Exhibit 99.1
Support.com Reports Fourth Quarter and Year-End 2009 Financial Results
Revenue and Gross Margin Top Expectations
REDWOOD CITY, CA — (Marketwire) – 2/10/2010 — Support.com® (NASDAQ: SPRT), a leading provider of online care for the digital home, today reported unaudited financial results for its fourth quarter and fiscal year ended December 31, 2009.
Q4 and 2009 Financial Summary
For the fourth quarter of 2009, total revenue was $5.8 million including $0.5 million from the acquisition of Sammsoft, compared to $3.1 million in the fourth quarter of 2008 and $4.6 million in the third quarter of 2009.
On a GAAP basis, net loss from continuing operations for the fourth quarter of 2009 was $3.4 million, or $(0.07) per share, compared to $9.2 million, or $(0.20) per share, in the fourth quarter of 2008, and $5.5 million, or $(0.12) per share, in the third quarter of 2009.
Non-GAAP net loss from continuing operations for the fourth quarter of 2009 was $3.3 million, or $(0.07) per share, compared to $7.1 million, or $(0.15) per share, in the fourth quarter of 2008, and $4.2 million, or $(0.09) per share, in the third quarter of 2009.
Total revenue for 2009 was $17.5 million, an increase of 157% from $6.8 million in 2008. On a GAAP basis, net loss from continuing operations for 2009 was $21.6 million, or $(0.47) per share, compared to $31.7 million, or $(0.69) per share, in 2008. Non-GAAP net loss from continuing operations for 2009 was $21.2 million, or $(0.46) per share, compared to $27.1 million, or $(0.59) per share, in 2008.
Non-GAAP results exclude stock-based compensation expense, amortization of intangible assets, restructuring and impairment charges, acquisition expense and the income tax impact of the disposition of a business unit on continuing operations. These items impacted results from continuing operations by $0.1 million in the fourth quarter of 2009, $2.1 million in the fourth quarter of 2008, and $1.2 million in the third quarter of 2009. On an annual basis, these items impacted results from continuing operations by $0.4 million in 2009 and $4.6 million in 2008. A reconciliation of GAAP to non-GAAP results is presented in the tables below.
“We had a strong fourth quarter, with continued revenue and gross margin growth and decreased operating cash usage,” said Josh Pickus, President and Chief Executive Officer. “We also expanded our offerings to include consumer software products, added AOL as our first partner in the internet service provider channel, and continued our technology leadership with the introduction of full support and optimization for the Windows 7 platform. We are aggressively hiring personal technology experts to support partner demand in 2010.”
Recent Highlights
• | Consumer Services Revenue Grows 17% Sequentially from Q3 to Q4 |
• | Gross Margin on Consumer Services Increases to 24% from 15% in Q3 |
• | Operating Cash Usage Decreases to $3.6 million from $5.6 million in Q3 |
• | Selected by AOL as Technology Services Partner |
• | Acquired Sammsoft, a Provider of Consumer Software Products |
• | Launched Advance Registry Optimizer 2010; Awarded 4.5 Star CNET Review |
• | Introduced Full Support and Optimization for the Windows 7 Platform |
• | Michael Linton, Former Chief Marketing Officer of eBay and Best Buy, Joins Board of Directors |
Balance Sheet Information
At December 31, 2009 cash, cash equivalents and investments, including a put option relating to auction rate securities, were $84.8 million compared to $96.9 million at September 30, 2009. During the quarter, the Company acquired Sammsoft for $8.5 million in cash.
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.
Conference Call
Support.com will host a conference call discussing the Company’s fourth quarter and year-end 2009 results on Wednesday, February 10, 2010 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://corp.support.com/webcastsevents. The live call may be accessed by dialing (888) 811-5448 (domestic) or (913) 312-0943 (international) and referencing passcode 908-5451. A replay of the call can also be accessed by dialing (888) 203-1112 (domestic) or (719) 457-0820 (international), and referencing passcode: 908-5451.
About Support.com
Support.com, Inc. (NASDAQ:SPRT—News) provides Instant Technology Relief® to consumers and microbusinesses. Support.com is a services and software company that is changing the way people manage their technology. Support.com’s North American Personal Technology Experts can provide quick, cost-effective and satisfying technology support over the Internet and the phone using Support.com’s advanced technology platform. Support.com also provides consumer software for the do-it-yourself customer through its recently acquired Sammsoft brand. Support.com, the SupportMan Logo, Sammsoft, and Advanced Registry Optimizer 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.
