Support.com, Inc. (NASDAQ: SPRT), makers of Support.com® Cloud
software for Support Interaction Optimization, and a leading
provider of tech support and turnkey support center services, today
reported unaudited financial results for its third quarter ended
September 30, 2016.
“Q3 2016 showed good progress,” said Rick Bloom, interim
President and Chief Executive Officer. “I look forward to working
with the entire Support.com community and am excited about the
prospects for the business and delivering shareholder value.”
Q3 2016 Financial Summary
For the third quarter of 2016, total revenue was $15.5 million
compared to $17.9 million in the third quarter of 2015 and $14.9
million in the second quarter of 2016.
On a GAAP basis, loss from continuing operations for the third
quarter of 2016 was $(2.1) million, or $(0.04) per share, compared
to $(3.9) million, or $(0.07) per share, in the third quarter of
2015 and $(6.0) million, or $(0.11) per share, in the second
quarter of 2016.
On a non-GAAP basis, loss from continuing operations for the
third quarter of 2016 was $(1.2) million, or $(0.02) per share,
compared to a loss of $(2.9) million, or $(0.05) per share, in the
third quarter of 2015 and a loss of $(4.9) million, or $(0.09) per
share, in the second quarter of 2016.
Non-GAAP income (loss) from continuing operations excludes
stock-based compensation expense, amortization of intangible assets
and other, restructuring and impairment charges and tax expense
(benefit) associated with acquired goodwill. Collectively, these
items impacted income (loss) from continuing operations by $0.9
million in the third quarter of 2016, $1.0 million in the third
quarter of 2015 and $1.1 million in the second quarter of 2016. A
reconciliation of GAAP to non-GAAP results is presented in the
tables below.
Balance Sheet Information
At September 30, 2016, cash, cash equivalents and investments
were $54.5 million, compared to $58.0 million at June 30, 2016.
Recent Company Highlights
- Successfully launched services programs
with Sears and Target in Q3 2016, which were both announced in Q2
2016
- Closed second enterprise Support.com
Cloud customer, driven by SeeSupport, the remote video support
application that is part of Support.com Cloud
- Launched first enterprise Cloud
customer at the end of September with several hundred agents, and
expected to expand to approximately 2,000 agents in Q4
- TMC awarded Support.com® Cloud
SeeSupport a 2016 Communications Solutions Products of the Year
Award
Support.com will host a conference call discussing the Company’s
third quarter 2016 results on Thursday, November 3, 2016, starting
at 4:30 p.m. EDT (1:30 p.m. PDT). The live call may be accessed by
dialing (877) 388-8486 (domestic), or (408) 427-3864
(international), using passcode 11088825. A live audio webcast and
replay of the call will be available at the Investor Relations
section of the Support.com website at
https://www.support.com/about-us/investor-relations/investor-webinars-events/.
About Support.com
Support.com, Inc. (NASDAQ:SPRT) is the leading provider of
cloud-based software and services to deliver next-generation
technical support. Support.com helps leading brands in software,
electronics, communications, retail, Internet of Things (IoT) and
other connected technology industries deepen their customer
relationships. Customers want technology that works the way it’s
intended. By using Support.com software and services, companies can
deliver a fantastic customer experience, leading to happier
customers, greater brand loyalty and growing revenues.
For more information, please visit
http://www.support.com or follow us
@support_com.
Support.com, Inc. is an Equal Opportunity Employer. For more
information,
visit http://www.support.com/about-us/careers.
© 2016 Support.com, Inc. All rights reserved. Support.com and
the Support.com logo are trademarks or registered trademarks of
Support.com, Inc. in the United States and other countries. All
other marks are the property of their respective owners.
