ININ Interactive Intelligence Grp., Inc.

Product Revenues Up 18 Percent INDIANAPOLIS, Oct. 25 /PRNewswire-FirstCall/ -- Interactive Intelligence Inc. (NASDAQ:ININ), a global developer of business communications software, today reported total revenues of $15.2 million for the quarter ended Sept. 30, 2005, an increase of 13 percent from total revenues of $13.4 million in the same period last year. Net income for the 2005 third quarter was $28,000, or $0.00 per share, compared to $102,000, or $0.01 per share in the third quarter of 2004. Product revenues increased 18 percent to $7.8 million in the 2005 third quarter and services revenues increased 9 percent to $7.4 million. (Logo: http://www.newscom.com/cgi-bin/prnh/19990914/IILOGO ) "Orders in the quarter were up sharply from the same period last year," said Interactive Intelligence president and chief executive officer, Dr. Donald E. Brown. "This activity drove an increase in new revenues that enabled us to record our seventh consecutive quarter of profitability. We have good momentum across all product lines, received positive outlooks from our major resellers at our recent partner conference, have some very innovative product releases nearing completion, and continue to see an increasing number of wins over our major competitors. Overall, we are pleased with results in the quarter and the progress we are making in both the contact center and enterprise IP telephony markets." For the first nine months of 2005, total revenue was $45.4 million, an 11 percent increase from $40.8 million of total revenue in the same period of 2004. Net income for the first nine months of 2005 was $343,000, or $0.02 per share, compared to $526,000, or $0.03 per share in the first nine months of 2004. Product revenues increased 16 percent to $24.3 million in the 2005 nine month period and services revenues increased 7 percent to $21.1 million. Customers signing contracts in the third quarter included American Health Network, Angie's List, Bass Pro Shops, Case Western Reserve University, Dialogue Marketing, ITT Educational Services, OSI Software, Research In Motion, Robert Half International, and State of Tennessee. The company received two significant market recognitions during the third quarter: -- Interactive Intelligence contact center automation software was named the "Best Integrated Multimedia, IP Contact Center" offering in a hands-on, side-by-side comparison of contact center solutions completed by independent network consultancy and test lab Miercom, which included products from Avaya, Genesys, Mitel, Nortel, and Siemens. -- Global research and consulting firm, Frost & Sullivan, named Interactive Intelligence its 2005 "Excellence in Technology of the Year" recipient in the field of customer contact center management software. 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 1-888-882-0115 at least five minutes prior to the start of the call. Ask for the teleconference by the following name: "Interactive Intelligence third 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) offers business communications innovation, experience and value with software solutions for IP contact centers, enterprise IP telephony, self-service automation, and unified communications and messaging. The company was founded in 1994 and has more than 1,500 customers worldwide. Recent awards include Software Magazine's 2005 Top 500 Global Software and Services Companies, Miercom's 2005 Best Integrated Multimedia IP Contact Center product award, and Frost & Sullivan's 2005 Excellence in Technology of the Year 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 maintain 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. Condensed Consolidated Balance Sheets (in thousands) September 30, December 31, 2005 2004 (unaudited) Assets Current assets: Cash and cash equivalents $13,692 $14,603 Accounts receivable, net 14,847 10,251 Prepaid expenses 2,367 2,119 Other current assets 555 836 Total current assets 31,461 27,809 Property and equipment, net 3,968 4,071 Other assets, net 592 618 Total assets $36,021 $32,498 Liabilities and Shareholders' Equity Current liabilities: Line of credit $3,000 $3,000 Accounts payable and accrued liabilities 5,244 5,894 Accrued compensation and related expenses 1,657 1,200 Deferred product revenues 4,375 4,484 Deferred services revenues 15,805 12,884 Total current liabilities 30,081 27,462 Shareholders' equity: Preferred stock - - Common stock 161 159 Additional paid-in-capital 65,738 65,179 Accumulated deficit (59,959) (60,302) Total shareholders' equity 5,940 5,036 Total liabilities and shareholders' equity $36,021 $32,498 Interactive Intelligence, Inc. Condensed Consolidated Statements of Operations (in thousands, except per share amounts) Three months Nine months ended ended September 30, September 30, 2005 2004 2005 2004 (unaudited) (unaudited) Revenues: Product $7,783 $6,591 $24,265 $20,947 Services 7,405 6,823 21,138 19,814 Total revenues 15,188 13,414 45,403 40,761 Cost of revenues: Product 963 452 2,837 1,451 Services 2,743 2,564 8,153 8,088 Total cost of revenues 3,706 3,016 10,990 9,539 Gross profit 11,482 10,398 34,413 31,222 Operating expenses: Sales and marketing 6,188 5,228 18,188 15,292 Research and development 3,061 3,208 9,468 9,744 General and administrative 2,153 1,860 6,209 5,666 Total operating expenses 11,402 10,296 33,865 30,702 Operating income 80 102 548 520 Other income (expense): Interest income, net 69 28 182 60 Other income (expense) (74) 10 (256) 82 Total other income (expense) (5) 38 (74) 142 Income before income taxes 75 140 474 662 Income taxes 47 38 131 136 Net income $28 $102 $343 $526 Net income per share: Basic $0.00 $0.01 $0.02 $0.03 Diluted $0.00 $0.01 $0.02 $0.03 Shares used to compute net income per share: Basic 16,054 15,872 16,009 15,841 Diluted 16,928 16,476 16,730 16,637 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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