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, income (loss), earnings (loss) per share, capital expenditures, dividends, capital structure, or other financial items); the plans and objectives of management for future operations, products or services; and future performance in economic terms, products or services, or other any other measures. 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 maintain and grow revenue through new channels and direct-to-consumer, our ability to scale our workforce, our ability to control expenses and achieve profitability, and our ability to successfully integrate acquired products and services. 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, acquisition expense and the income tax impact of the disposition of business units on continuing operations 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 measure, when viewed in addition to and not in lieu of our reported GAAP results, assists investors in understanding our results of operations.
A. Stock-based compensation. 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 compensation expense was $0.7 million in the fourth quarter of 2009, compared to $0.9 million in the fourth quarter of 2008 and $0.8 million in the third quarter of 2009. Stock-based compensation expense for 2009 was $2.9 million, compared to $3.3 million for 2008.
B. 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. Amortization expense was $52,000 in the fourth quarter of 2009, compared to $42,000 in the fourth quarter of 2008 and $42,000 in the third quarter of 2009. Amortization expense was $177,000 in 2009, compared to $112,000 in 2008.
C. Restructuring and impairment charges. 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. Restructuring and impairment expense was zero in the fourth quarter of 2009, compared to $1.2 million in the fourth quarter of 2008 and $1.3 million in the third quarter of 2009. Restructuring and impairment expense for 2009 was $1.7 million, compared to $1.2 million for 2008.
D. Acquisition expense. The Company does not acquire businesses on a predictable cycle; therefore management excludes acquisition expense such as legal fees and banker or advisor fees, when evaluating ongoing operating performance. Acquisition expense was $0.5 million in the fourth quarter of 2009, compared to zero in the fourth quarter of 2008 and zero in the third quarter of 2009. Acquisition expense for 2009 was $0.5 million, compared to zero for 2008.
E. Income tax impact of disposition of business units. The Company 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 benefit related to the disposal of business units was $1.2 million in the fourth quarter of 2009, compared to zero in the fourth quarter of 2008 and $0.9 million in the third quarter of 2009. Tax benefit for 2009 was $5.0 million, compared to zero for 2008.
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.
Contact Information:
Investor Contact
Carolyn Bass and Daniel Wood
Market Street Partners
(415) 445-3235
sprt@marketstreetpartners.com
Media Contact
Catherine Muriel
Support.com
(650) 556-8972
catherine.muriel@support.com
SUPPORT.COM
GAAP CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(unaudited)
Three Months Ended | Year Ended December 31, | |||||||||||||||||||
December 31, 2009(1) | September 30, 2009(1) | December 31, 2008(2) | 2009(1) | 2008(2) | ||||||||||||||||
Revenues: | ||||||||||||||||||||
Services | $ | 5,302 | $ | 4,542 | $ | 3,050 | $ | 16,770 | $ | 6,468 | ||||||||||
Software and Other | 546 | 57 | 57 | 725 | 343 | |||||||||||||||
Total revenues | 5,848 | 4,599 | 3,107 | 17,495 | 6,811 | |||||||||||||||
Costs of revenue: | ||||||||||||||||||||
Cost of services | 4,043 | 3,856 | 4,027 | 16,424 | 10,126 | |||||||||||||||
Cost of software and other | 59 | — | — | 59 | — | |||||||||||||||
Total cost of revenue | 4,102 | 3,856 | 4,027 | 16,483 | 10,126 | |||||||||||||||
Gross profit (loss) | 1,746 | 743 | (920 | ) | 1,012 | (3,315 | ) | |||||||||||||
Operating expenses: | ||||||||||||||||||||
Research and development | 1,051 | 1,173 | 1,496 | 5,131 | 6,455 | |||||||||||||||
