Science & Technology
Science and Technology
Science and Technology
Thu, February 12, 2009
Wed, February 11, 2009 SupportSoft, Inc.: SupportSoft Reports Fourth Quarter and Fiscal Year 2008 Financial Results
REDWOOD CITY, CA--(Marketwire - February 11, 2009) - SupportSoft, Inc. (
Q4 and 2008 Financial Summary
Total revenue for the fourth quarter of 2008 was $12.8 million, as compared to $12.8 million in the third quarter of 2008 and $12.6 million in the fourth quarter of 2007.
For the fourth quarter of 2008, Consumer revenue was $3.1 million as compared to $2.1 million in the third quarter of 2008 and $349,000 in the year ago quarter.
For the fourth quarter of 2008, Enterprise revenue was $9.7 million as compared to $10.7 million in the third quarter of 2008 and $12.3 million in the year ago quarter. Fourth quarter 2008 Enterprise revenue consisted of $3.1 million of license revenue, $4.0 million of maintenance revenue and $2.7 million of service revenue.
Total revenue for 2008 was $48.9 million as compared to $47.8 million in 2007. Consumer revenue for 2008 was $6.8 million, an increase of 549% from $1.1 million in 2007. Enterprise revenue was $42.1 million, a decrease of 10% from $46.8 million in 2007.
On a GAAP basis, net loss for the fourth quarter of 2008 was $6.8 million, or $(0.15) per share, compared to a net loss of $4.3 million, or $(0.09) per share, in the third quarter of 2008 and $5.8 million, or $(0.13) per share, in the fourth quarter of 2007. GAAP net loss for 2008 was $19.1 million, or $(0.41) per share, compared to a GAAP net loss of $21.4 million, or $(0.47) per share, for 2007.
Non-GAAP net loss for the fourth quarter of 2008 was $3.4 million, or $(0.07) per share, compared to a non-GAAP net loss of $3.1 million, or $(0.07) per share, in the third quarter of 2008 and $1.4 million, or $(0.03) per share, in the fourth quarter of 2007. Non-GAAP net loss for 2008 was $11.9 million, or $(0.26) per share, compared to a non-GAAP net loss of $12.4 million, or $(0.27) per share, for 2007. Non-GAAP results exclude stock compensation expenses, amortization/write-down of intangible assets and restructuring and impairment charges. These items totaled $3.3 million for the fourth quarter of 2008, $1.2 million for the third quarter of 2008, $4.4 million for the fourth quarter of 2007, $7.2 million in 2008, and $8.9 million in 2007. A reconciliation of GAAP to non-GAAP results is presented in the tables below.
At December 31, 2008 cash and total investments (including the put option relating to auction rate securities) were $95.0 million, compared to $98.3 million at September 30, 2008.
"We finished the year with a solid fourth quarter featuring substantial Consumer revenue growth and continued non-GAAP profitability in Enterprise," commented Josh Pickus, CEO of SupportSoft. "Looking forward to 2009, our key goals are achieving revenue growth and gross margin improvement for our Consumer segment, and maintaining non-GAAP profitability on lower revenue while introducing new products for our Enterprise segment," said Pickus.
Recent Company Highlights
Consumer Segment -- Consumer revenue growth of 47% from third quarter 2008 -- Office Depot 2008 Innovation Award for contributions to fast growing Tech Depot Services program -- Progress in partner relationships with leading retailers and anti-virus provider -- Launch of subscription offerings through support.com Enterprise Segment -- Continued non-GAAP profitability -- License transactions with Verizon, Telefonica and digital service providers in Denmark, Switzerland, Italy and India -- Introduction of new Dynamic Agent product Other -- Significant cost reductions through restructuring actions
Conference Call
SupportSoft will host a conference call discussing the Company's fourth quarter 2008 results and first quarter 2009 activities on Wednesday, February 11, 2009 starting at 4:30 p.m. EST (1:30 p.m. PST). A live audio webcast and replay of the call will be available at the Investor Relations section of SupportSoft's Web Site at [ http://www.supportsoft.com/Company/investor_relations.html ]. The live call may be accessed by dialing (888) 208-1812 (domestic) or (719) 325-2418 (international) and referencing passcode 2756146. A replay of the call can also be accessed by dialing (888) 203-1112 (domestic) or (719) 457-0820 (international), and referencing passcode: 2756146.
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," "goal," and similar expressions often identify such forward-looking statements. Forward-looking statements in this press release include, without limitation, the following: expectations regarding the progress of our collaboration with partners (including Office Depot) and the anticipated impact of those relationships on our business; anticipated increases in revenue and gross margin from our consumer operations; maintaining segment profitability in our enterprise segment despite anticipated decreases in revenue; introductions of new products in our enterprise segment; assessments of our future growth; and our future plans, investments and opportunities.
