SOURCE: SupportSoft, Inc.

February 11, 2009 16:01 ET

SupportSoft Reports Fourth Quarter and Fiscal Year 2008 Financial Results

REDWOOD CITY, CA--(Marketwire - February 11, 2009) - SupportSoft, Inc. (NASDAQ: SPRT), a provider of software and services that make technology work, today reported unaudited financial results for its fourth quarter and fiscal year ended December 31, 2008.

Q4 and 2008 Financial Summary

Total revenue for the fourth quarter of 2008 was $12.8 million, as compared to $12.8 million in the third quarter of 2008 and $12.6 million in the fourth quarter of 2007.

For the fourth quarter of 2008, Consumer revenue was $3.1 million as compared to $2.1 million in the third quarter of 2008 and $349,000 in the year ago quarter.

For the fourth quarter of 2008, Enterprise revenue was $9.7 million as compared to $10.7 million in the third quarter of 2008 and $12.3 million in the year ago quarter. Fourth quarter 2008 Enterprise revenue consisted of $3.1 million of license revenue, $4.0 million of maintenance revenue and $2.7 million of service revenue.

Total revenue for 2008 was $48.9 million as compared to $47.8 million in 2007. Consumer revenue for 2008 was $6.8 million, an increase of 549% from $1.1 million in 2007. Enterprise revenue was $42.1 million, a decrease of 10% from $46.8 million in 2007.

On a GAAP basis, net loss for the fourth quarter of 2008 was $6.8 million, or $(0.15) per share, compared to a net loss of $4.3 million, or $(0.09) per share, in the third quarter of 2008 and $5.8 million, or $(0.13) per share, in the fourth quarter of 2007. GAAP net loss for 2008 was $19.1 million, or $(0.41) per share, compared to a GAAP net loss of $21.4 million, or $(0.47) per share, for 2007.

Non-GAAP net loss for the fourth quarter of 2008 was $3.4 million, or $(0.07) per share, compared to a non-GAAP net loss of $3.1 million, or $(0.07) per share, in the third quarter of 2008 and $1.4 million, or $(0.03) per share, in the fourth quarter of 2007. Non-GAAP net loss for 2008 was $11.9 million, or $(0.26) per share, compared to a non-GAAP net loss of $12.4 million, or $(0.27) per share, for 2007. Non-GAAP results exclude stock compensation expenses, amortization/write-down of intangible assets and restructuring and impairment charges. These items totaled $3.3 million for the fourth quarter of 2008, $1.2 million for the third quarter of 2008, $4.4 million for the fourth quarter of 2007, $7.2 million in 2008, and $8.9 million in 2007. A reconciliation of GAAP to non-GAAP results is presented in the tables below.

At December 31, 2008 cash and total investments (including the put option relating to auction rate securities) were $95.0 million, compared to $98.3 million at September 30, 2008.

"We finished the year with a solid fourth quarter featuring substantial Consumer revenue growth and continued non-GAAP profitability in Enterprise," commented Josh Pickus, CEO of SupportSoft. "Looking forward to 2009, our key goals are achieving revenue growth and gross margin improvement for our Consumer segment, and maintaining non-GAAP profitability on lower revenue while introducing new products for our Enterprise segment," said Pickus.

Recent Company Highlights

Consumer Segment

--  Consumer revenue growth of 47% from third quarter 2008

--  Office Depot 2008 Innovation Award for contributions to fast growing
    Tech Depot Services program

--  Progress in partner relationships with leading retailers and anti-virus
    provider

--  Launch of subscription offerings through support.com

Enterprise Segment

--  Continued non-GAAP profitability

--  License transactions with Verizon, Telefonica and digital service
    providers in Denmark, Switzerland, Italy and India

--  Introduction of new Dynamic Agent product

Other

--  Significant cost reductions through restructuring actions

Conference Call

SupportSoft will host a conference call discussing the Company's fourth quarter 2008 results and first quarter 2009 activities on Wednesday, February 11, 2009 starting at 4:30 p.m. EST (1:30 p.m. PST). A live audio webcast and replay of the call will be available at the Investor Relations section of SupportSoft's Web Site at http://www.supportsoft.com/Company/investor_relations.html. The live call may be accessed by dialing (888) 208-1812 (domestic) or (719) 325-2418 (international) and referencing passcode 2756146. A replay of the call can also be accessed by dialing (888) 203-1112 (domestic) or (719) 457-0820 (international), and referencing passcode: 2756146.

