,209	)
Income tax (provision) benefit		(7	)		1			(38	)		(23	)
Net loss		(4,361	)		(2,807	)		(15,681	)		(14,232	)
Dividends related to Series B Stock		(147	)		(148	)		(588	)		(589	)
Net loss available to Common Stock holders	$	(4,508	)	$	(2,955	)	$	(16,269	)	$	(14,821	)
Per share of Common Stock:
Basic net loss available to Common Stock holders	$	(0.18	)	$	(0.14	)	$	(0.70	)	$	(0.74	)
Diluted net loss available to Common Stock holders	$	(0.18	)	$	(0.14	)	$	(0.70	)	$	(0.74	)
Shares used to calculate basic net loss per share		24,963			21,722			23,264			19,923
Shares used to calculate diluted net loss per share		24,963			21,722			23,264			19,923
Stock-based compensation, primarily restricted stock, is included in individual line items above:
Total cost of revenue	$	68		$	39		$	255		$	181
Research and development		262			199			1,075			1,326
Sales and marketing		218			33			1,330			696
General and administrative		596			503			2,742			1,975

MATTERSIGHT CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(Unaudited and in thousands)

	For the Three Months						For the Twelve Months
	Ended						Ended
	Dec. 31, 2015			Dec. 31, 2014			Dec. 31, 2015			Dec. 31, 2014
Net loss	$	(4,361	)	$	(2,807	)	$	(15,681	)	$	(14,232	)
Other comprehensive loss:
Effect of currency translation		(1	)		2			(1	)		7
Comprehensive net loss	$	(4,362	)	$	(2,805	)	$	(15,682	)	$	(14,225	)

MATTERSIGHT CORPORATION

CONSOLIDATED BALANCE SHEETS

(Unaudited and in thousands, except share and per share data)

	December 31,			December 31,
	2015			2014
ASSETS:
Current Assets:
Cash and cash equivalents	$	15,407		$	14,238
Receivables (net of allowances of $24 and $17, respectively)		4,863			3,460
Prepaid expenses		4,582			4,449
Other current assets		235			236
Total current assets		25,087			22,383
Equipment and leasehold improvements, net		8,523			4,657
Goodwill		972			972
Intangibles, net		3,353			571
Other long-term assets		2,467			3,495
Total assets	$	40,402		$	32,078
LIABILITIES AND STOCKHOLDERS’ EQUITY:
Current Liabilities:
Accounts payable	$	1,223		$	1,183
Accrued compensation and related costs		2,761			2,241
Unearned revenue		6,378			7,859
Capital leases		1,819			1,637
Other current liabilities		1,796			2,549
Total current liabilities		13,977			15,469
Long-term unearned revenue		1,597			2,532
Long-term capital leases		1,614			1,176
Other long-term liabilities		5,689			282
Total liabilities		22,877			19,459
Series B Stock, $0.01 par value; 5,000,000 shares authorized and designated; 1,644,768 and 1,648,185 shares issued and outstanding, with a liquidation preference of $10,443 and $9,877 at December 31, 2015 and December 31, 2014, respectively		8,388			8,406
Stockholders’ Equity:
Preferred stock, $0.01 par value; 35,000,000 shares authorized; none issued and outstanding		—			—
Common Stock, $0.01 par value; 50,000,000 shares authorized; 27,636,853 and 24,046,977 shares issued and 25,849,876 and 22,324,093 outstanding at December 31, 2015 and December 31, 2014, respectively		276			240
Additional paid-in capital		264,212			243,282
Accumulated deficit		(242,085	)		(226,404	)
Treasury stock, at cost, 1,786,977 and 1,722,884 shares at December 31, 2015 and December 31, 2014, respectively		(9,239	)		(8,879	)
Accumulated other comprehensive loss		(4,027	)		(4,026	)
Total stockholders’ equity		9,137			4,213
Total liabilities and stockholders’ equity	$	40,402		$	32,078

MATTERSIGHT CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited and in thousands)

