Printer Friendly Version Print Version
Mattersight Announces Second Quarter 2012 Results

Aug 08, 2012 (Marketwire via COMTEX) --Mattersight Corporation (NASDAQ: MATR) today announced financial results for the second quarter ended June 30, 2012. 

Mattersight's total services revenue was $7.9 million, including $6.6 million of subscription revenues. The Company realized an "Adjusted Earnings1" loss of $1.8 million for the second quarter of 2012. 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 $3.6 million in the second quarter of 2012 and its operating loss from continuing operations2 was $3.5 million. 

Q2 Highlights

  • Grew subscription revenues by 32%, year over year, to $6.6 million
  • Increased total service revenues by 20%, year over year, to $7.9 million
  • Recorded managed services bookings of $19.4 million
  • Ended Q2 with a record managed services backlog3 of $104.6 million
  • Signed 5 new pilots, including 2 new logo customers
  • Ended Q2 with a record 17 pilots
  • Established a $10.0 million credit facility with Silicon Valley Bank

Q3 Guidance

Mattersight currently expects its total services revenues will be between $8.0 million and $8.3 million. Mattersight is currently 100% sold to $8.3 million.

Conference Call Information

Mattersight management will host a conference call at 5:00 p.m. ET on Wednesday, August 8, 2012. The conference call and slide presentation will be available at the Investment Community section of Mattersight's website at http://ctt.marketwire.com/?release=917911&id=1888993&type=1&url=http%3a%2f%2fwww.mattersight.com%2finvestment%2f. To listen to the conference call via telephone, please call 800.952.4789 (domestic) or 404.665.9579 (international), conference ID: 14562298. 

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 September 8, 2012, by dialing 855.859.2056 (domestic) or 404.537.3406 (international), conference ID: 14562298.  

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, http://ctt.marketwire.com/?release=917911&id=1888996&type=1&url=http%3a%2f%2fwww.mattersight.com%2f. 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's Behavioral Analytics service captures and analyzes customer and employee interactions, employee desktop data, and other contextual information to 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 applications are used by leading companies in Healthcare, Insurance, Financial Services, Telecommunications, Cable, Utilities and Government. See What Matters™ by visiting http://ctt.marketwire.com/?release=917911&id=1888999&type=1&url=http%3a%2f%2fwww.mattersight.com%2f.

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.

2 On May 28, 2011, the company divested its Integrated Contact Solutions ("ICS") business unit and "eLoyalty" registered trademark / trade name to a subsidiary of TeleTech Holdings, Inc. As a result of this divestiture, the company has classified the ICS business unit as discontinued operations and the associated results of operations, financial position, and cash flows have been separately recorded as appropriate.

3 Mattersight uses the term "backlog" to reflect the estimated future amount of Managed services revenue related to its Managed services contracts. The value of these contracts is based on anticipated usage volumes over the anticipated term of the agreement. The anticipated term of the agreement is based on the contractually agreed fixed term of the contract, plus agreed upon, but optional, extension periods. Anticipated volumes may be greater or less than anticipated. In addition, these contracts typically are cancellable without cause based on the customer making a substantial early termination payment or forfeiture of prepaid contract amounts. The reported backlog is expected to be recognized as follows: $17.0m in 2012; $31.5m in 2013; $23.6m in 2014; $17.3m in 2015; and $15.2m in 2016 and thereafter.

 
MATTERSIGHT CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited and in thousands, except per share data)
 
             
    For the     For the  
    Three Months Ended     Six Months Ended  
    June 30,     July 2,     June 30,     July 2,  
    2012     2011     2012     2011  
Revenue:                                
  Behavioral Analytics revenue   $ 7,557     $ 6,288     $ 16,113     $ 12,255  
  Other revenue     376       339       721       919  
    Total services revenue     7,933       6,627       16,834       13,174  
  Reimbursed expenses     102       76       200       153  
Total revenue     8,035       6,703       17,034       13,327  
Operating expenses:                                
  Cost of Behavioral Analytics revenue     2,947       2,894       6,135       5,656  
  Cost of other revenue     187       254       391       596  
    Cost of services     3,134       3,148       6,526       6,252  
  Reimbursed expenses     102       76       200       153  
Total cost of revenue, exclusive of depreciation and amortization:     3,236       3,224       6,726       6,405  
  Sales, marketing and development     5,447       4,764       10,631       9,630  
  General and administrative     2,007       2,614       3,963       5,369  
  Severance and related costs     14       (434 )     693       (430 )
  Depreciation and amortization     755       820       1,622       1,595  
Total operating expenses     11,459       10,988       23,635       22,569  
                                 
