SOURCE: Mattersight Corporation

Mattersight Corporation

May 07, 2014 16:15 ET

Mattersight Announces First Quarter 2014 Results

CHICAGO, IL--(Marketwired - May 7, 2014) -  Mattersight Corporation (NASDAQ: MATR), a leading provider of enterprise analytics, today announced financial results for the first quarter ended March 31, 2014. 

Mattersight's total services revenue was $7.0 million, including $5.9 million of subscription revenue. The Company realized an "Adjusted Earnings1" loss of $1.6 million for the first quarter of 2014. 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 $4.0 million in the first quarter of 2014. 

Q1 Highlights

  • Q1 performance in line with forecast, which reflected the previously announced loss of a contract
  • Booked contracts with incremental ACV of $3.4 million
  • Increased rolling four quarter incremental ACV bookings by 98%
  • Achieved a 9% sequential increase in our book of business
  • Converted three pilots to subscription contracts
  • Added a record 29 new pilots, including 22 routing pilots; 18 of these pilots are with new logo customers
  • Ended the quarter with a record 66 pilots having a record follow-on ACV of ~$34 million
  • Signed a paid pilot with a Fortune 50 company for our performance management application, with large follow-on potential
  • Closed significant add-on orders at several existing large customers

Conference Call Information

Mattersight management will host a conference call at 5:00 p.m. ET on Wednesday, May 7, 2014. 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: 33606370. 

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 June 7, 2014, by dialing 855.859.2056 (domestic) or 404.537.3406 (international), conference ID: 33606370.  

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® Behavioral Analytics captures and analyzes customer and employee interactions, employee desktop data, and other contextual information to optimally route customers to the best available employee, 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 solutions 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.
   
   
MATTERSIGHT CORPORATION  
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS  
(Unaudited and in thousands, except per share data)  
   
    For the Three Months Ended  
    March 31,     March 31,  
    2014     2013  
Revenue:                
  Behavioral Analytics revenue   $ 6,749     $ 8,194  
  Other revenue     232       322  
    Total services revenue     6,981       8,516  
  Reimbursed expenses     32       82  
Total revenue     7,013       8,598  
Operating expenses:                
  Cost of Behavioral Analytics revenue     2,098       2,723  
  Cost of Other revenue     103       156  
    Cost of services     2,201       2,879  
  Reimbursed expenses     32       82  
Total cost of revenue, exclusive of depreciation and amortization shown below:     2,233       2,961  
  Sales, marketing and development     5,221       6,230  
  General and administrative     2,250       2,271  
  Depreciation and amortization     743       966  
Total operating expenses     10,447       12,428  
                 
Operating loss     (3,434 )     (3,830 )
Interest and other expense, net     (150 )     (91 )
Change in fair value of warrant liability     (370 )     --  
Loss before income taxes     (3,954 )     (3,921 )
Income tax (provision) benefit     (9 )     248  
Net loss     (3,963 )     (3,673 )
Dividends related to Series B Stock     (147 )     (147 )
Net loss available to Common Stock holders   $ (4,110 )   $ (3,820 )
                 
Per share of Common Stock:                
Basic net loss available to Common Stock holders   $ (0.22 )   $ (0.23 )
Diluted net loss available to Common Stock holders   $ (0.22 )   $ (0.23 )
                 
Shares used to calculate basic net loss per share     18,503       16,320  
Shares used to calculate diluted net loss per share     18,503       16,320  
                 
Stock-based compensation, primarily restricted stock, is included in individual line items above:                
  Cost of Behavioral Analytics revenue   $ 56     $ 4  
  Sales, marketing and development     590       849  
  General and administrative     442       518  
                   
                   
                   
MATTERSIGHT CORPORATION  
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS  
(Unaudited and in thousands)  
   
    For the Three Months Ended  
    March 31,     March 31,  
    2014     2013  
Net loss   $ (3,963 )   $ (3,673 )
Other comprehensive loss:                
Effect of currency translation     5       (8 )
Comprehensive net loss   $ (3,958 )   $ (3,681 )
                 
                 
                 
MATTERSIGHT CORPORATION  
CONDENSED CONSOLIDATED BALANCE SHEETS  
(Unaudited and in thousands, except share and per share data)  
   
    March 31,     December 31,  
    2014     2013  
ASSETS:                
Current Assets:                
  Cash and cash equivalents   $ 8,101     $ 13,392  
  Receivables (net of allowances of $12 as of March 31, 2014 and $12 as of December 31, 2013)     2,435       2,384  
  Prepaid expenses     4,309       3,576  
  Other current assets     362       427  
    Total current assets     15,207       19,779  
Equipment and leasehold improvements, net     4,922       5,158  
Goodwill     972       972  
Intangibles, net     453       409  
Other long-term assets     4,328       4,431  
    Total assets   $ 25,882     $ 30,749  
                 
