·

Cloud revenues increased 61 percent, Recurring revenues up 25 percent from 2014 first quarter

·

$13.3 million generated in cash from operations

·

Guidance maintained for 2015 cloud revenue and contracted annual recurring revenues 

·

Revenues: Total revenues were $89.5 million, an increase of 13 percent from the 2014 first quarter.  Recurring revenues, which include cloud subscriptions and support fees from on-premises licenses, increased 25 percent to $54.2 million and accounted for 61 percent of total revenues, up from 55 percent last year. Revenues from Cloud subscriptions were $21.0 million, an increase of 61 percent from $13.1 million in the first quarter of 2014. Licenses and hardware revenues were $21.6 million and Services revenues $13.6 million, compared to $22.8 million and $13.2 million, respectively, in the same quarter last year.

·

Orders: During the first quarter of 2015, Interactive Intelligence added 61 new customers, including 26 new cloud customers, compared to 54 new customers during the first quarter of last year.   Contracts signed over $250,000 increased to 40 in the first quarter of 2015 from 34 in the first quarter of last year. Contracted annual recurring revenue for cloud contracts was down year-over-year because of two very large orders received in the 2014 first quarter. Excluding these two contracts, growth in contracted annual recurring revenue was 44 percent year-over-year. Orders for on-premises licenses increased by 20 percent from the same quarter last year.

·

Operating Loss: GAAP operating loss was $4.8 million, in the first quarters of 2015 and 2014. Non-GAAP* operating loss was $1.1 million, compared to a loss of $1.0 million in the same quarter last year.

·

Net Loss: GAAP net loss was $3.5 million, or $0.16 per diluted share based on 21.4 million weighted average diluted shares outstanding, compared to GAAP net loss of $2.6 million, or $0.12 per diluted share based on 20.7 million weighted average diluted shares outstanding in the same quarter of 2014. The first quarter 2015 GAAP results included certain non-recurring tax credits of $1.8 million.

·

Balance sheet: As of March 31, 2015, the company had cash and cash equivalents and investments of $64.9 million, up from $61.7 million as of December 31, 2014.  Total deferred revenue increased to $111.6 million from $110.7 million at the end of last year.

·

Cash Flows: The company generated $13.3 million from operating activities in the first quarter, compared to $5.3 million in the 2014 quarter.  Capital expenditures totaled $6.3 million, primarily for office space expansion, office equipment, and data center infrastructure, and $5.6 million of PureCloud℠ development costs were capitalized.

·

The company launched PureCloud Collaborate℠, new collaboration cloud services designed to reduce costs, increase productivity and improve the user experience.

·

Interactive Intelligence featured in eWEEK, No Jitter and TheStreet.

·

Interactive Intelligence expanded its presence in Canada with the opening of an office in Toronto and a data center in Montreal.

Interactive Intelligence Group, Inc.

Condensed Consolidated Statements of Operations

(in thousands, except per share amounts)

(unaudited)

Three Months Ended

March 31,

2015

2014

Revenues:

Recurring

$              54,212

$              43,409

Licenses and hardware

Services

Total revenues

Costs of revenues (1)(2):

Costs of recurring

Costs of licenses and hardware

Costs of services

Total costs of revenues

Gross profit

Operating expenses (1)(2):

Sales and marketing

Research and development

General and administrative

Total operating expenses

Operating loss

Other income (expense):

Interest income, net

Other expense

Total other income (expense)

Loss before income taxes

Income tax benefit

Net loss

$              (3,459)

$              (2,564)

Net loss per share:

Basic

$                (0.16)

$                (0.12)

Diluted

Shares used to compute net loss per share:

Basic

Diluted

Interactive Intelligence Group, Inc.

