Support.com Reports First Quarter 2021 Financial Results; Updates on Merger Transaction Process

Rhea-AI Summary

Support.com (NASDAQ:SPRT) reported a first-quarter 2021 revenue of $9.6 million, down 19% year-over-year. The company experienced a net loss of $2.0 million, translating to $0.10 per share, compared to a net income of $0.3 million in Q1 2020. Operating expenses rose to $5.6 million due to $1.5 million in merger-related costs as it prepares for its acquisition by Greenidge Generation Holdings. As of March 31, 2021, cash equivalents totaled $39.0 million, up from $28.4 million a year prior. The merger is expected to close in Q3 2021, pending shareholder approval.

Positive

• Gross profit margin increased to 37%, up from 35% year-over-year.
• Cash and short-term investments improved to $39.0 million, reflecting strong liquidity.

Negative

• First-quarter revenue decreased by $2.3 million, or 19%, from the previous year.
• Net loss of $2.0 million compared to a profit of $0.3 million in Q1 2020.
• Operating expenses rose significantly by $1.7 million year-over-year.

LOS ANGELES, CA / ACCESSWIRE / May 13, 2021 / Support.com, Inc. (NASDAQ:SPRT), a leader in customer and technical support solutions delivered by home-based employees, today reported unaudited financial results for its first quarter ended March 31, 2021.

As previously announced on March 22, 2021, Support.com and Greenidge Generation Holdings Inc. ("Greenidge") entered into an agreement providing for the acquisition of Support.com by Greenidge in a merger transaction. In connection with the proposed merger, a registration statement on Form S-4 has been filed by Greenidge with the U.S. Securities and Exchange Commission at https://www.sec.gov/Archives/edgar/data/0001844971/000119312521149057/d166032ds4.htm. Upon the effectiveness of the Form S-4, we intend to solicit the adoption of the merger agreement by a majority of the holders of the outstanding shares of our common stock entitled to vote at a special meeting. The proposed merger is expected to close during the third quarter of 2021.

Financial Summary
For the first quarter of 2021, total revenue was $9.6 million, a decrease of $2.3 million or 19 percent compared to revenues of $11.9 million in the first quarter of 2020 and $0.9 million or 9 percent compared to revenues of $10.5 million in the fourth quarter of 2020.

We recorded net loss $2.0 million, or $0.10 per share, in the first quarter of 2021, compared to net income of $0.3 million, or $0.02 per share, in the first quarter of 2020 and breakeven net income in the fourth quarter of 2020.

Key changes in our net income (loss) included the following:

• Gross profit was $3.5 million in the first quarter of 2021, compared to $4.2 million in the first quarter of 2020 and $3.8 million in the fourth quarter of 2020.
• Gross profit margin of 37% in the first quarter of 2021 increased compared to 35% in the first quarter of 2020 and 36% in the fourth quarter of 2020.
• Operating expenses were $5.6 million in the first quarter of 2021, compared to $3.9 million in the first quarter of 2020 and $3.9 million in the fourth quarter of 2020.
• Included in the first quarter 2021 operating costs are $1.5 million in merger related expenses and $0.2 million in transition related costs as we re-focus on building an enterprise-ready leader in homesourcing™.

Balance Sheet Information
At March 31, 2021, cash, cash equivalents and short-term investments were $39.0 million, compared with $28.4 million at March 31, 2020 and $30.0 million at December 31, 2020. As previously announced, and in connection with the proposed merger transaction with Greenidge, 210 Capital, LLC acquired approximately 3.9 million shares of Support.com in a private placement in March 2021.

Total assets as of March 31, 2021 were $47.7 million and total stockholders' equity was $40.9 million.

Support.com will not host a conference call discussing the Company's first quarter results. For more information, please visit the Investor Relations section of the Support.com website at Support.com/about-us/investor-relations/.

