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/.
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 Relations, Support.com
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CONDENSED CONSOLIDATED BALANCE SHEETS
Cash, cash equivalents and short-term investments
Accounts receivable, net
Prepaid expenses and other current assets
Total current assets
Property and equipment, net
Intangible assets, net
Right of Use assets
Liabilities and Stockholders' Equity
Accounts payable and accrued compensation
Other accrued liabilities
Accrued legal settlement
Short-term lease liability
Short-term deferred revenue
Total current liabilities
Long-term lease liability
Other long-term liabilities
Accumulated other comprehensive loss
Total stockholders' equity
Total liabilities and stockholders' equity
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.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
Three Months Ended
Nine Months Ended
Sept. 30, 2019 (1)
June 30, 2019
Sept. 30, 2018
Sept. 30, 2019
Sept. 30, 2018
Software and other
Cost of revenue:
Cost of services
Cost of software and other
Total cost of revenue
Research and development
Sales and marketing
General and administrative
Total operating expenses
Income (loss) from operations
Interest income and other, net
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Shares used in computing per share amounts
SOURCE: Support.com, Inc.