Support.com Reports Third Quarter 2019 Financial Results

SUNNYVALE, CA / ACCESSWIRE / November 8, 2019 / Support.com, Inc. (NASDAQ:SPRT), a full-spectrum leader in outsourced call center and direct-to-consumer technical support solutions, today reported unaudited GAAP financial results for its third quarter ended September 30, 2019.

Q3 2019 Financial Summary

For the third quarter of 2019, total revenue was $15.2 million, a decrease of 15 percent compared to revenues of $18.0 million in the third quarter of 2018 and down 9 percent compared to revenues of $16.7 million in the second quarter of 2019. This decrease in revenue from the second quarter primarily reflects lower billable hours with our major customers but was somewhat offset by new subscriber growth. The reduction in billable hours substantially reduced the cost of recruiting, hiring, training, and attrition of employees. Once the billable hours stabilize, the company will once again incur these expenses.

We recorded net income for the third quarter of 2019 of $1.6 million, or $0.08 per share, compared to a net loss of ($9.1) million, or ($0.49) per share, in the third quarter of 2018 and net income of $0.7 million, or $0.03 per share, in the second quarter of 2019.

Key changes in our net income/(loss) included the following:

  • Gross profit increased by $1.1 million in the third quarter compared to the same period in 2018 and increased by $0.7 million compared to the second quarter of 2019.
  • Our gross profit margin increased by 11 percent compared with the same quarter of 2018 and increased by 7 percent relative to the second quarter of 2019.
  • Operating expenses in the third quarter of 2019 were $3.3 million, as compared with $12.9 million of operating expenses in the third quarter of 2018 and $3.4 million of operating expenses in the second quarter of 2019.
  • Operating expenses in the third quarter of 2018 included a $10.0 million one-time legal settlement for FTC litigation.

Balance Sheet Information

On September 30, 2019, cash, cash equivalents, and short-term investments were $44.8 million as compared with $43.2 million on June 30, 2019, and $49.6 million on December 31, 2018. The decrease in cash from December 31, 2018, reflects the $10 million payment to the Federal Trade Commission (“FTC”) on April 1, 2019, as a part of the previously disclosed settlement negotiations. This decrease in cash was offset by earnings and a reduction in working capital.

Total assets as of September 30, 2019, were $57.2 million and total shareholders’ equity was $52.0 million.

Support.com will not host a conference call discussing the Company’s third-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 full-spectrum leader in outsourced call center and direct-to-consumer technical support solutions. The company’s skilled US-based workforce delivers high quality, turnkey support solutions. With more than 20 years serving well-known brands, Support.com has the expertise, tools, and software solutions to troubleshoot and maintain all the devices in the connected home, helping people get the most out of their technology. For more information, please visit www.support.com.

Support.com, Inc. is an Equal Opportunity Employer. For more information, visit http://www.support.com/about-us/careers.

© 2019 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 announcement contains forward-looking statements (including within the meaning of Section 21E of the United States Securities Exchange Act of 1934, as amended, and Section 27A of the United States Securities Act of 1933, as amended) concerning Support.com. These statements include, but are not limited to, statements that address our expected future business and financial performance and other statements identified by words such as “will”, “expect”, “believe”, “anticipate”, “estimate”, “should”, “intend”, “plan”, “potential”, “predict” “project”, “aim”, and similar words, phrases or expressions. These forward-looking statements are based on current expectations and beliefs of the management of Support.com, as well as assumptions made by, and information currently available to, such management, current market trends and market conditions and involve risks and uncertainties, many of which are outside the Company’s and management’s control, and which may cause actual results to differ materially from those contained in forward-looking statements. Accordingly, you should not place undue reliance on such statements. 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 maintain and grow revenue, any acquisitions we may make, including integrating acquired companies with our existing businesses and our ability to achieve the benefits, growth prospects and synergies expected by such acquisitions, 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 ability to maintain or improve gross margin, 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, fluctuations in government laws and regulations, 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, any expenses or reputational damage associated with resolving customer warranty and/or indemnification claims; and our ability to manage the effects of the cost reduction plan on our workforce and other operations. Our filings with the SEC, which may be obtained for free at the SEC’s website at http://www.sec.gov, discuss some of the important risk factors that may affect our business, results of operations and financial condition. Actual results may vary from the estimates provided. We undertake no intent or obligation to publicly update or revise any of the estimates and other forward-looking statements made in this announcement, whether as a result of new information, future events or otherwise, except as required by law.

