Support.com Reports Fourth Quarter and 2012 Financial Results

Wed Feb 13, 2013 4:01pm EST

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REDWOOD CITY, Calif., Feb. 13, 2013 (GLOBE NEWSWIRE) -- Support.com
http://www.globenewswire.com/newsroom/ctr?d=10021731&l=1&a=Support.com&u=http%3A%2F%2Fwww.support.com%2F
, Inc. (Nasdaq:SPRT), a leading provider of cloud-based technology services and software designed
to create new revenue streams and improve customer experience, today reported unaudited financial
results for its fourth quarter ended December 31, 2012.

Q4 Financial Summary

For the fourth quarter of 2012, total revenue was $18.9 million compared to $15.0 million in the
fourth quarter of 2011 and $18.2 million in the third quarter of 2012.

On a GAAP basis, income from continuing operations for the fourth quarter of 2012 was $1.2
million, or $0.02 per share, compared to a loss of $4.2 million, or $(0.09) per share, in the
fourth quarter of 2011 and income of $298,000, or $0.01 per share, in the third quarter of 2012.

Non-GAAP income from continuing operations for the fourth quarter of 2012 was $2.9 million, or
$0.06 per share, compared to a loss of $2.8 million, or $(0.06) per share, in the fourth quarter
of 2011 and income of $1.8 million, or $0.04 per share, in the third quarter of 2012.

At December 31, 2012 cash, cash equivalents and investments were $56.3 million compared to $51.6
million at September 30, 2012.

2012 Financial Summary

Total revenue for 2012 was $72.0 million compared to $53.8 million in 2011.

On a GAAP basis, loss from continuing operations for 2012 was $5.5 million, or $(0.11) per share,
compared to a loss of $18.5 million, or $(0.38) per share, in 2011.

Non-GAAP income from continuing operations for 2012 was $935,000, or $0.02 per share, compared to
a loss of $12.5 million, or $(0.26) per share, in 2011.

Non-GAAP results exclude stock-based compensation expense, amortization of intangible assets and
other, restructuring and impairment charges, acquisition expense, other non-recurring items and
tax expense associated with acquired goodwill. These items impacted results from continuing
operations by $1.7 million in the fourth quarter of 2012, $1.4 million in the fourth quarter of
2011 and $1.5 million in the third quarter of 2012. On an annual basis, these items impacted
results from continuing operations by $6.5 million in 2012 and $6.0 million in 2011. A
reconciliation of GAAP to non-GAAP results is presented in the tables below.

"We finished 2012 strong, with record revenue, profitability and cash generation," said Josh
Pickus, President and CEO. "In 2013, our focus will be on maintaining and enhancing operating
performance, building out new initiatives in SaaS and SMB, and extending our market leadership."

Recent Company Highlights

* Revenue growth of 34% year over year
* Full year 2012 non-GAAP profitability
* 2012 net increase in cash, cash equivalents and investments of $3.3 million
* First SaaS customer US Tech Support in production
* SMB partnerships with AppDirect and OnForce
* Tablet SKU gains traction in retail
* New version of SUPERAntiSpyware released; enterprise license customers added

Conference Call

Support.com will host a conference call discussing the Company's fourth quarter and full year 2012
results on Wednesday, February 13, 2013 starting at 4:30 p.m. ET (1:30 p.m. PT). The live call may
be accessed by dialing (877) 388-8486 (domestic) or (408) 427-3864 (international) and referencing
passcode 88124558. A live audio webcast and replay of the call will be available at the Investor
Relations section of Support.com's website at http://www.support.com/investors/events
http://www.globenewswire.com/newsroom/ctr?d=10021731&l=15&u=http%3A%2F%2Fwww.support.com%2Finvestors%2Fevents
.

About Support.com

Support.com, Inc. (Nasdaq:SPRT) is a leading provider of cloud-based technology services and
software. We help leading brands create new revenue streams and deepen customer loyalty through
programs that enhance their customers' technology experience. Our solution includes a
comprehensive Service Delivery Platform
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, mobile and desktop apps, a scalable workforce of technology specialists and proven expertise in
program design and execution. Our partners include many of the nation's leading communications
providers, retailers and technology companies. For more information, please visit us at:
http://www.support.com
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.

