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Support.com Reports First Quarter 2018 Financial ResultsSupport.com, Inc. (NASDAQ: SPRT), a leading provider of tech support and turnkey support center services, producer of SUPERAntiSpyware® anti-malware products, and the maker of Support.com® software, today reported unaudited financial results for its first quarter ended March 31, 2018. "The company's continued investment during the first quarter in driving growth opportunities for the balance of the fiscal year adversely impacted our financial performance relative to the prior two quarters," said Rick Bloom, Interim President and Chief Executive Officer of the company, "This investment included costs associated with recruiting and training highly-skilled tech support agents for several of our major customers, as well as continuing to re-align our market-leading Support.com software offerings with our chat and live agent capabilities." Mr. Bloom continued, "The investments made in the first quarter are expected to boost longer term profits and cash flow. These investments are likely to continue as long as the opportunities for growth are still present." "Our growth strategy remains focused on our unique combination of highly-skilled tech support agents and market-leading Support.com software offerings, as we believe these enable us to provide high quality customer support in a very cost efficient manner," shared Mr. Bloom. Q1 2018 Financial Summary For the first quarter of 2018, total revenue was $16.5 million, up 16 percent compared to revenues of $14.3 million in the first quarter of 2017 and up 1.4 percent compared to revenues of $16.3 million in the fourth quarter of 2017. On a GAAP basis, we recorded a net loss for the first quarter of 2018 of $(0.8) million, or $(0.04) per share, compared to a loss of $(1.3) million, or $(0.07) per share, in the first quarter of 2017 and a loss of $(0.3) million, or $(0.02) per share, in the fourth quarter of 2017. On a non-GAAP basis, we recorded a net loss in the first quarter of 2018 of $(0.4) million, or $(0.02) per share, compared to a loss of $(1.2) million, or $(0.06) per share, in the first quarter of 2017 and income of $0.4 million, or $0.02 per share, in the fourth quarter of 2017. On both a GAAP and non-GAAP basis, operating expenses for the first quarter of 2018 included $0.02 million in primarily legal expenses not associated with normal business operations. This compares with $0.5 million in the first quarter of 2017 and $0.1 million in the fourth quarter of 2017, both primarily legal expenses. Key changes in our non-GAAP net income/(loss) included the following:
Non-GAAP income/(loss) excludes stock-based compensation, amortization of intangible assets, and a one-time tax expense. Collectively, these items impacted income/(loss) from continuing operations by $0.4 million in the first quarter of 2018, $0.1 million in the first quarter of 2017, and $0.7 million in the fourth quarter of 2017 (including $0.5 million related to a one-time tax expense on foreign earnings and profits). A reconciliation of GAAP to non-GAAP results is presented in the tables below. Balance Sheet Information At March 31, 2018, cash, cash equivalents and short-term investments were $47.6 million, compared to $50.8 million at March 31, 2017 and $49.2 million at December 31, 2017. Total assets as of March 31, 2018 were $62.5 million and total shareholders' equity was $55.9 million. Support.com will not host a conference call discussing the Company's first quarter results. For more information, please visit the Investor Relations section of the Support.com website at Support.com/about-us/investor-relations/. About Support.com Support.com, Inc. (NASDAQ: SPRT) is a leading provider of support services and software to deliver next-generation technical support. Support.com helps leading brands in software, electronics, communications, retail, and other connected technology industries deepen their customer relationships. Customers want technology that works the way it's intended. By using Support.com services and software, 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. © 2018 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 (News - Alert)) 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, potential intellectual property, class action or other litigation, 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, 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 charges and tax expense on foreign earnings and profits 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 $376,000 in the first quarter of 2018, compared to $90,000 in the first quarter of 2017 and $135,000 in the fourth quarter of 2017. 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. Amortization of intangible assets was zero in the first quarter of 2018, compared to $10,000 in the first quarter of 2017 and zero in the fourth quarter of 2017. C. Tax expenses on foreign earnings and profits. Following the passage of the Tax Cuts and Jobs Act on December 22, 2017, Management reviewed the company's investments in its foreign subsidiaries under ASC (News - Alert) 740-30-25. Based on this review, the company changed its assertion regarding its investment in Support.com India Private Ltd which resulted in the company accruing $543,000 for a one-time transition tax in the fourth quarter of 2017 on our previously untaxed foreign earnings and profits. No expenses were recorded in the first quarters of 2018 or 2017 related to this item. 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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