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"Our strong performance during the fourth quarter led to a record year
for orders and revenues," said
"While continuing to add some of the most recognized global companies as customers, we remain committed to maintaining our pace of innovation, with several new products scheduled for release this year," continued Brown. "Looking forward, given our strong global pipeline of opportunities, we are reaffirming our 2013 total order growth forecast of 20 percent and expect cloud-based orders to represent approximately 50 percent of total 2013 orders. We remain focused on innovation, product leadership and cloud-based growth and are confident in our long-term financial profile, which will be driven by growth in recurring revenues."
Fourth Quarter 2012 Financial Highlights:
Full Year 2012 Financial Highlights:
* A reconciliation of GAAP to non-GAAP financial measures has been provided in the financial statement tables included with this press release. An explanation of these measures is also included below under the heading "Non-GAAP Measures."
Additional Fourth-Quarter 2012 and Recent Highlights:
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 fourth-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
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, 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 certain amounts of income tax expense are 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.
Forward Looking Statements
This release may contain 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
|
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||||||||||||||||||
| Condensed Consolidated Statements of Income | ||||||||||||||||||
| (in thousands, except per share amounts) | ||||||||||||||||||
| Three Months Ended | Year Ended | |||||||||||||||||
|
|
December 31, | |||||||||||||||||
| 2012 | 2011 | 2012 | 2011 | |||||||||||||||
| (unaudited) | (unaudited) | (unaudited) | ||||||||||||||||
| Revenues: | ||||||||||||||||||
| Product | $ | 27,207 | $ | 26,538 | $ | 88,626 | $ | 92,786 | ||||||||||
| Recurring | 33,120 | 25,186 | 118,343 | 93,363 | ||||||||||||||
| Services | 10,215 | 5,951 | 30,396 | 23,377 | ||||||||||||||
| Total revenues | 70,542 | 57,675 | 237,365 | 209,526 | ||||||||||||||
| Costs of revenues: | ||||||||||||||||||
| Product | 6,742 | 5,818 | 24,329 | 25,095 | ||||||||||||||
| Recurring | 9,053 | 6,227 | 32,227 | 23,801 | ||||||||||||||
| Services | 6,796 | 4,600 | 22,868 | 16,389 | ||||||||||||||
| Amortization of intangible assets | 58 | 35 | 163 | 140 | ||||||||||||||
| Total cost of revenues | 22,649 | 16,680 | 79,587 | 65,425 | ||||||||||||||
| Gross profit | 47,893 | 40,995 | 157,778 | 144,101 | ||||||||||||||
| Operating expenses: | ||||||||||||||||||
| Sales and marketing | 23,172 | 18,339 | 79,770 | 63,039 | ||||||||||||||
| Research and development | 12,386 | 9,522 | 45,682 | 35,626 | ||||||||||||||
| General and administrative | 8,312 | 6,284 | 29,722 | 22,729 | ||||||||||||||
| Amortization of intangible assets | 494 | 306 | 1,521 | 1,066 | ||||||||||||||
| Total operating expenses | 44,364 | 34,451 | 156,695 | 122,460 | ||||||||||||||
