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8-K - FORM 8-K - inContact, Inc.d431669d8k.htm

Exhibit 99.1

inContact Reports Third Quarter 2012 Financial Results

Company Achieves 40% Year-over-Year Quarterly Software Revenue Growth

SALT LAKE CITY – November 1, 2012 – inContact, Inc. (NASDAQ: SAAS), the leading provider of cloud contact center software and contact center agent optimization tools, today reported financial results for the third quarter ended September 30, 2012.

Said Paul Jarman, inContact CEO, “It was a strong quarter for inContact across all of our financial metrics. We are benefiting from the overall momentum of cloud adoption and the power of our recurring cloud model. During the quarter, we achieved a new record in annual contract value booked and we closed 50 new customers and 19 expansion deals for a total of 69 contracts.”

Revenue

Software segment revenue totaled $14.0 million for the quarter ended September 30, 2012, an increase of 40% from Q3 2011 and an increase of 9% from $12.8 million in Q2 2012. Software segment revenue exceeded Telecom segment revenue for the first time in Q3 2012. Telecom segment revenue for Q3 2012 was $13.9 million, an increase of $1.8 million or 14% from $12.1 million in Q3 2011. This increase marks the eighth consecutive quarter that software and software related telecom revenue has increased.

Consolidated revenue for the quarter ended September 30, 2012 was $27.9 million versus $22.2 million for the same period in 2011, an increase of 26%.

For the nine months ended September 30, 2012, Software segment revenue totaled $39.1 million, an increase of 36% from $28.9 million in 2011. For the nine months ended September 30, 2012, Telecom segment revenue totaled $40.6 million, an increase of 12% from $36.4 million for 2011.

Gross Margin

The Q3 Software segment gross margin was 60% versus 55% in Q3 2011, and excluding non-cash charges, non-GAAP Software segment gross margin was 72% for the quarter, versus 69% in Q3 2011. This increase in gross margin is principally attributable to revenue increases in 2012 in excess of higher costs of revenue. Third quarter 2012 Telecom segment gross margin was 34% versus 25% in Q3 2011.

Consolidated gross margin percentage was 47% in the third quarter compared to 39% for the same period in 2011. Excluding non-cash charges, non-GAAP consolidated gross margin was 54% for the third quarter compared to 46% for the same period in 2011.


EBITDAS

Earnings before interest, taxes, depreciation and amortization and stock-based compensation (“EBITDAS”) for the third quarter was $2.2 million versus a negative $590,000 during the same period in 2011. Our increase in EBITDAS is primarily due to the increase in margins discussed above. EBITDAS is a non-GAAP measure management believes provides important insight into our operating results (see reconciliation of non-GAAP measures below).

Net Results

GAAP net loss for quarter ended September 30, 2012 was $953,000, or ($0.02) per share, as compared to a net loss of $3.2 million, or ($0.07) per share for the same period in 2011. This decrease in net loss is primarily due to increased revenues and improved margins.

Jarman concluded, “We have another record quarter behind us as our software revenue run rate grows at a very healthy rate. We will continue to leverage the market opportunity before us through innovation in our platform, growth in our ecosystem, and expanding leverage through key partnerships. We are on track to achieve our 2012 guidance, and look forward to continuing this progress in 2013.”

CONFERENCE CALL INFORMATION

We will host a conference call to discuss our third quarter 2012 financial results later today, November 1, 2012, at 4:30 p.m. Eastern time (1:30 p.m. Pacific).

Dial-in Number: 1-866-952-1906

International Dial-in Number: + 1-785-424-1825

Conference ID#: INCONTACT

Webcast URL: http://investor.inContact.com

An audio file of the call will be available after November 1, 2012 on the inContact Investor Relations website at http://investor.incontact.com, in the Webcasts and Presentations section. A replay of the call will be available via telephone after 7:30 p.m. Eastern time today and until November 16, 2012:

Toll-free replay number: 1-877-870-5176

International replay number: + 1-858-384-5517

Replay Pin Number: 12328

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995

All statements included in this press release, other than statements or characterizations of historical fact, are forward-looking statements. These forward-looking statements are based on inContact’s current expectations, estimates and projections about inContact’s industry, management’s beliefs, and certain assumptions made by management, all of which are subject to change. Forward-looking statements can often be identified by words such as “anticipates,” “expects,” “intends,” “plans,” “predicts,” “believes,” “seeks,” “estimates,” “may,” “will,” “should,” “would,” “could,” “potential,” “continue,” “ongoing,” similar expressions, and variations or negatives of these words and include, but are not limited to, statements regarding projected results of operations and management’s


future strategic plans. These forward-looking statements are not guarantees of future results and are subject to risks, uncertainties and assumptions that could cause our actual results to differ materially and adversely from those expressed in any forward-looking statement.

The risks and uncertainties referred to above include, but are not limited to, risks associated with inContact’s business model; our ability to develop or acquire, and gain market acceptance for new products, including our new sales and marketing and voice automation products, in a cost-effective and timely manner; the gain or loss of key customers; competitive pressures; its ability to expand operations; fluctuations in its earnings as a result of the impact of stock-based compensation expense; interruptions or delays in our hosting operations; breaches of our security measures; its ability to protect our intellectual property from infringement, and to avoid infringing on the intellectual property rights of third parties; and its ability to expand, retain and motivate our employees and manage its growth. Further information on potential factors that could affect our financial results is included in inContact’s annual report on Form 10-K, quarterly reports of Form 10-Q, and in other filings with the Securities and Exchange Commission. The forward-looking statements in this release speak only as of the date they are made. inContact undertakes no obligation to revise or update publicly any forward-looking statement for any reason.


INCONTACT, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS - (Unaudited)

(in thousands)

 

     September 30,
2012
     December 31,
2011
 
ASSETS      

Current assets:

     

Cash and cash equivalents

   $ 48,513       $ 17,724   

Restricted cash

     81         246   

Accounts and other receivables, net of allowance for uncollectible

     

accounts of $906 and $491, respectively

     15,833         12,916   

Other current assets

     3,447         2,526   
  

 

 

    

 

 

 

Total current assets

     67,874         33,412   

Property and equipment, net

     20,273         18,685   

Intangible assets, net

     1,342         1,394   

Goodwill

     4,086         4,086   

Other assets

     951         837   
  

 

 

    

 

 

 

Total assets

   $ 94,526       $ 58,414   
  

 

 

    

 

 

 
LIABILITIES AND STOCKHOLDERS’ EQUITY      

Current liabilities:

     

Trade accounts payable

   $ 7,405       $ 7,180   

Accrued liabilities

     2,588         2,769   

Accrued commissions

     1,563         1,291   

Current portion of deferred revenue

     1,665         1,056   

Current portion of long-term debt and capital lease obligations

     2,806         2,831   

Total current liabilities

     16,027         15,127   

Long-term debt and capital lease obligations

     2,509         5,964   

Deferred rent

     370         161   

Deferred revenue

     1,947         946   
  

 

 

    

 

 

 

Total liabilities

     20,853         22,198   

Total stockholders’ equity

     73,673         36,216   
  

 

 

    

 

 

 

Total liabilities and stockholders’ equity

   $ 94,526       $ 58,414   
  

 

 

    

 

 

 


INCONTACT, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS and COMPREHENSIVE LOSS - (Unaudited)

(in thousands, except per share data)

 

 

 

 

 

 

 

 

     Three months
ended September 30,
    Nine months
ended September 30,
 
     2012     2011     2012     2011  

Net revenue:

        

Software

   $ 13,976      $ 10,015      $ 39,106      $ 28,852   

Telecom

     13,886        12,137        40,646        36,378   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total net revenue

     27,862        22,152        79,752        65,230   
  

 

 

   

 

 

   

 

 

   

 

 

 

Costs of revenue:

        

Software

     5,623        4,488        15,972        12,071   

Telecom

     9,195        9,049        27,618        26,680   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total costs of revenue

     14,818        13,537        43,590        38,751   
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     13,044        8,615        36,162        26,479   
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating expenses:

        

