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Support.com Reports Third Quarter 2011 Financial Results

(October 27, 2011)

REDWOOD CITY, CA -- (Marketwire) -- 10/27/11 -- Support.com (NASDAQ: SPRT), a leading provider of cloud-based technology services and software for consumers and small business, today reported unaudited financial results for its third quarter ended September 30, 2011.

Q3 2011 Financial Summary

For the third quarter of 2011, total revenue was $12.4 million compared to $12.2 million in the third quarter of 2010 and $13.5 million in the second quarter of 2011.

On a GAAP basis, loss from continuing operations for the third quarter of 2011 was $7.1 million, or $(0.15) per share, compared to $3.8 million, or $(0.08) per share, in the third quarter of 2010, and $4.0 million, or $(0.08) per share, in the second quarter of 2011.


Non-GAAP loss from continuing operations for the third quarter of 2011 was $5.0 million, or $(0.10) per share, compared to $2.9 million, or $(0.06) per share, in the third quarter of 2010, and $2.4 million, or $(0.05) per share, in the second quarter of 2011.

Non-GAAP results exclude stock-based compensation expense, amortization of intangible assets, restructuring and impairment charges, income tax impact of the disposition of business units on continuing operations, acquisition expense and tax expense associated with acquired goodwill. These items impacted results from continuing operations by $2.1 million in the third quarter of 2011, $878,000 in the third quarter of 2010, and $1.6 million in the second quarter of 2011. A reconciliation of GAAP to non-GAAP results is presented in the tables below.

"We're moving forward on key initiatives including growing subscription revenue from existing programs, expanding our client roster, improving service efficiency and enhancing software channels and monetization," said Josh Pickus, President and Chief Executive Officer. "We are dedicated to achieving profitability and providing best-in-class experiences for our customers."

Balance Sheet Information

At September 30, 2011 cash, cash equivalents and investments were $59.3 million compared to $62.7 million at June 30, 2011.

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Conference Call

Support.com will host a conference call discussing the Company's third quarter 2011 results on Thursday, October 27, 2011 starting at 4:30 p.m. ET (1:30 p.m. PT). 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/about/investor-relations/webcastsevents. The live call may be accessed by dialing (877) 312-8789 (domestic) or (253) 237-1314 (international) and referencing passcode 19084591. A replay of the call can also be accessed by dialing (855) 859-2056 (domestic) or (404) 537-3406 (international) and referencing passcode19084591.

About Support.com

Support.com, Inc. (NASDAQ: SPRT) provides cloud-based technology services and software for consumers and small business. Support.com Personal Technology Experts® provide a quick, cost-effective and stress-free technology support experience over the Internet and the phone using the Company's advanced technology platform. Support.com also offers a wide range of easy-to-use software products that detect and repair common computer problems and optimize performance and security. Support.com offers programs through many of the nation's leading retailers, broadband service providers, software vendors and PC/CE OEMs, and provides software to over a million consumers and small businesses. For more information please visit us at: www.support.com, www.facebook.com/support.com, or http://twitter.com/support_com.

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

Copyright © 2011 Support.com, Inc. All rights reserved. Support.com, SUPERAntiSpyware, RapidStart and Personal Technology Experts are trademarks or registered trademarks of Support.com, Inc. in the U.S. and other countries. Facebook is a trademark or registered trademark of Facebook, Inc. in the U.S. and other countries. All other marks are the property of their respective owners.

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, 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 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. 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, restructuring and impairment charges, income tax impact of the disposition of business units on continuing operations, acquisition expense and tax expense associated with acquired goodwill from its GAAP results in order to determine the non-GAAP financial measure of net loss 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. 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 $937,000 in the third quarter of 2011, compared to $727,000 in the third quarter of 2010 and $1.1 million in the second quarter of 2011.

B. Amortization of intangible assets. 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 expense was $330,000 in the third quarter of 2011, compared to $93,000 in the third quarter of 2010 and $122,000 in the second quarter of 2011.

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 $368,000 in the third quarter of 2011, compared to zero in the third quarter of 2010 and $65,000 in the second quarter of 2011.

