2020 Revenue of $194.6 million
2020 GAAP Net Loss of $18.5 million; 2020 Non-GAAP Net Loss of $2.3 million
2020 Adjusted EBITDA of $4.3 million
DENVER–(BUSINESS WIRE)–#earnings–ServiceSource (NASDAQ: SREV), the customer journey experience company, today announced financial results for the three months and year ended December 31, 2020.
“Throughout the disruption and uncertainty of 2020, market-leading technology companies relied on ServiceSource to preserve the value of their existing customer relationships and enhance the return on their go-to-market investments. Customer success and renewals became board-level priorities, while digitally-enabled, virtual selling became the dominant form of B2B customer acquisition and engagement,” said Gary B. Moore, ServiceSource’s chairman and chief executive officer. “In the fourth quarter and over the course of the year, we delivered for our clients through a prolonged period of constrained technology industry spend in nearly every sector. Against this backdrop, we grew closer to the world-class brands we serve and improved the health of our partnerships. We fully committed to a virtual first operating model that will define how and where we deliver our solutions going forward. And importantly, we demonstrated the strength and resilience of our people and our business with solid operating and financial results.”
Key Financial Results – Fourth Quarter 2020
- GAAP revenue was $51.1 million, compared with $54.9 million reported for Q4 2019.
- GAAP net loss was $1.7 million or $0.02 per diluted share, compared with GAAP net loss of $2.5 million or $0.03 per diluted share reported for Q4 2019.
- Non-GAAP net income was $2.3 million or $0.02 per diluted share, compared with non-GAAP net income of $0.6 million or $0.01 per diluted share reported for Q4 2019.
- Adjusted EBITDA, a non-GAAP financial measure, was $4.8 million, compared with $2.7 million reported for Q4 2019.
Key Financial Results – Full-Year Ended December 31, 2020
- GAAP revenue was $194.6 million, compared with $216.1 million reported for the year ended December 31, 2019.
- GAAP net loss was $18.5 million or $0.19 per diluted share, compared with GAAP net loss of $18.7 million or $0.20 per diluted share reported for the year ended December 31, 2019.
- Non-GAAP net loss was $2.3 million or $0.02 per diluted share, compared with non-GAAP net loss of $3.3 million or $0.04 per diluted share reported for the year ended December 31, 2019.
- Adjusted EBITDA, a non-GAAP financial measure, was $4.3 million, compared with $4.2 million reported for the year ended December 31, 2019.
- Ended the year with $36.3 million of cash and cash equivalents and restricted cash, including $15.0 million of borrowings under the Company’s $40.0 million revolving line of credit.
A reconciliation of GAAP to non-GAAP financial measures is provided following the Condensed Consolidated Financial Statement tables contained within this press release.
Key Business Highlights – Full-Year Ended December 31, 2020
- Grew revenue year-over-year with four of our five largest clients and signed expansion wins with seven of our top ten clients.
- Won two new clients in the fourth quarter and six for the full year, all within the higher growth software and cloud sectors.
- Signed a one-year contract in the fourth quarter to provide customer acquisition and conversion services for a rapidly growing Unified Communications as a Service (UCaaS) company.
- Secured a one-year contract in the fourth quarter with a market-leading digital operations management platform provider to drive higher ARR retention rates through a proactive customer success and renewals management program.
- Successfully renewed or extended approximately 81% of the annual contract value that was up for renewal during the year.
“We executed well throughout 2020 and finished the year strong,” commented Chad Lyne, executive vice president and chief financial officer of ServiceSource. “Despite a challenging operating environment and some client-specific headwinds from the global pandemic, we expanded non-GAAP gross profit margins by 130 basis points and generated higher Adjusted EBITDA year-over-year. The investments we made in our client relationships, go-to-market teams, technology infrastructure, and virtual first operating model position us well for success in a market with attractive growth potential. With a solid balance sheet, ample liquidity, disciplined financial management, and strong operating fundamentals, we are confident in our ability to execute our long-term strategy to build value for our stockholders.”