| Operating income | 3,529 | 6,544 | 1,083 | 21,641 | ||||||||||||||
| Other income: | ||||||||||||||||||
| Interest income, net | 207 | 134 | 772 | 434 | ||||||||||||||
| Other income (expense) | (123 | ) | (118 | ) | (189 | ) | 144 | |||||||||||
| Total other income | 84 | 16 | 583 | 578 | ||||||||||||||
| Income before income taxes | 3,613 | 6,560 | 1,666 | 22,219 | ||||||||||||||
| Income tax expense | 1,343 | 1,965 | 760 | 7,421 | ||||||||||||||
| Net income | $ | 2,270 | $ | 4,595 | $ | 906 | $ | 14,798 | ||||||||||
| Other comprehensive income: | ||||||||||||||||||
| Foreign currency translation adjustment | $ | 129 | $ | 710 | $ | (645 | ) | $ | (73 | ) | ||||||||
| Net unrealized investment gain (loss) | (191 | ) | (89 | ) | 163 | 93 | ||||||||||||
| Comprehensive income | $ | 2,208 | $ | 5,216 | $ | 424 | $ | 14,818 | ||||||||||
| Net income per share: | ||||||||||||||||||
| Basic | $ | 0.12 | $ | 0.24 | $ | 0.05 | $ | 0.79 | ||||||||||
| Diluted | 0.11 | 0.23 | 0.04 | 0.74 | ||||||||||||||
| Shares used to compute net income per share: | ||||||||||||||||||
| Basic | 19,367 | 18,908 | 19,241 | 18,714 | ||||||||||||||
| Diluted | 20,308 | 19,850 | 20,162 | 19,885 | ||||||||||||||
|
|
|||||||||||||||||
|
Reconciliation of Supplemental Financial Information |
|||||||||||||||||
|
(in thousands, except per share amounts) |
|||||||||||||||||
|
Unaudited |
|||||||||||||||||
| Three Months Ended | Year Ended | ||||||||||||||||
|
|
December 31, | ||||||||||||||||
| 2012 | 2011 | 2012 | 2011 | ||||||||||||||
| Recurring revenue, as reported | $ | 33,120 | $ | 25,186 | $ | 118,343 | $ | 93,363 | |||||||||
| Purchase accounting adjustments | 178 | 309 | 522 | 471 | |||||||||||||
| Non-GAAP recurring revenue | $ | 33,298 | $ | 25,495 | $ | 118,865 | $ | 93,834 | |||||||||
| Recurring revenue gross profit as reported | $ | 24,067 | $ | 18,959 | $ | 86,116 | $ | 69,562 | |||||||||
| Purchase accounting adjustments | 178 | 309 | 522 | 471 | |||||||||||||
| Non-cash stock-based compensation expense | 135 | 89 | 523 | 422 | |||||||||||||
| Non-GAAP recurring revenue gross profit | $ | 24,380 | $ | 19,357 | $ | 87,161 | $ | 70,455 | |||||||||
| Non-GAAP recurring revenue gross margin | 73.2 | % | 75.9 | % | 73.3 | % | 75.1 | % | |||||||||
|
|
|||||||||||||||||
| Services revenue, as reported | $ | 10,215 | $ | 5,951 | $ | 30,396 | $ | 23,377 | |||||||||
| Purchase accounting adjustments | - | 6 | - | 54 | |||||||||||||
| Non-GAAP services revenue | $ | 10,215 | $ | 5,957 | $ | 30,396 | $ | 23,431 | |||||||||
| Services revenue gross profit as reported | $ | 3,419 | $ | 1,351 | $ | 7,528 | $ | 6,988 | |||||||||
| Purchase accounting adjustments | - | 6 | - | 54 | |||||||||||||
| Non-cash stock-based compensation expense | 27 | 35 | 147 | 101 | |||||||||||||
| Non-GAAP services revenue gross profit | $ | 3,446 | $ | 1,392 | $ | 7,675 | $ | 7,143 | |||||||||
| Non-GAAP services revenue gross margin | 33.7 | % | 23.4 | % | 25.3 | % | 30.5 | % | |||||||||
| Total revenue, as reported | $ | 70,542 | $ | 57,675 | $ | 237,365 | $ | 209,526 | |||||||||
| Purchase accounting adjustments | 178 | 315 | 522 | 525 | |||||||||||||
