Support.com, Inc. (NASDAQ: SPRT), a leading provider of tech
support and turnkey support center services, producer of
SUPERAntiSpyware® anti-malware products, and the maker of
Support.com® software, today reported unaudited financial results
for its second quarter ended June 30, 2017.
“The company continued to focus on reducing operating costs
during the second quarter and a significant part of our improved
financial results were driven by these cost saving initiatives. We
also remain focused on our cash position. Our cash, cash
equivalents and short-term investments at the end of the second
quarter were slightly higher at $51.7 million,” said Rick
Bloom, Interim President and Chief Executive Officer of the
company.
“While we remain focused on fiscal discipline and continuing to
move towards profitability, we are even more excited by the growth
opportunities afforded by the unique combination of our service and
software offerings. Our highly-skilled tech support agents provide
a unique insight into the challenges faced by consumers seeking to
resolve issues with technology. Our software captures useful data
and the combination is powerful. This enables us to tailor our
Support.com software and software enabled services to provide high
quality customer support in a very cost efficient manner,” shared
Mr. Bloom.
Q2 2017 Financial Summary
For the second quarter of 2017, total revenue was
$14.5 million, up 1.5 percent compared to revenues of
$14.3 million in the first quarter of 2017 and down
2.8 percent compared to revenues of $14.9 million in the
second quarter of 2016.
On a GAAP basis, we recorded a loss from continuing operations
for the second quarter of 2017 of $(0.2) million, or $(0.01)
per share, compared to a loss of $(6.0) million, or $(0.33)
per share, in the second quarter of 2016 and a loss of
$(1.3) million, or $(0.07) per share, in the first quarter of
2017.
On a non-GAAP basis, we recorded income from continuing
operations in the second quarter of 2017 of $0.02 million, or
$0.00 per share, compared to a loss of $(4.9) million, or
$(0.27) per share, in the second quarter of 2016 and a loss of
$(1.2) million, or $(0.06) per share, in the first quarter of
2017. Key changes in our non-GAAP income from continuing operations
included the following:
- Gross profit improved by
$1.3 million in the second quarter compared to the same period
in 2016, and was up $0.4 million compared to the first quarter
of 2017.
- Our gross profit margin improved by
9 percentage points compared with the same quarter of 2016 and
was up 3 percentage points relative to the first quarter of
2017.
- Operating expenses in the second
quarter of 2017 were $3.5 million, lower by $3.6 million
(50 percent) than the $7.1 million of operating expenses
in the second quarter of 2016 and lower by $0.8 million
(18 percent) than the $4.3 million of operating expenses
in the first quarter of 2017.
- Operating expenses for the second
quarter of 2017 included $0.2 million in expenses not
associated with normal business operations (primarily higher than
expected legal expenses). This compares with $1.6 million in
the second quarter of 2016 (which included costs related to our
proxy contest), and $0.6 million in the first quarter of 2017
(which included higher than expected legal expenses).
- Our improved gross profit margin and
lower operating expenses reflects the ongoing impact of our cost
saving initiatives, which included operational efficiencies,
continued reductions in headcount, tighter fiscal controls on
spending, lower rent, and the renegotiation of certain vendor
agreements.
Non-GAAP income/(loss) from continuing operations excludes
stock-based compensation, amortization of intangible assets, and
restructuring charges. Collectively, these items impacted
income/(loss) from continuing operations by $0.2 million in
the second quarter of 2017, $1.1 million in the second quarter
of 2016, and $0.1 million in the first quarter of 2017. A
reconciliation of GAAP to non-GAAP results is presented in the
tables below.
Balance Sheet Information
At June 30, 2017, cash, cash equivalents and short-term
investments were $51.7 million, compared to $50.8 million
at March 31, 2017 and $53.4 million at December 31,
2016.
Total assets as of June 30, 2017 were $64.6 million
and total shareholders’ equity was $56.3 million.
Support.com will not host a conference call discussing the
Company’s second quarter results. For more information, please
visit the Investor Relations section of the Support.com website at
Support.com/about-us/investor-relations/.
About Support.com
Support.com, Inc. (NASDAQ: SPRT) is a leading provider of
support services and software to deliver next-generation technical
support. Support.com helps leading brands in software, electronics,
communications, retail, and other connected technology industries
deepen their customer relationships. Customers want technology that
works the way it’s intended. By using Support.com services and
software, companies can deliver a fantastic customer experience,
leading to happier customers, greater brand loyalty and growing
revenues. For more information, please visit http://www.support.com
or follow us @support com.
Support.com, Inc. is an Equal Opportunity Employer. For more
information,
visit http://www.support.com/about-us/careers.
© 2017 Support.com, Inc. All rights reserved. Support.com and
the Support.com logo are trademarks or registered trademarks of
Support.com, Inc. in the United States and other countries. All
other marks are the property of their respective owners.