Business Outlook for Full-Year 2021
There are encouraging signs that the pace of economic activity and global technology spend will accelerate over the course of 2021. However, there remains a high degree of uncertainty regarding the timing of the recovery and how it may impact ServiceSource’s clients, as well as the mid-market and small-to-midsize businesses that ServiceSource supports on behalf of its clients. Due to these factors, the Company will not be issuing guidance for fiscal 2021 at this time. Management will provide forward-looking contextual commentary during the earnings call and webcast that will accompany this release.
Quarterly Conference Call
ServiceSource will discuss its fourth quarter and full-year 2020 results on February 25, 2021, via teleconference at 9:30 a.m. Eastern Time. To access the call within the U.S., please dial (877) 293-5486, or outside the U.S. (914) 495-8592, at least five minutes prior to the start time. Conference ID number: 7582178. In addition, a live webcast of the call will also be available on the Investor Relations section of the ServiceSource website under Events and Presentations. The related slide presentation and a replay of the webcast will also be available on the Company’s website at http://ir.servicesource.com.
Forward-Looking Statements
This press release contains forward-looking statements, including statements regarding our financial management and our expectation to continue to invest in our strategic priorities and digital transformation initiatives. These forward-looking statements are based on our current assumptions and beliefs and involve risks and uncertainties that could cause our results to differ materially from our forward-looking statements. Those risks and uncertainties include: a decline in client renewals, the loss of one or more of our key clients, the contraction in our revenue from one or more of our key clients – either in the ordinary course of business or as a result of macroeconomic conditions resulting from the COVID-19 pandemic – in each case resulting in churn, or our clients not expanding their relationships with us; economic or other adverse events or conditions affecting the technology industry, including as a result of the COVID-19 pandemic; and other risks and uncertainties described more fully in our periodic reports filed with the Securities and Exchange Commission, which can be obtained online at the Commission’s website at http://www.sec.gov. All forward-looking statements in this press release are based on information currently available to us, and except as may be legally required we assume no obligation to update these forward-looking statements.
About ServiceSource
ServiceSource International, Inc. (NASDAQ: SREV) is a global outsourced go-to-market services provider that accelerates B2B digital sales and customer success transformation. Our expert sales professionals, data-powered insights and proven methodologies scale and reimagine customer journey experiences (CJX™) into profitable business outcomes. Backed by more than 20 years of experience, ServiceSource drives billions of dollars in client value annually, conducting commerce in 45 languages and 175 countries. To learn more about how we design, develop and manage CJX solutions that transform the agility, speed, efficiency and value of our clients’ growth initiatives, visit www.servicesource.com.
