Interactive Intelligence (Nasdaq: ININ), a global provider of
unified IP business communications solutions, has announced
operating results for the three months ended March 31, 2011.
The company reported revenues of $47.7 million, an increase of
36 percent from revenues of $35.0 million in the first quarter of
2010. Product revenues increased by 32 percent, recurring revenues
by 30 percent, and services revenues by 88 percent compared to the
2010 first quarter.
First-quarter operating results included the following:
- On a generally accepted accounting
principles (GAAP) basis, net income of $3.1 million in 2011, with
diluted earnings per share (EPS) of $0.16, compared to net income
of $1.9 million in 2010, or EPS of $0.10.
- Net income on a non-GAAP* basis of $5.5
million in 2011, with EPS of $0.28, compared to non-GAAP net income
of $4.2 million in 2010, or EPS of $0.22.
- GAAP operating income of $4.9 million
in 2011, up 23 percent from $4.0 million in 2010.
- Non-GAAP operating income of $6.8
million in 2011, up 34 percent from 2010.
- Other expense of $123,000 in 2011,
compared to $733,000 in 2010, reflecting foreign currency
translation losses in both years.
- An increase in cash flows from
operations to $6.7 million in 2011, compared to $5.3 million in
2010.
For the first quarter of 2011, non-GAAP net income and EPS
excluded charges for stock-based compensation of $1.3 million, or
EPS of $0.07, purchase accounting adjustments of $510,000, or EPS
of $0.03, and non-cash income tax expense of approximately
$549,000, or EPS of $0.02.
For the first quarter of 2010, non-GAAP net income and EPS
excluded charges for stock-based compensation of $1.0 million, or
EPS of $0.05, and non-cash income tax expense of $1.2 million, or
EPS of $0.07.
Cash and investment balances, including long-term investments,
as of March 31, 2011, increased to $91.9 million with no debt.
“We again saw strong year-over-year order increases across all
major geographies and product groups,” said Interactive
Intelligence founder and CEO, Dr. Donald E. Brown. “Total orders
were up 55 percent over the first quarter of 2010, which included a
near tripling in cloud-based contracts year-over-year. We’re
executing well on our sales and marketing plans and are benefiting
from an increase in new opportunities as a result of our
relationships with key strategic partners.”
During the first quarter of 2011, the company was also named a
“2011 Service Leader” by CRM Magazine and a "Need to Know Vendor”
by Computer Reseller News.
On April 11, 2011, Interactive Intelligence announced that it
will ask shareholders at its 2011 annual shareholder meeting to
vote on a proposal to reorganize the company as a holding company
incorporated in Indiana. The annual meeting is scheduled for June
10, 2011 at 9 a.m., Eastern time (EDT) at the company's world
headquarters located at 7601 Interactive Way, Indianapolis, Indiana
46278. Shareholders of record as of the close of business on April
21, 2011 will be entitled to vote by proxy or in person at the
annual meeting.
Interactive Intelligence and Interactive Intelligence Group,
Inc., its wholly owned subsidiary, have filed a registration
statement with the Securities and Exchange Commission (SEC) that
includes a preliminary proxy statement/prospectus and other
relevant documents in connection with the proposed reorganization.
More information regarding the proposed reorganization is available
on the company's website at www.inin.com, under the "About Us"
tab.
Interactive Intelligence will host a first quarter 2011 earnings
conference call April 25 at 4:30 p.m. Eastern time (EDT) featuring
Dr. Brown and the company’s CFO, Stephen R. Head. A live Q&A
session will follow opening remarks.
To access the teleconference, please dial 1.877.324.1969 at
least five minutes prior to the start of the call. Ask for the
teleconference by the following name: "Interactive Intelligence
first quarter earnings call."
The teleconference will also be broadcast live on the company's
investor relations' page at http://investors.inin.com. An archive
of the teleconference will be posted following the call.
About Interactive Intelligence, Inc.
Interactive Intelligence, Inc. (Nasdaq: ININ) is a global
provider of unified business communications solutions for contact
center automation, enterprise IP telephony, and business process
automation. The company’s solutions, which can be deployed via an
on-premise or hosted model, include vertical-specific applications
for insurance and collections. Interactive Intelligence was founded
in 1994 and has more than 4,000 customers worldwide. The company is
among Software Magazine’s 2010 Top 500 Global Software and Services
Suppliers, and Forbes Magazine’s 2010 Best Small Companies in
America. Interactive Intelligence is also positioned in the
leaders’ quadrant of the Gartner Magic Quadrant for Contact Center
Infrastructure, Worldwide report (Feb. 22, 2010). The company
employs more than 800 people and is headquartered in Indianapolis,
Indiana. It has 19 offices throughout North America, Latin America,
Europe, Middle East, Africa and Asia Pacific. Interactive
Intelligence can be reached at +1 317.872.3000 or info@inin.com; on
the Net: www.inin.com.
