SALT LAKE CITY – November 1, 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 third quarter ended September 30, 2012.
Said Paul Jarman, inContact CEO, “It was a strong quarter for inContact across all of our financial metrics. We are benefiting from the overall momentum of cloud adoption and the power of our recurring cloud model. During the quarter, we achieved a new record in annual contract value booked and we closed 50 new customers and 19 expansion deals for a total of 69 contracts.”
Software segment revenue totaled $14.0 million for the quarter ended September 30, 2012, an increase of 40% from Q3 2011 and an increase of 9% from $12.8 million in Q2 2012. Software segment revenue exceeded Telecom segment revenue for the first time in Q3 2012. Telecom segment revenue for Q3 2012 was $13.9 million, an increase of $1.8 million or 14% from $12.1 million in Q3 2011. This increase marks the eighth consecutive quarter that software and software related telecom revenue has increased.
Consolidated revenue for the quarter ended September 30, 2012 was $27.9 million versus $22.2 million for the same period in 2011, an increase of 26%.
For the nine months ended September 30, 2012, Software segment revenue totaled $39.1 million, an increase of 36% from $28.9 million in 2011. For the nine months ended September 30, 2012, Telecom segment revenue totaled $40.6 million, an increase of 12% from $36.4 million for 2011.
The Q3 Software segment gross margin was 60% versus 55% in Q3 2011, and excluding non-cash charges, non-GAAP Software segment gross margin was 72% for the quarter, versus 69% in Q3 2011. This increase in gross margin is principally attributable to revenue increases in 2012 in excess of higher costs of revenue. Third quarter 2012 Telecom segment gross margin was 34% versus 25% in Q3 2011.
Consolidated gross margin percentage was 47% in the third quarter compared to 39% for the same period in 2011. Excluding non-cash charges, non-GAAP consolidated gross margin was 54% for the third quarter compared to 46% for the same period in 2011.
Earnings before interest, taxes, depreciation and amortization and stock-based compensation (“EBITDAS”) for the third quarter was $2.2 million versus a negative $590,000 during the same period in 2011. Our increase in EBITDAS is primarily due to the increase in margins discussed above. EBITDAS is a non-GAAP measure management believes provides important insight into our operating results (see reconciliation of non-GAAP measures below).
GAAP net loss for quarter ended September 30, 2012 was $953,000, or ($0.02) per share, as compared to a net loss of $3.2 million, or ($0.07) per share for the same period in 2011. This decrease in net loss is primarily due to increased revenues and improved margins.
Jarman concluded, “We have another record quarter behind us as our software revenue run rate grows at a very healthy rate. We will continue to leverage the market opportunity before us through innovation in our platform, growth in our ecosystem, and expanding leverage through key partnerships. We are on track to achieve our 2012 guidance, and look forward to continuing this progress in 2013.”
CONFERENCE CALL INFORMATION
We will host a conference call to discuss our third quarter 2012 financial results later today, November 1, 2012, at 4:30 p.m. Eastern time (1:30 p.m. Pacific).
Dial-in Number: 1-866-952-1906
International Dial-in Number: + 1-785-424-1825
Conference ID#: INCONTACT
Webcast URL: http://investor.inContact.com
An audio file of the call will be available after November 1, 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 November 16, 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.
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 the year ended 2013, 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 three and nine month ended September 30, 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.
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.
Market Street Partners
inContact, Communications Coordinator
inContact® is the registered trademark of inContact, Inc.