SupportSoft Reports Second Quarter 2008 Financial Results

REDWOOD CITY, CA, Jul 31 (MARKET WIRE) --
SupportSoft, Inc. (NASDAQ: SPRT), a leading provider of software and
services that make technology work, today reported unaudited financial
results for its second quarter ended June 30, 2008.

Financial Summary

Total revenue for the second quarter of 2008 was $11.6 million, as
compared to $11.6 million in the first quarter of 2008 and $13.4 million
in the second quarter of 2007.

For the second quarter of 2008, Enterprise revenue was $10.7 million as
compared to $10.9 million in the first quarter of 2008 and $13.2 million
in the year ago quarter. Second quarter 2008 Enterprise revenue consisted
of $2.9 million of license revenue, $3.9 million of maintenance revenue
and $3.9 million of service revenue.

For the second quarter of 2008, Consumer revenue was $891,000 as compared
to $703,000 in the first quarter of 2008 and $262,000 in the second
quarter of 2007.

On a GAAP basis, net loss for the second quarter of 2008 was $4.3 million,
or $(0.09) per share, compared to a net loss of $3.6 million, or $(0.08)
per share, in the first quarter of 2008 and $4.9 million, or $(0.11) per
share, in the second quarter of 2007.

Non-GAAP net loss for the second quarter of 2008 was $3.0 million, or
$(0.06) per share, compared to a non-GAAP net loss of $2.4 million, or
$(0.05) per share, in the first quarter of 2008 and $3.3 million, or
$(0.07) per share, in the second quarter of 2007. Non-GAAP results exclude
stock compensation expenses of $1.3 million, $1.2 million, and $1.3
million in the second quarter of 2008, first quarter of 2008 and second
quarter of 2007, respectively, and amortization of intangible assets of
$58,000, $30,000 and $272,000 in the second quarter of 2008, first
quarter of 2008 and second quarter of 2007, respectively. A
reconciliation of GAAP to non-GAAP results is presented in the tables
below.

Cash and total marketable securities at June 30, 2008 were $100.9 million,
compared to $107.4 million at March 31, 2008. The change in cash and
marketable securities reflects approximately $3.4 million used for
operations, $2.9 million associated with the acquisition and integration
of YourTechOnline.com, and $169,000 of incremental unrealized loss for
auction rate securities.

"Q2 was a solid quarter in which we laid important groundwork for the
future," said Josh Pickus, CEO of SupportSoft. "Our Enterprise segment
delivered a second consecutive quarter of non-GAAP profitability while our
Consumer segment grew revenue 27% sequentially, added new partners and
strengthened operations. We plan to increase investment levels in the
Consumer business in the third quarter to support ongoing rollouts as well
as planned launches of new pilots."

Recent Company Highlights

-- SupportSoft added to the Russell 2000 Index

Consumer Segment

-- Q2 Consumer revenue increases 27% sequentially
-- Office Depot rollout reaches 400 stores in Q2, up from 84 in Q1;
national rollout continuing in the third quarter
-- Relationships established with two new retail partners; pilots
expected to commence in the fall
-- Transition to North American work-from-home agents completed
successfully
-- Multi-tenant technology platform for scalable partner deployments
released

Enterprise Segment

-- Second consecutive quarter of non-GAAP profitability
-- Agreement with Lockheed Martin expands growing customer base of
outsourcing firms
-- Three new emerging market telecommunication firms deploy the Company's
service provider solutions

Financial Outlook

For the third quarter of 2008, SupportSoft currently expects total revenue
of $11.9 million to $12.4 million and a non-GAAP net loss of $(0.10) to
$(0.12) per share. Anticipated non-GAAP results exclude stock-based
compensation expenses and amortization of intangible assets. We do not
provide guidance on a GAAP basis because the Company does not forecast its
future stock based compensation expenses.

