CHICAGO, Feb. 14, 2018 (GLOBE NEWSWIRE) -- Mattersight Corporation (NASDAQ:MATR), the pioneer in personality-based software applications, today announced financial results for the fourth quarter ended December 31, 2017. 

“Mattersight’s fourth quarter was marked by 9% growth in total revenues and 12% growth in subscription revenue versus the same period last year,” said Mattersight CEO Kelly Conway. “We set a new record for quarterly revenue, and saw continued improvement on the cost side resulting from a more favorable product mix and improved operating efficiency.”  

Fourth Quarter 2017 Financial Highlights

  • Bookings: Annual Contract Value (ACV) bookings were $2.8 million.
  • Total Revenue: Total revenue was $13.6 million.
  • Subscription Revenue: Total subscription revenue was $12.8 million.
  • Backlog: ACV in deployment was $8.9 million at the end of the quarter.
  • Gross Margin: Gross margin was 73%.

Fourth Quarter 2017 Business Highlights

  • Routing business:  We saw continued revenue growth with our routing business, and fourth quarter bookings include a new customer that is a Fortune 100 financial services organization.
  • Patents:  Recently issued patents include:
    • Chatbot Communication - Personality-based Chatbot and methods is an invention for a digital assistant, such as Siri, Alexa or Google Home, that will tailor its interactions with users based on their personalities.
    • Face-to-Face Analysis - Face-to-face communication analysis via mono recording system and methods will be able to predict a customer’s personality type just as Mattersight currently predicts personality types for callers into contact centers.
    • Fraud Detection - Two new patents, both titled Methods and Apparatus for Identifying Fraudulent Callers, cover new and more efficient ways of determining if an unknown speaker is a known fraudster.  By leveraging biometrics and analyzing the speaker’s voiceprint, the invention instantly cross-references the speaker’s most distinctive features with a database containing the voiceprints of known fraudsters.

Non-GAAP Financial Measures

Mattersight's net loss was $1.5 million in the fourth quarter of 2017. The Company realized positive "Adjusted EBITDA1" of $1.0 million for the fourth quarter of 2017. 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, February 14, 2018. 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: 2685018.

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 18, 2018, by dialing 855.859.2056 (domestic) or 404.537.3406 (international), conference ID: 2685018.

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.  A reader can identify these forward-looking statements because they are not limited to historical fact or they  use words such as “scheduled,” “will,” “anticipate,” “project,” “estimate,” “forecast,” “goal,” “objective,” “committed,” “intend,” “continue,” “plan,” “may,” “might,” “believe,” “expect,” “intend,” “could,” “would,” “should,” or “will likely result,” and other similar expressions, words and terms of similar meaning, involving 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 unleashes the power of personality to improve every interaction with every customer every time. With tools to learn, analyze, and predict customer behavior based on customer conversations, Mattersight helps brands create chemistry with their customers through shorter, more satisfying conversations that increase loyalty. To learn how Mattersight can help you click better with your customers 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 other measures of financial performance prepared in accordance with GAAP.

Contact
David Mullen
Chief Financial Officer
312.954.7380
dave.mullen@mattersight.com


MATTERSIGHT CORPORATION 
CONSOLIDATED STATEMENTS OF OPERATIONS 
(Unaudited and in thousands, except per share data) 
          
      
  Quarter Ended Twelve Months Ended 
  December 31,
  December 31,
  December 31,
  December 31,
  