Safe Harbor Statement
This press release contains “forward-looking statements” as
defined under the U.S. federal securities laws, including the
Private Securities Litigation Reform Act of 1995, and is subject to
the safe harbors created by such laws. Forward-looking statements
include, for example, all statements relating to expected financial
performance (including without limitation statements involving
growth and projections of revenue, margin, profitability, income
(loss) from continuing operations, income (loss) per share from
continuing operations, cash usage or generation, cash balance as of
any future date, capital structure and other financial items); the
plans and objectives of management for future operations, customer
relationships, products, services or investments; personnel
matters; and future performance in economic and other terms. Such
forward-looking statements are based on current expectations that
involve a number of uncertainties and risks that may cause actual
events or results to differ materially from those indicated by such
forward-looking statements, including, among others, our ability to
retain and grow major programs, our ability to expand and diversify
our customer base, our ability to market and sell our Support.com
Cloud (formerly “Nexus®”) software-as-a-service (SaaS) offering,
our ability to maintain and grow revenue, our ability to
successfully develop new products and services, our ability to
manage our workforce, our ability to operate in markets that are
subject to extensive regulations, such as support for home security
systems, our ability to control expenses and achieve desired
margins, our dependence on a small number of customers and
partners, our ability to attract, train and retain talented
employees, the potential for acquisitions or other strategic
transactions that deplete our resources or do not prove successful,
privacy concerns, the potential for payment fraud issues, potential
intellectual property, class action or other litigation, potential
impairments of long lived assets, our ability to utilize and
realize the value of our net operating loss carryforwards and how
they could be substantially limited or permanently impaired, given
our current market capitalization and cash position, if we
experienced an “ownership change” as defined in Section 382 of the
Internal Revenue Code and whether our recently adopted tax benefits
preservation plan will be effective in reducing the likelihood of
such an unintended ownership change from occurring, the recent
change in the composition of our Board and the recent resignation
of our former President and Chief Executive Officer and appointment
of a new interim President and Chief Executive Officer may lead to
the perception of a change in the direction of our business,
instability or a lack of continuity which may be exploited by our
competitors, cause concern to our current or potential clients, and
may result in the loss of potential business opportunities and make
it more difficult to attract and retain qualified personnel and
business partners, our ability to execute the cost reduction
program involving the planned actions on the expected schedule, our
ability to achieve the cost savings expected in connection with the
cost reduction plan, the ultimate effect of any such cost
reductions on our financial results, and our ability to manage the
effects of the cost reduction plan on our workforce and other
operations. These and other risks may be detailed from time to time
in Support.com’s periodic reports filed with the Securities and
Exchange Commission, including, but not limited to, its latest
Annual Report on Form 10-K and its latest Quarterly Report on Form
10-Q, copies of which may be obtained from www.sec.gov. Support.com
assumes no obligation to update its forward-looking statements,
except as may otherwise be required by the federal securities
laws.
Disclosure Regarding Non-GAAP Financial Measures
Support.com excludes stock-based compensation expense,
amortization of intangible assets and other, restructuring and
impairment charges and tax expense (benefit) associated with
acquired goodwill from its GAAP results, in order to determine the
non-GAAP financial measures of income (loss) from continuing
operations and income (loss) from continuing operations per share,
as described in A through D below. We believe that the non-GAAP
measures, when viewed in addition to and not in lieu of our
reported GAAP results, assist investors in understanding our
results of operations.
A. Stock-based compensation expense. Management excludes
stock-based compensation expense when evaluating its performance
from period to period because such expenses do not require cash
settlement and because such expenses are not used by management to
assess the performance of the Company’s business. Stock-based
compensation expense was $661,000 in the third quarter of 2016,
compared to $735,000 in the third quarter of 2015 and $454,000 in
the second quarter of 2016.
B. Amortization of intangible assets and other. The Company does
not acquire businesses on a predictable cycle; therefore management
excludes acquisition-related intangible asset amortization and
related charges when evaluating its operating performance.
Amortization of intangible assets and other was $267,000 in the
third quarter of 2016, the third quarter of 2015 and the second
quarter of 2016.
C. Restructuring and impairment charges. Management excludes
restructuring and impairment charges when evaluating its operating
performance because the Company does not incur such charges on a
predictable basis and exclusion of such charges enables more
consistent evaluation of the Company’s operating performance.
Restructuring charge was zero in the third quarter of 2016, zero in
the third quarter of 2015, and $423,000 in the second quarter of
2016. There was no impairment charge in the third quarter of 2016,
the third quarter of 2015, or the second quarter of 2016.
D. Tax expense (benefit) associated with acquired goodwill. The
Company does not amortize goodwill in its consolidated financial
statements. Goodwill created through Asset Purchase Agreement
transactions is amortizable for tax purposes and a deferred tax
liability is recorded as the tax deduction is realized. The Company
excludes the tax expense (benefit) associated with acquired
goodwill when evaluating its operating performance because the
Company does not acquire businesses on a predictable cycle and
excluding such expense (benefit) enables more consistent evaluation
of the Company’s operating performance. Tax expense (benefit)
associated with acquired goodwill was zero in the third quarter of
2016, the third quarter of 2015 and the second quarter of 2016.
The Company believes that non-GAAP financial measures have
significant limitations in that they do not reflect all of the
amounts associated with the Company’s financial results as
determined in accordance with GAAP and that these measures should
only be used to evaluate the Company’s financial results in
conjunction with the corresponding GAAP measures. In addition, the
exclusion of the items indicated above from the non-GAAP financial
measures presented does not indicate an expectation by management
that such items will not be incurred in subsequent periods.