Conference Call

SupportSoft will host a conference call discussing the Company's second
quarter 2008 results and third quarter activities on Thursday, July 31,
2008 starting at 4:30 p.m. EDT (1:30 p.m. PDT). A live webcast of the call
will be available on the Investor Relations section of the Company's
website at www.supportsoft.com/investors. For those unable to listen to
the live webcast, a replay of the call will also be available on the
SupportSoft website or by dialing (888) 286-8010 and entering passcode
5171-3844.

Cautionary Note Regarding Forward-Looking Statements

This press release contains forward-looking statements regarding our
expected future performance as well as assumptions underlying or relating
to such statements of expectation, all of which are "forward-looking
statements" within the meaning of Section 27A of the Securities Act of
1933 and Section 21E of the Securities Exchange Act of 1934. We are
subject to many risks and uncertainties that may materially affect our
business and future performance and cause those forward-looking
statements to be inaccurate. All statements in this press release, other
than statements that are purely historical, are forward-looking
statements. Words such as "outlook," "anticipates," "expects,"
"believes," "intends," "plans," "continuing," "seeks," "forecasts,"
"estimates," "goal," and similar expressions often identify such
forward-looking statements. Forward-looking statements in this press
release include, without limitation, the following: the Company's
expected revenue and non-GAAP net loss for the second quarter of 2008;
expectations regarding the progress of our collaboration with partners
(including the Office Depot rollout) and the anticipated impact of those
relationships on our business; anticipated new partner relationships;
anticipated pilots; contribution to our revenue from our consumer
operations; our continuing ability to run our enterprise business
profitably; assessments of our future growth; and our future plans,
investments and opportunities.

Forward-looking statements are subject to risks and uncertainties that
could cause actual results to differ materially from those discussed in
these forward-looking statements. These risks and uncertainties include,
but are not limited to: our dependence on our third-party alliances and
partnerships to help us provide our software and services to consumers;
our ability to establish new partnerships and the potential that such
partnerships take longer than we expect to produce revenue or do not
produce revenue; the potential that cancellations or delays in rolling out
our consumer partner programs (including Office Depot) could decrease our
revenues; the cancellation or delay of pilots with new consumer partners
or the failure of those pilots to mature into full rollouts; our ability
to hire, train and manage home-based consumer technology support agents
effectively; our ability to achieve broad adoption and acceptance of our
offerings; the potential for a decrease in revenue in our enterprise
segment caused by our reliance on a few large transactions that generally
occur at the end of reporting periods; long sales cycles; the ability of
our software to operate with hardware and software platforms that are used
by our customers now or in the future; our ability to compete successfully
in the consumer technology support market and the support automation
software market; our limited experience in servicing consumers directly;
our ability to manage headcount changes including reductions in force; our
ability to successfully integrate any acquisitions including
YourTechOnline.com; our ability to profitably manage our enterprise
business, including our professional services organization and its cost
structure; expectations regarding our international business; fluctuation
in our quarterly results; diversion of management attention to strategic
matters or litigation; our ability to accurately predict performance; our
ability to attract and retain key employees; our ability to obtain and
enforce sufficient patent protection; the uncertain economic conditions in
the United States and in international markets; further weakness or
changes in the market for auction rate securities or in other investments
we may hold; a determination, upon completion of further quarterly
closing and review procedures, that the financial results for the second
quarter are different than the results set forth in this press release;
as well as other risks detailed from time to time in our SEC filings,
including those described in the "Risk Factors" section in our most
recent Quarterly Report on Form 10-Q filed with the SEC on May 9, 2008.
You can locate these filings on the Investor Relations page of our
website, www.supportsoft.com/investors.

Statements included in this release are based upon information known to
SupportSoft as of the date of this release, and SupportSoft assumes no
obligation to publicly revise or update any forward-looking statement for
any reason.

Disclosure Regarding Non-GAAP Financial Measures

SupportSoft has excluded stock-based compensation expenses,
amortization/write-down of intangible assets and restructuring charges
from its GAAP results in order to determine the non-GAAP financial
measures of net income/loss and net income/loss per share. Each of the
excluded items (as such items are applicable to particular time periods)
is discussed in more detail below.