Cautionary Note Regarding Forward-Looking Statements

This press release contains forward-looking statements regarding our expected future performance as well as assumptions underlying or relating to such statements of expectation, all of which are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. We are subject to many risks and uncertainties that may materially affect our business and future performance and cause those forward-looking statements to be inaccurate. All statements in this press release, other than statements that are purely historical, are forward-looking statements. Words such as "outlook," "anticipates," "expects," "believes," "intends," "plans," "seeks," "forecasts," "estimates," "goal," and similar expressions often identify such forward-looking statements. Forward-looking statements in this press release include, without limitation, the following: expectations regarding the progress of our collaboration with partners (including Office Depot) and the anticipated impact of those relationships on our business; anticipated increases in revenue and gross margin from our consumer operations; maintaining segment profitability in our enterprise segment despite anticipated decreases in revenue; introductions of new products in our enterprise segment; assessments of our future growth; and our future plans, investments and opportunities.

Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those discussed in these forward-looking statements. These risks and uncertainties include, but are not limited to: our dependence on our third-party alliances and partnerships to help us provide our software and services to consumers; the potential that such partnerships take longer than we expect to produce revenue or do not produce revenue; the potential that delays or cancellation of third-party programs (including Office Depot) that include our software and services could decrease our revenues; our ability to achieve broad adoption and acceptance of our offerings; the impact of the global macroeconomic downturn on both segments of our business; our ability to profitably manage our enterprise business, including our professional services organization and its cost structure; the potential for a decrease in revenue in our enterprise segment caused by our reliance on a few large transactions that generally occur at the end of reporting periods; long sales cycles; the ability of our software to operate with hardware and software platforms that are used by our customers now or in the future; our ability to compete successfully in the consumer technology support market and the support automation software market; our limited experience in servicing consumers directly; our ability to manage headcount changes including reductions in force; our ability to manage home-based consumer technology support agents; our ability to successfully integrate any acquisitions; expectations regarding our international business; fluctuation in our quarterly results; diversion of management attention to strategic matters or litigation; our ability to accurately predict performance; our ability to attract and retain key employees; our ability to obtain sufficient patent protection; further weakness or changes in the market for auction rate securities; a determination, upon completion of further quarterly closing and review procedures, that the financial results for the first quarter are different than the results set forth in this press release; as well as other risks detailed from time to time in our SEC filings, including those described in the "Risk Factors" section in our most recent Annual Report on Form 10-K filed with the SEC on March 13, 2008. You can locate these filings on the Investor Relations page of our website, http://www.supportsoft.com/Company/investor_relations.html.

Statements included in this release are based upon information known to SupportSoft as of the date of this release, and SupportSoft assumes no obligation to publicly revise or update any forward-looking statement for any reason.

Disclosure Regarding Non-GAAP Financial Measures

SupportSoft has excluded stock-based compensation expenses, amortization/write-down of intangible assets and restructuring and impairment charges from its GAAP results in order to determine the non-GAAP financial measures of net income/loss and net income/loss per share. Each of the excluded items (as such items are applicable to particular time periods) is discussed in more detail below.

Stock-based compensation -- we believe that the non-GAAP measures, excluding stock-based compensation expenses, when viewed in addition to and not in lieu of our reported GAAP results, assist investors in understanding our results of operations. Management excludes stock-based compensation expense when evaluating its performance from period to period 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.