   2017   2016   2017   2016  
Revenue:         
Subscription revenue $  12,787  $  11,423  $  43,712  $  38,720  
Other revenue    862     1,136     2,798     3,377  
Total revenue    13,649     12,559     46,510     42,097  
Operating expenses:         
Cost of subscription revenue    2,583     2,525     10,159     10,365  
Cost of other revenue    1,099     1,379     3,394     3,423  
Total cost of revenue, exclusive of depreciation and amortization    3,682     3,904     13,553     13,788  
Product development    3,100     2,914     13,295     12,502  
Sales and marketing    3,851     3,397     13,389     16,848  
General and administrative    2,841     2,877     12,166     11,827  
Depreciation and amortization    1,473     1,650     6,347     5,946  
Total operating expenses    14,947     14,742     58,750     60,911  
Operating loss    (1,298)    (2,183)    (12,240)    (18,814) 
Non-operating income (expense):         
Interest and other borrowing costs    (432)    (1,027)    (2,785)    (2,319) 
Loss on early extinguishment of debt    —     —     (1,834)    —  
Change in fair value of warrant liability    69     109     377     167  
Other non-operating income    2     6     56     39  
Total non-operating expense    (361)    (912)    (4,186)    (2,113) 
Loss before income taxes    (1,659)    (3,095)    (16,426)    (20,927) 
Income tax benefit (provision)    110     (24)    106     (50) 
Net loss    (1,549)    (3,119)    (16,320)    (20,977) 
Dividends related to 7% Series B convertible preferred stock    (146)    (146)    (584)    (586) 
Net loss available to common stockholders $  (1,695) $  (3,265) $  (16,904) $  (21,563) 
Per share of common stock:         
Basic net loss available to common stockholders $  (0.05) $  (0.13) $  (0.56) $  (0.86) 
Diluted net loss available to common stockholders $  (0.05) $  (0.13) $  (0.56) $  (0.86) 
Shares used to calculate basic net loss per share    31,581     25,366     30,451     25,209  
Shares used to calculate diluted net loss per share    31,581     25,366     30,451     25,209  
Stock-based compensation expense is included in individual line items above:          
Total cost of revenue $  77  $  72  $  353  $  371  
Product development    174     271     667     1,134  
Sales and marketing    130     282     348     1,697  
General and administrative    422     404     1,559     2,122  

 

MATTERSIGHT CORPORATION 
CONSOLIDATED BALANCE SHEETS 
(Unaudited and in thousands, except share and per share data) 
      
      
      
  December 31,
2017 
 December 31,
2016 
 
ASSETS     
Current Assets:     
Cash and cash equivalents $  9,044  $  12,538  
Receivables net of allowances of $41 and $311, at December 31, 2017 and December 31,
  2016, respectively
    6,565     8,508  
Prepaid expenses    5,805     4,440  
Other current assets    65     296  
Total current assets    21,479     25,782  
Equipment and leasehold improvements, net of accumulated depreciation and
  amortization of $24,955 and $19,748, at December 31, 2017 and December 31, 2016,
  respectively
    8,572     9,576  
Goodwill    972     972  
Intangible assets, net of amortization of $4,357 and $3,820, respectively    2,952     3,201  
Other long-term assets (includes $2,675 and $4,210 of restricted cash, at December 31, 2017
  and December 31, 2016, respectively)
    5,960     6,033  
Total assets $  39,935  $  45,564  
LIABILITIES AND STOCKHOLDERS’ EQUITY     
Current Liabilities:     
Short-term debt $  93  $  738  
Accounts payable    1,474     1,835  
Accrued compensation and related costs    3,312     2,302  
Unearned revenue    3,032     4,911  
Capital leases    1,967     1,982  
Other current liabilities    3,399     3,374  
Total current liabilities    13,277     15,142  
Long-term debt    17,056     20,839  
Long-term unearned revenue    914     757  
Long-term capital leases    1,190     1,602  
Other long-term liabilities    6,475     5,945  
Total liabilities    38,912     44,285  
7% Series B convertible preferred stock, $0.01 par value; 5,000,000 shares authorized and
  designated; 1,637,786 and 1,637,948 shares issued and outstanding at December 31,
  2017 and December 31, 2016, respectively, with a liquidation preference of $11,568
  and $10,985, at December 31, 2017 and December 31, 2016, respectively
    8,353     8,354  
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; 33,083,180 and
  27,511,361 shares issued at December 31, 2017 and December 31, 2016,
  respectively; 33,039,713 and 26,622,706 shares outstanding at December 31, 2017
  and December 31, 2016, respectively
    331     275  
Additional paid-in capital    275,963     264,214  
Accumulated deficit    (279,425)    (263,062) 
Treasury stock, at cost, 43,467 and 888,655 shares at December 31, 2017 and
  December 31, 2016, respectively
    (117)    (4,455) 
Accumulated other comprehensive loss    (4,082)    (4,047) 
Total stockholders’ equity (deficit)     (7,330)    (7,075) 
Total liabilities and stockholders’ equity  $  39,935  $  45,564  
      

