SOURCE: Mattersight Corporation

Mattersight Corporation

February 12, 2014 16:42 ET

Mattersight Announces Fourth Quarter 2013 Results

CHICAGO, IL--(Marketwired - Feb 12, 2014) - Mattersight Corporation (NASDAQ: MATR) today announced financial results for the fourth quarter ended December 31, 2013. 

Mattersight's total services revenue was $9.2 million, including $7.6 million of subscription revenue. The Company realized an "Adjusted Earnings1" profit of $0.8 million for the fourth quarter of 2013. 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 $1.5 million in the fourth quarter of 2013. 

Q4 Highlights

  • Achieved record revenues of $9.2 million
  • Achieved $0.8 million of adjusted earnings
  • Attained record gross margins of 75%
  • Booked contracts with incremental ACV of $2.0 million
  • Signed twenty-five new pilots, including twenty-two routing pilots; fifteen of these pilots are new logos
  • Ended the quarter with a record fifty-four pilots

Conference Call Information
Mattersight management will host a conference call at 5:00 p.m. ET on Wednesday, February 12, 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: 41324412.

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 March 12, 2014, by dialing 855.859.2056 (domestic) or 404.537.3406 (international), conference ID: 41324412. 

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  
 CONSOLIDATED STATEMENTS OF OPERATIONS  
 (Unaudited and in thousands, except per share data)  
   
    For the     For the  
    Three Months Ended     Twelve Months Ended  
    Dec. 31,     Dec. 31,     Dec. 31,     Dec. 31,  
    2013     2012     2013     2012  
Revenue:                                
  Behavioral Analytics revenue   $ 8,938     $ 8,343     $ 33,005     $ 32,138  
  Other revenue     233       285       1,206       1,314  
    Total services revenue     9,171       8,628       34,211       33,452  
  Reimbursed expenses     96       97       283       411  
Total revenue     9,267       8,725       34,494       33,863  
Operating expenses:                                
  Cost of Behavioral Analytics revenue     2,181       3,245       10,139       12,208  
  Cost of other revenue     100       156       617       702  
    Cost of services     2,281       3,401       10,756       12,910  
  Reimbursed expenses     96       97       283       411  
Total cost of revenue, exclusive of depreciation and amortization shown below:     2,377       3,498       11,039       13,321  
  Sales, marketing and development     5,250       6,571       21,752       23,142  
  General and administrative     2,156       2,341       8,781       8,255  
  Severance and related costs     --       --       154       693  
  Depreciation     764       915       3,450       3,419  
  Amortization of intangibles     (77 )     17       66       81  
Total operating expenses     10,470       13,342       45,242       48,911  
                                 
Operating loss     (1,203 )     (4,617 )     (10,748 )     (15,048 )
Interest and other expense, net     (346 )     (81 )     (659 )     (384 )
Loss from continuing operations before income taxes     (1,549 )     (4,698 )     (11,407 )     (15,432 )
Income tax benefit (provision)     15       (8 )     244       (38 )
Loss from continuing operations     (1,534 )     (4,706 )     (11,163 )     (15,470 )
Income from discontinued operations, net of tax     --       21       --       249  
Net loss     (1,534 )     (4,685 )     (11,163 )     (15,221 )
Series B Stock fair value over stated value     --       --       --       (69 )
Dividends related to Series B Stock     (148 )     (147 )     (589 )     (591 )
Net loss available to Common Stock holders   $ (1,682 )   $ (4,832 )   $ (11,752 )   $ (15,881 )
                                 
Per share of Common Stock:                                
Basic loss from continuing operations   $ (0.10 )   $ (0.30 )   $ (0.70 )   $ (1.01 )
Basic income from discontinued operations   $ --     $ --     $ --     $ 0.02  
Basic net loss available to Common Stock holders   $ (0.10 )   $ (0.30 )   $ (0.70 )   $ (0.99 )
                                 
