CHICAGO, IL--(Marketwired - Nov 2, 2016) - Mattersight Corporation (
"Mattersight's third quarter was marked by reaccelerated growth thanks to a deployment of backlogged revenue, which resulted in an on-target quarter-over-quarter revenue increase of 15%," said Mattersight CEO Kelly Conway. "We are extremely pleased with the progress we've made during the past quarter, and with our trajectory heading toward the end of the year. With a backlog that is up 64% over last year and a sales pipeline that continues to be the strongest we've ever seen, we expect to maintain our pattern of acceleration throughout 2017."
Third Quarter 2016 Financial Highlights
- Bookings: Annual Contract Value (ACV) bookings for the third quarter were $4.7 million. ACV bookings for the last four quarters were $21.5 million.
- Subscription Revenue: Total subscription revenue for the third quarter was $9.6 million.
- Total Revenue: Total revenue for the third quarter was $10.4 million.
- Backlog : ACV in deployment was $19.2 million at the end of the third quarter.
- Gross Margin: Gross margin was 67% in the third quarter.
Third Quarter 2016 Business Highlights
- Patent Acceleration: Added five new patents, bringing Mattersight's total U.S. patent portfolio to 31 and further bolstering the protection of Mattersight's innovative analytics and routing solutions.
- Hercules Funding: Entered into a long-term loan facility for up to $30 million with Hercules Capital, with initial proceeds of $22.5 million. The facility will be used for working capital and general corporate purposes, and carries a term of 42 months.
- Call to Loyalty: Hosted over 200 attendees from 70+ unique companies at Mattersight's second annual Call to Loyalty customer summit in Austin, Texas.
- Personality Labs: Launched Mattersight's first non-commercial research and thought leadership platform, featuring a joint research article with customer experience analyst firm Temkin Group.
Non-GAAP Financial Measures
Mattersight's net loss was $5.8 million in the third quarter of 2016. The Company realized an "Adjusted EBITDA 1 " loss of $2.3 million for the third 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, November 2, 2016. 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: 88669579.
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 2, 2016, by dialing 855.859.2056 (domestic) or 404.537.3406 (international), conference ID: 88669579.
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 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, operating income, cash flows or 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 Nine Months | |||||||||||||||
| Ended | Ended | |||||||||||||||
| Sept. 30, | Sept. 30, | Sept. 30, | Sept. 30, | |||||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||||||
| Revenue: | ||||||||||||||||
| Subscription revenue | $ | 9,574 | $ | 9,313 | $ | 27,297 | $ | 26,519 | ||||||||
| Other revenue | 838 | 1,169 | 2,242 | 3,021 | ||||||||||||
| Total revenue | 10,412 | 10,482 | 29,539 | 29,540 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Cost of subscription revenue | 2,781 | 1,930 | 7,840 | 5,853 | ||||||||||||
| Cost of other revenue | 662 | 609 | 2,044 | 1,930 | ||||||||||||
| Total cost of revenue, exclusive of depreciation and amortization shown below: | 3,443 | 2,539 | 9,884 | 7,783 | ||||||||||||
| Research and development | 2,988 | 3,397 | 9,588 | 10,185 | ||||||||||||
