inContact Reports First Quarter 2012 Financial Results

SALT LAKE CITY – May 3, 2012 – inContact, Inc. (NASDAQ: SAAS), the leading provider of cloud contact center software and contact center agent optimization tools, today reported financial results for the first quarter ended March 31, 2012. 

“Our Software segment revenues were a record $12.3 million, up 32% over the same period a year ago and represent the sixth consecutive quarter of software and consolidated revenue growth, a trend we expect to continue.  Additionally, we closed 57 contracts, of which 34 were new contracts and 23 were up-sells in existing accounts,” said Paul Jarman, inContact CEO. “We continue to see a change in the size and type of contact centers selecting inContact as we move upmarket and the cloud is more widely recognized as a proven technology delivery method.”

Revenue
Software segment revenue totaled $12.3 million for the quarter ended March 31, 2012, an increase of 32% from Q1 2011 and an increase of 12% from $11.0 million in Q4 2011. Telecom segment revenue for Q1 2012 was $13.4 million for the quarter ended March 31, 2012, an increase of $1.4 million or 11% from $12.0 million in Q1 2011.  This increase marks the seventh consecutive quarter that software related telecom revenue has increased.
 
Consolidated revenue for the quarter ended March 31, 2012 was $25.7 million versus $21.3 million for the same period in 2011, an increase of 20%. This reflects an increase of $3.0 million in Software segment revenue and an increase of $1.4 million in Telecom segment revenue.  
 
Gross Margin 
The Q1 Software segment gross margin was 59% versus 62% in Q1 2011, and excluding non-cash charges, non-GAAP Software segment gross margin was 71% for the quarter, versus 73% in Q1 2011.  This decrease in gross margin is principally attributable to investments we made in our international facilities and reseller programs, as well as higher non-cash depreciation and amortization. First quarter 2012 Telecom segment gross margin was 31% versus 26% in Q1 2011.
  
Consolidated gross margin percentage was 44% in the first quarter compared to 42% for the same period in 2011.  Excluding non-cash charges, consolidated gross margin was 51% for the first quarter compared to 48% for the same period in 2011.
 
EBITDAS
Earnings before interest, taxes, depreciation and amortization and stock-based compensation (“EBITDAS”) for the first quarter was $935,000 versus $989,000 during the same period in 2011. Our decrease in EBITDAS is primarily due to the investments impacting gross profit mentioned above, and investments in sales and marketing of approximately $1.8 million. EBITDAS 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 March 31, 2012 was $1.7 million, or ($0.04) per share, as compared to a net loss of $1.0 million or ($0.03) per share for the same period in 2011.  This decrease in net results is due to the items mentioned above.   
 
Jarman concluded, “Our strong Q1 performance continues to solidify our leadership position in the accelerating cloud contact center market. We are making significant strides forward to increase our market position by investing in our platform, expanding our inCloud ecosystem, and leveraging our reseller partners. The strength of our model continues to be affirmed as we close larger enterprise accounts, including four Global 500 companies in first quarter. We have built a strong foundation to increase leverage in the model and accelerate our software revenue growth. We believe this will create value for our shareholders throughout this year and into the future.”
 
CONFERENCE CALL INFORMATION
We will host a conference call to discuss our first quarter 2012 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 May 4, 2012 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 May 10, 2012:
 
Toll-free replay number: 1-877-870-5176
International replay number: + 1-858-384-5517
Replay Pin Number: 12328 
 
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 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 related to the software services product features. 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 March 31, 2012 and 2011 were as follows (in thousands):
 
 
 
RECONCILIATION of NON-GAAP MEASURES:
“EBITDAS” 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). EBITDAS 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.
 
 

 
 
 
About inContact
inContact (NASDAQ:SAAS) helps contact centers around the globe create profitable customer experiences through its powerful portfolio of cloud contact center software solutions. The company’s services and solutions enable contact centers to operate more efficiently, optimize the cost and quality of every customer interaction, create new pathways to profit and ensure ongoing customer-centric business improvement and growth. To learn more, visit www.inContact.com.
 
inContact® is the registered trademark of inContact, Inc.