Interactive Intelligence Forward-Looking Statement
Disclosure
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; the company's ability
to maintain profitability; to manage successfully its growth; to
manage successfully its increasingly complex third-party
relationships resulting from the software and hardware components
being licensed or sold with its solutions; to maintain successful
relationships with certain suppliers which may be impacted by the
competition in the technology industry; to maintain successful
relationships with its current and any new partners; to maintain
and improve its current products; to develop new products; to
protect its proprietary rights adequately; to successfully
integrate acquired businesses; and other factors described in the
company's SEC filings, including the company's latest annual report
on Form 10-K.
* Non-GAAP Measures
The non-GAAP measures shown in this release include revenue
which was not recognized on a GAAP basis due to purchase accounting
adjustments and exclude non-cash stock-based compensation expense
for stock options, the amortization of certain intangible assets
related to acquisitions by the company and non-cash income tax
expense. Reconciliations of these non-GAAP measures to the most
directly comparable GAAP measures are included with the financial
information included in this press release. These measures are not
in accordance with, or an alternative for, GAAP and may be
different from non-GAAP measures used by other companies.
Stock-based compensation expense and amortization of intangibles
related to acquisitions are non-cash and income tax expense is
primarily non-cash. Management believes that the presentation of
non-GAAP results, when shown in conjunction with corresponding GAAP
measures, provides useful information to management and investors
regarding financial and business trends related to the company's
results of operations. Further, management believes that these
non-GAAP measures improve management's and investors' ability to
compare the company's financial performance with other companies in
the technology industry. Because stock-based compensation expense,
non-cash income tax expense amounts and amortization of intangibles
related to acquisitions can vary significantly between companies,
it is useful to compare results excluding these amounts. Management
also uses financial statements that exclude stock-based
compensation expense related to stock options, non-cash income tax
amounts and amortization of intangibles related to acquisitions for
its internal budgets.
Where to Find Additional Information
Interactive Intelligence, Inc. and Interactive Intelligence
Group, Inc. (ININ Group) have filed a registration statement that
includes a preliminary proxy statement/prospectus and other
relevant documents in connection with the proposed reorganization.
INTERACTIVE INTELLIGENCE SHAREHOLDERS ARE URGED TO CAREFULLY
READ THESE DOCUMENTS AND THE DEFINITIVE PROXY STATEMENT/PROSPECTUS,
WHEN FILED AND MAILED, BECAUSE THEY CONTAIN AND WILL CONTAIN
IMPORTANT INFORMATION ABOUT THE PROPOSED REORGANIZATION. The
definitive proxy statement/prospectus will be mailed to Interactive
Intelligence shareholders prior to the shareholder meeting. In
addition, investors may obtain a free copy of the preliminary proxy
statement/prospectus and other filings containing information about
Interactive Intelligence, ININ Group, and the proposed
reorganization, from the SEC at the SEC’s website at
http://www.sec.gov. In addition, copies of the preliminary proxy
statement/prospectus and other filings containing information about
Interactive Intelligence, ININ Group, and the proposed
reorganization can be obtained without charge by sending a request
to Interactive Intelligence, Inc., 7601 Interactive Way,
Indianapolis, Indiana 46278, Attention: Investor Relations; by
calling (317) 872-3000; or by accessing them on Interactive
Intelligence, Inc.’s investor relations Web page at
http://investors.inin.com/.
Participants in the Solicitation
Interactive Intelligence, its directors, executive officers,
certain other members of management, and employees may be deemed to
be participants in the solicitation of proxies from the
shareholders of Interactive Intelligence in favor of the proposed
holding company reorganization. Additional information regarding
the interests of potential participants in the proxy solicitation
is included in the preliminary proxy statement/prospectus and will
be included in the definitive proxy statement/prospectus and other
relevant documents that Interactive Intelligence and ININ Group
have filed and intend to file with the SEC in connection with the
annual meeting of shareholders of Interactive Intelligence,
Inc.
