Mattersight Announces Fourth Quarter 2012 Results

Mattersight Announces Fourth Quarter 2012 Results 
CHICAGO, IL -- (Marketwire) -- 02/13/13 --  Mattersight Corporation
(NASDAQ: MATR) today announced financial results for the fourth
quarter ended December 31, 2012.  
Mattersight's total services revenue was $8.6 million, including $6.9
million of subscription revenues. The Company realized an "Adjusted
Earnings(1)" loss of $2.8 million for the fourth 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 $4.6 million in the fourth quarter of 2012
and its operating loss from continuing operations(2) was $4.7
million.  
Q4 Highlights 


 
--  Increased subscription revenues by 6% sequentially
--  Increased total services revenues by 8% sequentially
--  Recorded managed services bookings of $4.1 million
--  Signed five new pilots with two new logos

  
Full Year Highlights 


 
--  Grew subscription revenues by 24%, to $27.3 million
--  Increased total services revenues by 16%, to $33.4 million
--  Increased gross margins by over 700 bps
--  Signed 7 new logos as compared to 1 in 2011
--  Ended the year with managed services backlog(3) of $89.1 million
--  Signed 18 total pilots as compared to 6 in 2011

  
Q1 Guidance 
Mattersight currently expects its total subscription revenues will be
approximately flat in the first quarter of 2013. 
Conference Call Information 
Mattersight management will host a conference call at 5:00 p.m. ET on
Wednesday, February 13, 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: 95215703.  
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 March 13, 2013, by dialing
855.859.2056 (domestic) or 404.537.3406 (international), conference
ID: 95215703.   
Safe Harbor for Forward-Looking Statements  
Statements in this press release that are not historical facts are
"forward-looking statements" t
hat 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'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, Education, Hospitality, and Government. See What
Matters(TM) 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. 
(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.  


 
                                                                            
                          MATTERSIGHT CORPORATION                           
                   CONSOLIDATED STATEMENTS OF OPERATIONS                    
            (Unaudited and in thousands, except per share data)             
                                                                            
                                        For the               For the       
                                 --------------------  -------------------- 
                                  Three Months Ended    Twelve Months Ended 
                                 --------------------  -------------------- 
                                  Dec. 31,   Dec. 31,   Dec. 31,   Dec. 31, 
                                    2012       2011       2012       2011   
                                 ---------  ---------  ---------  --------- 
Revenue:                                                                    
  Behavioral Analytics revenue   $   8,343  $   8,260  $  32,138  $  27,257 
  Other revenue      
                  285        309      1,314      1,519 
                                 ---------  ---------  ---------  --------- 
    Total services revenue           8,628      8,569     33,452     28,776 
  Reimbursed expenses                   97         79        411        319 
                                 ---------  ---------  ---------  --------- 
Total revenue                        8,725      8,648     33,863     29,095 
Operating expenses:                                                         
  Cost of Behavioral Analytics                                              
   revenue                           3,211      3,503     12,174     12,188 
  Cost of other revenue                156        200        702      1,000 
                                 ---------  ---------  ---------  --------- 
    Cost of services                 3,367      3,703     12,876     13,188 
  Reimbursed expenses                   97         79        411        319 
                                 ---------  ---------  ---------  --------- 
Total cost of revenue, exclusive                                            
 of depreciation and                                                        
 amortization:                       3,464      3,782     13,287     13,507 
  Sales, marketing and                                                      
   development                       6,560      5,195     23,131     19,954 
  General and administrative         2,341      1,791      8,255      9,144 
  Severance and related costs           --         40        693       (336)
  Depreciation                         915        875      3,419      3,218 
Amortization of intangibles             17         26         81        177 
                                 ---------  ---------  ---------  --------- 
Total operating expenses            13,297     11,709     48,866     45,664 
                                 ---------  ---------  ---------  --------- 
                                                                            
