inContact Reports Fourth Quarter and Full Year 2012 Financial Results

    inContact Reports Fourth Quarter and Full Year 2012 Financial Results

Quarterly Highlights Include Record Software Revenue, Up 42% Year-over-Year

PR Newswire

SALT LAKE CITY, Feb. 14, 2013

SALT LAKE CITY, Feb. 14, 2013 /PRNewswire/ --inContact, Inc. (NASDAQ:
SAAS),the leading provider of cloud contact center software and contact
center agent optimization tools, today reported financial results for the
fourth quarter and year ended December 31, 2012.

(Logo: http://photos.prnewswire.com/prnh/20120216/LA54560LOGO)

Said Paul Jarman, inContact CEO, "It was another record quarter for inContact
and we closed 51 new customers and 11 expansions for a total of 62 contracts.
In addition, during the quarter, we added 2 new Fortune 500 customers and
booked the largest deal in the company's history."

Continued Jarman, "2012 was a great year for inContact driven by growth in the
following key areas: new bookings, as we continue our focus on sales and
marketing, revenue from existing accounts, as our "land and expand strategy"
delivered strong results, and customer retention, as the recurring revenue
model continues to demonstrate its true power. These three growth pillars
combined to create a powerful result in 2012, giving us a software growth rate
for the full year 2012 of 37%."

Revenue

Consolidated revenue for the quarter ended December 31, 2012 was $30.7 million
versus $23.8 million for the same period in 2011. This record consolidated
revenue reflects an increase of $4.6 million in Software segment revenue and
an increase of $2.4 million in Telecom segment revenue over the same period in
2011. Software segment revenue totaled $15.6 million for the quarter ended
December 31, 2012, an increase of 42% from Q4 2011 and the largest organic
quarterly sequential increase ever. Telecom segment revenue totaled $15.1
million for the quarter ended December 31, 2012, an increase of 19% from Q4
2011, driven by increases in software-related telecom revenue. This increase
marks the ninth consecutive quarter that software and software related telecom
revenue has increased.

For the year ended December 31, 2012, Software segment revenue totaled $54.7
million, an increase of 37% from $39.9 million for 2011. For the year ended
December 31, 2012, Telecom segment revenue totaled $55.8 million, an increase
of 14% from $49.1 million for 2011

Gross Margin

The Q4 Software segment gross margin was 60% versus 56% in Q4 2011, and
excluding non-cash charges, non-GAAP Software segment gross margin was 72% for
the quarter, versus 68% in Q4 2011. This increase in gross margin is
principally attributable to revenue increases in 2012 as well as operational
efficiencies and leverage in international infrastructure investments made in
Q4 of 2011. Fourth quarter 2012 Telecom segment gross margin was 34% versus
30% in Q4 2011.

Consolidated gross margin percentage was 47% in the fourth quarter compared to
42% for the same period in 2011. Excluding non-cash charges, consolidated
gross margin was 54% for the fourth quarter compared to 48% for the same
period in 2011.

Net Results

GAAP net loss for the quarter ended December 31, 2012 was $793,000, or ($0.01)
per share, as compared to a net loss of $3.1 million, or ($0.07) per share for
the same period in 2011. This decrease in net loss is primarily due to the
combination of increased revenues and improved margins.

For the full year ended December 31, 2012, the Company reported a GAAP net
loss of $5.2 million versus a net loss of $9.4 million for 2011.

Adjusted EBITDA

Earnings before interest, taxes, depreciation, amortization and stock-based
compensation ("Adjusted EBITDA") for the fourth quarter was $2.4 million
versus ($761,000) during the same period in 2011. Our increase in Adjusted
EBITDA is primarily due to the increase in margins discussed above. Adjusted
EBITDA is a non-GAAP measure management believes provides important insight
into our operating results (see reconciliation of non-GAAP measures below).

Jarman concluded, "We are pleased to have achieved the high end of our market
guidance in 2012 and believe these results have established the foundation for
a strong growth trajectory for 2013. We've made significant progress over the
past year in supporting our resellers, expanding sales and marketing
initiatives, developing cutting-edge innovation and delivering unmatched
customer satisfaction. This progress, combined with our cloud market
leadership, positions us extremely well throughout 2013 and beyond, as the
cloud contact center market continues to accelerate."

CONFERENCE CALL INFORMATION

We will host a conference call to discuss our fourth quarter and year ended
2012 financial results later today, February 14^th, 2013, at 4:30 p.m. Eastern
time (1:30 p.m. Pacific).

