Interactive Intelligence Reports Second-Quarter 2014 Financial Results
Cloud-based revenues increased 77 percent from 2013 second quarter.
- (1888PressRelease) August 08, 2014 - DUBAI, United Arab Emirates - Interactive Intelligence Group Inc. (Nasdaq: ININ), a global provider of software and services designed to improve the customer experience, has announced financial results for the three and six months ended June 30, 2014.
"Our second-quarter revenues show the ongoing shift of our business to the cloud and were primarily impacted by lower than expected on-premises orders as well as the deferral of revenues from two sizable contracts we expected to recognize," said Interactive Intelligence founder and CEO Dr. Donald Brown. "The shift to the cloud market is accelerating and will continue to result in more revenues being deferred to future quarters leading to greater overall growth of recurring revenue. Given the ongoing demand for our cloud-based offering and the strength of our pipeline globally, we remain committed to making investments that drive the growth of our business. With the release of our new multi-tenant Interactive Intelligence PureCloud offering expected in October, the company remains well positioned to gain market share and reduce cost of delivery."
Second-Quarter 2014 Financial Highlights:
Orders: Excluding the largest cloud-based order in the company's history that was received in the same quarter last year, total orders increased by 12 percent from the second quarter of 2013, with cloud-based orders up 69 percent and representing 52 percent of total orders. Including this large cloud-based order, total orders decreased by 38 percent year-over-year. During the quarter, the company signed 39 orders over $250,000, including 10 orders over $1 million.
Revenues: Total revenues were $79.8 million, up 5 percent from the 2013 second quarter. Recurring revenues, including support fees from on-premises license agreements and fees from cloud-based customers, increased 27 percent to $44.6 million and accounted for 56 percent of total revenues. Cloud-based revenues increased 77 percent to $13.9 million. Product revenues were $21.5 million and services revenues $13.7 million, compared to $27.9 million and $13.2 million, respectively, in the second quarter of 2013.
Total Deferred Revenues: Deferred revenues increased to $111.9 million, up from $108.3 million as of June 30, 2013. In addition, the amount of unbilled future cloud-based revenues increased to $224.8 million from $136.0 million at the end of the 2013 second quarter. The combination of deferred and unbilled future cloud-based revenues grew to $336.7 million, up 38 percent from $244.3 million as of June 30, 2013.
Operating Income (Loss): GAAP operating loss was $(11.5) million, compared to GAAP operating income of $849,000 in the same quarter last year. Non-GAAP(*) operating loss was $(6.6) million, compared to non-GAAP operating income of $3.8 million in the second quarter of 2013. The year-over-year decline was primarily due to lower than anticipated product revenues, combined with increased sales and marketing expenses to capture cloud market share, and increased research and development expenses to accelerate time-to-market of Interactive Intelligence PureCloud.
Income Taxes: Income tax benefit for the second quarter was $4.6 million. The company's estimated annual effective tax rate is 41.0 percent.
Net Income (Loss): GAAP net loss was $(6.8) million, or $(0.33) per diluted share based on 20.9 million weighted average shares outstanding, compared to GAAP net income in the same quarter of 2013 of $2.9 million, or $0.14 per diluted share based on 20.9 million weighted average diluted shares outstanding. GAAP net income for the second quarter of 2013 included an income tax benefit primarily related to a change in transfer pricing implemented in the second quarter of 2013.
Non-GAAP net loss for the second quarter was $(3.7) million, or $(0.18) per diluted share, compared to non-GAAP net income of $3.4 million, or $0.16 per diluted share in the same quarter of 2013.
Cash, Cash Equivalents and Investments: Cash, cash equivalents and investments totaled $86.0 million as of June 30, 2014, compared to $104.9 million as of March 31, 2014.
Cash Flows: The company used $1.4 million for operating activities in the quarter and used $4.9 million for capital expenditures, which included continued expansion of its cloud infrastructure and $9.3 million in connection with an acquisition.
* An explanation of GAAP to non-GAAP financial measures is included below under the heading "Non-GAAP Measures."
Six Months Ended 2014 Financial Highlights:
Orders: Excluding the largest cloud-based order in the company's history received during the second quarter of 2013, total orders increased by 26 percent from the first six months of 2013, and cloud-based orders were up 112 percent over the first six months of 2013. Including this large cloud-based order, total orders decreased by 12 percent year-over-year. Cloud-based orders comprised 55 percent of total orders during the first six months of 2014. The company signed 73 orders over $250,000, including 19 orders over $1 million.
Revenues: Total revenues were $159.3 million, an increase of 7 percent over the first six months of 2013. Recurring revenues increased 28 percent to $88.0 million and accounted for 55 percent of total revenues. Cloud-based revenues increased 80 percent to $26.9 million. Product revenues were $44.4 million, down 21 percent, and services revenues were $26.9 million, up 9 percent compared to the first six months of 2013.
