Support.com, Inc. (NASDAQ:SPRT), a leading provider of tech
support and turnkey support center services, producer of
SUPERAntiSpyware® anti-malware products, and the maker of
Support.com® Cloud software, today reported unaudited financial
results for its first quarter ended March 31, 2017.
“The company continued to focus on reducing operating costs
during the first quarter and our improved financial results reflect
some of the significant cost savings initiatives we have recently
put in place. Some of these initiatives include changing certain
vendors to the company for various products and services, more
efficiently running our call center operations, and selective
headcount reductions, among others. And, while this period was
impacted by a temporary halt by one of our largest customers to
certain services we provided to them, we have subsequently
reinstated similar services and are now ramping up to pre-halt
levels,” said Rick Bloom, Interim President and Chief Executive
Officer.
“Our cash position at the end of the first quarter was
negatively impacted by some delayed payments that were collected
after the quarter-end, and, as of May 1st 2017, we relocated our
corporate offices to 1200 Crossman Avenue, Suite 210, in Sunnyvale,
California, substantially lowering the rent and related spending
level,” Mr. Bloom continued.
“Although we remain focused on fiscal discipline and continuing
to reduce our net loss from previous quarters, we are just as
excited by the growth opportunities ahead as Support.com is
uniquely positioned to capitalize on the evolving support market.
With a lean, energized team in place, we are eager to drive growth
and profitability through an innovative approach to our Service
offerings, a greater focus on our End-User Software products and a
new more targeted Cloud software marketing and sales effort,”
shared Rick.
Q1 2017 Financial Summary
For the first quarter of 2017, total revenue was $14.3 million
compared to $16.6 million in the first quarter of 2016 and $14.6
million in the fourth quarter of 2016.
On a GAAP basis, loss from continuing operations for the first
quarter of 2017 was $(1.3) million, or $(0.07) per share, compared
to $(4.6) million, or $(0.25) per share, in the first quarter of
2016 and $(3.5) million or $(0.19) per share, in the fourth quarter
of 2016.
On a non-GAAP basis, loss from continuing operations for the
first quarter of 2017 was $(1.2) million, or $(0.06) per share,
compared to a loss of $(3.7) million, or $(0.20) per share in the
first quarter of 2016 and a loss of $(2.3) million, or $(0.13) per
share, in the fourth quarter of 2016.
Non-GAAP income (loss) from continuing operations excludes
stock-based compensation expense, amortization of intangible assets
and other, and restructuring charges. Collectively, these items
impacted income (loss) from continuing operations by $100,000 in
the first quarter of 2017, $928,000 in the first quarter of 2016
and $1.2 million in the fourth quarter of 2016. A reconciliation of
GAAP to non-GAAP results is presented in the tables below.
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.
Balance Sheet Information
At March 31, 2017, cash, cash equivalents and investments were
$50.8 million, compared to $53.4 million at December 31, 2016.
For more information, please visit the Investor Relations
section of the Support.com website at
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, 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 former
Executive Vice President, Chief Financial Officer and Chief
Operating 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, and restructuring
charges 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 C 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 $90,000 in the first quarter of 2017,
compared to $661,000 in the first quarter of 2016 and $211,000 in
the fourth 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 $10,000 in the
first quarter of 2017, compared to $267,000 in the first quarter of
2016 and $227,000 in the fourth quarter of 2016.
C. Restructuring charges. Management excludes restructuring
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 charges were zero in
the first quarter of 2017 and 2016, and $723,000 in the fourth
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)
March 31, December 31,
2017 (1) 2016 (2)
Assets Current assets: Cash, cash equivalents and
short-term investments $ 50,754 $ 53,409 Accounts receivable, net
10,224 9,567 Prepaid expenses and other current assets 980
1,211
Total current assets 61,958
64,187 Property and equipment, net 1,552 1,706 Intangible assets,
net 256 266 Other assets 1,073 1,070
Total assets $ 64,839 $ 67,229
Liabilities and Stockholders' Equity Current liabilities:
Accounts payable and accrued compensation $ 2,987 $ 4,059 Other
accrued liabilities 2,118 2,496 Short-term deferred revenue
2,876 2,759
Total current liabilities
7,981 9,314 Long-term deferred revenue 88 106 Other long-term
liabilities 510 501
Total
liabilities 8,579 9,921
Stockholders' equity: Common stock 2 2 Additional paid-in-capital
267,490 267,400 Treasury stock (5,295 ) (5,295 ) Accumulated other
comprehensive loss (2,181 ) (2,329 ) Accumulated deficit
(203,756 ) (202,470 )
Total stockholders' equity
56,260 57,308
Total
liabilities and stockholders' equity $ 64,839 $ 67,229
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, 2016.
