Support.com Q3 revenue just short of its $7.4m estimates

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Support.com reported total revenue of $7.1 million against an estimate of $7.4 million in its financial results for its third quarter ended September 30. This represents an increase of 32% from $5.4 million for 3Q 2000, and an increase of 13% from $6.3 million reported in 2Q 2001.

Support.com licenses its software primarily through term license agreements. Revenue is recognised monthly over the life of the contract, which is typically 36 months. The resulting order backlog continues to range between six and 10 times the quarterly reported revenue.

License revenue was $5.1 million, representing 72% of total revenue in the second quarter, while service revenue was $2 million, accounting for the remaining 28% of total revenue. International revenue was 19% of total revenue.

Net loss and net loss per share, excluding certain charges, were $5.7 million and $0.18 per share for 3Q ($6.7m; $0.24). The company reported third quarter cash, cash equivalents and short-term investment balances of $29.6 million.

Revenue for the nine months ended September 30, was $22 million ($10.8m), an increase of 103%. Net loss and net loss per share for the same period were $18.2 million and $0.59 per share ($19.1m; $0.76).

Support has reassessed its outlook and expects revenues to be in the range of $8.2 to $8.6 million for 4Q 2001, which reflects approximately 16-22% sequential revenue growth.

The company will continue to reduce expenses, thereby maintaining its bottom-line results within the original guidance range of ($0.65) to ($0.71) pro forma loss per share for the full year 2001. The guidance for loss per share, excluding certain non-cash charges, for 4Q 2001 is $0.10 to $0.12.

For 2002, revenues are forecasted in the range of $40 to $44 million. The company still expects to be on track with its initial targets for cash flow and profitability in 2002.

Recent highlights

The company's performance highlights since the end of the second quarter include:
• Grew total customer base to over 120

• Representative customer wins include new wins with Procter & Gamble, Road Runner, and Dimension Data (UK) and repeat business from companies like CSC, JP Morgan Chase, and Comcast. The average deal size for the quarter was over $600,000, with one multi-million dollar deal.

• Introduction of IBM's Virtual Help Desk Solution using the company's support automation software

• IBM Global Services introduced its newly unveiled product line, Virtual Help Desk Solution, built on Support.com's software platform. It is an outsourced service offering, targeted at its corporate enterprise customers designed to alleviate the high costs associated with corporate help desks. During the quarter, the two companies signed their first customer for this product.

• Extended its Mobile Support Solution to support RIM Blackberry and Microsoft Pocket PC platforms in addition to the Palm OS platform, which was announced in the second quarter.

• Further strengthened our relationship with Siebel Systems through Siebel 7 integration and joined PeopleSoft's Alliance Program covering joint marketing and integrated products.

• Received the annual STAR award for best Support Technology Vendor from the Service Support Professionals Association, which is comprised of almost 15,000 service and support professionals from Global 2000 companies.

Support.com

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