Dial-in Number: 1-866-952-7532
International Dial-in Number: + 1-785-424-1834
Conference ID#: INCONTACT

An audio file of the call will be available after February 16, 2013 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 February 21, 2013:

Toll-free replay number: 1-877-870-5176
International replay number: + 1-858-384-5517
Replay Pin Number: 12329

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
(in thousands)
                                        December 31,        December 31,
                                        2012                2011
ASSETS                                  (Unaudited)
Current assets:
Cash and cash equivalents               $     48,836   $     17,724
Restricted cash                         81                  246
Accounts and other receivables, net of
allowance for uncollectible
accounts of $831 and $491 respectively  18,043              12,916
Other current assets                    3,278               2,526
Total current assets                    70,238              33,412
Property and equipment, net             19,862              18,685
Intangible assets, net                  1,156               1,394
Goodwill                                4,086               4,086
Other assets                            1,005               837
Total assets                            $     96,347   $     58,414
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Trade accounts payable                  $      7,247  $      7,180
Accrued liabilities                     3,820               2,769
Accrued commissions                     1,610               1,291
Current portion of deferred revenue     1,973               1,056
Current portion of long-term debt and   2,691               2,831
capital lease obligations
Total current liabilities               17,341              15,127
Long-term debt and capital lease        2,859               5,964
obligations
Deferred rent                           383                 161
Deferred revenue                        1,958               946
Total liabilities                       22,541              22,198
 Total stockholders' equity  73,806              36,216
 Total liabilities and       $     96,347   $     58,414
stockholders' equity



INCONTACT, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
                    Quarter ended December 31,      Year ended December 31,
                    2012           2011             2012           2011
                    (Unaudited)    (Unaudited)      (Unaudited)
Net revenue:
Software            $          $          $          $     
                    15,599        11,018          54,705         39,870
Telecom             15,133         12,737           55,779         49,115
Total net revenue   30,732         23,755           110,484        88,985
Costs of revenue:
Software            6,162          4,869            22,134         16,940
Telecom             10,024         8,957            37,642         35,637
Total costs of      16,186         13,826           59,776         52,577
revenue
Gross profit        14,546         9,929            50,708         36,408
Operating expenses:
Selling and         7,717          6,825            28,591         24,563
marketing
Research and        2,790          2,007            9,401          6,354
development
General and         4,656          3,987            17,140         14,090
administrative
Total operating     15,163         12,819           55,132         45,007
expenses
Loss from           (617)          (2,890)          (4,424)        (8,599)
operations
Other income
(expense):
Interest income     -              1                3              1
Interest expense    (33)           (170)            (364)          (507)
Change in fair      -              -                -              (158)
value of warrants
Other expense       (74)           (33)             (275)          (91)
Total other expense (107)          (202)            (636)          (755)
Loss before income  (724)          (3,092)          (5,060)        (9,354)
taxes
Income tax expense  (69)           (26)             (120)          (74)
Net loss            $        $          $         $     
                    (793)         (3,118)         (5,180)         (9,428)
Net loss per common
share:
Basic and diluted   $        $         $        $     
                    (0.01)         (0.07)          (0.11)           (0.23)
Weighted average common shares
outstanding:
Basic and diluted   53,410         43,980           47,108         40,434
Diluted             53,410         43,980           47,108         40,434



INCONTACT, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
                                                     Year ended December 31,
                                                     2012            2011
                                                     (Unaudited)
Cash flows from operating activities:
Net loss                                             $   (5,180)  $ (9,428)
Adjustments to reconcile net loss to net cash from
(used in) operating activities:
Depreciation of property and equipment               5,047           3,504
Amortization of software development costs           4,133           2,994
Amortization of intangible assets                    238             544
Amortization of note financing costs                 29              61
Interest accretion                                   9               16
Stock-based compensation                             1,967           1,431
Warrants and stock issued for services               -               67
Change in fair value of warrants                     -               158
Loss on disposal of property and equipment           274             95
Intangible assets written off                        133             -
Changes in operating assets and liabilities:
Accounts and other receivables, net                  (5,178)         (3,522)
Other current assets                                 (758)           (405)
Other non-current assets                             (144)           (375)
Trade accounts payable                               92              2
Accrued liabilities                                  1,245           411
Accrued commissions                                  319             233
Deferred rent                                        78              (88)
Deferred revenue                                     1,929           1,070
Net cash from (used in) operating activities         4,233           (3,232)
Cash flows from investing activities:
Gross decrease in restricted cash                    165             -
Contingent purchase price payments                   -               (135)
Purchase of intangible assets                        (133)           -
Payments made for deposits                           (23)            (98)
Proceeds from deposits                               -               181
Capitalized software development costs               (5,504)         (4,753)
Purchases of property and equipment                  (3,737)         (5,217)
Net cash used in investing activities                (9,232)         (10,022)
Cash flows from financing activities:
Proceeds from issuance of common stock               37,475          23,865
Offering costs payments                              (214)           (32)
Proceeds from exercise of options and warrants       3,262           1,182
Proceeds from sale of stock under employee stock     280             225
purchase plan
Principal payments on long-term debt and capital     (3,163)         (2,234)
leases
Borrowings under promissory note                     -               2,500
Payment of debt financing fees                       (29)            (79)
Borrowings under the revolving credit notes          7,000           12,730
Payments under the revolving credit notes            (8,500)         (17,500)
Net cash from financing activities                   36,111          20,657
Net increase (decrease) in cash and cash equivalents 31,112          7,403
Cash and cash equivalents at the beginning of the    17,724          10,321
year
Cash and cash equivalents at the end of the year     $   48,836   $ 17,724