Support.com, Inc. is an Equal Opportunity Employer. For more information, visit
http://www.support.com/about/careers
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.

The Support.com, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=11893
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Copyright © 2013 Support.com, Inc. All rights reserved. Support.com and SUPERAntiSpyware are
trademarks or registered trademarks of Support.com, Inc. in the U.S. and other countries.

Note on Forward-Looking Statements

Statements made in this document that are not historical facts are "forward-looking statements"
and accordingly involve risks and uncertainties that could cause actual results to differ
materially from those described herein. Forward-looking statements include, for example, all
statements relating to projected financial performance (including without limitation statements
involving projections of revenue, margin, income (loss), earnings (loss) per share, cash usage or
generation, capital structure, and other financial items); the plans and objectives of management
for future operations, partnerships, products, services or investments; and future performance in
economic and other terms. The potential risks and uncertainties that could cause results to differ
materially include, among others, our ability to retain and grow major partnerships, our ability
to market and sell software and services to consumers and small businesses, our ability to market
and sell our service delivery platform on a SaaS basis, our ability to maintain and grow revenue,
our ability to scale and manage our workforce and our ability to control expenses and achieve
desired margins. These and other risks are detailed in Support.com's reports filed with the
Securities and Exchange Commission, including without limitation its latest Annual Report on Form
10-K and its latest quarterly report on Form 10-Q, copies of which may be obtained from
www.sec.gov
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. Support.com does not intend to update this information to reflect future events or
circumstances, and disclaims any obligation to do so except as may be required by law.

Disclosure Regarding Non-GAAP Financial Measures

Support.com has excluded stock-based compensation expense, amortization of intangible assets and
other, restructuring and impairment charges, acquisition expense, other non-recurring items and
tax expense associated with acquired goodwill from its GAAP results in order to determine the
non-GAAP financial measures of income (loss) from continuing operations and income (loss) from
continuing operations per share referenced in this document. We believe that the non-GAAP
measures, when viewed in addition to and not in lieu of our reported GAAP results, assist
investors in understanding our results of operations.

A. Stock-based compensation expense. Management excludes stock-based compensation expense when
evaluating its operating performance because such expense does not require cash settlement and
because such expense is not used by management to assess the performance of the Company's
business. Stock-based compensation expense was $1.6 million in the fourth quarter of 2012,
compared to $957,000 in the fourth quarter of 2011 and $911,000 in the third quarter of 2012.

B. Amortization of intangible assets and other. Management excludes acquisition-related intangible
asset amortization and related charges when evaluating its operating performance because the
Company does not acquire businesses on a predictable cycle and excluding such charges enables more
consistent evaluation of the Company's operating performance. Management also excludes such
charges because they represent non-cash expenses. Amortization of intangible assets and other was
$368,000 in the fourth quarter of 2012, compared to $330,000 in the fourth quarter of 2011 and
$397,000 in the third quarter of 2012.

C. Restructuring and impairment charges. Management excludes restructuring and impairment charges
when evaluating its operating performance because the Company does not undertake restructurings on
a predicable basis and excluding such charges enables more consistent evaluation of the Company's
operating performance. Restructuring and impairment charges were zero in the fourth quarter of
2012, compared to zero in the fourth quarter of 2011 and $72,000 in the third quarter of 2012.

D. Acquisition expense. Management excludes acquisition expense such as legal fees and advisor
fees when evaluating its operating performance because the Company does not acquire businesses on
a predictable cycle and excluding such expense enables more consistent evaluation of the Company's
operating performance. Acquisition expense was zero in the fourth quarter of 2012, compared to
$5,000 in the fourth quarter of 2011 and $1,000 in the third quarter of 2012.

E. Other non-recurring items. Management excludes non-recurring items, that generally do not
require cash settlement, when evaluating its operating performance because the Company does not
incur such expenses or obtain such benefits on a predictable basis and exclusion of such expenses
or benefits enables more consistent evaluation of the Company's operating performance. Other
non-recurring items resulted in a benefit of $293,000 in the fourth quarter of 2012, compared to
zero in the fourth quarter of 2011 and an expense of $86,000 in the third quarter of 2012.

