SOURCE: support.com

Support.com

February 15, 2011 16:01 ET

Support.com Reports Fourth Quarter and Year-End 2010 Financial Results

REDWOOD CITY, CA--(Marketwire - February 15, 2011) - Support.com® (NASDAQ: SPRT), a leading provider of cloud-based technology services and software for consumers and small business, today reported unaudited financial results for its fourth quarter and year ended December 31, 2010.

Q4 and 2010 Financial Summary

For the fourth quarter of 2010, total revenue was $12.3 million compared to $5.8 million in the fourth quarter of 2009 and $12.2 million in the third quarter of 2010.

On a GAAP basis, net loss from continuing operations for the fourth quarter of 2010 was $4.0 million, or $(0.08) per share, compared to $3.4 million, or $(0.07) per share, in the fourth quarter of 2009, and $3.8 million, or $(0.08) per share, in the third quarter of 2010.

Non-GAAP net loss from continuing operations for the fourth quarter of 2010 was $3.1 million, or $(0.07) per share, compared to $3.3 million, or $(0.07) per share, in the fourth quarter of 2009, and $2.9 million, or $(0.06) per share, in the third quarter of 2010.

Total revenue for 2010 was $44.2 million, an increase of 153% from $17.5 million in 2009. On a GAAP basis, net loss from continuing operations for 2010 was $18.1 million, or $(0.39) per share, compared to $21.6 million, or $(0.47) per share, in 2009. Non-GAAP net loss from continuing operations for 2010 was $14.3 million, or $(0.31) per share, compared to $21.2 million, or $(0.46) per share, in 2009.

Non-GAAP results exclude stock-based compensation expense, amortization of intangible assets, restructuring and impairment charges, acquisition expenses, and the income tax impact of the disposition of a business unit on continuing operations. These items impacted results from continuing operations by $807,000 in the fourth quarter of 2010, $132,000 in the fourth quarter of 2009, and $878,000 in the third quarter of 2010. On an annual basis, these items impacted results from continuing operations by $3.8 million in 2010 and $418,000 in 2009. A reconciliation of GAAP to non-GAAP results is presented in the tables below.

"We posted strong fourth quarter financial results," said Josh Pickus, President and Chief Executive Officer. "Recent launches of programs for Comcast and Symantec expand our footprint beyond retail into other key verticals and extend our leadership position in the market."

Balance Sheet Information

At December 31, 2010 cash, cash equivalents and investments were $74.2 million compared to $75.2 million at September 30, 2010.

Recent Highlights
-- Revenue increases 153% year over year
-- Non-GAAP net loss from continuing operations improves 32% year over year
-- Symantec premium technology subscription program launched
-- Comcast premium technology services offerings launched
-- Technology platform and service offerings expanded to cover tablets,
   smartphones and data
-- Lead software product ARO 2011 introduced
-- Support services innovator Toni Portmann joins Board of Directors

Treatment of Continuing and Discontinued Operations

On June 23, 2009, the Company completed the sale of its enterprise business to Consona Corporation. As a result of this transaction, all revenue and direct expenses associated with the enterprise business have been reflected as discontinued operations in a single line on the condensed statement of operations.

Conference Call

Support.com will host a conference call discussing the Company's fourth quarter and year-end 2010 results on Tuesday, February 15, 2011 starting at 4:30 p.m. ET (1:30 p.m. PT). A live audio webcast and replay of the call will be available at the Investor Relations section of Support.com's website at http://www.support.com/about/investor-relations/webcastsevents. The live call may be accessed by dialing (877) 312-8789 (domestic) or (253) 237-1314 (international) and referencing passcode 37992943. A replay of the call can also be accessed by dialing (800) 642-1687 (domestic) or (706) 645-9291 (international), and referencing passcode: 37992943.

About Support.com

Support.com, Inc. (NASDAQ: SPRT) provides cloud-based technology services and software for consumers and small business. Support.com's Personal Technology Experts® provide a quick, cost-effective and stress-free technology support experience over the Internet and the phone using the Company's advanced technology platform. Support.com's easy-to-use software products detect and repair common problems to keep customers' technology running smoothly. Support.com offers programs through many of the nation's leading retailers, broadband service providers, software vendors and PC/CE OEMs, and provides software to over a million consumers and small businesses.

Support.com is a trademark or registered trademark of Support.com, Inc. or its affiliates in the U.S and other countries. Other names may be trademarks of their respective owners.

Support.com, Inc. is an Equal Opportunity Employer.

For more information, visit www.support.com.

