EX-99.1 2 pressrelease.htm PRESS RELEASE pressrelease.htm
EXHIBIT 99.1
 
 
Support.com Reports Third Quarter 2012 Financial Results, Achieves Profitability
 
 
REDWOOD CITY, CA - October 24, 2012 - Support.com, Inc. (NASDAQ: SPRT), which provides a comprehensive solution for monetizing technology services, today reported unaudited financial results for its third quarter ended September 30, 2012.
 
Q3 2012 Financial Summary
 
For the third quarter of 2012, total revenue was $18.2 million compared to $12.4 million in the third quarter of 2011 and $17.3 million in the second quarter of 2012.
 
On a GAAP basis, income from continuing operations for the third quarter of 2012 was $298,000, or $0.01 per share, compared to a loss of $7.1 million, or $(0.15) per share, in the third quarter of 2011 and a loss of $2.6 million, or $(0.05) per share, in the second quarter of 2012.
 
Non-GAAP income from continuing operations for the third quarter of 2012 was $1.8 million or $0.04 per share, compared to a loss of $5.0 million, or $(0.10) per share, in the third quarter of 2011 and a loss of $897,000 or $(0.02) per share, in the second quarter of 2012.
 
Non-GAAP results exclude stock-based compensation expense, amortization of intangible assets and other, restructuring and impairment charges, acquisition expense, other non-recurring items and tax expense associated with acquired goodwill. These items impacted results from continuing operations by $1.5 million in the third quarter of 2012, $2.1 million in the third quarter of 2011 and $1.7 million in the second quarter of 2012. A reconciliation of GAAP to non-GAAP results is presented in the tables below.
 
“Q3 was a milestone quarter for Support.com,” said Josh Pickus, President and CEO. “We achieved long-held efficiency goals, enabling us to reach profitability and generate cash.  Our results reflect the success we’re having in working with leading brands to monetize technology services. We look forward to extending our market leadership position.”
 
Balance Sheet Information
 
At September 30, 2012 cash, cash equivalents and investments were $51.6 million compared to $48.5 million at June 30, 2012.
 
Recent Highlights
 
·  
Revenue growth of 47% year-over-year
·  
Non-GAAP earnings of $0.04 per share
·  
Cash and cash equivalents increase of $3.1 million sequentially
·  
Non-GAAP services gross margin of 41%
·  
Reached agreement with leading Canadian communications provider for SMB program
·  
Business model extended to provide service delivery platform on a standalone basis; first agreement signed
·  
5 Star “Spectacular” review from CNET for SUPERAntiSpyware product
 
Conference Call
 
Support.com will host a conference call discussing the Company's third quarter 2012 results on Wednesday, October 24, 2012 starting at 4:30 p.m. ET (1:30 p.m. PT). The live call may be accessed by dialing (877) 312-8789 (domestic) or (253) 237-1314 (international) and referencing passcode 39316444. A live audio webcast and replay of the call will be available at the Investor Relations section of Support.com's website at http://www.support.com/about/investor-relations/webcastsevents.
 
About Support.com

Support.com, Inc. (NASDAQ: SPRT) enables partners to unlock the potential of technology services.  We help leading brands create new revenue streams and deepen customer loyalty through programs that enhance their customers’ technology experience.  Our solution includes a comprehensive service delivery platform, mobile and desktop apps, a scalable workforce of technology specialists and proven expertise in program design and execution.  Our partners include many of the nation’s leading communications providers, retailers and technology companies.  For more information, please visit us at: www.support.com.
 
Support.com, Inc. is an Equal Opportunity Employer. For more information, visit http://www.support.com/about/careers.
 
Copyright © 2012 Support.com, Inc. All rights reserved. Support.com and SUPERAntiSpyware are trademarks or registered trademarks of Support.com, Inc. in the U.S. and other countries.  All other marks are the property of their respective owners.
 
