- Total software segment revenues of $26.3 million, up 53% year-over-year
- Consolidated revenue of $44.2 million, up 37% year-over-year
- SaaS bookings at record levels, up 41% over 3rd quarter of prior year
SALT LAKE CITY – November 10, 2014 – inContact, Inc., the leading provider of cloud contact center software and contact center optimization tools, today reported record financial results for the third quarter ended September 30, 2014.
Said Paul Jarman, inContact CEO, “I’m pleased to announce the strongest results in the company's history with record SaaS bookings, revenues and new implementations during the quarter. SaaS bookings increased 41% year over year in estimated annual contract value. We closed 99 total contracts, 54 with new customers and 45 expansion deals. Our win rate in competitive opportunities is over 60%, and we achieved an all-time high in newly implemented contract value. inContact is the only proven cloud provider in a rapidly expanding market, and we will leverage every advantage to lengthen our lead, as companies of all sizes across a wide variety of industries select our award-winning cloud platform.”
Software segment revenue totaled $26.3 million for the quarter ended September 30, 2014, an increase of 53% from $17.1 million in Q3 2013. Combined software and software-related network connectivity revenue for the quarter ended September 30, 2014 was $41.7 million, an increase of 43% from $29.2 million for the quarter ended September 30, 2013. Approximately 86% of Network connectivity segment revenues were derived from contracts with customers utilizing our contact center software.
Consolidated revenue for the quarter ended September 30, 2014 was $44.2 million versus $32.2 million for the same period in 2013, an increase of 37%.
For the nine months ended September 30, 2014, Software segment revenue totaled $70.5 million, an increase of 42% from $49.5 million for the same period in 2013. For the nine months ended September 30, 2014, Network connectivity segment revenue totaled $51.9 million, an increase of 14% from $45.5 million for the same period in 2013.
Software segment gross margin for the quarter ended September 30, 2014 was 54% versus 59% for the same period in 2013. Software segment gross margin in 2014 was impacted by increased depreciation and amortization, primarily related to the Uptivity acquisition. Excluding non-cash charges, non-GAAP Software segment gross margin was 70% for the third quarter of 2014, versus 71% in the third quarter of 2013. Third quarter 2014 Network connectivity segment gross margin was 37% versus 36%.
Consolidated gross margin percentage was 47% in the third quarter of 2014 compared to 48% for the same period in 2013. Excluding non-cash charges, consolidated gross margin was 57% for the third quarter 2014 compared to 55% for the same period in 2013.
Earnings before interest, taxes, depreciation, amortization and stock-based compensation (“Adjusted EBITDA”), without acquisition-related adjustments, was $2.2 million for the third quarter of 2014. Adjusted EBITDA for the third quarter of 2014, with acquisition-related adjustments was $993,000 versus $1.6 million during the same period in 2013. Adjusted EBITDA is a non-GAAP measure management believes provides important insight into our operating results (see reconciliation of non-GAAP measures below). Results for the three and nine months ended September 30, 2013 reflect the immaterial restatement of General and Administrative expenses.
Net loss for the quarter ended September 30, 2014 was $6.7 million, or ($0.11) per share (basic and diluted), as compared to a net loss of $2.8 million or ($0.05) per share (basic and diluted) for the same period in 2013. The increase in net loss was is principally attributable to increased amortization and stock based compensation charges of $3.2 million, principally related to the Uptivity acquisition.
CONFERENCE CALL INFORMATION
We will host a conference call to discuss our third quarter 2014 financial results later today at 4:30 p.m. Eastern time (1:30 p.m. Pacific).
Dial-In Number: 1-866-952-1906
International: + 1-785-424-1825
Conference ID#: INCONTACT
An audio file of the call will be available after November 10, 2014 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 17, 2014.
Toll-free replay number: 1-877-870-5176
International replay number: 1-858-384-5517
Replay Pin Number: 1233202
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.
We operate under two business segments: Software and Network connectivity (formerly “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 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 and nine months ended September 30, 2014 and 2013 were as follows (in thousands-unaudited):
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.
On May 6, 2014, we acquired CallCopy, Inc., a Delaware corporation doing business as Uptivity (“Uptivity”). The below table provides a detail of the inContact and Uptivity operating results for the three months ended September 30, 2014 without consideration of all adjustments that give effect to events that are directly attributable to the acquisition of Uptivity. Also detailed in the table are the adjustments directly attributable to the acquisition of Uptivity.
This presentation is 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. 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.
Adjustments Directly Attributable to the Acquisition of Uptivity
- To record the resulting decrease in revenue as part of the fair value adjustment to Uptivity’s deferred revenue balances.
- To record the increase in amortization expense associated with acquired intangible assets, based on the fair value of approximately $21.1 million. Customer relationships which have a useful life of 8 years are amortized using the double declining balance method. Other intangibles have useful lives of 5 or 7 years and are amortized using the straight line method.
- To record the increased stock based compensation expense related to the issuance of inContact restricted stock and restricted stock awards granted to management and employees of Uptivity in exchange for outstanding unvested stock options in Uptivity and to retain key employees.
inContact 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 enterprise-class Network connectivity for a complete customer interaction solution. Winner of 2014 CRM Magazine Rising Star Award, 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, firstname.lastname@example.org, or General Contact: Mariann McDonagh, inContact, Chief Marketing Officer, 801-320-3347, mariann.mcdonagh@inContact.com