SUPPORT.COM, INC. GAAP CONDENSED CONSOLIDATED BALANCE
SHEETS (in thousands) (unaudited)
September 30, December 31, 2016
(1 ) 2015 (2 )
Assets Current assets: Cash, cash equivalents and short-term
investments $ 54,497 $ 65,734 Accounts receivable, net 10,195
10,019 Prepaid expenses and other current assets 1,352
1,474
Total current assets 66,044
77,227 Property and equipment, net 1,940 1,989 Intangible assets,
net 493 1,294 Other assets 988 982
Total assets $ 69,465 $ 81,492
Liabilities and Stockholders' Equity Current liabilities:
Accounts payable and accrued compensation $ 3,022 $ 3,035 Other
accrued liabilities 2,601 4,135 Short-term deferred revenue
2,658 2,184
Total current liabilities
8,281 9,354 Long-term deferred revenue 72 102 Other long-term
liabilities 415 690
Total
liabilities 8,768 10,146
Stockholders' equity: Common stock 6 5 Additional paid-in-capital
267,144 265,324 Treasury stock (5,239 ) (5,167 ) Accumulated other
comprehensive loss (2,233 ) (2,302 ) Accumulated deficit
(198,981 ) (186,514 )
Total stockholders' equity
60,697 71,346
Total
liabilities and stockholders' equity $ 69,465 $ 81,492
Note 1: Amounts are subject to completion of management’s
customary closing and review procedures. Note 2: Derived
from audited consolidated financial statements for the year ended
December 31, 2015.
SUPPORT.COM, INC. GAAP CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except
per share amounts) (unaudited)
Three Months Ended
Nine Months Ended
September 30,2016
(1 )
June 30,2016
September 30,2015
September 30,2016
(1 )
September 30,2015
Revenue: Services $ 14,163 $ 13,609 $ 16,563 $ 43,055
$ 57,733 Software and other 1,364 1,320
1,302 3,998 3,889
Total revenue 15,527 14,929
17,865 47,053 61,622
Cost of revenue: Cost of services (3) 11,847 12,696
14,357 38,403 48,555 Cost of software and other (3) 120
138 128 377
409
Total cost of revenue 11,967
12,834 14,485 38,780
48,964 Gross profit 3,560 2,095
3,380 8,273 12,658
Operating expenses: Research and development (3)
1,336 1,420 1,790 4,464 5,244 Sales and marketing (3) 1,463 1,866
2,195 5,401 6,492 General and administrative (3) 2,703 4,235 3,047
10,186 9,183 Amortization of intangible assets and other 267 267
267 801 802 Goodwill impairment - - - - 14,240 Restructuring
- 423 - 423
-
Total operating expenses 5,769
8,211 7,299 21,275 35,961
Loss from operations (2,209 ) (6,116 ) (3,919
) (13,002 ) (23,303 ) Interest income and other, net
124 126 113 383
319
Loss from continuing operations, before
income taxes (2,085 ) (5,990 ) (3,806 ) (12,619 ) (22,984 )
Income tax provision (benefit) 44
36 60 132 (1,041 )
Loss from continuing operations, after income taxes
(2,129 ) (6,026 ) (3,866 ) (12,751 ) (21,943 )
Income
(loss) from discontinued operations, net of income taxes
- - (5 ) 284 32
Net loss $ (2,129 ) $ (6,026 ) $ (3,871 ) $
(12,467 ) $ (21,911 )
Loss from continuing
operations, after income taxes Basic $ (0.04 ) $ (0.11 ) $
(0.07 ) $ (0.23 ) $ (0.40 ) Diluted $ (0.04 ) $ (0.11 ) $ (0.07 ) $
(0.23 ) $ (0.40 )
Income (loss) from discontinued
operations, net of income taxes Basic $
(0.00
)
$ (0.00 ) $ (0.00 ) $ 0.01 $ 0.00 Diluted $
(0.00
)
$ (0.00 ) $ (0.00 ) $ 0.01 $ 0.00
Shares
used in computing per share amounts: Basic 55,337
55,120 54,637 55,116
54,465 Diluted 55,337 55,120
54,637 55,116 54,465
Note 3: Includes stock-based compensation expense as
follows:
Three Months Ended Nine Months Ended
September 30,2016
June 30,2016
September 30,2015
September 30,2016
September 30,2015
Cost of revenue: Cost of services $ 43 $ 35 $ 62 $ 134 $ 187
Cost of software and other 1 - 2 4 8
Operating expenses:
Research and development 156 92 156 346 442 Sales and marketing 79
