Interactive Intelligence Group Inc. (Nasdaq: ININ), a global
provider of unified IP business communications solutions, has
announced operating results for the three and nine months ended
Sept. 30, 2011.
The company reported revenues of $52.1 million, an increase of
25 percent over the third quarter of 2010. On a generally accepted
accounting principles (GAAP) basis, 2011 third-quarter operating
income was $4.7 million, net income was $3.3 million, and diluted
earnings per share (EPS) was $0.16, compared to operating income of
$5.6 million, net income of $3.5 million, and EPS of $0.19 in the
same quarter last year.
On a non-GAAP* basis, operating income was $6.6 million, net
income was $5.8 million, and EPS was $0.29 in the third quarter of
2011, compared to operating income of $6.7 million, net income of
$7.0 million, and EPS of $0.37 in the third quarter of 2010.
Non-GAAP operating income, net income, and EPS in the 2011 third
quarter excluded the following: purchase accounting adjustments of
$476,000, or EPS of $0.02; charges for stock-based compensation of
$1.4 million, or EPS of $0.07; and non-cash income tax expense of
$636,000, or EPS of $0.04. For the third quarter of 2010 these
results excluded charges for stock-based compensation of $1.0
million, or EPS of $0.06; and non-cash income tax expense of $2.4
million, or EPS of $0.12.
Cloud-based orders received during the quarter more than doubled
from the 2010 third quarter, increasing to 31 percent of total
orders from 18 percent in the same quarter last year. Cloud-based
transactions were entered into with 23 customers, up from nine in
the 2010 third quarter. If the mix of premise- and cloud-based
contracts had been the same in the third quarter of 2011 as it was
in the third quarter of 2010, financial results for the third
quarter of 2011 would have shown increases in reported results of
approximately $4 million in revenues, $3 million in operating
income, and $0.15 in EPS.
“There is clearly a market shift toward cloud-based contact
centers and we are focused on extending our leadership position in
the high end of this segment,” said Interactive Intelligence
founder and CEO, Dr. Donald E. Brown. “We manage our business based
on winning a customer and the long-term value of that customer. We
look beyond the short-term revenue recognition effects of these
transactions as we continue the strategy of building an increasing
recurring revenue stream.
“We signed the largest deal in the company’s history during this
third quarter, a $10 million five-year cloud contract with a peak
of 4,200 agent seats and additional opportunities for
expansion. We view this transaction with a recognized
world-class vendor as yet another demonstration of both the breadth
and architectural strength of our offering, particularly at the
upper end of the market.”
Cash and investment balances as of Sept. 30, 2011 were $91.0
million. The company has no debt. During the quarter, the company
used cash of $9.3 million to acquire CallTime Solutions, a reseller
of the Interactive Intelligence solutions throughout Australia and
New Zealand.
Deferred revenues increased to $65.7 million and unrecognized
future cloud contracts increased to over $29.5 million at Sept. 30,
2011 from $62.1 million in recorded deferred revenues and $22.0
million in future cloud revenues at June 30, 2011.
Results for the first nine months of 2011 included:
- Total revenues of $151.9 million, a 31
percent increase from $115.7 million in 2010.
- GAAP operating income of $15.1 million,
up from $14.3 million in 2010.
- Non-GAAP operating income of $20.6
million, compared to $17.3 million in 2010.
- GAAP net income of $10.2 million or EPS
of $0.51, compared to $7.8 million, or EPS of $0.42 in 2010.
- Non-GAAP net income of $17.6 million,
or EPS of $0.88, compared to $16.1 million, or EPS of $0.86 in
2010.
For the first nine months of 2011, non-GAAP net income and EPS
excluded charges for purchase accounting adjustment of $1.5
million, or EPS of $0.07; stock-based compensation of $4.0 million,
or EPS of $0.20; and non-cash income tax expense of $1.9 million,
or EPS of $0.10. For the first nine months of 2010, non-GAAP net
income and EPS excluded charges for stock-based compensation of
$3.0 million, or EPS of $0.16; and non-cash income tax expense of
$5.2 million, or EPS of $0.28.
