ServiceSource Reports Record Fourth Quarter and Full 2011 Financial Results

ServiceSource, the global leader in Service Revenue Management, today announced record financial results for the fourth quarter and fiscal year ended December 31, 2011.

"2011 was a strong year for ServiceSource, and our fourth quarter performance was an excellent way to finish the year. We executed on our corporate objectives, exceeded our financial goals and drove momentum throughout the business," said Mike Smerklo, Chairman and CEO of ServiceSource. "We continue to raise our brand awareness in the industry through investments in sales and marketing, our unequalled value proposition, innovative innovation and the results we drive for our clients. We are proud of our accomplishments in 2011 and excited to pursue the $250 billion market possibility in front of us."

Revenue was $60.8 million in the fourth quarter, representing a 37% increase over the $44.5 million in the prior year. Revenue for the full year was $205.5 million, up 34% from $152.9 million in 2010.

"We are pleased to report our fourth quarter results, rounding out a successful performance in our first year as a public company," said David Oppenheimer, CFO of ServiceSource. "Going into 2012, we are more focused than ever on capitalizing on our momentum and investing strategically in the business in sales and marketing and our industry-leading research. We believe we have a unparalleled opportunity to extend our market leadership and create a broader foundation for long term success."

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The global leader in service revenue management

ServiceSource is the global leader in service revenue management, partnering with innovation-based companies to optimize maintenance, support and subscription revenue streams, during also improving customer relationships and loyalty. ServiceSource delivers these results via a cloud-based solution, combining its Service Revenue Performance Suite™ of applications with dedicated service sales teams, leveraging a proprietary Service Revenue Intelligence Platform™ of transaction data, benchmarks and best practices. ServiceSource offers its service revenue management solution on a in a class by itself pay-for-performance business model that enables a success-driven, shared-risk partnership. The Company is headquartered in San Francisco, and manages service revenue performance for clients across the globe in more than 35 languages.

The following tables reconcile the business outlook net income to adjusted EBITDA; the business outlook net income to non-GAAP net income; and the business outlook net income per share to non-GAAP diluted revenues per share for the fourth quarter and full fiscal year:

(A) Stock-based compensation. Included in our GAAP presentation of cost of revenue and operating expenses, stock-based compensation consists of expenses for stock options and awards and purchase rights pursuant to this agreement our stock purchase plan. We exclude stock-based compensation expense from our non-GAAP measures because some investors may view it as not reflective of our core operating performance at this stage a non-cash expense.

(B) Amortization of internally-developed software. Included in our GAAP presentation of cost of revenue and operating expenses, amortization of internally-developed software reflects non-cash expense for certain software purchases and software developed or obtained for internal use. We exclude these expenses from our non-GAAP measures because we believe they are not indicative of our core operating performance.

(C) One-time tax benefit due to conversion to corporation. We elected to be treated as a corporation in accordance with Subchapter C of Chapter 1 of the United States Internal Revenue Code, effective March 1, 2011, and in short became subject to federal and state tax expense beginning March 1, 2011. As a result of this tax election, we recorded a net deferred tax asset and a one-time non-cash tax benefit of $20.7 million. We excluded the tax benefit from our non-GAAP measures because it is non-recurring and unequalled to this one time event and is not indicative of our core operating performance.