Total Revenue of $45.0 million
GAAP Net Loss of $8.8 million; Non-GAAP Net
Loss of $2.1 million
Adjusted EBITDA of negative $0.2 million
ServiceSource (NASDAQ: SREV), the customer journey experience
company, today announced financial results for the three months
ended March 31, 2021.
“The pandemic has reminded everyone of the value of personal
connection and the importance of relationships that add value to
our daily lives. Against this backdrop, we have strengthened ties
with our clients and deepened their bonds with their customers.
This alignment of market need with our business strategy positions
us well to deliver on our objectives and we are pleased with our
results through the first quarter of the year,” said Gary B. Moore,
ServiceSource’s chairman and chief executive officer. “We have kept
our clients present, relevant, and compelling with their customers
through the power of human touch and the efficiency of digital
engagement. And although uncertainty remains around the size and
pace of the economic recovery, we have strengthened our business
model and enhanced the value of our solutions to allow us to build
upon our position as a strategic partner to leading brands across
the world.”
Key Financial Results – First Quarter
2021
- GAAP revenue was $45.0 million, compared with $50.1 million
reported for Q1 2020.
- GAAP net loss was $8.8 million or $0.09 per diluted share,
compared with GAAP net loss of $5.9 million or $0.06 per diluted
share reported for Q1 2020.
- Non-GAAP net loss was $2.1 million or $0.02 per diluted share,
compared with non-GAAP net loss of $1.8 million or $0.02 per
diluted share reported for Q1 2020.
- Adjusted EBITDA, a non-GAAP financial measure, was negative
$0.2 million, compared with positive $0.1 million reported for Q1
2020.
- Ended the quarter with $36.5 million of cash and cash
equivalents and restricted cash and $15.0 million of borrowings
under the Company's $40.0 million revolving line of credit.
A reconciliation of GAAP to non-GAAP financial measures is
provided following the Condensed Consolidated Financial Statement
tables contained within this press release.
Key Business Highlights – First Quarter
2021
- Secured a three-year global contract renewal with one of the
Company’s largest software and cloud clients, representing an
estimated total contract value in excess of $90 million over the
expected term of the agreement.
- Successfully renewed or extended more than 95% of the contract
value that was up for renewal during the quarter.
- Accelerated our go-to-market momentum with a 30% year-over-year
increase in new bookings on a trailing twelve-month basis.
- Signed our first new client logo win of the year to support the
accelerated transformation to a subscription-based renewals model
for a leading data insights provider.
- Grew revenue with five of our top 10 clients on a trailing
twelve-month basis.
“We continued to improve the fundamentals of the Company and had
a good start to the year,” commented Chad Lyne, executive vice
president and chief financial officer of ServiceSource. “Through
our early visibility into the market dynamics and challenges our
clients were facing, we were able to adapt and position the
business accordingly in response to the anticipated revenue
contraction. We are increasingly encouraged by our team’s stronger
execution to win new contracts, renew existing scopes of work, and
enhance our value with our clients. Although it’s early and more
work remains to be done, we are confident our focus and efforts
will allow us to deliver on our expectation to return to growth in
the second half of the year.”
Quarterly Conference Call
ServiceSource will discuss its first quarter 2021 results on
April 29, 2021, via teleconference at 9:30 a.m. Eastern Time. To
access the call within the U.S., please dial (877) 293-5486, or
outside the U.S. (914) 495-8592, at least five minutes prior to the
start time. Conference ID number: 6571544. In addition, a live
webcast of the call will also be available on the Investor
Relations section of the ServiceSource website under Events and
Presentations. The related slide presentation and a replay of the
webcast will also be available on the Company's website at
http://ir.servicesource.com.
Forward-Looking Statements
This press release contains forward-looking statements,
including statements regarding our financial management and our
expectation to continue to invest in our strategic priorities and
digital transformation initiatives. These forward-looking
statements are based on our current assumptions and beliefs and
involve risks and uncertainties that could cause our results to
differ materially from our forward-looking statements. Those risks
and uncertainties include: a decline in client renewals, the loss
of one or more of our key clients, the contraction in our revenue
from one or more of our key clients - either in the ordinary course
of business or as a result of macroeconomic conditions resulting
from the COVID-19 pandemic - in each case resulting in churn, or
our clients not expanding their relationships with us; economic or
other adverse events or conditions affecting the technology
industry, including as a result of the COVID-19 pandemic; and other
risks and uncertainties described more fully in our periodic
reports filed with the Securities and Exchange Commission, which
can be obtained online at the Commission's website at
http://www.sec.gov. All forward-looking statements in this press
release are based on information currently available to us, and
except as may be legally required we assume no obligation to update
these forward-looking statements.