This press release is being made pursuant to and in compliance
with the Securities Act of 1933, as amended, and does not
constitute an offer of any securities for sale or a solicitation of
an offer to buy any securities, nor shall there be any sale of the
securities in any state or jurisdiction in which such an offer,
solicitation or sale would be unlawful prior to the registration or
qualification under the securities laws of any such state or
jurisdiction. Any offer of the securities will be made solely by
means of a prospectus included in the registration statement and
any prospectus supplement that may be issued in connection with
such offering.
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.
ININ-G
Follow Interactive Intelligence:
Twitter: http://www.inin.com/twitter
Blog: www.inin.com/blog
YouTube: http://www.inin.com/YouTube
Facebook: http://www.inin.com/facebook
LinkedIn: http://www.inin.com/linkedin
Interactive Intelligence, Inc. Condensed Consolidated
Statements of Income (in thousands, except per share
amounts) (unaudited) Three
Months Ended March 31, 2011 2010 Revenues:
Product $ 20,766 $ 15,786 Recurring 20,746 15,925 Services
6,218 3,312 Total revenues 47,730
35,023 Costs of revenues: Product 6,196 4,799
Recurring 5,282 3,423 Services 3,712 2,174 Amortization of
intangible assets 35 16 Total cost of
revenues 15,225 10,412 Gross profit
32,505 24,611 Operating expenses: Sales
and marketing 14,157 10,352 Research and development 8,147 6,425
General and administrative 5,095 3,836 Amortization of intangible
assets 184 9 Total operating expenses
27,583 20,622 Operating income 4,922
3,989 Other income (expense): Interest income, net 43 42 Other
expense (166 ) (775 ) Total other income (expense)
(123 ) (733 ) Income before income taxes 4,799 3,256
Income tax expense 1,704 1,388 Net
income $ 3,095 $ 1,868 Net income per share:
Basic $ 0.17 $ 0.11 Diluted 0.16 0.10 Shares used to compute
net income per share: Basic 18,417 17,320 Diluted 19,780 18,708
Interactive Intelligence, Inc. Reconciliation of
Supplemental Financial Information (in thousands, except per
share amounts) (unaudited) Three
Months Ended March 31, 2011 2010
Net income, as reported $ 3,095 $ 1,868 Purchase accounting
adjustments: Increase to revenues: Recurring 59 7 Services 31 2
Reduction of operating expenses: Customer relationships 139 9
Technology 35 16 Non-compete agreements 45 - Acquisition costs
201 - Total 510 34 Non-cash stock-based
compensation expense: Cost of recurring revenues 105 31 Cost of
services 25 48 Sales and marketing 392 324 Research and development
408 298 General and administrative 388 311 Total
1,318 1,012 Non-cash income tax expense 549
1,241
Non-GAAP net income $ 5,472 $ 4,155
Operating income, as reported $ 4,922 $ 3,989 Purchase
accounting adjustments 510 34 Non-cash stock-based compensation
expense 1,318 1,012
Non-GAAP operating income
$ 6,750 $ 5,035
Diluted EPS, as reported $ 0.16 $
0.10 Purchase accounting adjustments 0.03 0.00 Non-cash stock-based
compensation expense 0.07 0.05 Non-cash income tax expense
0.02 0.07
Non-GAAP diluted EPS $ 0.28 $ 0.22
Interactive Intelligence, Inc. Condensed Consolidated
Balance Sheets (in thousands)
March 31, December 31, 2011 2010
(unaudited) Assets Current assets: Cash and cash
equivalents $ 51,870
$ 48,300 Short-term investments 34,439 37,582 Accounts receivable,
net 37,295
36,130 Deferred tax assets, net 5,112
5,499 Prepaid expenses 9,054
7,456 Other current assets 4,773
4,989 Total current assets 142,543 139,956 Long-term
investments 5,566 - Property and equipment, net 11,877
10,336 Deferred tax assets, net 2,494 2,765 Goodwill 14,567 11,371
Intangible assets, net 12,068 11,001 Other assets, net 931
