Interactive Intelligence Reports First-Quarter 2013 Financial Results
Interactive Intelligence Reports First-Quarter 2013 Financial Results
Total orders up 31 percent from 2012 first quarter.
Cloud-based orders increased 42 percent to 31 percent of total orders.
Total revenues up 39 percent to $73.2 million.
INDIANAPOLIS--(BUSINESS WIRE)-- Interactive Intelligence Group Inc. (NAS: ININ) , a global provider of unified IP business communications software and services, has announced financial results for the first quarter ended March 31, 2013.
"During the first quarter of 2013, we had solid order growth in all our geographies and booked twice as many orders greater than $250,000 as we did in the first quarter last year," said Interactive Intelligence founder and CEO, Dr. Donald Brown. "Our year-over-year revenue growth further highlights our ongoing traction with some of the world's largest global companies as they adopt our technology with on-premises deployments or by joining the move to the cloud. The rapid growth of our cloud-based orders and revenues continued to enhance the scale of our overall recurring revenues. We will continue to make those investments that drive growth in market share, particularly with our cloud-based offering, which remains the highest growth segment of our market."
Brown added: "We remain committed to innovation and extending our product capabilities, as evidenced by the recent launch of our cloud-based product for small contact centers. Looking forward, we are confident in our long-term strategy to expand our cloud business, thereby increasing our recurring revenues and consistently gaining market share. Based on our strong global pipeline, we are maintaining our 2013 total order growth forecast of 20 percent, with cloud-based orders expected to represent approximately half of total orders."
First-Quarter 2013 Financial Highlights:
Orders: Total orders increased by 31 percent from the first quarter of 2012, while cloud-based orders were up 42 percent over the first quarter of 2012 and comprised 31 percent of total orders. The company signed 39 contracts over $250,000, which included eight orders over $1 million, up from 17 orders over $250,000, including six orders over $1 million in the first quarter of 2012.
Revenues: Total revenues were $73.2 million, an increase of 39 percent over the first quarter of 2012. Recurring revenues, which include both maintenance and support from perpetual license agreements and cloud-based revenues, increased 22 percent to $33.8 million and accounted for 46 percent of total revenues. Cloud-based revenues increased 42 percent to $7.1 million. Product revenues were $28.0 million and services revenues were $11.4 million, up 44 percent and 101 percent, respectively, compared to the first quarter of 2012. During the first quarter of 2013, product revenues benefited from partial revenue recognition of a large order signed during the fourth quarter of 2012.
Total Deferred Revenues: Deferred revenues increased to $110.2 million as of March 31, 2013, from $77.8 million as of March 31, 2012. In addition, the amount of unbilled future cloud-based revenues as of March 31, 2013 increased to $95.8 million from $40.6 million at the end of the 2012 first quarter. The combination of deferred revenues and unbilled future cloud-based revenues was $206.0 million, up 74 percent from $118.4 million as of March 31, 2012.
Operating Income: GAAP operating income was $3.4 million for the first quarter of 2013, compared to $276,000 in same quarter last year. Non-GAAP* operating income was $6.2 million for the first quarter of 2013, with a non-GAAP operating margin of 8.5 percent, compared to $2.4 million and 4.6 percent, respectively, in the first quarter of 2012.
Net Income: GAAP net income for the first quarter of 2013 was $1.5 million, or $0.07 per diluted share based on 20.7 million weighted average diluted shares outstanding, and included a tax credit related to 2012 research and development of $600,000. These results compare to GAAP net income for the same quarter in 2012 of $189,000, or $0.01 per diluted share based on 20.0 million weighted average diluted shares outstanding.
Non-GAAP net income for the first quarter of 2013 was $3.6 million, or $0.17 per diluted share, compared to non-GAAP net income of $1.9 million, or $0.09 per diluted share for the same quarter in 2012.
Cash, Cash Equivalents, and Investments: As of March 31, 2013, we had cash, cash equivalents, and investments of $81.9 million.
Cash Flows: The company used $1.0 million in cash flow for operating activities in the first quarter of 2013 and $3.6 million for capital expenditures, which included expansion of its cloud infrastructure, and received $5.7 million from the exercise of stock options.
* A reconciliation of GAAP to non-GAAP financial measures has been provided in the financial statement tables included with this press release. An explanation of these measures is also included below under the heading "Non-GAAP Measures."
Additional First-Quarter 2013 and Recent Highlights:
Interactive Intelligence launched CaaS Small Center℠, a new cloud solution designed to give contact centers with under 50 agents a simple, cost-effective way to access the same sophisticated communications applications as the largest global centers.
Interactive Intelligence released an enhanced version of its Bay Bridge Decisions™ contact center forecasting, capacity planning and analysis product suite, which was designed to help customers reduce costs and improve service.
Interactive Intelligence purchased the customer support agreements of Amtel Communications Ltd., its New Zealand-based reseller, effective April 1, 2013.