Stock-based compensation -- we believe that the non-GAAP measures,
excluding stock-based compensation expenses, when viewed in addition to
and not in lieu of our reported GAAP results, assist investors in
understanding our results of operations. Management excludes stock-based
compensation expense when evaluating its performance from period to
period because such expenses do not require cash settlement and because
such expenses are not used by management to assess the performance of the
Company's business.

Amortization/write-down of intangible assets -- the Company does not
acquire businesses on a predictable cycle; therefore management excludes
acquisition-related intangible asset amortization and related charges when
evaluating its operating performance. The Company also excludes such
charges as they represent non-cash expenses.

Restructuring charges -- we believe the non-GAAP measures, excluding
restructuring charges, provide meaningful supplemental information to
investors in understanding our ongoing operational costs and expenses,
without the broad-based termination costs that comprised our restructuring
expense. The Company does not undertake significant restructurings on a
predictable basis and, as result, excludes associated charges in order to
enable better and more consistent evaluation of the Company's operating
expenses before and after such actions are taken.

SupportSoft uses these non-GAAP financial measures internally to evaluate
its performance from period to period and against the performance of other
software companies, many of which present similar non-GAAP financial
measures. We also believe that investors benefit from seeing "through the
eyes of management" as our operating budgets and compensation programs are
based on the non-GAAP financial measures we present in this press release.

Finally, SupportSoft believes the non-GAAP measures provide useful
supplemental information for investors to evaluate our operating results
in the same manner as the research analysts that follow SupportSoft, all
of whom present non-GAAP projections in their published reports. As such,
the non-GAAP measures provided by the Company facilitate an "apples to
apples" comparison of our performance with the financial projections
published by the analysts.

The economic substance behind our decision to use such non-GAAP measures
is that such measures approximate our controllable operating performance
more closely than the most directly comparable GAAP financial measures.

The material limitation associated with the use of the non-GAAP financial
measures is that the non-GAAP measures do not reflect the full economic
impact of the Company's activities and reliance solely on non-GAAP
measures may lead management to make business decisions with
unanticipated economic consequences on the Company's GAAP financial
results. We compensate for this limitation by not relying exclusively on
non-GAAP financial measures to make business decisions. We also
continuously reevaluate which non-GAAP measures are appropriate.

Amounts related to second quarter of 2008 are subject to completion of
management's and its independent registered public accounting firm's
customary closing and review procedures.

About SupportSoft

SupportSoft (NASDAQ: SPRT) provides software and services that make
technology work. The Company's solutions reduce technology support costs,
improve customer satisfaction and enable new revenue streams for companies
reaching 50 million users worldwide. The Company also provides Instant
Technology Relief(R) to consumers and small businesses through a series of
channel partners and www.support.com. For more information about the
Company and its enterprise offerings, visit www.supportsoft.com. For
Instant Technology Relief to consumer and small business technology
problems, visit www.support.com or dial 1-800-PC-SUPPORT.

SUPPORTSOFT, INC.
GAAP CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(unaudited)

Three Months Ended Six Months Ended
June 30, June 30,
-------------------- --------------------
2008 (1) 2007 (2) 2008 (1) 2007 (2)
--------- --------- --------- ---------
Revenue:

License $ 2,897 $ 5,891 $ 5,871 $ 9,138
Maintenance 3,895 3,910 7,898 7,834
Services 3,934 3,370 7,883 6,464
Consumer revenue 891 262 1,593 423
--------- --------- --------- ---------
Total revenue 11,617 13,433 23,245 23,859

Costs and expenses:
Cost of license 92 52 143 90
Cost of maintenance 465 661 1,014 1,299
Cost of services 3,496 4,174 7,249 7,834
Cost of consumer revenue 1,871 1,017 3,110 1,876
Amortization of intangible
assets 58 272 88 544
Research and development 2,184 2,434 4,420 4,705
Sales and marketing 5,710 8,623 12,096 16,029
General and administrative 2,725 2,519 5,081 5,061
--------- --------- --------- ---------