803 Total assets $ 190,046
$ 176,232
Liabilities and Shareholders' Equity
Current liabilities: Accounts payable and accrued liabilities $
15,139
$ 16,364 Accrued compensation and related expenses 5,303
6,553 Deferred product revenues 4,989
3,350 Deferred services revenues 47,109
43,281 Total current liabilities 72,540 69,548
Deferred revenue 8,935
7,420 Total liabilities 81,475
76,968 Shareholders' equity: Preferred stock - -
Common stock 186 182 Additional paid-in-capital 109,990 103,837
Accumulated other comprehensive income (235 ) (290 ) Accumulated
deficit (1,370 ) (4,465 ) Total shareholders' equity
108,571 99,264 Total liabilities and
shareholders' equity $ 190,046 $ 176,232
Interactive Intelligence, Inc. Condensed Consolidated
Statements of Cash Flows (in thousands)
(unaudited) Three Months
Ended March 31, 2011 2010
Operating activities: Net income $ 3,095 $ 1,868 Adjustments
to reconcile net income to net cash provided by operating
activities: Depreciation, amortization and other non-cash items
1,481
1,059 Stock-based compensation expense 1,318
1,012 Tax benefits from stock-based payment arrangements (862 )
(1,251 ) Deferred income tax 34
(150 ) Accretion of investment income (682 )
27 Changes in operating assets and liabilities: Accounts receivable
(49 )
5,110 Prepaid expenses (1,311 )
(346 ) Other current assets 272
(47 ) Other assets (128 )
53 Accounts payable and accrued liabilities (1,598 )
143 Accrued compensation and related expenses (1,585 )
(1,304 ) Deferred product revenues 1,793
(615 ) Deferred services revenues 4,889
(214 ) Net cash provided by operating activities
6,667
5,345
Investing activities: Sales of
available-for-sale investments 21,028
2,550 Purchases of available-for-sale investments (22,740 )
(7,828 ) Purchases of property and equipment (2,139 )
(985 ) Acquisition, net of cash (4,111 ) - Unrealized gain on
investment 26
- Net cash used in investing activities (7,936
) (6,263 )
Financing activities: Proceeds from
stock options exercised 3,881
691 Proceeds from issuance of common stock 96
158 Tax benefits from stock-based payment arrangements 862
1,251 Net cash provided by financing activities
4,839
2,100 Net increase in cash and cash
equivalents 3,570 1,182 Cash and cash equivalents, beginning of
period 48,300
48,497 Cash and cash equivalents, end of period $
51,870 $ 49,679
Cash paid during the period
for: Interest $ -
$ 1 Income taxes 842
318
Other non-cash item: Purchases of property and
equipment payable at end of period $ 746
$ 57
Condensed Consolidated Statements of Income - GAAP
(in thousands, except per share amounts) (unaudited)
2010 2011 Q1 Q2
Q3 Q4 Total Q1 Revenues: Product
$ 15,786 $ 18,315 $ 20,671 $ 25,045 $ 79,817 $ 20,766 Recurring
15,925 16,322 16,595 19,898 68,740 20,746 Services 3,312
4,174 4,565 5,707
17,758 6,218 Total revenues
35,023 38,811 41,831
50,650 166,315 47,730 Costs of
revenues: Product 4,799 5,502 6,198 7,369 23,868 6,196 Recurring
3,423 4,043 4,302 5,223 16,991 5,282 Services 2,174 2,144 2,465
3,005 9,788 3,712 Amortization of intangibles 16
16 16 35 83
35 Total cost of revenues 10,412
11,705 12,981 15,632
50,730 15,225 Gross profit 24,611
27,106 28,850 35,018
115,585 32,505 Operating
expenses: Sales and marketing 10,352 11,480 12,106 13,134 47,072
14,157 Research and development 6,425 6,945 7,193 7,786 28,349
8,147 General and administrative 3,836 4,013 3,935 4,800 16,584
5,095 Amortization of intangibles 9 9
9 184 211 184
Total operating expenses 20,622 22,447
23,243 25,904 92,216
27,583 Operating income 3,989
4,659 5,607 9,114
23,369 4,922 Other income (expense): Interest
income, net 42 67 120 111 340 43 Other income (expense) (775
) (590 ) 337 (118 ) (1,146 )
(166 ) Total other income (expense) (733 )
