Support.com, Inc. - FORM 8-K - EX-99.1 - PRESS RELEASE RE 2011-Q2 EARNINGS - July 27, 2011

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8-K - FORM 8-K RE 2011-Q2 EARNINGS - Support.com, Inc.form8k.htm
 
EXHIBIT 99.1
 
Support.com Reports Second Quarter 2011 Financial Results
 
 
REDWOOD CITY, CA -- (Marketwire) -- 07/27/2011 -- 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 second quarter ended June 30, 2011.
 
 
Q2 - 2011 Financial Summary
 
 
For the second quarter of 2011, total revenue was $13.5 million compared to $9.9 million in the second quarter of 2010 and $13.0 million in the first quarter of 2011.
 
 
On a GAAP basis, net loss from continuing operations for the second quarter of 2011 was $4.0 million, or $(0.08) per share, compared to $6.2 million, or $(0.13) per share, in the second quarter of 2010, and $3.1 million, or $(0.07) per share, in the first quarter of 2011.
 
 
Non-GAAP net loss from continuing operations for the second quarter of 2011 was $2.4 million, or $(0.05) per share, compared to $5.1 million, or $(0.11) per share, in the second quarter of 2010, and $2.2 million, or $(0.05) per share, in the first quarter of 2011.
 
 
Non-GAAP results exclude stock-based compensation expense, amortization of intangible assets, restructuring and impairment charges, and acquisition expense. These items impacted results from continuing operations by $1.6 million in the second quarter of 2011, $1.1 million in the second quarter of 2010, and $925,000 in the first quarter of 2011. A reconciliation of GAAP to non-GAAP results is presented in the tables below.
 
 
"We made progress on many fronts in the second quarter," said Josh Pickus, President and Chief Executive Officer. "Our services rollouts, our software expansion and our investment in agent capacity position us well for the second half of the year."
 
 
Balance Sheet Information
 
 
At June 30, 2011 cash, cash equivalents and investments were $62.7 million compared to $72.7 million at March 31, 2011.  Cash usage in the quarter included approximately $8.8 million for the acquisition of SUPERAntiSpyware.
 
Recent Highlights

-- Total revenue for the second quarter grows 36% year over year
-- Software revenue for the second quarter increases 67% year over year
-- Xfinity Signature Support program expands across Comcast footprint
-- OfficeMax renews services agreement
-- New software product RapidStart launches
-- SUPERAntiSpyware acquisition expands software suite

 
Conference Call
 
 
Support.com will host a conference call discussing the Company's second quarter 2011 results on Wednesday, July 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 82802280. A replay of the call can also be accessed by dialing (855) 859-2056 (domestic) or (404) 537-3406 (international) and referencing passcode 82802280.
 
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. 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.
 
Support.com and Personal Technology Experts are trademarks or registered trademarks of Support.com, Inc. or its affiliates in the U.S. and other countries.

 
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, 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 directly 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, and acquisition expense 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 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 $1.1 million in the second quarter of 2011, compared to $1.0 million in the second quarter of 2010 and $805,000 in the first 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 $122,000 in the second quarter of 2011, compared to $93,000 in the second quarter of 2010 and $83,000 in the first 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 $65,000 in the second quarter of 2011, compared to zero in the second quarter of 2010 and $37,000 in the first quarter of 2011.
 
 
D. 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 $348,000 in the second quarter of 2011, compared to zero in the second quarter of 2010 and zero in the first 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)
           
           
     
 June 30,
 
 December 31,
     
2011
(1)
2010
     
(unaudited)
    
Assets
      
Current assets:
      
 
Cash, cash equivalents and short-term investments
 $                  60,031
 
 $                      71,568
 
Accounts receivable, net
                       5,925
 
                           5,133
 
Prepaid expenses and other current assets
                       1,246
 
                           1,617
   
Total current assets
                     67,202
 
                         78,318
Long-term investments
                       2,659
 
                           2,667
Property and equipment, net
                          599
 
                              623
Purchased technology, net
                          185
 
                              226
Goodwill
                     13,621
 
                         10,181
Intangible assets, net
                       6,331
 
                           1,076
Other assets
                          623
 
                              648
           
Total assets
 $                  91,220
 
 $                      93,739
           
Liabilities and Stockholders' Equity
     
Liabilities:
      
 
Accounts payable
 $                       659
 
 $                           536
 
Accrued compensation
                       1,438
 
                           1,248
 
Other accrued liabilities
                       3,994
 
                           3,575
 
Deferred revenue
                       3,211
 
                           1,574
 
Total current liabilities
                       9,302
 
                           6,933
 
Other long-term liabilities
                          835
 
                              749
   
Total liabilities
                     10,137
 
                           7,682
           
Stockholders' equity:
      
 
Common stock
                              5
 
                                  5
 
Additional paid-in-capital
                   231,984
 
                       229,692
 
Accumulated other comprehensive loss
                     (1,416)
  
                          (1,331)
 
Accumulated deficit
                 (149,490)
  
                      (142,309)
   
Total stockholders' equity
                     81,083
 
                         86,057
           
Total liabilities and stockholders' equity
 $                  91,220
 
 $                      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
   
 Six Months Ended
       
 June 30,
   
 June 30,
       
2011
(1)
2010
    
2011
(1)
2010
Revenue:
                
   
Services
 $                   8,442
 
 $                6,882
   
 $                 17,592
 
 $              13,612
   
Software and other
                      5,012
 
                   3,004
   
                      8,892
 
                   6,133
     
Total revenue
                    13,454
 
                   9,886
   
                    26,484
 
                 19,745
                       
Cost of revenue:
                