| Non-GAAP total revenue | $ | 70,720 | $ | 57,990 | $ | 237,887 | $ | 210,051 | |||||||||
| Gross Profit | $ | 47,893 | $ | 40,995 | $ | 157,778 | $ | 144,101 | |||||||||
| Purchase accounting adjustments | 178 | 315 | 522 | 525 | |||||||||||||
| Operating expenses | 58 | 35 | 163 | 140 | |||||||||||||
| Non-cash stock-based compensation expense | 162 | 124 | 670 | 523 | |||||||||||||
| Non-GAAP gross profit | $ | 48,291 | $ | 41,469 | $ | 159,133 | $ | 145,289 | |||||||||
| Non-GAAP gross margin | 68.3 | % | 71.5 | % | 66.9 | % | 69.2 | % | |||||||||
| Operating income, as reported | $ | 3,529 | $ | 6,544 | $ | 1,083 | $ | 21,641 | |||||||||
| Purchase accounting adjustments | 769 | 849 | 2,487 | 2,331 | |||||||||||||
| Non-cash stock-based compensation expense | 1,650 | 1,294 | 6,677 | 5,298 | |||||||||||||
| Non-GAAP operating income | $ | 5,948 | $ | 8,687 | $ | 10,247 | $ | 29,270 | |||||||||
| Non-GAAP operating margin | 8.4 | % | 15.0 | % | 4.3 | % | 13.9 | % | |||||||||
|
|
|||||||||||||
|
Reconciliation of Supplemental Financial Information |
|||||||||||||
|
(in thousands, except per share amounts) |
|||||||||||||
|
Unaudited |
|||||||||||||
| Three Months Ended | Year Ended | ||||||||||||
|
|
December 31, | ||||||||||||
| 2012 | 2011 | 2012 | 2011 | ||||||||||
| Net income, as reported | $ | 2,270 | $ | 4,595 | $ | 906 | $ | 14,798 | |||||
| Purchase accounting adjustments: | |||||||||||||
| Increase to revenues: | |||||||||||||
| Recurring | 178 | 309 | 522 | 471 | |||||||||
| Services | - | 6 | - | 54 | |||||||||
| Reduction of operating expenses: | |||||||||||||
| Customer Relationships | 449 | 261 | 1,341 | 886 | |||||||||
| Technology | 58 | 35 | 163 | 140 | |||||||||
| Non-compete agreements | 46 | 45 | 180 | 180 | |||||||||
| Acquisition Costs | 38 | 193 | 281 | 600 | |||||||||
| Total | 769 | 849 | 2,487 | 2,331 | |||||||||
| Non-cash stock-based compensation expense: | |||||||||||||
| Cost of recurring revenues | 135 | 89 | 523 | 422 | |||||||||
| Cost of services revenues | 27 | 35 | 147 | 101 | |||||||||
| Sales and marketing | 543 | 394 | 2,250 | 1,677 | |||||||||
| Research and development | 510 | 374 | 1,886 | 1,570 | |||||||||
| General and administrative | 435 | 402 | 1,871 | 1,528 | |||||||||
| Total | 1,650 | 1,294 | 6,677 | 5,298 | |||||||||
| Non-cash income tax expense | 1,039 | 522 | - | 2,434 | |||||||||
| Non-GAAP net income | $ | 5,728 | $ | 7,260 | $ | 10,070 | $ | 24,861 | |||||
| Diluted EPS, as reported | $ | 0.11 | $ | 0.23 | $ | 0.04 | $ | 0.74 | |||||
| Purchase accounting adjustments | 0.04 | 0.04 | 0.12 | 0.12 | |||||||||
| Non-cash stock-based compensation expense | 0.08 | 0.07 | 0.34 | 0.27 | |||||||||
| Non-cash income tax expense | 0.05 | 0.03 | - | 0.12 | |||||||||
| Non-GAAP diluted EPS | $ | 0.28 | $ | 0.37 | $ | 0.50 | $ | 1.25 | |||||
|
|
|||||||||||
| Condensed Consolidated Balance Sheets | |||||||||||
| (in thousands) | |||||||||||
| Year Ended | |||||||||||
| December 31, | |||||||||||
| 2012 | 2011 | ||||||||||
| Assets | (unaudited) | ||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | 45,057 | $ | 28,465 | |||||||
| Short-term investments | 23,816 | 40,589 | |||||||||