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: our dependence on our third-party alliances and partnerships to help us provide our software and services to consumers; the potential that such partnerships take longer than we expect to produce revenue or do not produce revenue; the potential that delays or cancellation of third-party programs (including Office Depot) that include our software and services could decrease our revenues; our ability to achieve broad adoption and acceptance of our offerings; the impact of the global macroeconomic downturn on both segments of our business; our ability to profitably manage our enterprise business, including our professional services organization and its cost structure; the potential for a decrease in revenue in our enterprise segment caused by our reliance on a few large transactions that generally occur at the end of reporting periods; long sales cycles; the ability of our software to operate with hardware and software platforms that are used by our customers now or in the future; our ability to compete successfully in the consumer technology support market and the support automation software market; our limited experience in servicing consumers directly; our ability to manage headcount changes including reductions in force; our ability to manage home-based consumer technology support agents; our ability to successfully integrate any acquisitions; expectations regarding our international business; fluctuation in our quarterly results; diversion of management attention to strategic matters or litigation; our ability to accurately predict performance; our ability to attract and retain key employees; our ability to obtain sufficient patent protection; further weakness or changes in the market for auction rate securities; a determination, upon completion of further quarterly closing and review procedures, that the financial results for the first quarter are different than the results set forth in this press release; 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 13, 2008. You can locate these filings on the Investor Relations page of our website, [ http://www.supportsoft.com/Company/investor_relations.html ].
Statements included in this release are based upon information known to SupportSoft as of the date of this release, and SupportSoft assumes no obligation to publicly revise or update any forward-looking statement for any reason.
Disclosure Regarding Non-GAAP Financial Measures
SupportSoft has excluded stock-based compensation expenses, amortization/write-down of intangible assets and restructuring and impairment charges from its GAAP results in order to determine the non-GAAP financial measures of net income/loss and net income/loss per share. Each of the excluded items (as such items are applicable to particular time periods) is discussed in more detail 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. 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.
Amortization/write-down 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 comprised 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.
SupportSoft 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, SupportSoft believes the non-GAAP measures provide useful supplemental information for investors to evaluate our operating results in the same manner as the research analysts that follow SupportSoft, 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.
Amounts related to the fourth quarter of 2008 are subject to completion of management's and its independent registered public accounting firm's customary closing and review procedures.
About SupportSoft
SupportSoft (
SUPPORTSOFT, INC. GAAP CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share amounts) (unaudited) Three Months Ended December September December Year Ended 31, 30, 31, December 31, --------- --------- --------- -------------------- 2008 (1) 2008 (1) 2007 (2) 2008 (1) 2007 --------- --------- --------- --------- --------- Revenues: License $ 3,081 $ 2,861 $ 4,055 $ 11,813 $ 15,780 Maintenance 3,997 3,987 4,050 15,881 16,084 Services 2,661 3,822 4,166 14,365 14,888 Consumer 3,107 2,110 349 6,811 1,050 --------- --------- --------- --------- --------- Total revenues 12,846 12,780 12,620 48,870 47,802 Costs and expenses: Cost of license 134 60 76 337 218 Cost of maintenance 420 454 554 1,848 2,424 Cost of services 2,587 3,291 3,801 12,775 14,953 Cost of consumer 3,870 2,561 1,143 9,494 4,433 Amortization/ write-down of intangible assets 41 71 1,999 202 2,815 Research and development 1,936 2,079 2,067 8,175 8,771 Sales and marketing 5,048 5,179 6,146 21,458 27,648 General and administrative 2,309 2,245 1,650 8,691 7,631 Restructuring and impairment charges 1,885 - 1,172 1,885 1,190 Stock-based compensation 1,417 1,154 1,211 5,078 4,943 --------- --------- --------- --------- --------- Total costs and expenses 19,647 17,094 19,819 69,943 75,026 Loss from operations (6,801) (4,314) (7,199) (21,073) (27,224) Interest income and other, net 177 158 1,506 2,506 6,526 --------- --------- --------- --------- --------- Income (Loss) before income taxes (6,624) (4,156) (5,693) (18,567) (20,698) Provision for income taxes (164) (184) (113) (539) (671) --------- --------- --------- --------- --------- Net loss $ (6,788) $ (4,340) $ (5,806) $ (19,106) $ (21,369) --------- --------- --------- --------- --------- Net loss per share: Basic $ (0.15) $ (0.09) $ (0.13) $ (0.41) $ (0.47) Diluted $ (0.15) $ (0.09) $ (0.13) $ (0.41) $ (0.47) --------- --------- --------- --------- --------- Shares used in computing per share amounts: Basic 46,142 46,119 46,069 46,098 45,610 --------- --------- --------- --------- --------- Diluted 46,142 46,119 46,069 46,098 45,610 --------- --------- --------- --------- --------- Allocation of restructuring and impairment charges: Cost of maintenance - - 82 - 82 Cost of service 212 - 58 212 66 Cost of consumer 5 - 169 5 175 Research and development 137 - 160 137 160 Sales and marketing 1,006 - 675 1,006 679 General and administrative 525 - 28 525 28 --------- --------- --------- --------- --------- Total restructuring and impairment charges 1,885 - 1,172 1,885 1,190 ========= ========= ========= ========= ========= Allocation of stock-based compensation: Cost of maintenance 23 19 21 82 80 Cost of service 180 133 193 665 757 Cost of consumer 47 21 - 116 - Research and development 173 152 143 584 510 Sales and marketing 517 460 454 1,841 1,885 General and administrative 477 369 400 1,790 1,711 --------- --------- --------- --------- --------- Total stock-based compensation 1,417 1,154 1,211 5,078 4,943 ========= ========= ========= ========= ========= Note 1: 2008 ammounts are subject to completion of management's and its independent registered public accounting firm's customary closing and review procedures. Note 2: In January 2008, we reorganized the Company and created two business segments, Consumer and Enterprise. Prior to 2008, the Company conducted its business in one segment. Revenue and cost of revenue are provided on a segment basis, all other operating expenses are incorporated into the overall company results for these periods. See the segment information table included in this press release for more information. SUPPORTSOFT, INC. RECONCILIATION OF GAAP FINANCIAL RESULTS TO NON-GAAP FINANCIAL MEASURES (in thousands, except per share amounts) (unaudited) Three Months Ended December September December Year Ended 31, 30, 31, December 31, --------- --------- --------- -------------------- 2008 2008 2007 2008 2007 --------- --------- --------- --------- --------- GAAP costs and expenses $ 19,647 $ 17,094 $ 19,819 $ 69,943 $ 75,026 Amortization/ write-down of intangible assets (41) (71) (1,999) (202) (2,815) Restructuring and impairment charges (1,885) - (1,172) (1,885) (1,190) Stock-based compensation (1,417) (1,154) (1,211) (5,078) (4,943) --------- --------- --------- --------- --------- Non-GAAP costs and expenses 16,304 15,869 15,437 62,778 66,078 GAAP loss from operations (6,801) (4,314) (7,199) (21,073) (27,224) Amortization/ write-down of intangible assets 41 71 1,999 202 2,815 Restructuring and impairment charges 1,885 - 1,172 1,885 1,190 Stock-based compensation 1,417 1,154 1,211 5,078 4,943 --------- --------- --------- --------- --------- Non-GAAP loss from operations (3,458) (3,089) (2,817) (13,908) (18,276) GAAP income (loss) before income taxes (6,624) (4,156) (5,693) (18,567) (20,698) Amortization/ write-down of intangible assets 41 71 1,999 202 2,815 Restructuring and impairment charges 1,885 - 1,172 1,885 1,190 Stock-based compensation 1,417 1,154 1,211 5,078 4,943 --------- --------- --------- --------- --------- Non-GAAP income (loss) before income taxes (3,281) (2,931) (1,311) (11,402) (11,750) GAAP net loss $ (6,788) $ (4,340) $ (5,806) $ (19,106) $ (21,369) Amortization/ write-down of intangible assets 41 71 1,999 202 2,815 Restructuring and impairment charges 1,885 - 1,172 1,885 1,190 Stock-based compensation 1,417 1,154 1,211 5,078 4,943 --------- --------- --------- --------- --------- Non-GAAP net income (loss) $ (3,445) $ (3,115) $ (1,424) $ (11,941) $ (12,421) ========= ========= ========= ========= ========= Basic net income (loss) per share GAAP $ (0.15) $ (0.09) $ (0.13) $ (0.41) $ (0.47) Non-GAAP $ (0.07) $ (0.07) $ (0.03) $ (0.26) $ (0.27) Diluted net income (loss) per share GAAP $ (0.15) $ (0.09) $ (0.13) $ (0.41) $ (0.47) Non-GAAP $ (0.07) $ (0.07) $ (0.03) $ (0.26) $ (0.27) Shares used in computing per share amounts (GAAP) Basic 46,142 46,119 46,069 46,098 45,610 Diluted 46,142 46,119 46,069 46,098 45,610 Shares used in computing per share amounts (Non-GAAP) Basic 46,142 46,119 46,069 46,098 45,610 Diluted 46,142 46,119 46,069 46,098 45,610 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 and impairment charges, stock-based compensation and amortization/write-down of intangible assets 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. 