About Support.com
Support.com, Inc. (NASDAQ:SPRT) is a leading provider of customer and technical support solutions delivered by home-based employees. For more than twenty years, the company has achieved stellar results for global enterprise clients and top-tier businesses. Support.com's proven, omnichannel solutions have been specifically designed and optimized for the homesourcing™ environment, resulting in industry-leading NPS scores and first call resolution rates. The company efficiently meets changing client needs through its highly scalable, global network of home-based employees and secure, proprietary, cloud-based platforms. For more information, please visit www.support.com.

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

© 2021 Support.com, Inc. All rights reserved. Support.com and the Support.com logo are trademarks or registered trademarks of Support.com, Inc. in the United States and other countries. All other marks are the property of their respective owners.

Safe Harbor Statement
This announcement may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include, but are not limited to, all statements relating to our plans to build an enterprise-ready leader in homesourcing™. Such forward-looking statements are based on current expectations and information that involve a number of uncertainties and risks that may cause actual events or results to differ materially from those indicated by such forward-looking statements, including, among others, our ability to retain and grow major programs, our ability to expand and diversify our customer base, our ability to maintain and grow revenue, any acquisitions we may make, including integrating acquired companies with our existing businesses and our ability to achieve the benefits, growth prospects and synergies expected by such acquisitions, our ability to successfully develop new products and services, our ability to manage our workforce, our ability to operate in markets that are subject to extensive regulations, such as support for home security systems, our ability to control expenses and achieve desired margins, our ability to maintain or improve gross margin, our dependence on a small number of customers and partners, our ability to attract, train and retain talented employees, potential intellectual property, class action or other litigation, fluctuations in government laws and regulations, our ability to utilize and realize the value of our net operating loss carryforwards and how they could be substantially limited or permanently impaired, given our current market capitalization and cash position, our ability to execute the cost reduction program involving the planned actions on the expected schedule, our ability to achieve the cost savings expected in connection with the cost reduction plan, the ultimate effect of any such cost reductions on our financial results, any expenses or reputational damage associated with resolving customer warranty and/or indemnification claims; and our ability to manage the effects of the cost reduction plan on our workforce and other operations. Many of the foregoing risks and uncertainties are, and will be, exacerbated by the COVID-19 pandemic and any worsening of the global business and economic environment as a result. More information on these risks and other potential factors that could affect the Company's business and financial results is included in the Company's filings with the SEC, including in the "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" sections of the Company's most recently filed periodic reports on Form 10-K and Form 10-Q and subsequent filings. The Company assumes no obligation to update any forward-looking statements or information, which speak as of their respective dates.

ADDITIONAL INFORMATION AND WHERE TO FIND IT
In connection with the transactions contemplated by that certain Agreement and Plan of Merger dated March 19, 2021 by and between Greenidge Generation Holdings Inc. ("Parent"), GGH Merger Sub, Inc. ("Merger Sub") and Support.com, Inc. (the "Company"), the Company and Parent will file relevant materials with the U.S. Securities and Exchange Commission ("SEC"), and Parent has filed a registration statement on Form S-4, which will include a proxy statement of the Company. INVESTORS AND SECURITY HOLDERS ARE URGED TO READ CAREFULLY AND IN THEIR ENTIRETY THE REGISTRATION STATEMENT, PROXY STATEMENT/PROSPECTUS AND ALL OTHER RELEVANT DOCUMENTS FILED OR THAT WILL BE FILED WITH THE SEC WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. A definitive proxy statement/prospectus will be mailed to stockholders of the Company when it becomes available. Investors and security holders will be able to obtain free copies of the registration statement, proxy statement/prospectus (when available) and the other documents filed with the SEC by the Company or Parent through the SEC's website at www.sec.gov.

PARTICIPANTS IN SOLICITATION
The Company and its directors and executive officers and other members of management and employees may be deemed to be participants in the solicitation of proxies from stockholders of the Company in connection with the proposed transaction. A list of the names of such directors and executive officers, information regarding their interests in the proposed merger and a description of their direct and indirect interests, by security holdings or otherwise, will be contained in the registration statement, proxy statement/prospectus and other relevant materials to be filed with the SEC when they become available.

