Mattersight Announces First Quarter 2013 Results

Mattersight Announces First Quarter 2013 Results 
CHICAGO, IL -- (Marketwired) -- 05/08/13 --  Mattersight Corporation
(NASDAQ: MATR) today announced financial results for the first
quarter ended March 31, 2013.  
Mattersight's total services revenue was $8.5 million, including $7.2
million of subscription revenues. The Company realized an "Adjusted
Earnings(1)" loss of $1.5 million for the first quarter of 2013.
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 $3.7 million in the first quarter of 2013. 
Q1 Highlights 


 
--  Increased subscription revenues by 4% sequentially
--  Recorded bookings of $6.7 million
--  Signed three new pilots, one of which is a new logo
--  Converted two pilots

  
Revenue Guidance and Outlook
 Mattersight currently expects its
subscription revenues to be down approximately 10% in Q2 as compared
with Q1. Looking out to Q3 and Q4, we currently expect subscription
revenues, separate from our revenues related to the Affordable Care
Act, to grow 8% - 10% sequentially each quarter. 
Conference Call Information 
Mattersight management will host a conference call at 5:00 p.m. ET on
Wednesday, May 8, 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: 56886432.  
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 June 8, 2013, by dialing
855.859.2056 (domestic) or 404.537.3406 (international), conference
ID: 56886432.   
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. 
About Mattersight 
Mattersight is a leader in enterprise analytics focused on customer
and employee interactions and behaviors. Mattersight(R) Behavioral
Analytics captures and analyzes customer and employee interactions,
employee desktop data and other contextual information to optimally
route customers to the best available employee, 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 solutions 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. 


 
                                                                            
                                                                            
                          MATTERSIGHT CORPORATION                           
              CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS               
            (Unaudited and in thousands, except per share data)             
                                                                            
                                                           For the          
                                                 -------------------------- 
                                                     Three Months Ended     
                                                          March 31,         
                                                 -------------------------- 
                                                     2013          2012     
                                                 ------------  ------------ 
                                                                            
Revenue:                                                                    
  Behavioral Analytics revenue                   $      8,194  $      8,556 
  Other revenue                                           322           345 
                                                 ------------  ------------ 
    Total services revenue                              8,516         8,901 
  Reimbursed expenses                                      82            98 
                                                 ------------  ------------ 
Total revenue                                           8,598         8,999 
Operating expenses:                                                         
  Cost of Behavioral Analytics revenue                  2,723         3,188 
  Cost of other revenue                                   156           204 
                                                 ------------  ------------ 
    Cost of services                                    2,879         3,392 
  Reimbursed expenses                                      82            98 
                                                 ------------  ------------ 
Total cost of revenue, exclusive of depreciation                            
 and amortization:                                      2,961         3,490 
  Sales, marketing and development                      6,230         5,184 
  General and administrative                            2,271         1,956 
  Severance and related costs                              --           679 
  Depreciation and amortization                           966           867 
                                                 ------------  ------------ 
Total operating expenses                               12,428        12,176 
                                                 ------------  ------------ 
                                                                            
Operating loss                                         (3,830)       (3,177)
Interest and other expense, net                           (91)         (102)
                                                 ------------  ------------ 
Loss from continuing operations before income                               
 taxes                                                 (3,921)       (3,279)
Income tax benefit (provision)                            248           (10)
                                                 ------------  ------------ 
Loss from continuing operations                        (3,673)       (3,289)
Loss from discontinued operations, net of tax              --           (81)
                                                 ------------  ------------ 
Net loss                                               (3,673)       (3,370)
Dividends related to Series B Stock                      (147)         (149)
                                                 ------------  ------------ 
Net loss available to Common Stock holders       $     (3,820) $     (3,519)
                                                 ============  ============ 
                                                                            
Per share of Common Stock:                                                  
Basic loss from continuing operations            $      (0.23) $      (0.22)
                                                 ============  ============ 
Basic loss from discontinued operations          $         --  $      (0.01)
                                                 ============  ============ 
Basic net loss available to Common Stock holders $      (0.23) $      (0.22)
                                                 ============  ============ 
                                                                            
Per share of Common Stock:                                                  
Diluted loss from continuing operations          $      (0.23) $      (0.22)
                                                 ============  ============ 
Diluted loss from discontinued operations        $         --  $      (0.01)
                                                 ============  ============ 
Diluted net loss available to Common Stock                                  
 holders                                         $      (0.23) $      (0.22)
                                                 ============  ============ 
                                                                            