| Accounts receivable, net | 68,409 | 56,331 | |||||||||
| Deferred tax assets, net | 16,600 | 8,952 | |||||||||
| Prepaid expenses | 15,565 | 11,474 | |||||||||
| Other current assets | 5,958 | 4,966 | |||||||||
| Total current assets | 175,405 | 150,777 | |||||||||
| Long-term investments | 11,757 | 23,415 | |||||||||
| Property and equipment, net | 26,816 | 18,304 | |||||||||
| Goodwill | 38,723 | 22,696 | |||||||||
| Intangible assets, net | 22,676 | 15,029 | |||||||||
| Other assets, net | 6,419 | 2,581 | |||||||||
| Total assets | $ | 281,796 | $ | 232,802 | |||||||
| Liabilities and Shareholders' Equity | |||||||||||
| Current liabilities: | |||||||||||
| Accounts payable | $ | 8,795 | $ | 5,434 | |||||||
| Accrued liabilities | 23,008 | 11,111 | |||||||||
| Accrued compensation and related expenses | 13,640 | 8,870 | |||||||||
| Deferred product revenues | 5,999 | 3,870 | |||||||||
| Deferred services revenues | 67,893 | 57,423 | |||||||||
| Total current liabilities | 119,336 | 86,708 | |||||||||
| Long-term deferred revenues | 18,000 | 14,141 | |||||||||
| Deferred tax liabilities, net | 99 | 1,688 | |||||||||
| Other long-term liabilities | 244 | 291 | |||||||||
| Total liabilities | $ | 137,679 | $ | 102,828 | |||||||
| Shareholders' equity: | |||||||||||
| Preferred stock | - | - | |||||||||
| Common stock | 194 | 190 | |||||||||
| Additional paid-in-capital | 133,359 | 119,644 | |||||||||
| Accumulated other comprehensive loss | (675 | ) | (193 | ) | |||||||
| Retained earnings | 11,239 | 10,333 | |||||||||
| Total shareholders' equity | 144,117 | 129,974 | |||||||||
| Total liabilities and shareholders' equity | $ | 281,796 | $ | 232,802 | |||||||
|
|
||||||||||
| Condensed Consolidated Statements of Cash Flows | ||||||||||
| (in thousands) | ||||||||||
| Year Ended | ||||||||||
| December 31, | ||||||||||
| 2012 | 2011 | |||||||||
| (unaudited) | ||||||||||
| Operating activities: | ||||||||||
| Net income | $ | 906 | $ | 14,798 | ||||||
|
Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||||
| Depreciation | 7,975 | 5,669 | ||||||||
| Amortization | 1,776 | 1,209 | ||||||||
| Other non-cash items | (757 | ) | 37 | |||||||
| Stock-based compensation expense | 6,676 | 5,298 | ||||||||
| Tax benefits from stock-based payment arrangements | (1,586 | ) | (3,336 | ) | ||||||
| Deferred income tax | (12,311 | ) | (524 | ) | ||||||
| Amortization (accretion) of investment income | 846 | (1,165 | ) | |||||||
| Loss (gain) on disposal of fixed assets | (74 | ) | 4 | |||||||
| Changes in operating assets and liabilities: | ||||||||||
| Accounts receivable | (10,166 | ) | (13,313 | ) | ||||||
| Prepaid expenses | (3,918 | ) | (2,888 | ) | ||||||
| Other current assets | (975 | ) | (85 | ) | ||||||
| Other assets | (3,838 | ) | (1,778 | ) | ||||||
| Accounts payable | 5,071 | (7,700 | ) | |||||||
| Accrued liabilities | 11,941 | 6,918 | ||||||||
| Accrued compensation and related expenses | 4,400 | (918 | ) | |||||||
| Deferred product revenues | 1,190 | 489 | ||||||||
| Deferred services revenues | 12,850 | 18,675 | ||||||||
| Net cash provided by operating activities | 20,006 | 21,390 | ||||||||