Note on Forward-Looking Statements
 
Statements made in this document that are not historical facts are "forward-looking statements" and accordingly involve risks and uncertainties that could cause actual results to differ materially from those described herein. Forward-looking statements include, for example, all statements relating to projected financial performance (including without limitation statements involving projections of revenue, margin, income (loss), earnings (loss) per share, cash usage, capital structure, and other financial items); the plans and objectives of management for future operations, partnerships, products, services or investments; and future performance in economic and other terms. The potential risks and uncertainties that could cause results to differ materially include, among others, our ability to retain and grow major partnerships, our ability to maintain and grow revenue, our ability to scale and manage our workforce and our ability to control expenses and achieve desired margins. These and other risks are detailed in Support.com's reports filed with the Securities and Exchange Commission, including without limitation 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 does not intend to update this information to reflect future events or circumstances, and disclaims any obligation to do so except as may be required by law.
 
Disclosure Regarding Non-GAAP Financial Measures
 
Support.com has excluded stock-based compensation expense, amortization of intangible assets and other, restructuring and impairment charges, acquisition expense, other non-recurring items and tax expense associated with acquired goodwill from its GAAP results in order to determine the non-GAAP financial measures of income (loss) from continuing operations and earnings (loss) from continuing operations per share referenced in this document. 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 operating performance because such expense does not require cash settlement and because such expense is not used by management to assess the performance of the Company's business. Stock-based compensation expense was $911,000 in the third quarter of 2012, compared to $937,000 in the third quarter of 2011 and $1.0 million in the second quarter of 2012.
 
B. Amortization of intangible assets and other. Management excludes acquisition-related intangible asset amortization and related charges when evaluating its operating performance because the Company does not acquire businesses on a predictable cycle and excluding such charges enables more consistent evaluation of the Company's operating performance. Management also excludes such charges because they represent non-cash expenses. Amortization of intangible assets and other was $397,000 in the third quarter of 2012, compared to $330,000 in the third quarter of 2011 and $391,000 in the second quarter of 2012.
 
C. Restructuring and impairment charges. Management excludes restructuring and impairment charges when evaluating its operating performance because the Company does not undertake restructurings on a predicable basis and excluding such charges enables more consistent evaluation of the Company's operating performance. Restructuring and impairment charges were $72,000 in the third quarter of 2012, compared to $368,000 in the third quarter of 2011 and $172,000 in the second quarter of 2012.
 
D. Acquisition expense. Management excludes acquisition expense such as legal fees and advisor fees when evaluating its operating performance because the Company does not acquire businesses on a predictable cycle and excluding such expense enables more consistent evaluation of the Company's operating performance. Acquisition expense was $1,000 in the third quarter of 2012, compared to $190,000 in the third quarter of 2011 and $16,000 in the second quarter of 2012.
 
E. Other non-recurring items. Management excludes other non-recurring items when evaluating its operating performance because the Company does not incur such expenses on a predictable basis and exclusion of such expenses enables more consistent evaluation of the Company’s operating performance. Other non-recurring items totaled $86,000 in the third quarter of 2012, compared to zero in the third quarter of 2011 and $57,000 in the second quarter of 2012.
 
F. Tax expense associated with acquired goodwill. The Company is required to record a deferred tax liability and the related tax expense that results from the amortization for income tax purposes of acquired goodwill. Management excludes tax expense associated with acquired goodwill when evaluating its operating performance because the Company does not acquire businesses on a predictable cycle and excluding such expense enables more consistent evaluation of the Company's operating performance. Tax expense associated with acquired goodwill was $69,000 in the third quarter of 2012, compared to $270,000 in the third quarter of 2011 and $68,000 in the second quarter of 2012.
 
The Company believes that non-GAAP 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 charges and expenses indicated above from the non-GAAP financial measures presented does not indicate an expectation by management that such charges and expenses will not be incurred in subsequent periods.
 

 
 

 

SUPPORT.COM, INC.
       
