ININ Interactive Intelligence Grp., Inc.

Interactive Intelligence Reports Record Revenues for the Second Quarter Product revenues grow 18 percent year-over-year; sixth consecutive profitable quarter INDIANAPOLIS, July 26 /PRNewswire-FirstCall/ -- Interactive Intelligence Inc. (NASDAQ:ININ), a global developer of business communications software, today reported record revenues of $15.6 million for the second quarter ended June 30, 2005. This is an increase of more than 14 percent based on revenues of $13.6 million reported for the second quarter of 2004. (Logo: http://www.newscom.com/cgi-bin/prnh/19990914/IILOGO ) Product revenues for the second quarter of 2005 were $8.6 million, an increase of over 18 percent based on product revenues of $7.3 million recognized in the second quarter of 2004. Product costs increased from the prior year, with the increase being associated with the IP telephony solution sold by the company's wholly-owned subsidiary, Vonexus. Sales and marketing expenses increased from the prior year, also as a result of Vonexus activities. Operating income in the second quarter of 2005 increased to $418,000, compared to $300,000 in 2004. The company recognized non-operating other expenses of $136,000 in the second quarter of 2005 compared to non-operating other income of $25,000 in the second quarter of 2004. The non-operating expenses in 2005 related to foreign currency translation and foreign tax withholdings. These amounts were reclassified from sales and marketing, and general and administrative expenses for prior periods. Net income for the second quarter of 2005 was $290,000, or $0.02 per share, compared to net income of $304,000, or $0.02 per share in the comparable quarter of 2004. For the first six months of 2005, revenues totaled $30.2 million, an increase of over 10 percent, compared to $27.3 million in 2004. Net income per share was $0.02 for the first six months of 2005, compared to $0.03 in 2004. "We had a very good quarter with solid contribution from our traditional contact center market, increasing revenues from our Vonexus subsidiary, and record sales from our unified messaging and communications product, Communite(TM)," said Interactive Intelligence president and chief executive officer, Dr. Donald E. Brown. "Geographically, sales contributions from our North American and EMEA regions were particularly strong, adding new customers, as well as a significant number of follow-on contracts from current customers. Our enterprise IP telephony offering, which is marketed by Vonexus, continued to grow by a strong double-digit percentage during the quarter compared to the previous quarter." Customers signing contracts in the second quarter included Amway Moscow, Bell Sell Telephone Marketing, Channel Life, Delta Dental Plan of Michigan, Education Sales Management (ESM), Heartland Payment Systems, Herff Jones, Iowa Telecom, ITV Direct, Market Reach (Netherlands), Nordia, Shinsei Bank, University of California, Berkeley, and West Business Services. Other highlights in the second quarter included an announcement of upgrades to the company's intelligent multi-site routing software, Interaction Director(R), ideal for high call-volume, distributed organizations and outsourced teleservices firms. During the quarter the company also released an enhanced version of its award-winning contact center automation suite, Customer Interaction Center(R) (CIC), adding a new zero-effort deployment .NET client, as well as new product integrations for Microsoft Outlook, Microsoft Great Plains, and Microsoft CRM. The new release also included enhanced Web self-service and e-mail response management capabilities -- two areas of the market that continue to have significant upside potential. For additional details about the latest CIC enhancements, visit http://www.inin.com/News/PressReleases/pressreleases.asp?id=459. In recognition of the company's continued revenue growth, Interactive Intelligence was named by Network World magazine among the top 200 domestic public network companies for 2004. This was the second consecutive year Interactive Intelligence has been included in the Network World 200. Interactive Intelligence will host an earnings conference call today at 4:30 p.m. Eastern time (EDT), featuring Dr. Brown and the company's chief financial officer, Stephen R. Head. There will be a live Q&A session following opening remarks. The teleconference is expected to last approximately 45 minutes. To access the teleconference, please dial 1-800-621-5170 at least five minutes prior to the start of the call. Ask for the teleconference by the following name: "Interactive Intelligence second quarter earnings call." The teleconference will also be broadcast live on the company's investor relations' page at http://www.inin.com/investors . An archive of the teleconference