Total costs and
expenses 16,601 19,752 33,201 37,438

Loss from operations (4,984) (6,319) (9,956) (13,579)

Interest income and other, net 721 1,531 2,170 3,384
--------- --------- --------- ---------

Loss before income taxes (4,263) (4,788) (7,786) (10,195)

Provision for income taxes (84) (131) (192) (346)
--------- --------- --------- ---------

Net loss $ (4,347) $ (4,919) $ (7,978) $ (10,541)
--------- --------- --------- ---------

Net loss per share:
Basic $ (0.09) $ (0.11) $ (0.17) $ (0.23)
--------- --------- --------- ---------
Diluted $ (0.09) $ (0.11) $ (0.17) $ (0.23)
--------- --------- --------- ---------

Shares used in computing per
share amounts:
Basic 46,076 45,418 46,065 45,175
--------- --------- --------- ---------
Diluted 46,076 45,418 46,065 45,175
--------- --------- --------- ---------

Note 1: 2008 amounts are subject to completion of management's and its
independent registered public accounting firm's customary closing and
review procedures.

Note 2: In January 2008, we reorganized the Company and created two
business units, consumer and enterprise.
Prior to 2008, the Company conducted its business in one segment. Revenue
and cost of revenue are provided on a segment basis, all other operating
expenses are incorporated into the overall company results for these
periods. See the segment information table included in this press release
for more information.

SUPPORTSOFT, INC.
RECONCILIATION OF GAAP FINANCIAL RESULTS TO NON-GAAP FINANCIAL MEASURES (1)
(in thousands, except per share amounts)
(unaudited)

Three Months Ended Six Months Ended
June 30, June 30,
-------------------- --------------------
2008 (1) 2007 (2) 2008 (1) 2007 (2)
--------- --------- --------- ---------

GAAP costs and expenses $ 16,601 $ 19,752 $ 33,201 $ 37,438
Amortization of intangible
assets (58) (272) (88) (544)
Restructuring charges (2) - (2) (17)
Stock-based compensation (1,333) (1,319) (2,507) (2,503)
--------- --------- --------- ---------
Non-GAAP costs and expenses 15,208 18,161 30,604 34,374

Detail of costs and operating
expenses:
GAAP cost of maintenance 465 661 1,014 1,299
Restructuring charges - - - -
Stock-based
compensation (19) (22) (39) (38)
--------- --------- --------- ---------
Non-GAAP cost of
maintenance 446 639 975 1,261

GAAP cost of services 3,496 4,174 7,249 7,834
Restructuring charges - - - (7)
Stock-based
compensation (178) (187) (352) (371)
--------- --------- --------- ---------
Non-GAAP cost of services 3,318 3,987 6,897 7,456

GAAP cost of consumer
revenue 1,871 1,017 3,110 1,876
Restructuring charges - - - (6)
Stock-based
compensation (36) - (48) -
--------- --------- --------- ---------
Non-GAAP cost of
consumer revenue 1,835 1,017 3,062 1,870

GAAP cost of research and
development 2,184 2,434 4,420 4,705
Restructuring charges - - - -
Stock-based
compensation (115) (122) (260) (238)
--------- --------- --------- ---------
Non-GAAP cost of research
and development 2,069 2,312 4,160 4,467

GAAP cost of sales and
marketing 5,710 8,623 12,096 16,029
Restructuring charges - - - (4)
Stock-based
compensation (458) (484) (863) (938)
--------- --------- --------- ---------
Non-GAAP cost of sales and
marketing 5,252 8,139 11,233 15,087

GAAP cost of general and
administrative 2,725 2,519 5,081 5,061
Restructuring charges (2) - (2) -
Stock-based
compensation (527) (504) (945) (918)
--------- --------- --------- ---------
Non-GAAP cost of general
and administrative 2,196 2,015 4,134 4,143