2008 amounts are subject to completion of management's and its independent registered public accounting firm's customary closing and review procedures. SUPPORTSOFT, INC. GAAP CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands) December 31, September 30, December 31, 2008 (1) 2008 (1) 2007 (2) ------------ ------------ ------------ (unaudited) (unaudited) (audited) Assets Current assets: Cash, cash equivalents and short-term investments $ 72,090 $ 76,069 $ 112,940 Accounts receivable, net 10,384 8,157 10,087 Prepaid expenses and other current assets 1,642 2,153 2,531 ------------ ------------ ------------ Total current assets 84,116 86,379 125,558 ------------ ------------ ------------ Long-term investments 15,766 22,212 - Auction rate security put option 7,148 - - Property and equipment, net 1,275 1,675 2,086 Goodwill 12,646 12,646 9,792 Purchased technology 1,318 1,375 - Intangible assets, net 417 459 340 Other assets 900 573 682 ------------ ------------ ------------ Total assets $ 123,586 $ 125,319 $ 138,458 ============ ============ ============ Liabilities and Stockholders' Equity Liabilities: Accounts payable and accrued compensation $ 3,019 $ 2,384 $ 2,781 Other accrued liabilities 3,534 3,032 3,421 Deferred revenue 10,119 8,784 10,502 Other long-term liabilities 1,468 1,101 892 ------------ ------------ ------------ Total liabilities $ 18,140 $ 15,301 $ 17,596 ------------ ------------ ------------ Stockholders' equity: Common stock $ 5 $ 5 $ 5 Additional paid-in-capital 217,647 216,230 212,188 Accumulated other comprehensive loss (2,541) (3,340) (772) Accumulated deficit (109,665) (102,877) (90,559) ------------ ------------ ------------ Total stockholders' equity $ 105,446 $ 110,018 $ 120,862 ------------ ------------ ------------ Total liabilities and stockholders' equity $ 123,586 $ 125,319 $ 138,458 ============ ============ ============ Note 1: 2008 amounts are subject to completion of management's and its independent registered public accounting firm's customary closing and review procedures. Note 2: Derived from audited financial statements. SUPPORTSOFT, INC. SEGMENT INFORMATION (in thousands) (unaudited) Three Months Ended December 31, 2008 ----------------------------------------------- Consolidated Enterprise Consumer Corporate Total ----------- --------- --------- ------------ Revenue: License $ 3,081 $ - $ - $ 3,081 Maintenance 3,997 - - 3,997 Services 2,661 - - 2,661 Consumer - 3,107 - 3,107 ----------- --------- --------- ------------ Total revenue 9,739 3,107 - 12,846 ----------- --------- --------- ------------ Segment operating costs and expenses (6,688) (7,307) - (13,995) Amortization of intangible assets - (41) - (41) Common corporate expenses - - (2,309) (2,309) Restructuring and impairment charges (690) (670) (525) (1,885) Stock-based compensation (523) (417) (477) (1,417) Interest income and other, net - - 177 177 ----------- --------- --------- ------------ Income (loss) before income taxes $ 1,838 $ (5,328) $ (3,134) $ (6,624) =========== ========= ========= ============ Twelve Months Ended December 31, 2008 ----------------------------------------------- Consolidated Enterprise Consumer Corporate Total ----------- --------- --------- ------------ Revenue: License $ 11,813 $ - $ - $ 11,813 Maintenance 15,881 - - 15,881 Services 14,365 - - 14,365 Consumer - 6,811 - 6,811 ----------- --------- --------- ------------ Total revenue 42,059 6,811 - 48,870 ----------- --------- --------- ------------ Segment operating costs and expenses (29,758) (24,329) - (54,087) Amortization of intangible assets (90) (112) - (202) Common corporate expenses - - (8,691) (8,691) Restructuring and impairment charges (690) (670) (525) (1,885) Stock-based compensation (1,789) (1,499) (1,790) (5,078) Interest income and other, net - - 2,506 2,506 ----------- --------- --------- ------------ Income (loss) before income taxes $ 9,732 $ (19,799) $ (8,500) $ (18,567) =========== ========= ========= ============ Consumer Segment. In our Consumer segment, we provide premium technology support to consumers over the phone and the internet for a fee. We offer our services to consumers through retailers and other companies who provide technology products and services to consumers. We also provide our services directly to consumers through [ www.support.com ]. Enterprise Segment. Our Enterprise customers use our software to resolve technical problems for their customers. Digital service providers use our products to automate the installation, activation and verification of broadband services, to reduce the cost and improve the quality of support for customers, and to enable the remote management of devices located at customer premises. Corporate IT departments and IT outsourcing firms use our software to improve the cost-effectiveness and efficiency of their support through an integrated portfolio of proactive service, self service and assisted service products. Corporate. This category of common corporate expenses such as general and administrative expenses, interest income, and other income or expenses, which are items that we do not allocate to our business segments. 2008 amounts are subject to completion of management's and its independent public accounting firm's customary closing and review procedures.
