REDWOOD CITY, CA -- (Marketwire) -- 10/27/11 -- Support.com (NASDAQ: SPRT), a leading provider of cloud-based technology services and software for consumers and small business, today reported unaudited financial results for its third quarter ended September 30, 2011.
Q3 2011 Financial Summary
For the third quarter of 2011, total revenue was $12.4 million compared to $12.2 million in the third quarter of 2010 and $13.5 million in the second quarter of 2011.
On a GAAP basis, loss from continuing operations for the third quarter of 2011 was $7.1 million, or $(0.15) per share, compared to $3.8 million, or $(0.08) per share, in the third quarter of 2010, and $4.0 million, or $(0.08) per share, in the second quarter of 2011.
Non-GAAP loss from continuing operations for the third quarter of 2011 was $5.0 million, or $(0.10) per share, compared to $2.9 million, or $(0.06) per share, in the third quarter of 2010, and $2.4 million, or $(0.05) per share, in the second quarter of 2011.
Non-GAAP results exclude stock-based compensation expense, amortization of intangible assets, restructuring and impairment charges, income tax impact of the disposition of business units on continuing operations, acquisition expense and tax expense associated with acquired goodwill. These items impacted results from continuing operations by $2.1 million in the third quarter of 2011, $878,000 in the third quarter of 2010, and $1.6 million in the second quarter of 2011. A reconciliation of GAAP to non-GAAP results is presented in the tables below.
"We're moving forward on key initiatives including growing subscription revenue from existing programs, expanding our client roster, improving service efficiency and enhancing software channels and monetization," said Josh Pickus, President and Chief Executive Officer. "We are dedicated to achieving profitability and providing best-in-class experiences for our customers."
Balance Sheet Information
At September 30, 2011 cash, cash equivalents and investments were $59.3 million compared to $62.7 million at June 30, 2011.
Recent Highlights
- Comcast agreement successfully amended
- SUPERAntiSpyware® 5, major update of popular anti-malware software product, released
- RapidStart™, new software product designed to reduce computer boot time, released
- Secure My Account for Facebook® service launched
Conference Call
Support.com will host a conference call discussing the Company's third quarter 2011 results on Thursday, October 27, 2011 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://www.support.com/about/investor-relations/webcastsevents. The live call may be accessed by dialing (877) 312-8789 (domestic) or (253) 237-1314 (international) and referencing passcode 19084591. A replay of the call can also be accessed by dialing (855) 859-2056 (domestic) or (404) 537-3406 (international) and referencing passcode19084591.
About Support.com
Support.com, Inc. (NASDAQ: SPRT) provides cloud-based technology services and software for consumers and small business. Support.com Personal Technology Experts® provide a quick, cost-effective and stress-free technology support experience over the Internet and the phone using the Company's advanced technology platform. Support.com also offers a wide range of easy-to-use software products that detect and repair common computer problems and optimize performance and security. Support.com offers programs through many of the nation's leading retailers, broadband service providers, software vendors and PC/CE OEMs, and provides software to over a million consumers and small businesses. For more information please visit us at: www.support.com, www.facebook.com/support.com, or http://twitter.com/support_com.
Support.com, Inc. is an Equal Opportunity Employer. For more information, visit: http://www.support.com/about/careers.
Copyright © 2011 Support.com, Inc. All rights reserved. Support.com, SUPERAntiSpyware, RapidStart and Personal Technology Experts are trademarks or registered trademarks of Support.com, Inc. in the U.S. and other countries. Facebook is a trademark or registered trademark of Facebook, 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 market and sell software and services to consumers and small businesses, 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, restructuring and impairment charges, income tax impact of the disposition of business units on continuing operations, acquisition expense and tax expense associated with acquired goodwill from its GAAP results in order to determine the non-GAAP financial measure of net loss 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. 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 $937,000 in the third quarter of 2011, compared to $727,000 in the third quarter of 2010 and $1.1 million in the second quarter of 2011.