Reconciliation of Supplemental Financial Information

(in thousands, except per share amounts)

(unaudited)

Three Months Ended

March 31,

2015

2014

GAAP recurring revenue gross profit, as reported

$           35,468

$           29,351

Purchase accounting adjustments

Non-cash stock-based compensation expense

Non-GAAP recurring revenue gross profit

$           35,925

$           29,663

Non-GAAP recurring revenue gross margin

GAAP licenses and hardware revenue gross profit, as reported

$           15,092

$           16,013

Acquired technology

Non-GAAP licenses and hardware revenue gross profit

$           15,269

$           16,062

Non-GAAP licenses and hardware revenue gross margin

GAAP services revenue gross profit as reported

$             2,391

$             2,676

Non-cash stock-based compensation expense

Non-GAAP services revenue gross profit

$             2,520

$             2,782

Non-GAAP services revenue gross margin

GAAP Gross Profit, as reported

$           52,951

$           48,040

Revenue adjustments

Acquired technology

Non-cash stock-based compensation expense

Non-GAAP gross profit

$           53,714

$           48,507

Non-GAAP gross margin

GAAP Operating loss, as reported

$           (4,771)

$           (4,813)

Purchase accounting adjustments

Non-cash stock-based compensation expense

Non-GAAP operating loss

$           (1,149)

$           (1,047)

Non-GAAP operating margin

-1.3%

-1.3%

GAAP Net loss, as reported

Purchase accounting adjustments

Non-cash stock-based compensation expense

Non-GAAP income tax expense adjustment

Non-GAAP net loss

$              (863)

$              (393)

GAAP Diluted loss per share, as reported

$             (0.16)

$             (0.12)

Purchase accounting adjustments

Non-cash stock-based compensation expense

Non-GAAP income tax expense adjustment

Non-GAAP diluted loss per share

$             (0.04)

$             (0.02)

Interactive Intelligence Group, Inc.

Condensed Consolidated Balance Sheets

(in thousands)

March 31,

December 31,

2015

2014

Assets

(unaudited)

Current assets:

Cash and cash equivalents

$                 54,277

$                 36,168

Short-term investments

Accounts receivable, net

Prepaid expenses

Other current assets

Total current assets

Long-term investments

Property and equipment, net

Capitalized software, net

Goodwill

Intangible assets, net

Other assets, net

Total assets

$               334,816

$               338,723

Liabilities and Shareholders' Equity

Current liabilities:

Accounts payable

$                 10,435

$                 10,236

Accrued liabilities

Accrued compensation and related expenses

Deferred licenses and hardware revenues

Deferred recurring revenues

Deferred services revenues

Total current liabilities

Long-term deferred revenues

Deferred tax liabilities, net

Other long-term liabilities

Total liabilities

Shareholders' equity:

Common stock

Additional paid-in-capital

Accumulated other comprehensive loss

Accumulated deficit

Total shareholders' equity

Total liabilities and shareholders' equity

$               334,816

$               338,723

Interactive Intelligence Group, Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

Three Months Ended

March 31,

2015

2014

Operating activities:

Net loss

$            (3,459)

$           (2,564)

Adjustments to reconcile net loss to net cash provided by operating activities:

Depreciation

Amortization

Other non-cash items

Stock-based compensation expense

Excess tax benefit from stock-based payment arrangements

 -

Deferred income taxes

Amortization (accretion) of investment premium (discount)

Loss on disposal of fixed assets

Changes in operating assets and liabilities:

Accounts receivable

Prepaid expenses

Other current assets

Accounts payable

Accrued liabilities

Accrued compensation and related expenses

Deferred licenses and hardware revenues

Deferred recurring revenues

Deferred services revenues

Other assets and liabilities

Net cash provided by operating activities

Investing activities:

Sales of available-for-sale investments

Purchases of available-for-sale investments

 -

Purchases of property and equipment

Capitalized software

Unrealized loss on investment

 -

Net cash provided by (used in) investing activities

Financing activities:

Proceeds from stock options exercised

Proceeds from issuance of common stock

Tax withholding on restricted stock awards

Issuance of retirement plan shares

 -

Excess tax benefit from stock-based payment arrangements

 -

Net cash provided by financing activities

Net increase (decrease) in cash and cash equivalents

Cash and cash equivalents, beginning of period

Cash and cash equivalents, end of period

$           54,277

$           51,990

Cash paid during the period for:

Interest

$                    -

$                    7

Income taxes

Other non-cash item:

Purchases of property and equipment payable at end of period