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Mattersight Announces Third Quarter 2012 Results
By: Marketwire .
Nov. 7, 2012 04:15 PM
CHICAGO, IL -- (Marketwire) -- 11/07/12 -- Mattersight Corporation (NASDAQ: MATR) today announced financial results for the third quarter ended September 29, 2012. Mattersight's total services revenue was $8.0 million, including $6.5 million of subscription revenues. The Company realized an "Adjusted Earnings(1)" loss of $2.0 million for the third 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 $3.6 million in the third quarter of 2012 and its operating loss from continuing operations(2) was $3.8 million. Q3 Highlights
Q4 Guidance Mattersight currently expects its total services revenues will increase sequentially by 4%-6% in the fourth quarter of 2012. Conference Call Information Mattersight management will host a conference call at 5:00 p.m. ET on Wednesday, November 7, 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: 57090694. 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 December 7, 2012, by dialing 855.859.2056 (domestic) or 404.537.3406 (international), conference ID: 57090694. 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, Education, Hospitality, 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 contract term. Actual usage volumes may be greater or less than anticipated. In addition, actual contract terms may vary from the anticipated terms because these contracts typically are cancellable without cause based on the client making a substantial early termination payment or forfeiture of prepaid contract amounts. The reported backlog is expected to be recognized as follows: $8.3m in 2012; $27.6m in 2013; $21.3m in 2014; $19.3m in 2015; and $20.3m in 2016 and thereafter.
MATTERSIGHT CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited and in thousands, except per share data)
For the For the
-------------------- --------------------
Three Months Ended Nine Months Ended
-------------------- --------------------
Sept. 29, Oct. 1, Sept. 29, Oct. 1,
2012 2011 2012 2011
--------- --------- --------- ---------
Revenue:
Behavioral Analytics revenue $ 7,682 $ 6,742 $ 23,795 $ 18,997
Other revenue 308 291 1,029 1,210
--------- --------- --------- ---------
Total services revenue 7,990 7,033 24,824 20,207
Reimbursed expenses 114 87 314 240
--------- --------- --------- ---------
Total revenue 8,104 7,120 25,138 20,447
Operating expenses:
Cost of Behavioral Analytics
revenue 2,828 3,029 8,963 8,685
Cost of other revenue 155 204 546 800
--------- --------- --------- ---------
Cost of services 2,983 3,233 9,509 9,485
Reimbursed expenses 114 87 314 240
--------- --------- --------- ---------
Total cost of revenue, exclusive
of depreciation and
amortization: 3,097 3,320 9,823 9,725
Sales, marketing and
development 5,940 5,129 16,571 14,759
General and administrative 1,951 1,984 5,914 7,353
Severance and related costs -- 54 693 (376)
Depreciation and amortization 946 899 2,568 2,494
--------- --------- --------- ---------
Total operating expenses 11,934 11,386 35,569 33,955
--------- --------- --------- ---------
Operating loss (3,830) (4,266) (10,431) (13,508)
Interest and other (expense)
income, net (88) 103 (303) 181
--------- --------- --------- ---------
Loss from continuing operations
before income taxes (3,918) (4,163) (10,734) (13,327)
Income tax (provision) benefit (9) 1,652 (30) 5,280
--------- --------- --------- ---------
Loss from continuing operations (3,927) (2,511) (10,764) (8,047)
Income (loss) from discontinued
operations, net of tax 332 (477) 228 27,710
--------- --------- --------- ---------
Net (loss) income (3,595) (2,988) (10,536) 19,663
Series B Stock fair value over
stated value -- -- (69) --
Dividends related to Series B
Stock (147) (316) (444) (950)
--------- --------- --------- ---------
Net (loss) income available to
Common Stock holders $ (3,742) $ (3,304) $ (11,049) $ 18,713
