Attached files
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| 8-K - FORM 8-K - inContact, Inc. | d621833d8k.htm |
Exhibit 99.1
inContact Reports Third Quarter 2013 Financial Results
| • | Software Segment Revenues of $17.1 million, up 23% year over year |
| • | Bookings at record levels, up 35% over 3rd quarter of prior year |
| • | 71 contracts signed, 4 new Fortune 500 customers join the expanding base |
SALT LAKE CITY – November 4, 2013 – inContact, Inc. (NASDAQ: SAAS), the leading provider of cloud contact center software, today reported financial results for the third quarter ended September 30, 2013.
Said Paul Jarman, inContact CEO, “We are seeing record achievements across all of our business metrics including sales pipeline, bookings, implementations and revenue. As a result, Q3 was another record bookings quarter, up 35 percent over what was a very strong comparable quarter in Q3 2012. During the quarter, we closed 71 contracts, 52 with new logo customers and 19 expansion deals. We continue to make inroads into the enterprise market as the cloud contact center model is being increasingly adopted by larger organizations.”
Revenue
Software segment revenue totaled $17.1 million for the quarter ended September 30, 2013, an increase of 23% from $14.0 million in Q3 2012. Telecom segment revenue for the quarter ended September 30, 2013 was $15.1 million, an increase of 8% from $14.0 million for the quarter ended September 30, 2012, driven by increases in software-related telecom revenue. Approximately 80% of Telecom segment revenues were derived from contracts with customers utilizing our contact center software.
Consolidated revenue for the quarter ended September 30, 2013 was $32.2 million versus $27.9 million for the same period in 2012, an increase of 15%.
For the nine months ended September 30, 2013, Software segment revenue totaled $49.5 million, an increase of 27% from $39.1 million for the same period in 2012. For the nine months ended September 30, 2013, Telecom segment revenue totaled $45.5 million, an increase of 12% from $40.5 million for the nine months ended September 30, 2012.
Gross Margin
Software segment gross margin for the quarter ended September 30, 2013 was 59% versus 60% for the same period in 2012, and excluding non-cash charges, non-GAAP Software segment gross margin was 71% for the third quarter of 2013, versus 72% in the third quarter of 2012. The decrease in gross margin is principally attributable to slightly higher levels of professional service costs and customer service costs incurred to service larger mid-market and enterprise customers and to support resellers. Third quarter 2013 Telecom segment gross margin was 36% versus 34%, due to increased efficiencies in call routing related to previous investments in technology, which has resulted in lower variable Telecom costs.
Consolidated gross margin percentage was 48% in the third quarter of 2013 compared to 47% for the same period in 2012. Excluding non-cash charges, consolidated gross margin was 55% for the third quarter compared to 54% for the same period in 2012.
Adjusted EBITDA
Earnings before interest, taxes, depreciation, amortization and stock-based compensation (“Adjusted EBITDA”) for the third quarter of 2013 was $1.9 million versus $2.2 million during the same period in 2012. This decrease in Adjusted EBITDA is due to the slight decrease in gross margins discussed above and an increased investment in software segment sales and marketing. 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 September 30, 2013 was $2.5 million, or ($0.05) per share, as compared to a net loss of $882,000 or ($0.02) per share for the same period in 2012.
Jarman concluded, “The cloud contact center market has clear and powerful momentum, as cited by technology industry analysts and by the continued acceleration of inContact’s enterprise business. We now have 36 of the Fortune 500 companies on our client roster. We continue an aggressive pace of innovation, helping contact centers adapt to changing customer expectations and demands. We are pleased by the growth in software and software related revenues as many of the larger contracts signed earlier this year are being implemented with staged roll-outs that have started in Q3. inContact is well-positioned and has a confirmed leadership position in a market that is expected to more than double in size within the next five years.”
CONFERENCE CALL INFORMATION
We will host a conference call to discuss our third quarter 2013 financial results later today at 4:30 p.m. Eastern time (1:30 p.m. Pacific).
Dial-In Number: 1-800-895-0198
International: + 1-785-424-1053
Conference ID#: INCONTACT
An audio file of the call will be available after November 5, 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 November 11, 2013.