F. Tax expense associated with acquired goodwill. The Company is required to record a deferred tax
liability and the related tax expense that results from the amortization for income tax purposes
of acquired goodwill. Management excludes tax expense associated with acquired goodwill when
evaluating its operating performance because the Company does not acquire businesses on a
predictable cycle and excluding such expense enables more consistent evaluation of the Company's
operating performance. Tax expense associated with acquired goodwill was $88,000 in the fourth
quarter of 2012, compared to $67,000 in the fourth quarter of 2011 and $69,000 in the third
quarter of 2012.

The Company believes that non-GAAP measures have significant limitations in that they do not
reflect all of the amounts associated with the Company's financial results as determined in
accordance with GAAP and that these measures should only be used to evaluate the Company's
financial results in conjunction with the corresponding GAAP measures. In addition, the exclusion
of the items indicated above from the non-GAAP financial measures presented does not indicate an
expectation by management that such items will not be incurred in subsequent periods.

 SUPPORT.COM, INC.                                                                                
 GAAP CONDENSED CONSOLIDATED BALANCE SHEETS                                                       
 (in thousands)                                                                                   
 (unaudited)                                                                                      
                                                                                               
                                                    December 31,  September 30,  December 31,  
                                                    2012 (1)      2012           2011 (2)      
                                                                                               
 Assets                                                                                        
 Current assets:                                                                               
 Cash, cash equivalents and short-term investments  $ 56,350      $ 51,587       $ 51,902      
 Accounts receivable, net                           9,689         9,785          10,284        
 Prepaid expenses and other current assets          1,359         1,565          1,068         
 Total current assets                               67,398        62,937         63,254        
 Long-term investment                               --            --             1,111         
 Property and equipment, net                        591           670            461           
 Purchased technology, net                          62            82             144           
 Goodwill                                           14,240        14,240         13,621        
 Intangible assets, net                             4,775         5,126          5,670         
 Other assets                                       1,193         940            735           
                                                                                               
 Total assets                                       $ 88,259      $ 83,995       $ 84,996      
                                                                                               
 Liabilities and Stockholders' Equity                                                          
 Current liabilities:                                                                          
 Accounts payable and accrued compensation          $ 2,053       $ 3,011        $ 2,872       
 Other accrued liabilities                          3,969         4,477          4,491         
 Short-term deferred revenue                        6,618         5,971          4,723         
 Total current liabilities                          12,640        13,459         12,086        
 Long-term deferred revenue                         35            139            489           
 Other long-term liabilities                        1,421         1,422          1,086         
 Total liabilities                                  14,096        15,020         13,661        
                                                                                               
 Stockholders' equity:                                                                         
 Common stock                                       5             5              5             
 Additional paid-in-capital                         242,032       237,984        233,977       
 Accumulated other comprehensive loss               (1,501)       (1,343)        (1,698)       
 Accumulated deficit                                (166,373)     (167,671)      (160,949)     
 Total stockholders' equity                         74,163        68,975         71,335        
                                                                                               
 Total liabilities and stockholders' equity         $ 88,259      $ 83,995       $ 84,996      
                                                                                               
                                                                                                  
 Note 1: 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 consolidated financial statements for the year ended December 31, 2011. 
                                                                                                  


 SUPPORT.COM, INC.                                                                                                                                                          
 GAAP CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS                                                                                                                       
 (in thousands, except per share amounts)                                                                                                                                   
 (unaudited)                                                                                                                                                                
                                                                                                                                                                       
                                                                  Three Months Ended                                                         Year Ended December 31,      
                                                                  December 31, 2012 (3)             September 30, 2012  December 31, 2011  2012 (3)      2011 (2)      
                                                                                                                                                                       
 Revenue:                                                                                                                                                              
 Services                                                         $ 15,344                          $ 14,769            $ 11,124           $ 57,622      $ 37,248      
 Software and other                                               3,533                             3,407               3,880              14,332        16,591        
 Total revenue                                                    18,877                            18,176              15,004             71,954        53,839        
                                                                                                                                                                       
 Cost of revenue:                                                                                                                                                      
 Cost of services (4)                                             8,648                             8,815               8,585              37,343        29,919        
 Cost of software and other (4)                                   278                               312                 449                1,421         1,744         
 Total cost of revenue                                            8,926                             9,127               9,034              38,764        31,663        
                                                                                                                                                                       
