support.com Reports Second Quarter 2009 Financial Results
- Press Release
- Source: support.com
- On 4:02 pm EDT, Thursday July 30, 2009
REDWOOD CITY, CA--(Marketwire - 07/30/09) - support.com� (NASDAQ:SPRT - News), a leading provider of online technology services, today reported unaudited financial results for its second quarter ended June 30, 2009.
Q2 2009 Financial Summary
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.
Continuing Operations
For the second quarter of 2009, Consumer revenue (revenue from continuing operations) was $3.4 million, as compared to $891,000 in the second quarter of 2008 and $3.6 million in the first quarter of 2009.
On a GAAP basis, net loss from continuing operations for the second quarter of 2009 was $4.2 million, or $(0.09) per share, compared to $7.8 million, or $(0.17) per share, in the second quarter of 2008, and $8.5 million, or $(0.18) per share, in the first quarter of 2009.
Non-GAAP net loss from continuing operations for the second quarter of 2009 was $6.1 million, or $(0.13) per share, compared to $6.9 million, or $(0.15) per share, in the second quarter of 2008, and $7.6 million, or $(0.16) per share, in the first quarter of 2009.
Non-GAAP results from continuing operations exclude stock compensation expense, amortization of intangible assets, restructuring and impairment charges and the income tax impact of the sale of the Enterprise business on continuing operations. These items impacted results from continuing operations by $(1.8) million for the second quarter of 2009, $910,000 for the second quarter of 2008, and $887,000 for the first quarter of 2009. A reconciliation of GAAP to non-GAAP results is presented in the tables below.
"We're excited to begin our life as support.com, a pure play online technology services company," said Josh Pickus, President and CEO. "We have a substantial market opportunity and the technology, resources and talent to build a truly differentiated business to seize that opportunity."
Recent Consumer Highlights
�
-- Sale of Enterprise business completed
-- Staples program grows with service card offerings
-- Major consumer electronics company selects support.com for technology
services program
-- Office Depot program extends offerings to include subscriptions
-- Direct support.com business grows on AVG referral partnership strength
-- Technology enhancements drive service delivery efficiencies
Overall Results
On a GAAP basis, overall net income for the second quarter of 2009 was $2.2 million, or $0.05 per share, compared to net loss of $4.3 million, or $(0.09) per share, in the second quarter of 2008, and a net loss $7.4 million, or $(0.16) per share, in the first quarter of 2009. GAAP results reflect income from discontinued operations and the sale of the Enterprise business.
Balance Sheet Information
At June 30, 2009 cash and total investments including a put option relating to auction rate securities were $103.1 million, or $2.22 per share, compared to $89.9 million, or $1.94 per share, at March 31, 2009.
The Company's deferred revenue balance from Consumer operations grew sequentially as a result of subscription sales.
Conference Call
support.com will host a conference call discussing the Company's second quarter 2009 results and go forward plans on Thursday, July 30, 2009 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 Web Site at http://corp.support.com/node/19. The live call may be accessed by dialing (888) 539-3679 (domestic) or (719) 325-2249 (international) and referencing passcode 4102806. A replay of the call can also be accessed by dialing (888) 203-1112 (domestic) or (719) 457-0820 (international), and referencing passcode: 4102806.
About support.com
support.com, Inc. (NASDAQ:SPRT - News) provides Instant Technology Relief� to consumers and small businesses via channel partners and the www.support.com site. support.com is a pure play technology enabled services company that is changing the way people manage their technology. Until recently consumers and small businesses dealt with technology issues with a trip to the computer repair shop or a long wait for a technician. Now support.com's expert North American Solutions Engineers can provide a quick, cost-effective and satisfying technology support experience over the internet and the phone using support.com's advanced technology platform. By serving as a trusted advisor, support.com is committed to helping consumers and small businesses realize the promise of their technology.
support.com and the SupportMan Logo 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.
Cautionary Note Regarding Forward-Looking Statements
This press release contains forward-looking statements regarding our expected future performance as well as assumptions underlying or relating to such statements of expectation, all of which are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. We are subject to many risks and uncertainties that may materially affect our business and future performance and cause those forward-looking statements to be inaccurate. All statements in this press release, other than statements that are purely historical, are forward-looking statements. Words such as "outlook," "anticipates," "expects," "believes," "intends," "plans," "seeks," "forecasts," "estimates" and similar expressions often identify such forward-looking statements. Forward-looking statements in this press release include, without limitation, the following: statements about the progress of support.com's technology and Consumer partnerships, the market opportunity for support.com's services and support.com's technology, resources and talent.
Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those discussed in these forward-looking statements. These risks and uncertainties include, but are not limited to: the potential for second quarter 2009 results to change based on the completion of the quarterly closing and review by support.com's independent registered public accounting firm; our lack of profitability in our Consumer business, which is our sole business following the sale of our Enterprise business; our dependence on a limited number of channel partners for our consumer revenue; the potential that any of support.com's consumer partnerships take longer to produce revenue or do not produce revenue; our ability to improve service delivery efficiency; our ability to successfully transition divestitures and acquisitions; the possibility that restructuring actions and other cost reduction measures may not be effective as planned; as well as other risks detailed from time to time in our SEC filings, including those described in the "Risk Factors" section in our most recent Annual Report on Form 10-K filed with the SEC on March 11, 2009. You can locate these filings on the Investor Relations page of our website: http://corp.support.com/node/34.
Statements included in this release are based upon information known to support.com as of the date of this release, and support.com assumes no obligation to publicly revise or update any statement for any reason.
Disclosure Regarding Non-GAAP Financial Measures
support.com has excluded stock-based compensation expenses, amortization of intangible assets and restructuring and impairment charges, and the income tax impact of the sale of the Enterprise business on continuing operations from its GAAP results in order to determine the non-GAAP financial measures of net loss and net loss per share. Additional information is provided below.
Stock-based compensation -- we believe that the non-GAAP measures, excluding stock-based compensation expenses, when viewed in addition to and not in lieu of our reported GAAP results, assist investors in understanding our results of operations. Stock-based compensation expenses do not require cash settlement and are not used by management to assess the performance of the Company's business.
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.
Restructuring and impairment charges -- we believe the non-GAAP measures, excluding restructuring and impairment charges, provide meaningful supplemental information to investors in understanding our ongoing operational costs and expenses, without the broad-based termination costs that comprise our restructuring expense. 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.
support.com uses these non-GAAP financial measures internally to evaluate its performance from period to period and against the performance of other software companies, many of which present similar non-GAAP financial measures. We also believe that investors benefit from seeing "through the eyes of management" as our operating budgets and compensation programs are based on the non-GAAP financial measures we present in this press release.
Finally, support.com believes the non-GAAP measures provide useful supplemental information for investors to evaluate our operating results in the same manner as any research analyst that follows support.com, all of whom present non-GAAP projections in their published reports. As such, the non-GAAP measures provided by the Company facilitate an "apples to apples" comparison of our performance with the financial projections published by the analysts.
The economic substance behind our decision to use such non-GAAP measures is that such measures approximate our controllable operating performance more closely than the most directly comparable GAAP financial measures.
The material limitation associated with the use of the non-GAAP financial measures is that the non-GAAP measures do not reflect the full economic impact of the Company's activities and reliance solely on non-GAAP measures may lead management to make business decisions with unanticipated economic consequences on the Company's GAAP financial results. We compensate for this limitation by not relying exclusively on non-GAAP financial measures to make business decisions. We also continuously reevaluate which non-GAAP measures are appropriate.
�
SUPPORT.COM, INC.