Trademarks
ServiceSource®, and any ServiceSource product or service names or logos above are trademarks of ServiceSource International, Inc. All other trademarks used herein belong to their respective owners.
Connect with ServiceSource:
http://www.facebook.com/ServiceSource
http://twitter.com/servicesource
http://www.linkedin.com/company/servicesource
http://www.youtube.com/user/ServiceSourceMKTG
|
ServiceSource International, Inc. |
|||||||||||||||||||
|
Condensed Consolidated Statements of Operations |
|||||||||||||||||||
|
(in thousands, except per share amounts) |
|||||||||||||||||||
|
(unaudited) |
|||||||||||||||||||
|
|
|
|
|
||||||||||||||||
|
|
For the Three Months Ended |
|
For the Year Ended |
||||||||||||||||
|
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
||||||||
|
Net revenue |
$ |
51,059 |
|
|
|
$ |
54,871 |
|
|
|
$ |
194,601 |
|
|
|
$ |
216,135 |
|
|
|
Cost of revenue(1) |
33,626 |
|
|
|
37,459 |
|
|
|
137,041 |
|
|
|
153,155 |
|
|
||||
|
Gross profit |
17,433 |
|
|
|
17,412 |
|
|
|
57,560 |
|
|
|
62,980 |
|
|
||||
|
Operating expenses: |
|
|
|
|
|
|
|
||||||||||||
|
Sales and marketing(1) |
5,951 |
|
|
|
7,075 |
|
|
|
24,999 |
|
|
|
30,009 |
|
|
||||
|
Research and development(1) |
1,416 |
|
|
|
1,146 |
|
|
|
5,602 |
|
|
|
4,848 |
|
|
||||
|
General and administrative(1) |
10,126 |
|
|
|
11,127 |
|
|
|
41,970 |
|
|
|
43,208 |
|
|
||||
|
Restructuring and other related costs |
839 |
|
|
|
93 |
|
|
|
1,542 |
|
|
|
1,929 |
|
|
||||
|
Total operating expenses |
18,332 |
|
|
|
19,441 |
|
|
|
74,113 |
|
|
|
79,994 |
|
|
||||
|
Loss from operations |
(899 |
) |
|
|
(2,029 |
) |
|
|
(16,553 |
) |
|
|
(17,014 |
) |
|
||||
|
Interest and other expense, net |
(229 |
) |
|
|
(259 |
) |
|
|
(1,279 |
) |
|
|
(1,226 |
) |
|
||||
|
Loss before provision for income taxes |
(1,128 |
) |
|
|
(2,288 |
) |
|
|
(17,832 |
) |
|
|
(18,240 |
) |
|
||||
|
Provision for income tax expense |
(536 |
) |
|
|
(204 |
) |
|
|
(709 |
) |
|
|
(443 |
) |
|
||||
|
Net loss |
$ |
(1,664 |
) |
|
|
$ |
(2,492 |
) |
|
|
$ |
(18,541 |
) |
|
|
$ |
(18,683 |
) |
|
|
Net loss per share, basic and diluted |
$ |
(0.02 |
) |
|
|
$ |
(0.03 |
) |
|
|
$ |
(0.19 |
) |
|
|
$ |
(0.20 |
) |
|
|
Weighted-average common shares outstanding, basic and diluted |
96,821 |
|
|
|
94,608 |
|
|
|
95,787 |
|
|
|
93,882 |
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||||||
|
(1) Reported amounts include stock-based compensation expense as follows: |
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
||||||||||||
|
|
For the Three Months Ended |
|
For the Year Ended |
||||||||||||||||
|
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
||||||||
|
Cost of revenue |
$ |
144 |
|
|
|
$ |
124 |
|
|
|
$ |
389 |
|
|
|
$ |
538 |
|
|
|
Sales and marketing |
395 |
|
|
|
382 |
|
|
|
1,416 |
|
|
|
1,772 |
|
|
||||
|
Research and development |
24 |
|
|
|
17 |
|
|
|
57 |
|
|
|
41 |
|
|
||||
|
General and administrative |
716 |
|
|
|
654 |
|
|
|
3,003 |
|
|
|
2,811 |
|
|
||||
|
Total stock-based compensation |
$ |
1,279 |
$ |
1,177 |
$ |
4,865 |
|
|
$ |
5,162 |
|||||||||
|
ServiceSource International, Inc. |
|||||||||
|
Condensed Consolidated Balance Sheets |
|||||||||
|
(in thousands) |
|||||||||
|
(unaudited) |
|||||||||
|
|
|
||||||||
|
|
December 31, 2020 |
|
December 31, 2019 |
||||||
|