 

MATTERSIGHT CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited and in thousands)
     
     
     
  Twelve Months Ended
  December 31,
2017 
 December 31,
2016 
Cash Flows from Operating Activities:    
Net loss $  (16,320) $  (20,977)
Adjustments to reconcile net loss to net cash used in operating activities:    
Depreciation and amortization    6,347     5,946 
Stock-based compensation    2,927     5,324 
Discount accretion and other debt-related costs    1,417     436 
Provision for uncollectible accounts    59     287 
Change in fair value of warrant liability    (377)    (167)
Changes in assets and liabilities:    
Receivables    1,884     (3,932)
Prepaid expenses    (1,089)    71 
Other current assets    231     (62)
Other long-term assets    (1,257)    (3,615)
Accounts payable    (559)    375 
Accrued compensation and related costs    1,010     (459)
Unearned revenue    (1,722)    (2,307)
Other current liabilities    1,292     722 
Other long-term liabilities    633     582 
Total adjustments    10,796     3,201 
Net cash used in operating activities    (5,524)    (17,776)
Cash Flows from Investing Activities:    
Capital expenditures    (2,998)    (3,714)
Investment in intangible assets    (279)    (349)
Net cash used in investing activities    (3,277)    (4,063)
Cash Flows from Financing Activities:    
Proceeds from line of credit    26,900     16,246 
Repayments of line of credit    (10,000)    (16,246)
Proceeds from term loan and other borrowings   —      28,880 
Repayments of term loan and other borrowings    (23,512)    (6,945)
Debt prepayment costs    (692)    (96)
Fees paid for issuance of debt    (206)    (628)
Proceeds from issuance of common stock, net of costs    14,752     — 
Cash paid to satisfy tax withholding upon vesting of employee stock awards    (1,177)    (440)
Principal payments on capital lease obligations    (2,498)    (2,296)
Proceeds from employee stock purchase plan    240     289 
7% Series B convertible preferred stock dividend   —      (10)
Proceeds from exercise of stock options   —      236 
Net cash provided by financing activities    3,807     18,990 
Effect of exchange rate changes on cash and cash equivalents    (35)    (20)
Decrease in total cash    (5,029)    (2,869)
Cash and cash equivalents    12,538     15,407 
Restricted cash (included in Other long-term assets on the Consolidated Balance Sheets)    4,210    —  
Total cash, beginning of period    16,748     15,407 
Cash and cash equivalents    9,044     12,538 
Restricted cash (included in Other long-term assets on the Consolidated Balance Sheets)    2,675    —  
Total cash, end of period $  11,719  $  12,538 
Non-Cash Investing and Financing Activities:    
Capital lease obligations incurred $  2,071  $  2,447 
Capital equipment purchased on credit    2,071     2,447 
Issuance of warrant, at fair value    —     924 
Supplemental Disclosures of Cash Flow Information:    
Interest paid $  2,476  $  1,343 

 

MATTERSIGHT CORPORATION
CALCULATION OF ADJUSTED EBITDA
(Unaudited and in thousands)
         
         
  Quarter Ended Twelve Months Ended
  December 31,
  December 31,
  December 31,
  December 31,
 
   2017   2016   2017   2016 
GAAP - Net Loss $  (1,549) $  (3,119) $  (16,320) $  (20,977)
Depreciation and amortization    1,473     1,650     6,347     5,946 
Interest and other borrowings    432     1,027     2,785     2,319 
Loss on early extinguishment of debt   —     —      1,834    —  
Interest income    (2)    (6)    (56)    (39)
Income tax benefit (provision)    (110)    24     (106)    50 
EBITDA $  244  $  (424) $  (5,516) $  (12,701)
Stock based compensation    803     1,029     2,927     5,324 
Change in fair value of warrant liability    (69)    (109)    (377)    (167)
Adjusted EBITDA $  978  $  496  $  (2,966) $  (7,544)