Per share of Common Stock:                                
Diluted loss from continuing operations   $ (0.10 )   $ (0.30 )   $ (0.70 )   $ (1.01 )
Diluted income from discontinued operations   $ --     $ --     $ --     $ 0.02  
Diluted net loss available to Common Stock holders   $ (0.10 )   $ (0.30 )   $ (0.70 )   $ (0.99 )
                                 
Shares used to calculate basic net loss per share     17,342       16,223       16,722       16,002  
Shares used to calculate diluted net loss per share     17,342       16,223       16,722       16,002  
                                 
Stock-based compensation, primarily restricted stock, is included in individual line items above:                                
  Cost of Behavioral Analytics revenue   $ 59     $ 2     $ 267     $ 16  
  Sales, marketing and development     780       530       3,874       2,308  
  General and administrative     498       349       2,151       1,405  
  Severance and related costs     --       --       29       268  
                                   
                                   
                                   
MATTERSIGHT CORPORATION  
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS  
(Unaudited and in thousands)  
                         
    For the     For the  
    Three Months Ended     Twelve Months Ended  
    Dec. 31,     Dec. 31,     Dec. 31,     Dec. 31,  
    2013     2012     2013     2012  
Net loss   $ (1,534 )   $ (4,685 )   $ (11,163 )   $ (15,221 )
Other comprehensive loss:                                
Effect of currency translation     6       2       6       (1 )
Comprehensive net loss   $ (1,528 )   $ (4,683 )   $ (11,157 )   $ (15,222 )
                                 
                                 
                                 
MATTERSIGHT CORPORATION  
CONSOLIDATED BALANCE SHEETS  
(Unaudited and in thousands, except share and per share data)  
             
    December 31,     December 31,  
    2013     2012  
ASSETS:            
Current Assets:                
  Cash and cash equivalents   $ 13,392     $ 14,419  
  Receivables (net of allowances of $12 and $12)     2,384       2,568  
  Prepaid expenses     3,576       4,359  
  Other current assets     427       305  
    Total current assets     19,779       21,651  
Equipment and leasehold improvements, net     5,158       4,727  
Goodwill     972       972  
Intangibles, net     409       236  
Other long-term assets     4,431       3,776  
    Total assets   $ 30,749     $ 31,362  
                 
LIABILITIES AND STOCKHOLDERS' EQUITY:                
Current Liabilities:                
  Short-term debt   $ --     $ 3,703  
  Accounts payable     752       781  
  Accrued compensation and related costs     1,118       1,335  
  Unearned revenue     7,215       5,853  
  Other current liabilities     4,098       2,889  
    Total current liabilities     13,183       14,561  
Long-term unearned revenue     2,866       2,374  
Other long-term liabilities     1,607       1,231  
    Total liabilities     17,656       18,166  
                     
Series B Stock, $0.01 par value; 5,000,000 shares authorized and designated; 1,649,122 and 1,649,201 shares issued and outstanding at December 31, 2013 and December 31, 2012, respectively, with a liquidation preference of $9,294 and $8,705 at December 31, 2013 and December 31, 2012, 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; 20,465,984 and 18,407,848 shares issued at December 31, 2013, and December 31, 2012, respectively; and 18,886,966 and 17,114,880 outstanding at December 31, 2013 and December 31, 2012, respectively     205       184  
  Additional paid-in capital     228,755       216,667  
  Accumulated deficit     (212,163 )     (201,000 )
  Treasury stock, at cost, 1,579,018 and 1,292,968 shares at December 31, 2013 and December 31, 2012, respectively     (8,082 )     (7,027 )
  Accumulated other comprehensive loss     (4,033 )     (4,039 )
    Total stockholders' equity     4,682       4,785  
    Total liabilities and stockholders' equity   $ 30,749     $ 31,362  
                 
                 
                 
MATTERSIGHT CORPORATION  
CONSOLIDATED STATEMENTS OF CASH FLOWS  
(Unaudited and in thousands)  
   
