Mattersight Announces Second Quarter 2017 Results
August 08 2017 - 4:20PM
Mattersight Corporation (NASDAQ:MATR), the pioneer in
personality-based software applications, today announced financial
results for the second quarter ended June 30, 2017.
“Mattersight’s second quarter was marked by 16% growth in total
revenues and 17% growth in subscription revenue versus the same
period last year,” said Mattersight CEO Kelly Conway. “We expect to
realize significant savings as a result of the refinancing
completed during the quarter, and we continue to be encouraged by
our outlook based on the conversion of our backlog to revenue and
our strong pipeline.”
Second Quarter 2017 Financial Highlights
- Bookings: Annual Contract Value (ACV) bookings
were $2.5 million.
- Total Revenue: Total revenue was $10.6
million.
- Subscription Revenue: Total subscription
revenue was $9.9 million.
- Backlog: ACV in deployment was
$13.1 million at the end of the quarter.
- Gross Margin: Gross margin was 69%.
Second Quarter 2017 Business Highlights
- Line of Credit: Entered into new
three-year, $20 million revolving line of credit agreement with The
Private Bank and retired more expensive mezzanine debt, lowering
our borrowing costs.
- Patent: Received a new patent that combines
Mattersight’s speech analytics and predictive behavior models to
create artificial intelligence (AI) algorithms capable of
generating chatbot communication that is both humanized and
personalized.
Non-GAAP Financial Measures
Mattersight's net loss was $6.8 million in the second quarter of
2017. The Company realized an "Adjusted EBITDA1" loss of $1.7
million for the second quarter of 2017. Adjusted EBITDA is a
non-GAAP measure. For a reconciliation of net loss to Adjusted
EBITDA, see the accompanying schedule.
Conference Call Information
Mattersight management will host a conference call at 5:00 p.m.
ET on Tuesday, August 8, 2017. 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:
57891222.
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 September 9, 2017, by
dialing 855.859.2056 (domestic) or 404.537.3406 (international),
conference ID: 57891222.
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. A
reader can identify these forward-looking statements because they
are not limited to historical fact or they use words such as
“scheduled,” “will,” “anticipate,” “project,” “estimate,”
“forecast,” “goal,” “objective,” “committed,” “intend,” “continue,”
“plan,” “may,” “might,” “believe,” “expect,” “intend,” “could,”
“would,” “should,” or “will likely result,” and other similar
expressions, words and terms of similar meaning, involving 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 MattersightMattersight unleashes the
power of personality to improve every interaction with every
customer every time. With tools to learn, analyze, and predict
customer behavior based on customer conversations, Mattersight
helps brands create chemistry with their customers through shorter,
more satisfying conversations that increase loyalty. To learn how
Mattersight can help you click better with your customers visit
www.mattersight.com.
1 Mattersight presents Adjusted EBITDA, 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 EBITDA provides investors with a
better understanding of the results of Mattersight's operations.
Management believes that Adjusted EBITDA reflects 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
EBITDA measure should be considered in addition to, not as a
substitute for or superior to other measures of financial
performance prepared in accordance with GAAP.
