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8-K - 8-K - Interactive Intelligence Group, Inc. | inin-20130204x8k.htm |
Interactive Intelligence Reports Fourth-Quarter and Full Year 2012 Financial Results
-Total orders for the fourth quarter up 119 percent from 2011 fourth quarter; 2012 total orders up
48 percent year-over-year.
-Cloud-based orders for the fourth quarter up 311 percent year-over-year; 2012 cloud-based
orders up 123 percent year-over-year.
-Cloud-based orders in 2012 were 35 percent of total orders, up from 23 percent in 2011.
-Recurring revenues in 2012 increased 27 percent year-over-year to 50 percent of total revenue.
INDIANAPOLIS, Feb. 4, 2013 -- Interactive Intelligence Group Inc. (Nasdaq: ININ), a global provider of
unified IP business communications solutions, has announced financial results for the fourth quarter and
full year ended Dec. 31, 2012.
"Our strong performance during the fourth quarter led to a record year for orders and revenues," said Interactive Intelligence founder and CEO, Dr. Donald Brown. "In 2012, we have further extended our product leadership position and gained even more momentum in cloud-based offerings, which is the
fastest growing segment of the contact center market. The number of our new cloud-based customers
reached record levels in the fourth quarter and the total dollar amount of contracts continues growing at a rate significantly higher than the overall market.
"While continuing to add some of the most recognized global companies as customers, we remain
committed to maintaining our pace of innovation, with several new products scheduled for release this
year," continued Brown. "Looking forward, given our strong global pipeline of opportunities, we are
reaffirming our 2013 total order growth forecast of 20 percent and expect cloud-based orders to represent approximately 50 percent of total 2013 orders. We remain focused on innovation, product leadership and cloud-based growth and are confident in our long-term financial profile, which will be driven by growth in
recurring revenues."
Fourth Quarter 2012 Financial Highlights:
- Orders: Total orders grew by 119 percent from the fourth quarter of 2011, while cloud-based orders
were up 311 percent over the fourth quarter of 2011 and comprised 39 percent of total orders. The
company signed 68 contracts over $250,000, which included 19 orders over $1.0 million, up from 37 and six, respectively, in the fourth quarter of 2011.
-Revenues: Total revenues were $70.5 million, an increase of 22 percent over the fourth quarter of
2011. Recurring revenues, which include both maintenance and support from perpetual license
agreements and cloud-based revenues, increased 31 percent to $33.1 million and accounted for 47
percent of total revenues. Cloud-based revenues increased 47 percent to $6.6 million. Product
revenues were $27.2 million and services revenues were $10.2 million, compared to $26.5 million and $6.0 million, respectively, in the fourth quarter of 2011.
-Total Deferred Revenues: Deferred revenues increased to $91.9 million as of Dec. 31, 2012, from
$75.4 million as of Dec. 31, 2011. In addition, the amount of unbilled future cloud-based revenues as of Dec. 31, 2012 increased to $89.5 million from $34.6 million as of Dec. 31, 2011. The combination
of deferred revenues and unbilled future cloud-based revenues was $181.4 million, up 65 percent from $110.0 million as of Dec. 31, 2011.
Operating Income: GAAP operating income was $3.5 million for the fourth quarter of 2012,
compared to $6.5 million in the fourth quarter of 2011. Non-GAAP* operating income was $5.9 million
for the fourth quarter of 2012, with a non-GAAP operating margin of 8.4 percent, compared to $8.7
million and a non-GAAP operating margin of 15.0 percent in the fourth quarter of 2011. The year- over-year decline in operating income resulted from the deferral of revenues due to an increase in cloud-based orders, certain premises-based orders received in the fourth quarter of 2012 for which
revenues were deferred to future periods, and the increased investment in sales, marketing, and
research and development to expand the company's product leadership and share in the cloud-based market.
-Net Income: GAAP net income for the fourth quarter of 2012 was $2.3 million, or $0.11 per diluted
share based on 20.3 million weighted average diluted shares outstanding. This compares to GAAP
net income for the same quarter in 2011 of $4.6 million, or $0.23 per diluted share based on 19.9 million weighted average diluted shares outstanding.
