CHICAGO, IL--(Marketwire - May 10, 2012) - Mattersight Corporation (
Mattersight's total services revenue was $8.9 million, including $7.2 million of subscription revenues. The Company realized an "Adjusted Earnings1" loss of $0.5 million for the first quarter of 2012. Adjusted Earnings is a non-GAAP measure. For a reconciliation of operating loss to Adjusted Earnings, see the accompanying schedule. Mattersight's net loss was $3.4 million in the first quarter of 2012 and its operating loss from continuing operations2 was $3.2 million.
Q1 Highlights
- Increased subscription revenues by 7% sequentially, and 53% year over year, to a record $7.2 million
- Grew total service revenues by 4% sequentially to $8.9 million
- Expanded gross margins by 500 basis points sequentially
- Improved operating performance by 500 basis points sequentially
- Recorded managed services bookings of $8.0 million
- Ended Q1 with managed services backlog3 of $94.6 million
- Signed a record 7 new pilots, including 2 new logo customers
- Converted 2 pilots, and ended Q1 with a record 13 pilots
Q2 Guidance
Mattersight currently expects its Q2 subscription revenues will be approximately $7.0 million, and its total services revenues will be approximately $8.4 million.
Conference Call Information
Mattersight management will host a conference call at 5:00 p.m. ET on Thursday, May 10, 2012. The conference call and slide presentation will be available at the Investment Community section of Mattersight's website at http://www.mattersight.com/investment/. To listen to the conference call via telephone, please call 800.952.4789 (domestic) or 404.665.9579 (international), conference ID: 73455437.
For those who cannot access the live broadcast, a replay of the conference call will be available beginning approximately two hours after the live call is completed until May 24, 2012, by dialing 855.859.2056 (domestic) or 404.537.3406 (international), conference ID: 73455437.
Safe Harbor for Forward-Looking Statements
Statements in this press release that are not historical facts are "forward-looking statements" that are made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements, which may be identified by use of words such as "plan," "may," "might," "believe," "expect," "intend," "could," "would," "should," and other words and terms of similar meaning, involve risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. In addition to other factors and matters contained or incorporated in this document, important factors that could cause actual results or events to differ materially from those indicated by such forward-looking statements include, among other things, the risks detailed from time to time in Mattersight's SEC filings. You can locate these filings on the Investor Relations page of Mattersight's website, www.mattersight.com. Statements included or incorporated by reference into this press release are based upon information known to Mattersight as of the date of this press release, and the company assumes no obligation to publicly revise or update any forward-looking statement for any reason.
About Mattersight
Mattersight is a leader in enterprise analytics focused on customer and employee interactions and behaviors. Mattersight's Behavioral Analytics service captures and analyzes customer and employee interactions, employee desktop data, and other contextual information to improve operational performance and predict future customer and employee outcomes. Mattersight's analytics are based on millions of proprietary algorithms and the application of unique behavioral models. The company's SaaS+ delivery model combines analytics in the cloud with deep customer partnerships to drive significant business value. Mattersight's applications are used by leading companies in Healthcare, Insurance, Financial Services, Telecommunications, Cable, Utilities and Government. See What Matters™ by visiting www.Mattersight.com.
1 Mattersight presents Adjusted Earnings, a non-GAAP measure that represents cash earnings performance, excluding the impact of non-cash expenses and expense reduction activities, because management believes that Adjusted Earnings provide investors with a better understanding of the results of Mattersight's operations. Management believes that Adjusted Earnings reflect Mattersight's resources available to invest in its business and strengthen its balance sheet. In addition, expense reduction activities can vary significantly between periods on the basis of factors that management does not believe reflect current-period operating performance. Although similar adjustments for expense reduction activities may be recorded in future periods, the size and frequency of these adjustments cannot be predicted. The Adjusted Earnings measure should be considered in addition to, not as a substitute for or superior to, operating income, cash flows or other measures of financial performance prepared in accordance with GAAP.
2 On May 28, 2011, the company divested its Integrated Contact Solutions ("ICS") business unit and "eLoyalty" registered trademark / trade name to a subsidiary of TeleTech Holdings, Inc. As a result of this divestiture, the company has classified the ICS business unit as discontinued operations and the associated results of operations, financial position, and cash flows have been separately recorded as appropriate.