In the third quarter of 2011 research firm, Frost &
Sullivan, honored Interactive Intelligence with its “Company of the
Year, Contact Center Systems, North America, 2011” award.
Interactive Intelligence will host a conference call Oct. 24,
2011 at 4:30 p.m. Eastern time (EDT) featuring Dr. Brown and the
company’s CFO, Stephen R. Head. A live Q&A session will follow
opening remarks.
To access the teleconference, please dial 1 877.324.1969 at
least five minutes prior to the start of the call. Ask for the
teleconference by the following name: "Interactive Intelligence
third-quarter earnings call."
The teleconference will also be broadcast live on the company's
investor relations' page at http://investors.inin.com. An archive
of the teleconference will be posted following the call.
About Interactive IntelligenceInteractive Intelligence
Group Inc. (Nasdaq: ININ) is a global provider of unified business
communications solutions for contact center automation, enterprise
IP telephony, and business process automation. The company’s
solutions, which can be deployed via an on-premise or hosted model,
include vertical-specific applications for insurance and
collections. Interactive Intelligence was founded in 1994 and has
more than 4,000 customers worldwide. The company is among Forbes
Magazine’s 2011 Best Small Companies in America, and Software
Magazine’s 2011 Top 500 Global Software and Services Suppliers. It
employs approximately 1,000 people and is headquartered in
Indianapolis, Indiana. The company has offices throughout North
America, Latin America, Europe, Middle East, Africa and Asia
Pacific. Interactive Intelligence can be reached at +1 317.872.3000
or info@inin.com; on the Net: www.inin.com.
*Non-GAAP MeasuresThe non-GAAP measures shown in this release
include revenue which was not recognized on a GAAP basis due to
purchase accounting adjustments and exclude non-cash stock-based
compensation expense for stock options, the amortization of certain
intangible assets related to acquisitions by the company and
non-cash income tax expense. Reconciliations of these non-GAAP
measures to the most directly comparable GAAP measures are included
with the financial information included in this press release.
These measures are not in accordance with, or an alternative for,
GAAP and may be different from non-GAAP measures used by other
companies. Stock-based compensation expense and amortization of
intangibles related to acquisitions are non-cash and income tax
expense is primarily non-cash. Management believes that the
presentation of non-GAAP results, when shown in conjunction with
corresponding GAAP measures, provides useful information to
management and investors regarding financial and business trends
related to the company's results of operations. Further, management
believes that these non-GAAP measures improve management's and
investors' ability to compare the company's financial performance
with other companies in the technology industry. Because
stock-based compensation expense, non-cash income tax expense
amounts and amortization of intangibles related to acquisitions can
vary significantly between companies, it is useful to compare
results excluding these amounts. Management also uses financial
statements that exclude stock-based compensation expense related to
stock options, non-cash income tax amounts and amortization of
intangibles related to acquisitions for its internal budgets.
This release may contain certain forward-looking statements that
involve a number of risks and uncertainties. Among the factors that
could cause actual results to differ materially are the following:
rapid technological changes in the industry; the company's ability
to maintain profitability; to manage successfully its growth; to
manage successfully its increasingly complex third-party
relationships resulting from the software and hardware components
being licensed or sold with its solutions; to maintain successful
relationships with certain suppliers which may be impacted by the
competition in the technology industry; to maintain successful
relationships with its current and any new partners; to maintain
and improve its current products; to develop new products; to
protect its proprietary rights adequately; to successfully
integrate acquired businesses; and other factors described in the
company's SEC filings, including the company's latest annual report
on Form 10-K.
Interactive Intelligence is the owner of the marks INTERACTIVE
INTELLIGENCE, its associated LOGO and numerous other marks. All
other trademarks mentioned in this document are the property of
their respective owners.
