inContact Reports Second Quarter 2013 Financial Results

           inContact Reports Second Quarter 2013 Financial Results

Company Achieves Record Bookings, Year-Over-Year Software Revenue Growth of
26% and Consolidated Revenue Growth of 19%

PR Newswire

SALT LAKE CITY, Aug. 8, 2013

SALT LAKE CITY, Aug. 8, 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
second quarter ended June30, 2013.

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

Said Paul Jarman, inContact CEO, "I'm pleased to announce that Q2 was the
strongest bookings quarter in the company's history, up 46 percent over what
was a very strong comparable quarter in Q2 2012. During the quarter, we closed
a record number of 83 contracts, 54 with new logo customers and 29 expansion
deals. These strong bookings results have been fueled by our continued
investment in demand generation marketing and sales expansion. As the cloud
market becomes increasingly mainstream, we see larger and larger enterprise
customers adopting the cloud, which is another driver of our extremely strong
bookings. We believe that the cloud contact center market is undergoing a
meaningful shift into a new phase of adoption and inContact is benefiting from
these powerful market dynamics."

Revenue

Software segment revenue totaled $16.2 million for the quarter ended June30,
2013, an increase of $3.4 million or 26% from $12.8 million in Q2 2012.
Telecom segment revenue for Q2 2013 was $14.9 million for the quarter ended
June30, 2013, an increase of $1.6 million or 12% from $13.3 million in Q2
2012, driven by increases in software-related telecom revenue.

Consolidated revenue for the quarter ended June30, 2013 was $31.1 million
versus $26.1 million for the same period in 2012, an increase of 19%.

For the six months ended June 30, 2013, Software segment revenue totaled $32.4
million, an increase of 29% from $25.1 million for 2012. For the six months
ended June 30, 2013, Telecom segment revenue totaled $30.3 million, an
increase of 14% from $26.6 million for 2012.

Gross Margin

The Q2 2013 Software segment gross margin was 61% versus 59% in Q2 2012, and
excluding non-cash charges, non-GAAP Software segment gross margin was 73% for
the quarter, versus 72% in Q2 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. Second quarter 2013 Telecom segment gross margin was 35% versus
31% in Q2 2012.

Consolidated gross margin percentage was 49% in the second quarter compared to
45% for the same period in 2012. Excluding non-cash charges, consolidated
gross margin was 56% for the second quarter compared to 52% for the same
period in 2012.

Adjusted EBITDA

Earnings before interest, taxes, depreciation, amortization and stock-based
compensation ("Adjusted EBITDA") for the second quarter 2013 was $1.9 million
versus $1.1 million 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 June30, 2013 was $1.8 million, or ($0.03) per
share, as compared to a net loss of $1.8 million or ($0.04) per share for the
same period in 2012.

Jarman concluded, "We have a clear leadership position in a market that is
rapidly growing, and have the right innovative products that contact centers
need to address their biggest challenges. We are winning in a variety of
promising new vertical markets and are having increasing success in large
enterprise deals. We have a strong and growing distribution channel to help
us reach the broadest possible audience for our award-winning portfolio
solutions. These factors give us great confidence in our strategy and in our
long-term growth opportunity."

CONFERENCE CALL INFORMATION

We will host a conference call to discuss our second quarter 2013 financial
results later today at 4:30 p.m. Eastern time (1:30 p.m. Pacific).

Dial-In Number: 1-866-952-1906
International: + 1-785-424-1825
Conference ID#: INCONTACT

An audio file of the call will be available after August 10, 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 August 15, 2013.