Interactive Intelligence will host a conference call today at 4:30 p.m. Eastern time (EDT) featuring Dr. Brown and the company's CFO, Stephen R. Head. A live Q&A session will follow opening remarks.
To access the teleconference, please dial 1 877.324.1969 at least five minutes prior to the start of the call. Ask for the teleconference by the following name: "Interactive Intelligence first-quarter earnings call." The teleconference will also be broadcast live on the company's investor relations' page at http://investors.inin.com. An archive of the teleconference will be posted following the call.
About Interactive Intelligence
Interactive Intelligence Group Inc. (NAS: ININ) is a global provider of contact center, unified communications, and business process automation software and services. The company's unified IP business communications solutions, which can be deployed on-premises or via the cloud, are ideal for industries such as financial services, insurance, outsourcers, collections, and utilities. Interactive Intelligence was founded in 1994 and has more than 5,000 customers worldwide. The company is among Forbes Magazine's 2011 Best Small Companies in America and Software Magazine's 2012 Top 500 Global Software and Service Providers. It employs approximately 1,400 people and is headquartered in Indianapolis, Indiana. The company has offices throughout North America, Latin America, Europe, Middle East, Africa and Asia Pacific. Interactive Intelligence can be reached at +1 317.872.3000 or info@inin.com; on the Net: www.inin.com.
Non-GAAP Measures
The non-GAAP measures shown in this release include revenue which was not recognized on a GAAP basis due to purchase accounting adjustments and exclude non-cash stock-based compensation expense, the amortization of certain intangible assets related to acquisitions by the company and non-GAAP income tax expense. Reconciliations of these non-GAAP measures to the most directly comparable GAAP measures are included with the financial information included in this press release. These measures are not in accordance with, or an alternative for, GAAP and may be different from non-GAAP measures used by other companies. Stock-based compensation expense and amortization of intangibles related to acquisitions are non-cash and non-GAAP income tax expense is pro forma based on non-GAAP earnings. Management believes that the presentation of non-GAAP results, when shown in conjunction with corresponding GAAP measures, provides useful information to management and investors regarding financial and business trends related to the company's results of operations. Further, management believes that these non-GAAP measures improve management's and investors' ability to compare the company's financial performance with other companies in the technology industry. Because stock-based compensation expense, non-GAAP income tax expense amounts and amortization of intangibles related to acquisitions can vary significantly between companies, it is useful to compare results excluding these amounts. Management also uses financial statements that exclude stock-based compensation expense, non-GAAP income tax amounts and amortization of intangibles related to acquisitions for its internal budgets.
Forward Looking Statements
This release may contain certain forward-looking statements that involve a number of risks and uncertainties. Among the factors that could cause actual results to differ materially are the following: rapid technological changes in the industry; the company's ability to maintain profitability; to manage successfully its growth; to manage successfully its increasingly complex third-party relationships resulting from the software and hardware components being licensed or sold with its solutions; to maintain successful relationships with certain suppliers which may be impacted by the competition in the technology industry; to maintain successful relationships with its current and any new partners; to maintain and improve its current products; to develop new products; to protect its proprietary rights adequately; to successfully integrate acquired businesses; and other factors described in the company's SEC filings, including the company's latest annual report on Form 10-K.
Interactive Intelligence is the owner of the marks INTERACTIVE INTELLIGENCE, its associated LOGO and numerous other marks. All other trademarks mentioned in this document are the property of their respective owners.
Interactive Intelligence Group, Inc. | ||||||||||
Condensed Consolidated Statements of Operations and Comprehensive Income | ||||||||||
(in thousands, except per share amounts) | ||||||||||
(unaudited) | ||||||||||
Three Months Ended | ||||||||||
March 31, | ||||||||||
2013 | 2012 | |||||||||
Revenues: | ||||||||||
Product | $ | 27,991 | $ | 19,435 | ||||||
Recurring | 33,827 | 27,639 | ||||||||