MATTERSIGHT CORPORATION |
|
CONSOLIDATED STATEMENTS OF
OPERATIONS |
|
(Unaudited and in thousands, except per share
data) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended |
|
Six Months Ended |
|
|
|
June 30, |
|
June 30, |
|
June 30, |
|
June 30, |
|
|
|
|
2017 |
|
|
|
2016 |
|
|
|
2017 |
|
|
|
2016 |
|
|
Revenue: |
|
|
|
|
|
|
|
|
|
Subscription revenue |
|
$ |
9,943 |
|
|
$ |
8,501 |
|
|
$ |
20,286 |
|
|
$ |
17,723 |
|
|
Other
revenue |
|
|
615 |
|
|
|
573 |
|
|
|
1,231 |
|
|
|
1,404 |
|
|
Total
revenue |
|
|
10,558 |
|
|
|
9,074 |
|
|
|
21,517 |
|
|
|
19,127 |
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
Cost of
subscription revenue |
|
|
2,492 |
|
|
|
2,579 |
|
|
|
5,210 |
|
|
|
5,059 |
|
|
Cost of
other revenue |
|
|
821 |
|
|
|
616 |
|
|
|
1,542 |
|
|
|
1,382 |
|
|
Total
cost of revenue, exclusive of depreciation and amortization |
|
|
3,313 |
|
|
|
3,195 |
|
|
|
6,752 |
|
|
|
6,441 |
|
|
Product
development |
|
|
3,586 |
|
|
|
3,350 |
|
|
|
6,907 |
|
|
|
6,600 |
|
|
Sales and
marketing |
|
|
3,018 |
|
|
|
4,197 |
|
|
|
6,468 |
|
|
|
8,827 |
|
|
General
and administrative |
|
|
3,115 |
|
|
|
2,872 |
|
|
|
6,410 |
|
|
|
6,038 |
|
|
Depreciation and amortization |
|
|
1,726 |
|
|
|
1,417 |
|
|
|
3,271 |
|
|
|
2,818 |
|
|
Total
operating expenses |
|
|
14,758 |
|
|
|
15,031 |
|
|
|
29,808 |
|
|
|
30,724 |
|
|
Operating loss |
|
|
(4,200 |
) |
|
|
(5,957 |
) |
|
|
(8,291 |
) |
|
|
(11,597 |
) |
|
Non-operating income (expense): |
|
|
|
|
|
|
|
|
|
Interest
and other borrowing costs |
|
|
(1,050 |
) |
|
|
(250 |
) |
|
|
(2,019 |
) |
|
|
(431 |
) |
|
Loss on
early extinguishment of debt |
|
|
(1,834 |
) |
|
|
— |
|
|
|
(1,834 |
) |
|
|
— |
|
|
Change in
fair value of warrant liability |
|
|
263 |
|
|
|
— |
|
|
|
360 |
|
|
|
— |
|
|
Other
non-operating income |
|
|
31 |
|
|
|
13 |
|
|
|
41 |
|
|
|
23 |
|
|
Total
non-operating income (expense) |
|
|
(2,590 |
) |
|
|
(237 |
) |
|
|
(3,452 |
) |
|
|
(408 |
) |
|
Loss
before income taxes |
|
|
(6,790 |
) |
|
|
(6,194 |
) |
|
|
(11,743 |
) |
|
|
(12,005 |
) |
|
Income
tax provision |
|
|
(13 |
) |
|
|
(6 |
) |
|
|
(12 |
) |
|
|
(16 |
) |
|
Net
loss |
|
|
(6,803 |
) |
|
|
(6,200 |
) |
|
|
(11,755 |
) |
|
|
(12,021 |
) |
|
Dividends related to 7% Series B convertible preferred stock |
|
|
(146 |
) |
|
|
(147 |
) |
|
|
(292 |
) |
|
|
(293 |
) |
|
Net loss
available to common stockholders |
|
$ |
(6,949 |
) |
|
$ |
(6,347 |
) |
|
$ |
(12,047 |
) |
|
$ |
(12,314 |
) |
|
Per
share of common stock: |
|
|
|
|
|
|
|
|
|
Basic net
loss available to common stockholders |
|
$ |
(0.22 |
) |
|
$ |
(0.25 |
) |
|
$ |
(0.41 |
) |
|
$ |
(0.49 |
) |
|
Diluted
net loss available to common stockholders |
|
$ |
(0.22 |
) |
|
$ |
(0.25 |
) |
|
$ |
(0.41 |
) |
|
$ |
(0.49 |
) |
|
Shares
used to calculate basic net loss per share |
|
|