========= ========= ========= =========
Per share of Common Stock:
Basic loss from continuing
operations $ (0.25) $ (0.20) $ (0.71) $ (0.64)
========= ========= ========= =========
Basic income (loss) from
discontinued operations $ 0.02 $ (0.03) $ 0.01 $ 1.96
========= ========= ========= =========
Basic net (loss) income
available to Common Stock
holders $ (0.23) $ (0.23) $ (0.69) $ 1.33
========= ========= ========= =========
Per share of Common Stock:
Diluted loss from continuing
operations $ (0.25) $ (0.20) $ (0.71) $ (0.64)
========= ========= ========= =========
Diluted income (loss) from
discontinued operations $ 0.02 $ (0.03) $ 0.01 $ 1.96
========= ========= ========= =========
Diluted net (loss) income
available to Common Stock
holders $ (0.23) $ (0.23) $ (0.69) $ 1.33
========= ========= ========= =========
Shares used to calculate basic
net (loss) income per share 16,069 14,297 15,928 14,121
========= ========= ========= =========
Shares used to calculate diluted
net (loss) income per share 16,069 14,297 15,928 14,121
========= ========= ========= =========
Stock-based compensation, primarily restricted stock, is
included in individual line items above:
Cost of Behavioral Analytics
revenue $ 3 $ 3 $ 14 $ 17
Sales, marketing and
development 524 829 1,778 2,600
General and administrative 342 438 1,056 1,668
Severance and related costs -- -- 268 --
Discontinued operations -- -- -- 1,568
MATTERSIGHT CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME
(Unaudited and in thousands)
For the For the
-------------------- --------------------
Three Months Ended Nine Months Ended
-------------------- --------------------
Sept. 29, Oct. 1, Sept. 29, Oct. 1,
2012 2011 2012 2011
--------- --------- --------- ---------
Net (loss) income $ (3,595) $ (2,988) $ (10,536) $ 19,663
Other comprehensive loss:
Effect of currency translation (1) (224) (3) (340)
--------- --------- --------- ---------
Comprehensive net (loss) income $ (3,596) $ (3,212) $ (10,539) $ 19,323
========= ========= ========= =========
MATTERSIGHT CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited and in thousands, except share and per share data)
September December
29, 31,
2012 2011
---------- ----------
ASSETS:
Current Assets:
Cash and cash equivalents $ 14,461 $ 29,408
Restricted cash -- 1,500
Receivables (net of allowances of $15 and $13) 2,959 2,540
Prepaid expenses 6,075 5,302
Other current assets 759 288
---------- ----------
Total current assets 24,254 39,038
Equipment and leasehold improvements, net 4,807 4,271
Goodwill 972 972
Intangibles, net 241 238
Other long-term assets 4,292 4,746
---------- ----------
Total assets $ 34,566 $ 49,265
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current Liabilities:
Short-term debt $ 3,703 $ 3,567
Accounts payable 1,369 812
Accrued compensation and related costs 1,220 1,382
Unearned revenue 4,261 9,783
Other current liabilities 3,335 3,673
---------- ----------
Total current liabilities 13,888 19,217
Long-term unearned revenue 2,514 3,036
Other long-term liabilities 1,162 1,401
---------- ----------
Total liabilities 17,564 23,654
---------- ----------
Series B Stock, $0.01 par value; 5,000,000 shares
authorized and designated; 1,650,875 and 1,670,696
shares issued and outstanding at September 29, 2012
and December 31, 2011, respectively, with a
liquidation preference of $8,566 and $8,819 at
September 29, 2012 and December 31, 2011,
respectively 8,419 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; 18,271,019 and 18,037,552 shares
issued at September 29, 2012, and at December 31,
2011, respectively; and 17,015,543 and 16,935,204
outstanding at September 29, 2012 and December
31, 2011, respectively 183 180
Additional paid-in capital 215,589 212,618
Accumulated deficit (196,315) (185,779)
Treasury stock, at cost, 1,255,476 and 1,102,348
shares at September 29, 2012 and December 31,
2011, respectively (6,833) (5,891)
