EX-99.1 2 ex99_1.htm EXHIBIT 99.1
Exhibit 99.1
 
Support.com Reports Second Quarter 2014 Financial Results

Redwood City, CA – July 30, 2014 – Support.com, Inc. (NASDAQ: SPRT), a leading provider of cloud software and services for technology support, today reported unaudited financial results for its second quarter ended June 30, 2014.

Q2 2014 Financial Summary

For the second quarter of 2014, total revenue was $20.2 million compared to $20.1 million in the second quarter of 2013 and $18.6 million in the first quarter of 2014.

On a non-GAAP basis, income from continuing operations for the second quarter of 2014 was $478,000, or $0.01 per share, compared to $3.8 million, or $0.07 per share, in the second quarter of 2013 and $490,000, or $0.01 per share, in the first quarter of 2014.

On a GAAP basis, loss from continuing operations for the second quarter of 2014 was $649,000, or $(0.01) per share, compared to income of $2.6 million, or $0.05 per share, in the second quarter of 2013 and a loss of $476,000, or $(0.01) per share, in the first quarter of 2014.

Non-GAAP income from continuing operations excludes any warrant-related charges and 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. Collectively, these items impacted income from continuing operations by $1.1 million in the second quarter of 2014, $1.2 million in the second quarter of 2013 and $966,000 in the first quarter of 2014. A reconciliation of GAAP to non-GAAP results is presented in the tables below.

 “After having been at Support.com for two months, I can say with confidence that the Company is well-run with a strong team,” said Elizabeth Cholawsky, President and Chief Executive Officer. “Underlying our positive results in the second quarter is our services’ operations, which is highly scalable and efficient. Our next-generation Nexus product has been released to the market and initial reaction has been positive.  Our job now is to continue to listen to customer feedback, which will accelerate our innovation, and invest over the long-term to establish leadership with Nexus while continuing to grow services’ customers.”

Balance Sheet Information

 At June 30, 2014 cash, cash equivalents and investments were $75.6 million, compared to $75.5 million at March 31, 2014.
Recent Company Highlights

·
Q2 2014 exceeded non-GAAP earnings per share guidance
·
Growth in Comcast Home Networking bundle
·
Launch of XFINITY Home pilot, Comcast's home security and automation system
·
Continued strong relationship with Office Depot, culminating in a two year contract extension
·
Released next-generation Nexus® and have received strong product feedback from customers
 
Conference Call

Support.com will host a conference call discussing the Company's second quarter 2014 results on Wednesday, July 30, 2014 starting at 4:30 p.m. ET (1:30 p.m. PT). The live call may be accessed by dialing (877)-388-8486 (domestic) or (408)-427-3864 (international) and referencing passcode 72833878. A live audio webcast and replay of the call will be available at the Investor Relations section of Support.com's website at http://corp.support.com/company/investor-relations/investor-webcasts-events/.

About Support.com

Support.com, Inc. (NASDAQ: SPRT) is a leading provider of cloud software and services for technology support. Our technology support programs help leading brands create new revenue streams and deepen customer relationships. Our cloud Nexus® Service Platform enables companies to boost their support productivity, dramatically improve their customer experience and resolve connected technology issues quickly. Support.com is the choice of leading communications providers including 3 of the top 5 cable companies in North America, top retailers, and other leading brands in software and connected technology. 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 © 2014 Support.com, Inc. All rights reserved. Support.com and Nexus are trademarks or registered trademarks of Support.com, Inc. in the United States and other countries. All other trademarks are the property of their respective owners.

Note on Forward-Looking Statements
This 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, income (loss) from continuing operations, income (loss) per share from continuing operations, cash usage or generation, cash balance, 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 of the Company. 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 including, among others, our ability to retain and grow major programs, our ability to expand our customer base, our ability to market and sell Nexus, 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 retain personnel, and our ability to control expenses and achieve desired margins. 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.
Disclosure Regarding Non-GAAP Financial Measures

Support.com excludes warrant-related charges and 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 income (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. Warrant-related charges. When evaluating its operating performance management excludes warrant-related charges against revenue in the period in which performance milestones are met and warrants are earned and issued because the Company does not incur such non-cash charges on a predictable basis and exclusion of such charges enables more consistent evaluation of the Company's operating performance. Warrant-related charge was zero for the second quarter of 2014, the second quarter of 2013 and the first quarter of 2014.

B. 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 Company's operating performance. Stock-based compensation expense was $633,000 in the second quarter of 2014, compared to $768,000 in the second quarter of 2013 and $622,000 in the first quarter of 2014.

 C. Amortization of intangible assets and other. Management excludes acquisition-related intangible asset amortization and other 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 $273,000 in the second quarter of 2014, compared to $335,000 in the second quarter of 2013 and $273,000 in the first quarter of 2014.
D. 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 zero in the second quarter of 2014, the second quarter of 2013 and the first quarter of 2014.