Note on Forward-Looking Statements

Statements made in this document that are not historical facts are "forward-looking statements" and accordingly involve risks and uncertainties that could cause actual results to differ materially from those described herein. Forward-looking statements include, for example, all statements relating to projected financial performance (including without limitation statements involving projections of revenue, margin, income (loss), earnings (loss) per share, cash usage, capital structure, and other financial items); the plans and objectives of management for future operations, products or services; and future performance in economic and other terms. The potential risks and uncertainties that could cause results to differ materially include, among others, our ability to retain and grow major partnerships, our ability to market and sell software and services directly to consumers and small businesses, our ability to maintain and grow revenue, our ability to scale and manage our workforce and our ability to control expenses and achieve desired margins. These and other risks are detailed in Support.com's reports filed with the Securities and Exchange Commission, including without limitation its latest Annual Report on Form 10-K and its latest quarterly report on Form 10-Q, copies of which may be obtained from www.sec.gov. Support.com does not intend to update this information to reflect future events or circumstances, and disclaims any obligation to do so except as may be required by law.

Disclosure Regarding Non-GAAP Financial Measures

Support.com has excluded stock-based compensation expenses, amortization of intangible assets, restructuring and impairment charges, acquisition expenses, and the income tax impact of the disposition of business units on continuing operations from its GAAP results of continuing operations in order to determine the non-GAAP financial measure of net income (loss) per share referenced in this document. We believe that the non-GAAP measures, when viewed in addition to and not in lieu of our reported GAAP results, assist investors in understanding our results of operations.

A. Stock-based compensation. Management excludes stock-based compensation expenses when evaluating its operating performance because such expenses do not require cash settlement and because such expenses are not used by management to assess the performance of the Company's business. Stock-based compensation expense was $717,000 in the fourth quarter of 2010, compared to $715,000 in the fourth quarter of 2009 and $727,000 in the third quarter of 2010. On an annual basis, stock-based compensation expense was $3.3 million in 2010 and $2.9 million in 2009.

B. Amortization of intangible assets. Management excludes acquisition-related intangible asset amortization and related charges when evaluating its operating performance because the Company does not acquire businesses on a predictable cycle and excluding such charges enables more consistent evaluation of the Company's operating performance. Management also excludes such charges because they represent non-cash expenses. Amortization expense was $90,000 in the fourth quarter of 2010, compared to $51,000 in the fourth quarter of 2009 and $93,000 in the third quarter of 2010. On an annual basis, amortization expense was $364,000 in 2010 and $177,000 in 2009.

C. Restructuring and impairment charges. Management excludes restructuring and impairment charges when evaluating its operating performance because the Company does not undertake restructurings on a predicable basis and excluding such charges enables more consistent evaluation of the Company's operating performance. Restructuring and impairment expense was zero in the fourth quarter of 2010, compared to zero in the fourth quarter of 2009 and zero in the third quarter of 2010. On an annual basis, restructuring and impairment expense was zero in 2010 and $1.7 million in 2009.

D. Acquisition expenses. Management excludes acquisition expenses such as legal fees and banker or advisor fees when evaluating its operating performance because the Company does not acquire businesses on a predictable cycle and excluding such expenses enables more consistent evaluation of the Company's operating performance. Acquisition expense was zero in the fourth quarter of 2010, compared to $542,000 in the fourth quarter of 2009 and zero in the third quarter of 2010. On an annual basis, acquisition expense was zero in 2010 and $542,000 in 2009.

E. Income tax impact of disposition of business units. Management excludes the income tax impact of the disposition of business units when evaluating performance because this tax impact is not a result of the Company's continuing operations. The income tax expense (benefit) related to the disposition of business units was zero in the fourth quarter of 2010, compared to $(1.2) million in the fourth quarter of 2009 and $58,000 in the third quarter of 2010. On an annual basis, the income tax expense (benefit) related to the disposition of business units was $58,000 in 2010 and $(4.9) million in 2009.

The Company believes that non-GAAP measures have significant limitations in that they do not reflect all of the amounts associated with the Company's financial results as determined in accordance with GAAP and that these measures should only be used to evaluate the Company's financial results in conjunction with the corresponding GAAP measures. In addition, the exclusion of the charges and expenses indicated above from the non-GAAP financial measures presented does not indicate an expectation by management that such charges and expenses will not be incurred in subsequent periods.

