inContact Reports First Quarter 2013 Financial Results Company Achieves Year-Over-Year Software Revenue Growth of 31%, Consolidated Revenue Growth of 24% and Record Bookings PR Newswire SALT LAKE CITY, May 2, 2013 SALT LAKE CITY, May 2, 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 first quarter ended March 31, 2013. (Logo: http://photos.prnewswire.com/prnh/20120216/LA54560LOGO) "Q1 was the strongest bookings quarter in inContact's history, fueled by the increasing momentum of cloud adoption and our growing win rate in larger enterprise deals. We closed a total of 57 contracts, 39 with new customers and 18 with existing customers," said Paul Jarman, inContact CEO. "In addition, we continued to experience very positive momentum in our reseller channel during the quarter." Revenue Software segment revenue totaled $16.2 million for the quarter ended March 31, 2013, an increase of $3.9 million or 31% from $12.3 million in Q1 2012. Telecom segment revenue for Q1 2013 was $15.5 million for the quarter ended March 31, 2013, an increase of $2.2 million or 17% from $13.3 million in Q1 2012, driven by increases in software-related telecom revenue. This increase marks the tenth consecutive quarter that software and software related telecom revenue has increased. Consolidated revenue for the quarter ended March 31, 2013 was $31.6 million versus $25.6 million for the same period in 2012, an increase of 24%. Gross Margin The Q1 2013 Software segment gross margin was 60% versus 59% in Q1 2012, and excluding non-cash charges, non-GAAP Software segment gross margin was 72% for the quarter, versus 71% in Q1 2012. This increase in gross margin is principally attributable to revenue increases in 2013 as well as operational efficiencies and leverage in international infrastructure investments made in Q4 of 2011. First quarter 2013 Telecom segment gross margin was 35% versus 30% in Q1 2012. Consolidated gross margin percentage was 48% in the first quarter compared to 44% for the same period in 2012. Excluding non-cash charges, consolidated gross margin was 55% for the first quarter compared to 51% for the same period in 2012. Adjusted EBITDA Earnings before interest, taxes, depreciation, amortization and stock-based compensation ("Adjusted EBITDA") for the first quarter 2013 was $2.2 million versus $816,000 during the same period in 2012. 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). Net Loss Net loss for the quarter ended March 31, 2013 was $1.2 million, or ($0.02) per share, as compared to a net loss of $1.9 million or ($0.04) per share for the same period in 2012. This improvement in net results is due to the items mentioned above. Jarman concluded, "We are experiencing great traction across a wide variety of vertical markets, and are seeing an increasing frequency of large enterprises moving to the cloud. We are extremely encouraged by our strong start to the year and are well positioned to meet our guidance and growth commitments for the remainder of 2013." CONFERENCE CALL INFORMATION We will host a conference call to discuss our first quarter 2013 financial results later today at 4:30 p.m. Eastern time (1:30 p.m. Pacific). Dial-In Number: 1-866-952-7532 International: + 1-785-424-1834 Conference ID#: INCONTACT An audio file of the call will be available after May 3, 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 May 9, 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 - (Unaudited) (in thousands) March 31, December 31, 2013 2012 ASSETS Current assets: Cash and cash equivalents $ 44,771 $ 48,836 Restricted cash 81 81 Accounts and other receivables, net of allowance for uncollectible accounts of $1,038 and $831, 17,350 18,043 respectively Other current assets 3,398 3,278 Total current assets 65,600 70,238 Property and equipment, net 21,475 19,862 Intangible assets, net 1,103 1,156 Goodwill 4,086 4,086 Other assets 1,211 1,005 Total assets $ 93,475 $ 96,347 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Trade accounts payable $ 8,260 $ 7,247 Accrued liabilities 4,451 5,638 Accrued commissions 1,961 1,610 Current portion of deferred revenue 1,622 1,973 Current portion of long-term debt and 2,489 2,691 capital lease obligations Total current liabilities 18,783 19,159 Long-term debt and capital lease obligations 1,387 2,859 Deferred rent 396 383 Deferred revenue 2,785 1,958 Total liabilities 23,351 24,359 Total stockholders' equity 70,124 71,988 Total liabilities and stockholders' equity $ 93,475 $ 96,347 INCONTACT, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS and COMPREHENSIVE LOSS (Unaudited) (in thousands, except per share data) Three months ended March 31, 2013 2012 Net revenue: Software $ 16,172 $ 12,302 Telecom 15,473 13,254 Total net revenue 31,645 25,556 Costs of revenue: Software 6,435 5,090 Telecom 10,033 9,227 Total costs of revenue 16,468 14,317 Gross profit 15,177 11,239 Operating expenses: Selling and marketing 8,422 7,020 Research and development 2,771 1,837 General and administrative 5,045 4,094 Total operating expenses 16,238 12,951 Loss from