Mattersight Lost $0.22 Per Share, On A GAAP Basis, In Q2 2017 — DEAD ON Bob’s Projection!

The loss was seven cents per share worse than the “paid” analysts (at Lake Street Capital, JMP Securities and Craig Hallum) had predicted. But Bob was… spot on, as ever!

More in a moment. Bob has these jokers — dead to rights! And it will be fascinating to watch how quickly Mr. Singer, the activist behind Viex — a new 5 per cent stock-holder — surfaces, to advocate for more aggressive changes in the business model, and executive management. And perhaps… the board, as well.

U G L Y.

As Bob points out, the company had to really push the large accounts for collections, in order to get to the level of cash flow burn they are now showing. Truly ugly.

Several large deals are (once again) taking longer in getting to the start line, and/or fully deployed, according to CFO and board member Mullen. Same old song — same old. Same old.

Only $10.558 million in total revenue.

Another humpty-dumpty quarter. Look for the stock to fall again, tomorrow.

CEO Conway is openly saying that the company needs to rebuild its pipeline — it is relying on too few deals, and so a delay in more than one causes a miss at the revenue line, on the quarter. Mr. Conway is finally admitting what has been clear since Q2 2016 — the larger customers are taking “slow walks“, or even a “wait and see” approach — to deploying into larger seat footprints.

We will listen to the call in a few moments.

That ought to be… priceless.

I am on the call now — revenues falling (per the SEC filed Q2 2017 slide deck):

The Lake Street Capital analyst just called “Q2 2017 a disappointing replay of Q1 2017….” That sums it up.

George Sutton of Craig-Hallum is asking for granularity on the way they think they can get to a projection of EBITDA positive (as adjusted) in Q4 2017. That’s a projection they are remaking, expecting $300,000 of cost savings per quarter in Q3 and Q4 2017 — compared to Q1 and Q2.

It seems, says Mr. Sutton, the “price rebate guarantee” is not driving all the leverage the company had hoped for. Now Mr. Conway is explaining how hard it is to sell to large companies’ procurement functions.

This is just… sad. There is no other word for it.

JMP Securities is asking what was the typical sales cycle a year ago, as compared to today? Great question! CEO Conway says they are so different, that one cannot generalize. What an ugly dodge.

I’ll close this by posting a link to the same Q2 call — but from five years ago: 2012. Except for the CFO, it is a… dead ringer. These guys have been telling this same “Cubs story” (i.e., wait until next year) for 17 years. Un-freaking-believable. But actually, that is now an insult to… the Cubs. They actually… won. It was in the papers — at least I think it was.

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11 thoughts on “Mattersight Lost $0.22 Per Share, On A GAAP Basis, In Q2 2017 — DEAD ON Bob’s Projection!”

  1. If Conway doesn’t resign he has no shame. If the board of directors doesn’t let him go they have no business being board members.

  2. The financials are going to take a little time to unpack but the key takeaway is that at the end of q1 they had 22 million dollars in cash. At the end of Q2 they had seven million dollars in cash. We are almost halfway through Q3. What is the cash position of the company at the present time? Are employees being paid on a timely basis?

  3. My response to the Lake Street analyst would be that this is not just disappointing this is a bad version of Groundhog Day. And in this version of the film every day ends in the red pickup truck going over the cliff and crashing in a fiery explosion. Because in this version of Groundhog Day the key figures never learn a damn thing.

  4. When the author mentioned that Winston and Strawn lawyers were perusing the website over the weekend I’m wondering if they had been given notice of what the financial results were going to be reported and they were trying to figure out how the heck we nailed it. This of course is the absolute wrong question to be asking. The right question is since these guys have been right about everything for years why the heck don’t we hire them to see if they can help fix the company because the current management team and board doesn’t seem to have a freaking clue.

    1. And lawyers from Winston & Strawn looked in at 3:35 today — a few moments after press release — presumably to see what we’d write. Now they know.

      Grin!

  5. Do you mean to tell me that the CEO of a company that focuses on analytics is not analyzing his own sale cycle? What has he been doing? Oh that’s right, he’s been too busy inventing s***.!

    1. That was the most stupefying — in a long line of stupefying comments, this evening… that, and when the CFO had to check his spreadsheet, to explain how the company could possibly reach EBITDA positive (even on double secret probation!) as adjusted basis.

      He said he hadn’t “looked at it in a while”… seriously?! Cue Mr. Singer, and Viex Capital, in 3… 2… one…

      Great stuff man!

      Will make new posts — mañana!

  6. So, for someone not so financially minded.. They are pulling in, in my mind, a lot of money. They are just spending even more to keep the lights on?

    1. Yes Rip… one other way to say it is to say that the market apparently won’t bear the price needed to allow this business to make a profit.

      The customers are only willing to buy these analytical tools at a price well below what it actually costs Mr. Conway to deploy them. And now we learn, for the first time, that he is paying others — essentially reselling their solutions and software, under his own umbrella. That’s a very difficult model to make net profits on. Ever. If their products were designed as “plug and play“, then they could eventually make it up on volume — but clearly this is not the case.

      These are expensive time consuming installs, usually over old legacy systems. Lots of custom (high priced) US based tech worker-years to make it all run smoothly…

      And, it seems the company does a bad job of collecting from its larger accounts — again a reflection of the probability that the Fortune 50 only wants this SaaS offering if it is very nearly… free.

      All in all — not a recipe for long term survival.

      Namaste!

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