- Previously announced cost reduction
plan complete; renewed focus on fiscal discipline
- Acquired third Support.com Cloud
enterprise customer
- Exited 2016 with Support.com Cloud
Annual Recurring Revenue (ARR) of $1.2 million and 4,635 total
seats
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 fourth quarter and
year ended December 31, 2016.
“In Q4 2016, we continued to execute at a high level and made
strides in Services, Support.com Cloud and End-User Software, all
while taking actions to mitigate our future cash burn,” said Rick
Bloom, Interim President and Chief Executive Officer. “We will
continue to be fiscally responsible and methodically evaluate cost
reduction measures while not hampering our ability to execute. The
short and long term opportunities in front of us combined with our
refreshed view of expense management give us confidence in
achieving our ultimate goal of delivering shareholder value.”
Q4 2016 Financial Summary
For the fourth quarter of 2016, total revenue was $14.6 million,
compared to $15.7 million in the fourth quarter of 2015 and $15.5
million in the third quarter of 2016.
All share and per-share data has been adjusted for the 1-for-3
stock split announced on January 13, 2017 and effected on January
20, 2017.
On a GAAP basis, loss from continuing operations for the fourth
quarter of 2016 was $(3.5) million, or $(0.19) per share, compared
to $(5.1) million, or $(0.28) per share, in the fourth quarter of
2015 and $(2.1) million, or $(0.12) per share, in the third quarter
of 2016.
On a non-GAAP basis, loss from continuing operations for the
fourth quarter of 2016 was $(2.3) million, or $(0.13) per share,
compared to a loss of $(4.2) million, or $(0.23) per share, in the
fourth quarter of 2015 and a loss of $(1.2) million, or $(0.07) per
share, in the third 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 $1.2
million in the fourth quarter of 2016, $1.0 million in the fourth
quarter of 2015 and $0.9 million in the third quarter of 2016. A
reconciliation of GAAP to non-GAAP results is presented in the
tables below.
At December 31, 2016, cash, cash equivalents and investments
were $53.4 million compared to $54.5 million at September 30,
2016.
2016 Financial Summary
Total revenue for 2016 was $61.7 million, compared to $77.3
million in 2015.
On a GAAP basis, loss from continuing operations for 2016 was
$16.2 million, or ($0.88) per share, compared to a loss of $27.1
million, or $(1.49) per share, in 2015.
On a non-GAAP basis, loss from continuing operations for 2016
was $12.1 million, or $(0.66) per share, compared to a loss of
$10.1 million, or ($0.55) per share in 2015.
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 results from continuing operations by $4.2 million
in 2016 and $17.0 million in 2015. A reconciliation of GAAP to
non-GAAP results is presented in the tables below.
On October 11, 2016 the Wage and Hour Division of the U.S.
Department of Labor notified the Company that it would be
conducting an audit of the Company. The audit commenced on October
20, 2016 and is ongoing.
Support.com will not host a conference call discussing the
Company’s fourth quarter and full year 2016 results. For more
information, please visit the Investor Relations section of the
Support.com website at
http://www.support.com/about-us/investor-relations/.
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.