Assets |
|
|
|
||||||
|
Current assets: |
|
|
|
||||||
|
Cash and cash equivalents |
$ |
34,006 |
|
|
|
$ |
27,089 |
|
|
|
Accounts receivable, net |
38,890 |
|
|
|
41,754 |
|
|
||
|
Prepaid expenses and other |
9,275 |
|
|
|
7,296 |
|
|
||
|
Total current assets |
82,171 |
|
|
|
76,139 |
|
|
||
|
|
|
|
|
||||||
|
Property and equipment, net |
29,948 |
|
|
|
36,149 |
|
|
||
|
ROU assets |
29,798 |
|
|
|
36,396 |
|
|
||
|
Contract acquisition costs |
872 |
|
|
|
1,602 |
|
|
||
|
Goodwill |
6,334 |
|
|
|
6,334 |
|
|
||
|
Other assets |
3,490 |
|
|
|
4,844 |
|
|
||
|
Total assets |
$ |
152,613 |
|
|
|
$ |
161,464 |
|
|
|
|
|
|
|
||||||
|
Liabilities and Stockholders’ Equity |
|
|
|
||||||
|
Current liabilities: |
|
|
|
||||||
|
Accounts payable |
$ |
1,204 |
|
|
|
$ |
4,392 |
|
|
|
Accrued expenses |
3,217 |
|
|
|
3,366 |
|
|
||
|
Accrued compensation and benefits |
18,342 |
|
|
|
16,700 |
|
|
||
|
Revolver |
15,000 |
|
|
|
— |
|
|
||
|
Operating lease liabilities |
10,797 |
|
|
|
9,652 |
|
|
||
|
Other current liabilities |
1,209 |
|
|
|
2,218 |
|
|
||
|
Total current liabilities |
49,769 |
|
|
|
36,328 |
|
|
||
|
|
|
|
|
||||||
|
Operating lease liabilities, net of current portion |
25,975 |
|
|
|
33,716 |
|
|
||
|
Other long-term liabilities |
1,593 |
|
|
|
2,983 |
|
|
||
|
Total liabilities |
77,337 |
|
|
|
73,027 |
|
|
||
|
|
|
|
|
||||||
|
Stockholders’ equity: |
|
|
|
||||||
|
Preferred stock |
— |
|
|
|
— |
|
|
||
|
Common stock |
10 |
|
|
|
9 |
|
|
||
|
Treasury stock |
(441 |
) |
|
|
(441 |
) |
|
||
|
Additional paid-in capital |
379,696 |
|
|
|
374,525 |
|
|
||
|
Accumulated deficit |
(304,607 |
) |
|
|
(286,066 |
) |
|
||
|
Accumulated other comprehensive income |
618 |
|
|
|
410 |
|
|
||
|
Total stockholders’ equity |
75,276 |
|
|
|
88,437 |
|
|
||
|
Total liabilities and stockholders’ equity |
$ |
152,613 |
|
|
|
$ |
161,464 |
|
|
|
ServiceSource International, Inc. |
|||||||||
|
Condensed Consolidated Statements of Cash Flows |
|||||||||
|
(in thousands) |
|||||||||
|
(unaudited) |
|||||||||
|
|
|
||||||||
|
|
For the Year Ended December 31, |
||||||||
|
|
2020 |
|
|
2019 |
|
||||
|
Cash flows from operating activities: |
|
|
|
||||||
|
Net loss |
$ |
(18,541 |
) |
|
|
$ |
(18,683 |
) |
|
|
Adjustments to reconcile net loss to net cash provided by operating activities: |
|
|
|
||||||
|
Depreciation and amortization |
13,925 |
|
|
|
13,449 |
|
|
||
|
Amortization of contract acquisition costs |
1,003 |
|
|
|
1,504 |
|
|
||
|
Amortization of ROU assets |
9,841 |
|
|
|
9,715 |
|
|
||
|
Stock-based compensation |
4,865 |
|
|
|
5,162 |
|
|
||
|
Restructuring and other related costs |
1,460 |
|
|
|
1,866 |
|
|
||
|
Other |
71 |
|
|
|
(168 |
) |
|
||
|
Net changes in operating assets and liabilities: |
|
|
|
||||||
|
Accounts receivable, net |
3,232 |
|
|
|
12,449 |
|
|
||
|
Prepaid expenses and other assets |
(82 |
) |
|
|
(1,558 |
) |
|
||
|
Contract acquisition costs |
(266 |
) |
|
|
(442 |
) |
|
||
|
Accounts payable |
(3,213 |
) |
|
|
2,441 |
|
|
||
|
Accrued compensation and benefits |
(97 |
) |
|
|
(646 |
) |
|
||
|
Operating lease liabilities |
(10,195 |
) |
|
|
(8,678 |
) |
|
||
|
Accrued expenses |
(107 |
) |
|
|
(102 |
) |
|
||
|
Other liabilities |
(1,495 |
) |
|
|
(3,864 |
) |
|
||
|
Net cash provided by operating activities |
401 |
|
|
|
12,445 |
|
|
||
|
Cash flows from investing activities: |