                            SUPPORT.COM, INC.
           GAAP CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                 (in thousands, except per share amounts)
                                (unaudited)

                               Three Months Ended
                          December  September  December     Year Ended
                             31,       30,        31,      December 31,
                          -------   --------   -------  ------------------
                            2010 (1)  2010  (1)  2009     2010  (1)  2009
                          -------   --------   -------  --------  --------
Revenues:
  Services                $ 9,384   $  9,280   $ 5,302  $ 32,276  $ 16,770
  Software and other        2,870      2,898       546    11,901       725
                          -------   --------   -------  --------  --------
    Total revenues         12,254     12,178     5,848    44,177    17,495

Costs of revenue:
  Cost of services          6,980      6,927     4,077    26,737    16,620
  Cost of software and
   other                      381        294        59     1,358        59
                          -------   --------   -------  --------  --------
    Total cost of revenue   7,361      7,221     4,136    28,095    16,679
Gross profit                4,893      4,957     1,712    16,082       816
                          -------   --------   -------  --------  --------

Operating expenses:
  Research and development  1,316      1,274     1,186     5,214     5,795
  Sales and marketing       4,911      4,889     2,013    18,091     7,675
  General and
   administrative           2,625      2,499     3,276    10,963    14,119
  Amortization of
   intangible assets           90         93        51       364       177
                          -------   --------   -------  --------  --------

    Total operating
     expenses               8,942      8,755     6,526    34,632    27,766

Loss from operations       (4,049)    (3,798)   (4,814)  (18,550)  (26,950)

Interest income and
 other, net                   104        101       191       540       428
                          -------   --------   -------  --------  --------

Loss from continuing
 operations, before
 income taxes              (3,945)    (3,697)   (4,623)  (18,010)  (26,522)

Income taxes provision
 (benefit)                     10         56    (1,186)       88    (4,941)
                          -------   --------   -------  --------  --------

Loss from continuing
 operations, after income
 taxes                     (3,955)    (3,753)   (3,437)  (18,098)  (21,581)

Income (loss) from
 discontinued operations,
 after income taxes             4         30      (216)       31     7,004
                          -------   --------   -------  --------  --------
Net Loss                  $(3,951)  $ (3,723)  $(3,653) $(18,067) $(14,577)
                          =======   ========   =======  ========  ========

Earnings per share:
  Basic and diluted
   earnings per share:
    Loss from continuing
     operations, after
     income taxes         $ (0.08)  $  (0.08)  $ (0.07) $  (0.39) $  (0.47)
    Discontinued
     operations, after
     income taxes            0.00       0.00     (0.01)     0.00      0.16
                          -------   --------   -------  --------  --------
  Net earnings per basic
   and diluted share      $ (0.08)  $  (0.08)  $ (0.08) $  (0.39) $  (0.31)
                          =======   ========   =======  ========  ========

Shares used in computing
 per share amounts:
    Basic                  47,536     46,721    46,443    46,818    46,378
                          -------   --------   -------  --------  --------
    Diluted                47,536     46,721    46,443    46,818    46,378
                          -------   --------   -------  --------  --------


Note 1:  2010 amounts are subject to completion of management's and its
independent registered public accounting firm's customary closing and
review procedures.



                            SUPPORT.COM, INC.
  RECONCILIATION OF GAAP FINANCIAL RESULTS TO NON-GAAP FINANCIAL MEASURES
                 (in thousands, except per share amounts)
                               (unaudited)


                               Three Months Ended
                          December  September  December     Year Ended
                              31,       30,      31,      December 31,
                           -------   -------   -------  ------------------
                             2010 (1)  2010 (1)  2009     2010  (1)  2009
                           -------   -------   -------  --------  --------

GAAP cost of revenue from
 continuing operations     $ 7,361   $ 7,221   $ 4,136  $ 28,095  $ 16,679
   Stock-based
    compensation (Cost of
    revenue portion only)      (47)      (42)      (34)     (169)     (134)
   Restructuring and
    impairment charges
    (Cost of revenue
    portion only)                -         -         -         -       (62)
                           -------   -------   -------  --------  --------
Non-GAAP cost of revenue
 from continuing
 operations                  7,314     7,179     4,102    27,926    16,483

GAAP operating expenses
 from continuing operations  8,942     8,755     6,526    34,632    27,766
   Stock-based compensation
    (Excl. cost of revenue
    portion)                  (670)     (685)     (681)   (3,162)   (2,808)
   Amortization of
    intangible assets          (90)      (93)      (51)     (364)     (177)
   Restructuring and
    impairment charges
    (Excl. cost of revenue
    portion)                     -         -         -         -    (1,635)
   Acquisition expenses          -         -      (542)        -      (542)
                           -------   -------   -------  --------  --------
Non-GAAP operating
 expenses from continuing
 operations                  8,182     7,977     5,252    31,106    22,604

GAAP income taxes
 provision (benefit)            10        56    (1,186)       88    (4,941)
   Income tax impact of
    the disposition of
    business units on
    continuing operations        -       (58)    1,176       (58)    4,940
                           -------   -------   -------  --------  --------
Non-GAAP income (loss)
 before income taxes from
 continuing operations          10        (2)      (10)       30        (1)