(523 ) 457 (7 ) (806 ) (123 )
Income before income taxes 3,256 4,136 6,064 9,107 22,563 4,799
Income tax expense 1,388 1,680
2,561 2,033 7,662 1,704
Net income $ 1,868 $ 2,456 $ 3,503 $
7,074 $ 14,901 $ 3,095 Net income per
share: Basic $ 0.11 $ 0.14 $ 0.20 $ 0.39 $ 0.85 $ 0.17 Diluted $
0.10 $ 0.13 $ 0.19 $ 0.37 $ 0.79 $ 0.16 Shares used to
compute net income per share: Basic 17,320 17,445 17,524 17,956
17,563 18,417 Diluted 18,708 18,772 18,695 19,302 18,894 19,780
Condensed Consolidated Statements of Income -
Non-GAAP (in thousands, except per share amounts)
(unaudited) 2010 2011 Q1 Q2
Q3 Q4 Total Q1 Revenues: Product
$ 15,786 $ 18,315 $ 20,671 $ 25,045 $ 79,817 $ 20,766 Recurring
15,932 16,323 16,595 19,978 68,828 20,805 Services 3,314
4,175 4,566 5,707
17,762 6,249 Total revenues
35,032 38,813 41,832
50,730 166,407 47,820 Costs of
revenues: Product 4,799 5,502 6,198 7,369 23,868 6,196 Recurring
3,392 3,983 4,234 5,155 16,764 5,177 Services 2,126
2,141 2,447 2,980
9,694 3,687 Total cost of revenues
10,317 11,626 12,879
15,504 50,326 15,060 Gross
profit 24,715 27,187 28,953
35,226 116,081 32,760
Operating expenses: Sales and marketing 10,028 11,162 11,774
12,878 45,842 13,765 Research and development 6,127 6,647 6,908
7,489 27,171 7,739 General and administrative 3,525
3,728 3,609 4,383
15,245 4,506 Total operating expenses
19,680 21,537 22,291
24,750 88,258 26,010 Operating
income 5,035 5,650 6,662
10,476 27,823 6,750 Other
income (expense): Interest income, net 42 67 120 111 340 43 Other
income (expense) (775 ) (590 ) 337
(118 ) (1,146 ) (166 ) Total other income
(expense) (733 ) (523 ) 457 (7 )
(806 ) (123 ) Income before income taxes 4,302 5,127
7,119 10,469 27,017 6,627 Income tax expense 147
133 151 55 486
1,155 Net income $ 4,155 $ 4,994
$ 6,968 $ 10,414 $ 26,531 $ 5,472
Net income per share: Basic $ 0.24 $ 0.29 $ 0.40 $ 0.58 $
1.51 $ 0.30 Diluted 0.22 0.27 0.37 0.54 1.40 0.28 Shares
used to compute net income per share: Basic 17,320 17,445 17,524
17,956 17,563 18,417 Diluted 18,708 18,772 18,695 19,302 18,894
19,780
Supplemental Data (Dollars in
thousands) 2010 2011 Q1 Q2
Q3 Q4 Total Q1 Non-GAAP
Adjustments: Purchase accounting adjustments: Increase to
revenues: Recurring $ 7 $ 1 $ - $ 80 $ 88 $ 59 Services 2 1 1 - 4
31 Reduction of operating expenses: Customer relationships 9
9 9 139 166 139 Technology 16 16 16 35 83 35 Non-compete agreements
- - - 45 45 45 Acquisition costs - -
- 89 89 201
Total purchase accounting adjustments $ 34 $ 27 $ 26
$ 388 $ 475 $ 510 Stock-based
compensation expense: Costs of recurring revenues $ 31 $ 60 $ 68 $
68 $ 227 $ 105 Costs of services revenues 48 3 18 25 94 25 Sales
and marketing 324 318 332 256 1,230 392 Research and development
298 298 285 297 1,178 408 General and administrative 311
285 326 328
1,250 388 Total $ 1,012 $ 964 $
1,029 $ 974 $ 3,979 $ 1,318
Non-cash income tax expense $ 1,241 $ 1,547 $ 2,410
$ 1,978 $ 7,176 $ 549
Other Information: Margins (GAAP): Product 69.6 % 70.0
% 70.0 % 70.6 % 70.1 % 70.2 % Recurring 78.5 % 75.2 % 74.1 % 73.8 %
75.3 % 74.5 % Services 34.4 % 48.6 % 46.0 % 47.3 % 44.9 % 40.3 %
Overall 70.3 % 69.8 % 69.0 % 69.1 % 69.5 % 68.1 %
Year-over-year Revenue Growth (GAAP): Product 20.7 % 10.6 % 32.5 %
38.5 % 26.0 % 31.5 % Recurring 18.8 % 23.2 % 15.7 % 34.4 % 23.2 %
30.3 % Services 10.7 % 35.0 % 41.6 % 91.3 % 44.5 % 87.7 % Overall
18.8 % 18.0 % 26.1 % 41.2 % 26.6 % 36.3 % Orders: Over $1
million 3 2 9 5 19 3 Between $250,000 and $1 million 11 18 16 26 71
24 Number of new customers 71 62 48 77 258 65 Average
new customer order: Overall $ 135 $ 178 $ 318 $ 225 $ 206 $ 275
Cloud-based 535 446 617 139 401 488
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