Operating loss     (3,424 )     (4,285 )     (6,601 )     (9,242 )
Interest and other (expense) income, net     (113 )     (53 )     (215 )     78  
Loss from continuing operations before income taxes     (3,537 )     (4,338 )     (6,816 )     (9,164 )
Income tax (provision) benefit     (11 )     3,563       (21 )     3,628  
Loss from continuing operations     (3,548 )     (775 )     (6,837 )     (5,536 )
(Loss) income from discontinued operations, net of tax     (23 )     28,065       (104 )     28,187  
Net (loss) income     (3,571 )     27,290       (6,941 )     22,651  
Dividends related to Series B Stock     (148 )     (317 )     (297 )     (634 )
Net (loss) income available to common stockholders   $ (3,719 )   $ 26,973     $ (7,238 )   $ 22,017  
                                 
Per common share:                                
Basic loss from continuing operations   $ (0.23 )   $ (0.08 )   $ (0.45 )   $ (0.44 )
Basic (loss) income from discontinued operations   $ (0.00 )   $ 1.99     $ (0.01 )   $ 2.01  
Basic net (loss) income available to common stockholders   $ (0.23 )   $ 1.91     $ (0.46 )   $ 1.57  
                                 
Per common share:                                
Diluted loss from continuing operations   $ (0.23 )   $ (0.08 )   $ (0.45 )   $ (0.44 )
Diluted (loss) income from discontinued operations   $ (0.00 )   $ 1.99     $ (0.01 )   $ 2.01  
Diluted net (loss) income available to common stockholders   $ (0.23 )   $ 1.91     $ (0.46 )   $ 1.57  
                                 
Shares used to calculate basic net loss per share     15,966       14,111       15,858       14,032  
Shares used to calculate diluted net loss per share     15,966       14,111       15,858       14,032  
                                 
Stock-based compensation, primarily restricted stock, is included in individual line items above:                                
  Cost of Behavioral Analytics revenue   $ 5     $ 7     $ 11     $ 14  
  Sales, marketing and development     557       899       1,254       1,771  
  General and administrative     314       680       714       1,230  
  Severance and related costs     --       --       268       --  
  Discontinued operations     --       1,491       ï½--       1,568  
                                   
                                   
 
MATTERSIGHT CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(Unaudited and in thousands)
 
             
    For the     For the  
    Three Months Ended     Six Months Ended  
    June 30,     July 2,     June 30,     July 2,  
    2012     2011     2012     2011  
Net (loss) income   $ (3,571 )   $ 27,290     $ (6,941 )   $ 22,651  
Other comprehensive loss:                                
Effect of currency translation     (7 )     ï½(24 )     (2 )     (116 )
Comprehensive net (loss) income   $ (3,578 )   $ 27,266     $ (6,943 )   $ 22,535  
                                 
                                 
 
 MATTERSIGHT CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited and in thousands, except share and per share data)
 
             
    June 30,     December 31,  
    2012     2011  
ASSETS:                
Current Assets:                
  Cash and cash equivalents   $ 20,474     $ 29,408  
  Restricted cash     --       1,500  
  Receivables (net of allowances of $10 and $13)     1,822       2,540  
  Prepaid expenses     6,739       5,302  
  Other current assets     548       288  
    Total current assets     29,583       39,038  
Equipment and leasehold improvements, net     4,535       4,271  
Goodwill     972       972  
Intangibles, net     239       238  
Other long-term assets     4,328       4,746  
    Total assets   $ 39,657     $ 49,265  
                 
LIABILITIES AND STOCKHOLDERS' EQUITY:                
Current Liabilities:                
  Short-term debt   $ 3,691     $ 3,567  
  Accounts payable     1,520       812  
  Accrued compensation and related costs     1,201       1,382  
  Unearned revenue     6,381       9,783  
  Other current liabilities     3,848       3,673  
    Total current liabilities     16,641       19,217  
Long-term unearned revenue     2,350       3,036  
Other long-term liabilities     860       1,401  
    Total liabilities     19,851       23,654  
                 
Series B Stock, $0.01 par value; 5,000,000 shares authorized and designated; 1,650,875 and 1,670,696 shares issued and outstanding at June 30, 2012 and December 31, 2011, respectively, with a liquidation preference of $8,714 and $8,819 at June 30, 2012 and December 31, 2011, respectively     8,419       8,521  
                 