31,336 |
|
|
|
25,161 |
|
|
|
29,379 |
|
|
|
25,112 |
|
|
Shares
used to calculate diluted net loss per share |
|
|
31,336 |
|
|
|
25,161 |
|
|
|
29,379 |
|
|
|
25,112 |
|
|
Stock-based compensation expense is included in individual line
items above: |
|
|
|
|
|
|
|
|
|
Total
cost of revenue |
|
$ |
156 |
|
|
$ |
112 |
|
|
$ |
237 |
|
|
$ |
186 |
|
|
Product
development |
|
|
195 |
|
|
|
340 |
|
|
|
329 |
|
|
|
669 |
|
|
Sales and
marketing |
|
|
— |
|
|
|
454 |
|
|
|
123 |
|
|
|
933 |
|
|
General
and administrative |
|
|
407 |
|
|
|
512 |
|
|
|
761 |
|
|
|
1,255 |
|
|
MATTERSIGHT CORPORATION |
|
CONSOLIDATED BALANCE SHEET |
|
(Unaudited and in thousands, except share and
per share data) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
2017 |
|
December 31,
2016 |
|
ASSETS |
|
|
|
|
|
Current
Assets: |
|
|
|
|
|
Cash and
cash equivalents |
|
$ |
7,138 |
|
|
$ |
12,538 |
|
|
Receivables net of allowances of $151 and $311, at June 30, 2017
and December 31, 2016, respectively |
|
|
7,756 |
|
|
|
8,508 |
|
|
Prepaid
expenses |
|
|
5,242 |
|
|
|
4,440 |
|
|
Other
current assets |
|
|
105 |
|
|
|
296 |
|
|
Total
current assets |
|
|
20,241 |
|
|
|
25,782 |
|
|
Equipment and leasehold improvements, net of accumulated
depreciation and amortization of $22,432 and $19,748, at
June 30, 2017 and December 31, 2016, respectively |
|
|
10,588 |
|
|
|
9,576 |
|
|
Goodwill |
|
|
972 |
|
|
|
972 |
|
|
Intangible assets, net of amortization of $4,070 and $3,820,
respectively |
|
|
3,088 |
|
|
|
3,201 |
|
|
Other
long-term assets (includes $3,400 and $4,210 of restricted cash, at
June 30, 2017 and December 31, 2016, respectively) |
|
|
5,753 |
|
|
|
6,033 |
|
|
Total
assets |
|
$ |
40,642 |
|
|
$ |
45,564 |
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
|
Current
Liabilities: |
|
|
|
|
|
Short-term debt |
|
$ |
88 |
|
|
$ |
738 |
|
|
Accounts
payable |
|
|
1,732 |
|
|
|
1,835 |
|
|
Accrued
compensation and related costs |
|
|
3,016 |
|
|
|
2,302 |
|
|
Unearned
revenue |
|
|
4,701 |
|
|
|
4,911 |
|
|
Capital
leases |
|
|
2,322 |
|
|
|
1,982 |
|
|
Other
current liabilities |
|
|
2,373 |
|
|
|
3,374 |
|
|
Total
current liabilities |
|
|
14,232 |
|
|
|
15,142 |
|
|
Long-term debt |
|
|
13,703 |
|
|
|
20,839 |
|
|
Long-term unearned revenue |
|
|
517 |
|
|
|
757 |
|
|
Long-term capital leases |
|
|
2,007 |
|
|
|
1,602 |
|
|
Other
long-term liabilities |
|
|
5,665 |
|
|
|
5,945 |
|
|
Total
liabilities |
|
|
36,124 |
|
|
|
44,285 |
|
|
7%
Series B convertible preferred stock, $0.01 par value; 5,000,000
shares authorized and designated; 1,637,786 and 1,637,948
shares issued and outstanding at June 30, 2017 and December
31, 2016, respectively, with a liquidation preference of $11,276
and $10,985, at June 30, 2017 and December 31, 2016,
respectively |
|
|
8,353 |
|
|
|
8,354 |
|
|
Stockholders’ Equity: |