Shares used to calculate basic net loss per                                 
 share                                                 16,320        15,750 
                                                 ============  ============ 
Shares used to calculate diluted net loss per                               
 share                                                 16,320        15,750 
                                                 ============  ============ 
                                                                            
Stock-based compensation, primarily restricted stock, is included in        
 individual line items above:                                               
  Cost of Behavioral Analytics revenue           $          4  $          6 
  Sales, marketing and development                        849           697 
  General and administrative                              518           400 
  Severance and related costs                              --           268 
                                                                            
                                                                            
                                                                            
                          MATTERSIGHT CORPORATION                           
          CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS           
                        (Unaudited and in thousands)                        
                                                                            
                                                           For the          
                                                 -------------------------- 
                                                     Three Months Ended     
                                                          March 31,         
                                                 -------------------------- 
                                                     2013          2012     
                                                 ------------  ------------ 
Net loss                                         $     (3,673) $     (3,370)
Other comprehensive loss:                                                   
Effect of currency translation                             (8)            5 
                                                 ------------  ------------ 
Comprehensive net loss                           $     (3,681) $     (3,365)
                                                 ============  ============ 
                                                                            
                                                                            
                                                                            
                          MATTERSIGHT CORPORATION                           
                   CONDENSED CONSOLIDATED BALANCE SHEETS                    
       (Unaudited and in thousands, except share and per share data)        
                                                                            
                                                   March 31,   December 31, 
                                                     2013          2012     
                                                 ------------  ------------ 
                     ASSETS:                                                
Current Assets:                                                             
  Cash and cash equivalents                      $     12,480  $     14,419 
  Receivables (net of allowances of $12 and $12)        3,182         2,568 
  Prepaid expenses                                      4,408         4,359 
  Other current assets                                    351           305 
                                                 ------------  ------------ 
    Total current assets                               20,421        21,651 
Equipment and leasehold improvements, net               4,805         4,727 
Goodwill                                                  972           972 
Intangibles, net                                          249           236 
Other long-term assets                                  3,688         3,776 
                                                 ------------  ------------ 
    Total assets                                 $     30,135  $     31,362 
                                                 ============  ============ 
                                                                            
      LIABILITIES AND STOCKHOLDERS' EQUITY:                                 
Current Liabilities:                                                        
  Short-term debt                                $      3,703  $      3,703 
  Accounts payable                                      1,270           781 
  Accrued compensation and related costs                1,188         1,335 
  Unearned revenue                                      7,310         5,853 
  Other current liabilities                             2,720         2,889 
                                                 ------------  ------------ 
    Total current liabilities                          16,191        14,561 
Long-term unearned revenue                              1,881         2,374 
Other long-term liabilities                             1,492         1,231 
                                                 ------------  ------------ 
    Total liabilities                                  19,564        18,166 
                                                 ------------  ------------ 
                                                                            
Series B Stock, $0.01 par value; 5,000,000                                  
 shares authorized and designated; 1,649,078 and                            
 1,649,201 shares issued and outstanding at                                 
 March 31, 2013 and December 31, 2012,                                      
 respectively, with a liquidation preference of                             
 $8,852 and $8,705 at March 31, 2013 and                                    
 December 31, 2012, respectively                        8,410         8,411 
                                                                            
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; 18,467,254 and 18,407,848                             
   shares issued at March 31, 2013, and at                                  
   December 31, 2012, respectively; and                                     
   17,131,550 and 17,114,880 outstanding at                                 
   March 31, 2013 and December 31, 2012,                                    
   respectively                                           185           184 
  Additional paid-in capital                          217,918       216,667 
  Accumulated deficit                                (204,673)     (201,000)
  Treasury stock, at cost, 1,335,704 and                                    
   1,292,968 shares at March 31, 2013 and                                   
   December 31, 2012, respectively                     (7,222)       (7,027)
  Accumulated other comprehensive loss                 (4,047)       (4,039)
                                                 ------------  ------------ 
    Total stockholders' equity                          2,161         4,785 
                                                 ------------  ------------ 
    Total liabilities and stockholders' equity   $     30,135  $     31,362 
                                                 ============  ============ 
                                                                            
                                                                            
                                                                            
                          MATTERSIGHT CORPORATION                           
              CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS               
                        (Unaudited and in thousands)                        
                                                                            