3 Mattersight uses the term "backlog" to reflect the estimated future amount of Managed services revenue related to its Managed services contracts. The value of these contracts is based on anticipated usage volumes over the anticipated term of the agreement. The anticipated term of the agreement is based on the contractually agreed fixed term of the contract, plus agreed upon, but optional, extension periods. Anticipated volumes may be greater or less than anticipated. In addition, these contracts typically are cancellable without cause based on the customer making a substantial early termination payment or forfeiture of prepaid contract amounts. The reported backlog is expected to be recognized as follows: $25.8m in 2012; $29.7m in 2013; $19.7m in 2014; $19.4m in 2015 and thereafter.
| MATTERSIGHT CORPORATION | ||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||
| (Unaudited and in thousands, except per share data) | ||||||||||
| For the | ||||||||||
| Three Months Ended | ||||||||||
| March 31, | April 2, | |||||||||
| 2012 | 2011 | |||||||||
| Revenue: | ||||||||||
| Behavioral Analytics revenue | $ | 8,556 | $ | 5,967 | ||||||
| Other revenue | 345 | 580 | ||||||||
| Total services revenue | 8,901 | 6,547 | ||||||||
| Reimbursed expenses | 98 | 77 | ||||||||
| Total revenue | 8,999 | 6,624 | ||||||||
| Operating expenses: | ||||||||||
| Cost of Behavioral Analytics revenue | 3,188 | 2,762 | ||||||||
| Cost of other revenue | 204 | 342 | ||||||||
| Cost of services | 3,392 | 3,104 | ||||||||
| Reimbursed expenses | 98 | 77 | ||||||||
| Total cost of revenue, exclusive of depreciation and amortization: | 3,490 | 3,181 | ||||||||
| Sales, marketing and development | 5,184 | 4,866 | ||||||||
| General and administrative | 1,956 | 2,755 | ||||||||
| Severance and related costs | 679 | 4 | ||||||||
| Depreciation and amortization | 867 | 775 | ||||||||
| Total operating expenses | 12,176 | 11,581 | ||||||||
| Operating loss | (3,177 | ) | (4,957 | ) | ||||||
| Interest and other (expense) income, net | (102 | ) | 131 | |||||||
| Loss from continuing operations before income taxes | (3,279 | ) | (4,826 | ) | ||||||
| Income tax (provision) benefit | (10 | ) | 65 | |||||||
| Loss from continuing operations | (3,289 | ) | (4,761 | ) | ||||||
| (Loss) income from discontinued operations, net of tax | (81 | ) | 122 | |||||||
| Net loss | (3,370 | ) | (4,639 | ) | ||||||
| Dividends related to Series B Stock | (149 | ) | (317 | ) | ||||||
| Net loss available to common stockholders | $ | (3,519 | ) | $ | (4,956 | ) | ||||
| Per common share: | ||||||||||
| Basic loss from continuing operations | $ | (0.22 | ) | $ | (0.36 | )1 | ||||
| Basic (loss) income from discontinued operations | $ | (0.01 | ) | $ | 0.01 | |||||
| Basic net loss available to common stockholders | $ | (0.22 | ) | $ | (0.36 | ) | ||||
| Per common share: | ||||||||||
| Diluted loss from continuing operations | $ | (0.22 | ) | $ | (0.36 | )1 | ||||
| Diluted (loss) income from discontinued operations | $ | (0.01 | ) | $ | 0.01 | |||||
| Diluted net loss available to common stockholders | $ | (0.22 | ) | $ | (0.36 | ) | ||||
| Shares used to calculate basic net loss per share | 15,750 | 13,953 | ||||||||
| Shares used to calculate diluted net loss per share | 15,750 | 13,953 | ||||||||
Stock-based compensation, primarily restricted stock, is included in individual line items above:
| For the | ||||||
| Three Months Ended | ||||||
| March 31, | April 2, | |||||
| 2012 | 2011 | |||||
| Cost of Behavioral Analytics revenue | $ | 6 | $ | 7 | ||
| Sales, marketing and development | 697 | 872 | ||||
| General and administrative | 400 | 550 | ||||
| Severance and related costs | 268 | -- | ||||
| Discontinued operations | -- | 77 | ||||
1 As reported in its Form 8-K filed today with the SEC, the Company intends to restate its previously issued Consolidated Statement of Operations for the three year period ended December 31, 2011 to correct for an error in the calculation of Basic and Diluted loss per share from continuing operations. The restatement will reflect in such calculation dividends or other payments made in respect of the Series B Stock. Amounts shown for the three months ended April 2, 2011 reflect such corrections. The effect of such corrections results in a reduction of previously reported Basic and Diluted loss per share from continuing operations of ($0.02) for the period. The change in presentation will have no effect on net loss or any other amounts for any period.