| Sales and marketing | 4,625 | 3,773 | 13,452 | 10,016 | ||||||||||||
| General and administrative | 2,912 | 3,108 | 8,950 | 8,811 | ||||||||||||
| Depreciation and amortization | 1,477 | 1,396 | 4,295 | 3,607 | ||||||||||||
| Total operating expenses | 15,445 | 14,213 | 46,169 | 40,402 | ||||||||||||
| Operating loss | (5,033 | ) | (3,731 | ) | (16,630 | ) | (10,862 | ) | ||||||||
| Non-operating income (expense): | ||||||||||||||||
| Interest and other borrowing costs | (860 | ) | (173 | ) | (1,291 | ) | (434 | ) | ||||||||
| Change in fair value of warrant liability | 58 | (22 | ) | 58 | 3 | |||||||||||
| Other non-operating income | 8 | 2 | 31 | 4 | ||||||||||||
| Total non-operating income (expense) | (794 | ) | (193 | ) | (1,202 | ) | (427 | ) | ||||||||
| Loss before income taxes | (5,827 | ) | (3,924 | ) | (17,832 | ) | (11,289 | ) | ||||||||
| Income tax provision | (11 | ) | (15 | ) | (27 | ) | (31 | ) | ||||||||
| Net loss | (5,838 | ) | (3,939 | ) | (17,859 | ) | (11,320 | ) | ||||||||
| Dividends related to 7% Series B convertible preferred stock | (147 | ) | (147 | ) | (440 | ) | (441 | ) | ||||||||
| Net loss available to common stock holders | $ | (5,985 | ) | $ | (4,086 | ) | $ | (18,299 | ) | $ | (11,761 | ) | ||||
| Per share of common stock: | ||||||||||||||||
| Basic net loss available to common stock holders | $ | (0.24 | ) | $ | (0.17 | ) | $ | (0.73 | ) | $ | (0.52 | ) | ||||
| Diluted net loss available to common stock holders | $ | (0.24 | ) | $ | (0.17 | ) | $ | (0.73 | ) | $ | (0.52 | ) | ||||
| Shares used to calculate basic net loss per share | 25,244 | 24,185 | 25,156 | 22,698 | ||||||||||||
| Shares used to calculate diluted net loss per share | 25,244 | 24,185 | 25,156 | 22,698 | ||||||||||||
| Stock-based compensation expense is included in individual line items above: | ||||||||||||||||
| Total cost of revenue | $ | 112 | $ | 63 | $ | 298 | $ | 187 | ||||||||
| Research and development | 194 | 294 | 863 | 813 | ||||||||||||
| Sales and marketing | 482 | 391 | 1,415 | 1,112 | ||||||||||||
| General and administrative | 463 | 728 | 1,718 | 2,146 | ||||||||||||
| MATTERSIGHT CORPORATION | |||||||||||||||||
| CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS | |||||||||||||||||
| (Unaudited and in thousands) | |||||||||||||||||
| For the Three Months | For the Nine Months | ||||||||||||||||
| Ended | Ended | ||||||||||||||||
| Sept. 30, | Sept. 30, | Sept. 30, | Sept. 30, | ||||||||||||||
| 2016 | 2015 | 2016 | 2015 | ||||||||||||||
| Net loss | $ | (5,838 | ) | $ | (3,939 | ) | $ | (17,859 | ) | $ | (11,320 | ) | |||||
| Other comprehensive loss: | |||||||||||||||||
| Effect of currency translation | (10 | ) | (2 | ) | (17 | ) | -- | ||||||||||
| Comprehensive net loss | $ | (5,848 | ) | $ | (3,941 | ) | $ | (17,876 | ) | $ | (11,320 | ) | |||||
| MATTERSIGHT CORPORATION | ||||||||||
| CONSOLIDATED BALANCE SHEETS | ||||||||||
| (Unaudited and in thousands, except share and per share data) | ||||||||||
| Sept. 30, | December 31, | |||||||||
| 2016 | 2015 | |||||||||
| ASSETS | ||||||||||
| Current Assets: | ||||||||||
| Cash and cash equivalents | $ | 14,652 | $ | 15,407 | ||||||
| Receivables net of allowances of $28 and $24, respectively | 5,447 | 4,863 | ||||||||
| Prepaid expenses | 5,985 | 4,582 | ||||||||
| Other current assets | 718 | 235 | ||||||||
| Total current assets | 26,802 | 25,087 | ||||||||