E. Acquisition expense. Management excludes acquisition expense such as legal 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 zero in the second quarter of 2014, the second quarter of 2013 and the first quarter of 2014.

F. Other non-recurring items. Management excludes non-recurring items when evaluating its operating performance because the Company does not incur such expenses or obtain such benefits on a predictable basis and exclusion of such expenses or benefits enables more consistent evaluation of the Company's operating performance. Other non-recurring items resulted in expense of $150,000 in the second quarter of 2014 for patent litigation settlement, no expense or benefit in the second quarter of 2013 and the first quarter of 2014.

G. 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 $71,000 in the second quarter of 2014, compared to $82,000 in the second quarter of 2013 and $71,000 in the first quarter of 2014.

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 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)

 
  
   
 
 
  
June 30,
   
December 31,
 
 
  
2014
(1
)
  
2013
(2
)
 
  
             
Assets
  
             
Current assets:
  
             
Cash, cash equivalents and short-term investments
  
$
75,581
      
$
72,357
    
Accounts receivable, net
    
13,105
        
13,993
    
Prepaid expenses and other current assets
    
853
        
1,322
    
Total current assets
    
89,539
        
87,672
    
Property and equipment, net
    
454
        
461
    
Goodwill
    
14,240
        
14,240
    
Intangible assets, net
    
2,909
        
3,454
    
Other assets
    
1,221
        
1,072
    
 
                    
Total assets
  
$
108,363
      
$
106,899
    
 
                    
Liabilities and Stockholders' Equity
                    
Current liabilities:
                    
Accounts payable and accrued compensation
  
$
3,284
      
$
3,017
    
Other accrued liabilities
    
3,855
        
3,359
    
Short-term deferred revenue
    
2,816
        
3,323
    
Total current liabilities
    
9,955
        
9,699
    
Long-term deferred revenue
    
54
        
50
    
Other long-term liabilities
    
1,906
        
1,754
    
Total liabilities
    
11,915
        
11,503
    
 
                    
Stockholders' equity:
                    
Common stock
    
5
        
5
    
Additional paid-in-capital
    
260,396
        
258,291
    
Treasury stock
    
(5,036
 )      
(5,036
 )  
Accumulated other comprehensive loss
    
(1,790
 )       
(1,874
 )   
Accumulated deficit
    
(157,127
 )       
(155,990
 )  
Total stockholders' equity
    
96,448
        
95,396
    
 
                    
Total liabilities and stockholders' equity
  
$
108,363
      
$
106,899
    

 
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, 2013.
 
 
SUPPORT.COM, INC.
GAAP CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(unaudited)

 
  
Three Months Ended
    
Six Months Ended
  
 
  
June 30, 2014
 (1)
June 30, 2013
    
June 30, 2014
(1)
June 30, 2013
  
 
  
   
   
   
 
Revenue:
  
   
   
   
 
Services
  
$
18,335
    
$
16,128
    
$
35,061
    
$
32,574
  
Software and other
    
1,843
      
3,996
      
3,730
      
7,752
  
Total revenue
    
20,178
      
20,124
      
38,791
      
40,326
  
 
                                
Cost of revenue:
                                
Cost of services (3)
    
14,531
      
8,838
      
27,493
      
18,148
  
Cost of software and other (3)
    
228
      
271
      
467
      
578
  
Total cost of revenue
    
14,759
      
9,109
      
27,960
      
18,726
  
Gross profit
    
5,419
      
11,015
      
10,831
      
21,600
  
Operating expenses:
                                
Amortization of intangible assets and other
    
273
      
335
      
546
      
670
  
Research and development (3)
    
1,057
      
1,282
      
2,411
      
2,870
  
Sales and marketing (3)
    
1,688
      
4,375
      
3,239
      
8,311
  
General and administrative (3)
    
2,980
      
2,354
      
5,643
      
5,117
  
Total operating expenses
    
5,998
      
8,346
      
11,839
      
16,968
  
 
                                
Income (loss) from operations
    
(579
)
    
2,669
      
(1,008
)
    
4,632
  
 
                                
Interest income and other, net
    
62
      
108
      
140
      
181
  
 
                                
Income (loss) from continuing operations, before income taxes
    
(517
)
    
2,777
      
(868
)
    
4,813
  
 
                                
Income tax provision
    
132
      
177
      
257
      
326
  
 
                                
Income (loss) from continuing operations, after income taxes
    
(649
)
    
2,600
      
(1,125
)
    
4,487
  
 
                                
Loss from discontinued operations, net of income taxes
    
(6
)
    
(5
)
    
(12
)
    
(10
)
 
                                
Net income (loss)
  
$
(655
)
  
$
2,595
    
$
(1,137
)
  
$
4,477
  
 
                                
 
                                
Income (loss) from continuing operations, after income taxes
                                
Basic
  
$
(0.01
)
  