|
|
|
|
|
Preferred
stock, $0.01 par value; 35,000,000 shares authorized; none
issued |
|
|
— |
|
|
|
— |
|
|
Common
stock, $0.01 par value; 50,000,000 shares authorized; 32,769,960
and 27,511,361 shares issued at June 30, 2017 and December
31, 2016, respectively; 32,748,831 and 26,622,706 shares
outstanding at June 30, 2017 and December 31, 2016,
respectively |
|
|
328 |
|
|
|
275 |
|
|
Additional paid-in capital |
|
|
274,828 |
|
|
|
264,214 |
|
|
Accumulated deficit |
|
|
(274,860 |
) |
|
|
(263,062 |
) |
|
Treasury
stock, at cost, 21,129 and 888,655 shares at June 30, 2017 and
December 31, 2016, respectively |
|
|
(58 |
) |
|
|
(4,455 |
) |
|
Accumulated other comprehensive loss |
|
|
(4,073 |
) |
|
|
(4,047 |
) |
|
Total
stockholders’ equity (deficit) |
|
|
(3,835 |
) |
|
|
(7,075 |
) |
|
Total
liabilities and stockholders’ equity |
|
$ |
40,642 |
|
|
$ |
45,564 |
|
|
|
|
|
|
|
|
MATTERSIGHT CORPORATION |
|
CONSOLIDATED STATEMENTS OF CASH
FLOWS |
|
(Unaudited and in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended |
|
|
|
June 30,
2017 |
|
June 30,
2016 |
|
Cash
Flows from Operating Activities: |
|
|
|
|
|
Net
loss |
|
$ |
(11,755 |
) |
|
$ |
(12,021 |
) |
|
Adjustments to reconcile net loss to net cash used in operating
activities: |
|
|
|
|
|
Depreciation and amortization |
|
|
3,271 |
|
|
|
2,818 |
|
|
Stock-based compensation |
|
|
1,450 |
|
|
|
3,043 |
|
|
Discount
accretion and other debt-related costs |
|
|
1,417 |
|
|
|
— |
|
|
Provision
for uncollectible accounts |
|
|
(160 |
) |
|
|
26 |
|
|
Change in
fair value of warrant liability |
|
|
(360 |
) |
|
|
— |
|
|
Changes
in assets and liabilities: |
|
|
|
|
|
Receivables |
|
|
912 |
|
|
|
(900 |
) |
|
Prepaid
expenses |
|
|
(537 |
) |
|
|
(1,138 |
) |
|
Other
current assets |
|
|
187 |
|
|
|
(12 |
) |
|
Other
long-term assets |
|
|
(325 |
) |
|
|
88 |
|
|
Accounts
payable |
|
|
(303 |
) |
|
|
377 |
|
|
Accrued
compensation and related costs |
|
|
714 |
|
|
|
(434 |
) |
|
Unearned
revenue |
|
|
(450 |
) |
|
|
(2,793 |
) |
|
Other
current liabilities |
|
|
(6 |
) |
|
|
(179 |
) |
|
Other
long-term liabilities |
|
|
(192 |
) |
|
|
522 |
|
|
Total
adjustments |
|
|
5,618 |
|
|
|
1,418 |
|
|
Net cash
used in operating activities |
|
|
(6,137 |
) |
|
|
(10,603 |
) |
|
Cash
Flows from Investing Activities: |
|
|
|
|
|
Capital
expenditures |
|
|
(2,152 |
) |
|
|
(973 |
) |
|
Investment in intangible assets |
|
|
(105 |
) |
|
|
(472 |
) |
|
Net cash
used in investing activities |
|
|
(2,257 |
) |
|
|
(1,445 |
) |
|
Cash
Flows from Financing Activities: |
|
|
|
|
|
Proceeds
from line of credit |
|
|
13,500 |
|
|
|
16,246 |
|
|
Repayments of line of credit |
|
|
— |
|
|
|
(9,200 |
) |
|
Proceeds
from term loan |
|
|
— |
|
|
|
6,000 |
|
|
Repayments of term loan and other borrowings |
|
|
(23,006 |
) |
|
|
— |