About ServiceSource
ServiceSource International, Inc. (NASDAQ: SREV) is a global
outsourced go-to-market services provider that accelerates B2B
digital sales and customer success transformation. Our expert sales
professionals, data-powered insights and proven methodologies scale
and reimagine customer journey experiences (CJX™) into profitable
business outcomes. Backed by more than 20 years of experience,
ServiceSource drives billions of dollars in client value annually,
conducting commerce in 45 languages and 175 countries. To learn
more about how we design, develop and manage CJX solutions that
transform the agility, speed, efficiency and value of our clients’
growth initiatives, visit www.servicesource.com.
Trademarks
ServiceSource®, and any ServiceSource product or service names
or logos above are trademarks of ServiceSource International, Inc.
All other trademarks used herein belong to their respective
owners.
Connect with ServiceSource:
http://www.facebook.com/ServiceSource
http://twitter.com/servicesource
http://www.linkedin.com/company/servicesource
http://www.youtube.com/user/ServiceSourceMKTG
ServiceSource International,
Inc.
Condensed Consolidated
Statements of Operations
(in thousands, except per share
amounts)
(unaudited)
For the Three Months Ended
March 31,
2021
2020
Net revenue
$
45,023
$
50,114
Cost of revenue(1)
34,067
35,560
Gross profit
10,956
14,554
Operating expenses:
Sales and marketing(1)
4,030
7,268
Research and development(1)
1,160
1,181
General and administrative(1)
12,190
10,688
Restructuring and other related costs
920
467
Total operating expenses
18,300
19,604
Loss from operations
(7,344
)
(5,050
)
Interest and other expense, net
(1,160
)
(874
)
Loss before provision for income taxes
(8,504
)
(5,924
)
Provision for income tax expense
(331
)
(18
)
Net loss
$
(8,835
)
$
(5,942
)
Net loss per share, basic and diluted
$
(0.09
)
$
(0.06
)
Weighted-average common shares
outstanding, basic and diluted
97,234
94,968
(1) Reported amounts include stock-based
compensation expense as follows:
For the Three Months Ended
March 31,
2021
2020
Cost of revenue
$
130
$
45
Sales and marketing
191
377
Research and development
15
18
General and administrative
2,139
605
Total stock-based compensation
$
2,475
$
1,045
ServiceSource International,
Inc.
Condensed Consolidated Balance
Sheets
(in thousands)
(unaudited)
March 31, 2021
December 31, 2020
Assets
Current assets:
Cash and cash equivalents
$
34,171
$
34,006
Accounts receivable, net
34,578
38,890
Prepaid expenses and other
10,876
9,275
Total current assets
79,625
82,171
Property and equipment, net
26,998
29,948
ROU assets
27,515
29,798
Contract acquisition costs
757
872
Goodwill
6,334
6,334
Other assets
3,580
3,490
Total assets
$
144,809
$
152,613
Liabilities and Stockholders’
Equity
Current liabilities:
Accounts payable
$
5,151
$
1,204
Accrued expenses
2,728
3,217
Accrued compensation and benefits
15,313
18,342
Revolver
15,000
15,000
Operating lease liabilities
10,365
10,797
Other current liabilities
827
1,209
Total current liabilities
49,384
49,769
Operating lease liabilities, net of
current portion
23,739
25,975
Other long-term liabilities
2,302
1,593
Total liabilities
75,425
77,337
Stockholders’ equity:
Preferred stock
—
—
Common stock
10
10
Treasury stock
(441
)
(441
)
Additional paid-in capital
382,314
379,696
Accumulated deficit
(313,442
)
(304,607
)
Accumulated other comprehensive income
943
618
Total stockholders’ equity
69,384
75,276
Total liabilities and stockholders’
equity
$
144,809
$
152,613
ServiceSource International,
Inc.