    For the  
    Twelve Months Ended  
    December 31,     December 31,  
    2013     2012  
Cash Flows from Operating Activities:                
  Net loss   $ (11,163 )   $ (15,221 )
  Less: net income from discontinued operations     --       249  
  Net loss from continuing operations     (11,163 )     (15,470 )
  Adjustments to reconcile net loss from continuing operations to net cash provided by (used in) operating activities:                
    Depreciation and amortization     3,516       3,500  
    Stock-based compensation     6,292       3,729  
    Severance and related costs     29       268  
    Change in fair value of warrant liability     125       --  
    Other     2       2  
  Changes in assets and liabilities:                
    Receivables     184       (27 )
    Prepaid expenses     739       1,879  
    Other assets     (112 )     (50 )
    Accounts payable     (29 )     (31 )
    Accrued compensation and related costs     (217 )     (47 )
    Unearned revenue     1,854       (4,592 )
    Other liabilities     330       (177 )
      Total adjustments     12,713       4,454  
        Net cash provided by (used in) continuing operations     1,550       (11,016 )
        Net cash provided by discontinued operations     --       24  
        Net cash provided by (used in) operating activities     1,550       (10,992 )
Cash Flows from Investing Activities:                
  Capital expenditures and other     (1,233 )     (2,081 )
  Patents and trademarks     (239 )     (79 )
        Net cash used in continuing investing activities     (1,472 )     (2,160 )
        Net cash used in discontinued investing activities     --       --  
        Net cash used in investing activities     (1,472 )     (2,160 )
Cash Flows from Financing Activities:                
  Proceeds from issuance of Common Stock, net     5,621       --  
  Proceeds from line of credit     2,400       3,691  
  Repayments from line of credit     (6,096 )     --  
  Principal payments under capital lease obligations     (2,117 )     (2,311 )
  Acquisition of treasury stock     (1,055 )     (1,136 )
  Proceeds from stock compensation and employee stock purchase plans, net     138       802  
  Proceeds from issuance of stock warrants     4       --  
  Fees from issuance of Common Stock     --       (49 )
  Decrease in restricted cash     --       1,500  
  Purchase of shares of Series B Stock     --       (3,743 )
  Payment of Series B Stock dividends     --       (595 )
        Net cash used in continuing financing activities     (1,105 )     (1,841 )
        Net cash used in discontinued financing activities     --       --  
        Net cash used in financing activities     (1,105 )     (1,841 )
Effect of exchange rate changes on cash and cash equivalents by continuing operations     --       4  
Effect of exchange rate changes on cash and cash equivalents by discontinued operations     --       --  
Effect of exchange rate changes on cash and cash equivalents     --       4  
Decrease in cash and cash equivalents     (1,027 )     (14,989 )
Cash and cash equivalents, beginning of period     14,419       29,408  
Cash and cash equivalents of continuing operations, end of period   $ 13,392     $ 14,419  
                 
                 
    For the  
    Twelve Months Ended  
    December 31,     December 31,  
    2013     2012  
Non-Cash Investing and Financing Transactions:                
  Capital lease obligations incurred   $ 2,973     $ 1,793  
  Capital equipment purchased on credit     2,973       1,793  
  Fair value of warrants classified as liability     785       --  
Supplemental Disclosures of Cash Flow Information:                
  Interest paid   $ 403     $ 371  
                 
                 
                 
MATTERSIGHT CORPORATION  
CALCULATION OF ADJUSTED EARNINGS MEASURE  
(Unaudited and in thousands)  
                         
    For the     For the  
    Three Months Ended     Twelve Months Ended  
    Dec. 31,     Dec. 31,     Dec. 31,     Dec. 31,  
    2013     2012     2013     2012  
GAAP -- Operating loss   $ (1,203 )   $ (4,617 )   $ (10,748 )   $ (15,048 )
                                 
Add back (reduce) the effect of:                                
Stock-based compensation     1,337       881       6,292       3,729  
Severance and related costs     --       --       154       693  
Depreciation and amortization     687       932       3,516       3,500  
Adjusted earnings measure -- earnings (loss)   $ 821     $ (2,804 )   $ (786 )   $ (7,126 )
                                 
                                 

Contact Information

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