Interactive Intelligence Group, Inc. Condensed
Consolidated Statements of Income (in thousands, except per
share amounts) Unaudited Three
Months Ended Nine Months Ended September 30,
September 30, 2011 2010 2011
2010 Revenues: Product $ 22,190 $ 20,671 $ 67,451 $ 54,772
Recurring 24,185 16,595 66,974 48,842 Services 5,765
4,565 17,426 12,051 Total revenues
52,140 41,831 151,851 115,665 Costs of
revenues: Product 6,689 6,198 19,277 16,499 Recurring 6,479 4,302
17,574 11,768 Services 4,158 2,465 11,789 6,783 Amortization of
intangible assets 35 16 105 48
Total cost of revenues 17,361 12,981 48,745
35,098 Gross profit 34,779 28,850
103,106 80,567 Operating expenses: Sales and
marketing 15,223 12,106 44,700 33,938 Research and development
9,243 7,193 26,104 20,563 General and administrative 5,326 3,935
16,445 11,784 Amortization of intangible assets 302 9
760 28 Total operating expenses 30,094
23,243 88,009 66,313 Operating income
4,685 5,607 15,097 14,254 Other income (expense): Interest income,
net 165 120 300 229 Other income (expense) 172 337
262 (1,028 ) Total other income (expense) 337
457 562 (799 ) Income before income taxes
5,022 6,064 15,659 13,455 Income tax expense 1,741
2,561 5,456 5,629 Net income $ 3,281 $ 3,503 $
10,203 $ 7,826 Net income per share: Basic $ 0.17 $
0.20 $ 0.55 $ 0.45 Diluted 0.16 0.19 0.51 0.42 Shares used
to compute net income per share: Basic 18,816 17,524 18,648 17,431
Diluted 19,946 18,695 19,890 18,731
Interactive
Intelligence Group, Inc. Reconciliation of Supplemental
Financial Information (in thousands, except per share
amounts) Unaudited Three Months Ended
Nine Months Ended September 30, September 30,
2011 2010 2011 2010 Net
income, as reported $ 3,281 $ 3,503 $ 10,203 $ 7,826 Purchase
accounting adjustments: Increase to revenues: Recurring 64 - 162 8
Services - 1 48 4 Reduction of operating expenses: Customer
Relationships 257 9 625 27 Technology 35 16 105 48 Non-compete
agreements 45 - 135 - Acquisition Costs 75 -
407 - Total 476 26 1,482 87
Non-cash stock-based compensation expense: Cost of recurring
revenues 119 68 328 159 Cost of services revenues 36 18 71 69 Sales
and marketing 458 332 1,283 974 Research and development 392 285
1,196 881 General and administrative 406 326
1,126 922 Total 1,411 1,029 4,004
3,005 Non-cash income tax expense 636 2,410
1,912 5,198
Non-GAAP net income $ 5,804 $
6,968 $ 17,601 $ 16,116
Operating income, as reported
$ 4,685 $ 5,607 $ 15,097 $ 14,254 Purchase accounting adjustments
476 26 1,482 87 Non-cash stock-based compensation expense
1,411 1,029 4,004 3,005
Non-GAAP operating
income $ 6,572 $ 6,662 $ 20,583 $ 17,346
Diluted EPS,
as reported $ 0.16 $ 0.19 $ 0.51 $ 0.42 Purchase accounting
adjustments 0.02 0.00 0.07 0.00 Non-cash stock-based compensation
expense 0.07 0.06 0.20 0.16 Non-cash income tax expense 0.04
0.12 0.10 0.28
Non-GAAP diluted EPS $
0.29 $ 0.37 $ 0.88 $ 0.86
Interactive Intelligence Group, Inc.
