CHICAGO, IL -- (Marketwire) -- 05/10/12 -- Mattersight Corporation (NASDAQ: MATR) today announced financial results for the first quarter ended March 31, 2012.
Mattersight's total services revenue was $8.9 million, including $7.2 million of subscription revenues. The Company realized an "Adjusted Earnings(1)" 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 operations(2) 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 backlog(3) 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)
=========== ===========
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