Amortization/write-down of intangible assets -- the Company does not acquire businesses on a predictable cycle; therefore management excludes acquisition-related intangible asset amortization and related charges when evaluating its operating performance. The Company also excludes such charges as they represent non-cash expenses.

Restructuring and impairment charges -- we believe the non-GAAP measures, excluding restructuring and impairment charges, provide meaningful supplemental information to investors in understanding our ongoing operational costs and expenses, without the broad-based termination costs that comprised our restructuring expense. The Company does not undertake significant restructurings on a predictable basis and, as result, excludes associated charges in order to enable better and more consistent evaluation of the Company's operating expenses before and after such actions are taken.

SupportSoft uses these non-GAAP financial measures internally to evaluate its performance from period to period and against the performance of other software companies, many of which present similar non-GAAP financial measures. We also believe that investors benefit from seeing "through the eyes of management" as our operating budgets and compensation programs are based on the non-GAAP financial measures we present in this press release.

Finally, SupportSoft believes the non-GAAP measures provide useful supplemental information for investors to evaluate our operating results in the same manner as the research analysts that follow SupportSoft, all of whom present non-GAAP projections in their published reports. As such, the non-GAAP measures provided by the Company facilitate an "apples to apples" comparison of our performance with the financial projections published by the analysts.

The economic substance behind our decision to use such non-GAAP measures is that such measures approximate our controllable operating performance more closely than the most directly comparable GAAP financial measures.

The material limitation associated with the use of the non-GAAP financial measures is that the non-GAAP measures do not reflect the full economic impact of the Company's activities and reliance solely on non-GAAP measures may lead management to make business decisions with unanticipated economic consequences on the Company's GAAP financial results. We compensate for this limitation by not relying exclusively on non-GAAP financial measures to make business decisions. We also continuously reevaluate which non-GAAP measures are appropriate.

Amounts related to the fourth quarter of 2008 are subject to completion of management's and its independent registered public accounting firm's customary closing and review procedures.

About SupportSoft

SupportSoft (NASDAQ: SPRT) provides software and services that make technology work. The Company's solutions reduce technology support costs, improve customer satisfaction and enable new revenue streams for companies reaching 50 million users worldwide. The Company also provides Instant Technology Relief® to consumers and small businesses through a series of channel partners and www.support.com. For more information about the Company and its enterprise offerings, visit http://www.supportsoft.com; for Instant Technology Relief from consumer and small business technology problems, visit www.support.com.



                            SUPPORTSOFT, 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,
                     ---------  ---------  ---------  --------------------
                       2008   (1)  2008  (1)  2007  (2)  2008  (1)  2007
                     ---------  ---------  ---------  ---------  ---------
Revenues:
  License            $   3,081  $   2,861  $   4,055  $  11,813  $  15,780
  Maintenance            3,997      3,987      4,050     15,881     16,084
  Services               2,661      3,822      4,166     14,365     14,888
  Consumer               3,107      2,110        349      6,811      1,050
                     ---------  ---------  ---------  ---------  ---------
    Total revenues      12,846     12,780     12,620     48,870     47,802

Costs and expenses:
  Cost of license          134         60         76        337        218
  Cost of
   maintenance             420        454        554      1,848      2,424
  Cost of services       2,587      3,291      3,801     12,775     14,953
  Cost of consumer       3,870      2,561      1,143      9,494      4,433
  Amortization/
   write-down of
   intangible assets        41         71      1,999        202      2,815
  Research and
   development           1,936      2,079      2,067      8,175      8,771
  Sales and
   marketing             5,048      5,179      6,146     21,458     27,648
  General and
   administrative        2,309      2,245      1,650      8,691      7,631
  Restructuring and
   impairment
   charges               1,885          -      1,172      1,885      1,190
  Stock-based
   compensation          1,417      1,154      1,211      5,078      4,943
                     ---------  ---------  ---------  ---------  ---------

    Total costs and
     expenses           19,647     17,094     19,819     69,943     75,026

Loss from operations    (6,801)    (4,314)    (7,199)   (21,073)   (27,224)