© 2017 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, government
investigations or audits, including the U.S. Department of Labor
audit that is currently ongoing, 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 $211,000 in the fourth quarter of 2016,
compared to $686,000 in the fourth quarter of 2015 and $661,000 in
the third 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 $227,000 in the
fourth quarter of 2016, compared to $267,000 the fourth quarter of
2015 and $267,000 in the third 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 $723,000 in the fourth quarter of 2016,
zero in the fourth quarter of 2015, and zero in the third quarter
of 2016. There was no impairment charge in the fourth quarter of
2016, the fourth quarter of 2015, or the third 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 fourth quarter of
2016, the fourth quarter of 2015 and the third 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)
December 31,
December 31,
2016
(1)
2015
(2)
Assets Current assets: Cash, cash equivalents and
short-term investments $ 53,409 $ 65,734 Accounts receivable, net
9,567 10,019 Prepaid expenses and other current assets 1,211
1,474
Total current assets 64,187
77,227 Property and equipment, net 1,706 1,989 Intangible assets,
net 266 1,294 Other assets 1,070 982
Total assets
$ 67,229 $ 81,492
Liabilities and Stockholders'
Equity
Current liabilities: Accounts payable and accrued compensation (3)
$ 4,059 $ 3,547 Other accrued liabilities (3) 2,496 3,623
Short-term deferred revenue 2,759 2,184
Total current liabilities 9,314 9,354 Long-term deferred
revenue 106 102 Other long-term liabilities 501
690
Total liabilities 9,921
10,146 Stockholders' equity: Common stock 6 5
Additional paid-in-capital 267,396 265,324 Treasury stock (5,295 )
(5,167 ) Accumulated other comprehensive loss (2,329 ) (2,302 )
Accumulated deficit (202,470 ) (186,514 )
Total stockholders' equity
57,308 71,346
Total liabilities and stockholders'
equity
$ 67,229 $ 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. Note 3:
Certain expenses accrued at December 31, 2015 related to employee
commissions and bonuses were reclassified from "Other accrued
liabilities" to "Accounts payable and accrued compensation" to
conform to the presentation of those liabilities in the balance
sheet for the year ended December 31, 2016. These reclassifications
have no impact on previously reported total revenue, net income
(loss), net assets, or total cash flows.
SUPPORT.COM, INC. GAAP CONDENSED CONSOLIDATED STATEMENTS
OF OPERATIONS (in thousands, except per share amounts)
(unaudited) Three Months Ended Twelve
Months Ended December 31, 2016 (1) September
30, 2016 December 31, 2015 December 31, 2016
(1) December 31, 2015 (2)
Revenue: Services $ 13,256 $ 14,163 $ 14,418 $ 56,311 $
72,151 Software and other 1,351 1,364
1,293 5,349 5,182
Total revenue 14,607 15,527
15,711 61,660 77,333
Cost of revenue: Cost of services (4) 11,842 11,847
12,884 50,245 61,439 Cost of software and other (4) 109
120 127 486
536
Total cost of revenue 11,951
11,967 13,011 50,731
61,975 Gross profit 2,656 3,560
2,700 10,929 15,358
Operating expenses: Research and
development (4) 1,113 1,336 1,713 5,577 6,957 Sales and marketing
(4) 1,270 1,463 2,053 6,671 8,545 General and administrative (4)
2,772 2,703 3,828 12,958 13,011 Amortization of intangible assets
and other 227 267 267 1,028 1,069 Goodwill impairment - - - -
14,240 Restructuring 723 - -
1,146 -
Total operating expenses
6,105 5,769 7,861
27,380 43,822
Loss from operations
(3,449 ) (2,209 ) (5,161 ) (16,451 ) (28,464 ) Interest
income and other, net 135 124
111 518 430
Loss from
continuing operations, before income taxes (3,314 ) (2,085 )
(5,050 ) (15,933 ) (28,034 )
Income tax provision
(benefit) 175 44 76
307 (965 )
Loss from continuing operations, after
income taxes
(3,489 ) (2,129 ) (5,126 ) (16,240 ) (27,069 )
Income (loss) from discontinued
operations, net of income taxes
- - (4 ) 284
28
Net loss $ (3,489 ) $ (2,129 ) $
(5,130 ) $ (15,956 ) $ (27,041 )
Loss from continuing operations, after
income taxes (5)
Basic $ (0.19 ) $ (0.12 ) $ (0.28 ) $ (0.88 ) $ (1.49 ) Diluted $
(0.19 ) $ (0.12 ) $ (0.28 ) $ (0.88 ) $ (1.49 )
Income (loss) from discontinued
operations, net of income taxes (5)
Basic $ (0.00 ) $ (0.00 ) $ (0.00 ) $ 0.02 $ 0.00
Diluted $ (0.00 ) $ (0.00 ) $ (0.00 ) $ 0.02 $ 0.00
Shares used in computing per share
amounts: (5)
Basic 18,514 18,445 18,264
18,409 18,182 Diluted
18,514 18,445 18,264
18,409 18,182
Note 4:
Includes stock-based compensation expense as follows:
Three Months Ended Twelve Months Ended December
31, 2016 September 30, 2016 December 31, 2015
December 31, 2016 December 31, 2015 Cost of
revenue: Cost of services $ 38 $ 43 $ 47 $ 172 $ 234 Cost of
software and other 1 1 2 5 10
Operating expenses: Research
and development 54 156 147 400 589 Sales and marketing 51 79 106
172 381 General and administrative 67 382
384 1,238 1,700
Total $ 211 $ 661 $ 686 $ 1,987 $ 2,914
Note 5: On January 20, 2017, the Company implemented
a 1-for-3 reverse stock split. All share and per share information
contained within this press release has been retroactively adjusted
to reflect the effects of the reverse stock split.