Selling and marketing

     6,956        6,641        20,874        17,738   

Research and development

     2,495        1,575        6,611        4,347   

General and administrative

     4,341        3,451        12,484        10,103   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     13,792        11,667        39,969        32,188   
  

 

 

   

 

 

   

 

 

   

 

 

 

Loss from operations

     (748     (3,052     (3,807     (5,709

Other income (expense):

        

Interest income

     —          —          3        —     

Interest expense

     (129     (59     (331     (337

Change in fair value of warrants

     —          —          —          (158

Other expense

     (55     (42     (201     (58
  

 

 

   

 

 

   

 

 

   

 

 

 

Total other expense

     (184     (101     (529     (553
  

 

 

   

 

 

   

 

 

   

 

 

 

Loss before income taxes

     (932     (3,153     (4,336     (6,262

Income tax expense

     (21     (17     (51     (48
  

 

 

   

 

 

   

 

 

   

 

 

 

Net loss and comprehensive loss

   $ (953   $ (3,170   $ (4,387   $ (6,310
  

 

 

   

 

 

   

 

 

   

 

 

 

Net loss per common share:

        

Basic and diluted

   $ (0.02   $ (0.07   $ (0.10   $ (0.16

Weighted average common shares outstanding:

        

Basic and diluted

     46,214        43,836        44,992        39,238   

SEGMENT REPORTING

We operate under two business segments: Software and Telecom. The Software segment includes all monthly recurring revenue related to the delivery of our software applications, plus the associated professional services and setup fees and revenue related to quarterly minimum purchase commitments through the year ended 2013, from a related party reseller. The Telecom segment includes all voice and data long distance services provided to customers.


For segment reporting, we classify operating expenses as either “direct” or “indirect.” Direct expense refers to costs attributable solely to either selling and marketing efforts or research and development efforts. Indirect expense refers to costs that management considers to be overhead in running the business. Management evaluates expenditures for both selling and marketing and research and development efforts at the segment level without the allocation of overhead expenses, such as rent, utilities and depreciation on property and equipment. Operating segment revenues and profitability for the three and nine month ended September 30, 2012 and 2011 were as follows (in thousands):

 

     Three months ended September 30, 2012     Three months ended September 30, 2011  
     Software     Telecom     Consolidated     Software     Telecom     Consolidated  
     (Unaudited)     (Unaudited)     (Unaudited)     (Unaudited)     (Unaudited)     (Unaudited)  

Net revenue

   $ 13,976      $ 13,886      $ 27,862      $ 10,015      $ 12,137      $ 22,152   

Costs of revenue

     5,623        9,195        14,818        4,488        9,049        13,537   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     8,353        4,691        13,044        5,527        3,088        8,615   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross margin

     60 %      34 %      47 %      55 %      25 %      39 % 

Operating expenses:

            

Direct selling and marketing

     5,807        744        6,551        5,428        856        6,284   

Direct research and development

     2,252        —          2,252        1,412        —          1,412   

Indirect

     4,301        688        4,989        3,193        778        3,971   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

(Loss) income from operations

   $ (4,007   $ 3,259      $ (748   $ (4,506   $ 1,454      $ (3,052
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
     Nine months ended September 30, 2012     Nine months ended September 30, 2011  
     Software     Telecom     Consolidated     Software     Telecom     Consolidated  
     (Unaudited)     (Unaudited)     (Unaudited)     (Unaudited)     (Unaudited)     (Unaudited)  

Net revenue

   $ 39,106      $ 40,646      $ 79,752      $ 28,852      $ 36,378      $ 65,230   

Costs of revenue

     15,972        27,618        43,590        12,071        26,680        38,751   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     23,134        13,028        36,162        16,781        9,698        26,479   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross margin

     59 %      32 %      45 %      58 %      27 %      41 % 

Operating expenses:

            

Direct selling and marketing

     17,330        2,354        19,684        14,248        2,520        16,768   

Direct research and development

     5,954        —          5,954        3,886        —          3,886   

Indirect

     12,129        2,202        14,331        9,169        2,365        11,534   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

(Loss) income from operations

   $ (12,279   $ 8,472      $ (3,807   $ (10,522   $ 4,813      $ (5,709
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

RECONCILIATION of NON-GAAP MEASURES:

“EBITDAS” is Earnings Before deductions for Interest, Taxes, Depreciation and Amortization and Stock-Based Compensation. “Gross Margin Before deductions for Depreciation and Amortization and Stock-Based Compensation” is Gross Margin before deductions for Depreciation and Amortization and Stock-Based Compensation. Neither are measures of financial performance under generally accepted accounting principles (GAAP). EBITDAS and Gross Margin Before deductions for Depreciation and Amortization and Stock-Based Compensation are provided for the use of the reader in understanding our operating results and are not prepared in accordance with, nor does it serve as an alternative to GAAP measures and


may be materially different from similar measures used by other companies. While not a substitute for information prepared in accordance with GAAP, management believes that this information is helpful for investors to more easily understand our operating financial performance. Management also believes these measures may better enable an investor to form views of our potential financial performance in the future. These measures have limitations as analytical tools, and investors should not consider these measures in isolation or as a substitute for analysis of our results prepared in accordance with GAAP.

Reconciliation of EBITDAS to Net loss applicable to

common stockholders as it is presented on the Condensed Consolidated

Statements of Operations for inContact, Inc.

(in thousands - unaudited)

 

     Quarter ended September 30,     Nine Months ended September 30,  
     2012     2011     2012     2011  

Net loss

   $ (953   $ (3,170   $ (4,387   $ (6,310

Depreciation and amortization

     2,435        1,954        6,911        5,211   

Stock-based compensation

     530        550        1,380        1,167   

Interest, net

     129        59        328        337   

Income tax expense

     21        17        51        48   
  

 

 

   

 

 

   

 

 

   

 

 

 

EBITDAS

   $ 2,162      $ (590   $ 4,283      $ 453   
  

 

 

   

 

 

   

 

 

   

 

 

 

Reconciliation of Consolidated Gross Profit and Margin to Consolidated Gross Profit and Margin Before deductions for Depreciation and Amortization and Stock-Based Compensation, as presented in Segment Reporting for inContact, Inc.

(in thousands - unaudited)

 

     Quarter ended September 30, 2012     Quarter ended September 30, 2011  
     Gross Profit      Gross Margin     Gross Profit      Gross Margin  

Consolidated gross profit and margin

   $ 13,044         47   $ 8,615         39

Depreciation and amortization

     1,853         7     1,547         7

Stock-based compensation

     68         0     74         0
  

 

 

    

 

 

   

 

 

    

 

 

 

Consolidated gross profit and margin, excluding non-cash charges

   $ 14,965         54   $ 10,236         46
  

 

 

    

 

 

   

 

 

    

 

 

 

Reconciliation of Software Segment Gross Profit and Margin to Software Segment Gross Profit and Margin Before deductions for Depreciation and Amortization and Stock-Based Compensation, as presented in Segment Reporting for inContact, Inc.

(in thousands - unaudited)

 

     Quarter ended September 30, 2012     Quarter ended September 30, 2011  
     Gross Profit      Gross Margin     Gross Profit      Gross Margin  

Software segment gross profit and margin

   $ 8,353         60   $ 5,527         55

Depreciation and amortization

     1,626         12     1,274         13

Stock-based compensation

     67         0     71         1
  

 

 

    

 

 

   

 

 

    

 

 

 

Software segment gross profit and margin, excluding non-cash charges

   $ 10,046         72   $ 6,872         69
  

 

 

    

 

 

   

 

 

    

 

 

 


About inContact

inContact (NASDAQ:SAAS) helps contact centers around the globe create profitable customer experiences through its powerful portfolio of cloud contact center software solutions. The company’s services and solutions enable contact centers to operate more efficiently, optimize the cost and quality of every customer interaction, create new pathways to profit and ensure ongoing customer-centric business improvement and growth. To learn more, visit www.inContact.com.

Contacts:

Investor Contact:

Steven Pasko

Market Street Partners

415-445-3238

spasko@marketstreetpartners.com

General Contact:

Ryan Hamlin

inContact, Communications Director

801-320-3250

Ryan.Hamlin@inContact.com

inContact® is the registered trademark of inContact, Inc.