Toll-free replay number:1-877-870-5176
International replay number:+ 1-858-384-5517
Replay Pin Number:12330

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)
                                               June 30,     December 31,
                                               2013         2012
ASSETS
Current assets:
 Cash and cash equivalents                    $  51,069   $     48,836
 Restricted cash                              81           81
 Accounts and other receivables, net of
allowance for uncollectible accounts of $1,161 18,128       18,043
and $831, respectively
 Other current assets                         3,426        3,278
  Total current assets                       72,704       70,238
Property and equipment, net                    23,221       19,862
Intangible assets, net                         1,051        1,156
Goodwill                                       4,086        4,086
Other assets                                   1,355        1,005
  Total assets                               $ 102,417    $     96,347
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
 Trade accounts payable                       $   8,482  $      7,247
 Accrued liabilities                          5,278        5,638
 Accrued commissions                          2,030        1,610
 Current portion of deferred revenue          3,018        1,973
 Current portion of long-term debt and        3,606        2,691
capital lease obligations
  Total current liabilities                  22,414       19,159
Long-term debt and capital lease obligations   3,434        2,859
Deferred rent                                  405          383
Deferred revenue                               3,292        1,958
  Total liabilities                          29,545       24,359
  Total stockholders' equity                 72,872       71,988
  Total liabilities and stockholders' equity $ 102,417    $     96,347



INCONTACT, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS and COMPREHENSIVE LOSS
(Unaudited)
(in thousands, except per share data)
                                Three months            Six months
                                ended June 30,          ended June 30,
                                2013        2012        2013        2012
Net revenue:
 Software                      $ 16,185    $ 12,828    $ 32,357    $ 25,130
 Telecom                       14,898      13,312      30,371      26,566
  Total net revenue           31,083      26,140      62,728      51,696
Costs of revenue:
 Software                      6,344       5,259       12,779      10,349
 Telecom                       9,610       9,196       19,643      18,423
  Total costs of revenue      15,954      14,455      32,422      28,772
Gross profit                    15,129      11,685      30,306      22,924
Operating expenses:
 Selling and marketing         9,008       6,898       17,430      13,918
 Research and development      2,964       2,279       5,735       4,116
 General and administrative    4,811       4,049       9,856       8,143
  Total operating expenses    16,783      13,226      33,021      26,177
   Loss from operations      (1,654)     (1,541)     (2,715)     (3,253)
Other income (expense):
 Interest income               -           3           -           3
 Interest expense              (90)        (108)       (150)       (202)
 Other expense                 -           (99)        (25)        (146)
  Total other expense         (90)        (204)       (175)       (345)
   Loss before income taxes  (1,744)     (1,745)     (2,890)     (3,598)
Income tax expense              (32)        (15)        (49)        (30)
   Net loss and              $ (1,776)   $ (1,760)   $ (2,939)   $ (3,628)
comprehensive loss
Net loss per common share:
Basic and diluted             $  (0.03)  $  (0.04)  $  (0.05)  $  (0.08)
Weighted average common shares
outstanding:
 Basic and diluted             54,196      44,561      53,897      44,374



INCONTACT, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - (Unaudited)
(in thousands)
                                                     Six months ended June 30,
                                                     2013           2012
Cash flows from operating activities:
 Net loss                                           $ (2,939)      $ (3,628)
 Adjustments to reconcile net loss to net cash
provided by operating activities:
 Depreciation of property and equipment           2,929          2,382
 Amortization of software development costs       2,312          1,961
 Amortization of intangible assets                105            133
 Amortization of note financing costs             9              18
 Interest accretion                               3              8
 Stock-based compensation                         1,511          850
 Loss on disposal of property and equipment       87             146
 Changes in operating assets and liabilities:
  Accounts and other receivables, net            (2,816)        (766)
  Other current assets                           (148)          (616)
   Other non-current assets                       (339)          (147)
   Trade accounts payable                         741            494
   Accrued liabilities                            (366)          426
  Accrued commissions                            420            247
  Deferred rent                                  28             40
   Deferred revenue                               2,379          1,182
   Net cash provided by operating activities 3,916          2,730
Cash flows from investing activities:
 Decrease in restricted cash                        -              165
 Purchase of intangible assets                      -              (125)
 Payments made for deposits                         (11)           (19)
 Acquisition of assets                              (2,296)        -
 Capitalized software development costs             (2,880)        (2,760)
 Purchases of property and equipment                (3,017)        (2,473)
   Net cash used in investing activities      (8,204)        (5,212)
Cash flows from financing activities:
 Proceeds from exercise of options                  4,849          2,078
 Proceeds from sale of stock under employee stock   194            121
purchase plan
 Borrowings under term loan                         4,000          -
 Payment of debt financing fees                     (43)           (29)
 Principal payments on long-term debt and capital   (1,479)        (1,417)
leases
 Borrowings under the revolving credit notes        -              6,000
 Payments under the revolving credit notes          (1,000)        (5,500)
    Net cash (used in) provided by financing   6,521          1,253
activities
    Net decrease in cash and cash equivalents  2,233          (1,229)
Cash and cash equivalents at the beginning of the    48,836         17,724
period
Cash and cash equivalents at the end of the period   $ 51,069       $ 16,495