Non-GAAP net income for the fourth quarter of 2012 was $5.7 million, or $0.28 per diluted share. This compares to non-GAAP net income of $7.3 million, or $0.37 per diluted share for the same quarter in 2011.
-Cash, Cash Equivalents and Investments: As of Dec. 31, 2012, we had cash, cash equivalents
and investments of $80.6 million.
-Cash Flows: During the fourth quarter of 2012, the company generated $3.6 million in cash flow from
operations and used $2.9 million for capital expenditures, which included expansion of its cloud infrastructure.
Full Year 2012 Financial Highlights:
- Orders: Total orders increased 48 percent in 2012 compared to 2011, while cloud-based orders were
up 123 percent year-over-year. The company signed 158 contracts over $250,000, which included 42
orders over $1.0 million, up from 113 and 17, respectively, in 2011. Cloud-based orders were 35 percent of total orders, up from 23 percent in 2011.
-Revenues: Total revenues were $237.4 million in 2012, an increase of 13 percent over 2011.
Recurring revenues increased 27 percent to $118.3 million. Cloud-based revenues increased 54
percent year-over-year to $22.0 million. Product revenues were $88.6 million and services revenues were $30.4 million in 2012, compared to $92.8 million and $23.4 million, respectively, in 2011.
-Operating Income: GAAP operating income in 2012 was $1.1 million, compared to $21.6 million in
2011. Non-GAAP operating income in 2012 was $10.2 million, with a non-GAAP operating margin of 4.3 percent, compared to $29.3 million and a non-GAAP operating margin of 13.9 percent in 2011.
The year-over-year decline in operating income resulted from deferral of revenues due to an increase
in cloud-based orders, certain premises-based orders received in 2012 for which revenues were
deferred to future periods, and the increased investment in sales, marketing, and research and development to expand the company's product leadership and share in the cloud-based market.
-Net Income: GAAP net income was $906,000, or $0.04 per diluted share based on 20.2 million
weighted average diluted shares outstanding. This compares to GAAP net income in 2011 of $14.8
million, or $0.74 per diluted share based on 19.9 million weighted average diluted shares outstanding. The annual effective tax rate was 46 percent and includes a tax reserve on certain tax positions of the
company, offset by one-time benefits recorded in 2012 principally related to a change in the company's treatment of its officer compensation.
Non-GAAP net income was $10.1 million, or $0.50 per diluted share, compared to non-GAAP net income in 2011 of $24.9 million, or $1.25 per diluted share.
-Cash Flows: During the full year of 2012, the company generated $20.0 million in cash flow from
operations, used $22.7 million for acquisitions, and used $15.6 million for capital expenditures, which included expansion of its cloud infrastructure.
* A reconciliation of GAAP to non-GAAP financial measures has been provided in the financial statement
tables included with this press release. An explanation of these measures is also included below under
the heading "Non-GAAP Measures."
Additional Fourth-Quarter 2012 and Recent Highlights:
- Interactive Intelligence was honored with a 2012 Cloud Computing Excellence Award from TMC's
Cloud Computing Magazine.
-Interactive Intelligence launched Interaction Mobilizer™ for Windows 8, a software platform that
enables mid-size to large contact centers and enterprises to rapidly deploy customer service
applications for tablets and other mobile devices.
-Interactive Intelligence released Interaction Dialer® version 4.0, a major predictive dialer software
upgrade which was designed to improve ease-of-use, simplify management, and help contact centers more effectively execute dialing campaigns.
-The company launched an e-commerce website, the Interactive Intelligence Marketplace , giving
customers and resellers fast and easy access to products that complement the vendor's all-in-one IP
communications software suite.