SUPPORT.COM, INC. RECONCILIATION OF GAAP FINANCIAL
RESULTS TO NON-GAAP FINANCIAL MEASURES (in thousands, except
per share amounts) (unaudited) Three Months
Ended Twelve Months Ended December 31, 2016
September 30, 2016 December 31, 2015 December 31,
2016 December 31, 2015 GAAP cost of
revenue $ 11,951 $ 11,967 $ 13,011 $ 50,731 $ 61,975
Stock-based compensation expense (Cost of revenue portion only)
(39 ) (44 ) (49 ) (177 ) (244 )
Non-GAAP cost of revenue $ 11,912 $ 11,923 $ 12,962 $ 50,554
$ 61,731
GAAP operating expenses $ 6,105 $ 5,769 $
7,861 $ 27,380 $ 43,822 Stock-based compensation expense (Excl.
cost of revenue portion) (172 ) (617 ) (637 ) (1,810 ) (2,670 )
Amortization of intangible assets and other (227 ) (267 ) (267 )
(1,028 ) (1,069 ) Restructuring and impairment charges (723
) - - (1,146 ) (14,240 )
Non-GAAP operating expenses $ 4,983 $ 4,885 $ 6,957 $ 23,396
$ 25,843
GAAP income tax provision (benefit) $ 175 $
44 $ 76 $ 307 $ (965 ) Tax expense associated with acquired
goodwill - - - -
1,204
Non-GAAP income tax provision $
175 $ 44 $ 76 $ 307 $ 239
GAAP loss from continuing
operations, after income taxes $ (3,489 ) $ (2,129 ) $ (5,126 )
$ (16,240 ) $ (27,069 ) Stock-based compensation expense 211 661
686 1,987 2,914 Amortization of intangible assets and other 227 267
267 1,028 1,069 Tax expense associated with acquired goodwill - - -
- (1,204 ) Restructuring and impairment charges 723
- - 1,146 14,240
Total impact of Non-GAAP exclusions 1,161 928 953 4,161
17,019
Non-GAAP income (loss) from continuing operations, after
income taxes $ (2,328 ) $ (1,201 ) $ (4,173 ) $ (12,079 ) $
(10,050 )
Loss from continuing operations, after income
taxes (5) Basic - GAAP $ (0.19 ) $ (0.12 ) $ (0.28 ) $ (0.88 )
$ (1.49 ) Basic - Non-GAAP $ (0.13 ) $ (0.07 ) $ (0.23 ) $ (0.66 )
$ (0.55 ) Diluted - GAAP $ (0.19 ) $ (0.12 ) $ (0.28 ) $
(0.88 ) $ (1.49 ) Diluted - Non-GAAP $ (0.13 ) $ (0.07 ) $ (0.23 )
$ (0.66 ) $ (0.55 )
Shares used in computing per share amounts
(GAAP) (5) Basic 18,514 18,445
18,264 18,409 18,182
Diluted 18,514 18,445 18,264
18,409 18,182
Shares used in
computing per share amounts (Non-GAAP) (5) Basic 18,514
18,445 18,264 18,409
18,182 Diluted 18,514
18,445 18,264 18,409
18,182
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/20170216005405/en/
Support.comJacob Moelter, +1-650-556-8595Investor
Relationsjacob.moelter@support.com
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