|
|
Debt
prepayment costs |
|
|
(692 |
) |
|
|
— |
|
|
Fees paid
for issuance of debt |
|
|
(206 |
) |
|
|
(60 |
) |
|
Proceeds
from issuance of common stock, net of costs |
|
|
14,736 |
|
|
|
— |
|
|
Cash paid
to satisfy tax withholding upon vesting of employee stock
awards |
|
|
(973 |
) |
|
|
(211 |
) |
|
Principal
payments on capital lease obligations |
|
|
(1,269 |
) |
|
|
(1,107 |
) |
|
Proceeds
from employee stock purchase plan |
|
|
120 |
|
|
|
145 |
|
|
7% Series
B convertible preferred stock dividend |
|
|
— |
|
|
|
(3 |
) |
|
Proceeds
from exercise of stock options |
|
|
— |
|
|
|
236 |
|
|
Net cash
provided by financing activities |
|
|
2,210 |
|
|
|
12,046 |
|
|
Effect
of exchange rate changes on cash and cash equivalents |
|
|
(26 |
) |
|
|
(5 |
) |
|
Decrease
in total cash |
|
|
(6,210 |
) |
|
|
(7 |
) |
|
Cash and
cash equivalents |
|
|
12,538 |
|
|
|
15,407 |
|
|
Restricted cash (included in Other long-term assets) |
|
|
4,210 |
|
|
|
— |
|
|
Total
cash, beginning of period |
|
|
16,748 |
|
|
|
15,407 |
|
|
Cash and
cash equivalents |
|
|
7,138 |
|
|
|
15,400 |
|
|
Restricted cash (included in Other long-term assets) |
|
|
3,400 |
|
|
|
500 |
|
|
Total
cash, end of period |
|
$ |
10,538 |
|
|
$ |
15,900 |
|
|
Non-Cash
Investing and Financing Activities: |
|
|
|
|
|
Capital
lease obligations incurred |
|
$ |
2,014 |
|
|
$ |
2,111 |
|
|
Capital
equipment purchased on credit |
|
|
2,014 |
|
|
|
2,111 |
|
|
Supplemental Disclosures of Cash Flow Information: |
|
|
|
|
|
Interest
paid |
|
$ |
1,806 |
|
|
$ |
279 |
|
|
MATTERSIGHT CORPORATION |
CALCULATION OF ADJUSTED EBITDA |
(Unaudited and in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended |
|
Six Months Ended |
|
|
June 30, |
|
June 30, |
|
June 30, |
|
June 30, |
|
|
|
2017 |
|
|
|
2016 |
|
|
|
2017 |
|
|
|
2016 |
|
GAAP -
Net Loss |
|
$ |
(6,803 |
) |
|
$ |
(6,200 |
) |
|
$ |
(11,755 |
) |
|
$ |
(12,021 |
) |
Depreciation and amortization |
|
|
1,726 |
|
|
|
1,417 |
|
|
|
3,271 |
|
|
|
2,818 |
|
Interest
and other borrowings |
|
|
1,050 |
|
|
|
250 |
|
|
|
2,019 |
|
|
|
431 |
|
Loss on
early extinguishment of debt |
|
|
1,834 |
|
|
|
— |
|
|
|
1,834 |
|
|
|
— |
|
Interest
income |
|
|
(31 |
) |
|
|
(13 |
) |
|
|
(41 |
) |
|
|
(23 |
) |
Income
tax provision |
|
|
13 |
|
|
|
6 |
|
|
|
12 |
|
|
|
16 |
|
EBITDA |
|
$ |
(2,211 |
) |
|
$ |
(4,540 |
) |
|
$ |
(4,660 |
) |
|
$ |
(8,779 |
) |
Stock
based compensation |
|
|
758 |
|
|
|
1,418 |
|
|
|
1,450 |
|
|
|
3,043 |
|
Change
in fair value of warrant liability |
|
|
(263 |
) |
|
|
— |
|
|
|
(360 |
) |
|
|
— |
|
Adjusted
EBITDA |
|
$ |
(1,716 |
) |
|
$ |
(3,122 |
) |
|
$ |
(3,570 |
) |
|
$ |
(5,736 |
) |
|
|
|
|
|
|
|
|
|
Contact
David Mullen
Chief Financial Officer
312.954.7380
dave.mullen@mattersight.com
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