EX-99.1 2 dex991.htm PRESS RELEASE Press Release

Exhibit 99.1

Support.com Reports Fourth Quarter and Year-End 2009 Financial Results

Revenue and Gross Margin Top Expectations

REDWOOD CITY, CA — (Marketwire) – 2/10/2010 — Support.com® (NASDAQ: SPRT), a leading provider of online care for the digital home, today reported unaudited financial results for its fourth quarter and fiscal year ended December 31, 2009.

Q4 and 2009 Financial Summary

For the fourth quarter of 2009, total revenue was $5.8 million including $0.5 million from the acquisition of Sammsoft, compared to $3.1 million in the fourth quarter of 2008 and $4.6 million in the third quarter of 2009.

On a GAAP basis, net loss from continuing operations for the fourth quarter of 2009 was $3.4 million, or $(0.07) per share, compared to $9.2 million, or $(0.20) per share, in the fourth quarter of 2008, and $5.5 million, or $(0.12) per share, in the third quarter of 2009.

Non-GAAP net loss from continuing operations for the fourth quarter of 2009 was $3.3 million, or $(0.07) per share, compared to $7.1 million, or $(0.15) per share, in the fourth quarter of 2008, and $4.2 million, or $(0.09) per share, in the third quarter of 2009.

Total revenue for 2009 was $17.5 million, an increase of 157% from $6.8 million in 2008. On a GAAP basis, net loss from continuing operations for 2009 was $21.6 million, or $(0.47) per share, compared to $31.7 million, or $(0.69) per share, in 2008. Non-GAAP net loss from continuing operations for 2009 was $21.2 million, or $(0.46) per share, compared to $27.1 million, or $(0.59) per share, in 2008.

Non-GAAP results exclude stock-based compensation expense, amortization of intangible assets, restructuring and impairment charges, acquisition expense and the income tax impact of the disposition of a business unit on continuing operations. These items impacted results from continuing operations by $0.1 million in the fourth quarter of 2009, $2.1 million in the fourth quarter of 2008, and $1.2 million in the third quarter of 2009. On an annual basis, these items impacted results from continuing operations by $0.4 million in 2009 and $4.6 million in 2008. A reconciliation of GAAP to non-GAAP results is presented in the tables below.

“We had a strong fourth quarter, with continued revenue and gross margin growth and decreased operating cash usage,” said Josh Pickus, President and Chief Executive Officer. “We also expanded our offerings to include consumer software products, added AOL as our first partner in the internet service provider channel, and continued our technology leadership with the introduction of full support and optimization for the Windows 7 platform. We are aggressively hiring personal technology experts to support partner demand in 2010.”


Recent Highlights

 

   

Consumer Services Revenue Grows 17% Sequentially from Q3 to Q4

 

   

Gross Margin on Consumer Services Increases to 24% from 15% in Q3

 

   

Operating Cash Usage Decreases to $3.6 million from $5.6 million in Q3

 

   

Selected by AOL as Technology Services Partner

 

   

Acquired Sammsoft, a Provider of Consumer Software Products

 

   

Launched Advance Registry Optimizer 2010; Awarded 4.5 Star CNET Review

 

   

Introduced Full Support and Optimization for the Windows 7 Platform

 

   

Michael Linton, Former Chief Marketing Officer of eBay and Best Buy, Joins Board of Directors

Balance Sheet Information

At December 31, 2009 cash, cash equivalents and investments, including a put option relating to auction rate securities, were $84.8 million compared to $96.9 million at September 30, 2009. During the quarter, the Company acquired Sammsoft for $8.5 million in cash.

Treatment of Continuing and Discontinued Operations

On June 23, 2009, the Company completed the sale of its Enterprise business to Consona Corporation. As a result of this transaction, all revenue and direct expenses associated with the Enterprise business have been reflected as discontinued operations in a single line on the condensed statement of operations. Results from discontinued operations include the write-down of certain balances, including goodwill, related to the assets sold to Consona, as well as other transaction related expenses. Results from continuing operations include all revenue and direct expenses associated with the Consumer business, as well as all Company general and administrative expense and ongoing facility expense, which were previously allocated to the Enterprise and Consumer businesses. Results from prior periods have been reclassified to conform to the current financial presentation.