   
Cost of services
                      6,601
 
                   7,346
   
                    13,418
 
                 12,830
   
Cost of software and other
                         433
 
                      335
   
                         837
 
                      683
     
Total cost of revenue
                      7,034
 
                   7,681
   
                    14,255
 
                 13,513
Gross profit
                      6,420
 
                   2,205
   
                    12,229
 
                   6,232
Operating expenses:
                
   
Amortization of intangible assets
                         122
 
                        93
   
                         205
 
                      181
   
Research and development
                      1,433
 
                   1,281
   
                      2,881
 
                   2,624
   
Sales and marketing
                      5,543
 
                   4,320
   
                    10,328
 
                   8,291
   
General and administrative
                      3,439
 
                   2,887
   
                      6,225
 
                   5,839
     
Total operating expenses
                    10,537
 
                   8,581
   
                    19,639
 
                 16,935
                       
Loss from operations
                    (4,117)
  
                 (6,376)
    
                    (7,410)
  
               (10,703)
                       
Interest income and other, net
                         125
 
                      149
   
                         275
 
                      335
                       
Loss from continuing operations, before income taxes
                    (3,992)
  
                 (6,227)
    
                    (7,135)
  
               (10,368)
                       
Provision for income taxes
                           29
 
                        10
   
                           31
 
                        22
                       
Loss from continuing operations, after income taxes
                    (4,021)
  
                 (6,237)
    
                    (7,166)
  
               (10,390)
                       
                       
Income/(loss) from discontinued operations, net of income taxes
                         (18)
  
                          2
   
                         (15)
  
                        (3)
                       
Net loss
  
 $                 (4,039)
  
 $              (6,235)
    
 $                 (7,181)
  
 $            (10,393)
                       
                       
                       
Basic and diluted earnings per share:
                
 
Loss from continuing operations, after income taxes
 $                   (0.08)
  
 $                (0.13)
    
 $                   (0.15)
  
 $                (0.22)
 
Income/(loss) from discontinued operations, after income taxes
                      (0.00)
  
                     0.00
   
                      (0.00)
  
                   (0.00)
 
Basic and diluted net loss per share
 $                   (0.08)
  
 $                (0.13)
    
 $                   (0.15)
  
 $                (0.22)
                       
Shares used in computing per share amounts:
                
   
Basic
                    48,293
 
                 46,534
   
                    48,237
 
                 46,503
   
Diluted
                    48,293
 
                 46,534
   
                    48,237
 
                 46,503
 
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
 
 Six Months Ended
       
 June 30,
 
 June 30,
       
2011
  
2010
  
2011
  
2010
                     
GAAP cost of revenue from continuing operations
 $                  7,034
 
 $                  7,681
 
 $                14,255
 
 $                13,513
 
Stock-based compensation (Cost of revenue portion only)
                        (59)
  
                         (40)
  
                      (114)
  
                         (80)
 
Restructuring and impairment charges (Cost of revenue portion only)
                          -   
  
                           -   
  
                        (37)
  
                           -   
Non-GAAP cost of revenue from continuing operations
 $                  6,975
 
 $                  7,641
 
 $                14,104
 
 $                13,433
                     
GAAP operating expenses from continuing operations
 $                10,537
 
 $                  8,581
 
 $                19,639
 
 $                16,935
 
Stock-based compensation (Excl. cost of revenue portion)
                   (1,010)
  
                       (992)
  
                   (1,760)
  
                    (1,808)
 
Amortization of intangible assets
  
                      (122)
  
                         (93)
  
                      (205)
  
                       (181)
 
Restructuring and impairment charges (Excl. cost of revenue portion)
                        (65)
  
                           -   
  
                        (65)
  
                           -   
 
Acquisition expense
  
                      (348)
  
                           -   
  
                      (348)
  
                           -   
Non-GAAP operating expenses from continuing operations
 $                  8,992
 
 $                  7,496
 
 $                17,261
 
 $                14,946
                     
GAAP net loss from continuing operations
 $                (4,021)
  
 $                 (6,237)
  
 $                (7,166)
  
 $               (10,390)
 
Stock-based compensation
  
                     1,069
 
                     1,032
 
                     1,874
 
                     1,888
 
Amortization of intangible assets
  
                        122
 
                          93
 
                        205
 
                        181
 
Restructuring and impairment charges
                          65
 
                           -   
  
                        102
 
                           -   
 
Acquisition expense
  
                        348
 
                           -   
  
                        348
 
                           -   
   Total impact of Non-GAAP exclusions
                     1,604
 
                     1,125
 
                     2,529
 
                     2,069
Non-GAAP net loss from continuing operations
 $                (2,417)
  
 $                 (5,112)
  
 $                (4,637)
  
 $                 (8,321)
                     
Basic and diluted net loss per share from continuting operations
        
 
GAAP
  
 $                  (0.08)
  
 $                   (0.13)
  
 $                  (0.15)
  
 $                   (0.22)
 
Non-GAAP
  
 $                  (0.05)
  
 $                   (0.11)
  
 $                  (0.10)
  
 $                   (0.18)
                     
Shares used in computing per share amounts (GAAP)
            
 
Basic
  
                   48,293
 
                   46,534
 
                   48,237
 
                   46,503
 
Diluted
  
                   48,293
 
                   46,534
 
                   48,237
 
                   46,503
                     
Shares used in computing per share amounts (Non-GAAP)
            
 
Basic
  
                   48,293
 
                   46,534
 
                   48,237
 
                   46,503
 
Diluted
  
                   48,293
 
                   46,534
 
                   48,237
 
                   46,503
 
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 and acquisition expense. 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
 
 

Support.com, Inc. Reports