SOURCE: Mattersight Corporation

Mattersight Corporation

February 08, 2017 16:21 ET

Mattersight Announces Fourth Quarter 2016 Results

CHICAGO, IL--(Marketwired - Feb 8, 2017) - Mattersight Corporation (NASDAQ: MATR), the pioneer in personality-based software applications, today announced financial results for the fourth quarter and year ended December 31, 2016. 

"Mattersight's fourth quarter was marked by 20% sequential growth in revenues, thanks to deployment of backlogged revenue," said Mattersight CEO Kelly Conway. "We are extremely pleased with the progress we've made during the last half of the year and are heading into 2017 with what we feel is a great deal of momentum." 

Fourth Quarter 2016 Financial Highlights

  • Bookings: Annual Contract Value (ACV) bookings were $6.4 million.
  • Total Revenue: Total revenue was $12.6 million.
  • Subscription Revenue: Total subscription revenue was $11.4 million.
  • Backlog: ACV in deployment was $12.6 million at the end of the quarter.
  • Gross Margin: Gross margin was 69%.

Non-GAAP Financial Measures

Mattersight's net loss was $3.1 million in the fourth quarter of 2016. The Company realized positive "Adjusted EBITDA1" of $0.5 million for the fourth quarter of 2016. Adjusted EBITDA is a non-GAAP measure. For a reconciliation of net loss to Adjusted EBITDA, see the accompanying schedule.

Conference Call Information

Mattersight management will host a conference call at 5:00 p.m. ET on Wednesday, February 8, 2017. The conference call and slide presentation will be available at the Investor Relations section of Mattersight's website at http://www.mattersight.com/about-us/investor-relations. To listen to the conference call via telephone, please call 800.952.4789 (domestic) or 404.665.9579 (international), conference ID: 89270006.

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 8, 2017, by dialing 855.859.2056 (domestic) or 404.537.3406 (international), conference ID: 89270006.

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. In light of Regulation FD, it is our policy not to comment on earnings, financial guidance or operations other than through press releases, publicly announced conference calls, or other means that will constitute public disclosure for purposes of Regulation FD. Mattersight uses its website at www.mattersight.com as a means of disclosing material non-public information and for complying with its disclosure obligations under Regulation FD.

About Mattersight
Mattersight's mission is to help brands have more effective and effortless conversations with their customers. Using a suite of innovative personality-based software applications, Mattersight can analyze and predict customer behavior based on the language exchanged during service and sales interactions. This insight can then facilitate real-time connections between customers and the agents best capable of handling their needs. Mattersight's stack of patented SaaS applications has influenced hundreds of millions of shorter, more satisfying customer interactions. Organizations across the Financial Services, Healthcare, Technology and Telco industries rely on Mattersight to drive customer retention, employee engagement and operating efficiency. An independent research study documents the average return on investment for these organizations over a 3-year period is 344%. To learn more about how Mattersight can help your company, please visit www.mattersight.com.

1 Mattersight presents Adjusted EBITDA, 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 EBITDA provides investors with a better understanding of the results of Mattersight's operations. Management believes that Adjusted EBITDA reflects 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 EBITDA measure should be considered in addition to, not as a substitute for or superior to 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 Three Months     For the Twelve Months  
  Ended     Ended  
  Dec. 31,     Dec. 31,     Dec. 31,     Dec. 31,  
  2016     2015     2016     2015  
Revenue:                              
  Subscription revenue $ 11,423     $ 9,572     $ 38,720     $ 36,091  
  Other revenue   1,136       800       3,377       3,821  
Total revenue   12,559       10,372       42,097       39,912  
Operating expenses:                              
  Cost of subscription revenue   2,525       2,219       10,365       8,072  
  Cost of other revenue   1,379       674       3,423       2,604  
                               
Total cost of revenue, exclusive of depreciation and amortization   3,904       2,893       13,788       10,676  
  Research and development   2,914       3,706       12,502       13,891  
  Sales and marketing   3,397       3,738       16,848       13,754  
  General and administrative   2,877       2,894       11,827       11,705  
  Depreciation and amortization   1,650       1,335       5,946       4,942  
Total operating expenses   14,742       14,566       60,911       54,968  
                               