Condensed Consolidated
Statements of Cash Flows
(in thousands)
(unaudited)
For the Three Months Ended
March 31,
2021
2020
Cash flows from operating
activities:
Net loss
$
(8,835
)
$
(5,942
)
Adjustments to reconcile net loss to net
cash provided by (used in) operating activities:
Depreciation and amortization
3,657
3,396
Amortization of contract acquisition
costs
167
279
Amortization of ROU assets
2,391
2,313
Stock-based compensation
2,475
1,045
Restructuring and other related costs
902
431
Other
265
18
Net changes in operating assets and
liabilities:
Accounts receivable, net
4,131
(1,722
)
Prepaid expenses and other assets
(2,099
)
1,323
Contract acquisition costs
(51
)
9
Accounts payable
3,952
(3,253
)
Accrued compensation and benefits
(3,673
)
(1,210
)
Operating lease liabilities
(2,738
)
(1,838
)
Accrued expenses
(511
)
223
Other liabilities
504
(741
)
Net cash provided by (used in) operating
activities
537
(5,669
)
Cash flows from investing
activities:
Purchases of property and equipment
(1,019
)
(1,557
)
Net cash used in investing activities
(1,019
)
(1,557
)
Cash flows from financing
activities:
Repayment on finance lease obligations
(161
)
(238
)
Proceeds from Revolver
—
27,000
Proceeds from issuance of common stock
132
76
Net cash (used in) provided by financing
activities
(29
)
26,838
Effect of exchange rate changes on cash
and cash equivalents and restricted cash
650
480
Net change in cash and cash equivalents
and restricted cash
139
20,092
Cash and cash equivalents and restricted
cash, beginning of period
36,326
29,383
Cash and cash equivalents and restricted
cash, end of period
$
36,465
$
49,475
Use of Non-GAAP Financial Measures
To supplement its Condensed Consolidated Financial Statements
presented in accordance with generally accepted accounting
principles, or GAAP, ServiceSource provides investors with non-GAAP
gross profit, non-GAAP net income (loss), non-GAAP net income
(loss) per diluted share and Adjusted EBITDA. A reconciliation of
these non-GAAP financial measures to the closest GAAP financial
measure is presented in the following financial tables.
ServiceSource believes non-GAAP financial information provided
in this release can assist investors in understanding and assessing
its on-going core operations and prospects for the future and
provides an additional tool for investors to use in comparing
ServiceSource's financial results with other companies in the
industry, many of which present similar non-GAAP financial measures
to investors.
Non-GAAP gross profit consists of gross profit plus adjustments
to stock-based compensation and amortization of internally
developed software.
Non-GAAP net income (loss) consists of net income (loss) plus
stock-based compensation, amortization of internally developed
software, restructuring and other related costs, amortization of
contract acquisition costs related to the initial adoption of
Accounting Standards Update No. 2014-09, Revenue from Contracts
with Customers (Topic 606) (“ASC 606”), non-cash interest expense
and applying an income tax rate of 26.5% on non-GAAP adjustments.
Stock-based compensation expense is expected to vary depending on
the number of new grants issued, changes in the Company's stock
price, stock market volatility, expected option lives and risk-free
interest rates, all of which are difficult to estimate.
EBITDA consists of net income (loss) plus provision for income
tax expense (benefit), interest and other expense (income), net and
depreciation and amortization. Adjusted EBITDA consists of EBITDA
plus stock-based compensation, restructuring and other related
costs, and amortization of contract acquisition costs related to
the initial adoption of ASC 606.
These non-GAAP measures should not be considered a substitute
for, or superior to, financial measures calculated in accordance
with GAAP.
ServiceSource International,
Inc.
GAAP To Non-GAAP
Reconciliation
(in thousands, except per share
amounts)
(unaudited)
For the Three Months Ended
March 31,
2021
2020
Net revenue
$
45,023
$
50,114
Gross profit
GAAP gross profit
$
10,956
$
14,554
Non-GAAP adjustments:
Stock-based compensation
(A)
130
45
Amortization of internally developed
software
(B)
1,832
1,253
Non-GAAP gross profit
$
12,918
$
15,852
Gross profit %
GAAP gross profit
24.3
%
29.0
%
Non-GAAP adjustments:
Stock-based compensation
(A)
0.3
%
0.1
%
Amortization of internally developed
software
(B)
4.1
%
2.5
%
Non-GAAP gross profit
28.7
%
31.6
%
Certain totals do not add due to
rounding
Operating expenses
GAAP operating expenses
$
18,300
$
19,604
Non-GAAP adjustments:
Stock-based compensation
(A)
(2,345
)
(1,000
)
Amortization of internally developed
software
(B)
(360
)
(512
)
Restructuring and other related costs
(C)
(920
)
(467
)
Amortization of contract acquisition costs
- ASC 606 initial adoption
(D)
(84
)
(218
)
Non-GAAP operating expenses
$
14,591
$
17,407
Net loss
GAAP net loss
$
(8,835
)
$
(5,942
)
Non-GAAP adjustments:
Stock-based compensation
(A)
2,475
1,045
Amortization of internally developed
software
(B)
2,192
1,765
Restructuring and other related costs
(C)
920
467
Amortization of contract acquisition costs
- ASC 606 initial adoption
(D)
84
218
Non-cash interest expense
(E)
18
18
Income tax effect on non-GAAP
adjustments
(F)
1,077
656
Non-GAAP net loss
$
(2,069
)
$
(1,773
)
Diluted net loss per share
GAAP net loss per share
$
(0.09
)
$
(0.06
)
Non-GAAP adjustments:
Stock-based compensation
(A)
0.03
0.01
Amortization of internally developed
software
(B)
0.02
0.02
Restructuring and other related costs
(C)
0.01
0.00
Amortization of contract acquisition costs
- ASC 606 initial adoption
(D)
0.00
0.00
Non-cash interest expense
(E)
0.00
0.00
Income tax effect on non-GAAP
adjustments
(F)
0.01
0.01
Non-GAAP diluted net loss per share
$
(0.02
)
$
(0.02
)
Certain totals do not add due to
rounding
Shares used in calculating diluted net
loss per share on a non-GAAP basis
(G)
97,234
94,968
Footnotes to GAAP to Non-GAAP Reconciliation
(A) Stock-based compensation. Included in our GAAP
presentation of cost of revenue and operating expenses, stock-based
compensation consists of expenses for stock options, stock unit
awards and purchase rights under our stock purchase plan. We
exclude stock-based compensation expense from our non-GAAP measures
because some investors may view it as not reflective of our core
operating performance as it is a non-cash expense.
(B) Amortization of internally developed software.
Included in our GAAP presentation of cost of revenue and operating
expenses, amortization of internally developed software reflects
non-cash expense for software developed or obtained for internal
use. We exclude these expenses from our non-GAAP measures because
we believe they are not indicative of our core operating
performance.
(C) Restructuring and other related costs. Included in
our GAAP presentation, we incurred expenses related to our
restructuring effort to better align our cost structure with
current revenue levels. Restructuring and other related costs
consist primarily of employees' severance payments, related
employee benefits, related legal fees and charges related to leases
and other contract termination costs. These are one-time in nature
costs that are not indicative of our core operating
performance.
(D) Amortization of contract acquisition costs - ASC 606
initial adoption. Upon adoption of ASC 606 using the modified
retrospective approach, we capitalized approximately $3.3 million
of previously expensed sales commissions from 2015, 2016 and 2017.
Amortization of these amounts are included in our GAAP presentation
as sales and marketing expense. We believe the non-cash
amortization expense is not related to or indicative of our ongoing
operating performance.
(E) Non-cash interest expense. Under GAAP, we recognize
interest expense at the effective interest rate which includes
interest costs related to the amortization of debt issuance costs.
The difference between the effective interest rate and the
contractual interest rate is excluded from our assessment of our
operating performance because we believe this non-cash expense is
not indicative of ongoing operating performance. We believe that
the exclusion of the non-cash interest expense provides investors a
view of our core operating performance.
(F) Income tax effect on non-GAAP adjustments. This
adjusts the provision for income taxes to reflect the effect of the
non-GAAP items A, B, C, D, E and F noted above on our non-GAAP net
income (loss).
(G) Shares used in calculating diluted net income (loss) per
share on a non-GAAP basis. The share count for basic and
diluted earnings per share is the same due to GAAP net losses for
the three months ended March 31, 2021 and 2020.
ServiceSource International,
Inc.
Reconciliation of Net Loss to
Adjusted EBITDA
(in thousands)
(unaudited)
For the Three Months Ended
March 31,
2021
2020
Net loss
$
(8,835
)
$
(5,942
)
Provision for income tax expense
331
18
Interest and other expense, net
1,160
874
Depreciation and amortization(1)
3,657
3,396
EBITDA
(3,687
)
(1,654
)
Stock-based compensation
(A)
2,475
1,045
Restructuring and other related costs
(C)
920
467
Amortization of contract acquisition asset
costs - ASC 606 initial adoption
(D)
84
218
Adjusted EBITDA
$
(208
)
$
76
(1) Depreciation and amortization expense
are comprised of the following:
For the Three Months Ended
March 31,
2021
2020
Internally developed software
amortization
$
2,192
$
1,765
Property and equipment depreciation
1,465
1,631
Depreciation and amortization
$
3,657
$
3,396
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210428005044/en/
Investor Relations Contact for ServiceSource: Chad Lyne
ServiceSource International, Inc.
investorrelations@servicesource.com
ServiceSource (NASDAQ:SREV)
Historical Stock Chart
From Mar 2024 to Apr 2024
ServiceSource (NASDAQ:SREV)
Historical Stock Chart
From Apr 2023 to Apr 2024
