Good day, ladies and gentlemen and welcome to the Support.com First Quarter 2016 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will be given at that time. [Operator Instructions] As a reminder, today's program maybe recorded. I would now like to turn the conference over to Michelle Johnson, General Counsel, you may begin.

Thank you. Good afternoon, everyone. Joining me here today is Elizabeth Cholawsky, our President and Chief Executive Officer; and Roop Lakkaraju, our Chief Financial Officer and Chief Operating Officer. Before we begin, I would like to remind everyone that our remarks today will include forward-looking statements about our future financial results and other matters. There are a number of risks and uncertainties that could cause our actual results to differ materially from expectations. These risks are detailed in today's press release and the reports we filed with the SEC, all of which can be found through the Investor Relations page of our Web site at www.support.com. I would also like to point out that we will present certain non-GAAP information on this call. All numbers presented today are non-GAAP unless otherwise stated. The reconciliation of GAAP to non-GAAP financial measures is included with today's press release and also on our Investor Relations Web page. The statements we'll make on this conference call are based on information we know of as of today. And we assume no obligation to update any of these statements. With that, I'll turn it over to our President and CEO, Elizabeth Cholawsky.

Thanks Michelle, good afternoon everyone and welcome to our first quarter 2016 earnings conference call. In today's call we will discuss the continued execution of our business strategy, evolution of the market, progress in our SaaS offering and update on our services program. We will also highlight some key actions we have taken that will accelerate our path to non-GAAP profitability and help us become a financially stronger, leaner, and more agile company. Let me start with a quick overview of the quarter and then Roop will discuss further details later in the call. We met or exceeded the revenue and EPS guidance that we provided. Revenue came in at $16.6 million at the high-end of our guidance of $15.8 million to $16.6 million. Non-GAAP loss from continuing operations for the quarter came in at $0.07 per share better than our guidance of a loss of $0.8 to $0.10 per share. I would now like to discuss our SaaS offering which continues to grow and expand its capabilities in the market. In addition to the continued traction of agent support and guided tab, self-support capabilities added late last year are becoming more and more important. Our vision of self-support and agent support is being recognized as differentiated in the market. It is also becoming important in identifying new types of services opportunities. We will talk more about those later in the call. But first, I would like to mention that Support.com cloud is the new name for what we have previously referred to as Nexus. As our technology encompasses a wider range of capabilities we decided on a naming convention similar to that of other SaaS company. Additionally Support.com is a strong brand and as our SaaS offering gains momentum, we are leveraging that brand by using the name Support.com…

Thank you, Elizabeth. Total revenue for Q1 was $16.6 million compared to $23.2 million in Q1 2015 and $15.7 million in Q4 2015. Services revenue for the quarter was $15.3 million compared to $21.9 million in Q1 2015 and $14.4 million in Q4 2015. Sequentially services revenue increased as North American service provider was fully ramped by the end of Q1 as we had previously stated. As well as strength from office depot in a quarter, the year-over-year decline was primarily due to Comcast customer experience improvements efforts. Software and other revenue was $1.3 million in Q1 2016 flat from Q1 2015 and from q4 2015. The Q1 2016 revenue mix was 92% services and 8% software compared to 94% and 6% in Q1 2015 and 92% and 80% in Q4 2015. In Q1 Comcast represented 60% of our total revenue and office depot represented 17%. Overall non-GAAP margin for Q1 2016 was 16% compared to 20% in Q1 2015 and 17% in Q4 2015. In Q1 2016 non-GAAP services gross margin was 10% compared to 16% in Q1 2015 and 11% in Q4 2015. During Q1 2016 our services and overall gross margins were affected by higher than expected costs of our data center migration as the move is taking slightly longer than anticipated. To reduce our hosting cost, we are moving from a fully managed service model to one that is co-located and managed directly by us. This move is in the final stages and associated migration costs is onetime expenses. We will see a portion of the migration costs continuing into Q2 2016 but beyond that it will not be incurred. The higher cost adversely affected our gross margins by 1.3%. We also incurred higher than expected claims for medical benefits. As a reminder last year, we…

Thank you. [Operator Instructions] First question is from Joe Fadgen of Craig-Hallum. Your line is open.

Hey guys on here for Chad today, thanks for taking the question. I guess on the first one around the services business, is it fair to say that you still expect that business ex-Comcast sale to be a growth business in 2016 and beyond?

Yes, hi Joe and thanks for taking the call. Yes, we absolutely do and I will put it this way as I said in the past. Non Comcast and OD are over 10% customers. If we look other than that we services to be a growth business.