Condensed Consolidated Balance Sheets (in thousands)
September 30, December 31,
2011 2010 (unaudited) Assets Current
assets: Cash and cash equivalents $ 24,629 $ 48,300 Short-term
investments 44,162 37,582 Accounts receivable, net 43,020 36,130
Deferred tax assets, net 4,333 5,499 Prepaid expenses 12,292 7,456
Other current assets 4,258 4,989 Total
current assets 132,694 139,956 Long-term investments 22,230 -
Property and equipment, net 13,898 10,336 Deferred tax assets, net
1,580 2,765 Goodwill 23,914 11,371 Intangible assets, net 15,171
11,001 Other assets, net 1,091 803
Total assets $ 210,578 $ 176,232
Liabilities and Shareholders' Equity Current liabilities:
Accounts payable and accrued liabilities $ 16,017 $ 16,364 Accrued
compensation and related expenses 7,191 6,553 Deferred product
revenues 5,826 3,350 Deferred services revenues 49,867
43,281 Total current liabilities 78,901 69,548
Long-term deferred revenues 9,963 7,420 Other long-term liabilities
350 - Total liabilities 89,214
76,968 Shareholders' equity: Preferred
stock - - Common stock 189 182 Additional paid-in-capital 115,841
103,837 Accumulated other comprehensive loss (404 ) (290 ) Retained
earnings (accumulated deficit) 5,738 (4,465 )
Total shareholders' equity 121,364 99,264
Total liabilities and shareholders' equity $ 210,578
$ 176,232
Interactive Intelligence
Group, Inc. Condensed Consolidated Statements of Cash
Flows (in thousands) (unaudited)
Nine Months Ended
September 30, 2011 2010 Operating
activities: Net income $ 10,203 $ 7,826 Adjustments to
reconcile net income to net cash provided by operating activities:
Depreciation, amortization and other non-cash items 4,968 3,219
Stock-based compensation expense 4,004 3,002 Tax benefits from
stock-based payment arrangements (1,658 ) (4,528 ) Deferred income
tax 828 (56 ) Accretion of investment income (1,261 ) (407 )
Changes in operating assets and liabilities: - - Accounts
receivable (4,011 ) (325 ) Prepaid expenses (4,802 ) (1,778 ) Other
current assets 623 (1,104 ) Other assets (288 ) (82 ) Accounts
payable and accrued liabilities 760 7,143 Accrued compensation and
related expenses (2,597 ) 723 Deferred product revenues 2,445 (717
) Deferred services revenues 7,410 4,309
Net cash provided by operating activities 16,624
17,225
Investing activities:
Sales of available-for-sale investments 55,596 15,565 Purchases of
available-for-sale investments (83,083 ) (34,678 ) Purchases of
property and equipment (7,439 ) (3,540 ) Acquisition, net of cash
(13,376 ) - Net cash used in investing
activities (48,302 ) (22,653 )
Financing
activities: Proceeds from stock options exercised 5,962 1,830
Proceeds from issuance of common stock 387 261 Tax benefits from
stock-based payment arrangements 1,658 4,528
Net cash provided by financing activities 8,007
6,619 Net increase (decrease) in cash
and cash equivalents (23,671 ) 1,191 Cash and cash equivalents,
beginning of period 48,300 48,497 Cash
and cash equivalents, end of period $ 24,629 $ 49,688
