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, firstname.lastname@example.org, or General Contact: Mariann McDonagh, inContact, Chief Marketing Officer, 801-320-3347, mariann.mcdonagh@inContact.com
inContact Reports Second Quarter 2013 Financial Results
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