SOURCE: Mattersight Corporation

Mattersight Corporation

November 06, 2013 16:15 ET

Mattersight Announces Third Quarter 2013 Results

CHICAGO, IL--(Marketwired - Nov 6, 2013) -  Mattersight Corporation (NASDAQ: MATR) today announced financial results for the third quarter ended September 30, 2013. 

Mattersight's total services revenue was $8.6 million, including $6.8 million of subscription revenue. The Company realized an "Adjusted Earnings1" profit of $0.3 million for the third 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 $2.7 million in the third quarter of 2013. 

Q3 Highlights

  • Achieved $0.3m of Adjusted Earnings
  • Achieved record gross margin of 68%
  • Recorded incremental ACV bookings of $3.8 million
  • Signed seventeen new routing pilots, which will create potential conversion opportunities in 2014; nine of these pilots are new logos
  • Ended the quarter with a record thirty-three pilots
  • Increased the conversion value of the active pilots by 80% sequentially
  • Converted two pilots, one of which resulted in Mattersight's first OEM agreement

Q4 Guidance
Mattersight currently expects its total subscription revenues will increase approximately 7% sequentially in the fourth quarter of 2013.

Conference Call Information
Mattersight management will host a conference call at 5:00 p.m. ET on Wednesday, November 6, 2013. 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: 91905725. 

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 6, 2013, by dialing 855.859.2056 (domestic) or 404.537.3406 (international), conference ID: 91905725.  

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     For the  
    Three Months Ended     Nine Months Ended  
    Sept. 30,     Sept. 29,     Sept. 30,     Sept. 29,  
    2013     2012     2013     2012  
Revenue:                        
  Behavioral Analytics revenue   $ 8,307     $ 7,682     $ 24,067     $ 23,795  
  Other revenue     302       308       973       1,029  
    Total services revenue     8,609       7,990       25,040       24,824  
  Reimbursed expenses     56       114       187       314  
Total revenue     8,665       8,104       25,227       25,138  
Operating expenses:                                
  Cost of Behavioral Analytics revenue     2,721       2,828       7,958       8,963  
  Cost of other revenue     163       155       517       546  
    Cost of services     2,884       2,983       8,475       9,509  
  Reimbursed expenses     56       114       187       314  
Total cost of revenue, exclusive of depreciation and amortization shown below:     2,940       3,097       8,662       9,823  
  Sales, marketing and development     4,878       5,940       16,502       16,571  
  General and administrative     2,241       1,951       6,625       5,914  
  Severance and related costs     154       --       154       693  
  Depreciation and amortization     950       946       2,829       2,568  
Total operating expenses     11,163       11,934       34,772       35,569  
                                 
Operating loss     (2,498 )     (3,830 )     (9,545 )     (10,431 )
Interest and other expense, net     (125 )     (88 )     (313 )     (303 )
Loss from continuing operations before income taxes     (2,623 )     (3,918 )     (9,858 )     (10,734 )
Income tax (provision) benefit     (10 )     (9 )     229       (30 )
Loss from continuing operations     (2,633 )     (3,927 )     (9,629 )     (10,764 )
Income from discontinued operations, net of tax     --       332       --       228  
Net loss     (2,633 )     (3,595 )     (9,629 )     (10,536 )
Series B Stock fair value over stated value     --       --       --       (69 )
Dividends related to Series B Stock     (147 )     (147 )     (441 )     (444 )
Net loss available to Common Stock holders   $ (2,780 )   $ (3,742 )   $ (10,070 )   $ (11,049 )
                                 
Per share of Common Stock:                                
Basic loss from continuing operations   $ (0.17 )   $ (0.25 )   $ (0.61 )   $ (0.71 )
Basic income from discontinued operations   $ --     $ 0.02     $ --     $ 0.01  
Basic net loss available to Common Stock holders   $ (0.17 )   $ (0.23 )   $ (0.61 )   $ (0.69 )
                                 