Operating Income (Loss): GAAP operating loss was $(16.3) million for the first six months of 2014, compared to GAAP operating income of $4.3 million over the same period last year. Non-GAAP operating loss was $(7.6) million for the first six months of 2014, compared to non-GAAP operating income of $10.0 million during the same period last year. The year-over-year decline was primarily due to lower than anticipated product revenues, combined with increased sales and marketing expenses to capture cloud market share, and increased research and development expenses to accelerate time-to-market of PureCloud.
Net Income (Loss): GAAP net loss for the first six months of 2014 was $(9.4) million, or $(0.45) per diluted share based on 20.8 million weighted average shares outstanding, compared to GAAP net income for the same period in 2013 of $4.4 million, or $0.21 per diluted share based on 20.8 million weighted average diluted shares outstanding. GAAP net income for the six months ended June 30, 2013 included an income tax benefit primarily driven by a change in transfer pricing implemented during the second quarter of 2013.
Non-GAAP net loss for the first six months of 2014 was $(4.1) million, or $(0.20) per diluted share, compared to non-GAAP net income of $7.0 million, or $0.33 per diluted share during the same period in 2013.
Cash, Cash Equivalents and Investments: Cash, cash equivalents and investments totaled $86.0 million as of June 30, 2014, compared to $107.8 million as of Dec. 31, 2013.
Cash Flows: The company generated $3.8 million in cash flow from operations during the six months ended June 30, 2014, and used $13.1 million for capital expenditures, which included continued expansion of its cloud infrastructure and $9.3 million in connection with an acquisition.
Additional Second-Quarter 2014 and Recent Highlights:
The company signed West Interactive (a subsidiary of West Corp.) as an Elite Partner, which enables West to provide sales, service and support nationwide for the entire suite of Interactive Intelligence business communications solutions.
Interactive Intelligence announced the launch of Interactive Intelligence PureCloud, a highly scalable, multi-tenant suite of cloud-based services for communications, collaboration and customer engagement that leverages the latest open source technologies.
Interactive Intelligence was named Frost & Sullivan's 2014 North American Contact Center Systems Company of the Year.
CRM magazine named Interactive Intelligence its Service Leader winner in the category of interactive voice response.
About Interactive Intelligence
Interactive Intelligence Group Inc. (Nasdaq: ININ) is a global provider of software and services designed to improve the customer experience. The company's 6,000-plus customers worldwide have benefitted from its cloud and on-premises solutions for contact center, unified communications, and business process automation. Interactive Intelligence is among Software Magazine's 2013 Top 500 Global Software and Service Providers, and has received a Frost & Sullivan Company of the Year Award for the last five consecutive years. In addition, Glassdoor honored Interactive Intelligence with its 2014 Employees' Choice Award as one of the Best Places to Work in the U.S., and Mashable ranked Interactive Intelligence second on its 2014 list of the Seven Best Tech Companies to Work For. The company was founded in 1994 and employs more than 2,000 people worldwide. Interactive Intelligence is headquartered in Indianapolis, Indiana and has offices throughout North America, Latin America, Europe, Middle East, Africa and Asia Pacific. It can be reached at +1 317.872.3000 or info ( @ ) inin dot com dot Visit Interactive Intelligence on the Web at www dot inin dot com; on Twitter at www dot inin dot com/twitter; on Facebook at www dot inin dot com/facebook; or on LinkedIn at www dot inin dot com/linkedin dot
Non-GAAP Measures
The non-GAAP measures shown in this release include revenue which was not recognized on a GAAP basis due to purchase accounting adjustments, exclude non-cash stock-based compensation expense, certain acquisition-related expenses and the amortization of certain intangible assets related to acquisitions by the company, and adjust for non-GAAP 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 non-GAAP income tax expense is pro forma based on non-GAAP earnings. 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, our 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, certain acquisition-related expenses and amortization of intangibles related to acquisitions amounts can vary significantly between companies, it is useful to compare results excluding these amounts. Our management also reviews financial statements that exclude stock-based compensation expense, certain acquisition-related expenses and amortization of intangibles amounts related to acquisitions for its internal budgets.
Forward Looking Statements
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 and competitive pressures in the industry; worldwide economic conditions and their impact on customer purchasing decisions; 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 and sensitive customer information adequately; improve the company's brand and name recognition; 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.
Product Information Contact:
Mr. Shaheen Haque
Turkey & Middle East Territory Manager
Interactive Intelligence Middle East
Dubai, UAE
Direct phone: +971(4) 4347217
Mobile: +971 (50) 4573186
Email: shaheen.haque ( @ ) inin dot com.
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