operations (1,061) (1,712) Other income (expense): Interest expense (60) (94) Other expense (25) (47) Total other expense (85) (141) Loss before income taxes (1,146) (1,853) Income tax expense (17) (15) Net loss and comprehensive loss $ (1,163) $ (1,868) Net loss per common share: Basic and diluted $ (0.02) $ (0.04) Weighted average common shares outstanding: Basic and diluted 53,594 44,188 INCONTACT, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - (Unaudited) (in thousands) Three months ended March 31, 2013 2012 Cash flows from operating activities: Net loss $ (1,163) $ (1,868) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation of property and equipment 1,392 1,087 Amortization of software development costs 1,079 899 Amortization of intangible assets 53 80 Amortization of note financing costs 4 8 Interest accretion 2 4 Stock-based compensation 775 509 Loss on disposal of property and equipment 25 46 Changes in operating assets and liabilities: Accounts and other receivables, net (2,038) 141 Other current assets (120) (639) Other non-current assets (195) (65) Trade accounts payable 998 (183) Accrued liabilities (1,190) (542) Accrued commissions 351 238 Deferred rent 16 19 Deferred revenue 476 447 Net cash provided by operating activities 465 181 Cash flows from investing activities: Purchases of intangible assets - (93) Payments made for deposits (11) - Acquisition of assets (1,923) - Capitalized software development costs (1,476) (1,361) Purchases of property and equipment (695) (704) Net cash used in investing activities (4,105) (2,158) Cash flows from financing activities: Proceeds from exercise of options 1,164 580 Proceeds from sale of stock under employee stock 91 45 purchase plan Principal payments on long-term debt and capital leases (680) (690) Borrowings under the revolving credit notes - 3,000 Payments under the revolving credit notes (1,000) (2,500) Net cash (used in) provided by financing activities (425) 435 Net decrease in cash and cash equivalents (4,065) (1,542) Cash and cash equivalents at the beginning of the period 48,836 17,724 Cash and cash equivalents at the end of the period $ 44,771 $ 16,182 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 ended March 31, 2013 and 2012 were as follows (in thousands - unaudited): Quarter Ended March 31, 2013 Software Telecom Consolidated Net revenue $ 16,172 $ $ 15,473 31,645 Costs of revenue 6,435 10,033 16,468 Gross profit 9,737 5,440 15,177 Gross margin 60% 35% 48% Operating expenses: Direct selling and 6,963 992 7,955 marketing Direct research and 2,539 - 2,539 development Indirect 4,745 999 5,744 (Loss) income from $ $ $ operations (4,510) 3,449 (1,061) Quarter Ended March 31, 2012 Software Telecom Consolidated Net revenue $ 12,302 $ $ 13,254 25,556 Costs of revenue 5,090 9,227 14,317 Gross profit 7,212 4,027 11,239 Gross margin 59% 30% 44% Operating expenses: Direct selling and 5,805 843 6,648 marketing Direct research and 1,654 - 1,654 development Indirect 3,833 816 4,649 (Loss) income from $ $ $ operations (4,080) 2,368 (1,712) 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 Condensed Consolidated Statements of Operations for inContact, Inc. (in thousands - unaudited) Quarter Ended March 31, 2013 2012 Net loss and comprehensive loss $ (1,163) $ (1,868) Depreciation and amortization 2,524 2,066 Stock-based compensation 775 509 Interest income and expense, net 60 94 Income tax expense 17 15 EBITDAS $ 2,213 $ 816 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 March 31, Quarter Ended March 2013 31, 2012 Gross Gross Gross Gross Margin Margin Profit Profit Consolidated gross $ $ profit and margin 15,177 48% 44% 11,239 Depreciation and 1,921 6% 1,609 6% amortization Stock-based 149 0% 130 1% compensation Consolidated $ gross profit and $ 55% 51% margin, excluding 17,247 12,978 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 March 31, Quarter Ended March 2013 31, 2012 Gross Gross Gross Gross Margin Margin Profit Profit Software segment $ $ gross profit and 9,737 60% 59% margin 7,212 Depreciation and 1,707 11% 1,384 11% amortization Stock-based 146 1% 127 1% compensation Software segment $ gross profit and $ 72% 71% margin, excluding 11,590 8,723 non-cash charges About inContact inContact (NASDAQ: SAAS) is the cloud contact center software leader, helping organizations around the globe create high quality customer experiences. inContact is 100% focused on the cloud and is the only provider to combine cloud software with an enterprise-class telecommunications network for a complete customer interaction solution. Winner of Frost & Sullivan 2012 North American Cloud Company of the Year in Cloud Contact Center Solutions, inContact has deployed over 1,300 cloud contact center instances. 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, firstname.lastname@example.org, or General Contact: Mariann McDonagh, inContact, Chief Marketing Officer, 801-320-3347, mariann.mcdonagh@inContact.com
inContact Reports First Quarter 2013 Financial Results
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