| Investing activities: | ||||||||||
| Sales of available-for-sale investments | 58,234 | 73,118 | ||||||||
| Purchases of available-for-sale investments | (30,348 | ) | (98,205 | ) | ||||||
| Purchases of property and equipment | (15,554 | ) | (13,280 | ) | ||||||
| Acquisitions, net of cash | (22,651 | ) | (13,376 | ) | ||||||
| Unrealized gain (loss) on investment | (138 | ) | 1 | |||||||
| Net cash used in investing activities | (10,457 | ) | (51,742 | ) | ||||||
| Financing activities: | ||||||||||
| Proceeds from stock options exercised | 5,030 | 6,671 | ||||||||
| Proceeds from issuance of common stock | 680 | 510 | ||||||||
| Employee taxes withheld for restricted stock units | (253 | ) | - | |||||||
| Tax benefits from stock-based payment arrangements | 1,586 | 3,336 | ||||||||
| Net cash provided by financing activities | 7,043 | 10,517 | ||||||||
| Net increase (decrease) in cash and cash equivalents | 16,592 | (19,835 | ) | |||||||
| Cash and cash equivalents, beginning of period | 28,465 | 48,300 | ||||||||
| Cash and cash equivalents, end of period | $ | 45,057 | $ | 28,465 | ||||||
| Cash paid during the period for: | ||||||||||
| Interest | $ | 5 | $ | 3 | ||||||
| Income taxes | 3,213 | 2,835 | ||||||||
| Other non-cash item: | ||||||||||
| Purchases of property and equipment payable at end of period | 44 | 70 | ||||||||
| Supplemental Data | ||||||||||||||||||||||
| (Dollars in thousands) | ||||||||||||||||||||||
| (unaudited) | ||||||||||||||||||||||
| 2011 | 2012 | |||||||||||||||||||||
| Q1 | Q2 | Q3 | Q4 | Total | Q1 | Q2 | Q3 | Q4 | Total | |||||||||||||
| Margins (GAAP): | ||||||||||||||||||||||
| Product | 70.2% | 73.6% | 69.1% | 78.1% | 73.4% | 70.9% | 69.5% | 73.4% | 75.2% | 72.5% | ||||||||||||
| Recurring | 74.5% | 74.0% | 73.8% | 75.3% | 74.0% | 73.8% | 72.4% | 72.3% | 72.7% | 72.8% | ||||||||||||
| Services | 40.3% | 28.0% | 27.9% | 22.7% | 29.9% | 19.7% | 22.6% | 18.9% | 33.5% | 24.8% | ||||||||||||
| Overall | 68.1% | 68.9% | 66.7% | 71.1% | 68.8% | 66.8% | 65.2% | 65.6% | 67.9% | 66.5% | ||||||||||||
| Year-over-year Revenue Growth (GAAP): | ||||||||||||||||||||||
| Product | 31.5% | 33.7% | 7.3% | 9.0% | 18.7% | -4.8% | -18.8% | 3.3% | 2.5% | -6.2% | ||||||||||||
| Recurring | 30.3% | 35.1% | 45.7% | 22.8% | 33.0% | 31.1% | 27.2% | 17.9% | 31.5% | 29.1% | ||||||||||||
| Services | 87.7% | 30.4% | 26.3% | 4.3% | 31.6% | -8.4% | 23.5% | 34.7% | 71.7% | 30.0% | ||||||||||||
| Overall | 36.3% | 33.9% | 24.6% | 13.9% | 26.0% | 10.6% | 5.4% | 13.7% | 22.3% | 13.3% | ||||||||||||
| Orders: | ||||||||||||||||||||||
|
Over |
3 | 5 | 3 | 6 | 17 | 6 | 8 | 9 | 19 | 42 | ||||||||||||
|
Between |
24 | 27 | 14 | 31 | 96 | 11 | 28 | 28 | 49 | 116 | ||||||||||||
| Number of new customers | 65 | 81 | 55 | 103 | 304 | 60 | 67 | 65 | 110 | 302 | ||||||||||||
| Average new customer order: | ||||||||||||||||||||||
| Overall |
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||||||||||||
| Cloud-based | 488 | 282 | 3,691 | 642 | 693 | 761 | 557 | 822 | 1,134 | 866 | ||||||||||||
ININ-G
steve.head@inin.com
OR
seth.potter@icrinc.com
OR
christine.holley@inin.com
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