| Equipment and leasehold improvements, net of accumulated depreciation | ||||||||||
| and amortization of $18,263 and $14,805, respectively | 9,743 | 8,523 | ||||||||
| Goodwill | 972 | 972 | ||||||||
| Intangible assets, net of amortization of $3,699 and $3,351, respectively | 3,262 | 3,353 | ||||||||
| Other long-term assets (includes $4,789 of restricted cash at September 30, 2016) | 6,287 | 2,467 | ||||||||
| Total assets | $ | 47,066 | $ | 40,402 | ||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||||
| Current Liabilities: | ||||||||||
| Short-term debt | $ | 80 | $ | -- | ||||||
| Accounts payable | 1,583 | 1,223 | ||||||||
| Accrued compensation and related costs | 2,915 | 2,761 | ||||||||
| Unearned revenue | 2,331 | 6,378 | ||||||||
| Capital leases | 2,034 | 1,819 | ||||||||
| Other current liabilities | 4,662 | 1,796 | ||||||||
| Total current liabilities | 13,605 | 13,977 | ||||||||
| Long-term debt | 21,339 | -- | ||||||||
| Long-term unearned revenue | 857 | 1,597 | ||||||||
| Long-term capital leases | 1,885 | 1,614 | ||||||||
| Other long-term liabilities | 5,792 | 5,689 | ||||||||
| Total liabilities | 43,478 | 22,877 | ||||||||
| 7% Series B convertible preferred stock, $0.01 par value; 5,000,000 shares authorized and designated; 1,641,960 and 1,644,768 shares issued and outstanding at September 30, 2016 and December 31, 2015, respectively, with a liquidation preference of $10,865 and $10,443 at September 30, 2016 and December 31, 2015, respectively | 8,374 | 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; 27,497,604 and 27,636,853 shares issued at September 30, 2016 and December 31, 2015, respectively; and 26,520,854 and 25,849,876 shares outstanding at September 30, 2016 and December 31, 2015, respectively | 275 | 276 | ||||||||
| Additional paid-in capital | 263,906 | 264,212 | ||||||||
| Accumulated deficit | (259,944 | ) | (242,085 | ) | ||||||
| Treasury stock, at cost, 976,750 and 1,786,977 shares at September 30, 2016 and December 31, 2015, respectively | (4,979 | ) | (9,239 | ) | ||||||
| Accumulated other comprehensive loss | (4,044 | ) | (4,027 | ) | ||||||
| Total stockholders' (deficit) equity | (4,786 | ) | 9,137 | |||||||
| Total liabilities and stockholders' equity | $ | 47,066 | $ | 40,402 | ||||||
| MATTERSIGHT CORPORATION | ||||||||||||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||||||
| (Unaudited and in thousands) | ||||||||||||
| For the Nine Months Ended | ||||||||||||
| Sept. 30, | Sept. 30, | |||||||||||
| 2016 | 2015 | |||||||||||
| Cash Flows from Operating Activities: | ||||||||||||
| Net loss | $ | (17,859 | ) | $ | (11,320 | ) | ||||||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||||||
| Discount accretion and other debt related costs | 173 | -- | ||||||||||
| Depreciation and amortization | 4,295 | 3,607 | ||||||||||
| Stock-based compensation | 4,294 | 4,258 | ||||||||||
| Provision for uncollectible accounts | 25 | -- | ||||||||||
| Change in fair value of warrant liability | (58 | ) | (3 | ) | ||||||||
| Changes in assets and liabilities: | ||||||||||||
| Receivables | (609 | ) | (366 | ) | ||||||||
| Prepaid expenses | (1,448 | ) | (957 | ) | ||||||||
| Other current assets | (484 | ) | (240 | ) | ||||||||
| Other long-term assets | (3,820 | ) | 707 | |||||||||
| Accounts payable | 287 | 75 | ||||||||||
| Accrued compensation and related costs | 154 | 210 | ||||||||||