Safe Harbor Statement
This press 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, profitability, income
(loss) from continuing operations, income (loss) per share from
continuing operations, cash usage or generation, cash balance as of
any future date, 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 in economic and other terms. 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 from those indicated by such
forward-looking statements, including, among others, our ability to
retain and grow major programs, our ability to expand and diversify
our customer base, our ability to market and sell our Support.com
Cloud (formerly “Nexus®”) software-as-a-service (SaaS) offering,
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 operate in markets that are
subject to extensive regulations, such as support for home security
systems, our ability to control expenses and achieve desired
margins, our dependence on a small number of customers and
partners, our ability to attract, train and retain talented
employees, the potential for acquisitions or other strategic
transactions that deplete our resources or do not prove successful,
privacy concerns, the potential for payment fraud issues, potential
intellectual property, class action or other litigation, potential
impairments of long lived assets, our ability to utilize and
realize the value of our net operating loss carryforwards and how
they could be substantially limited or permanently impaired, given
our current market capitalization and cash position, if we
experienced an “ownership change” as defined in Section 382 of the
Internal Revenue Code and whether our recently adopted tax benefits
preservation plan will be effective in reducing the likelihood of
such an unintended ownership change from occurring, the recent
change in the composition of our Board and the recent resignation
of our former President and Chief Executive Officer, and former
Executive Vice President, Chief Financial Officer and Chief
Operating Officer and appointment of a new interim President and
Chief Executive Officer may lead to the perception of a change in
the direction of our business, instability or a lack of continuity
which may be exploited by our competitors, cause concern to our
current or potential clients, and may result in the loss of
potential business opportunities and make it more difficult to
attract and retain qualified personnel and business partners, our
ability to execute the cost reduction program involving the planned
actions on the expected schedule, our ability to achieve the cost
savings expected in connection with the cost reduction plan, the
ultimate effect of any such cost reductions on our financial
results, and our ability to manage the effects of the cost
reduction plan on our workforce and other operations. 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, except as may otherwise
be required by the federal securities laws.
Disclosure Regarding Non-GAAP Financial Measures
Support.com excludes stock-based compensation expense,
amortization of intangible assets and other, and restructuring
charges 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, as described in
A through C below. 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 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-based
compensation expense was $177,000 in the second quarter of 2017,
compared to $454,000 in the second quarter of 2016 and $90,000 in
the first quarter of 2017.
B. Amortization of intangible assets and other. 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. Amortization of intangible assets and other was $6,000
in the second quarter of 2017, compared to $267,000 in the second
quarter of 2016 and $10,000 in the first quarter of 2017.
C. Restructuring charges. Management excludes restructuring
charges when evaluating its operating performance because the
Company does not incur such charges on a predictable basis and
exclusion of such charges enables more consistent evaluation of the
Company’s operating performance. Restructuring charges were zero in
the second quarter of 2017, $423,000 in the second quarter of 2016,
and zero in the first quarter of 2017.
The Company believes that non-GAAP financial 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, 2017 (1)
2016 (2) Assets Current assets:
Cash, cash equivalents and short-term investments $ 51,659 $ 53,409
Accounts receivable, net 9,561 9,567 Prepaid expenses and other
current assets 723 1,211
Total
current assets 61,943 64,187 Property and equipment, net 1,411
1,706 Intangible assets, net 250 266 Other assets 1,005
1,070
Total assets $ 64,609
$ 67,229
Liabilities and Stockholders'
Equity Current liabilities: Accounts payable and accrued
compensation $ 3,298 $ 4,059 Other accrued liabilities 1,848 2,496
Short-term deferred revenue 2,566 2,759
Total current liabilities 7,712 9,314 Long-term deferred
revenue 66 106 Other long-term liabilities 510
501
Total liabilities 8,288
9,921 Stockholders' equity: Common stock 2 2
Additional paid-in-capital 267,694 267,400 Treasury stock (5,297 )
(5,295 ) Accumulated other comprehensive loss (2,157 ) (2,329 )
Accumulated deficit (203,921 ) (202,470 )
Total
stockholders' equity 56,321 57,308
Total liabilities and stockholders' equity $ 64,609
$ 67,229 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, 2016.