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; 18,174,618 and 18,037,552 shares issued at June 30, 2012, and at December 31, 2011, respectively; and 16,945,330 and 16,935,204 outstanding at June 30, 2012 and December 31, 2011, respectively     182       180  
  Additional paid-in capital     214,653       212,618  
  Accumulated deficit     (192,720 )     (185,779 )
  Treasury stock, at cost, 1,229,288 and 1,102,348 shares at June 30, 2012 and December 31, 2011, respectively     (6,688 )     (5,891 )
  Accumulated other comprehensive loss     (4,040 )     (4,038 )
    Total stockholders' equity     11,387       17,090  
    Total liabilities and stockholders' equity   $ 39,657     $ 49,265  
                     
                     
 
 MATTERSIGHT CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited and in thousands)
 
       
    For the Six Months Ended  
    June 30,     July 2,  
    2012     2011  
Cash Flows from Operating Activities:                
  Net (loss) income   $ (6,941 )   $ 22,651  
  Less: net (loss) income from discontinued operations     (104 )     28,187  
  Net loss from continuing operations     (6,837 )     (5,536 )
  Adjustments to reconcile net loss from continuing operations to net cash used in operating activities:                
    Depreciation and amortization     1,622       1,595  
    Stock-based compensation     1,979       3,015  
    Severance and related costs     268       --  
    Other     (2 )     12  
  Changes in assets and liabilities:                
    Receivables     720       (234 )
    Prepaid expenses     (1,035 )     (2,186 )
    Other assets     (276 )     97  
    Accounts payable     708       731  
    Accrued compensation and related costs     (181 )     (169 )
    Unearned revenue     (4,088 )     435  
    Other liabilities     (195 )     (4,227 )
      Total adjustments     (480 )     (931 )
        Net cash used in continuing operations     (7,317 )     (6,467 )
        Net cash used in discontinued operations     (179 )     (4,685 )
        Net cash used in operating activities     (7,496 )     (11,152 )
                 
Cash Flows from Investing Activities:                
  Capital expenditures and other     (900 )     (605 )
        Net cash used in continuing investing activities     (900 )     (605 )
        Net cash (used in) provided by discontinued investing activities     --       33,939  
        Net cash (used in) provided by investing activities     (900 )     33,334  
                 
Cash Flows from Financing Activities:                
  Proceeds from line of credit     3,691       --  
  Decrease (increase) in restricted cash     1,500       (17,140 )
  Purchase of shares of Series B Stock     (3,743 )     --  
  Principal payments under capital lease obligations     (1,070 )     (989 )
  Acquisition of treasury stock     (797 )     (513 )
  Payment of Series B Stock dividends     (300 )     (1,901 )
  Fees from issuance of common stock     (49 )     --  
  Proceeds from stock compensation and employee stock purchase plans, net     233       62  
        Net cash used in continuing financing activities     (535 )     (20,481 )
        Net cash used in discontinued financing activities     --       (678 )
        Net cash used in financing activities     (535 )     (21,159 )
                 
Effect of exchange rate changes on cash and cash equivalents by continuing operations     (3 )     (69 )
Effect of exchange rate changes on cash and cash equivalents by discontinued operations     --       (233 )
Effect of exchange rate changes on cash and cash equivalents     (3 )     (302 )
(Decrease) increase in cash and cash equivalents     (8,934 )     721  
Cash and cash equivalents, beginning of period     29,408       20,872  
Cash and cash equivalents of continuing operations, end of period   $ 20,474     $ 21,593  
                 
Non-Cash Investing and Financing Transactions:                
  Capital lease obligations incurred   $ 987     $ 2,081  
  Capital equipment purchased on credit     987       2,081  
Supplemental Disclosures of Cash Flow Information:                
  Interest paid   $ 214     $ 87  
                   
                   
 
MATTERSIGHT CORPORATION
CALCULATION OF ADJUSTED EARNINGS MEASURE
 (Unaudited and in thousands)
 
             
    For the     For the  
    Three Months Ended     Six Months Ended  
    June 30,     July 2,     June 30,     July 2,  
    2012     2011     2012     2011  
GAAP -- Operating loss   $ (3,424 )   $ (4,285 )   $ (6,601 )   $ (9,242 )
                                 
Add back (reduce) the effect of:                                
Stock-based compensation     876       1,586       1,979       3,015  
Severance and related costs     14       (434 )     693       (430 )
Depreciation and amortization     755       820       1,622       1,595  
Adjusted earnings measure -- (loss)   $ (1,779 )   $ (2,313 )   $ (2,307 )   $ (5,062 )
                                 

Contact

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

SOURCE: Mattersight Corporation

mailto:ir@mattersight.com