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 June30,
2013 and 2012 were as follows (in thousands - unaudited):

             Three months ended June 30, 2013  Three months ended June 30,
                                               2012
             Software   Telecom  Consolidated  Software  Telecom  Consolidated
Net revenue  $ 16,185   $        $         $ 12,828  $        $    
                        14,898   31,083                  13,312   26,140
Costs of     6,344      9,610    15,954        5,259     9,196    14,455
revenue
Gross profit 9,841      5,288    15,129        7,569     4,116    11,685
Gross margin 61%        35%      49%           59%       31%      45%
Operating
expenses:
 Direct
selling and  7,560      947      8,507         5,718     767      6,485
marketing
 Direct
research and 2,714      -        2,714         2,048     -        2,048
development
 Indirect   4,708      854      5,562         3,995     698      4,693
(Loss)      $          $       $         $         $       $    
income from  (5,141)   3,487    (1,654)       (4,192)  2,651    (1,541)
operations
             Six months ended June 30, 2013    Six months ended June 30, 2012
             Software   Telecom  Consolidated  Software  Telecom  Consolidated
Net revenue  $ 32,357   $        $         $ 25,130  $        $    
                        30,371   62,728                  26,566   51,696
Costs of     12,779     19,643   32,422        10,349    18,423   28,772
revenue
Gross profit 19,578     10,728   30,306        14,781    8,143    22,924
Gross margin 61%        35%      48%           59%       31%      44%
Operating
expenses:
 Direct
selling and  14,523     1,938    16,461        11,523    1,610    13,133
marketing
 Direct
research and 5,253      -        5,253         3,702     -        3,702
development
 Indirect   9,454      1,853    11,307        7,828     1,514    9,342
(Loss)      $          $       $         $         $       $    
income from  (9,652)   6,937    (2,715)       (8,272)  5,019    (3,253)
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 Condensed Consolidated
Statements of Operations for inContact, Inc.
(in thousands - unaudited)
                             Quarter ended June 30,     Six Months ended June
                                                        30,
                             2013           2012        2013         2012
Net loss and                 $ (1,776)      $ (1,760)   $ (2,939)    $ (3,628)
comprehensive loss
Depreciation and             2,822          2,410       5,346        4,476
amortization
Stock-based                  736            341         1,511        850
compensation
Interest income and          90             105         150          199
expense, net
Income tax expense           32             15          49           30
EBITDAS                      $ 1,904       $ 1,111    $ 4,117     $ 1,927
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 June 30,     Quarter ended June 30,
                             2013                       2012
                             Gross          Gross       Gross        Gross
                             Profit         Margin      Profit       Margin
Consolidated gross           $ 15,129       49%         $ 11,685     45%
profit and margin
Depreciation and             2,160          7%          1,852        7%
amortization
Stock-based                  103            0%          78           0%
compensation
Consolidated gross profit
and margin, excluding        $ 17,392       56%         $ 13,615     52%
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 June 30,     Quarter ended June 30,
                             2013                       2012
                             Gross          Gross       Gross        Gross
                             Profit         Margin      Profit       Margin
Software segment gross       $ 9,841        61%         $ 7,569      59%
profit and margin
Depreciation and             1,950          12%         1,611        13%
amortization
Stock-based                  100            1%          75           1%
compensation
Software segment gross
profit and margin,           $ 11,891       73%         $ 9,255      72%
excluding 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,
spasko@marketstreetpartners.com, or General Contact: Mariann McDonagh,
inContact, Chief Marketing Officer, 801-320-3347,
mariann.mcdonagh@inContact.com
 
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