Operating loss   (2,183 )     (4,194 )     (18,814 )     (15,056 )
                               
Non-operating income (expense):                              
  Interest and other borrowing costs   (1,027 )     (166 )     (2,319 )     (600 )
  Change in fair value of warrant liability   109       --       167       3  
  Other non-operating income   6       6       39       10  
Total non-operating income (expense)   (912 )     (160 )     (2,113 )     (587 )
Loss before income taxes   (3,095 )     (4,354 )     (20,927 )     (15,643 )
Income tax provision   (24 )     (7 )     (50 )     (38 )
Net loss   (3,119 )     (4,361 )     (20,977 )     (15,681 )
Dividends related to 7% Series B convertible preferred stock   (146 )     (147 )     (586 )     (588 )
Net loss available to common stock holders $ (3,265 )   $ (4,508 )   $ (21,563 )   $ (16,269 )
                               
Per share of common stock:                              
  Basic net loss available to common stock holders $ (0.13 )   $ (0.18 )   $ (0.86 )   $ (0.70 )
  Diluted net loss available to common stock holders $ (0.13 )   $ (0.18 )   $ (0.86 )   $ (0.70 )
                               
Shares used to calculate basic net loss per share   25,366       24,963       25,209       23,264  
Shares used to calculate diluted net loss per share   25,366       24,963       25,209       23,264  
                               
Stock-based compensation expense is included in individual line items above:                              
  Total cost of revenue $ 72     $ 68     $ 371     $ 255  
  Research and development   271       262       1,134       1,075  
  Sales and marketing   282       218       1,697       1,330  
  General and administrative   404       596       2,122       2,742  
                               
                               
   
MATTERSIGHT CORPORATION  
CONSOLIDATED BALANCE SHEETS  
(Unaudited and in thousands, except share and per share data)  
   
  December 31,     December 31,  
  2016     2015  
ASSETS              
Current Assets:              
  Cash and cash equivalents $ 12,538     $ 15,407  
  Receivables net of allowances of $311 and $24, respectively   8,508       4,863  
  Prepaid expenses   4,440       4,582  
  Other current assets   296       235  
    Total current assets   25,782       25,087  
Equipment and leasehold improvements, net of accumulated depreciation              
and amortization of $19,748 and $14,805, respectively   9,576       8,523  
Goodwill   972       972  
Intangible assets, net of amortization of $3,820 and $3,351, respectively   3,201       3,353  
Other long-term assets (includes $4,210 in restricted cash at December 31, 2016)   6,033       2,467  
    Total assets $ 45,564     $ 40,402  
               
LIABILITIES AND STOCKHOLDERS' EQUITY              
Current Liabilities:              
  Short-term debt $ 738     $ --  
  Accounts payable   1,835       1,223  
  Accrued compensation and related costs   2,302       2,761  
  Unearned revenue   4,911       6,378  
  Capital leases   1,982       1,819  
  Other current liabilities   3,374       1,796  
    Total current liabilities   15,142       13,977  
Long-term debt   20,839       --  
Long-term unearned revenue   757       1,597  
Long-term capital leases   1,602       1,614  
Other long-term liabilities   5,945       5,689  
    Total liabilities   44,285       22,877  
               
7% Series B convertible preferred stock, $0.01 par value; 5,000,000 shares authorized and designated; 1,637,948 and 1,644,768 shares issued and outstanding at December 31, 2016 and December 31, 2015, respectively, with a liquidation preference of $10,985 and $10,443 at December 31, 2016 and December 31, 2015, respectively   8,354       8,388  
               
Stockholders' Equity:              
Preferred stock, $0.01 par value; 35,000,000 shares authorized; none issued   --       --  
Common stock, $0.01 par value; 50,000,000 shares authorized; 27,511,361 and 27,636,853 shares issued at December 31, 2016 and December 31, 2015, respectively; and 26,622,706 and 25,849,876 shares outstanding at December 31, 2016 and December 31, 2015, respectively   275       276  
Additional paid-in capital   264,214       264,212  
Accumulated deficit   (263,062 )     (242,085 )
Treasury stock, at cost, 888,655 and 1,786,977 shares at December 31, 2016 and December 31, 2015, respectively   (4,455 )     (9,239 )
Accumulated other comprehensive loss   (4,047 )     (4,027 )
    Total stockholders' (deficit) equity   (7,075 )     9,137  
    Total liabilities and stockholders' equity $ 45,564     $ 40,402  
   