                                                           For the          
                                                 -------------------------- 
                                                     Three Months Ended     
                                                          March 31,         
                                                 -------------------------- 
                                                     2013          2012     
                                                 ------------  ------------ 
Cash Flows from Operating Activities:                                       
  Net loss                                       $     (3,673) $     (3,370)
  Less: net loss from discontinued operations              --           (81)
                                                 ------------  ------------ 
  Net loss from continuing operations                  (3,673)       (3,289)
  Adjustments to reconcile net loss from                                    
   continuing operations to net cash used in                                
   operating activities:                                                    
    Depreciation and amortization                         966           867 
    Stock-based compensation                            1,371         1,103 
    Severance and related costs                            --           268 
    Other                                                  --            (2)
  Changes in assets and liabilities:                                        
    Receivables                                          (614)          474 
    Prepaid expenses                                       30           196 
    Other assets                                          (38)          (63)
    Accounts payable                                      489          (155)
    Accrued compensation and related costs               (147)          328 
    Unearned revenue                                      964        (1,292)
    Other liabilities                                    (215)         (198)
                                                 ------------  ------------ 
      Total adjustments                                 2,806         1,526 
                                                 ------------  ------------ 
        Net cash used in continuing operations           (867)       (1,763)
        Net cash used in discontinued operations           --           (31)
                                                 ------------  ------------ 
        Net cash used in operating activities            (867)       (1,794)
                                                 ------------  ------------ 
Cash Flows from Investing Activities:                                       
  Capital expenditures and other                         (272)         (156)
                                                 ------------  ------------ 
        Net cash used in continuing investing                               
         activities                                      (272)         (156)
        Net cash used in discontinued investing                             
         activities                                        --            -- 
                                                 ------------  ------------ 
        Net cash used in investing activities            (272)         (156)
                                                 ------------  ------------ 
Cash Flows from Financing Activities:                                       
  Proceeds from stock compensation and employee                             
   stock purchase plans, net                               36            34 
  Principal payments under capital lease                                    
   obligations                                           (629)         (536)
  Acquisition of treasury stock                          (195)         (495)
  Payment of Series B Stock dividends                      --          (298)
  Fees from issuance of Common Stock                       --           (43)
                                                 ------------  ------------ 
        Net cash used in continuing financing                               
         activities                                      (788)       (1,338)
        Net cash used in discontinued financing                             
         activities                                        --            -- 
                                                 ------------  ------------ 
        Net cash used in financing activities            (788)       (1,338)
                                                 ------------  ------------ 
Effect of exchange rate changes on cash and cash                            
 equivalents by continuing operations                     (12)           10 
Effect of exchange rate changes on cash and cash                            
 equivalents by discontinued operations                    --            -- 
                                                 ------------  ------------ 
Effect of exchange rate changes on cash and cash                            
 equivalents                                              (12)           10 
                                                 ------------  ------------ 
Decrease in cash and cash equivalents                  (1,939)       (3,278)
Cash and cash equivalents, beginning of period         14,419        29,408 
                                                 ------------  ------------ 
Cash and cash equivalents of continuing                                     
 operations, end of period                       $     12,480  $     26,130 
                                                 ============  ============ 
                                                                            
                                                                            
                                                                            
                                                           For the          
                                                 ---------------------------
                                                      Three Months Ended    
                                                          March 31,         
                                                 ---------------------------
                                                      2013          2012    
                                                 ------------- -------------
Non-Cash Investing and Financing Transactions:                              
  Capital lease obligations incurred             $         785 $         710
  Capital equipment purchased on credit                    785           710
Supplemental Disclosures of Cash Flow                                       
 Information:                                                               
  Interest paid                                  $          71 $          44
                                                                            
                                                                            
                                                                            
                          MATTERSIGHT CORPORATION                           
                  CALCULATION OF ADJUSTED EARNINGS MEASURE                  
                        (Unaudited and in thousands)                        
                                                                            
                                                           For the          
                                                 -------------------------- 
                                                     Three Months Ended     
                                                          March 31,         
                                                 -------------------------- 
                                                     2013          2012     
                                                 ------------  ------------ 
GAAP -- Operating loss                           $     (3,830) $     (3,177)
                                                                            
Add back (reduce) the effect of:                                            
Stock-based compensation                                1,371         1,103 
Severance and related costs                                --           679 
Depreciation and amortization                             966           867 
                                                 ------------  ------------ 
Adjusted earnings measure -- loss                $     (1,493) $       (528)
                                                 ============  ============ 

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