Interest income and
 other, net                177        158      1,506      2,506      6,526
                     ---------  ---------  ---------  ---------  ---------

Income (Loss) before
 income taxes           (6,624)    (4,156)    (5,693)   (18,567)   (20,698)

Provision for income
 taxes                    (164)      (184)      (113)      (539)      (671)
                     ---------  ---------  ---------  ---------  ---------

Net loss             $  (6,788) $  (4,340) $  (5,806) $ (19,106) $ (21,369)
                     ---------  ---------  ---------  ---------  ---------

Net loss per share:
  Basic              $   (0.15) $   (0.09) $   (0.13) $   (0.41) $   (0.47)
  Diluted            $   (0.15) $   (0.09) $   (0.13) $   (0.41) $   (0.47)
                     ---------  ---------  ---------  ---------  ---------

Shares used in
 computing per share
 amounts:
  Basic                 46,142     46,119     46,069     46,098     45,610
                     ---------  ---------  ---------  ---------  ---------
  Diluted               46,142     46,119     46,069     46,098     45,610
                     ---------  ---------  ---------  ---------  ---------


Allocation of
 restructuring and
 impairment charges:
  Cost of maintenance        -          -         82          -         82
  Cost of service          212          -         58        212         66
  Cost of consumer           5          -        169          5        175
  Research and
   development             137          -        160        137        160
  Sales and
   marketing             1,006          -        675      1,006        679
  General and
   administrative          525          -         28        525         28
                     ---------  ---------  ---------  ---------  ---------
    Total
     restructuring
     and impairment
     charges             1,885          -      1,172      1,885      1,190
                     =========  =========  =========  =========  =========

Allocation of
 stock-based
 compensation:
  Cost of
   maintenance              23         19         21         82         80
  Cost of service          180        133        193        665        757
  Cost of consumer          47         21          -        116          -
  Research and
   development             173        152        143        584        510
  Sales and
   marketing               517        460        454      1,841      1,885
  General and
   administrative          477        369        400      1,790      1,711
                     ---------  ---------  ---------  ---------  ---------
    Total
     stock-based
     compensation        1,417      1,154      1,211      5,078      4,943
                     =========  =========  =========  =========  =========



Note 1: 2008 ammounts are subject to completion of management's and its
independent registered public accounting firm's customary closing and
review procedures.

Note 2: In January 2008, we reorganized the Company and created two
business segments, Consumer and Enterprise.
Prior to 2008, the Company conducted its business in one segment. Revenue
and cost of revenue are provided on a segment basis, all other operating
expenses are incorporated into the overall company results for these
periods. See the segment information table included in this press release
for more information.




                                SUPPORTSOFT, 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,
                     ---------  ---------  ---------  --------------------
                       2008       2008       2007       2008       2007
                     ---------  ---------  ---------  ---------  ---------

GAAP costs and
 expenses            $  19,647  $  17,094  $  19,819  $  69,943  $  75,026
   Amortization/
    write-down of
    intangible
    assets                 (41)       (71)    (1,999)      (202)    (2,815)
   Restructuring and
    impairment
    charges             (1,885)         -     (1,172)    (1,885)    (1,190)
   Stock-based
    compensation        (1,417)    (1,154)    (1,211)    (5,078)    (4,943)
                     ---------  ---------  ---------  ---------  ---------
Non-GAAP costs and
 expenses               16,304     15,869     15,437     62,778     66,078

GAAP loss from
 operations             (6,801)    (4,314)    (7,199)   (21,073)   (27,224)
   Amortization/
    write-down of
    intangible
    assets                  41         71      1,999        202      2,815
   Restructuring and
    impairment
    charges              1,885          -      1,172      1,885      1,190
   Stock-based
    compensation         1,417      1,154      1,211      5,078      4,943
                     ---------  ---------  ---------  ---------  ---------
Non-GAAP loss from
 operations             (3,458)    (3,089)    (2,817)   (13,908)   (18,276)