GAAP CONDENSED CONSOLIDATED BALANCE SHEETS
       
(in thousands)
       
(unaudited)
       
                         
                         
   
September 30,
         
December 31,
       
   
2012
 (1)             2011  (2)        
                               
Assets
                             
Current assets:
                             
Cash, cash equivalents and short-term investments
  $ 51,587             $ 51,902          
Accounts receivable, net
    9,785               10,284          
Prepaid expenses and other current assets
    1,565               1,068          
Total current assets
    62,937               63,254          
Long-term investment
    -               1,111          
Property and equipment, net
    670               461          
Purchased technology, net
    82               143          
Goodwill
    14,240               13,621          
Intangible assets, net
    5,126               5,670          
Other assets
    940               736          
                                 
Total assets
  $ 83,995             $ 84,996          
                                 
Liabilities and Stockholders' Equity
                               
Current liabilities:
                               
Accounts payable and accrued compensation
  $ 3,011             $ 2,872          
Other accrued liabilities
    4,477               4,491          
Short-term deferred revenue
    5,971               4,723          
Total current liabilities
    13,459               12,086          
Long-term deferred revenue
    139               489          
Other long-term liabilities
    1,422               1,086          
Total liabilities
    15,020               13,661          
                                 
Stockholders' equity:
                               
Common stock
    5               5          
Additional paid-in-capital
    237,984               233,977          
Accumulated other comprehensive loss
    (1,343 )             (1,698 )        
Accumulated deficit
    (167,671 )             (160,949 )        
Total stockholders' equity
    68,975               71,335          
                                 
Total liabilities and stockholders' equity
  $ 83,995             $ 84,996          
 
Note 1: Amounts are subject to completion of managements and its independent registered public accounting firm's customary closing and review procedures.
 
Note 2: Derived from audited consolidated financial statements for the year ended December 31, 2011.

 
 

 

  SUPPORT.COM, INC.
  GAAP CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
  (in thousands, except per share amounts)
  (unaudited)
                                     
   
Three Months Ended
   
Nine Months Ended
 
   
September 30,
   
September 30,
 
   
2012
 (3)             2011       2012  (3)             2011  
Revenue:
                                             
Services
  $ 14,769             $ 8,532     $ 42,278             $ 26,124  
Software and other
  $ 3,407               3,818       10,799               12,711  
Total revenue
    18,176               12,350       53,077               38,835  
                                                 
Cost of revenue:
                                               
Cost of services (4)
    8,815               7,917       28,696               21,334  
Cost of software and other (4)
    312               458       1,142               1,295  
Total cost of revenue
    9,127               8,375       29,838               22,629  
Gross profit
    9,049               3,975       23,239               16,206  
Operating expenses:
                                               
Amortization of intangible assets and other
    397               330       1,155               536  
Research and development (4)
    1,643               1,577       5,121               4,458  
Sales and marketing (4)
    3,789               5,954       14,908               16,282  
General and administrative (4)
    2,897               3,074       8,661               9,300  
Total operating expenses
    8,726               10,935       29,845               30,576  
                                                 
Income (loss) from operations
    323               (6,960 )     (6,606 )             (14,370 )
                                                 
Interest income and other, net
    93               96       227               371  
                                                 
Income (loss) from continuing operations, before income taxes
    416               (6,864 )     (6,379 )             (13,999 )
                                                 
Income tax provision
    118               264       353               295  
                                                 
Income (loss) from continuing operations, after income taxes
    298               (7,128 )     (6,732 )             (14,294 )
                                                 
                                                 
Income (loss) from discontinued operations, net of income taxes
    (7 )             18       10               3  
                                                 
Net income (loss)
  $ 291             $ (7,110 )   $ (6,722 )           $ (14,291 )
                                                 
                                                 
Income (loss) from continuing operations, after income taxes
                                         
Basic
  $ 0.01             $ (0.15 )   $ (0.14 )           $ (0.30 )
Diluted
  $ 0.01             $ (0.15 )   $ (0.14 )           $ (0.30 )
                                                 
Income (loss) from discontinued operations, net of income taxes
                                         
Basic
  $ (0.00 )           $ 0.00     $ 0.00             $ 0.00  
Diluted
  $ (0.00 )           $ 0.00     $ 0.00             $ 0.00  
                                                 
Shares used in computing per share amounts:
                                               
Basic
    48,707               48,326       48,571               48,267  
Diluted
    50,326               48,326       48,571               48,267  
 
Note 3:  Amounts are subject to completion of managements and its independent registered public accounting firm's customary closing and review procedures.
 