Sales and marketing | 1,950 | 1,450 | 1,729 | 6,805 | 7,624 | |||||||||||||||
General and administrative | 2,249 | 2,466 | 3,105 | 10,668 | 12,244 | |||||||||||||||
Amortization of intangible assets | 52 | 42 | 42 | 177 | 112 | |||||||||||||||
Acquisition expenses | 542 | — | — | 542 | — | |||||||||||||||
Restructuring and impairment | — | 1,294 | 1,195 | 1,697 | 1,195 | |||||||||||||||
Stock-based compensation | 715 | 824 | 894 | 2,942 | 3,289 | |||||||||||||||
Total operating expenses | 6,559 | 7,249 | 8,461 | 27,962 | 30,919 | |||||||||||||||
Loss from operations | (4,813 | ) | (6,506 | ) | (9,381 | ) | (26,950 | ) | (34,234 | ) | ||||||||||
Interest income and other, net | 191 | 117 | 177 | 428 | 2,505 | |||||||||||||||
Loss from continuing operations, before income taxes | (4,622 | ) | (6,389 | ) | (9,204 | ) | (26,522 | ) | (31,729 | ) | ||||||||||
Income taxes benefit | (1,186 | ) | (918 | ) | (23 | ) | (4,941 | ) | (18 | ) | ||||||||||
Loss from continuing operations, after income taxes | (3,436 | ) | (5,471 | ) | (9,181 | ) | (21,581 | ) | (31,711 | ) | ||||||||||
Income (loss) from discontinued operations, after income taxes | (181 | ) | 12 | 2,392 | 7,038 | 12,605 | ||||||||||||||
Net Loss | $ | (3,617 | ) | $ | (5,459 | ) | $ | (6,789 | ) | $ | (14,543 | ) | $ | (19,106 | ) | |||||
Earnings per share: | ||||||||||||||||||||
Basic and diluted earnings per share: | ||||||||||||||||||||
Loss from continuing operations, after income taxes | $ | (0.07 | ) | $ | (0.12 | ) | $ | (0.20 | ) | $ | (0.47 | ) | $ | (0.69 | ) | |||||
Income (Loss) from discontinued operations, after income taxes | (0.01 | ) | 0.00 | 0.05 | 0.16 | 0.28 | ||||||||||||||
Net loss per share, basic and diluted | $ | (0.08 | ) | $ | (0.12 | ) | $ | (0.15 | ) | $ | (0.31 | ) | $ | (0.41 | ) | |||||
Shares used in computing per share amounts: | ||||||||||||||||||||
Basic | 46,443 | 46,376 | 46,142 | 46,378 | 46,098 | |||||||||||||||
Diluted | 46,443 | 46,376 | 46,142 | 46,378 | 46,098 | |||||||||||||||
Allocation of restructuring and impairment charges for continuing operations: | ||||||||||||||||||||
Cost of consumer | — | — | 43 | 62 | 43 | |||||||||||||||
Research and development | — | — | 89 | 196 | 89 | |||||||||||||||
Sales and marketing | — | — | 538 | 295 | 538 | |||||||||||||||
General and administrative | — | 1,294 | 525 | 1,144 | 525 | |||||||||||||||
— | 1,294 | 1,195 | 1,697 | 1,195 | ||||||||||||||||
Allocation of stock-based compensation for continuing operations: | ||||||||||||||||||||
Cost of consumer | 34 | 31 | 48 | 134 | 138 | |||||||||||||||
Research and development | 135 | 133 | 117 | 467 | 450 | |||||||||||||||
Sales and marketing | 61 | 155 | 252 | 576 | 911 | |||||||||||||||
General and administrative | 485 | 505 | 477 | 1,765 | 1,790 | |||||||||||||||
715 | 824 | 894 | 2,942 | 3,289 | ||||||||||||||||
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
RECONCILIATION OF GAAP FINANCIAL RESULTS TO NON-GAAP FINANCIAL MEASURES
(in thousands, except per share amounts)
(unaudited)
Three Months Ended | Year Ended December 31, | |||||||||||||||||||
December 31, 2009 | September 30, 2009 | December 31, 2008 | 2009 | 2008 | ||||||||||||||||
GAAP operating expenses from continuing operations | $ | 6,559 | $ | 7,249 | $ | 8,461 | $ | 27,962 | $ | 30,919 | ||||||||||
Amortization of intangible assets | (52 | ) | (42 | ) | (42 | ) | (177 | ) | (112 | ) | ||||||||||
Acquisition expenses | (542 | ) | — | — | (542 | ) | — | |||||||||||||
Restructuring and impairment charges | — | (1,294 | ) | (1,195 | ) | (1,697 | ) | (1,195 | ) | |||||||||||
Stock-based compensation | (715 | ) | (824 | ) | (894 | ) | (2,942 | ) | (3,289 | ) | ||||||||||
Non-GAAP costs and expenses from continuing operations | 5,250 | 5,089 | 6,330 | 22,604 | 26,323 | |||||||||||||||
GAAP Income taxes benefit | (1,186 | ) | (918 | ) | (23 | ) | (4,941 | ) | (18 | ) | ||||||||||
Income tax impact of disposition of business unit | 1,176 | 923 | — | 4,940 | — | |||||||||||||||