Parent, Merger Sub and their directors, executive officers, other members of management and employees may also be deemed to be participants in the solicitation of proxies from the shareholders of the Company in connection with the proposed transaction. A list of the names of such directors and executive officers, information regarding their interests in the proposed merger and a description of their direct and indirect interests, by security holdings or otherwise, will be contained in the registration statement, proxy statement/prospectus and other relevant materials to be filed with the SEC when they become available.

NO OFFER OR SOLICITATION
This communication shall not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offering of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the U.S. Securities Act of 1933, as amended.

Investor Contact
Jacob Moelter
IR@support.com

SUPPORT.COM, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)

			March 31,				December 31,
			2021(1)				2020(2)
Assets
Current assets:
Cash, cash equivalents and short-term investments			$	39,021			$	29,967
Accounts receivable, net				6,312				6,975
Prepaid expenses and other current assets				702				670
	Total current assets			46,035				37,612
Property and equipment, net				1,105				1,115
Other assets				511				539
Total assets			$	47,651			$	39,266
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and accrued compensation			$	3,149			$	2,101
Other accrued liabilities				1,561				937
Short-term deferred revenue				1,146				881
	Total current liabilities			5,856				3,919
Other long-term liabilities				910				911
Total liabilities				6,766				4,830
Stockholders' equity:
Common stock				3				2
Additional paid-in-capital				259,401				250,954
Treasury stock				(5,297	)			(5,297	)
Accumulated other comprehensive loss				(2,424	)			(2,419	)
Accumulated deficit				(210,798	)			(208,804	)
	Total stockholders' equity			40,885				34,436
Total liabilities and stockholders' equity			$	47,651			$	39,266

		Note 1: Amounts are subject to completion of management's customary closing and review procedures.
		Note 2: Derived from audited consolidated financial statements for the year ended December 31, 2020.

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

			Three Months Ended
			March 31, 2021 (1)				December 31, 2020				March 31, 2020
Revenue:
Services			$	9,138			$	10,089			$	11,511
Software and other				493				454				438
	Total revenue			9,631				10,543				11,949
Cost of revenue:
Cost of services				6,005				6,695				7,685
Cost of software and other				90				75				29
	Total cost of revenue			6,095				6,770				7,714
Gross profit				3,536				3,773				4,235
Operating expenses:
Engineering and IT				924				794				1,040
Sales and marketing				425				488				813
General and administrative				4,206				2,586				2,053
	Total operating expenses			5,555				3,868				3,906
Income (loss) from operations				(2,019	)			(95	)			329
Interest income and other, net				42				150				84
Income (loss) before income taxes				(1,977	)			55				413
Income tax provision				17				37				49
Net income (loss)			$	(1,994	)		$	18			$	364
Net earnings (loss) per share
Basic			$	(0.10	)		$	0.00			$	0.02
Diluted			$	(0.10	)		$	0.00			$	0.02
Shares used in computing per share amounts
Basic				20,205				19,391				19,054
Diluted				20,205				19,732				19,233

SOURCE: Support.com, Inc.

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FAQ

What are the financial results for Support.com in Q1 2021?

Support.com reported a revenue of $9.6 million and a net loss of $2.0 million.

What is the status of the merger between Support.com and Greenidge Generation?

The merger is expected to close in the third quarter of 2021, pending shareholder approval.

What were the significant expenses reported by Support.com in Q1 2021?

Operating expenses included $1.5 million in merger-related costs.

How has Support.com's gross profit margin changed in Q1 2021?

The gross profit margin increased to 37% compared to 35% in Q1 2020.

What was Support.com's cash position as of March 31, 2021?

Support.com had cash and short-term investments of $39.0 million as of March 31, 2021.