GAAP loss from operations (4,984) (6,319) (9,956) (13,579)
Amortization of intangible
assets 58 272 88 544
Restructuring charges 2 - 2 17
Stock-based compensation 1,333 1,319 2,507 2,503
--------- --------- --------- ---------
Non-GAAP loss from operations (3,591) (4,728) (7,359) (10,515)

GAAP loss before income taxes (4,263) (4,788) (7,786) (10,195)
Amortization of intangible
assets 58 272 88 544
Restructuring charges 2 - 2 17
Stock-based compensation 1,333 1,319 2,507 2,503
--------- --------- --------- ---------
Non-GAAP loss before income
taxes (2,870) (3,197) (5,189) (7,131)

GAAP net loss $ (4,347) $ (4,919) $ (7,978) $ (10,541)
Amortization of intangible
assets 58 272 88 544
Restructuring charges 2 - 2 17
Stock-based compensation 1,333 1,319 2,507 2,503
--------- --------- --------- ---------
Non-GAAP net loss $ (2,954) $ (3,328) $ (5,381) $ (7,477)
========= ========= ========= =========

Basic net loss per share
GAAP $ (0.09) $ (0.11) $ (0.17) $ (0.23)
Non-GAAP $ (0.06) $ (0.07) $ (0.12) $ (0.17)

Diluted net loss per share
GAAP $ (0.09) $ (0.11) $ (0.17) $ (0.23)
Non-GAAP $ (0.06) $ (0.07) $ (0.12) $ (0.17)

Shares used in computing per
share amounts (GAAP)
Basic 46,076 45,418 46,065 45,175
Diluted 46,076 45,418 46,065 45,175

Shares used in computing per
share amounts (Non-GAAP)
Basic 46,076 45,418 46,065 45,175
Diluted 46,076 45,418 46,065 45,175

Note 1: The adjustments above reconcile the Company's GAAP financial
results to the non-GAAP financial measures used by the Company. The
Company's non-GAAP financial measures exclude restructuring charges, stock-
based compensation and amortization of intangible assets from the GAAP
financial results. The Company believes that presentation of these non-GAAP
items provides meaningful supplemental information to investors, when
viewed in conjunction with, and not in lieu of, the Company's GAAP results.
However, the non-GAAP financial measures have not been prepared under a
comprehensive set of accounting rules or principles. Non-GAAP information
should not be considered in isolation from, or as a substitute for,
information prepared in accordance with GAAP. Moreover, there are material
limitations associated with the use of non-GAAP financial measures. See
the text of this press release for more information on non-GAAP financial
measures.

2008 amounts are subject to completion of management's and its independent
registered public accounting firm's customary closing and review
procedures.

Note 2: In January 2008, we reorganized the Company and created two
business units, consumer and enterprise.
Prior to 2008, the Company conducted its business in one segment. Revenue
and cost of revenue are provided on a segment basis, all other operating
expenses are incorporated into the overall company results for these
periods. See the segment information table included in this press release
for more information.

SUPPORTSOFT, INC.
GAAP CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)

June 30, December 31,
2008 (1) 2007 (2)
------------- -------------
(unaudited)
Assets
Current assets:
Cash and short-term marketable securities $ 77,619 $ 112,940
Accounts receivable, net 9,523 10,087
Prepaid expenses and other current assets 1,812 2,531
------------- -------------
Total current assets 88,954 125,558
------------- -------------
Long-term marketable securities 23,265 -
Property and equipment, net 1,848 2,086
Goodwill 12,646 9,792
Purchased technology 1,375 -
Intangible assets, net 531 340
Other assets 649 682
------------- -------------

Total assets $ 129,268 $ 138,458
============= =============

Liabilities and Stockholders' Equity
Liabilities:
Accounts payable and accrued compensation $ 2,602 $ 2,781
Other accrued liabilities 2,786 3,421
Deferred revenue 8,932 10,502
Other long-term liabilities 1,076 892
------------- -------------
Total liabilities $ 15,396 $ 17,596
------------- -------------