Okay. And I guess the follow up to that is are there any metrics or data points that you can talk to either in terms of like -- I don't know, maybe services, customer churn rate or customer turnover or maybe average revenue per services, customer that you can kind of point or at least give us trends on so that we can hang our heads and look at something and say like yes, that is really showing signs of growth business ex-Comcast, ex-ODP?

Yes, what we are trying to do is highlight as we go along the kind of programs that are joining us and the kind of growth on the programs that we have got. For example I talked about Staples which we got back into the fold last year 2015 and expansion of their program which happens to include support.com cloud self-support capability so that's how we have been trying to give indications so that we can get a handle for what we are adding.

Yes, Joe I think one of the things that I want to add to that is obviously both, Comcast and SIP [ph] are greater than 10% customers. We provide those percentages, we back those out quarter-to-quarter you can see in recent quarters, especially with Q4, Q3 to Q4, Q4 to Q1 you see that increase in the non-Comcast, non-Office Depot revenue balances and obviously announcing new services deals as we move forward you will start to see that will continue to expand.

And then just one more quick one on the guess the Nexus support cloud. To get to that $2 million run-rate by the end of this year. can you get there based on the coverage you have right now whether that the sales coverage you have right now or the pipeline you have right now, how much visibility or coverage you have into that number exiting this year?

Yes, let me first talk about our sales and marketing which are I mentioned in the prepared remarks, we brought in a new leader Dustin Oxborrow, he is really come up to speed very quickly and not missed a beat with the execution so he's upskilled the team in certain ways so and better aligned it with marketing. So, I do firmly believe that we got the right coverage on the sales & marketing side to get to the $2 million number. And on the pipeline, again the pipeline is looking better than ever in terms of visibility and the future as well as different types of customers that are in the pipeline. We have now made the transition from the original niche that we had around premium tech support and I really are telling to a wide variety of different types of customer and that's where we wanted to be and we are there. So that again gives us great confidence that we can get to the $2 million number.

And Joe, just to add one additional point, we have grown our pipeline in Q1 in the time Dustin has been here and we anticipate growing it further with the types of targets that Elizabeth indicated in our prepared remarks so there is a continued expansion in that pipeline that will help support that $2 million and from Q1 alone we have increased that pipeline with the types of opportunities we have.

Okay. That will be all for me thank you.

Thank you, the next question is from Mike Latimore of Northland Capital. Your line is now open.

Hi there, this is Gerald [ph] for Mike Latimore. My first question here is on Office Depot, you guys mentioned that they were strong in this quarter. can you talk a little bit about what you expect from them this year and I also believe that contract renews this year and so what kind of preference we looking at this year and just some color on that.

Yes, we continue to work closely with Office Depot on new initiatives there and really trying to continue the good success we have seen in Q4 and Q1 so far. So, the relationship is strong as ever, regarding the contract, it's up for renewal and we are in the process of working on that and we will keep you posted.

Yes, one other thing to add. Office Depot has seasonality throughout the year and with some of the revenue guide that we gave being down, sequentially part of the revenue guide is the seasonality within the retail customers we have and Office Depot is obviously a key part of that so that's factored into kind of our view of the year as well.

Okay great and when you guys laid out your cash balance target for this year and next year, does that factor in any potential acquisitions or is that something we are not really considering as far as the cash targets?

Yes, those cash balances do not include consideration for acquisitions. We have indicated that acquisitions are a part of our overall strategy. We continue to obviously evaluate the opportunities in the market place in an appropriate and bring this forward but it's all part of the same strategy that we played our previously but the balance is that we have articulated our operational nature and non-inclusive of acquisitions.

Okay. Perfect and then you mention the little bit of expansion at Staples. What do you think is the kind of potential there? Could that get back to a level where Office Depot's size or do we expect that to be more smaller account within the foreseeable future?

Yes, as you heard things are going great with the new Staples initiative so right now they are small and continue the growth there but I don't think I can really comment on whether they will get to the greater than 10% customer. We will let you know if that happens.

Okay. Great thanks that's it for me.

Okay.

Thank you.

Thank you. And at this time I would like to turn the call back over to Elizabeth for closing remarks.

So I am going to thank everyone for listening. Roop and I are around to answer any additional questions and we look forward to continuing this dialogue and hopefully meeting many of you in the next number of months. Good bye.

Ladies and gentlemen this concludes today's conference. You may now disconnect. Good day.