Cash paid during the period for: Interest $ 2 $ 1
Income taxes 2,539 716
Other non-cash item: Purchases
of property and equipment payable at end of period $ 14 $ 22
Condensed Consolidated Statements of Income
- GAAP (in thousands, except per share amounts)
(unaudited) 2010 2011 Q1
Q2 Q3 Q4
Total Q1 Q2 Q3
Total Revenues: Product $ 15,786 $ 18,315 $
20,671 $ 25,045 $ 79,817 $ 20,766 $ 24,495 $ 22,190 $ 67,451
Recurring 15,925 16,322 16,595 19,898 68,740 20,746 22,043 24,185
66,974 Services 3,312 4,174
4,565 5,707 17,758 6,218
5,443 5,765 17,426
Total revenues 35,023 38,811
41,831 50,650 166,315
47,730 51,981 52,140
151,851 Costs of revenues: Product 4,799 5,502 6,198 7,369
23,868 6,196 6,392 6,689 19,277 Recurring 3,423 4,043 4,302 5,223
16,991 5,282 5,813 6,479 17,574 Services 2,174 2,144 2,465 3,005
9,788 3,712 3,919 4,158 11,789 Amortization of intangibles
16 16 16 35
83 35 35 35
105 Total cost of revenues 10,412
11,705 12,981 15,632
50,730 15,225 16,159
17,361 48,745 Gross profit 24,611
27,106 28,850 35,018
115,585 32,505 35,822
34,779 103,106 Operating
expenses: Sales and marketing 10,352 11,480 12,106 13,134 47,072
14,157 15,320 15,223 44,700 Research and development 6,425 6,945
7,193 7,786 28,349 8,147 8,714 9,243 26,104 General and
administrative 3,836 4,013 3,935 4,800 16,584 5,095 6,024 5,326
16,445 Amortization of intangibles 9 9
9 184 211 184
274 302 760 Total
operating expenses 20,622 22,447
23,243 25,904 92,216
27,583 30,332 30,094
88,009 Operating income 3,989 4,659
5,607 9,114 23,369
4,922 5,490 4,685
15,097 Other income (expense): Interest income, net 42 67
120 111 340 43 92 165 300 Other income (expense) (775 )
(590 ) 337 (118 ) (1,146 )
(166 ) 256 172 262
Total other income (expense) (733 ) (523 ) 457
(7 ) (806 ) (123 ) 348
337 562 Income before income taxes
3,256 4,136 6,064 9,107 22,563 4,799 5,838 5,022 15,659 Income tax
expense 1,388 1,680 2,561
2,033 7,662 1,704
2,011 1,741 5,456 Net income $
1,868 $ 2,456 $ 3,503 $ 7,074 $ 14,901
$ 3,095 $ 3,827 $ 3,281 $ 10,203
Net income per share: Basic $ 0.11 $ 0.14 $ 0.20 $ 0.39 $
0.85 $ 0.17 $ 0.20 $ 0.17 $ 0.55 Diluted 0.10 0.13 0.19 0.37 0.79
0.16 0.19 0.16 0.51 Shares used to compute net income per
share: Basic 17,320 17,445 17,524 17,956 17,563 18,417 18,707
18,816 18,563 Diluted 18,708 18,772 18,695 19,302 18,894 19,780
19,933 19,946 19,860
Supplemental Data (Dollars in
thousands) Margins (GAAP): Product 69.6 % 70.0 % 70.0 %
70.6 % 70.1 % 70.2 % 73.9 % 69.9 % 71.4 % Recurring 78.5 % 75.2 %
74.1 % 73.8 % 75.3 % 74.5 % 73.6 % 73.2 % 73.8 % Services 34.4 %
48.6 % 46.0 % 47.3 % 44.9 % 40.3 % 28.0 % 27.9 % 32.3 % Overall
70.3 % 69.8 % 69.0 % 69.1 % 69.5 % 68.1 % 68.9 % 66.7 % 67.9 %
Year-over-year Revenue Growth (GAAP): Product 20.7 % 10.6 %
32.5 % 38.5 % 26.0 % 31.5 % 33.7 % 7.3 % 97.8 % Recurring 18.8 %
23.2 % 15.7 % 34.4 % 23.2 % 30.3 % 35.1 % 45.7 % 107.7 % Services
10.7 % 35.0 % 41.6 % 91.3 % 44.5 % 87.7 % 30.4 % 26.3 % 132.8 %
Overall 18.8 % 18.0 % 26.1 % 41.2 % 26.6 % 36.3 % 33.9 % 24.6 %