Note 4: Includes stock-based compensation expense, restructuring and impairment charges, acquisition expense and other non-recurring items, as follows:
 
   
Three Months Ended
   
Nine Months Ended
 
   
September 30, 2012
   
September 30, 2011
   
September 30, 2012
   
September 30, 2011
 
Cost of revenue:
                       
Cost of services
  $ 86     $ 116     $ 270     $ 263  
Cost of software and other
    3       7       24       13  
Operating expenses:
                               
Research and development
    252       202       820       545  
Sales and marketing
    94       456       511       757  
General and administrative
    634       714       1,734       2,241  
Total
  $ 1,069     $ 1,495     $ 3,359     $ 3,819  
 

 
 

 

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,
   
September 30,
 
   
2012
   
2011
   
2012
   
2011
 
                         
GAAP cost of revenue
  $ 9,127     $ 8,375     $ 29,838     $ 22,629  
Stock-based compensation expense (Cost of revenue portion only)
    (89 )     (68 )     (295 )     (183 )
Restructuring and impairment charges (Cost of revenue portion only)
    -       (55 )     -       (93 )
Non-GAAP cost of revenue
  $ 9,038     $ 8,252     $ 29,543     $ 22,353  
                                 
GAAP operating expenses
  $ 8,726     $ 10,935     $ 29,845     $ 30,576  
Stock-based compensation expense (Excl. cost of revenue portion)
    (822 )     (869 )     (2,643 )     (2,628 )
Amortization of intangible assets and other
    (397 )     (330 )     (1,155 )     (536 )
Restructuring and impairment charges (Excl. cost of revenue portion)
    (72 )     (313 )     (244 )     (377 )
Acquisition expense
    (1 )     (190 )     (36 )     (538 )
Other non-recurring items
    (86 )     -       (143 )     -  
Non-GAAP operating expenses
  $ 7,348     $ 9,233     $ 25,624     $ 26,497  
                                 
GAAP income tax provision
  $ 118     $ 264     $ 353     $ 295  
Tax expense associated with acquired goodwill
    (69 )     (270 )     (206 )     (270 )
Non-GAAP income tax provision
  $ 49     $ (6 )   $ 147     $ 25  
                                 
GAAP income (loss) from continuing operations, after income taxes
  $ 298     $ (7,128 )   $ (6,732 )   $ (14,294 )
Stock-based compensation expense
    911       937       2,938       2,811  
Amortization of intangible assets and other
    397       330       1,155       536  
Restructuring and impairment charges
    72       368       244       470  
Acquisition expense
    1       190       36       538  
Other non-recurring items
    86       -       143       -  
Tax expense associated with acquired goodwill
    69       270       206       270  
   Total impact of Non-GAAP exclusions
    1,536       2,095       4,722       4,625  
Non-GAAP income (loss) from continuing operations, after income taxes
  $ 1,834     $ (5,033 )   $ (2,010 )   $ (9,669 )
                                 
Income (loss) from continuing operations, after income taxes
                         
Basic -GAAP
  $ 0.01     $ (0.15 )   $ (0.14 )   $ (0.30 )
Basic - Non-GAAP
  $ 0.04     $ (0.10 )   $ (0.04 )   $ (0.20 )
                                 
Diluted - GAAP
  $ 0.01     $ (0.15 )   $ (0.14 )   $ (0.30 )
Diluted - Non-GAAP
  $ 0.04     $ (0.10 )   $ (0.04 )   $ (0.20 )
Shares used in computing per share amounts (GAAP)
                               
Basic
    48,707       48,326       48,571       48,267  
Diluted
    50,326       48,326       48,571       48,267  
Shares used in computing per share amounts (Non-GAAP)
                         
Basic
    48,707       48,326       48,571       48,267  
Diluted
    50,326       48,326       48,571       48,267  
 
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, acquisition expense, other non-recurring items and tax expense 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.
 
Amounts are subject to completion of management’s and its independent registered public accounting firm's customary closing and review procedures.
 
 
 

 
 
 
Contact Information:

Investor Contact
Carolyn Bass and Jacob Moelter
Market Street Partners
(415) 445-3235
sprt@marketstreetpartners.com

Media Contact
Seth Geisler
Martin Levy Public Relations, Inc.
(858) 610-9860
seth@martinlevypr.com