Operating loss                      (4,572)    (3,061)   (15,003)   (16,569)
Interest and other (expense)                                                
 income, net                           (81)       (56)      (384)       125 
                                 ---------  ---------  ---------  --------- 
Loss from continuing operations                                             
 before income taxes                (4,653)    (3,117)   (15,387)   (16,444)
Income tax (provision) benefit          (8)       604        (38)     5,884 
                                 ---------  ---------  ---------  --------- 
Loss from continuing operations     (4,661)    (2,513)   (15,425)   (10,560)
Income from discontinued                                                    
 operations, net of tax                 21      1,210        249     28,920 
                                 ---------  ---------  ---------  --------- 
Net (loss) income                   (4,640)    (1,303)   (15,176)    18,360 
Series B Stock fair value over                                              
 stated value                           --     (6,555)       (69)    (6,555)
Dividends related to Series B                                               
 Stock                                (147)      (302)      (591)    (1,252)
                                 ---------  ---------  ---------  --------- 
Net (loss) income available to                                              
 Common Stock holders            $  (4,787) $  (8,160) $ (15,836) $  10,553 
                                 =========  =========  =========  ========= 
                                                                            
Per share of Common Stock:                                                  
Basic loss from continuing                                                  
 operations                      $   (0.30) $   (0.64) $   (1.01) $   (1.29)
                                 =========  =========  =========  ========= 
Basic income from discontinued                                              
 operations                      $      --  $    0.08  $    0.02  $    2.03 
                                 =========  =========  =========  ========= 
Basic net (loss) income                                                     
 available to Common Stock                                                  
 holders                         $   (0.30) $   (0.56) $   (0.99) $    0.74 
                                 =========  =========  =========  ========= 
                                                                            
Per share of Common Stock:                                                  
Diluted loss from continuing                                                
 operations                      $   (0.30) $   (0.64) $   (1.01) $   (1.29)
                                 =========  =========  =========  ========= 
Diluted income from discontinued                                            
 operations                      $      --  $    0.08  $    0.02  $    2.03 
                                 =========  =========  =========  ========= 
Diluted net (loss) income                                                   
 available to Common Stock                                                  
 holders                         $   (0.30) $   (0.56) $   (0.99) $    0.74 
                                 =========  =========  =========  ========= 
                                                                            
Shares used to calculate basic                                              
 net (loss) income per share        16,223     14,538     16,002     14,225 
                                 =========  =========  =========  ========= 
Shares used to calculate diluted                                            
 net (loss) income per share        16,223     14,538     16,002     14,225 
                                 =========  =========  =========  ========= 
                                                                            
Stock-based compensation,                                                   
 primarily restricted stock, is                                             
 included in individual line                                                
 items above:                                                               
  Cost of Behavioral Analytics                                              
   revenue                       $       2  $       3  $      16  $      20 
  Sales, marketing and                                                      
   development                         530        787      2,308      3,387 
  General and administrative           349        345      1,405      2,013 
  Severance and related costs           --         --        268         -- 
  Discontinued operations               --       (393)       --      
1,175 
                                                                            
                                                                            
                          MATTERSIGHT CORPORATION                           
           CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME           
                        (Unaudited and in thousands)                        
                                                
                            
                                        For the               For the       
                                 --------------------  -------------------- 
                                  Three Months Ended    Twelve Months Ended 
                                 --------------------  -------------------- 
                                  Dec. 31,   Dec. 31,   Dec. 31,   Dec. 31, 
                                    2012       2011       2012       2011   
                                 ---------  ---------  ---------  --------- 
Net (loss) income                $  (4,640) $  (1,303) $ (15,176) $  18,360 
Other comprehensive loss:                                                   
Effect of currency translation           2       (10)        (1)      
(350)
                                 ---------  ---------  ---------  --------- 
Comprehensive net (loss) income  $  (4,638) $  (1,313) $ (15,177) $  18,010 
                                 =========  =========  =========  ========= 
                                                                            
                                                                            
                          MATTERSIGHT CORPORATION                           
                        CONSOLIDATED BALANCE SHEETS                         
       (Unaudited and in thousands, except share and per share data)        
                                                                            