Interactive Intelligence will host a conference call today at 4:30 p.m. Eastern time (EST) 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 fourth-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 Intelligence
Interactive Intelligence Group Inc. (Nasdaq: ININ) is a global provider of contact center, unified
communications, and business process automation software and services. The company's unified IP business communications solutions, which can be deployed on-premise or via the cloud, are ideal for
industries such as financial services, insurance, outsourcers, collections, and utilities. Interactive
Intelligence was founded in 1994 and has more than 5,000 customers worldwide. The company is among
Forbes Magazine's 2011 Best Small Companies in America and Software Magazine's 2012 Top 500
Global Software and Service Providers. It employs approximately 1,400 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 Measures
The 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, 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 certain amounts of income tax expense are 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.
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 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.
ININ-G
Contacts:
Stephen R. Head
Chief Financial Officer Interactive Intelligence
+1 317.715.8412
steve.head@inin.com
Seth Potter
Investor Relations ICR, Inc.
+1 646.277.1230
seth.potter@icrinc.com
Christine Holley
Senior Director of Market Communications
Interactive Intelligence
+1 317.715.8220
christine.holley@inin.com
###
Interactive Intelligence Group, Inc.
Condensed Consolidated Statements of Income
(in thousands, except per share amounts)
Three Months Ended Year Ended
December 31, December 31,
2012 2011 2012 2011
(unaudited) (unaudited) (unaudited)
Revenues:
Product $27,207 $26,538 $ 88,626 $ 92,786 Recurring 33,120 25,186 118,343 93,363 Services 10,215 5,951 30,396 23,377
Total revenues 70,542 57,675 237,365 209,526
Costs of revenues:
Product 6,742 5,818 24,329 25,095 Recurring 9,053 6,227 32,227 23,801 Services 6,796 4,600 22,868 16,389 Amortization of intangible assets 58 35 163 140
Total cost of revenues 22,649 16,680 79,587 65,425 Gross profit 47,893 40,995 157,778 144,101
Operating expenses:
Sales and marketing 23,172 18,339 79,770 63,039 Research and development 12,386 9,522 45,682 35,626 General and administrative 8,312 6,284 29,722 22,729 Amortization of intangible assets 494 306 1,521 1,066
Total operating expenses 44,364 34,451 156,695 122,460 Operating income 3,529 6,544 1,083 21,641
Other income:
Interest income, net 207 134 772 434 Other income (expense) (123) (118) (189) 144
Total other income 84 16 583 578 Income before income taxes 3,613 6,560 1,666 22,219 Income tax expense 1,343 1,965 760 7,421
Net income $2,270 $4,595 $906 $ 14,798
Other comprehensive income:
Foreign currency translation adjustment $129 $710 $(645) $(73) Net unrealized investment gain (loss) (191) (89) 163 93
Comprehensive income $2,208 $5,216 $424 $ 14,818
Net income per share:
Basic $0.12 $0.24 $0.05 $0.79 Diluted 0.11 0.23 0.04 0.74
Shares used to compute net income per share:
Basic 19,367 18,908 19,241 18,714 Diluted 20,308 19,850 20,162 19,885
Interactive Intelligence Group, Inc.
Reconciliation of Supplemental Financial Information
(in thousands, except per share amounts)
Unaudited
Three Months Ended
December 31,
Year Ended
December 31,
2012 2011 2012 2011
Recurring revenue, as reported $33,120 $25,186 $ 118,343 $93,363
Purchase accounting adjustments 178 309 522 471
Non-GAAP recurring revenue $33,298 $25,495 $ 118,865 $93,834
Recurring revenue gross profit as reported $24,067 $18,959 $86,116 $69,562 Purchase accounting adjustments 178 309 522 471
Non-cash stock-based compensation expense 135 89 523 422
Non-GAAP recurring revenue gross profit $24,380 $19,357 $87,161 $70,455
Non-GAAP recurring revenue gross margin 73.2% 75.9% 73.3% 75.1%
.