$
0.05
    
$
(0.02
)
  
$
0.09
  
Diluted
  
$
(0.01
)
  
$
0.05
    
$
(0.02
)
  
$
0.09
  
 
                                
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
    
53,798
      
50,792
      
53,557
      
50,476
  
Diluted
    
53,798
      
52,866
      
53,557
      
52,535
  

 
 
  
 
     
   
       
   
    
 
  
 
Note 3: Includes stock-based compensation expense, restructuring and impairment charges, acquisition expense and other non-recurring items, as follows:
  
 
 
  
   
   
   
 
 
 
  
Three Months Ended
    
Six Months Ended
  
 
 
  
June 30, 2014
    
June 30, 2013
    
June 30, 2014
    
June 30, 2013
  
 
Cost of revenue:
  
   
   
   
 
 
Cost of services
  
$
195
    
$
65
    
$
282
    
$
157
  
 
Cost of software and other
    
4
      
2
      
7
      
6
  
 
Operating expenses:
                                
 
Research and development
    
(4
)
    
129
      
163
      
338
  
 
Sales and marketing
    
94
      
74
      
171
      
182
  
 
General and administrative
    
494
      
498
      
782
      
882
  
 
Total
  
$
783
    
$
768
    
$
1,405
    
$
1,565
  
 
 
                                    

SUPPORT.COM, INC.
RECONCILIATION OF GAAP FINANCIAL RESULTS TO NON-GAAP FINANCIAL MEASURES
(in thousands, except per share amounts)
(unaudited)

 
  
Three Months Ended
    
Six Months Ended
  
 
  
June 30, 2014
    
June 30, 2013
    
June 30, 2014
    
June 30, 2013
  
 
  
   
   
   
 
GAAP cost of revenue
 
$
14,759
    
$
9,109
    
$
27,960
    
$
18,726
  
Stock-based compensation expense (Cost of revenue portion only)
    
(49
)
    
(67
)
    
(139
)
    
(163
)
Other non-recurring items (Cost of revenue portion only)
    
(150
)
    
-
      
(150
)
    
-
  
Non-GAAP cost of revenue
 
$
14,560
    
$
9,042
    
$
27,671
    
$
18,563
  
 
                                
GAAP operating expenses
 
$
5,998
    
$
8,346
    
$
11,839
    
$
16,968
  
Stock-based compensation expense (Excl. cost of revenue portion)
    
(584
)
    
(701
)
    
(1,116
)
    
(1,402
)
Amortization of intangible assets and other
    
(273
)
    
(335
)
    
(546
)
    
(670
)
Non-GAAP operating expenses
 
$
5,141
    
$
7,310
    
$
10,177
    
$
14,896
  
 
                                
GAAP income tax provision
 
$
132
    
$
177
    
$
257
    
$
326
  
Tax expense associated with acquired goodwill
    
(71
)
    
(82
)
    
(142
)
    
(155
)
Non-GAAP income tax provision
 
$
61
    
$
95
    
$
115
    
$
171
  
 
                                
GAAP income (loss) from continuing operations, after income taxes
  
$
(649
)
  
$
2,600
    
$
(1,125
)
  
$
4,487
  
Stock-based compensation expense
    
633
      
768
      
1,255
      
1,565
  
Amortization of intangible assets and other
    
273
      
335
      
546
      
670
  
Tax expense associated with acquired goodwill
    
71
      
82
      
142
      
155
  
Other non-recurring items
   
150
      
-
      
150
      
-
  
    Total impact of Non-GAAP exclusions
    
1,127
      
1,185
      
2,093
      
2,390
  
Non-GAAP income from continuing operations, after income taxes
  
$
478
    
$
3,785
    
$
968
    
$
6,877
  
 
                                
Income (loss) from continuing operations, after income taxes
                                
Basic - GAAP
  
$
(0.01
)
  
$
0.05
    
$
(0.02
)
  
$
0.09
  
Basic - Non-GAAP
  
$
0.01
    
$
0.07
    
$
0.02
    
$
0.14
  
 
                                
Diluted - GAAP
  
$
(0.01
)
  
$
0.05
    
$
(0.02
)
  
$
0.09
  
Diluted - Non-GAAP
  
$
0.01
    
$
0.07
    
$
0.02
    
$
0.13
  
Shares used in computing per share amounts (GAAP)
                                
Basic
    
53,798
      
50,792
      
53,557
      
50,476
  
Diluted
    
53,798
      
52,866
      
53,557
      
52,535
  
Shares used in computing per share amounts (Non-GAAP)
                                
Basic
    
53,798
      
50,792
      
53,557
      
50,476
  
Diluted
    
53,864
      
52,866
      
53,818
      
52,535
  
 
 
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 warrant-related charges, 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.
 
2014 Amounts are subject to completion of management’s customary closing and review procedures.
 
 
Investor Contact

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