GAAP CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(unaudited)
Three
Months
Three Months Ended Six Months Ended Ended
June 30, June 30, March 31,
---------------- ------------------ -------
2009(1) 2008(2) 2009(1) 2008(2) 2009(1)
------- ------- -------- -------- -------
Revenue:
Consumer revenue $ 3,433 $ 891 $ 7,047 $ 1,593 $ 3,614
------- ------- -------- -------- -------
Total revenue 3,433 891 7,047 1,593 3,614
Costs and expenses:
Cost of consumer revenue 4,280 1,858 8,650 3,100 4,370
Amortization of
intangible assets 42 28 84 28 42
Research and development 1,342 1,392 2,748 2,872 1,406
Sales and marketing 2,273 2,492 4,620 5,448 2,347
General and
administrative 2,980 3,654 6,578 6,953 3,598
------- ------- -------- -------- -------
Total costs and
expenses 10,917 9,424 22,680 18,401 11,763
Loss from operations (7,484) (8,533) (15,633) (16,808) (8,149)
Interest income and other,
net 422 721 121 2,170 (301)
------- ------- -------- -------- -------
Loss from continuing
operations, before income
taxes (7,062) (7,812) (15,512) (14,638) (8,450)
Provision/(benefit) for
income taxes (2,841) 1 (2,837) 1 4
------- ------- -------- -------- -------
Loss from continuing
operations, after income
taxes $(4,221) $(7,813) $(12,675) $(14,639) $(8,454)
------- ------- -------- -------- -------
Income from discontinued
operations, net of income
taxes $ 6,460 $ 3,466 $ 7,518 $ 6,661 $ 1,058
------- ------- -------- -------- -------
Net income/(loss) $ 2,239 $(4,347) $ (5,157) $ (7,978) $(7,396)
======= ======= ======== ======== =======
Earning per share:
Basic and diluted earnings
per share:
Loss from continuing
operations, after
income taxes $ (0.09) $ (0.17) $ (0.27) $ (0.32) $ (0.18)
Discontinued operations,
after income taxes $ 0.14 $ 0.08 $ 0.16 $ 0.14 $ 0.02
------- ------- -------- -------- -------
Net earnings per basic and
diluted share $ 0.05 $ (0.09) $ (0.11) $ (0.17) $ (0.16)
======= ======= ======== ======== =======
Shares used in computing per
share amounts:
Basic 46,360 46,076 46,345 46,065 46,330
======= ======= ======== ======== =======
Diluted 46,360 46,076 46,345 46,065 46,330
======= ======= ======== ======== =======
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, INC.
RECONCILIATION OF GAAP FINANCIAL RESULTS TO NON-GAAP FINANCIAL MEASURES(1)
(in thousands, except per share amounts)
(unaudited)
Three
Months
Three Months Ended Six Months Ended Ended
June 30, June 30, March 31,
---------------- ------------------ -------
2009(1) 2008(2) 2009(1) 2008(2) 2009(1)
------- ------- -------- -------- -------
GAAP costs and expenses from
continuing operations $10,917 $ 9,424 $ 22,680 $ 18,401 $11,763
Amortization of
intangible assets (42) (28) (84) (28) (42)
Restructuring charges (327) - (403) - (76)
Stock-based compensation (634) (882) (1,403) (1,655) (769)
------- ------- -------- -------- -------
Non-GAAP costs and expenses
from continuing operations 9,914 8,514 20,790 16,718 10,876
Detail of costs and operating
expenses from continuing
operations:
GAAP cost of consumer
revenue from continuing
operations 4,280 1,858 8,650 3,100 4,370
Restructuring charges (62) - (62) - -
Stock-based
compensation (27) (36) (69) (48) (42)
------- ------- -------- -------- -------
Non-GAAP cost of consumer
revenue from continuing
operations 4,191 1,822 8,519 3,052 4,328
GAAP cost of research and
development from
continuing operations 1,342 1,392 2,748 2,872 1,406
Restructuring charges (187) - (187) - -
Stock-based
compensation (60) (70) (135) (156) (75)
------- ------- -------- -------- -------
Non-GAAP cost of research
and development from
continuing operations 1,095 1,322 2,426 2,716 1,331
GAAP cost of sales and
marketing from
continuing operations 2,273 2,492 4,620 5,448 2,347
Restructuring charges (298) - (304) - (6)
Stock-based
compensation (160) (248) (424) (506) (264)
------- ------- -------- -------- -------
Non-GAAP cost of sales
and marketing from
continuing operations 1,815 2,244 3,892 4,942 2,077
GAAP cost of general and
administrative from
continuing operations 2,980 3,654 6,578 6,953 3,598
Restructuring charges 220 - 150 - (70)
Stock-based
compensation (387) (528) (775) (945) (388)
------- ------- -------- -------- -------
Non-GAAP cost of general
and administrative from
continuing operations 2,813 3,126 5,953 6,008 3,140
GAAP operating income/(loss)
from continuing operations (7,484) (8,533) (15,633) (16,808) (8,149)
Amortization of
intangible assets 42 28 84 28 42