Accumulated other comprehensive loss (4,041) (4,038)
---------- ----------
Total stockholders' equity 8,583 17,090
---------- ----------
Total liabilities and stockholders' equity $ 34,566 $ 49,265
========== ==========
MATTERSIGHT CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited and in thousands)
For the Nine Months
Ended
--------------------
Sept. 29, Oct 1,
2012 2011
--------- ---------
Cash Flows from Operating Activities:
Net (loss) income $ (10,536) $ 19,663
Less: net income from discontinued operations 228 27,710
--------- ---------
Net loss from continuing operations (10,764) (8,047)
Adjustments to reconcile net loss from continuing
operations to net cash used in operating
activities:
Depreciation and amortization 2,568 2,494
Stock-based compensation 2,848 4,285
Severance and related costs 268 --
Other 2 14
Changes in assets and liabilities:
Receivables (421) (684)
Prepaid expenses (344) (2,247)
Other assets (219) 98
Accounts payable 557 (96)
Accrued compensation and related costs (162) (130)
Unearned revenue (6,044) (2,114)
Other liabilities 86 (5,623)
--------- ---------
Total adjustments (861) (4,003)
--------- ---------
Net cash used in continuing operations (11,625) (12,050)
Net cash used in discontinued operations (179) (5,445)
--------- ---------
Net cash used in operating activities (11,804) (17,495)
--------- ---------
Cash Flows from Investing Activities:
Capital expenditures and other (1,777) (664)
--------- ---------
Net cash used in continuing investing
activities (1,777) (664)
Net cash provided by discontinued investing
activities -- 35,842
--------- ---------
Net cash (used in) provided by investing
activities (1,777) 35,178
--------- ---------
Cash Flows from Financing Activities:
Proceeds from line of credit 3,691 --
Decrease (increase) in restricted cash 1,500 (17,457)
Proceeds from stock compensation and employee stock
purchase plans, net 455 93
Purchase of shares of Series B Stock (3,743) --
Principal payments under capital lease obligations (1,685) (1,360)
Acquisition of treasury stock (942) (681)
Payment of Series B Stock dividends (595) (1,901)
Fees from issuance of Common Stock (49) --
--------- ---------
Net cash used in continuing financing
activities (1,368) (21,306)
Net cash used in discontinued financing
activities -- (678)
--------- ---------
Net cash used in financing activities (1,368) (21,984)
--------- ---------
Effect of exchange rate changes on cash and cash
equivalents by continuing operations 2 (298)
Effect of exchange rate changes on cash and cash
equivalents by discontinued operations -- (233)
--------- ---------
Effect of exchange rate changes on cash and cash
equivalents 2 (531)
--------- ---------
Decrease in cash and cash equivalents (14,947) (4,832)
Cash and cash equivalents, beginning of period 29,408 20,872
--------- ---------
Cash and cash equivalents of continuing operations,
end of period $ 14,461 $ 16,040
========= =========
Non-Cash Investing and Financing Transactions:
Capital lease obligations incurred $ 1,331 $ 2,311
Capital equipment purchased on credit 1,331 2,311
Supplemental Disclosures of Cash Flow Information:
Interest paid $ 294 $ 139
MATTERSIGHT CORPORATION
CALCULATION OF ADJUSTED EARNINGS MEASURE
(Unaudited and in thousands)
For the For the
------------------ ------------------
Three Months Ended Nine Months Ended
------------------ ------------------
Sept. Oct. 1, Sept. Oct. 1,
29, 2012 2011 29, 2012 2011
-------- -------- -------- --------
GAAP -- Operating loss $ (3,830) $ (4,266) $(10,431) $(13,508)
Add back (reduce) the effect of:
Stock-based compensation 869 1,270 2,848 4,285
Severance and related costs -- 54 693 (376)
Depreciation and amortization 946 899 2,568 2,494
-------- -------- -------- --------
Adjusted earnings measure -- (loss) $ (2,015) $ (2,043) $ (4,322) $ (7,105)
======== ======== ======== ========
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