Toll-free replay number: 1-877-870-5176
International replay number: 1-858-384-5517
Replay Pin Number: 12331
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)
| September 30, | December 31, | |||||||
| 2013 | 2012 | |||||||
| ASSETS | ||||||||
| Current assets: |
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| Cash and cash equivalents |
$ | 47,611 | $ | 48,836 | ||||
| Restricted cash |
81 | 81 | ||||||
| Accounts and other receivables, net of allowance for accounts of $1,218 and $831, respectively |
18,474 | 18,043 | ||||||
| Other current assets |
4,418 | 3,278 | ||||||
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| Total current assets |
70,584 | 70,238 | ||||||
| Property and equipment, net |
22,748 | 19,862 | ||||||
| Intangible assets, net |
4,135 | 1,156 | ||||||
| Goodwill |
6,563 | 4,086 | ||||||
| Other assets |
1,494 | 1,005 | ||||||
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| Total assets |
$ | 105,524 | $ | 96,347 | ||||
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| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities: |
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| Trade accounts payable |
$ | 8,611 | $ | 7,247 | ||||
| Accrued liabilities |
5,449 | 5,638 | ||||||
| Accrued commissions |
2,222 | 1,610 | ||||||
| Current portion of deferred revenue |
2,734 | 1,973 | ||||||
| Current portion of long-term debt and capital lease obligations |
3,399 | 2,691 | ||||||
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| Total current liabilities |
22,415 | 19,159 | ||||||
| Long-term debt and capital lease obligations |
2,623 | 2,859 | ||||||
| Deferred rent |
507 | 383 | ||||||
| Deferred revenue |
3,711 | 1,958 | ||||||
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| Total liabilities |
29,256 | 24,359 | ||||||
| Total stockholders’ equity |
76,268 | 71,988 | ||||||
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| Total liabilities and stockholders’ equity |
$ | 105,524 | $ | 96,347 | ||||
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INCONTACT, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS and COMPREHENSIVE LOSS (Unaudited)
(in thousands, except per share data)
| Three months | Nine months | |||||||||||||||
| ended September 30, | ended September 30, | |||||||||||||||
| 2013 | 2012 | 2013 | 2012 | |||||||||||||
| Net revenue: |
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| Software |
$ | 17,133 | $ | 13,976 | $ | 49,490 | $ | 39,106 | ||||||||
| Telecom |
15,106 | 13,957 | 45,477 | 40,523 | ||||||||||||
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| Total net revenue |
32,239 | 27,933 | 94,967 | 79,629 | ||||||||||||
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| Costs of revenue: |
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| Software |
7,078 | 5,623 | 19,857 | 15,972 | ||||||||||||
| Telecom |
9,693 | 9,195 | 29,336 | 27,618 | ||||||||||||
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| Total costs of revenue |
16,771 | 14,818 | 49,193 | 43,590 | ||||||||||||
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| Gross profit |
15,468 | 13,115 | 45,774 | 36,039 | ||||||||||||
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| Operating expenses: |
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| Selling and marketing |
9,574 | 6,956 | 27,004 | 20,874 | ||||||||||||
| Research and development |
3,043 | 2,495 | 8,778 | 6,611 | ||||||||||||
| General and administrative |
5,239 | 4,341 | 15,095 | 12,484 | ||||||||||||
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| Total operating expenses |
17,856 | 13,792 | 50,877 | 39,969 | ||||||||||||
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| Loss from operations |
(2,388 | ) | (677 | ) | (5,103 | ) | (3,930 | ) | ||||||||
| Other income (expense): |
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| Interest income |
— | — | — | 3 | ||||||||||||
| Interest expense |
(88 | ) | (129 | ) | (238 | ) | (331 | ) | ||||||||
| Other expense |
1 | (55 | ) | (24 | ) | (201 | ) | |||||||||
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| Total other expense |
(87 | ) | (184 | ) | (262 | ) | (529 | ) | ||||||||
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| Loss before income taxes |
(2,475 | ) | (861 | ) | (5,365 | ) | (4,459 | ) | ||||||||
| Income tax expense |
(41 | ) | (21 | ) | (90 | ) | (51 | ) | ||||||||
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| Net loss and comprehensive loss |