|
|
|
||||||
|
Purchases of property and equipment |
(7,855 |
) |
|
|
(10,106 |
) |
|
||
|
Net cash used in investing activities |
(7,855 |
) |
|
|
(10,106 |
) |
|
||
|
Cash flows from financing activities: |
|
|
|
||||||
|
Repayment on finance lease obligations |
(952 |
) |
|
|
(900 |
) |
|
||
|
Proceeds from Revolver |
27,000 |
|
|
|
— |
|
|
||
|
Repayment of Revolver |
(12,000 |
) |
|
|
— |
|
|
||
|
Proceeds from issuance of common stock |
414 |
|
|
|
223 |
|
|
||
|
Payments related to minimum tax withholdings on RSU releases |
(161 |
) |
|
|
(182 |
) |
|
||
|
Net cash provided by (used in) financing activities |
14,301 |
|
|
|
(859 |
) |
|
||
|
Effect of exchange rate changes on cash and cash equivalents and restricted cash |
96 |
|
|
|
124 |
|
|
||
|
Net change in cash and cash equivalents and restricted cash |
6,943 |
|
|
|
1,604 |
|
|
||
|
Cash and cash equivalents and restricted cash, beginning of period |
29,383 |
|
|
|
27,779 |
|
|
||
|
Cash and cash equivalents and restricted cash, end of period |
$ |
36,326 |
|
|
|
$ |
29,383 |
|
|
Use of Non-GAAP Financial Measures
To supplement its Condensed Consolidated Financial Statements presented in accordance with generally accepted accounting principles, or GAAP, ServiceSource provides investors with non-GAAP gross profit, non-GAAP net income (loss), non-GAAP net income (loss) per diluted share and Adjusted EBITDA. A reconciliation of these non-GAAP financial measures to the closest GAAP financial measure is presented in the following financial tables.
ServiceSource believes non-GAAP financial information provided in this release can assist investors in understanding and assessing its on-going core operations and prospects for the future and provides an additional tool for investors to use in comparing ServiceSource’s financial results with other companies in the industry, many of which present similar non-GAAP financial measures to investors.
Non-GAAP gross profit consists of gross profit plus adjustments to stock-based compensation and amortization of internally developed software.
Non-GAAP net income (loss) consists of net income (loss) plus stock-based compensation, amortization of internally developed software, restructuring and other related costs, amortization of contract acquisition costs related to the initial adoption of Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASC 606”), costs attributable to establishing a litigation reserve, non-cash interest expense and applying an income tax rate of 26.5% on non-GAAP adjustments. Stock-based compensation expense is expected to vary depending on the number of new grants issued, changes in the Company’s stock price, stock market volatility, expected option lives and risk-free interest rates, all of which are difficult to estimate.
EBITDA consists of net income (loss) plus provision for income tax expense (benefit), interest and other expense (income), net and depreciation and amortization. Adjusted EBITDA consists of EBITDA plus stock-based compensation, restructuring and other related costs, amortization of contract acquisition costs related to the initial adoption of ASC 606 and costs attributable to establishing a litigation reserve.
These non-GAAP measures should not be considered a substitute for, or superior to, financial measures calculated in accordance with GAAP.
