Bob — On Increasingly Tenuous Performance — From eLoyalty, To Today…

I am crazed at the office (thus please forgive the poor formatting; I’ll clean it up tonight) — in the mean time… Bob has kindly offered this excellent background/perspective piece, on how current Mattersight compares to its historical cousin, then called eLoyalty:

“…As I’m going to project MATR earnings going forward using GAAP results as a percentage of revenues, I thought it would be useful to go back and calculate the company historical performance on this basis.

The following table contains numbers from the SEC filed 10-K forms starting with 2000 when ELOY/MATR became a public company. I’ve separated the results into the eLoyalty years and the Mattersight years. Remember, Mr. Conway sold off certain operations including the eLoyalty name to “reboot” under the Mattersight name. I also included the weighted share count to illustrate how those have expanded.

ELOY/MATR historical performance (numbers in 000s)
Year | Revenue | Earnings | Earnings as percent of revenue | Weighted Shares
2000 | $211,603 | ($424) | -0.20% | 4,823
2001 | $146,729 | ($57,237) | -39.01% | 5,011
2002 | $86,698 | ($40,775) | -47.03% | 5,190
2003 | $62,580 | ($19,779) | -31.61% | 5,689
2004 | $72,673 | ($7,366) | -10.14% | 6,023
2005 | $79,008 | ($9,101) | -11.52% | 6,359
2006 | $89,828 | ($12,612) | -14.04% | 6,769
2007 | $102,105 | ($10,143) | -9.93% | 8,399
2008 | $91,197 | ($22,949) | -25.16% | 10,365
2009 | $101,613 | ($11,912) | -11.72% | 13,255
2010 | $88,104 | ($14,591) | -16.56% | 13,701

ELOY total $1,132,138 ($206,889) -18.27%

2011 | $29,095 | ($10,533) | -36.20% | 14,225
2012 | $33,863 | ($15,881) | -46.90% | 16,002
2013 | $34,494 | ($11,761) | -34.10% | 16,722
2014 | $30,319 | ($14,821) | -48.88% | 19,923
2015 | $39,912 | ($16,269) | -40.76% | 23,264
2016 | $42,097 | ($21,563) | -51.22% | 25,209
2017 | $21,517 | ($12,047) | -55.99% | 29,379

MATR total $231,297 ($102,875) -44.48%

Look at this and let it sink in. As the days, weeks, quarters and years go on, you can lose sight of the big picture, but I think the table brings it into focus.

It is obvious that MATR is performing vastly poorer than ELOY, yet ELOY existed during 3 separate crises that severely impacted corporate business and the stock market (dot-com crash, 9/11 and the 2008 financial crisis) while MATR has existed during a time of relative calm.

Share count has increased over 6x as the company sold shares to raise money and gave away shares to reward/incent executives and employees. Neither of these activities has led to profitability. Unless something significant changes, continuing to sell shares and give them away as a reward and to align behavior is a classic example of doing the same thing over and over expecting a different result….”

Absolutely. Thanks man!

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One thought on “Bob — On Increasingly Tenuous Performance — From eLoyalty, To Today…”

  1. Not only did MATR’s rate of loss mushroom relative to ELOY from -18.27% to -44.48%, a 2.4x increase, but when you look at non-cash compensation (stock/option awards) awarded for performance as a percent of revenue, it also mushroomed from 5.2% of revenues to 14.1%, a 2.7x increase.

    The compensation committee of the board of directors, that is supposed to operate in the best interests of the shareholders, concluded that for dramatically worse performance, the management and employees of the company deserved a massive increase in stock awards, relative to revenues?

    WTF is going on here?

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