Services revenue, as reported $10,215 $5,951 $30,396 $23,377 Purchase accounting adjustments - 6 - 54
Non-GAAP services revenue $10,215 $5,957 $30,396 $23,431
Services revenue gross profit as reported $3,419 $1,351 $7,528 $6,988 Purchase accounting adjustments - 6 - 54
Non-cash stock-based compensation expense 27 35 147 101
Non-GAAP services revenue gross profit $3,446 $1,392 $7,675 $7,143
Non-GAAP services revenue gross margin 33.7% 23.4% 25.3% 30.5%
Total revenue, as reported $70,542 $57,675 $ 237,365 $209,526 Purchase accounting adjustments 178 315 522 525
Non-GAAP total revenue $70,720 $57,990 $ 237,887 $210,051
Gross Profit $47,893 $40,995 $ 157,778 $144,101 Purchase accounting adjustments 178 315 522 525
Operating expenses 58 35 163 140
Non-cash stock-based compensation expense 162 124 670 523
Non-GAAP gross profit $48,291 $41,469 $ 159,133 $145,289
Non-GAAP gross margin 68.3% 71.5% 66.9% 69.2%
Operating income, as reported $3,529 $6,544 $1,083 $21,641 Purchase accounting adjustments 769 849 2,487 2,331
Non-cash stock-based compensation expense 1,650 1,294 6,677 5,298
Non-GAAP operating income $5,948 $8,687 $10,247 $29,270
Non-GAAP operating margin 8.4% 15.0% 4.3% 13.9%
Interactive Intelligence Group, Inc.
Reconciliation of Supplemental Financial Information
(in thousands, except per share amounts)
Unaudited
Three Months Ended
December 31,
Year Ended
December 31,
2012 2011 2012 2011
Net income, as reported $2,270 $4,595 $906 $14,798
Purchase accounting adjustments:
Increase to revenues:
Recurring 178 309 522 471 Services - 6 - 54
Reduction of operating expenses:
Customer Relationships 449 261 1,341 886 Technology 58 35 163 140 Non-compete agreements 46 45 180 180 Acquisition Costs 38 193 281 600
Total 769 849 2,487 2,331
Non-cash stock-based compensation expense:
Cost of recurring revenues 135 89 523 422 Cost of services revenues 27 35 147 101 Sales and marketing 543 394 2,250 1,677 Research and development 510 374 1,886 1,570 General and administrative 435 402 1,871 1,528
Total 1,650 1,294 6,677 5,298 Non-cash income tax expense 1,039 522 - 2,434
Non-GAAP net income $5,728 $7,260 $10,070 $24,861
Diluted EPS, as reported $0.11 $0.23 $0.04 $0.74 Purchase accounting adjustments 0.04 0.04 0.12 0.12 Non-cash stock-based compensation expense 0.08 0.07 0.34 0.27 Non-cash income tax expense 0.05 0.03 - 0.12
Non-GAAP diluted EPS $0.28 $0.37 $0.50 $1.25
Interactive Intelligence Group, Inc.