Per share of Common Stock:                                
Diluted loss from continuing operations   $ (0.17 )   $ (0.25 )   $ (0.61 )   $ (0.71 )
Diluted income from discontinued operations   $ --     $ 0.02     $ --     $ 0.01  
Diluted net loss available to Common Stock holders   $ (0.17 )   $ (0.23 )   $ (0.61 )   $ (0.69 )
                                 
Shares used to calculate basic net loss per share     16,758       16,069       16,515       15,928  
Shares used to calculate diluted net loss per share     16,758       16,069       16,515       15,928  
                                 
Stock-based compensation, primarily restricted stock, is included in individual line items above:                                
  Cost of Behavioral Analytics revenue   $ 149     $ 3     $ 208     $ 14  
  Sales, marketing and development     943       524       3,094       1,778  
  General and administrative     596       342       1,653       1,056  
  Severance and related costs     29       --       29       268  
                                   
                                   
                                   
MATTERSIGHT CORPORATION  
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS  
(Unaudited and in thousands)  
   
    For the     For the  
    Three Months Ended     Nine Months Ended  
    Sept. 30,     Sept. 29,     Sept. 30,     Sept. 29,  
    2013     2012     2013     2012  
Net loss   $ (2,633 )   $ (3,595 )   $ (9,629 )   $ (10,536 )
Other comprehensive loss:                                
Effect of currency translation     5       (1 )     --       (3 )
Comprehensive net loss   $ (2,628 )   $ (3,596 )   $ (9,629 )   $ (10,539 )
                                 
                                 
                                 
MATTERSIGHT CORPORATION  
CONDENSED CONSOLIDATED BALANCE SHEETS  
(Unaudited and in thousands, except share and per share data)  
   
    September 30,     December 31,  
    2013     2012  
ASSETS:                
Current Assets:                
  Cash and cash equivalents   $ 13,740     $ 14,419  
  Receivables (net of allowances of $14 and $12)     2,209       2,568  
  Prepaid expenses     4,000       4,359  
  Other current assets     380       305  
    Total current assets     20,329       21,651  
Equipment and leasehold improvements, net     5,487       4,727  
Goodwill     972       972  
Intangibles, net     257       236  
Other long-term assets     4,627       3,776  
    Total assets   $ 31,672     $ 31,362  
                 
LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY:                
Current Liabilities:                
  Short-term debt   $ 3,696     $ 3,703  
  Accounts payable     732       781  
  Accrued compensation and related costs     1,218       1,335  
  Unearned revenue     10,830       5,853  
  Other current liabilities     3,876       2,889  
    Total current liabilities     20,352       14,561  
Long-term unearned revenue     1,466       2,374  
Other long-term liabilities     1,861       1,231  
    Total liabilities     23,679       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 September 30, 2013 and December 31, 2012, respectively, with a liquidation preference of $9,146 and $8,705 at September 30, 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; 18,919,276 and 18,407,848 shares issued at September 30, 2013, and December 31, 2012, respectively; and 17,362,740 and 17,114,880 outstanding at September 30, 2013 and December 31, 2012, respectively     189       184  
  Additional paid-in capital     222,035       216,667  
  Accumulated deficit     (210,629 )     (201,000 )
  Treasury stock, at cost, 1,556,536 and 1,292,968 shares at September 30, 2013 and December 31, 2012, respectively     (7,974 )     (7,027 )
  Accumulated other comprehensive loss     (4,039 )     (4,039 )
    Total stockholders' (deficit) equity     (418 )     4,785  
    Total liabilities and stockholders' (deficit) equity   $ 31,672     $ 31,362  
                 
                 
                 