$ | (2,516 | ) | $ | (882 | ) | $ | (5,455 | ) | $ | (4,510 | ) | ||||
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| Net loss per common share: |
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| Basic and diluted |
$ | (0.05 | ) | $ | (0.02 | ) | $ | (0.10 | ) | $ | (0.10 | ) | ||||
| Weighted average common shares outstanding: |
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| Basic and diluted |
55,317 | 46,214 | 54,375 | 44,992 | ||||||||||||
INCONTACT, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - (Unaudited)
(in thousands)
| Nine months ended September 30, | ||||||||
| 2013 | 2012 | |||||||
| Cash flows provided by operating activities: |
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| Net loss |
$ | (5,455 | ) | $ | (4,510 | ) | ||
| Adjustments to reconcile net loss to net cash provided by operating activities: |
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| Depreciation of property and equipment |
4,469 | 3,691 | ||||||
| Amortization of software development costs |
3,475 | 3,035 | ||||||
| Amortization of intangible assets |
270 | 185 | ||||||
| Amortization of note financing costs |
14 | 24 | ||||||
| Interest accretion |
5 | 9 | ||||||
| Stock-based compensation |
2,961 | 1,380 | ||||||
| Loss on disposal of property and equipment |
120 | 200 | ||||||
| Changes in operating assets and liabilities: |
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| Accounts and other receivables, net |
(3,162 | ) | (2,968 | ) | ||||
| Other current assets |
(1,140 | ) | (927 | ) | ||||
| Other non-current assets |
(477 | ) | (90 | ) | ||||
| Trade accounts payable |
1,137 | 161 | ||||||
| Accrued liabilities |
(550 | ) | 121 | |||||
| Accrued commissions |
612 | 272 | ||||||
| Other long-term liabilities |
134 | 60 | ||||||
| Deferred revenue |
2,514 | 1,610 | ||||||
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| Net cash provided by operating activities |
4,927 | 2,253 | ||||||
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| Cash flows used in investing activities: |
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| Decrease in restricted cash |
— | 165 | ||||||
| Purchase of intangible assets |
— | (133 | ) | |||||
| Payments made for deposits |
(12 | ) | (23 | ) | ||||
| Acquisition of assets |
(2,746 | ) | — | |||||
| Acquisition of a business |
(2,700 | ) | — | |||||
| Capitalized internal use software costs |
(4,583 | ) | (4,154 | ) | ||||
| Purchases of property and equipment |
(3,365 | ) | (2,949 | ) | ||||
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| Net cash used in investing activities |
(13,406 | ) | (7,094 | ) | ||||
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| Cash flows provided by financing activities: |
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| Proceeds from exercise of options |
6,475 | 3,006 | ||||||
| Proceeds from sale of stock under employee stock purchase plan |
326 | 197 | ||||||
| Proceeds from issuance of common stock |
— | 37,474 | ||||||
| Offering cost payments |
— | (125 | ) | |||||
| Borrowings under term loan |
4,000 | — | ||||||
| Payment of debt financing fees |
(43 | ) | (29 | ) | ||||
| Principal payments on long-term debt and capital leases |
(2,504 | ) | (2,393 | ) | ||||
| Borrowings under the revolving credit notes |
— | 6,000 | ||||||
| Payments under the revolving credit notes |
(1,000 | ) | (8,500 | ) | ||||
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| Net cash provided by financing activities |
7,254 | 35,630 | ||||||
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| Net increase (decrease) in cash and cash equivalents |
(1,225 | ) | 30,789 | |||||
| Cash and cash equivalents at the beginning of the period |
48,836 | 17,724 | ||||||
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| Cash and cash equivalents at the end of the period |
$ | 47,611 | $ | 48,513 | ||||
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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 September 30, 2013 and 2012 were as follows (in thousands - unaudited):
| Three months ended September 30, 2013 | Three months ended September 30, 2012 | |||||||||||||||||||||||
| Software | Telecom | Consolidated | Software | Telecom | Consolidated | |||||||||||||||||||
| Net revenue |
$ | 17,133 | $ | 15,106 | $ | 32,239 | $ | 13,976 | $ | 13,957 | $ | 27,933 | ||||||||||||
| Costs of revenue |
7,078 | 9,693 | 16,771 | 5,623 | 9,195 | 14,818 | ||||||||||||||||||
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| Gross profit |