|
ServiceSource International, Inc. |
|||||||||||||||||
|
GAAP To Non-GAAP Reconciliation |
|||||||||||||||||
|
(in thousands, except per share amounts) |
|||||||||||||||||
|
(unaudited) |
|||||||||||||||||
|
|
|
|
For the Three Months Ended |
|
For the Year Ended |
||||||||||||
|
|
|
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
||||
|
Net revenue |
|
$ |
51,059 |
|
|
$ |
54,871 |
|
|
$ |
194,601 |
|
|
$ |
216,135 |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
Gross profit |
|
|
|
|
|
|
|
|
|||||||||
|
GAAP gross profit |
|
$ |
17,433 |
|
|
$ |
17,412 |
|
|
$ |
57,560 |
|
|
$ |
62,980 |
|
|
|
Non-GAAP adjustments: |
|
|
|
|
|
|
|
|
|||||||||
|
|
Stock-based compensation |
(A) |
144 |
|
|
124 |
|
|
389 |
|
|
538 |
|
||||
|
|
Amortization of internally developed software |
(B) |
1,493 |
|
|
1,144 |
|
|
5,467 |
|
|
4,119 |
|
||||
|
Non-GAAP gross profit |
|
$ |
19,070 |
|
|
$ |
18,680 |
|
|
$ |
63,416 |
|
|
$ |
67,637 |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
Gross profit % |
|
|
|
|
|
|
|
|
|||||||||
|
GAAP gross profit |
|
34.1 |
% |
|
31.7 |
% |
|
29.6 |
% |
|
29.1 |
% |
|||||
|
Non-GAAP adjustments: |
|
|
|
|
|
|
|
|
|||||||||
|
|
Stock-based compensation |
(A) |
0.3 |
% |
|
0.2 |
% |
|
0.2 |
% |
|
0.2 |
% |
||||
|
|
Amortization of internally developed software |
(B) |
2.9 |
% |
|
2.1 |
% |
|
2.8 |
% |
|
1.9 |
% |
||||
|
Non-GAAP gross profit |
|
37.3 |
% |
|
34.0 |
% |
|
32.6 |
% |
|
31.3 |
% |
|||||
|
Certain totals do not add due to rounding |
|
|
|
|
|
|
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Operating expenses |
|
|
|
|
|
|
|
|
|||||||||
|
GAAP operating expenses |
|
$ |
18,332 |
|
|
$ |
19,441 |
|
|
$ |
74,113 |
|
|
$ |
79,994 |
|
|
|
Non-GAAP adjustments: |
|
|
|
|
|
|
|
|
|||||||||
|
|
Stock-based compensation |
(A) |
(1,135 |
) |
|
(1,053 |
) |
|
(4,476 |
) |
|
(4,624 |
) |
||||
|
|
Amortization of internally developed software |
(B) |
(611 |
) |
|
(468 |
) |
|
(2,234 |
) |
|
(1,683 |
) |
||||
|
|
Restructuring and other related costs |
(C) |
(839 |
) |
|
(93 |
) |
|
(1,542 |
) |
|
(1,929 |
) |
||||
|
|
Amortization of contract acquisition costs – ASC 606 initial adoption |
(D) |
(91 |
) |
|
(187 |
) |
|
(605 |
) |
|
(976 |
) |
||||
|
|
Litigation reserve |
(E) |
74 |
|
|
— |
|
|
74 |
|
|
256 |
|
||||
|
Non-GAAP operating expenses |
|
$ |
15,730 |
|
|
$ |
17,640 |
|
|
$ |
65,330 |
|
|
$ |
71,038 |
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Net loss |
|
|
|
|
|
|
|
|
|||||||||
|
GAAP net loss |
|
$ |
(1,664 |
) |
|
$ |
(2,492 |
) |
|
$ |
(18,541 |
) |
|
$ |
(18,683 |
) |
|
|
Non-GAAP adjustments: |
|
|
|
|
|
|
|
|
|||||||||
|
|
Stock-based compensation |
(A) |
1,279 |
|
|
1,177 |
|
|
4,865 |
|
|
5,162 |
|
||||
|
|
Amortization of internally developed software |
(B) |
2,104 |
|
|
1,612 |
|
|
7,701 |
|
|
5,802 |
|
||||
|
|
Restructuring and other related costs |
(C) |
839 |
|
|
93 |
|
|
1,542 |
|
|
1,929 |
|
||||
|
|
Amortization of contract acquisition costs – ASC 606 initial adoption |
(D) |
91 |
|
|
187 |
|
|
605 |
|
|
976 |
|
||||
|
|
Litigation reserve |
(E) |
(74 |
) |
|
— |
|
|
(74 |
) |
|
(256 |
) |
||||
|
|
Non-cash interest expense |
(F) |
18 |
|
|
17 |
|
|
71 |
|
|
73 |
|
||||
|
|
Income tax effect on non-GAAP adjustments |