Conference Call

Support.com will host a conference call discussing the Company’s fourth quarter and year-end 2009 results on Wednesday, February 10, 2010 starting at 4:30 p.m. ET (1:30 p.m. PT). 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/webcastsevents. The live call may be accessed by dialing (888) 811-5448 (domestic) or (913) 312-0943 (international) and referencing passcode 908-5451. A replay of the call can also be accessed by dialing (888) 203-1112 (domestic) or (719) 457-0820 (international), and referencing passcode: 908-5451.


About Support.com

Support.com, Inc. (NASDAQ:SPRT—News) provides Instant Technology Relief® to consumers and microbusinesses. Support.com is a services and software company that is changing the way people manage their technology. Support.com’s North American Personal Technology Experts can provide quick, cost-effective and satisfying technology support over the Internet and the phone using Support.com’s advanced technology platform. Support.com also provides consumer software for the do-it-yourself customer through its recently acquired Sammsoft brand. Support.com, the SupportMan Logo, Sammsoft, and Advanced Registry Optimizer are trademarks or registered trademarks of Support.com, Inc. or its affiliates in the US and other countries. Other names may be trademarks of their respective owners. For more information visit www.support.com.

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, income (loss), earnings (loss) per share, capital expenditures, dividends, capital structure, or other financial items); the plans and objectives of management for future operations, products or services; and future performance in economic terms, products or services, or other any other measures. 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 through new channels and direct-to-consumer, our ability to scale our workforce, our ability to control expenses and achieve profitability, and our ability to successfully integrate acquired products and services. 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, restructuring and impairment charges, acquisition expense and the income tax impact of the disposition of business units on continuing operations from its GAAP results in order to determine the non-GAAP financial measure of net income (loss) per share referenced in this document. We believe that the non-GAAP measure, when viewed in addition to and not in lieu of our reported GAAP results, assists investors in understanding our results of operations.

A. Stock-based compensation. 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 compensation expense was $0.7 million in the fourth quarter of 2009, compared to $0.9 million in the fourth quarter of 2008 and $0.8 million in the third quarter of 2009. Stock-based compensation expense for 2009 was $2.9 million, compared to $3.3 million for 2008.


B. Amortization of intangible assets. 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. The Company also excludes such charges as they represent non-cash expenses. Amortization expense was $52,000 in the fourth quarter of 2009, compared to $42,000 in the fourth quarter of 2008 and $42,000 in the third quarter of 2009. Amortization expense was $177,000 in 2009, compared to $112,000 in 2008.

C. Restructuring and impairment charges. The Company does not undertake significant restructurings on a predictable basis and, as result, excludes associated charges in order to enable better and more consistent evaluation of the Company’s operating expenses before and after such actions are taken. Restructuring and impairment expense was zero in the fourth quarter of 2009, compared to $1.2 million in the fourth quarter of 2008 and $1.3 million in the third quarter of 2009. Restructuring and impairment expense for 2009 was $1.7 million, compared to $1.2 million for 2008.

D. Acquisition expense. The Company does not acquire businesses on a predictable cycle; therefore management excludes acquisition expense such as legal fees and banker or advisor fees, when evaluating ongoing operating performance. Acquisition expense was $0.5 million in the fourth quarter of 2009, compared to zero in the fourth quarter of 2008 and zero in the third quarter of 2009. Acquisition expense for 2009 was $0.5 million, compared to zero for 2008.

E. Income tax impact of disposition of business units. The Company excludes the income tax impact of the disposition of business units when evaluating the performance of its continuing operations, because this tax impact is not a result of the Company’s continuing operations. The income tax benefit related to the disposal of business units was $1.2 million in the fourth quarter of 2009, compared to zero in the fourth quarter of 2008 and $0.9 million in the third quarter of 2009. Tax benefit for 2009 was $5.0 million, compared to zero for 2008.

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.