(42 ) 110 121 276 General and administrative 382
369 405 1,171
1,316 Total $ 661 $ 454 $ 735 $ 1,776
$ 2,229
SUPPORT.COM, INC. RECONCILIATION OF
GAAP FINANCIAL RESULTS TO NON-GAAP FINANCIAL MEASURES
(in thousands, except per share
amounts)
(unaudited)
Three Months Ended Nine Months Ended
September 30,2016
June 30,2016
September 30,2015
September 30,2016
September 30,2015
GAAP cost of revenue $ 11,967 $ 12,834 $ 14,485 $
38,780 $ 48,964 Stock-based compensation expense (Cost of revenue
portion only) (45 ) (35 ) (64 ) (138 ) (195 ) Other non-recurring
items - - - -
-
Non-GAAP cost of revenue $ 11,922 $
12,799 $ 14,421 $ 38,642 $ 48,769
GAAP operating
expenses $ 5,769 $ 8,211 $ 7,299 $ 21,275 $ 35,961 Stock-based
compensation expense (Excl. cost of revenue portion) (616 ) (419 )
(671 ) (1,638 ) (2,034 ) Amortization of intangible assets and
other (267 ) (267 ) (267 ) (801 ) (802 ) Restructuring and
impairment charges - (423 ) -
(423 ) (14,240 )
Non-GAAP operating expenses $
4,886 $ 7,102 $ 6,361 $ 18,413 $ 18,885
GAAP income tax
provision (benefit) $ 44 $ 36 $ 60 $ 132 $ (1,041 ) Tax expense
(benefit) associated with acquired goodwill -
- - - 1,204
Non-GAAP income tax provision $ 44 $ 36 $ 60 $ 132 $ 163
GAAP loss from continuing operations, after income
taxes $ (2,129 ) $ (6,026 ) $ (3,866 ) $ (12,751 ) $ (21,943 )
Stock-based compensation expense 661 454 735 1,776 2,229
Amortization of intangible assets and other 267 267 267 801 802 Tax
expense (benefit) associated with acquired goodwill - - - - (1,204
) Restructuring and impairment charges - 423
- 423 14,240 Total
impact of Non-GAAP exclusions 928 1,144 1,002 3,000 16,067
Non-GAAP income (loss) from continuing operations, after income
taxes $ (1,201 ) $ (4,882 ) $ (2,864 ) $ (9,751 ) $ (5,876 )
Loss from continuing operations, after income taxes
Basic - GAAP $ (0.04 ) $ (0.11 ) $ (0.07 ) $ (0.23 ) $ (0.40 )
Basic - Non-GAAP $ (0.02 ) $ (0.09 ) $ (0.05 ) $ (0.18 ) $ (0.11 )
Diluted - GAAP $ (0.04 ) $ (0.11 ) $ (0.07 ) $ (0.23 ) $
(0.40 ) Diluted - Non-GAAP $ (0.02 ) $ (0.09 ) $ (0.05 ) $ (0.18 )
$ (0.11 )
Shares used in computing per share amounts (GAAP)
Basic 55,337 55,120 54,637
55,116 54,465 Diluted
55,337 55,120 54,637
55,116 54,465
Shares used in computing per
share amounts (Non-GAAP) Basic 55,337
55,120 54,637 55,116
54,465 Diluted 55,337 55,120
54,637 55,116 54,465
The
adjustments above reconcile the Company’s GAAP financial results to
the non-GAAP financial measures used by the Company. The Company’s
non-GAAP financial measures exclude stock-based compensation
expense, amortization of intangible assets and other, restructuring
and impairment charges and tax expense (benefit) associated with
acquired goodwill. The Company believes that presentation of these
non-GAAP items provides meaningful supplemental information to
investors, when viewed in conjunction with, and not in lieu of, the
Company’s GAAP results. However, the non-GAAP financial measures
have not been prepared under a comprehensive set of accounting
rules or principles. Non-GAAP information should not be considered
in isolation from, or as a substitute for, information prepared in
accordance with GAAP. Moreover, there are material limitations
associated with the use of non-GAAP financial measures. See the
text of this press release for more information on non-GAAP
financial measures. 2016 Amounts are subject to
completion of management’s customary closing and review procedures.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20161103006680/en/
Support.comJacob Moelter, +1-650-556-8595Investor
Relationsjacob.moelter@support.com
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