 Gross profit                                                     9,951                             9,049               5,970              33,190        22,176        
                                                                                                                                                                       
 Operating expenses:                                                                                                                                                   
 Amortization of intangible assets and other                      368                               397                 330                1,522         866           
 Research and development (4)                                     1,652                             1,643               1,599              6,773         6,057         
 Sales and marketing (4)                                          3,377                             3,789               5,509              18,285        21,791        
 General and administrative (4)                                   3,572                             2,897               2,705              12,234        12,005        
 Total operating expenses                                         8,969                             8,726               10,143             38,814        40,719        
                                                                                                                                                                       
 Income (loss) from operations                                    982                               323                 (4,173)            (5,624)       (18,543)      
                                                                                                                                                                       
 Interest income and other, net                                   71                                93                  83                 297           455           
                                                                                                                                                                       
 Income (loss) from continuing operations, before income taxes    1,053                             416                 (4,090)            (5,327)       (18,088)      
                                                                                                                                                                       
 Income tax provision (benefit)                                   (145)                             118                 106                208           401           
                                                                                                                                                                       
 Income (loss) from continuing operations, after income taxes     1,198                             298                 (4,196)            (5,535)       (18,489)      
                                                                                                                                                                       
 Income (loss) from discontinued operations, net of income taxes  101                               (7)                 (153)              111           (151)         
                                                                                                                                                                       
 Net income (loss)                                                $ 1,299                           $ 291               $ (4,349)          $ (5,424)     $ (18,640)    
                                                                                                                                                                       
                                                                                                                                                                       
 Income (loss) from continuing operations, after income taxes                                                                                                           
 Basic                                                            $ 0.02                            $ 0.01              $ (0.09)           $ (0.11)      $ (0.38)      
 Diluted                                                          $ 0.02                            $ 0.01              $ (0.09)           $ (0.11)      $ (0.38)      
                                                                                                                                                                       
 Income (loss) from discontinued operations, net of income taxes                                                                                                        
 Basic                                                            $ 0.00                            $ (0.00)            $ (0.00)           $ 0.00        $ (0.00)      
 Diluted                                                          $ 0.00                            $ (0.00)            $ (0.00)           $ 0.00        $ (0.00)      
                                                                                                                                                                       
 Shares used in computing per share amounts:                                                                                                                           
 Basic                                                            49,475                            48,707              48,351             48,798        48,288        
 Diluted                                                          51,872                            50,326              48,351             48,798        48,288        
                                                                                                                                                                       
                                                                                                                                                                            
 Note 3: Amounts are subject to completion of management's and its independent registered public accounting firm's customary closing and review procedures.                 
                                                                                                                                                                       
 Note 4: Includes stock-based compensation expense, restructuring and impairment charges, acquisition expense and other non-recurring items, as follows:                    
                                                                                                                                                                            
                                                                  Three Months Ended                                                         Year Ended December 31,      
                                                                  December 31, 2012                 September 30, 2012  December 31, 2011  2012          2011          
 Cost of revenue:                                                                                                                                                      
 Cost of services                                                 $ 83                              $ 86                $ 75               $ 353         $ 337         
 Cost of software and other                                       2                                 3                   16                 26            29            
 Operating expenses:                                                                                                                                                   
 Research and development                                         199                               252                 271                1,019         816           
 Sales and marketing                                              111                               94                  138                623           896           
 General and administrative                                       1,191                             635                 462                2,926         2,703         
 Total                                                            $ 1,586                           $ 1,070             $ 962              $ 4,947       $ 4,781       
                                                                                                                                                                            


                                                                                                                                                                   
 SUPPORT.COM, INC.                                                                                                                                                 
 RECONCILIATION OF GAAP FINANCIAL RESULTS TO NON-GAAP FINANCIAL MEASURES                                                                                           
 (in thousands, except per share amounts)                                                                                                                          
 (unaudited)                                                                                                                                                       
                                                                                                                                                              
                                                                        Three Months Ended                                          Year Ended December 31,      
                                                                        December 31, 2012  September 30, 2012  December 31, 2011  2012          2011          
                                                                                                                                                              