                                                 December 31,  December 31, 
                                                     2012          2011     
                                                 ------------  ------------ 
                     ASSETS:                                                
Current Assets:                                                             
  Cash and cash equivalents                      $     14,419  $     29,408 
  Restricted cash                                          --         1,500 
  Receivables (net of allowances of $12 and $13)        2,395         2,540 
  Prepaid expenses                                      4,404         5,302 
  Other current assets                                    305           288 
                                                 ------------  ------------ 
    Total current assets                               21,523        39,038 
Equipment and leasehold improvements, net               4,727         4,271 
Goodwill                                                  972           972 
Intangibles, net                                          236           238 
Other long-term assets                                  3,776         4,746 
                                                 ------------  ------------ 
    Total assets                                 $     31,234  $     49,265 
                                                 ============  ============ 
                                                                            
      LIABILITIES AND STOCKHOLDERS' EQUITY:                                 
Current Liabilities:                                                        
  Short-term debt                                $      3,703  $      3,567 
  Accounts payable                                        781           812 
  Accrued compensation and related costs                1,335         1,382 
  Unearned revenue                                      5,680         9,783 
  Other current liabilities                             2,889         3,673 
                                                 ------------  ------------ 
    Total current liabilities                          14,388        19,217 
Long-term unearned revenue                              2,374         3,036 
Other long-term liabilities                             1,231         1,401 
                                                 ------------  ------------ 
    Total liabilities                                  17,993        23,654 
                                                 ------------  ------------ 
                                                                            
Series B Stock, $0.01 par value; 5,000,000                                  
 shares authorized and designated; 1,649,201 and                            
 1,670,696 shares issued and outstanding at                                 
 December 31, 2012 and December 31, 2011,                                   
 respectively, with a liquidation preference of                             
 $8,705 and $8,819 at December 31, 2012 and                                 
 December 31, 2011, respectively                        8,411         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; 18,407,848 and 18,037,552                             
   shares issued at December 31, 2012, and at                               
   December 31, 2011, respectively; and                                     
   17,114,880 and 16,935,204 outstanding at                                 
   December 31, 2012 and December 31, 2011,                                 
   respectively                                           184           180 
  Additional paid-in capital                          216,667       212,618 
  Accumulated deficit                                (200,955)     (185,779)
  Treasury stock, at cost, 1,292,968 and                                    
   1,102,348 shares at December 31, 2012 and                                
   December 31, 2011, respectively                     (7,027)       (5,891)
  Accumulated other comprehensive loss                 (4,039)       (4,038)
                                                 ------------  ------------ 
    Total stockholders' equity                          4,830        17,090 
                                                 ------------  ------------ 
    Total liabilities and stockholders' equity   $     31,234  $     49,265 
                                                 ============  ============ 
                                                                            
                                                                            
                          MATTERSIGHT CORPORATION                           
                   CONSOLIDATED STATEMENTS OF CASH FLOWS                    
                        (Unaudited and in thousands)                        
                                                                            
                                                          For the Twelve    
                                                           Months Ended     
                                                       -------------------- 
                                                        Dec. 31,   Dec 31,  
                                                          2012       2011   
                                                       ---------  --------- 
Cash Flows from Operating Activities:                                       
  Net (loss) income                                    $ (15,176) $  18,360 
  Less: net income from discontinued operations              249     28,920 
                                                       ---------  --------- 
  Net loss from continuing operations                    (15,425)   (10,560)
  Adjustments to reconcile net loss from continuing                         
   operations to net cash used in operating                                 
   activities:                                                              
    Depreciation and amortization            
              3,500      3,395 
    Stock-based compensation                               3,729      5,420 
    Severance and related costs                              268         -- 
    Other                                                      2         14 
  Changes in assets and liabilities:                                        
    Receivables                                              146       (554)
    Prepaid expenses                                       1,834     (2,254)
    Other assets                                             (50)       128 
    Accounts payable                                         (31)       445 
    Accrued compensation and related costs                   (47)      (264)
    Unearned revenue                                      (4,765)       275 
    Other liabilities                                       (177)    (6,554)
                                                       ---------  --------- 
      Total adjustments                                    4,409         51 
                                                       ---------  --------- 
        Net cash used in continuing operations           (11,016)   (10,509)
        Net cash provided by (used in) discontinued                         
         operations                                           24     (5,787)
                                                       ---------  --------- 
        Net cash used in operating activities            (10,992)   (16,296)
                                                       ---------  --------- 
                                                                            