LIABILITIES AND STOCKHOLDERS' EQUITY:                
 Current Liabilities:                
  Accounts payable   $ 779     $ 752  
  Accrued compensation and related costs     1,424       1,844  
  Unearned revenue     5,390       7,215  
  Other current liabilities     4,694       4,098  
    Total current liabilities     12,287       13,909  
Long-term unearned revenue     3,210       2,866  
Other long-term liabilities     1,584       1,607  
    Total liabilities     17,081       18,382  
                 
Series B Stock, $0.01 par value; 5,000,000 shares authorized and designated; 1,649,122 shares issued and outstanding at March 31, 2014 and December 31, 2013, with a liquidation preference of $9,441 and $9,294 at March 31, 2014 and December 31, 2013, respectively     8,411       8,411  
                 
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; 20,750,724 and 20,465,984 shares issued at March 31, 2014, and December 31, 2013, respectively; and 19,074,434 and 18,886,966 outstanding at March 31, 2014 and December 31, 2013, respectively     208       205  
  Additional paid-in capital     228,976       228,038  
  Accumulated deficit     (216,135 )     (212,172 )
  Treasury stock, at cost, 1,676,290 and 1,579,018 shares at March 31, 2014 and December 31, 2013, respectively     (8,631 )     (8,082 )
  Accumulated other comprehensive loss     (4,028 )     (4,033 )
    Total stockholders' equity     390       3,956  
    Total liabilities and stockholders' equity   $ 25,882     $ 30,749  
                 
                 
                 
MATTERSIGHT CORPORATION  
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS  
(Unaudited and in thousands)  
   
    For the Three Months Ended  
    March 31,     March 31,  
    2014     2013  
Cash Flows from Operating Activities:                
  Net loss   $ (3,963 )   $ (3,673 )
  Adjustments to reconcile net loss to net cash used in operating activities:                
    Depreciation and amortization     743       966  
    Stock-based compensation     1,088       1,371  
    Change in fair value of warrant liability     370       --  
  Changes in assets and liabilities:                
    Receivables     (51 )     (614 )
    Prepaid expenses     (664 )     30  
    Other assets     66       (38 )
    Accounts payable     27       489  
    Accrued compensation and related costs     (420 )     (147 )
    Unearned revenue     (1,481 )     964  
    Other liabilities     62       (215 )
      Total adjustments     (260 )     2,806  
        Net cash used in operating activities     (4,223 )     (867 )
Cash Flows from Investing Activities:                
  Capital expenditures and other     (66 )     (219 )
  Patents and trademarks     (65 )     (53 )
        Net cash used in investing activities     (131 )     (272 )
Cash Flows from Financing Activities:                
  Principal payments under capital lease obligations     (422 )     (629 )
  Acquisition of treasury stock     (549 )     (195 )
  Proceeds from stock compensation and employee stock purchase plans, net     36       36  
  Fees from issuance of Common Stock     (2 )     --  
        Net cash used in financing activities     (937 )     (788 )
Effect of exchange rate changes on cash and cash equivalents     --       (12 )
Decrease in cash and cash equivalents     (5,291 )     (1,939 )
Cash and cash equivalents, beginning of period     13,392       14,419  
Cash and cash equivalents, end of period   $ 8,101     $ 12,480  
                 
Non-Cash Investing and Financing Transactions:                
  Capital lease obligations incurred   $ 420     $ 785  
  Capital equipment purchased on credit     420       785  
  Fair value of warrants classified as liability     1,155       --  
Supplemental Disclosures of Cash Flow Information:                
Interest paid   $ 76     $ 71  
                 
                 
                 
MATTERSIGHT CORPORATION  
CALCULATION OF ADJUSTED EARNINGS MEASURE  
(Unaudited and in thousands)  
   
    For the Three Months Ended  
    March 31,     March 31,  
    2014     2013  
GAAP -- Operating loss   $ (3,434 )   $ (3,830 )
                 
Add back (reduce) the effect of:                
Stock-based compensation     1,088       1,371  
Depreciation and amortization     743       966  
Adjusted earnings measure -- loss   $ (1,603 )   $ (1,493 )

Contact Information

  • Contact

    Mark Iserloth
    Vice President and Chief Financial Officer
    312.454.3613
    ir@mattersight.com