| Unearned revenue | (4,787 | ) | (452 | ) | ||||||||
| Other current liabilities | 1,375 | (2,410 | ) | |||||||||
| Other long-term liabilities | 374 | 4,066 | ||||||||||
| Total adjustments | (229 | ) | 8,495 | |||||||||
| Net cash used in operating activities | (18,088 | ) | (2,825 | ) | ||||||||
| Cash Flows from Investing Activities: | ||||||||||||
| Capital expenditures | (2,364 | ) | (3,654 | ) | ||||||||
| Investment in intangible assets | (857 | ) | (660 | ) | ||||||||
| Net cash used in investing activities | (3,221 | ) | (4,314 | ) | ||||||||
| Cash Flows from Financing Activities: | ||||||||||||
| Proceeds from line of credit | 16,246 | 15,000 | ||||||||||
| Repayments of line of credit | (16,246 | ) | (15,000 | ) | ||||||||
| Proceeds from other borrowings | 28,880 | -- | ||||||||||
| Repayments of other borrowings | (6,030 | ) | -- | |||||||||
| Debt issuance costs | (680 | ) | -- | |||||||||
| Principal payments on capital lease obligations | (1,727 | ) | (1,552 | ) | ||||||||
| Proceeds from issuance of common stock, net | -- | 15,942 | ||||||||||
| 7% Series B convertible preferred stock dividend | (3 | ) | -- | |||||||||
| Cash paid to satisfy tax withholding upon vesting of employee stock awards | (328 | ) | (753 | ) | ||||||||
| Proceeds from exercise of stock options | 236 | 220 | ||||||||||
| Proceeds from employee stock purchase plan | 223 | 163 | ||||||||||
| Net cash provided by financing activities | 20,571 | 14,020 | ||||||||||
| Effect of exchange rate changes on cash and cash equivalents | (17 | ) | 1 | |||||||||
| (Decrease) increase in cash and cash equivalents | (755 | ) | 6,882 | |||||||||
| Cash and cash equivalents, beginning of period | 15,407 | 14,238 | ||||||||||
| Cash and cash equivalents, end of period | $ | 14,652 | $ | 21,120 | ||||||||
| Non-Cash Investing and Financing Activities: | ||||||||||||
| Capital lease obligations incurred | $ | 2,213 | $ | 2,002 | ||||||||
| Capital equipment purchased on credit | 2,213 | 2,002 | ||||||||||
| Change in fair value of intellectual property purchase liability | -- | 2,605 | ||||||||||
| Supplemental Disclosures of Cash Flow Information: | ||||||||||||
| Interest paid | $ | 758 | $ | 155 | ||||||||
| MATTERSIGHT CORPORATION | ||||||||||||||||
| CALCULATION OF ADJUSTED EBITDA | ||||||||||||||||
| (Unaudited and in thousands) | ||||||||||||||||
| For the Three Months | For the Nine Months | |||||||||||||||
| Ended | Ended | |||||||||||||||
| Sept. 30, | Sept 30, | Sept. 30, | Sept. 30, | |||||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||||||
| GAAP -- Net loss | $ | (5,838 | ) | $ | (3,939 | ) | $ | (17,859 | ) | $ | (11,320 | ) | ||||
| Depreciation and amortization | 1,477 | 1,396 | 4,295 | 3,607 | ||||||||||||
| Interest and other borrowing costs | 860 | 173 | 1,292 | 434 | ||||||||||||
| Interest income | (8 | ) | (2 | ) | (31 | ) | (4 | ) | ||||||||
| Income tax provision | 11 | 15 | 26 | 31 | ||||||||||||
| EBITDA | (3,498 | ) | (2,357 | ) | (12,277 | ) | (7,252 | ) | ||||||||
| Stock-based compensation | 1,251 | 1,476 | 4,294 | 4,258 | ||||||||||||
| Change in fair value of warrant liability | (58 | ) | 22 | (58 | ) | (3 | ) | |||||||||
| Adjusted EBITDA | $ | (2,305 | ) | $ | (859 | ) | $ | (8,041 | ) | $ | (2,997 | ) | ||||
Contact David Gustafson Interim Chief Financial Officer 847.582.7016 David.Gustafson@Mattersight.com