Investor Contact
Investor Relations, Support.com
+1 (650) 556-8574
IR@support.com

SUPPORT.COM, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
 
 
  September 30,     December 31,  
 
  2019 (1)     2018 (2)  
 
           
Assets
           
Current assets:
           
Cash, cash equivalents and short-term investments
  $ 44,754     $ 49,649  
Accounts receivable, net
    10,379       12,292  
Prepaid expenses and other current assets
    485       999  
Total current assets
    55,618       62,940  
Property and equipment, net
    561       703  
Intangible assets, net
    250       250  
Right of Use assets
    113        
Other assets
    687       707  
 
               
Total assets
  $ 57,229     $ 64,600  
 
               
Liabilities and Stockholders’ Equity
               
Current liabilities:
               
Accounts payable and accrued compensation
  $ 2,432     $ 3,791  
Other accrued liabilities
    831       978  
Accrued legal settlement
          10,000  
Short-term lease liability
    101        
Short-term deferred revenue
    1,098       1,135  
Total current liabilities
    4,462       15,904  
Long-term lease liability
    12        
Other long-term liabilities
    803       800  
Total liabilities
    5,277       16,704  
 
               
Stockholders’ equity:
               
Common stock
    2       2  
Additional paid-in-capital
    269,042       268,794  
Treasury stock
    (5,297 )     (5,297 )
Accumulated other comprehensive loss
    (2,388 )     (2,507 )
Accumulated deficit
    (209,407 )     (213,096 )
Total stockholders’ equity
    51,952       47,896  
 
               
Total liabilities and stockholders’ equity
  $ 57,229     $ 64,600  
 
Note 1: Amounts are subject to completion of management’s customary closing and review procedures.
Note 2: Derived from audited consolidated financial statements for the year ended December 31, 2018.
 
SUPPORT.COM, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(unaudited)
 
 
  Three Months Ended     Nine Months Ended  
 
  Sept. 30, 2019 (1)     June 30, 2019     Sept. 30, 2018     Sept. 30, 2019     Sept. 30, 2018  
 
                             
Revenue:
                             
Services
  14,327     15,508     16,759     46,698     48,179  
Software and other
    922       1,188       1,258       3,310       3,828  
Total revenue
    15,249       16,696       18,017       50,008       52,007  
 
                                       
Cost of revenue:
                                       
Cost of services
    10,582       12,686       14,412       37,065       42,985  
Cost of software and other
    26       38       51       119       152  
Total cost of revenue
    10,608       12,724       14,463       37,184       43,137  
Gross profit
    4,641       3,972       3,554       12,824       8,870  
Operating expenses:
                                       
Research and development
    1,132       915       690       2,796       2,082  
Sales and marketing
    485       438       424       1,315       1,383  
General and administrative
    1,685       2,090       1,800       5,671       5,623  
Legal settlement
                  10,000             10,000  
Total operating expenses
    3,302       3,443       12,914       9,782       19,088  
 
                                       
Income (loss) from operations
    1,339       529       (9,360 )     3,042       (10,218 )
 
                                       
Interest income and other, net
    265       255       241       817       676  
 
                                       
Income (loss) before income taxes
    1,604       784       (9,119 )     3,859       (9,542 )
 
                                       
Income tax provision (benefit)
    11       131       29       170       (24 )
 
                                       
Net income (loss)
  1,593     653     (9,148 )   3,689     (9,518 )
 
                                       
Net earnings (loss) per share
                                       
Basic
  0.08     0.03     (0.49 )   0.19     (0.51 )
Diluted
  0.08     0.03     (0.49 )   0.19     (0.51 )
 
                                       
Shares used in computing per share amounts
                                       
Basic
    19,011       18,962       18,805       18,977       18,786  
Diluted
    19,045       19,018       18,805       19,026       18,786  

SOURCE: Support.com, Inc.

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