Contact Information:

Investor Contact

Carolyn Bass and Daniel Wood

Market Street Partners

(415) 445-3235

sprt@marketstreetpartners.com

Media Contact

Catherine Muriel

Support.com

(650) 556-8972

catherine.muriel@support.com


SUPPORT.COM

GAAP CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)

(unaudited)

 

     Three Months Ended     Year Ended
December 31,
 
     December 31,
2009(1)
    September 30,
2009(1)
    December 31,
2008(2)
    2009(1)     2008(2)  

Revenues:

          

Services

   $ 5,302      $ 4,542      $ 3,050      $ 16,770      $ 6,468   

Software and Other

     546        57        57        725        343   
                                        

Total revenues

     5,848        4,599        3,107        17,495        6,811   

Costs of revenue:

          

Cost of services

     4,043        3,856        4,027        16,424        10,126   

Cost of software and other

     59        —          —          59        —     
                                        

Total cost of revenue

     4,102        3,856        4,027        16,483        10,126   

Gross profit (loss)

     1,746        743        (920     1,012        (3,315

Operating expenses:

          

Research and development

     1,051        1,173        1,496        5,131        6,455   

Sales and marketing

     1,950        1,450        1,729        6,805        7,624   

General and administrative

     2,249        2,466        3,105        10,668        12,244   

Amortization of intangible assets

     52        42        42        177        112   

Acquisition expenses

     542        —          —          542        —     

Restructuring and impairment

     —          1,294        1,195        1,697        1,195   

Stock-based compensation

     715        824        894        2,942        3,289   
                                        

Total operating expenses

     6,559        7,249        8,461        27,962        30,919   

Loss from operations

     (4,813     (6,506     (9,381     (26,950     (34,234

Interest income and other, net

     191        117        177        428        2,505   
                                        

Loss from continuing operations, before income taxes

     (4,622     (6,389     (9,204     (26,522     (31,729

Income taxes benefit

     (1,186     (918     (23     (4,941     (18
                                        

Loss from continuing operations, after income taxes

     (3,436     (5,471     (9,181     (21,581     (31,711

Income (loss) from discontinued operations, after income taxes

     (181     12        2,392        7,038        12,605   
                                        

Net Loss

   $ (3,617   $ (5,459   $ (6,789   $ (14,543   $ (19,106
                                        

Earnings per share:

          

Basic and diluted earnings per share:

          

Loss from continuing operations, after income taxes

   $ (0.07   $ (0.12   $ (0.20   $ (0.47   $ (0.69

Income (Loss) from discontinued operations, after income taxes

     (0.01     0.00        0.05        0.16        0.28   
                                        

Net loss per share, basic and diluted

   $ (0.08   $ (0.12   $ (0.15   $ (0.31   $ (0.41
                                        

Shares used in computing per share amounts:

          

Basic

     46,443        46,376        46,142        46,378        46,098   
                                        

Diluted

     46,443        46,376        46,142        46,378        46,098   
                                        

Allocation of restructuring and impairment charges for continuing operations:

          

Cost of consumer

     —          —          43        62        43   

Research and development

     —          —          89        196        89   

Sales and marketing

     —          —          538        295        538   

General and administrative

     —          1,294        525        1,144        525   
                                        
     —          1,294        1,195        1,697        1,195   
                                        

Allocation of stock-based compensation for continuing operations:

          

Cost of consumer

     34        31        48        134        138   

Research and development

     135        133        117        467        450   

Sales and marketing

     61        155        252        576        911   

General and administrative

     485        505        477        1,765        1,790   
                                        
     715        824        894        2,942        3,289   
                                        

Note 1: 2009 amounts are subject to completion of management’s and its independent registered public accounting firm’s customary closing and review procedures.

Note 2: Amounts are reclassified to conform to current presentation from reviewed financial statements.


SUPPORT.COM

RECONCILIATION OF GAAP FINANCIAL RESULTS TO NON-GAAP FINANCIAL MEASURES

(in thousands, except per share amounts)

(unaudited)

 

