ServiceSource (SREV) Reports Q3 Loss of $0.01, Revenues Beat

ServiceSource (NASDAQ: SREV) reported Q3 EPS of ($0.01), versus $0.01 reported last year. Revenue for the quarter came in at $53.4 million versus the consensus estimate of $49 million.

Key Financial Results – Third Quarter 2019

• GAAP revenue was $53.4 million, compared with $57.2 million reported for Q3 2018.
• GAAP net loss was $4.4 million or $0.05 per diluted share, compared with GAAP net loss of $6.6 million or $0.07 per diluted share reported for Q3 2018.
• Non-GAAP net loss was $0.7 million or $0.01 per diluted share, compared with non-GAAP net income of $0.7 million or $0.01 per diluted share reported for Q3 2018.
• Adjusted EBITDA was $1.1 million, compared with Adjusted EBITDA of $3.1 million reported for Q3 2018.
• Free cash flow of negative $2.6 million to end the quarter with $25.4 million of cash and cash equivalents and restricted cash and no borrowings under the Company’s $40.0 million revolving line of credit.

“We had a solid third quarter with improved focus, execution and results throughout the business,” said Gary B. Moore, Chairman and CEO of ServiceSource. “We grew revenue and expanded non-GAAP gross margins sequentially from last quarter, while strong expense discipline across the organization drove positive Adjusted EBITDA. Our delivery and global account management teams performed well on behalf of our clients, enabling year-over-year growth at the majority of our largest relationships. Importantly, we also made good strides improving our sales activity compared to the second quarter. As a result of our go-to-market organizational realignment, we enhanced our sales pipeline, generated stronger bookings momentum, secured a great multi-million dollar new logo, and won expansions with several key accounts. We also continued to make important progress on our strategic initiatives, which are foundational to our long-term value creation roadmap.”

Key Business Highlights – Third Quarter 2019

• Expanded revenue with six of the top 10 clients in the third quarter, with cumulative trailing 12 month revenue growth of 2.1% across the same top 10 clients.
• Signed a $2 million new logo win to provide an end-to-end solution for a $1 billion-plus revenue global security software provider.
• Successfully renewed or extended more than 75% of the contract value that was up for renewal year-to-date.
• Announced enhancements to the CJX solution suite with new digital capabilities that enable unified offline and online commerce experiences.

“We are pleased by the results we delivered in the third quarter, as we further differentiated our solutions in the marketplace, enhanced the value we provide to our clients, and expanded many of our loyal and long-tenured relationships,” said Richard G. Walker, CFO of ServiceSource. “Disciplined execution and operational rigor allowed us to exceed our expectations for the quarter. On a sequential basis, we grew revenue 2.0% and favorably reduced our non-GAAP cost of revenue and operating expenses by 2.2%, resulting in Adjusted EBITDA of $1.1 million. We ended the third quarter with a debt-free balance sheet, $25.4 million of cash, cash equivalents and restricted cash, and generated positive free cash flow of $0.6 million, prior to the impact of a one-time legal settlement. Given our performance in the third quarter, current conditions in the markets we serve, and ongoing actions to optimize our portfolio, we affirm the full-year financial outlook we provided on August 7th, 2019. And while we are encouraged by a quarter of demonstrable progress, we remain keenly focused on our longer-term transformation objectives and value-enhancing priorities.”

For earnings history and earnings-related data on ServiceSource (SREV) click here.

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