Stockholders' equity:
Common stock $ 5 $ 5
Additional paid-in-capital 214,891 212,188
Accumulated other comprehensive loss (2,487) (772)
Accumulated deficit (98,537) (90,559)
------------- -------------
Total stockholders' equity $ 113,872 $ 120,862
------------- -------------

Total liabilities and stockholders' equity $ 129,268 $ 138,458
============= =============

Note 1: 2008 amounts are subject to completion of management's and its
independent registered public accounting firm's customary closing and
review procedures.

Note 2: Derived from audited financial statements

SUPPORTSOFT, INC.
SEGMENT INFORMATION
(in thousands)
(unaudited)

Three Months Ended June 30,
2008
--------------------------------------------------
Consolidated
Enterprise Consumer Other Total
----------- ----------- ----------- -----------
Revenue:
License $ 2,897 $ - $ - $ 2,897
Maintenance 3,895 - - 3,895
Services 3,934 - - 3,934
Consumer - 891 - 891
----------- ----------- ----------- -----------
Total revenue 10,726 891 - 11,617
----------- ----------- ----------- -----------
Segment operating
costs and expenses (7,589) (5,424) - (13,013)
Amortization of
intangible assets (30) (28) - (58)
Common corporate
expenses - - (2,197) (2,197)
Stock-based
compensation - - (1,333) (1,333)
Interest income
and other, net - - 721 721
----------- ----------- ----------- -----------
Income (loss) before
income taxes $ 3,107 $ (4,561) $ (2,809) $ (4,263)
=========== =========== =========== ===========

Six Months Ended June 30,
2008
--------------------------------------------------
Consolidated
Enterprise Consumer Other Total
----------- ----------- ----------- -----------
Revenue:
License $ 5,871 $ - $ - $ 5,871
Maintenance 7,898 - - 7,898
Services 7,883 - - 7,883
Consumer - 1,593 - 1,593
----------- ----------- ----------- -----------
Total revenue 21,652 1,593 - 23,245
----------- ----------- ----------- -----------
Segment operating
costs and expenses (15,711) (10,760) - (26,471)
Amortization of
intangible assets (60) (28) (88)
Common corporate
expenses - - (4,135) (4,135)
Stock-based
compensation - - (2,507) (2,507)
Interest income
and other, net - - 2,170 2,170
----------- ----------- ----------- -----------
Income (loss) before
income taxes $ 5,881 $ (9,195) $ (4,472) $ (7,786)
=========== =========== =========== ===========

Consumer Segment. In our consumer segment, we provide premium technology
support to consumers over the phone and the internet for a fee. We offer
our services to consumers through retailers, digital service providers and
other companies who provide technology products and services to consumers.
We also provide our services directly to consumers through www.support.com.

Enterprise Segment. Our enterprise customers use our software to resolve
technical problems for their customers. Digital service providers use our
products to automate the installation, activation and verification of
broadband services, to reduce the cost and improve the quality of support
for customers, and to enable the remote management of devices located at
customer premises. Corporate IT departments and IT outsourcing firms use
our software to improve the cost-effectiveness and efficiency of their
support through an integrated portfolio of proactive service, self service
and assisted service products.

Other. This category consists of common corporate expenses such as general
and administrative expenses, stock-based compensation expense, interest
income, and other income or expenses, which are items that we do not
allocate to our business units.

2008 amounts are subject to completion of management's and its independent
registered public accounting firm's customary closing and review
procedures.

Investor Contact

Carolyn Bass, Daniel Wood
Market Street Partners
(415) 445-3235
sprt@marketstreetpartners.com

Media Contact

Scott Herring
SupportSoft, Inc.
(650) 556-8953
scott.herring@supportsoft.com

Copyright 2008, Market Wire, All rights reserved.

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