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Support.com Reports Fourth Quarter and 2016 Financial ResultsSupport.com, Inc. (NASDAQ: SPRT), makers of Support.com® Cloud software for Support Interaction Optimization, and a leading provider of tech support and turnkey support center services, today reported unaudited financial results for its fourth quarter and year ended December 31, 2016. "In Q4 2016, we continued to execute at a high level and made strides in Services, Support.com Cloud and End-User Software, all while taking actions to mitigate our future cash burn," said Rick Bloom, Interim President and Chief Executive Officer. "We will continue to be fiscally responsible and methodically evaluate cost reduction measures while not hampering our ability to execute. The short and long term opportunities in front of us combined with our refreshed view of expense management give us confidence in achieving our ultimate goal of delivering shareholder value." Q4 2016 Financial Summary For the fourth quarter of 2016, total revenue was $14.6 million, compared to $15.7 million in the fourth quarter of 2015 and $15.5 million in the third quarter of 2016. All share and per-share data has been adjusted for the 1-for-3 stock split announced on January 13, 2017 and effected on January 20, 2017. On a GAAP basis, loss from continuing operations for the fourth quarter of 2016 was $(3.5) million, or $(0.19) per share, compared to $(5.1) million, or $(0.28) per share, in the fourth quarter of 2015 and $(2.1) million, or $(0.12) per share, in the third quarter of 2016. On a non-GAAP basis, loss from continuing operations for the fourth quarter of 2016 was $(2.3) million, or $(0.13) per share, compared to a loss of $(4.2) million, or $(0.23) per share, in the fourth quarter of 2015 and a loss of $(1.2) million, or $(0.07) per share, in the third quarter of 2016. Non-GAAP income (loss) from continuing operations excludes stock-based compensation expense, amortization of intangible assets and other, restructuring and impairment charges and tax expense (benefit) associated with acquired goodwill. Collectively, these items impacted income (loss) from continuing operations by $1.2 million in the fourth quarter of 2016, $1.0 million in the fourth quarter of 2015 and $0.9 million in the third quarter of 2016. A reconciliation of GAAP to non-GAAP results is presented in the tables below. At December 31, 2016, cash, cash equivalents and investments were $53.4 million compared to $54.5 million at September 30, 2016. 2016 Financial Summary Total revenue for 2016 was $61.7 million, compared to $77.3 million in 2015. On a GAAP basis, loss from continuing operations for 2016 was $16.2 million, or ($0.88) per share, compared to a loss of $27.1 million, or $(1.49) per share, in 2015. On a non-GAAP basis, loss from continuing operations for 2016 was $12.1 million, or $(0.66) per share, compared to a loss of $10.1 million, or ($0.55) per share in 2015. Non-GAAP income (loss) from continuing operations excludes stock-based compensation expense, amortization of intangible assets and other, restructuring and impairment charges and tax expense (benefit) associated with acquired goodwill. Collectively, these items impacted results from continuing operations by $4.2 million in 2016 and $17.0 million in 2015. A reconciliation of GAAP to non-GAAP results is presented in the tables below. On October 11, 2016 the Wage and Hour Division of the U.S. Department of Labor notified the Company that it would be conducting an audit of the Company. The audit commenced on October 20, 2016 and is ongoing. Support.com will not host a conference call discussing the Company's fourth quarter and full year 2016 results. For more information, please visit the Investor Relations section of the Support.com website at http://www.support.com/about-us/investor-relations/. About Support.com Support.com, Inc. (NASDAQ:SPRT) is the leading provider of cloud-based software and services to deliver next-generation technical support. Support.com helps leading brands in software, electronics, communications, retail, Internet of Things (IoT) and other connected technology industries deepen their customer relationships. Customers want technology that works the way it's intended. By using Support.com software and services, 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, government investigations or audits, including the U.S. Department of Labor audit that is currently ongoing, 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 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, restructuring and impairment charges and tax expense (benefit) associated with acquired goodwill 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 D 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 $211,000 in the fourth quarter of 2016, compared to $686,000 in the fourth quarter of 2015 and $661,000 in the third quarter of 2016. 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 $227,000 in the fourth quarter of 2016, compared to $267,000 the fourth quarter of 2015 and $267,000 in the third quarter of 2016. C. Restructuring and impairment charges. Management excludes restructuring and impairment 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 charge was $723,000 in the fourth quarter of 2016, zero in the fourth quarter of 2015, and zero in the third quarter of 2016. There was no impairment charge in the fourth quarter of 2016, the fourth quarter of 2015, or the third quarter of 2016. D. Tax expense (benefit) associated with acquired goodwill. The Company does not amortize goodwill in its consolidated financial statements. Goodwill created through Asset Purchase Agreement transactions is amortizable for tax purposes and a deferred tax liability is recorded as the tax deduction is realized. The Company excludes the tax expense (benefit) associated with acquired goodwill when evaluating its operating performance because the Company does not acquire businesses on a predictable cycle and excluding such expense (benefit) enables more consistent evaluation of the Company's operating performance. Tax expense (benefit) associated with acquired goodwill was zero in the fourth quarter of 2016, the fourth quarter of 2015 and the third quarter of 2016. 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.
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