EX-99.1 2 ex99_1.htm EXHIBIT 99.1 ex99_1.htm
Interactive Intelligence Announces 2010 Third-Quarter Results
Revenues increase 26 percent

INDIANAPOLIS, Nov. 1, 2010 – Interactive Intelligence (Nasdaq: ININ), a global provider of unified IP business communications solutions, has announced results for the three and nine months ended Sept. 30, 2010.
 
The company reported the following for the third quarter of 2010:
-  
Total revenues of $41.8 million, an increase of 26 percent over revenues of $33.2 million in the same quarter last year.
-  
Net income on a generally accepted accounting principles (GAAP) basis of $3.5 million, with diluted earnings per share (EPS) of $0.19, compared to net income of $2.8 million and EPS of $0.15 in the third quarter of 2009.
-  
Non-GAAP* net income of $6.9 million, with EPS of $0.37, up from non-GAAP net income of $5.7 million and EPS of $0.31, in the same quarter last year.

Non-GAAP net income and EPS for the third quarter of 2010 excluded stock-based compensation expense of approximately $1.0 million, or EPS of $0.06, and non-cash income tax expense of $2.4 million, or EPS of $0.12. The 2009 third-quarter non-GAAP net income and EPS excluded stock-based compensation expense of $975,000, or EPS of $0.05, and non-cash income tax expense of $1.9 million, or EPS of $0.11.

Cash and investment balances as of Sept. 30, 2010 were $85.5 million and the company has no debt.

“Our performance during the quarter was strong across North America, Europe, Middle East, Africa, and specific regions throughout Asia-Pacific,” said Interactive Intelligence founder and CEO, Dr. Donald E. Brown. “As we reported in our preliminary third-quarter announcement, we closed a number of large orders during the quarter, which was a main contributor to our increased revenues and earnings. We continue to execute on our strategy of moving up-market, with record average dollar amounts for new orders. We’re also seeing strong increases in new cloud-based communications orders, positively building our recurring revenue base.”

The following are results for the first nine months of 2010:
-  
Total revenues of $115.7 million, a 21 percent increase over revenues of $95.5 million in the first nine months of 2009.
-  
Other expense, principally due to foreign exchange losses, of $801,000, compared to other income, principally due to foreign exchange gains, of $938,000 for the same period last year.
-  
GAAP net income of $7.8 million, or EPS of $0.42, compared to $6.1 million, or EPS of $0.34, for the first nine months of 2009.
-  
Non-GAAP net income of $16.0 million, or EPS of $0.86, compared to $12.9 million, or EPS of $0.71, for the same period last year.

Non-GAAP net income and EPS for the first nine months of 2010 exclude charges for stock-based compensation of $3.0 million, or EPS of $0.16, and non-cash income tax expense of $5.2 million, or EPS of $0.28. For the same period last year, non-GAAP net income and EPS exclude charges for stock-based compensation of $2.5 million, or EPS of $0.14, and non-cash income tax expense of $4.3 million, or EPS of $0.23.

Other recent company highlights included:
-  
Acquisition of Latitude Software, an accounts receivable management software and services company, effective Oct. 1, 2010.
-  
Launch of "Ditch the Frustration" campaign designed to provide educational resources to assist consumers and businesses with customer service.
-  
Opening of on-site health care clinic to help improve employee wellness.
-  
TMC Labs Unified Communications Innovation award for communications-based process automation product, Interaction Process Automation™ (IPA).
-  
Network Products Guide's Reader's Trust award for Interaction SIP Station™.
-  
Frost & Sullivan’s Technology Company of the Year award.
-  
More than 400 people in attendance at the 12th annual Interactive Intelligence Partner Conference.

Interactive Intelligence will host a conference call Nov. 1 at 4:30 p.m. 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 third-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
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 was founded in 1994 and has more than 3,500 customers worldwide. Interactive Intelligence is among Software Magazine’s top 500 global software and services suppliers, is a BusinessWeek “hot growth 50” company, and is among Fortune Small Business magazine’s top 100 fastest growing companies. The company is also positioned in the leaders’ quadrant of the Gartner Magic Quadrant for Contact Center Infrastructure, Worldwide report (Feb. 22, 2010). Interactive Intelligence employs approximately 800 people and is headquartered in Indianapolis, Indiana. It has 16 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.