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
July 2014, 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 quarters and years ended
December 31, 2012 and 2011 were as follows (in thousands):

            Quarter Ended December 31, 2012         Year Ended December 31, 2012
            Software     Telecom      Consolidated  Software     Telecom      Consolidated
            (Unaudited)  (Unaudited)  (Unaudited)   (Unaudited)  (Unaudited)  (Unaudited)
Net         $        $        $        $        $        $     
revenue     15,599      15,133       30,732      54,705      55,779      110,484
Costs of    6,162        10,024       16,186        22,134       37,642       59,776
revenue
Gross       9,437        5,109        14,546        32,571       18,137       50,708
profit
Gross       60%          34%          47%           60%          33%          46%
margin
Operating
expenses:
Direct
selling     6,428        853          7,281         23,758       3,207        26,965
and
marketing
Direct
research    2,548        -            2,548         8,502        -            8,502
and
development
Indirect    4,559        775          5,334         16,688       2,977        19,665
Income
(loss)      $        $       $        $         $        $     
from        (4,098)     3,481         (617)    (16,377)    11,953       (4,424)
operations
            Quarter Ended December 31, 2011         Year Ended December 31, 2011
            Software     Telecom      Consolidated  Software     Telecom      Consolidated
            (Unaudited)  (Unaudited)  (Unaudited)
Net         $        $        $        $        $        $     
revenue     11,018      12,737       23,755      39,870      49,115       88,985
Costs of    4,869        8,957        13,826        16,940       35,637       52,577
revenue
Gross       6,149        3,780        9,929         22,930       13,478       36,408
profit
Gross       56%          30%          42%           58%          27%          41%
margin
Operating
expenses:
Direct
selling     5,561        901          6,462         19,810       3,421        23,231
and
marketing
Direct
research    1,820        -            1,820         5,706        -            5,706
and
development
Indirect    3,565        972          4,537         12,734       3,336        16,070
Income
(loss)      $        $       $        $         $       $     
from        (4,797)     1,907        (2,890)     (15,320)    6,721        (8,599)
operations

RECONCILIATION of NON-GAAP MEASURES:

"Adjusted EBITDA" 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). Adjusted
EBITDA 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 Adjusted EBITDA to Net loss applicable to
common stockholders as it is presented on the Consolidated
Statements of Operations for inContact, Inc.
(in thousands - unaudited)
                                 Quarter ended December 31,
                                 2012                  2011
Net loss                         $       (793)  $      (3,118)
Depreciation and amortization    2,507                 1,831
Stock-based compensation         587                   331
Interest income and expense, net 33                    169
Income tax expense               69                    26
Adjusted EBITDA                  $       2,403   $        (761)
                                 Year ended December 31,
                                 2012                  2011
Net loss                         $      (5,180)   $      (9,428)
Depreciation and amortization    9,418                 7,042
Stock-based compensation         1,967                 1,498
Interest income and expense, net 361                   506
Income tax expense               120                   74
Adjusted EBITDA                  $       6,686   $        (308)



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 December      Quarter ended December
                    31, 2012                    31, 2011
                    Gross Profit     Gross      Gross          Gross
                                     Margin     Profit         Margin
Consolidated gross  $             47%        $          42%
profit and margin   14,546                     9,929
Depreciation and   1,904            6%         1,387          6%
amortization
Stock-based        99               0%         85             0%
compensation
Consolidated gross
profit and margin,  $             54%        $           48%
 excluding       16,549                     11,401
non-cash charges
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 December      Quarter ended December
                    31, 2012                    31, 2011
                    Gross Profit     Gross      Gross          Gross
                                     Margin     Profit         Margin
Software segment    $                       $    
gross profit and    9,437           60%        6,149         56%
margin
Depreciation and    1,687            11%        1,271          12%
amortization
Stock-based         96               1%         81             1%
compensation
Software segment
gross profit and    $                        $    
margin,             11,220          72%        7,501         68%
 excluding
non-cash charges

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.

inContact® is the registered trademark of inContact, Inc.



SOURCE inContact, Inc.

Website: http://www.inContact.com
Contact: Investor Contact, Steven Pasko, Market Street Partners, 415-445-3238,
spasko@marketstreetpartners.com, or General Contact, Mariann McDonagh,
inContact, Chief Marketing Officer, 801-320-3347,
mariann.mcdonagh@inContact.com
 
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