D. Income tax impact of disposition of business units on continuing operations. Management excludes the income tax impact of the disposition of business units when evaluating the performance of its continuing operations because this tax impact is not a result of the Company's continuing operations. The income tax expense related to the disposal of business units was zero in the third quarter of 2011, compared to $58,000 in the third quarter of 2010 and zero in the second quarter of 2011.

E. 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 $190,000 in the third quarter of 2011, compared to zero in the third quarter of 2010 and $348,000 in the second quarter of 2011.

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 $270,000 in the third quarter of 2011, compared to zero in the third quarter of 2010 and zero in the second quarter of 2011.

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 charges and expenses indicated above from the non-GAAP financial measures presented does not indicate an expectation by management that such charges and expenses will not be incurred in subsequent periods.

SUPPORT.COM, INC. GAAP CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands) September 30, December 31, 2011 (1) 2010 ------------- ------------- (unaudited) Assets Current assets: Cash, cash equivalents and short-term investments $ 56,682 $ 71,568 Accounts receivable, net 6,119 5,133 Prepaid expenses and other current assets 1,174 1,617 ------------- ------------- Total current assets 63,975 78,318 ------------- ------------- Long-term investments 2,625 2,667 Property and equipment, net 527 623 Purchased technology, net 165 226 Goodwill 13,621 10,181 Intangible assets, net 6,000 1,076 Other assets 723 648 ------------- ------------- Total assets $ 87,636 $ 93,739 ============= ============= Liabilities and Stockholders' Equity Liabilities: Accounts payable $ 609 $ 536 Accrued compensation 2,352 1,248 Other accrued liabilities 4,494 3,575 Short-term deferred revenue 3,897 1,574 ------------- ------------- Total current liabilities 11,352 6,933 Long-term deferred revenue 514 - Other long-term liabilities 1,119 749 ------------- ------------- Total liabilities 12,985 7,682 ------------- ------------- Stockholders' equity: Common stock 5 5 Additional paid-in-capital 232,954 229,692 Accumulated other comprehensive loss (1,708) (1,331) Accumulated deficit (156,600) (142,309) ------------- ------------- Total stockholders' equity 74,651 86,057 ------------- ------------- Total liabilities and stockholders' equity $ 87,636 $ 93,739 ============= =============

Note 1: 2011 amounts are subject to completion of management's and its independent registered public accounting firm's customary closing and review procedures.

SUPPORT.COM, INC. GAAP CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share amounts) (unaudited) Three Months Ended Nine Months Ended September 30, September 30, -------------------------- -------------------------- 2011 (1) 2010 2011 (1) 2010 ---------- ---------- ---------- ---------- Revenue: Services $ 8,532 $ 9,280 $ 26,124 $ 22,892 Software and other 3,818 2,898 12,711 9,031 --------- ---------- --------- --------- Total revenue 12,350 12,178 38,835 31,923 Cost of revenue: Cost of services 7,917 6,927 21,334 19,757 Cost of software and other 458 294 1,295 977 ---------- ---------- ---------- ---------- Total cost of revenue 8,375 7,221 22,629 20,734 Gross profit 3,975 4,957 16,206 11,189 ---------- ---------- ---------- ---------- Operating expenses: Amortization of intangible assets 330 93 536 274 Research and development 1,577 1,274 4,458 3,898 Sales and marketing 5,954 4,889 16,282 13,180 General and administrative 3,074 2,499 9,300 8,338 ---------- ---------- ---------- ---------- Total operating expenses 10,935 8,755 30,576 25,690 Loss from operations (6,960) (3,798) (14,370) (14,501) Interest income and other, net 96 101 371 436 ---------- ---------- ---------- ---------- Loss from continuing operations, before income taxes (6,864) (3,697) (13,999) (14,065) Income taxes provision 264 56 295 78 ---------- ---------- ---------- ---------- Loss from continuing operations, after income taxes (7,128) (3,753) (14,294) (14,143) Income from discontinued operations, net of income taxes 18 30 3 27 ---------- ---------- ---------- ---------- Net loss $ (7,110) $ (3,723) $ (14,291) $ (14,116) ========== ========== ========== ========== Basic and diluted earnings per share: Loss from continuing operations, after income taxes $ (0.15) $ (0.08) $ (0.30) $ (0.30) Income from discontinued operations, after income taxes 0.00 0.00 0.00 0.00 ---------- ---------- ---------- ---------- Basic and diluted net loss per share $ (0.15) $ (0.08) $ (0.30) $ (0.30) ========== ========== ========== ========== Shares used in computing per share amounts: Basic 48,326 46,721 48,267 46,576 ========== ========== ========== ========== Diluted 48,326 46,721 48,267 46,576 ========== ========== ========== ==========