GAAP net loss from
 continuing operations     $(3,955)  $(3,753)  $(3,437) $(18,098) $(21,581)
   Stock-based
    compensation               717       727       715     3,331     2,942
   Amortization of
    intangible assets           90        93        51       364       177
   Restructuring and
    impairment charges           -         -         -         -     1,697
   Acquisition expenses          -         -       542         -       542
   Income tax impact of
    the disposition of
    business units on
    continuing operations        -        58    (1,176)       58    (4,940)
                           -------   -------   -------  --------  --------
Non-GAAP net income (loss)
 from continuing
 operations                $(3,148)  $(2,875)  $(3,305) $(14,345) $(21,163)
                           =======   =======   =======  ========  ========

Basic and diluted net
 income (loss) per share
   GAAP                    $ (0.08)  $ (0.08)  $ (0.07) $  (0.39) $  (0.47)
   Non-GAAP                $ (0.07)  $ (0.06)  $ (0.07) $  (0.31) $  (0.46)

Shares used in computing
 per share amounts (GAAP)
   Basic                    47,536    46,721    46,443    46,818    46,378
   Diluted                  47,536    46,721    46,443    46,818    46,378

Shares used in computing
 per share amounts
 (Non-GAAP)
   Basic                    47,536    46,721    46,443    46,818    46,378
   Diluted                  47,536    46,721    46,443    46,818    46,378



Note 1:  The adjustments above reconcile the Company's GAAP financial
results to the non-GAAP financial measures used by the Company. The
Company's non-GAAP financial measures exclude stock-based compensation,
amortization of intangible assets, restructuring and impairment charges,
acquisition expenses and the income tax impact of the disposition of
business units on continuing operations from the GAAP financial results.
The Company believes that presentation of these non-GAAP items provides
meaningful supplemental information to investors, when viewed in
conjunction with, and not in lieu of, the Company's GAAP results. However,
the non-GAAP financial measures have not been prepared under a
comprehensive set of accounting rules or principles. Non-GAAP information
should not be considered in isolation from, or as a substitute for,
information prepared in accordance with GAAP. Moreover, there are material
limitations associated with the use of non-GAAP financial measures.  See
the text of this press release for more information on non-GAAP financial
measures.

2010 amounts are subject to completion of management's and its independent
registered public accounting firm's customary closing and review
procedures.




                            SUPPORT.COM, INC.
                GAAP CONDENSED CONSOLIDATED BALANCE SHEETS
                              (in thousands)



                                        December    September     December
                                        31, 2010 (1) 30, 2010 (1) 31, 2009
                                       ----------   ----------   ---------
                                       (unaudited)  (unaudited)  (audited)
Assets
Current assets:
    Cash, cash equivalents and
     short-term investments            $   71,568   $   72,274   $  80,035
    Accounts receivable, net                5,133        4,436       3,190
    Prepaid expenses and other current
     assets                                 1,617        1,736       1,252
    Auction-rate securities put option          -            -       1,289
                                       ----------   ----------   ---------
      Total current assets                 78,318       78,446      85,766
                                       ----------   ----------   ---------
Long-term investments                       2,667        2,970       3,444
Property and equipment, net                   623          493         447
Goodwill                                   10,181       10,181      10,171
Purchased technologies, net                   226          247         309
Intangible assets, net                      1,076        1,166       1,450
Other assets                                  648          559         372
                                       ----------   ----------   ---------

Total assets                           $   93,739   $   94,062   $ 101,959
                                       ==========   ==========   =========

Liabilities and Stockholders' Equity
Liabilities:
    Accounts payable                   $      536   $        5   $      99
    Accrued compensation                    1,248        1,682         745
    Other accrued liabilities               3,575        4,275       3,045
    Deferred revenue                        1,574        1,357         726
                                       ----------   ----------   ---------
      Total current liabilities             6,933        7,319       4,615
    Other long-term liabilities               749          917         992
                                       ----------   ----------   ---------
      Total liabilities                     7,682        8,236       5,607
                                       ----------   ----------   ---------

Stockholders' equity:
    Common stock                                5            5           5
    Additional paid-in-capital            229,692      225,466     221,822
    Accumulated other comprehensive
     loss                                  (1,331)      (1,287)     (1,233)
    Accumulated deficit                  (142,309)    (138,358)   (124,242)
                                       ----------   ----------   ---------
      Total stockholders' equity           86,057       85,826      96,352
                                       ----------   ----------   ---------

Total liabilities and stockholders'
 equity                                $   93,739   $   94,062   $ 101,959
                                       ==========   ==========   =========

Note 1: 2010 amounts are subject to completion of management's and its
independent registered public accounting firm's customary closing and
review procedures.

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