105.7 % Orders: Over $1 million 3 2 9 5 19 3 5 3 11 Between
$250,000 and $1 million 11 18 16 26 71 24 27 14 65 Number of
new customers 71 62 48 77 258 65 81 54 200 Average new
customer order: Overall $ 135 $ 178 $ 318 $ 225 $ 206 $ 275 $ 245 $
316 $ 272 Cloud-based 535 446 617 139 401 488 282 3,691 733
GAAP to Non-GAAP Reconciliation
(in thousands, except per share amounts) (unaudited)
2010 2011 Q1 Q2
Q3 Q4 Total Q1
Q2 Q3 Total Net
income, as reported $ 1,868 $ 2,456 $ 3,503 $ 7,074 $ 14,901 $
3,095 $ 3,827 $ 3,281 $ 10,203 Purchase accounting adjustments:
Increase to revenues: Recurring 7 1 - 80 88 59 39 64 162 Services 2
1 1 - 4 31 17 - 48 Reduction of operating expenses: Customer
Relationships 9 9 9 139 166 139 229 257 625 Technology 16 16 16 35
83 35 35 35 105 Non-compete agreements - - - 45 45 45 45 45 135
Acquisition Costs - - - 89 89
201 131 75 407 Total 34
27 26 388 475 510 496 476
1,482 Non-cash stock-based compensation expense: Cost of
recurring revenues 31 60 68 68 227 105 103 119 327 Cost of services
revenues 48 3 18 25 94 25 11 36 72 Sales and marketing 324 318 332
256 1,230 392 433 458 1,283 Research and development 298 298 285
297 1,178 408 395 392 1,195 General and administrative 311
285 326 328 1,250 388 333
406 1,127 Total 1,012 964 1,029
974 3,979 1,318 1,275 1,411
4,004 Non-cash income tax expense 1,241 1,547
2,410 1,978 7,176 549 727
636 1,912
Non-GAAP net income $ 4,155 $ 4,994 $ 6,968
$ 10,414 $ 26,531 $ 5,472 $ 6,325 $ 5,804 $ 17,601
Operating income, as reported $ 3,989 $ 4,659 $ 5,607 $
9,114 $ 23,369 $ 4,922 $ 5,490 $ 4,685 $ 15,097 Purchase accounting
adjustments 34 27 26 388 475 510 496 476 1,482 Non-cash stock-based
compensation expense 1,012 964 1,029
974 3,979 1,318 1,275 1,411
4,004
Non-GAAP operating income $ 5,035 $ 5,650 $ 6,662 $
10,476 $ 27,823 $ 6,750 $ 7,261 $ 6,572 $ 20,583
Diluted
EPS, as reported $ 0.10 $ 0.13 $ 0.19 $ 0.37 $ 0.79 $ 0.16 $
0.19 $ 0.16 $ 0.51 Purchase accounting adjustments 0.00 0.00 0.00
0.03 0.03 0.03 0.02 0.02 0.07 Non-cash stock-based compensation
expense 0.05 0.05 0.06 0.05 0.21 0.07 0.06 0.07 0.20 Non-cash
income tax expense 0.07 0.08 0.12 0.10
0.37 0.02 0.04 0.04 0.10
Non-GAAP diluted EPS $ 0.22 $ 0.26 $ 0.37 $ 0.55 $ 1.40 $
0.28 $ 0.31 $ 0.29 $ 0.88
Currency
Component
(dollars in thousands)
Revenue:
Currency Component forthe Quarter
Ended
Currency Exchange Rateinto USD as of
Impact of 1% Change inExchange Rate
per
Currency
September 30, 2011
September 30, 2011
$100 million in Revenue
USD 79% -- -- Euro
11%
1.3598 149,578 GBP 4% 1.5628 62,512 AUD 3% 0.9793 29,379 CAD 2%
0.9684 19,368 Other 1% Insignificant -- 100% $ 260,837
Expense:
Currency Component forthe Quarter
Ended
Currency Exchange Rateinto USD as of
Impact of 1% Change inExchange Rate
per
Currency
September 30, 2011
September 30, 2011
$100 million in Revenue
USD 83% -- -- Euro 5% 1.3598 67,990 GBP 4% 1.5628 62,512
AUD
3% 0.9793 29,379 CAD 2% 0.9684 19,368 Other 3% Insignificant
-- 100% $ 179,249
ININ-G
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