Condensed Consolidated Balance Sheets
(in thousands)
Year Ended
December 31,
2012 2011
Assets (unaudited)
Current assets:
Cash and cash equivalents $45,057 $28,465 Short-term investments 23,816 40,589
Accounts receivable, net 68,409 56,331
Deferred tax assets, net 16,600 8,952
Prepaid expenses 15,565 11,474
Other current assets 5,958 4,966
Total current assets 175,405 150,777 Long-term investments 11,757 23,415 Property and equipment, net 26,816 18,304 Goodwill 38,723 22,696 Intangible assets, net 22,676 15,029 Other assets, net 6,419 2,581
Total assets $281,796 $232,802
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $8,795 $5,434 Accrued liabilities 23,008 11,111 Accrued compensation and related expenses 13,640 8,870
Deferred product revenues 5,999 3,870
Deferred services revenues 67,893 57,423
Total current liabilities 119,336 86,708 Long-term deferred revenues 18,000 14,141 Deferred tax liabilities, net 99 1,688 Other long-term liabilities 244 291
Total liabilities $137,679 $102,828
Shareholders' equity:
Preferred stock --
Common stock 194 190
Additional paid-in-capital 133,359 119,644
Accumulated other comprehensive loss (675) (193)
Retained earnings 11,239 10,333
Total shareholders' equity 144,117 129,974
Total liabilities and shareholders' equity $281,796 $232,802
Interactive Intelligence Group, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
Year Ended
December 31,
2012 2011
(unaudited)
Operating activities:
Net income $906 $14,798
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation #mhc6xfz7,975 5,669 Amortization 1,776 1,209 Other non-cash items (757) 37 Stock-based compensation expense 6,676 5,298 Tax benefits from stock-based payment arrangements (1,586) (3,336) Deferred income tax (12,311) (524) Amortization (accretion) of investment income 846 (1,165)
Loss (gain) on disposal of fixed assets (74) 4
Changes in operating assets and liabilities:
Accounts receivable (10,166) (13,313) Prepaid expenses (3,918) (2,888) Other current assets (975) (85) Other assets (3,838) (1,778) Accounts payable 5,071 (7,700) Accrued liabilities 11,941 6,918 Accrued compensation and related expenses 4,400 (918) Deferred product revenues 1,190 489 Deferred services revenues 12,850 18,675
Net cash provided by operating activities 20,006 21,390
Investing activities:
Sales of available-for-sale investments 58,234 73,118 Purchases of available-for-sale investments (30,348) (98,205) Purchases of property and equipment (15,554) (13,280) Acquisitions, net of cash (22,651) (13,376) Unrealized gain (loss) on investment (138) 1
Net cash used in investing activities (10,457) (51,742)
Financing activities:
Proceeds from stock options exercised 5,030 6,671 Proceeds from issuance of common stock 680 510
Employee taxes withheld for restricted stock units (253) -
Tax benefits from stock-based payment arrangements 1,586 3,336 Net cash provided by financing activities 7,043 10,517
Net increase (decrease) in cash and cash equivalents 16,592 (19,835)
Cash and cash equivalents, beginning of period 28,465 (49,300)
Cash and cash equivalents, end of period $45,057 $ 28,465
Cash paid during the period for:
Interest $5$3
Income taxes 3,213 2,835
Other non-cash item:
Purchases of property and equipment payable at end of period 44 70
(unaudited)
(Dollars in thousands)
Supplemental Data
2011
2012
Q1
Q2
Q3
Q4
Total
Q1
Q2
Q3
Q4
Total
Margins (GAAP):
Recurring
Product
74.5%
70.2%
74.0%
73.6%
73.8%
69.1%
75.3%
78.1%
74.0%
73.4%
73.8%
70.9%
72.4%
69.5%
72.3%
73.4%
72.7%
75.2%
72.8%
72.5%
Overall
Services
68.1%
40.3%
68.9%
28.0%
66.7%
27.9%
71.1%
22.7%
68.8%
29.9%
66.8%
19.7%
65.2%
22.6%
65.6%
18.9%
67.9%
33.5%
66.5%
24.8%
Services
Recurring
Product
Year-over-year Revenue Growth (GAAP):
87.7%
30.3%
31.5%
30.4%
35.1%
33.7%
26.3%
45.7%
7.3%
4.3%
22.8%
9.0%
31.6%
33.0%
18.7%
-8.4%
31.1%
-4.8%
23.5%
27.2%
-18.8%
34.7%
17.9%
3.3%
71.7%
31.5%
2.5%
30.0%
26.8%
-4.5%
Overall
36.3%
33.9%
24.6%
13.9%
26.0%
10.6%
5.4%
13.7%
22.3%
13.3%
Orders:
Over $1 million
3
5
3
6
17
6
8
9
19
42
Between $250,000 and $1 million
24
27
14
31
96
11
28
28
49
116
Number of new customers
65
81
55
103
304
60
67
65
110
302
Average new customer order:
$
$
$
$
$
$
$
$
$
$
Cloud-based
Overall
488
275
282
240
3,691
314
642
259
693
267
761
240
557
349
822
409
1,134
623
866
440