B. Amortization of intangible assets. 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 expense was $330,000 in the third quarter of 2011, compared to $93,000 in the third quarter of 2010 and $122,000 in the second quarter of 2011.
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 $368,000 in the third quarter of 2011, compared to zero in the third quarter of 2010 and $65,000 in the second quarter of 2011.
D. Income tax impact of disposition of business units on continuing operations. Management 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 expense related to the disposal of business units was zero in the third quarter of 2011, compared to $58,000 in the third quarter of 2010 and zero in the second quarter of 2011.
E. 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 $190,000 in the third quarter of 2011, compared to zero in the third quarter of 2010 and $348,000 in the second quarter of 2011.
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 $270,000 in the third quarter of 2011, compared to zero in the third quarter of 2010 and zero in the second quarter of 2011.
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)
September 30, December 31,
2011 (1) 2010
------------- -------------
(unaudited)
Assets
Current assets:
Cash, cash equivalents and short-term
investments $ 56,682 $ 71,568
Accounts receivable, net 6,119 5,133
Prepaid expenses and other current
assets 1,174 1,617
------------- -------------
Total current assets 63,975 78,318
------------- -------------
Long-term investments 2,625 2,667
Property and equipment, net 527 623
Purchased technology, net 165 226
Goodwill 13,621 10,181
Intangible assets, net 6,000 1,076
Other assets 723 648
------------- -------------
Total assets $ 87,636 $ 93,739
============= =============
Liabilities and Stockholders' Equity
Liabilities:
Accounts payable $ 609 $ 536
Accrued compensation 2,352 1,248
Other accrued liabilities 4,494 3,575
Short-term deferred revenue 3,897 1,574
------------- -------------
Total current liabilities 11,352 6,933
Long-term deferred revenue 514 -
Other long-term liabilities 1,119 749
------------- -------------
Total liabilities 12,985 7,682
------------- -------------
Stockholders' equity:
Common stock 5 5
Additional paid-in-capital 232,954 229,692
Accumulated other comprehensive loss (1,708) (1,331)
Accumulated deficit (156,600) (142,309)
------------- -------------
Total stockholders' equity 74,651 86,057
------------- -------------
Total liabilities and stockholders' equity $ 87,636 $ 93,739
============= =============
Note 1: 2011 amounts are subject to completion of management's and its independent registered public accounting firm's customary closing and review procedures.
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,
-------------------------- --------------------------
2011 (1) 2010 2011 (1) 2010
---------- ---------- ---------- ----------
Revenue:
Services $ 8,532 $ 9,280 $ 26,124 $ 22,892
Software and
other 3,818 2,898 12,711 9,031
--------- ---------- --------- ---------
Total revenue 12,350 12,178 38,835 31,923
Cost of revenue:
Cost of services 7,917 6,927 21,334 19,757
Cost of software
and other 458 294 1,295 977
---------- ---------- ---------- ----------
Total cost of
revenue 8,375 7,221 22,629 20,734
Gross profit 3,975 4,957 16,206 11,189
---------- ---------- ---------- ----------
Operating expenses:
Amortization of
intangible
assets 330 93 536 274
Research and
development 1,577 1,274 4,458 3,898
Sales and
marketing 5,954 4,889 16,282 13,180
General and
administrative 3,074 2,499 9,300 8,338
---------- ---------- ---------- ----------
Total
operating
expenses 10,935 8,755 30,576 25,690
Loss from operations (6,960) (3,798) (14,370) (14,501)
Interest income and
other, net 96 101 371 436
---------- ---------- ---------- ----------
Loss from continuing
operations, before
income taxes (6,864) (3,697) (13,999) (14,065)
Income taxes
provision 264 56 295 78
---------- ---------- ---------- ----------
Loss from continuing
operations, after
income taxes (7,128) (3,753) (14,294) (14,143)
Income from
discontinued
operations, net of
income taxes 18 30 3 27
---------- ---------- ---------- ----------
Net loss $ (7,110) $ (3,723) $ (14,291) $ (14,116)
========== ========== ========== ==========
Basic and diluted
earnings per share:
Loss from
continuing
operations, after
income taxes $ (0.15) $ (0.08) $ (0.30) $ (0.30)
Income from
discontinued
operations, after
income taxes 0.00 0.00 0.00 0.00
---------- ---------- ---------- ----------
Basic and diluted
net loss per
share $ (0.15) $ (0.08) $ (0.30) $ (0.30)
========== ========== ========== ==========
Shares used in
computing per share
amounts:
Basic 48,326 46,721 48,267 46,576
========== ========== ========== ==========
Diluted 48,326 46,721 48,267 46,576
========== ========== ========== ==========
Note 1: 2011 amounts are subject to completion of management's and its independent registered public accounting firm's customary closing and review procedures.