(G) |
(293 |
) |
|
(7 |
) |
|
1,537 |
|
|
1,650 |
|
||||
|
Non-GAAP net income (loss) |
|
$ |
2,300 |
|
|
$ |
587 |
|
|
$ |
(2,294 |
) |
|
$ |
(3,347 |
) |
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Diluted net loss per share |
|
|
|
|
|
|
|
|
|||||||||
|
GAAP net loss per share |
|
$ |
(0.02 |
) |
|
$ |
(0.03 |
) |
|
$ |
(0.19 |
) |
|
$ |
(0.20 |
) |
|
|
Non-GAAP adjustments: |
|
|
|
|
|
|
|
|
|||||||||
|
|
Stock-based compensation |
(A) |
0.01 |
|
|
0.01 |
|
|
0.05 |
|
|
0.05 |
|
||||
|
|
Amortization of internally developed software |
(B) |
0.02 |
|
|
0.02 |
|
|
0.08 |
|
|
0.06 |
|
||||
|
|
Restructuring and other related costs |
(C) |
0.01 |
|
|
0.00 |
|
|
0.02 |
|
|
0.02 |
|
||||
|
|
Amortization of contract acquisition costs – ASC 606 initial adoption |
(D) |
0.00 |
|
|
0.00 |
|
|
0.01 |
|
|
0.01 |
|
||||
|
|
Litigation reserve |
(E) |
0.00 |
|
|
0.00 |
|
|
0.00 |
|
|
0.00 |
|
||||
|
|
Non-cash interest expense |
(F) |
0.00 |
|
|
0.00 |
|
|
0.00 |
|
|
0.00 |
|
||||
|
|
Income tax effect on non-GAAP adjustments |
(G) |
0.00 |
|
|
0.00 |
|
|
0.02 |
|
|
0.02 |
|
||||
|
Non-GAAP diluted net income (loss) per share |
|
$ |
0.02 |
|
|
$ |
0.01 |
|
|
$ |
(0.02 |
) |
|
$ |
(0.04 |
) |
|
|
Certain totals do not add due to rounding |
|
|
|
|
|
|
|
|
|||||||||
|
Shares used in calculating diluted net loss per share on a non-GAAP basis |
(H) |
96,821 |
|
|
94,608 |
|
|
95,787 |
|
|
93,882 |
|
|||||
Footnotes to GAAP to Non-GAAP Reconciliation
(A) Stock-based compensation. Included in our GAAP presentation of cost of revenue and operating expenses, stock-based compensation consists of expenses for stock options, stock unit awards and purchase rights under our stock purchase plan. We exclude stock-based compensation expense from our non-GAAP measures because some investors may view it as not reflective of our core operating performance as it is a non-cash expense.
(B) Amortization of internally developed software. Included in our GAAP presentation of cost of revenue and operating expenses, amortization of internally developed software reflects non-cash expense for software developed or obtained for internal use. We exclude these expenses from our non-GAAP measures because we believe they are not indicative of our core operating performance.
(C) Restructuring and other related costs. Included in our GAAP presentation, we incurred expenses related to our restructuring effort to better align our cost structure with current revenue levels. Restructuring and other related costs consist primarily of employees’ severance payments, related employee benefits, related legal fees and charges related to leases and other contract termination costs. These are one-time in nature costs that are not indicative of our core operating performance.
(D) Amortization of contract acquisition costs – ASC 606 initial adoption. Upon adoption of ASC 606 using the modified retrospective approach, we capitalized approximately $3.3 million of previously expensed sales commissions from 2015, 2016 and 2017. Amortization of these amounts are included in our GAAP presentation as sales and marketing expense. We believe the non-cash amortization expense is not related to or indicative of our ongoing operating performance.