Cash Flows from Investing Activities:                                       
  Capital expenditures and other                          (2,160)      (833)
                                                       ---------  --------- 
        Net cash used in continuing investing                               
         activities                                       (2,160)      (833)
        Net cash provided by discontinued investing                         
         activities                                           --     37,427 
                                                       ---------  --------- 
        Net cash (used in) provided by investing                            
         activities                                       (2,160)    36,594 
                                                       ---------  --------- 
                                                                            
Cash Flows from Financing Activities:                                       
  Proceeds from line of credit                             3,691         -- 
  Decrease in restricted cash                              1,500        960 
  Proceeds from stock compensation and employee stock                       
   purchase plans, net                                       802        126 
  Purchase of shares of Series B Stock                    (3,743)   (12,547)
  Principal payments under capital lease obligations      (2,311)    (1,862)
  Acquisition of treasury stock                           (1,136)    (1,008)
  Payment of Series B Stock dividends                       (595)    (2,221)
  (Fees) proceeds from issuance of Common Stock              (49)     6,000 
                                                       ---------  --------- 
        Net cash used in continuing financing                               
         activities                                       (1,841)   (10,552)
        Net cash used in discontinued financing                             
         activities                                           --       (678)
                                                       ---------  --------- 
        Net cash used in financing activities             (1,841)   (11,230)
                                                       ---------  --------- 
                                                                            
Effect of exchange rate changes on cash and cash                            
 equivalents by continuing operations                          4       (299)
Effect of exchange rate changes on cash and cash                            
 equivalents by discontinued operations                       --       (233)
                                                       ---------  --------- 
Effect of exchange rate changes on cash and cash                            
 equivalents                                                   4       (532)
                                                       ---------  --------- 
(Decrease) increase in cash and cash equivalents         (14,989)     8,536 
Cash and cash equivalents, beginning of period            29,408     20,872 
                                                       ---------  --------- 
Cash and cash equivalents of continuing operations,                         
 end of period.                                        $  14,419  $  29,408 
                                                       =========  ========= 
                                                                            
Non-Cash Investing and Financing Transactions:                              
  Capital lease obligations incurred                   $   1,793  $   2,517 
  Capital equipment purchased on credit                    1,793      2,517 
Supplemental Disclosures of Cash Flow Information:                          
  Interest paid                                        $     371  $     187 
                                                                            
                                                                            
                          MATTERSIGHT CORPORATION                           
                  CALCULATION OF ADJUSTED EARNINGS MEASURE                  
                        (Unaudited and in thousands)                        
                                                                            
                           
             For the               For the       
                                 --------------------  -------------------- 
                                  Three Months Ended    Twelve Months Ended 
                                 --------------------  -------------------- 
                                  Dec. 31,   Dec. 31,   Dec. 31,   Dec. 31, 
                                    2012       2011       2012       2011   
                                 ---------  ---------  ---------  --------- 
GAAP -- Operating loss           $  (4,572) $  (3,061) $ (15,003) $ (16,569)
                                                                            
Add back (reduce) the effect of:                                            
Stock-based compensation               881      1,135      3,729      5,420 
Severance and related costs             --         40        693       (336)
Depreciation and amortization          932        901      3,500      3,395 
                                 ---------  ---------  ---------  --------- 
Adjusted earnings measure --                                                
 (loss)                          $  (2,759) $    (985) $  (7,081) $  (8,090)
                                 =========  =========  =========  ========= 

  
Mark Iserloth
Vice President and Chief Financial Officer
312.454.3613
ir@mattersight.com 
 
 
Press spacebar to pause and continue. Press esc to stop.