SUPPORT.COM,
INC. GAAP CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS (in thousands, except per share amounts)
(unaudited) Three Months Ended March
31, 2017 (1) December 31, 2016
March 31, 2016 Revenue: Services $ 12,915 $
13,256 $ 15,283 Software and other 1,375 1,351
1,314
Total revenue 14,290
14,607 16,597
Cost of
revenue: Cost of services (3) 11,211 11,842 13,860 Cost of
software and other (3) 94 109
119
Total cost of revenue 11,305
11,951 13,979 Gross profit 2,985
2,656 2,618
Operating expenses:
Research and development (3) 923 1,113 1,708 Sales and marketing
(3) 807 1,270 2,072 General and administrative (3) 2,616 2,772
3,248 Amortization of intangible assets and other 10 227 267
Restructuring charges - 723 -
Total operating expenses 4,356
6,105 7,295
Loss from operations
(1,371 ) (3,449 ) (4,677 ) Interest income and other, net
133 135 133
Loss from continuing operations, before income taxes (1,238
) (3,314 ) (4,544 )
Income tax provision (benefit)
48 175 52
Loss
from continuing operations, after income taxes (1,286 ) (3,489
) (4,596 )
Income from discontinued operations, net of
income taxes - - 284
Net loss $ (1,286 ) $ (3,489 ) $ (4,312 )
Loss from continuing operations, after income taxes
(4) Basic $ (0.07 ) $ (0.19 ) $ (0.25 ) Diluted $ (0.07 ) $
(0.19 ) $ (0.25 )
Income (loss) from discontinued
operations, net of income taxes (4) Basic $ (0.00 ) $ (0.00 ) $
0.01 Diluted $ (0.00 ) $ (0.00 ) $ 0.01
Shares used in computing per share amounts: (4) Basic
18,557 18,514 18,295 Diluted
18,557 18,514 18,295
Note 3: Includes stock-based compensation expense as
follows:
Three Months Ended March 31, 2017
December 31, 2016 March 31, 2016 Cost of
revenue: Cost of services $ 42 $ 38 $ 56 Cost of software and
other 3 1 2
Operating expenses: Research and development 41
54 98 Sales and marketing 7 51 84 General and administrative
(3 ) 67 421 Total $ 90 $ 211
$ 661 Note 4: 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 March 31, 2017
December 31, 2016 March 31, 2016
GAAP cost of revenue $ 11,305 $ 11,951 $ 13,979 Stock-based
compensation expense (Cost of revenue portion only) (45 )
(39 ) (58 )
Non-GAAP cost of revenue $ 11,260
$ 11,912 $ 13,921
GAAP operating expenses $ 4,356 $
6,105 $ 7,295 Stock-based compensation expense (Excl. cost of
revenue portion) (45 ) (172 ) (603 ) Amortization of intangible
assets and other (10 ) (227 ) (267 ) Restructuring charges -
(723 ) -
Non-GAAP operating
expenses $ 4,301 $ 4,983 $ 6,425
GAAP loss from
continuing operations, after income taxes $ (1,286 ) $ (3,489 )
$ (4,596 ) Stock-based compensation expense 90 211 661 Amortization
of intangible assets and other 10 227 267 Restructuring charges
- 723 - Total impact of
Non-GAAP exclusions 100 1,161
928
Non-GAAP income (loss) from continuing operations,
after income taxes $ (1,186 ) $ (2,328 ) $ (3,668 )
Loss from continuing operations, after income taxes (4)
Basic - GAAP $ (0.07 ) $ (0.19 ) $ (0.25 ) Basic - Non-GAAP $ (0.06
) $ (0.13 ) $ (0.20 ) Diluted - GAAP $ (0.07 ) $ (0.19 ) $
(0.25 ) Diluted - Non-GAAP $ (0.06 ) $ (0.13 ) $ (0.20 )
Shares
used in computing per share amounts (GAAP) (4) Basic
18,557 18,514 18,295 Diluted
18,557 18,514 18,295
Shares used in computing per share amounts (Non-GAAP) (4)
Basic 18,557 18,514 18,295
Diluted 18,557 18,514
18,295 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, and restructuring charges. 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. 2017
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/20170515006493/en/
Investor ContactSupport.comDean Morris,
+1-650-556-8574Investor RelationsIR@support.com
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