GAAP income (loss)
 before income taxes    (6,624)    (4,156)    (5,693)   (18,567)   (20,698)
   Amortization/
    write-down of
    intangible
    assets                  41         71      1,999        202      2,815
   Restructuring and
    impairment
    charges              1,885          -      1,172      1,885      1,190
   Stock-based
    compensation         1,417      1,154      1,211      5,078      4,943
                     ---------  ---------  ---------  ---------  ---------
Non-GAAP income
 (loss) before
 income taxes           (3,281)    (2,931)    (1,311)   (11,402)   (11,750)

GAAP net loss        $  (6,788) $  (4,340) $  (5,806) $ (19,106) $ (21,369)
   Amortization/
    write-down of
    intangible
    assets                  41         71      1,999        202      2,815
   Restructuring and
    impairment
    charges              1,885          -      1,172      1,885      1,190
   Stock-based
    compensation         1,417      1,154      1,211      5,078      4,943
                     ---------  ---------  ---------  ---------  ---------
Non-GAAP net income
 (loss)              $  (3,445) $  (3,115) $  (1,424) $ (11,941) $ (12,421)
                     =========  =========  =========  =========  =========

Basic net income
 (loss) per share
   GAAP              $   (0.15) $   (0.09) $   (0.13) $   (0.41) $   (0.47)
   Non-GAAP          $   (0.07) $   (0.07) $   (0.03) $   (0.26) $   (0.27)

Diluted net income
 (loss) per share
   GAAP              $   (0.15) $   (0.09) $   (0.13) $   (0.41) $   (0.47)
   Non-GAAP          $   (0.07) $   (0.07) $   (0.03) $   (0.26) $   (0.27)

Shares used in
 computing per share
 amounts (GAAP)
   Basic                46,142     46,119     46,069     46,098     45,610
   Diluted              46,142     46,119     46,069     46,098     45,610

Shares used in
 computing per share
 amounts (Non-GAAP)
   Basic                46,142     46,119     46,069     46,098     45,610
   Diluted              46,142     46,119     46,069     46,098     45,610


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 restructuring and impairment charges,
stock-based compensation and amortization/write-down of intangible assets
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.

2008 amounts are subject to completion of management's and its independent
registered public accounting firm's customary closing and review
procedures.




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



                               December 31, September 30,  December 31,
                                  2008    (1)   2008    (1)   2007    (2)
                              ------------  ------------  ------------
                              (unaudited)   (unaudited)     (audited)
Assets
Current assets:
  Cash, cash equivalents and
   short-term investments     $     72,090  $     76,069  $    112,940
  Accounts receivable, net          10,384         8,157        10,087
  Prepaid expenses and other
   current assets                    1,642         2,153         2,531
                              ------------  ------------  ------------
    Total current assets            84,116        86,379       125,558
                              ------------  ------------  ------------
Long-term investments               15,766        22,212             -
Auction rate security put
 option                              7,148             -             -
Property and equipment, net          1,275         1,675         2,086
Goodwill                            12,646        12,646         9,792
Purchased technology                 1,318         1,375             -
Intangible assets, net                 417           459           340
Other assets                           900           573           682
                              ------------  ------------  ------------

Total assets                  $    123,586  $    125,319  $    138,458
                              ============  ============  ============

Liabilities and Stockholders'
 Equity
Liabilities:
  Accounts payable and
   accrued compensation       $      3,019  $      2,384  $      2,781
  Other accrued liabilities          3,534         3,032         3,421
  Deferred revenue                  10,119         8,784        10,502
  Other long-term liabilities        1,468         1,101           892
                              ------------  ------------  ------------
    Total liabilities         $     18,140  $     15,301  $     17,596
                              ------------  ------------  ------------

Stockholders' equity:
  Common stock                $          5  $          5  $          5
  Additional paid-in-capital       217,647       216,230       212,188
  Accumulated other
   comprehensive loss               (2,541)       (3,340)         (772)
  Accumulated deficit             (109,665)     (102,877)      (90,559)
                              ------------  ------------  ------------
    Total stockholders'
     equity                   $    105,446  $    110,018  $    120,862
                              ------------  ------------  ------------

Total liabilities and
 stockholders' equity         $    123,586  $    125,319  $    138,458
                              ============  ============  ============



Note 1: 2008 amounts are subject to completion of management's and its
independent registered public accounting firm's customary closing and
review procedures.