 GAAP cost of revenue                                                   $ 8,926            $ 9,127             $ 9,034            $ 38,764      $ 31,663      
 Stock-based compensation expense (Cost of revenue portion only)        (85)               (89)                (91)               (380)         (274)         
 Restructuring and impairment charges (Cost of revenue portion only)    --                 --                  --                 1             (93)          
 Non-GAAP cost of revenue                                               $ 8,841            $ 9,038             $ 8,943            $ 38,385      $ 31,296      
                                                                                                                                                              
 GAAP operating expenses                                                $ 8,969            $ 8,726             $ 10,143           $ 38,814      $ 40,719      
 Stock-based compensation expense (Excl. cost of revenue portion)       (1,501)            (822)               (866)              (4,145)       (3,494)       
 Amortization of intangible assets and other                            (368)              (397)               (330)              (1,522)       (866)         
 Restructuring and impairment charges (Excl. cost of revenue portion)   --                 (72)                --                 (244)         (377)         
 Acquisition expense                                                    --                 (1)                 (5)                (36)          (543)         
 Other non-recurring items                                              --                 (86)                --                 (143)         --            
 Non-GAAP operating expenses                                            $ 7,100            $ 7,348             $ 8,942            $ 32,724      $ 35,439      
                                                                                                                                                              
 GAAP income tax provision (benefit)                                    $ (145)            $ 118               $ 106              $ 208         $ 401         
 Tax expense associated with acquired goodwill                          (88)               (69)                (67)               (294)         (337)         
 Other non-recurring items                                              293                --                  --                 293           --            
 Non-GAAP income tax provision (benefit)                                $ 60               $ 49                $ 39               $ 207         $ 64          
                                                                                                                                                              
 GAAP income (loss) from continuing operations, after income taxes      $ 1,198            $ 298               $ (4,196)          $ (5,535)     $ (18,489)    
 Stock-based compensation expense                                       1,586              911                 957                4,525         3,768         
 Amortization of intangible assets and other                            368                397                 330                1,522         866           
 Restructuring and impairment charges                                   --                 72                  --                 243           470           
 Acquisition expense                                                    --                 1                   5                  36            543           
 Other non-recurring items                                              (293)              86                  --                 (150)         --            
 Tax expense associated with acquired goodwill                          88                 69                  67                 294           337           
 Total impact of Non-GAAP exclusions                                    1,749              1,536               1,359              6,470         5,984         
 Non-GAAP income (loss) from continuing operations, after income taxes  $ 2,947            $ 1,834             $ (2,837)          $ 935         $ (12,505)    
                                                                                                                                                              
 Income (loss) from continuing operations, after income taxes                                                                                                 
 Basic - GAAP                                                           $ 0.02             $ 0.01              $ (0.09)           $ (0.11)      $ (0.38)      
 Basic - Non-GAAP                                                       $ 0.06             $ 0.04              $ (0.06)           $ 0.02        $ (0.26)      
                                                                                                                                                              
 Diluted - GAAP                                                         $ 0.02             $ 0.01              $ (0.09)           $ (0.11)      $ (0.38)      
 Diluted - Non-GAAP                                                     $ 0.06             $ 0.04              $ (0.06)           $ 0.02        $ (0.26)      
 Shares used in computing per share amounts (GAAP)                                                                                                            
 Basic                                                                  49,475             48,707              48,351             48,798        48,288        
 Diluted                                                                51,872             50,326              48,351             48,798        48,288        
 Shares used in computing per share amounts (Non-GAAP)                                                                                                        
 Basic                                                                  49,475             48,707              48,351             48,798        48,288        
 Diluted                                                                51,872             50,326              48,351             50,273        48,288        
                                                                                                                                                              
                                                                                                                                                                   
 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 stock-based compensation expense, amortization of intangible assets and other, restructuring and impairment charges, acquisition expense, other non-recurring items and tax expense associated with acquired goodwill. 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.                                                                                                                                               
                                                                                                                                                              
 2012 Amounts are subject to completion of management's and its independent registered public accounting firm's customary closing and review procedures.           
                                                                                                                                                                   


CONTACT: Investor Contact
         Carolyn Bass and Jacob Moelter
         Market Street Partners
         (415) 445-3235
         sprt@marketstreetpartners.com
         
         Media Contact
         Seth Geisler
         Martin Levy Public Relations, Inc.
         (858) 610-9860
         seth@martinlevypr.com