inContact Reports Second Quarter 2016 Financial Results

  • Software revenues of $42.4 million in Q2
  • Consolidated revenue in Q2 of $63.8 million
  • Adjusted EBITDA in Q2 of $3.0 million
  • Annualized Recurring Software Revenues of $164.4 million
  • Closed 170 contracts in Q2

SALT LAKE CITY – Aug 4, 2016 – inContact, Inc., the leading provider of cloud contact center software and workforce optimization tools, today reported financial results for the second quarter ended June 30, 2016.

“I’m pleased to report strong revenues and positive adjusted EBITDA in the second quarter of 2016,” said Paul Jarman, inContact CEO. “During the quarter we closed 170 total contracts, including 111 new logo customers and 59 expansion deals with existing customers.”

Revenue

Software segment revenue totaled $42.4 million for the quarter ended June 30, 2016, an increase of 24% from $34.1 million in Q2 2015. Consolidated revenue for the quarter ended June 30, 2016 was $63.8 million versus $53.1 million for the same period in 2015, an increase of 20%.

As of June 2016 our Annualized Monthly Recurring Software Revenue was $164.4 million, an increase of 33% from $124.0 million as of June 2015.

Gross Margin

Software segment gross margin for the quarter ended June 30, 2016 was 59% versus 58% for the same period in 2015. Non-GAAP Software segment gross margin which represents the elimination of amortization of acquired intangible assets and stock-based compensation was 63% for the second quarter of 2016, versus 62% in the second quarter of 2015 (see reconciliation of non-GAAP measures below). Second quarter 2016 Network connectivity segment gross margin was 37% versus 37% for the same period in 2015.

Consolidated gross margin percentage was 52% in the second quarter of 2016 compared to 50% for the same period in 2015. Non-GAAP consolidated gross margin which represents the elimination of amortization of acquired intangible assets and stock-based compensation was 54% for the second quarter 2016 compared to 53% for the same period in 2015 (see reconciliation of non-GAAP measures below).

Operating Expenses

Operating expenses for the second quarter of 2016 were $38.6 million or 61% of total revenue versus $32.2 million or 61% of total revenue during the same period in 2015.  Non-GAAP operating expenses which represents the elimination of amortization of acquired intangible assets and stock-based compensation for the second quarter of 2016 were $36.8 million or 58% of total revenue versus $30.8 million or 58% of total revenue during the same period in 2015 (see reconciliation of non-GAAP measures below).  The second quarter of 2016 operating expenses includes $2.5 million in non-recurring expenses, $1.9 million of which relates to our proposed merger with NICE-Systems Ltd.  After adjusting for non-recurring items, operating expenses in the current quarter were $36.1 million or 57% of total revenues compared to 61% in the same period of 2015.  On a non-GAAP basis, operating expenses as a percent of total revenues were 54% and 58% for Q2 2016 compared to Q2 2015, respectively.

Adjusted EBITDA

Adjusted EBITDA for the second quarter of 2016 was $3.0 million versus $1.4 million during the same period in 2015, an increase of 115%. Adjusted EBITDA, after adjustment for the $2.5 million in non-recurring operating expenses was $5.5 million, an increase of 292% versus our second quarter 2015 operating results. 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 June 30, 2016 was $7.4 million, or ($0.12) per basic and diluted share, as compared to net loss of $7.3 million or ($0.12) per basic and diluted share for the same period in 2015. Non-GAAP net loss for the quarter ended June 30, 2016 was $3.1 million, or ($0.05) per basic and diluted share, as compared to non-GAAP net loss of $3.4 million or ($0.06) per basic and diluted share for the same period in 2015. Net loss, after adjustment for the $2.5 million in non-recurring operating expenses was $4.9 million on a GAAP basis and $0.6 million on a non-GAAP basis (see reconciliation of non-GAAP measures below).

Guidance for 2016

Given the announcement made on May 18, 2016 regarding the Company’s entry into a definitive agreement to be acquired by NICE-Systems Ltd., we will not be providing financial guidance for the third quarter or full year 2016.  The company’s previously issued financial guidance should no longer be relied upon.

Conference Call Information

There will be no earnings call held in conjunction with this release.  Please visit http://investor.incontact.com for the latest inContact releases and information.

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.



SEGMENT REPORTING

We operate under two business segments: Software and Network connectivity. The Software segment includes all revenue related to the delivery of our software applications, plus the associated professional services and setup fees. The Network connectivity 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 three months ended June 30, 2016 and 2015 were as follows (in thousands):


 

RECONCILIATION of NON-GAAP MEASURES:

“Adjusted EBITDA” is Earnings Before deductions for Interest, Taxes, Depreciation and Amortization and Stock-Based Compensation. The “Non-GAAP” measures represent the elimination of amortization of acquired intangible assets and stock-based compensation. Neither are measures of financial performance under generally accepted accounting principles (GAAP). The Adjusted EBITDA and the Non-GAAP measures 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.


About inContact

inContact is the cloud contact center software leader, with the most complete, easiest and most reliable solution to help organizations achieve their customer experience goals. inContact continuously innovates in the cloud and is the only provider to offer a complete solution that includes the customer interaction cloud, an expert service model and the broadest partner ecosystem. Recognized as a market leader by Gartner, IDC, Frost & Sullivan, Ovum and DMG, inContact supports over 6 billion interactions per year for enterprise, midmarket, government organizations and business process outsourcers (BPOs) who operate in multiple divisions, locations and global regions. To learn more, visit www.incontact.com.

inContact® is the registered trademark of inContact, Inc.

CONTACT: Investor Contact: Edward Keaney, Market Street Partners, 1-415-445-3238, ekeaney@marketstreetpartners.com, or General Contact: Cheryl Andrus, inContact, Director Corporate Communications, 1-801-320-3646, cheryl.andrus@incontact.com