   
   
MATTERSIGHT CORPORATION  
CONSOLIDATED STATEMENTS OF CASH FLOWS  
(Unaudited and in thousands)  
   
  For the Twelve Months Ended  
  Dec. 31,     Dec. 31,  
  2016     2015  
Cash Flows from Operating Activities:              
  Net loss $ (20,977 )   $ (15,681 )
  Adjustments to reconcile net loss to net cash used in operating activities:              
    Discount accretion and other debt-related costs   436       --  
    Depreciation and amortization   5,946       4,942  
    Stock-based compensation   5,324       5,402  
    Provision for uncollectible amounts   287       --  
    Change in fair value of warrant liability   (167 )     (3 )
  Changes in assets and liabilities:              
    Receivables   (3,932 )     (1,403 )
    Prepaid expenses   71       (623 )
    Other current assets   (62 )     (118 )
    Other long-term assets   (3,615 )     1,028  
    Accounts payable   375       (29 )
    Accrued compensation and related costs   (459 )     520  
    Unearned revenue   (2,307 )     (2,416 )
    Other current liabilities   722       (1,675 )
    Other long-term liabilities   582       3,667  
      Total adjustments   3,201       9,292  
        Net cash used in operating activities   (17,776 )     (6,389 )
Cash Flows from Investing Activities:              
  Capital expenditures   (3,714 )     (4,917 )
  Investment in intangible assets   (349 )     (171 )
        Net cash used in investing activities   (4,063 )     (5,088 )
Cash Flows from Financing Activities:              
  Proceeds from term loan and other borrowings   28,880       --  
  Repayments of term loan and other borrowings   (6,945 )     (750 )
  Proceeds from line of credit   16,246       15,000  
  Repayments of line of credit   (16,246 )     (15,000 )
  Fees paid for issuance of term loan   (724 )     --  
  Proceeds from issuance of common stock, net   --       15,942  
  Principal payments on capital lease obligations   (2,296 )     (2,116 )
  Cash paid to satisfy tax withholding upon employee vesting   (440 )     (874 )
  7% Series B convertible preferred stock dividend   (10 )     --  
  Proceeds from exercise of stock options   236       241  
  Proceeds from employee stock purchase plan   289       212  
        Net cash provided by financing activities   18,990       12,655  
Effect of exchange rate changes on cash and cash equivalents   (20 )     (9 )
(Decrease) increase in cash and cash equivalents   (2,869 )     1,169  
Cash and cash equivalents, beginning of period   15,407       14,238  
Cash and cash equivalents, end of period $ 12,538     $ 15,407  
               
Non-Cash Investing and Financing Activities:              
  Capital lease obligations incurred $ 2,447     $ 2,737  
  Capital equipment purchased on credit   2,447       2,737  
  Financing of intellectual property purchased, at fair value   --       1,958  
  Issuance of warrant, at fair value   924       --  
Supplemental Disclosures of Cash Flow Information:              
  Interest paid $ 1,343     $ 314  
   
   
   
MATTERSIGHT CORPORATION  
CALCULATION OF ADJUSTED EBITDA  
(Unaudited and in thousands)  
   
  For the Three Months     For the Twelve Months  
  Ended     Ended  
  Dec. 31,     Dec. 31,     Dec. 31,     Dec. 31,  
  2016     2015     2016     2015  
GAAP -- Net loss $ (3,119 )   $ (4,361 )   $ (20,977 )   $ (15,681 )
Depreciation and amortization   1,650       1,335       5,946       4,942  
Interest and other borrowing costs   1,027       166       2,319       600  
Interest income   (6 )     (6 )     (39 )     (10 )
Income tax provision   24       7       50       38  
EBITDA   (424 )     (2,859 )     (12,701 )     (10,111 )
Stock-based compensation   1,029       1,144       5,324       5,402  
Change in fair value of warrant liability   (109 )     --       (167 )     (3 )
Adjusted EBITDA $ 496     $ (1,715 )   $ (7,544 )   $ (4,712 )
                               

Contact Information