Support.com 2008 Annual Report Download - page 33

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Table of Contents
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
The following discussion of our financial condition and results of operations should be read in conjunction with our Consolidated Financial
Statements and the related notes included elsewhere in this Form 10-K. The following discussion includes forward-looking statements. Please see the
section entitled “Forward-Looking Statements and Risk Factors” in Item 1A of this Report for important information to consider when evaluating these
statements.
Overview
Consumer
In 2008, Consumer revenue increased to $6.8 million from $1.1 million in 2007, an increase of 549%. This growth was driven primarily by the national
rollout of our services to all North American stores of our largest channel partner, Office Depot. We experienced increases in the rate at which services such as
software installation are attached to sales of new technology products by our channel partners, as well as an increase in sales of diagnosis and repair services for
customers’ existing computers. Throughout the year, we increased our number of technical support agents to meet the increased demand for our services.
During the year, we also launched a number of additional programs. In our direct business at support.com, we expanded our service offerings to include
subscription services. We also expanded our service portfolio with a number of new product offerings, including data backup and data migration.
Our goals in the Consumer segment are to grow and diversify revenue and to improve service delivery efficiency. We aim to diversify and grow revenue
by enhancing our programs and expanding our service offerings. With respect to programs, we plan to expand existing programs, convert our most promising
pilots into full programs, add new channel partners and grow our direct support.com business. With respect to service offerings, we recently introduced
subscription-based offerings at support.com and began offering them through channel partners in early 2009. We have also introduced new services such as
online backup and data migration, and plan to continue to expand our offerings to include educational services and support for additional devices.
We aim to improve service delivery efficiency in the Consumer segment by optimizing our service delivery operations through increased automation,
process improvement, performance management, improved forecasting, revenue scale and labor cost optimization. We are focusing a substantial part of our
research and development activities on technology that increases the efficiency and improves the effectiveness of our technical support agents. We have
introduced significant process improvements into our service delivery operations; augmented our enhanced call center management team to drive efficiency gains
and productivity increases; and we expect improved forecasting and revenue scale to enable resource optimization. To further enhance service delivery
efficiency, we are exploring a number of means for optimizing labor costs.
In 2009, we expect to continue to invest in our Consumer business. While we expect our investments to ultimately provide revenue growth and operating
efficiencies, we currently expect to incur a net loss in the Consumer segment in 2009.
Enterprise
Total revenue in the Enterprise segment was $42.1 million, $46.8 million and $45.0 million for the years ending December 31, 2008, 2007 and 2006,
respectively. The decrease in total revenue in 2008 over 2007 was due primarily to lower license revenue and, in the fourth quarter of 2008, lower service
revenue. We have experienced a trend of decreasing annual license revenue over the last four years. License revenue has decreased due to closing fewer large
licensing transactions with customers. The increase in total revenue in 2007 over 2006 was due primarily to higher maintenance and services revenue. In 2009,
we expect significantly lower revenue as
30
Source: SUPPORTSOFT INC, 10-K, March 11, 2009