Note 2: Derived from audited financial statements.




                             SUPPORTSOFT, INC.
                            SEGMENT INFORMATION
                              (in thousands)
                                (unaudited)

                                Three Months Ended December 31, 2008
                           -----------------------------------------------
                                                              Consolidated
                           Enterprise   Consumer   Corporate     Total
                           -----------  ---------  ---------  ------------
Revenue:
  License                  $     3,081  $       -  $       -  $      3,081
  Maintenance                    3,997          -          -         3,997
  Services                       2,661          -          -         2,661
  Consumer                           -      3,107          -         3,107
                           -----------  ---------  ---------  ------------
Total revenue                    9,739      3,107          -        12,846
                           -----------  ---------  ---------  ------------
Segment operating costs
 and expenses                   (6,688)    (7,307)         -       (13,995)
Amortization of
 intangible assets                   -        (41)         -           (41)
Common corporate
 expenses                            -          -     (2,309)       (2,309)
Restructuring and
 impairment charges               (690)      (670)      (525)       (1,885)
Stock-based compensation          (523)      (417)      (477)       (1,417)
Interest income and
 other, net                          -          -        177           177
                           -----------  ---------  ---------  ------------
Income (loss) before
 income taxes              $     1,838  $  (5,328) $  (3,134) $     (6,624)
                           ===========  =========  =========  ============


                                Twelve Months Ended December 31, 2008
                           -----------------------------------------------
                                                              Consolidated
                           Enterprise   Consumer   Corporate     Total
                           -----------  ---------  ---------  ------------
Revenue:
  License                  $    11,813  $       -  $       -  $     11,813
  Maintenance                   15,881          -          -        15,881
  Services                      14,365          -          -        14,365
  Consumer                           -      6,811          -         6,811
                           -----------  ---------  ---------  ------------
Total revenue                   42,059      6,811          -        48,870
                           -----------  ---------  ---------  ------------
Segment operating costs
 and expenses                  (29,758)   (24,329)         -       (54,087)
Amortization of
 intangible assets                 (90)      (112)         -          (202)
Common corporate
 expenses                            -          -     (8,691)       (8,691)
Restructuring and
 impairment charges               (690)      (670)      (525)       (1,885)
Stock-based compensation        (1,789)    (1,499)    (1,790)       (5,078)
Interest income and
 other, net                          -          -      2,506         2,506
                           -----------  ---------  ---------  ------------
Income (loss) before
 income taxes              $     9,732  $ (19,799) $  (8,500) $    (18,567)
                           ===========  =========  =========  ============

Consumer Segment.  In our Consumer segment, we provide premium technology
support to consumers over the phone and the internet for a fee.  We offer
our services to consumers through retailers and other companies who provide
technology products and services to consumers.  We also provide our
services directly to consumers through www.support.com.

Enterprise Segment. Our Enterprise customers use our software to resolve
technical problems for their customers.  Digital service providers use our
products to automate the installation, activation and verification of
broadband services, to reduce the cost and improve the quality of support
for customers, and to enable the remote management of devices located at
customer premises.  Corporate IT departments and IT outsourcing firms use
our software to improve the cost-effectiveness and efficiency of their
support through an integrated portfolio of proactive service, self service
and assisted service products.

Corporate. This category of common corporate expenses such as general and
administrative expenses, interest income, and other income or expenses, 
which are items that we do not allocate to our business segments.

2008 amounts are subject to completion of management's and its independent
public accounting firm's customary closing and review procedures.

Contact Information