Services | 11,420 | 5,694 | ||||||||
Total revenues | 73,238 | 52,768 | ||||||||
Costs of revenues: | ||||||||||
Product | 7,878 | 5,652 | ||||||||
Recurring | 10,142 | 7,240 | ||||||||
Services | 7,861 | 4,233 | ||||||||
Amortization of intangible assets | 49 | 35 | ||||||||
Total cost of revenues | 25,930 | 17,160 | ||||||||
Gross profit | 47,308 | 35,608 | ||||||||
Operating expenses: | ||||||||||
Sales and marketing | 23,292 | 17,763 | ||||||||
Research and development | 12,524 | 10,380 | ||||||||
General and administrative | 7,614 | 6,888 | ||||||||
Amortization of intangible assets | 463 | 301 | ||||||||
Total operating expenses | 43,893 | 35,332 | ||||||||
Operating income | 3,415 | 276 | ||||||||
Other expense: | ||||||||||
Interest income, net | 199 | 182 | ||||||||
Other expense | (1,402 | ) | (184 | ) | ||||||
Total other expense | (1,203 | ) | (2 | ) | ||||||
Income before income taxes | 2,212 | 274 | ||||||||
Income tax expense | 755 | 85 | ||||||||
Net income | $ | 1,457 | $ | 189 | ||||||
Other comprehensive income: | ||||||||||
Foreign currency translation adjustment | $ | 105 | $ | 381 | ||||||
Net unrealized investment gain (loss) - net of tax | (32 | ) | 160 | |||||||
Comprehensive income | $ | 1,530 | $ | 730 | ||||||
Net income per share: | ||||||||||
Basic | $ | 0.07 | $ | 0.01 | ||||||
Diluted | 0.07 | 0.01 | ||||||||
Shares used to compute net income per share: | ||||||||||
Basic | 19,704 | 19,099 | ||||||||
Diluted | 20,738 | 20,020 | ||||||||
Interactive Intelligence Group, Inc. | |||||||||
Reconciliation of Supplemental Financial Information | |||||||||
(in thousands, except per share amounts) | |||||||||
(unaudited) | |||||||||
Three Months Ended | |||||||||
March 31, | |||||||||
2013 | 2012 | ||||||||
Recurring revenue, as reported | $ | 33,827 | $ | 27,639 | |||||
Purchase accounting adjustments | 85 | 130 | |||||||
Non-GAAP recurring revenue | $ | 33,912 | $ | 27,769 | |||||
Recurring revenue gross profit as reported | $ | 23,685 | $ | 20,399 | |||||
Purchase accounting adjustments | 85 | 130 | |||||||
Non-cash stock-based compensation expense | 166 | 122 | |||||||
Non-GAAP recurring revenue gross profit | $ | 23,936 | $ | 20,651 | |||||
Non-GAAP recurring revenue gross margin | 70.6 | % | 74.4 | % | |||||
Services revenue gross profit as reported | $ | 3,559 | $ | 1,461 | |||||
Non-cash stock-based compensation expense | 48 | 34 | |||||||
Non-GAAP services revenue gross profit | $ | 3,607 | $ | 1,495 | |||||
Non-GAAP services revenue gross margin | 31.6 | % | 26.3 | % | |||||
Total revenue, as reported | $ | 73,238 | $ | 52,768 | |||||
Purchase accounting adjustments | 85 | 130 | |||||||
Non-GAAP total revenue | $ | 73,323 | $ | 52,898 | |||||
Gross Profit, as reported | $ | 47,308 | $ | 35,608 | |||||
Purchase accounting adjustments | 85 | 130 | |||||||
Operating expenses | 49 | 35 | |||||||
Non-cash stock-based compensation expense | 214 | 156 | |||||||
Non-GAAP gross profit | $ | 47,656 | $ | 35,929 | |||||
Non-GAAP gross margin | 65.0 | % | 67.9 | % | |||||
Operating income, as reported | $ | 3,415 | $ | 276 | |||||
Purchase accounting adjustments | 611 | 588 | |||||||
Non-cash stock-based compensation expense | 2,170 | 1,579 | |||||||
Non-GAAP operating income | $ | 6,196 | $ | 2,443 | |||||
Non-GAAP operating margin | 8.5 | % | 4.6 | % | |||||
Interactive Intelligence Group, Inc. | |||||||||
Reconciliation of Supplemental Financial Information | |||||||||
(in thousands, except per share amounts) | |||||||||
(unaudited) | |||||||||
Three Months Ended | |||||||||
March 31, | |||||||||
2013 | 2012 | ||||||||
Net income, as reported | $ | 1,457 | $ | 189 | |||||
Purchase accounting adjustments: | |||||||||
Increase to revenues: | |||||||||
Recurring | 85 | 130 | |||||||
Reduction of operating expenses: | |||||||||
Customer Relationships | 418 | 256 | |||||||
Technology | 49 | 35 | |||||||
Non-compete agreements | 45 | 45 | |||||||
Acquisition Costs | 14 | 122 | |||||||
Total | 611 | 588 | |||||||
Non-cash stock-based compensation expense: | |||||||||
Cost of recurring revenues | 166 | 122 | |||||||
Cost of services revenues | 48 | 34 | |||||||
Sales and marketing | 807 | 533 | |||||||
Research and development | 616 | 397 | |||||||
General and administrative | 533 | 493 | |||||||
Total | 2,170 | 1,579 | |||||||
Non-GAAP income tax expense adjustment | (640 | ) | (501 | ) | |||||
Non-GAAP net income | $ | 3,598 | $ | 1,855 | |||||
Diluted EPS, as reported | $ | 0.07 | $ | 0.01 | |||||
Purchase accounting adjustments | 0.03 | 0.03 | |||||||
Non-cash stock-based compensation expense | 0.10 | 0.08 | |||||||
Non-GAAP income tax expense adjustment | (0.03 | ) | (0.03 | ) | |||||
Non-GAAP diluted EPS | $ | 0.17 | $ | 0.09 | |||||
Interactive Intelligence Group, Inc. | |||||||||||
Condensed Consolidated Balance Sheets | |||||||||||
(in thousands) | |||||||||||