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,
---------------------- ----------------------
2011 2010 2011 2010
---------- ---------- ---------- ----------
GAAP cost of revenue $ 8,375 $ 7,221 $ 22,629 $ 20,734
Stock-based compensation
(Cost of revenue
portion only) (68) (42) (183) (122)
Restructuring and
impairment charges
(Cost of revenue
portion only) (55) - (93) -
---------- ---------- ---------- ----------
Non-GAAP cost of revenue $ 8,252 $ 7,179 $ 22,353 $ 20,612
GAAP operating expenses $ 10,935 $ 8,755 $ 30,576 $ 25,690
Stock-based compensation
(Excl. cost of revenue
portion) (869) (685) (2,628) (2,492)
Amortization of
intangible assets (330) (93) (536) (274)
Restructuring and
impairment charges
(Excl. cost of revenue
portion) (313) - (377) -
Acquisition expense (190) - (538) -
---------- ---------- ---------- ----------
Non-GAAP operating expenses $ 9,233 $ 7,977 $ 26,497 $ 22,924
GAAP income taxes provision $ 264 $ 56 $ 295 $ 78
Income tax impact of the
disposition of business
units on continuing
operations - (58) - (58)
Tax expense associated
with acquired goodwill (270) - (270) -
---------- ---------- ---------- ----------
Non-GAAP income taxes
provision $ (6) $ (2) $ 25 $ 20
GAAP loss from continuing
operations, after income
taxes $ (7,128) $ (3,753) $ (14,294) $ (14,143)
Stock-based compensation 937 727 2,811 2,614
Amortization of
intangible assets 330 93 536 274
Restructuring and
impairment charges 368 - 470 -
Income tax impact of the
disposition of business
units on continuing
operations - 58 - 58
Acquisition expense 190 - 538 -
Tax expense associated
with acquired goodwill 270 - 270 -
---------- ---------- ---------- ----------
Total impact of Non-GAAP
exclusions 2,095 878 4,625 2,946
Non-GAAP loss from
continuing operations,
after income taxes $ (5,033) $ (2,875) $ (9,669) $ (11,197)
---------- ---------- ---------- ----------
Basic and diluted loss per
share from continuing
operations, after income
taxes
GAAP $ (0.15) $ (0.08) $ (0.30) $ (0.30)
Non-GAAP $ (0.10) $ (0.06) $ (0.20) $ (0.24)
Shares used in computing per
share amounts (GAAP)
Basic 48,326 46,721 48,267 46,576
Diluted 48,326 46,721 48,267 46,576
Shares used in computing per
share amounts (Non-GAAP)
Basic 48,326 46,721 48,267 46,576
Diluted 48,326 46,721 48,267 46,576
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, income tax impact of the disposition of business units on continuing operations, acquisition expense 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.
2011 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 Scott Morgan
Market Street Partners
(415) 445-3235
sprt@marketstreetpartners.com
Media Contact
Seth Geisler
Martin Levy Public Relations
(858) 610-9860
seth@martinlevypr.com