| MATTERSIGHT CORPORATION | ||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS | ||||||||
| (Unaudited and in thousands) | ||||||||
| For the | ||||||||
| Three Months Ended | ||||||||
| March 31, | April 2, | |||||||
| 2012 | 2011 | |||||||
| Net loss | $ | (3,370 | ) | $ | (4,639 | ) | ||
| Other comprehensive loss: | ||||||||
| Effect of currency translation | 5 | (92 | ) | |||||
| Comprehensive net loss | $ | (3,365 | ) | $ | (4,731 | ) | ||
| MATTERSIGHT CORPORATION | ||||||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||||
| (Unaudited and in thousands, except share and per share data) | ||||||||||
| March 31, | December 31, | |||||||||
| 2012 | 2011 | |||||||||
| ASSETS: | ||||||||||
| Current Assets: | ||||||||||
| Cash and cash equivalents | $ | 26,130 | $ | 29,408 | ||||||
| Restricted cash | 1,500 | 1,500 | ||||||||
| Receivables (net of allowances of $10 and $13) | 2,068 | 2,540 | ||||||||
| Prepaid expenses | 5,565 | 5,302 | ||||||||
| Other current assets | 479 | 288 | ||||||||
| Total current assets | 35,742 | 39,038 | ||||||||
| Equipment and leasehold improvements, net | 4,273 | 4,271 | ||||||||
| Goodwill | 972 | 972 | ||||||||
| Intangibles, net | 235 | 238 | ||||||||
| Other long-term assets | 4,278 | 4,746 | ||||||||
| Total assets | $ | 45,500 | $ | 49,265 | ||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY: | ||||||||||
| Current Liabilities: | ||||||||||
| Short-term debt | $ | 3,629 | $ | 3,567 | ||||||
| Accounts payable | 657 | 812 | ||||||||
| Accrued compensation and related costs | 1,978 | 1,382 | ||||||||
| Unearned revenue | 9,140 | 9,783 | ||||||||
| Other current liabilities | 3,795 | 3,673 | ||||||||
| Total current liabilities | 19,199 | 19,217 | ||||||||
| Long-term unearned revenue | 2,387 | 3,036 | ||||||||
| Other long-term liabilities | 1,090 | 1,401 | ||||||||
| Total liabilities | 22,676 | 23,654 | ||||||||
| Series B Stock, $0.01 par value; 5,000,000 shares authorized and designated; 1,670,696 and 1,670,696 shares issued and outstanding at March 31, 2012 and December 31, 2011, respectively, with a liquidation preference of $8,670 and $8,819 at March 31, 2012 and December 31, 2011, respectively | 8,521 | 8,521 | ||||||||
| Stockholders' Equity: | ||||||||||
| Preferred stock, $0.01 par value; 35,000,000 shares authorized; none issued and outstanding | -- | -- | ||||||||
| Common stock, $0.01 par value; 50,000,000 shares authorized; 17,983,189 and 18,037,552 shares issued at March 31, 2012, and at December 31, 2011, respectively; and 16,794,571 and 16,935,204 outstanding at March 31, 2012 and December 31, 2011, respectively | 180 | 180 | ||||||||
| Additional paid-in capital | 213,691 | 212,618 | ||||||||
| Accumulated deficit | (189,149 | ) | (185,779 | ) | ||||||
| Treasury stock, at cost, 1,188,618 and 1,102,348 shares at March 31, 2012 and December 31, 2011, respectively | (6,386 | ) | (5,891 | ) | ||||||
| Accumulated other comprehensive loss | (4,033 | ) | (4,038 | ) | ||||||
| Total stockholders' equity | 14,303 | 17,090 | ||||||||
| Total liabilities and stockholders' equity | $ | 45,500 | $ | 49,265 | ||||||
| MATTERSIGHT CORPORATION | ||||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||||||
| (Unaudited and in thousands) | ||||||||||||
| For the Three Months Ended | ||||||||||||
| March 31, | April 2, | |||||||||||
| 2012 | 2011 | |||||||||||
| Cash Flows from Operating Activities: | ||||||||||||
| Net loss | $ | (3,370 | ) | $ | (4,639 | ) | ||||||
| Less: net (loss) income from discontinued operations | (81 | ) | 122 | |||||||||
| Net loss from continuing operations | (3,289 | ) | (4,761 | ) | ||||||||