will be posted following the call. To receive a copy of the earnings release, please call 317.872.3000 and press "4" for investor relations, or e-mail . About Interactive Intelligence Interactive Intelligence Inc. (NASDAQ:ININ) is a global developer of business communications software for IP telephony, contact center automation, unified communications, and customer self-service. The company was founded in 1994 and has more than 1,500 customers worldwide. Recent awards include Software Magazine's 2004 Top 500 Global Software and Services Companies, the 2004 Network World 200, and Frost & Sullivan's 2004 Product Innovation Award. Interactive Intelligence employs approximately 350 people and is headquartered in Indianapolis. The company has 12 offices throughout North America, Europe and Asia Pacific. Interactive Intelligence can be reached at +1 317.872.3000 or ; on the Web: http://www.inin.com/ . This release contains certain forward-looking statements that involve a number of risks and uncertainties. Among the factors that could cause actual results to differ materially are the following: rapid technological changes in the industry; volatility in the market price of the company's common stock; the company's ability to achieve profitability, to manage successfully its growth and increasingly complex third party relationships, to maintain successful relationships with its current and any new resellers, to maintain and improve its current products and to develop new products and to protect its proprietary rights adequately; and other factors described in the company's SEC filings, including the company's latest annual report on Form 10-K and its quarterly reports on Form 10-Q. Interactive Intelligence Inc. is the owner of the marks INTERACTIVE INTELLIGENCE, its associated LOGO and numerous other marks. All other trademarks mentioned in this document are the property of their respective owners. Contacts: Stephen R. Head Chief Financial Officer Interactive Intelligence Inc. +1 317.715.8412 Christine Holley Director, Market Communications Interactive Intelligence Inc. +1 317.715.8220 Interactive Intelligence, Inc. Consolidated Balance Sheets (in thousands) June 30, December 31, 2005 2004 (unaudited) Assets Current assets: Cash and cash equivalents $13,639 $14,603 Accounts receivable, net 13,210 10,251 Prepaid expenses 2,130 2,119 Other current assets 689 836 Total current assets 29,668 27,809 Property and equipment, net 4,155 4,071 Other assets, net 654 618 Total assets $34,477 $32,498 Liabilities and Shareholders' Equity Current liabilities: Line of credit $3,000 $3,000 Accounts payable and accrued liabilities 4,956 5,894 Accrued compensation and related expenses 1,390 1,200 Deferred product revenues 4,477 4,484 Deferred services revenues 14,916 12,884 Total current liabilities 28,739 27,462 Shareholders' equity: Preferred stock - - Common stock 160 159 Additional paid-in-capital 65,565 65,179 Accumulated deficit (59,987) (60,302) Total shareholders' equity 5,738 5,036 Total liabilities and shareholders' equity $34,477 $32,498 Interactive Intelligence, Inc. Consolidated Statements of Operations (in thousands, except per share amounts) Three months ended Six months ended June 30, June 30, 2005 2004 2005 2004 (unaudited) (unaudited) Revenues: Product $8,596 $7,261 $16,482 $14,356 Services 7,026 6,380 13,733 12,991 Total revenues 15,622 13,641 30,215 27,347 Cost of revenues: Product 1,108 404 1,874 999 Services 2,703 2,771 5,410 5,524 Total cost of revenues 3,811 3,175 7,284 6,523 Gross profit 11,811 10,466 22,931 20,824 Operating expenses: Sales and marketing 6,146 5,047 12,000 10,064 Research and development 3,212 3,258 6,407 6,536 General and administrative 2,035 1,776 4,056 3,705 Restructuring and other charges - 85 - 101 Total operating expenses 11,393 10,166 22,463 20,406 Operating income 418 300 468 418 Other income (expense): Interest income, net 62 25 113 32 Other income (expense) (136) 25 (182) 72 Total other income (expense) (74) 50 (69) 104 Income before income taxes 344 350 399 522 Income taxes 54 46 84 98 Net income $290 $304 $315 $424 Net income per share: Basic $0.02 $0.02 $0.02 $0.03 Diluted $0.02 $0.02 $0.02 $0.03 Shares used to compute net income per share: Basic 16,015 15,845 15,986 15,826 Diluted 16,685 16,735 16,608 16,716 NOTE TO EDITORS: Communite is spelled with an accent acute mark over the 'e'. Due to limitations of wire transmission, this mark has been omitted. http://www.newscom.com/cgi-bin/prnh/19990914/IILOGO http://photoarchive.ap.org/ DATASOURCE: Interactive Intelligence Inc. CONTACT: Stephen R. Head, Chief Financial Officer, +1-317-715-8412, , or Christine Holley, Director, Market Communications, +1-317-715-8220, , both of Interactive Intelligence Inc. Web site: http://www.inin.com/

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