Non-GAAP income (loss) before income taxes from continuing operations | (10 | ) | 5 | (23 | ) | (1 | ) | (18 | ) | |||||||||||
GAAP net loss from continuing operations | $ | (3,436 | ) | $ | (5,471 | ) | $ | (9,181 | ) | $ | (21,581 | ) | $ | (31,711 | ) | |||||
Amortization of intangible assets | 52 | 42 | 42 | 177 | 112 | |||||||||||||||
Acquisition expenses | 542 | — | — | 542 | — | |||||||||||||||
Restructuring and impairment charges | — | 1,294 | 1,195 | 1,697 | 1,195 | |||||||||||||||
Stock-based compensation | 715 | 824 | 894 | 2,942 | 3,289 | |||||||||||||||
Income tax impact of disposition of business unit | (1,176 | ) | (923 | ) | — | (4,940 | ) | — | ||||||||||||
Non-GAAP net loss from continuing operations | $ | (3,303 | ) | $ | (4,234 | ) | $ | (7,050 | ) | $ | (21,163 | ) | $ | (27,115 | ) | |||||
Basic and diluted net loss per share | ||||||||||||||||||||
GAAP | $ | (0.07 | ) | $ | (0.12 | ) | $ | (0.20 | ) | $ | (0.47 | ) | $ | (0.69 | ) | |||||
Non-GAAP | $ | (0.07 | ) | $ | (0.09 | ) | $ | (0.15 | ) | $ | (0.46 | ) | $ | (0.59 | ) | |||||
Shares used in computing per share amounts (GAAP) | ||||||||||||||||||||
Basic | 46,443 | 46,376 | 46,142 | 46,378 | 46,098 | |||||||||||||||
Diluted | 46,443 | 46,376 | 46,142 | 46,378 | 46,098 | |||||||||||||||
Shares used in computing per share amounts (Non-GAAP) | ||||||||||||||||||||
Basic | 46,443 | 46,376 | 46,142 | 46,378 | 46,098 | |||||||||||||||
Diluted | 46,443 | 46,376 | 46,142 | 46,378 | 46,098 |
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, acquisition expenses, and the income tax impact of the disposition of a business unit on continuing operations 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.
SUPPORT.COM
GAAP CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
December 31, 2009(1) | September 30, 2009(1) | December 31, 2008(2) | ||||||||||
(unaudited) | (unaudited) | (audited) | ||||||||||
Assets | ||||||||||||
Current assets: | ||||||||||||
Cash, cash equivalents and short-term investments | $ | 80,034 | $ | 91,209 | $ | 72,090 | ||||||
Accounts receivable, net | 3,190 | 2,584 | 2,113 | |||||||||
Prepaid expenses and other current assets | 1,284 | 1,273 | 1,128 | |||||||||
Auction-rate securities put option | 1,289 | 2,411 | — | |||||||||
Current assets of discontinued operations | — | — | 8,785 | |||||||||
Total current assets | 85,797 | 97,477 | 84,116 | |||||||||
Long-term investments | 3,444 | 3,267 | 15,766 | |||||||||
Auction-rate security put option—long-term | — | — | 7,148 | |||||||||
Property and equipment, net | 447 | 414 | 1,065 | |||||||||
Goodwill | 10,171 | 2,854 | 2,854 | |||||||||
Purchased technologies, net | 309 | 329 | — | |||||||||
Intangible assets, net | 1,450 | 292 | 417 | |||||||||
Other assets | 374 | 749 | 886 | |||||||||
Long-term assets of discontinued operations | — | — | 11,334 | |||||||||
Total assets | $ | 101,992 | $ | 105,382 | $ | 123,586 | ||||||
Liabilities and Stockholders’ Equity | ||||||||||||
Liabilities: | ||||||||||||
Accounts payable | $ | 99 | $ | 135 | $ | 890 | ||||||
Accrued compensation | 745 | 823 | 1,469 | |||||||||
Other accrued liabilities | 3,045 | 3,601 | 3,534 | |||||||||
Deferred revenue | 725 | 437 | 22 | |||||||||
Current liabilities of discontinued operations | — | — | 9,772 | |||||||||
Total current liabilities | 4,614 | 4,996 | 15,687 | |||||||||
Other long-term liabilities | 992 | 1,424 | 1,434 | |||||||||
Long-term liabilities of discontinued operations | — | — | 1,019 | |||||||||
Total liabilities | $ | 5,606 | $ | 6,420 | $ | 18,140 | ||||||
Stockholders’ equity: | ||||||||||||
Common stock | $ | 5 | $ | 5 | $ | 5 | ||||||
Additional paid-in-capital | 221,822 | 221,039 | 217,647 | |||||||||
Accumulated other comprehensive loss | (1,233 | ) | (1,492 | ) | (2,541 | ) | ||||||
Accumulated deficit | (124,208 | ) | (120,590 | ) | (109,665 | ) | ||||||
Total stockholders’ equity | $ | 96,386 | $ | 98,962 | $ | 105,446 | ||||||
Total liabilities and stockholders’ equity | $ | 101,992 | $ | 105,382 | $ | 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 presentation from audited financial statements.