    Three Months Ended     Year Ended
December 31,
 
    December 31,
2009
    September 30,
2009
    December 31,
2008
    2009     2008  

GAAP operating expenses from continuing operations

  $ 6,559      $ 7,249      $ 8,461      $ 27,962      $ 30,919   

Amortization of intangible assets

    (52     (42     (42     (177     (112

Acquisition expenses

    (542     —          —          (542     —     

Restructuring and impairment charges

    —          (1,294     (1,195     (1,697     (1,195

Stock-based compensation

    (715     (824     (894     (2,942     (3,289
                                       

Non-GAAP costs and expenses from continuing operations

    5,250        5,089        6,330        22,604        26,323   

GAAP Income taxes benefit

    (1,186     (918     (23     (4,941     (18

Income tax impact of disposition of business unit

    1,176        923        —          4,940        —     
                                       

Non-GAAP income (loss) before income taxes from continuing operations

    (10     5        (23     (1     (18

GAAP net loss from continuing operations

  $ (3,436   $ (5,471   $ (9,181   $ (21,581   $ (31,711

Amortization of intangible assets

    52        42        42        177        112   

Acquisition expenses

    542        —          —          542        —     

Restructuring and impairment charges

    —          1,294        1,195        1,697        1,195   

Stock-based compensation

    715        824        894        2,942        3,289   

Income tax impact of disposition of business unit

    (1,176     (923     —          (4,940     —     
                                       

Non-GAAP net loss from continuing operations

  $ (3,303   $ (4,234   $ (7,050   $ (21,163   $ (27,115
                                       

Basic and diluted net loss per share

         

GAAP

  $ (0.07   $ (0.12   $ (0.20   $ (0.47   $ (0.69

Non-GAAP

  $ (0.07   $ (0.09   $ (0.15   $ (0.46   $ (0.59

Shares used in computing per share amounts (GAAP)

         

Basic

    46,443        46,376        46,142        46,378        46,098   

Diluted

    46,443        46,376        46,142        46,378        46,098   

Shares used in computing per share amounts (Non-GAAP)

         

Basic

    46,443        46,376        46,142        46,378        46,098   

Diluted

    46,443        46,376        46,142        46,378        46,098   

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, restructuring and impairment charges, acquisition expenses, and the income tax impact of the disposition of a business unit on continuing operations from the GAAP financial results. 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.


SUPPORT.COM

GAAP CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

 

     December 31,
2009(1)
    September 30,
2009(1)
    December 31,
2008(2)
 
     (unaudited)     (unaudited)     (audited)  

Assets

      

Current assets:

      

Cash, cash equivalents and short-term investments

   $ 80,034      $ 91,209      $ 72,090   

Accounts receivable, net

     3,190        2,584        2,113   

Prepaid expenses and other current assets

     1,284        1,273        1,128   

Auction-rate securities put option

     1,289        2,411        —     

Current assets of discontinued operations

     —          —          8,785   
                        

Total current assets

     85,797        97,477        84,116   
                        

Long-term investments

     3,444        3,267        15,766   

Auction-rate security put option—long-term

     —          —          7,148   

Property and equipment, net

     447        414        1,065   

Goodwill

     10,171        2,854        2,854   

Purchased technologies, net

     309        329        —     

Intangible assets, net

     1,450        292        417   

Other assets

     374        749        886   

Long-term assets of discontinued operations

     —          —          11,334   
                        

Total assets

   $ 101,992      $ 105,382      $ 123,586   
                        

Liabilities and Stockholders’ Equity

      

Liabilities:

      

Accounts payable

   $ 99      $ 135      $ 890   

Accrued compensation

     745        823        1,469   

Other accrued liabilities

     3,045        3,601        3,534   

Deferred revenue

     725        437        22   

Current liabilities of discontinued operations

     —          —          9,772   
                        

Total current liabilities

     4,614        4,996        15,687   
                        

Other long-term liabilities

     992        1,424        1,434   

Long-term liabilities of discontinued operations

     —          —          1,019   
                        

Total liabilities

   $ 5,606      $ 6,420      $ 18,140   
                        

Stockholders’ equity:

      

Common stock

   $ 5      $ 5      $ 5   

Additional paid-in-capital

     221,822        221,039        217,647   

Accumulated other comprehensive loss

     (1,233     (1,492     (2,541

Accumulated deficit

     (124,208     (120,590     (109,665
                        

Total stockholders’ equity

   $ 96,386      $ 98,962      $ 105,446   
                        

Total liabilities and stockholders’ equity

   $ 101,992      $ 105,382      $ 123,586   
                        

Note 1: 2009 amounts are subject to completion of management’s and its independent registered public accounting firm’s customary closing and review procedures.

Note 2: Amounts are reclassified to conform to current presentation from audited financial statements.