Note 1: 2011 amounts are subject to completion of management's and its independent registered public accounting firm's customary closing and review procedures.

SUPPORT.COM, INC. RECONCILIATION OF GAAP FINANCIAL RESULTS TO NON-GAAP FINANCIAL MEASURES (in thousands, except per share amounts) (unaudited) Three Months Ended Nine Months Ended September 30, September 30, ---------------------- ---------------------- 2011 2010 2011 2010 ---------- ---------- ---------- ---------- GAAP cost of revenue $ 8,375 $ 7,221 $ 22,629 $ 20,734 Stock-based compensation (Cost of revenue portion only) (68) (42) (183) (122) Restructuring and impairment charges (Cost of revenue portion only) (55) - (93) - ---------- ---------- ---------- ---------- Non-GAAP cost of revenue $ 8,252 $ 7,179 $ 22,353 $ 20,612 GAAP operating expenses $ 10,935 $ 8,755 $ 30,576 $ 25,690 Stock-based compensation (Excl. cost of revenue portion) (869) (685) (2,628) (2,492) Amortization of intangible assets (330) (93) (536) (274) Restructuring and impairment charges (Excl. cost of revenue portion) (313) - (377) - Acquisition expense (190) - (538) - ---------- ---------- ---------- ---------- Non-GAAP operating expenses $ 9,233 $ 7,977 $ 26,497 $ 22,924 GAAP income taxes provision $ 264 $ 56 $ 295 $ 78 Income tax impact of the disposition of business units on continuing operations - (58) - (58) Tax expense associated with acquired goodwill (270) - (270) - ---------- ---------- ---------- ---------- Non-GAAP income taxes provision $ (6) $ (2) $ 25 $ 20 GAAP loss from continuing operations, after income taxes $ (7,128) $ (3,753) $ (14,294) $ (14,143) Stock-based compensation 937 727 2,811 2,614 Amortization of intangible assets 330 93 536 274 Restructuring and impairment charges 368 - 470 - Income tax impact of the disposition of business units on continuing operations - 58 - 58 Acquisition expense 190 - 538 - Tax expense associated with acquired goodwill 270 - 270 - ---------- ---------- ---------- ---------- Total impact of Non-GAAP exclusions 2,095 878 4,625 2,946 Non-GAAP loss from continuing operations, after income taxes $ (5,033) $ (2,875) $ (9,669) $ (11,197) ---------- ---------- ---------- ---------- Basic and diluted loss per share from continuing operations, after income taxes GAAP $ (0.15) $ (0.08) $ (0.30) $ (0.30) Non-GAAP $ (0.10) $ (0.06) $ (0.20) $ (0.24) Shares used in computing per share amounts (GAAP) Basic 48,326 46,721 48,267 46,576 Diluted 48,326 46,721 48,267 46,576 Shares used in computing per share amounts (Non-GAAP) Basic 48,326 46,721 48,267 46,576 Diluted 48,326 46,721 48,267 46,576

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, restructuring and impairment charges, income tax impact of the disposition of business units on continuing operations, acquisition expense 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.

2011 amounts are subject to completion of management's and its independent registered public accounting firm's customary closing and review procedures.

Contact Information:

Investor Contact
Carolyn Bass and Scott Morgan
Market Street Partners
(415) 445-3235
sprt@marketstreetpartners.com

Media Contact
Seth Geisler
Martin Levy Public Relations
(858) 610-9860
seth@martinlevypr.com


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