SUPPORT.COM, INC. GAAP
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in
thousands, except per share amounts) (unaudited)
Three Months Ended Six
Months Ended June 30, 2017 (1) March 31,
2017 June 30, 2016 June 30, 2017 (1)
June 30, 2016 Revenue: Services $ 13,147 $
12,915 $ 13,609 $ 26,062 $ 28,892 Software and other 1,360
1,375 1,320 2,735
2,634
Total revenue 14,507
14,290 14,929 28,797
31,526
Cost of revenue: Cost of
services (3) 10,990 11,211 12,696 22,201 26,556 Cost of software
and other (3) 92 94 138
186 257
Total cost of revenue
11,082 11,305 12,834
22,387 26,813 Gross profit
3,425 2,985 2,095
6,410 4,713
Operating expenses:
Research and development (3) 875 923 1,420 1,798 3,128 Sales and
marketing (3) 583 807 1,866 1,390 3,938 General and administrative
(3) 2,235 2,616 4,235 4,851 7,483 Amortization of intangible assets
and other 6 10 267 16 534 Restructuring charges -
- 423 - 423
Total operating expenses 3,699 4,356
8,211 8,055 15,506
Loss from operations (274 ) (1,371 ) (6,116 ) (1,645
) (10,793 ) Interest income and other, net 154
133 126 287 259
Loss from continuing operations, before income
taxes (120 ) (1,238 ) (5,990 ) (1,358 ) (10,534 )
Income tax provision (benefit) 45 48
36 93 88
Loss from continuing operations, after income taxes (165 )
(1,286 ) (6,026 ) (1,451 ) (10,622 )
Income from
discontinued operations, net of income taxes -
- - - 284
Net loss $ (165 ) $ (1,286 ) $ (6,026 ) $ (1,451 ) $
(10,338 )
Loss from continuing operations, after
income taxes (4) Basic $ (0.01 ) $ (0.07 ) $ (0.33 ) $ (0.08 )
$ (0.58 ) Diluted $ (0.01 ) $ (0.07 ) $ (0.33 ) $ (0.08 ) $ (0.58 )
Income (loss) from discontinued operations, net of income
taxes (4) Basic $ (0.00 ) $ (0.00 ) $ (0.01 ) $ (0.00 ) $ 0.02
Diluted $ (0.00 ) $ (0.00 ) $ (0.01 ) $ (0.00 ) $ 0.02
Shares used in computing per share amounts:
(4) Basic 18,591 18,557
18,373 18,574 18,334 Diluted
18,591 18,557 18,373
18,574 18,334 Note 3:
Includes stock-based compensation expense as follows:
Three Months Ended Six Months Ended June 30,
2017 March 31, 2017 June 30, 2016 June 30,
2017 June 30, 2016 Cost of revenue: Cost of
services $ 22 $ 42 $ 35 $ 64 $ 91 Cost of software and other - 3 -
3 2
Operating expenses: Research and development 39 41 92 80
190 Sales and marketing 15 7 (42 ) 22 42 General and administrative
101 (3 ) 369 98
790 Total $ 177 $ 90 $ 454 $ 267
$ 1,115 Note 4: On January 20,
2017, the Company implemented a 1-for-3 reverse stock split. All
share and per share information contained within this press release
has been retroactively adjusted to reflect the effects of the
reverse stock split.
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, 2017 March 31, 2017 June 30,
2016 June 30, 2017 June 30, 2016 GAAP
cost of revenue $ 11,082 $ 11,305 $ 12,834 $ 22,387 $ 26,813
Stock-based compensation expense (Cost of revenue portion only)
(22 ) (45 ) (35 ) (67 ) (93 )
Non-GAAP cost of revenue $ 11,060 $ 11,260 $ 12,799 $ 22,320
$ 26,720
GAAP operating expenses $ 3,699 $ 4,356 $
8,211 $ 8,055 $ 15,506 Stock-based compensation expense (Excl. cost
of revenue portion) (155 ) (45 ) (419 ) (200 ) (1,022 )
Amortization of intangible assets and other (6 ) (10 ) (267 ) (16 )
(534 ) Restructuring charges - -
(423 ) - (423 )
Non-GAAP operating
expenses $ 3,538 $ 4,301 $ 7,102 $ 7,839 $ 13,527
GAAP loss from continuing operations, after income taxes $
(165 ) $ (1,286 ) $ (6,026 ) $ (1,451 ) $ (10,622 ) Stock-based
compensation expense 177 90 454 267 1,115 Amortization of
intangible assets and other 6 10 267 16 534 Restructuring charges
- - 423 -
423 Total impact of Non-GAAP exclusions 183
100 1,144 283
2,072
Non-GAAP income (loss) from continuing
operations, after income taxes $ 18 $ (1,186 ) $ (4,882
) $ (1,168 ) $ (8,550 )
Loss from continuing operations,
after income taxes (4) Basic - GAAP $ (0.01 ) $ (0.07 ) $ (0.33
) $ (0.08 ) $ (0.58 ) Basic - Non-GAAP $ 0.00 $ (0.06 ) $
(0.27 ) $ (0.06 ) $ (0.47 ) Diluted - GAAP $ (0.01 ) $ (0.07
) $ (0.33 ) $ (0.08 ) $ (0.58 ) Diluted - Non-GAAP $ 0.00 $
(0.06 ) $ (0.27 ) $ (0.06 ) $ (0.47 )
Shares used in computing
per share amounts (GAAP) (4) Basic 18,591
18,557 18,373 18,574
18,334 Diluted 18,591 18,557
18,373 18,574 18,334
Shares used in computing per share amounts (Non-GAAP) (4)
Basic 18,591 18,557 18,373
18,574 18,334 Diluted
18,689 18,557 18,373
18,574 18,334 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, and
restructuring charges. 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. 2017 amounts are subject to
completion of management’s customary closing and review procedures.
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version on businesswire.com: http://www.businesswire.com/news/home/20170809006101/en/
Investor ContactSupport.comDean Morris, +1
650-556-8574Investor RelationsDean.Morris@support.com
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