10,055 | 5,413 | 15,468 | 8,353 | 4,762 | 13,115 | ||||||||||||||||||
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| Gross margin |
59 | % | 36 | % | 48 | % | 60 | % | 34 | % | 47 | % | ||||||||||||
| Operating expenses: |
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| Direct selling and marketing |
8,227 | 847 | 9,074 | 5,807 | 744 | 6,551 | ||||||||||||||||||
| Direct research and development |
2,790 | — | 2,790 | 2,252 | — | 2,252 | ||||||||||||||||||
| Indirect |
5,256 | 736 | 5,992 | 4,301 | 688 | 4,989 | ||||||||||||||||||
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| (Loss) income from operations |
$ | (6,218 | ) | $ | 3,830 | $ | (2,388 | ) | $ | (4,007 | ) | $ | 3,330 | $ | (677 | ) | ||||||||
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| Nine months ended September 30, 2013 | Nine months ended September 30, 2012 | |||||||||||||||||||||||
| Software | Telecom | Consolidated | Software | Telecom | Consolidated | |||||||||||||||||||
| Net revenue |
$ | 49,490 | $ | 45,477 | $ | 94,967 | $ | 39,106 | $ | 40,523 | $ | 79,629 | ||||||||||||
| Costs of revenue |
19,857 | 29,336 | 49,193 | 15,972 | 27,618 | 43,590 | ||||||||||||||||||
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| Gross profit |
29,633 | 16,141 | 45,774 | 23,134 | 12,905 | 36,039 | ||||||||||||||||||
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| Gross margin |
60 | % | 35 | % | 48 | % | 59 | % | 32 | % | 45 | % | ||||||||||||
| Operating expenses: |
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| Direct selling and marketing |
22,750 | 2,786 | 25,536 | 17,330 | 2,354 | 19,684 | ||||||||||||||||||
| Direct research and development |
8,043 | — | 8,043 | 5,954 | — | 5,954 | ||||||||||||||||||
| Indirect |
14,709 | 2,589 | 17,298 | 12,129 | 2,202 | 14,331 | ||||||||||||||||||
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| (Loss) income from operations |
$ | (15,869 | ) | $ | 10,766 | $ | (5,103 | ) | $ | (12,279 | ) | $ | 8,349 | $ | (3,930 | ) | ||||||||
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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)
| Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
| 2013 | 2012 | 2013 | 2012 | |||||||||||||
| Net loss and comprehensive loss |
$ | (2,516 | ) | $ | (882 | ) | $ | (5,455 | ) | $ | (4,510 | ) | ||||
| Depreciation and amortization |
2,868 | 2,435 | 8,214 | 6,911 | ||||||||||||
| Stock-based compensation |
1,450 | 530 | 2,961 | 1,380 | ||||||||||||
| Interest income and expense, net |
88 | 129 | 238 | 328 | ||||||||||||
| Income tax expense |
41 | 21 | 90 | 51 | ||||||||||||
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| Adjusted EBITDA |
$ | 1,931 | $ | 2,233 | $ | 6,048 | $ | 4,160 | ||||||||
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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)
| Three months ended September 30, 2013 | Three months ended September 30, 2012 | |||||||||||||||
| Gross Profit | Gross Margin | Gross Profit | Gross Margin | |||||||||||||
| Consolidated gross profit and margin |
$ | 15,468 | 48 | % | $ | 13,115 | 47 | % | ||||||||
| Depreciation and amortization |
2,181 | 7 | % | 1,853 | 7 | % | ||||||||||
| Stock-based compensation |
123 | 0 | % | 68 | 0 | % | ||||||||||
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| Consolidated gross profit and margin, excluding non-cash charges |
$ | 17,772 | 55 | % | $ | 15,036 | 54 | % | ||||||||
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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)
| Three months ended September 30, 2013 | Three months ended September 30, 2012 | |||||||||||||||
| Gross Profit | Gross Margin | Gross Profit | Gross Margin | |||||||||||||
| Software segment gross profit and margin |
$ | 10,055 | 59 | % | $ | 8,353 | 60 | % | ||||||||
| Depreciation and amortization |
1,976 | 12 | % | 1,626 | 12 | % | ||||||||||
| Stock-based compensation |
121 | 1 | % | 67 | 0 | % | ||||||||||
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| Software segment gross profit and margin, excluding non-cash charges |
$ | 12,152 | 71 | % | $ | 10,046 | 72 | % | ||||||||
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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.
CONTACT: Investor Contact: Edward Keaney, Market Street Partners, 415-445-3238, ekeaney@marketstreetpartners.com, or General Contact: Mariann McDonagh, inContact, Chief Marketing Officer, 801-320-3347, mariann.mcdonagh@inContact.com