	For the Twelve Months Ended
	December 31,			December 31,
	2015			2014
Cash Flows from Operating Activities:
Net loss	$	(15,681	)	$	(14,232	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		4,682			3,128
Stock-based compensation		5,402			4,178
Change in fair value of warrant liability		(3	)		124
Changes in assets and liabilities:
Receivables		(1,403	)		(1,076	)
Prepaid expenses		(623	)		(85	)
Other assets		1,170			192
Accounts payable		(29	)		352
Accrued compensation and related costs		520			397
Unearned revenue		(2,416	)		310
Other liabilities		1,992			(222	)
Total Adjustments		9,292			7,298
Net cash used in operating activities		(6,389	)		(6,934	)
Cash Flows from Investing Activities:
Capital expenditures and other		(4,917	)		(766	)
Intangible assets		(921	)		(251	)
Net cash used in investing activities		(5,838	)		(1,017	)
Cash Flows from Financing Activities:
Proceeds from issuance of Common Stock, net		15,942			11,138
Proceeds from line of credit		15,000			7,000
Repayments from line of credit		(15,000	)		(7,000	)
Principal payments under capital lease obligations		(2,116	)		(1,701	)
Acquisition of treasury stock		(874	)		(797	)
Proceeds from stock compensation and employee stock purchase plans, net		453			165
Net cash provided by financing activities		13,405			8,805
Effect of exchange rate changes on cash and cash equivalents		(9	)		(8	)
Increase in cash and cash equivalents		1,169			846
Cash and cash equivalents, beginning of period		14,238			13,392
Cash and cash equivalents, end of period	$	15,407		$	14,238
Non-Cash Investing and Financing Transactions:
Capital lease obligations incurred	$	2,737		$	1,692
Capital equipment purchased on credit		2,737			1,692
Fair value of warrants classified as liability		—			380
Fair value of intellectual property purchase liability		1,958			—
Supplemental Disclosures of Cash Flow Information:
Interest paid	$	314		$	266

MATTERSIGHT CORPORATION

CALCULATION OF ADJUSTED EARNINGS MEASURE

(Unaudited and in thousands)

	For the Three Months						For the Twelve Months
	Ended						Ended
	Dec. 31,			Dec. 31,			Dec. 31,			Dec. 31,
	2015			2014			2015			2014
GAAP — Operating loss	$	(4,194	)	$	(2,706	)	$	(14,796	)	$	(12,995	)
Add back (reduce) the effect of:
Stock-based compensation		1,144			774			5,402			4,178
Depreciation and amortization		1,335			856			4,682			3,128
Adjusted earnings measure — loss	$	(1,715	)	$	(1,076	)	$	(4,712	)	$	(5,689	)

Q4 2015 Earnings Webinar February 10, 2016 Exhibit 99.2

Safe Harbor Language During today’s call we will be making both historical and forward-looking statements in order to help you better understand our business. These forward-looking statements include references to our plans, intentions, expectations, beliefs, strategies and objectives. Any forward-looking statements speak only as of today’s date. In addition, these forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those stated or implied by the forward-looking statements. The risks and uncertainties associated with our business are highlighted in our filings with the SEC, including our Annual Report filed on Form 10-K for the year ended December 31, 2014, our quarterly reports on Form 10-Q, as well as our earnings press release issued earlier today. Mattersight Corporation undertakes no obligation to publicly update or revise any forward-looking statements in this call. Also, be advised that this call is being recorded and is copyrighted by Mattersight Corporation. © 2016 Mattersight Corporation.

Q4 Results, Highlights and Trends

Q4…Record Results Across the Board Bookings Book of business Routing bookings New customer bookings Subscription revenues Revenues in deployment Total Account Opportunity 5 © 2016 Mattersight Corporation.

Building Leadership in a Massive Market Opportunity… TAM $6.3B Total US Call Center Market 6 MILLION SEATS Target Market CCs with > 200 Seats 70 % Addressable Price $125/ USER/MO © 2016 Mattersight Corporation.

…With a Highly Differentiated Product Suite Routing Coaching Workstyle for CX Workstyle for CRM 2017 Analytics Mattersight is the ONLY vendor with Suite of Personality, Routing and Analytics Products “The concept of using this data to proactively match employees and customers can provide transformational benefit to organizations and the market is less than 1 % penetrated” - Gartner © 2016 Mattersight Corporation.

Q4 Results Overview Bookings Annual Contract Value (ACV) bookings for the fourth quarter were $7.0M ACV bookings for the last four quarters were $22.7M, a 30% year-over-year increase Book of Business Annualized Book of Business was $56.6M for the fourth quarter, a 32% year-over-year increase Revenues Total revenues for the fourth quarter were $10.4M, a 25% year-over-year increase Subscription revenues were a record $9.6M, up 30% on a year-over-year basis Adjusted EBITDA Q4 Adjusted EBITDA was ($1.7M) Other Metrics Gross margin was 72.1% in the fourth quarter 95% subscription retention 128% net account growth 9 © 2016 Mattersight Corporation.