| Adjustments to reconcile net loss from continuing operations to net cash (used in) provided by operating activities: | ||||||||||||
| Depreciation and amortization | 867 | 775 | ||||||||||
| Stock-based compensation | 1,103 | 1,429 | ||||||||||
| Severance and related costs | 268 | -- | ||||||||||
| Other | (2 | ) | (86 | ) | ||||||||
| Changes in assets and liabilities: | ||||||||||||
| Receivables | 474 | 266 | ||||||||||
| Prepaid expenses | 196 | (1,533 | ) | |||||||||
| Other assets | (63 | ) | (17 | ) | ||||||||
| Accounts payable | (155 | ) | 881 | |||||||||
| Accrued compensation and related costs | 328 | (160 | ) | |||||||||
| Unearned revenue | (1,292 | ) | 1,970 | |||||||||
| Other liabilities | (198 | ) | (104 | ) | ||||||||
| Total adjustments | 1,526 | 3,421 | ||||||||||
| Net cash used in continuing operations | (1,763 | ) | (1,340 | ) | ||||||||
| Net cash used in discontinued operations | (31 | ) | (378 | ) | ||||||||
| Net cash used in operating activities | (1,794 | ) | (1,718 | ) | ||||||||
| Cash Flows from Investing Activities: | ||||||||||||
| Capital expenditures and other | (156 | ) | (206 | ) | ||||||||
| Net cash used in continuing investing activities | (156 | ) | (206 | ) | ||||||||
| Net cash used in discontinued investing activities | -- | (158 | ) | |||||||||
| Net cash used in investing activities | (156 | ) | (364 | ) | ||||||||
| Cash Flows from Financing Activities: | ||||||||||||
| Principal payments under capital lease obligations | (536 | ) | (444 | ) | ||||||||
| Acquisition of treasury stock | (495 | ) | (302 | ) | ||||||||
| Payment of Series B Stock dividends | (298 | ) | -- | |||||||||
| Fees from issuance of common stock | (43 | ) | -- | |||||||||
| Proceeds from stock compensation and employee stock purchase plans, net | 34 | 34 | ||||||||||
| Net cash used in continuing financing activities | (1,338 | ) | (712 | ) | ||||||||
| Net cash used in discontinued financing activities | -- | (29 | ) | |||||||||
| Net cash used in financing activities | (1,338 | ) | (741 | ) | ||||||||
| Effect of exchange rate changes on cash and cash equivalents by continuing operations | 10 | (86 | ) | |||||||||
| Effect of exchange rate changes on cash and cash equivalents by discontinued operations | -- | (22 | ) | |||||||||
| Effect of exchange rate changes on cash and cash equivalents | 10 | (108 | ) | |||||||||
| Decrease in cash and cash equivalents | (3,278 | ) | (2,931 | ) | ||||||||
| Cash and cash equivalents, beginning of period | 29,408 | 20,872 | ||||||||||
| Cash and cash equivalents of continuing operations, end of period | $ | 26,130 | $ | 17,941 | ||||||||
| Non-Cash Investing and Financing Transactions: | ||||||||||||
| Capital lease obligations incurred | $ | 710 | $ | 639 | ||||||||
| Capital equipment purchased on credit | 710 | 639 | ||||||||||
| Supplemental Disclosures of Cash Flow Information: | ||||||||||||
| Interest paid | $ | 44 | $ | 39 | ||||||||
| MATTERSIGHT CORPORATION | ||||||||
| CALCULATION OF ADJUSTED EARNINGS MEASURE | ||||||||
| (Unaudited and in thousands) | ||||||||
| For the | ||||||||
| Three Months Ended | ||||||||
| March 31, | April 2, | |||||||
| 2012 | 2011 | |||||||
| GAAP -- Operating loss | $ | (3,177 | ) | $ | (4,957 | ) | ||
| Add back (reduce) the effect of: | ||||||||
| Stock-based compensation | 1,103 | 1,429 | ||||||
| Severance and related costs | 679 | 4 | ||||||
| Depreciation and amortization | 867 | 775 | ||||||
| Adjusted earnings measure -- (loss) | $ | (528 | ) | $ | (2,749 | ) | ||
Contact Information:
Contact
Bill Noon
Vice President, Chief Financial Officer
847.582.7019
ir@mattersight.com