inContact Reports Fourth Quarter and Full Year 2012 Financial Results

SALT LAKE CITY – February 14, 2013 – inContact, Inc. (NASDAQ: SAAS), the leading provider of cloud contact center software and contact center agent optimization tools, today reported financial results for the fourth quarter and year ended December 31, 2012.

Said Paul Jarman, inContact CEO, “It was another record quarter for inContact and we closed 51 new customers and 11 expansions for a total of 62 contracts.  In addition, during the quarter, we added 2 new Fortune 500 customers and booked the largest deal in the company’s history.”

Continued Jarman, “2012 was a great year for inContact driven by growth in the following key areas: new bookings, as we continue our focus on sales and marketing, revenue from existing accounts, as our “land and expand strategy” delivered strong results, and customer retention, as the recurring revenue model continues to demonstrate its true power.  These three growth pillars combined to create a powerful result in 2012, giving us a software growth rate for the full year 2012 of 37%.”

Revenue

Consolidated revenue for the quarter ended December 31, 2012 was $30.7 million versus $23.8 million for the same period in 2011. This record consolidated revenue reflects an increase of $4.6 million in Software segment revenue and an increase of $2.4 million in Telecom segment revenue over the same period in 2011. Software segment revenue totaled $15.6 million for the quarter ended December 31, 2012, an increase of 42% from Q4 2011 and the largest organic quarterly sequential increase ever. Telecom segment revenue totaled $15.1 million for the quarter ended December 31, 2012, an increase of 19% from Q4 2011, driven by increases in software-related telecom revenue. This increase marks the ninth consecutive quarter that software and software-related telecom revenue has increased.

For the year ended December 31, 2012, Software segment revenue totaled $54.7 million, an increase of 37% from $39.9 million for 2011. For the year ended December 31, 2012, Telecom segment revenue totaled $55.8 million, an increase of 14% from $49.1 million for 2011.

Gross Margin

The Q4 Software segment gross margin was 60% versus 56% in Q4 2011, and excluding non-cash charges, non-GAAP Software segment gross margin was 72% for the quarter, versus 68% in Q4 2011. This increase in gross margin is principally attributable to revenue increases in 2012 as well as operational efficiencies and leverage in international infrastructure investments made in Q4 of 2011. Fourth quarter 2012 Telecom segment gross margin was 34% versus 30% in Q4 2011.
 
Consolidated gross margin percentage was 47% in the fourth quarter compared to 42% for the same period in 2011. Excluding non-cash charges, consolidated gross margin was 54% for the fourth quarter compared to 48% for the same period in 2011.  

Net Results

GAAP net loss for the quarter ended December 31, 2012 was $793,000, or ($0.01) per share, as compared to a net loss of $3.1 million, or ($0.07) per share for the same period in 2011. This decrease in net loss is primarily due to the combination of increased revenues and improved margins.

For the full year ended December 31, 2012, the Company reported a GAAP net loss of $5.2 million versus a net loss of $9.4 million for 2011.

Adjusted EBITDA

Earnings before interest, taxes, depreciation, amortization and stock-based compensation (“Adjusted EBITDA”) for the fourth quarter was $2.4 million versus ($761,000) during the same period in 2011. Our increase in Adjusted EBITDA is primarily due to the increase in margins discussed above. Adjusted EBITDA is a non-GAAP measure management believes provides important insight into our operating results (see reconciliation of non-GAAP measures below).

Jarman concluded, “We are pleased to have achieved the high end of our market guidance in 2012 and believe these results have established the foundation for a strong growth trajectory for 2013. We’ve made significant progress over the past year in supporting our resellers, expanding sales and marketing initiatives, developing cutting-edge innovation and delivering unmatched customer satisfaction. This progress, combined with our cloud market leadership, positions us extremely well throughout 2013 and beyond, as the cloud contact center market continues to accelerate.”

CONFERENCE CALL INFORMATION
We will host a conference call to discuss our fourth quarter and year ended 2012 financial results later today, February 14th, 2013, at 4:30 p.m. Eastern time (1:30 p.m. Pacific).

Dial-in Number: 1-866-952-7532
International Dial-in Number: + 1-785-424-1834
Conference ID#: INCONTACT

An audio file of the call will be available after February 16, 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 February 21, 2013.

Toll-free replay number: 1-877-870-5176
International replay number: + 1-858-384-5517
Replay Pin Number: 12329

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 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 and years ended December 31, 2012 and 2011 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. “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.

 

 

 

 
 
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.

Contacts:
Investor Contact:
Steven Pasko
Market Street Partners
415-445-3238
spasko@marketstreetpartners.com

General Contact:
Mariann McDonagh
inContact
Chief Marketing Officer
801-320-3347
mariann.mcdonagh@inContact.com

inContact® is the registered trademark of inContact, Inc.