(E) Litigation reserve. The Company records a contingent liability when it is probable that a loss has been incurred and the amount is reasonably estimable in accordance with accounting for contingencies. These reserves are one-time in nature charges that are not indicative of our core operating performance.
(F) Non-cash interest expense. Under GAAP, we recognize interest expense at the effective interest rate which includes interest costs related to the amortization of debt issuance costs. The difference between the effective interest rate and the contractual interest rate is excluded from our assessment of our operating performance because we believe this non-cash expense is not indicative of ongoing operating performance. We believe that the exclusion of the non-cash interest expense provides investors a view of our core operating performance.
(G) Income tax effect on non-GAAP adjustments. This adjusts the provision for income taxes to reflect the effect of the non-GAAP items A, B, C, D, E and F noted above on our non-GAAP net income (loss).
(H) Shares used in calculating diluted net income (loss) per share on a non-GAAP basis. The share count for basic and diluted earnings per share is the same due to GAAP net losses for the year ended December 31, 2020 and 2019.
|
ServiceSource International, Inc. |
||||||||||||||||||||
|
Reconciliation of Net Loss to Adjusted EBITDA |
||||||||||||||||||||
|
(in thousands) |
||||||||||||||||||||
|
(unaudited) |
||||||||||||||||||||
|
|
|
|
|
|
||||||||||||||||
|
|
|
For the Three Months Ended |
|
For the Year Ended |
||||||||||||||||
|
|
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
||||||||
|
Net loss |
|
$ |
(1,664 |
) |
|
|
$ |
(2,492 |
) |
|
|
$ |
(18,541 |
) |
|
|
$ |
(18,683 |
) |
|
|
Provision for income tax expense |
|
536 |
|
|
|
204 |
|
|
|
709 |
|
|
|
443 |
|
|
||||
|
Interest and other expense, net |
|
229 |
|
|
|
259 |
|
|
|
1,279 |
|
|
|
1,226 |
|
|
||||
|
Depreciation and amortization(1) |
|
3,594 |
|
|
|
3,291 |
|
|
|
13,925 |
|
|
|
13,449 |
|
|
||||
|
EBITDA |
|
2,695 |
|
|
|
1,262 |
|
|
|
(2,628 |
) |
|
|
(3,565 |
) |
|
||||
|
Stock-based compensation |
(A) |
1,279 |
|
|
|
1,177 |
|
|
|
4,865 |
|
|
|
5,162 |
|
|
||||
|
Restructuring and other related costs |
(C) |
839 |
|
|
|
93 |
|
|
|
1,542 |
|
|
|
1,929 |
|
|
||||
|
Amortization of contract acquisition asset costs – |
(D) |
91 |
|
|
|
187 |
|
|
|
605 |
|
|
|
976 |
|
|
||||
|
Litigation reserve |
(E) |
(74 |
) |
|
|
— |
|
|
|
(74 |
) |
|
|
(256 |
) |
|
||||
|
Adjusted EBITDA |
|
$ |
4,830 |
|
|
|
$ |
2,719 |
|
|
|
$ |
4,310 |
|
|
|
$ |
4,246 |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
(1) Depreciation and amortization expense are comprised of the following: |
||||||||||||||||||||
|
|
|
|
|
|
||||||||||||||||
|
|
|
For the Three Months Ended |
|
For the Year Ended |
||||||||||||||||
|
|
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
||||||||
|
Internally developed software amortization |
|
$ |
2,104 |
|
|
|
$ |
1,612 |
|
|
|
$ |
7,701 |
|
|
|
$ |
5,802 |
|
|
|
Property and equipment depreciation |
|
1,490 |
|
|
|
1,679 |
|
|
|
6,224 |
|
|
|
7,647 |
|
|
||||
|
Depreciation and amortization |
|
$ |
3,594 |
|
|
|
$ |
3,291 |
|
|
|
$ |
13,925 |
|
|
|
$ |
13,449 |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Contacts
Investor Relations Contact for ServiceSource:
Chad Lyne
ServiceSource International, Inc.
investorrelations@servicesource.com