Restructuring charges 327 - 403 - 76
Stock-based compensation 634 882 1,403 1,655 769
------- ------- -------- -------- -------
Non-GAAP operating
income/(loss) from
continuing operations (6,481) (7,623) (13,743) (15,125) (7,262)
GAAP income/(loss) from
continuing operations
before income taxes (7,062) (7,812) (15,512) (14,638) (8,450)
Amortization of
intangible assets 42 28 84 28 42
Restructuring charges 327 - 403 - 76
Stock-based compensation 634 882 1,403 1,655 769
------- ------- -------- -------- -------
Non-GAAP income/(loss) from
continuing operations
before income taxes (6,059) (6,902) (13,622) (12,955) (7,563)
GAAP net income/(loss) from
continuing operations $(4,221) $(7,813) $(12,675) $(14,639) $(8,454)
Amortization of
intangible assets 42 28 84 28 42
Restructuring charges 327 - 403 - 76
Stock-based compensation 634 882 1,403 1,655 769
Income taxes benefit (2,841) - (2,841) - -
------- ------- -------- -------- -------
Non-GAAP net income/(loss)
from continuing operations $(6,059) $(6,903) $(13,626) $(12,956) $(7,567)
======= ======= ======== ======== =======
GAAP income/(loss) from
discontinuing operations,
net of income taxes $ 6,460 $ 3,466 $ 7,518 $ 6,661 $ 1,058
Amortization of
intangible assets - 30 - 60 -
Restructuring charges 17 - 838 - 821
Stock-based compensation 336 451 755 852 419
------- ------- -------- -------- -------
Non-GAAP income/(loss) from
discontinued operations,
net of income taxes $ 6,813 $ 3,947 $ 9,111 $ 7,573 $ 2,298
======= ======= ======== ======== =======
Basic and diluted net loss
per share from continuting
operations
GAAP $ (0.09) $ (0.17) $ (0.27) $ (0.32) $ (0.18)
Non-GAAP $ (0.13) $ (0.15) $ (0.29) $ (0.28) $ (0.16)
Basic net income/(loss) per
share from discontinued
operations
GAAP $ 0.14 $ 0.08 $ 0.16 $ 0.14 $ 0.02
Non-GAAP $ 0.15 $ 0.09 $ 0.20 $ 0.16 $ 0.05
Shares used in computing per
share amounts (GAAP)
Basic 46,360 46,076 46,345 46,065 46,330
Diluted 46,360 46,076 46,345 46,065 46,330
Shares used in computing per
share amounts (Non-GAAP)
Basic 46,360 46,076 46,345 46,065 46,330
Diluted 46,360 46,076 46,345 46,065 46,330
Note 1: 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 restructuring charges, stock-
based compensation, amortization of intangible assets, and the income tax
benefit from the sale of the Enterprise business from the GAAP financial
results. The Company believes that the 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.
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, INC.
GAAP CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
June 30, December 31,
2009(1) 2008(2)
----------- -----------
(unaudited)
Assets
Current assets:
Cash and short-term investments $ 96,766 $ 85,842
Accounts receivable, net 2,332 2,113
Prepaid expenses and other current assets 1,408 1,128
Auction-rate securities put option 3,424 7,148
Current assets of discontinued operations - 8,785
----------- -----------
Total current assets 103,930 105,016
----------- -----------
Long-term investments 2,930 2,014
Property and equipment, net 699 1,065
Goodwill 2,854 2,854
Intangible assets, net 334 417
Other assets 648 886
Long-term assets of discontinued opertions - 11,334
----------- -----------
Total assets $ 111,395 $ 123,586
=========== ===========
Liabilities and Stockholders' Equity
Liabilities:
Accounts payable $ 170 $ 890
Accrued compensation 1,247 1,469
Other accrued liabilities 4,951 3,534
Deferred revenue 154 22
Current liabilities of discontinued operations - 9,772
----------- -----------
Total current liabilities 6,522 15,687
----------- -----------
Other long-term liabilities 1,394 1,434
Long-term liabilities of discontinued operations - 1,019
----------- -----------
Total liabilities $ 7,916 $ 18,140
----------- -----------
Stockholders' equity:
Common stock $ 5 $ 5
Additional paid-in-capital 220,070 217,647
Accumulated other comprehensive loss (1,774) (2,541)
Accumulated deficit (114,822) (109,665)
----------- -----------
Total stockholders' equity $ 103,479 $ 105,446
----------- -----------
Total liabilities and stockholders' equity $ 111,395 $ 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 persentation from
audited financial statements.
Contact:
Investor Contact
Carolyn Bass and Daniel Wood
Market Street Partners
(415) 445-3235
sprt@marketstreetpartners.com
Media Contact
Monica Diaz
support.com
(650) 556-8909
monica@support.com
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