MATTERSIGHT CORPORATION  
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS  
(Unaudited and in thousands)  
    For the  
    Nine Months Ended  
    Sept. 30,     Sept. 29,  
    2013     2012  
Cash Flows from Operating Activities:            
  Net loss   $ (9,629 )   $ (10,536 )
  Less: net income from discontinued operations     --       228  
  Net loss from continuing operations     (9,629 )     (10,764 )
  Adjustments to reconcile net loss from continuing operations to net cash provided by (used in) operating activities:                
    Depreciation and amortization     2,829       2,568  
    Stock-based compensation     4,955       2,848  
    Severance and related costs     29       268  
    Change in fair value of warrant liability     (43 )     --  
    Other     2       2  
  Changes in assets and liabilities:                
    Receivables     357       (421 )
    Prepaid expenses     233       (344 )
    Other assets     (65 )     (219 )
    Accounts payable     (49 )     557  
    Accrued compensation and related costs     (117 )     (162 )
    Unearned revenue     4,069       (6,044 )
    Other liabilities     486       86  
      Total adjustments     12,686       (861 )
        Net cash provided by (used in) continuing operations     3,057       (11,625 )
        Net cash used in discontinued operations     --       (179 )
        Net cash provided by (used in) operating activities     3,057       (11,804 )
Cash Flows from Investing Activities:                
  Capital expenditures and other     (1,168 )     (1,777 )
        Net cash used in continuing investing activities     (1,168 )     (1,777 )
        Net cash used in discontinued investing activities     --       --  
        Net cash used in investing activities     (1,168 )     (1,777 )
Cash Flows from Financing Activities:                
  Proceeds from line of credit     2,400       3,691  
  Repayments from line of credit     (2,400 )     --  
  Decrease in restricted cash     --       1,500  
  Proceeds from stock compensation and employee stock purchase plans, net     106       455  
  Purchase of shares of Series B Stock     --       (3,743 )
  Principal payments under capital lease obligations     (1,723 )     (1,685 )
  Acquisition of treasury stock     (947 )     (942 )
  Payment of Series B Stock dividends     --       (595 )
  Fees from issuance of Common Stock     --       (49 )
        Net cash used in continuing financing activities     (2,564 )     (1,368 )
        Net cash used in discontinued financing activities     --       --  
        Net cash used in financing activities     (2,564 )     (1,368 )
Effect of exchange rate changes on cash and cash equivalents by continuing operations     (4 )     2  
Effect of exchange rate changes on cash and cash equivalents by discontinued operations     --       --  
Effect of exchange rate changes on cash and cash equivalents     (4 )     2  
Decrease in cash and cash equivalents     (679 )     (14,947 )
Cash and cash equivalents, beginning of period     14,419       29,408  
Cash and cash equivalents of continuing operations, end of period   $ 13,740     $ 14,461  
                 
                 
    For the
    Nine Months Ended
    Sept. 30,   Sept. 29,
    2013   2012
         
Non-Cash Investing and Financing Transactions:            
  Capital lease obligations incurred   $ 2,767   $ 1,331
  Capital equipment purchased on credit     2,767     1,331
  Fair value of warrants classified as liability     617     --
Supplemental Disclosures of Cash Flow Information:            
  Interest paid   $ 295   $ 294
               
               
               
MATTERSIGHT CORPORATION  
CALCULATION OF ADJUSTED EARNINGS MEASURE  
(Unaudited and in thousands)  
   
    For the     For the  
    Three Months Ended     Nine Months Ended  
    Sept. 30,     Sept. 29,     Sept. 30,     Sept. 29,  
    2013     2012     2013     2012  
GAAP -- Operating loss   $ (2,498 )   $ (3,830 )   $ (9,545 )   $ (10,431 )
                                 
Add back (reduce) the effect of:                                
Stock-based compensation     1,688       869       4,955       2,848  
Severance and related costs     154       --       154       693  
Depreciation and amortization     950       946       2,829       2,568  
Adjusted earnings measure -- earnings (loss)   $ 294     $ (2,015 )   $ (1,607 )   $ (4,322 )

Contact Information

  • Contact

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