Discussion on Expenses Significant items impacting Q4 expenses Workstyle product development: ~$250K Increased commission expense: ~$225K Accelerated deployment expense: ~$100K Outside of growing sales and marketing, expenses are expected to be held tight in 2016 © 2016 Mattersight Corporation.

Growth vs. Gross Margin Benchmarking Note: 2015E revenue growth and gross margins for 49 public SaaS companies per consensus estimates Source: Craig Hallum / S&P Capital IQ. High Growth, High Margin SaaS © 2016 Mattersight Corporation.

2015 Accomplishments

Significant Investments in Our Sales Engine Sales Leadership Customer & Marketing Leadership Frank Suljic, SVP Strategic Sales Rejoined June 2015 Led sales organizations at 6 start-ups and 3 of the largest software companies U of Chicago, MBA Ryan Swanger, SVP National Sales Rejoined January 2015 Ran eLoyalty salesforce for Teletech closing $75m in ACV in 2014 U of Texas, Austin Brian Study, Chief Customer Officer Joined in October 2015 8 years Chief Customer Officer SAVO Accenture/Deloitte Wharton undergrad Jason Wesbecher, Chief Marketing Officer Rejoined January 2015 Venture-backed SaaS CEO; Jive/Siebel/TIBCO Wharton undergrad Matt Heller, VP Central Sales Joined January 2015 9 years regional sales management positions at Nuance Babson Gregg Carman, SVP East Sales Rejoined January 2016 Formerly CRO of Kaleo; Siebel/SAP/C3 Energy Ohio State 19 Scaling the Team Hired 4 new Farmers Hired 5 new Hunters © 2016 Mattersight Corporation.

Ramped up Predictive Behavioral Routing in 2015 2X+ SOLD SEATS Made significant progress in many areas of PBR in 2015… 300%+ ROUTED CALLS FIXED AVAYA REPORTING 3X+ SCALING 50%+ INCREASED LIFT 20 © 2016 Mattersight Corporation.

Workstyle Launch

Background 2016 is “The Year of Emotion” Forrester, CEB and Temkin claim emotion as the next wave of CX How customers feel about interactions will increasingly drive loyalty Mattersight is uniquely positioned to capitalize on this wave Unique competency with PCM Increasing interest in PBR Strong demand for personality-based solutions 22 “We found that emotion, how an experience makes the customer feel, has a bigger influence on their loyalty to a brand than either of the other two factors. Emotion was the #1 factor in customer loyalty across 17 of the 18 industries that we studied this time around.” Megan Burns, Principal Analyst Serving CX Professionals, July 2015 © 2016 Mattersight Corporation.

Our Personality Vision 23 Routing Coaching Workstyle for CX Workstyle for CRM 2017 Analytics Mattersight is the ONLY vendor with Suite of Personality, Routing and Analytics Products © 2016 Mattersight Corporation.

What is Workstyle? Workstyle is a lightweight SaaS app Workstyle is an engaging app that sits in front of agents everyday teaching & reinforcing personality concepts Reporting and analytics connect agent performance opptys with targeted learning pathways Workstyle becomes a natural bridge from Routing to Performance Mgmt Workstyle helps agents build personality acuity so they can better connect with customers & co-workers Deep reference content across the 6 styles Multimedia quizzes, points, in-app rewards Team analytics & leaderboards Email badges for sharing © 2016 Mattersight Corporation.

Workstyle Strategic Impact Extract more value out of Routing seats & make them stickier Accelerate market awareness of personality as a strategic lever for CX Lightweight tool to boost inbound lead gen Expansion opportunities into CRM © 2016 Mattersight Corporation.

2016 Guidance

2016 Goals and Outlook General Commentary The large deals sold in Q3/Q4 2015 will begin to show significant impact in Q2 Strong Q1/Q2 pipeline expected to drive further growth in back half of 2016 Expect to experience a significant increase in mix of subscription revenues due to increased routing and renewal revenues, neither having deployment fees Financial Goals >$60M Q4 revenue run rate EBITDA breakeven in Q3 Operating cash flow breakeven in Q4 EBITDA breakeven for whole year Guidance 30% - 35% growth in Book of Business 35% - 40% growth in subscription revenues 30% growth in total revenues 74% -76% gross margin © 2016 Mattersight Corporation.

Q&A

Thank You Kelly Conway 847.582.7200 kelly.conway@mattersight.com David Gustafson 847.582.7016 david.gustafson@mattersight.com Sheau-ming Ross 312.454.3594 sheau-ming.ross@mattersight.com © 2016 Mattersight Corporation.

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