 
 
 
 
* Non-GAAP Measures
The non-GAAP measures shown in this release exclude non-cash stock-based compensation expense for stock options 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 pres 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 is 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 and non-cash income tax expense amounts 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 and non-cash income tax amounts for its internal budgets.

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.

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

Contacts:
Stephen R. Head
Chief Financial Officer
Interactive Intelligence Inc.
+1 317.715.8412
steve.head@inin.com

Christine Holley
Director, Market Communications
Interactive Intelligence Inc.
+1 317.715.8220
christine.holley@inin.com

###

 
 
 

Interactive Intelligence, Inc.
Condensed Consolidated Statements of Income
(in thousands, except per share amounts)
Unaudited
                         
   
Three Months Ended
    
Nine Months Ended
  
   
September 30,
    
September 30,
  
   
2010
    
2009
    
2010
    
2009
  
Revenues:
                        
Product
   $ 20,586     $ 15,557     $ 54,484     $ 45,100  
Services
     21,245       17,613       61,181       50,441  
Total revenues
     41,831       33,170       115,665       95,541  
Costs of revenues:
                                
Product
     6,198       3,950       16,499       12,320  
Services
     6,767       5,549       18,552       16,758  
Total cost of revenues
     12,965       9,499       35,051       29,078  
Gross profit
     28,866       23,671       80,614       66,463  
Operating expenses:
                                
Sales and marketing
     12,106       9,696       33,939       28,877  
Research and development
     7,193       6,135       20,562       17,747  
General and administrative
     3,960       3,562       11,859       10,166  
Total operating expenses
     23,259       19,393       66,360       56,790  
Operating income
     5,607       4,278       14,254       9,673  
Other income (expense):
                                
Interest income
     120       50       228       232  
Other income (expense)
     337       480       (1,029 )     706  
Total other income (expense)
     457       530       (801 )     938  
Income before income taxes
     6,064       4,808       13,453       10,611  
Income tax expense
     2,561       2,005       5,627       4,488  
Net income
   $ 3,503     $ 2,803     $ 7,826     $ 6,123  
                                 
Net income per share:
                                
Basic
   $ 0.20     $ 0.16     $ 0.45     $ 0.36  
Diluted
     0.19       0.15       0.42       0.34  
                                 
Shares used to compute net income per share:
                                
Basic
     17,524       17,148       17,431       17,038  
Diluted
     18,695       18,486       18,731       18,125  

 
 
 

Interactive Intelligence, Inc.
Reconciliation of Supplemental Financial Information
(in thousands, except per share amounts)
Unaudited
                         
   
Three Months Ended
    
Nine Months Ended
  
   
September 30,
    
September 30,
  
   
2010
    
2009
    
2010
    
2009
  
                         
Net income, as reported
   $ 3,503     $ 2,803     $ 7,826     $ 6,123  
Non-cash stock-based compensation expense:
                                
  Cost of services
     86       71       228       186  
Sales and marketing
     332       352       971       890  
Research and development
     285       254       881       726  
General and administrative
     326       298       922       745  
Total
     1,029       975       3,002       2,547  
Non-cash income tax expense
     2,410       1,913       5,196       4,257  
Non-GAAP net income
   $ 6,942     $ 5,691     $ 16,024     $ 12,927  
                                 
Operating income, as reported
   $ 5,607     $ 4,278     $ 14,254     $ 9,673  
Non-cash stock-based compensation expense
     1,029       975       3,002       2,547  
Non-GAAP operating income
   $ 6,636     $ 5,253     $ 17,256     $ 12,220  
                                 
Diluted EPS, as reported
   $ 0.19     $ 0.15     $ 0.42     $ 0.34  
Non-cash stock-based compensation expense
     0.06       0.05       0.16       0.14  
Non-cash income tax expense
     0.12       0.11       0.28       0.23  
Non-GAAP diluted EPS
   $ 0.37     $ 0.31     $ 0.86     $ 0.71  

 
 
 

Interactive Intelligence, Inc.
Condensed Consolidated Balance Sheets
(in thousands)
             
             
   
September 30,
    
December 31,
  
   
2010
    
2009
  
   
(unaudited)
        
Assets
            
Current assets:
            
Cash and cash equivalents
   $ 49,688     $ 48,497  
Short-term investments
     35,842       16,482  
Accounts receivable, net
     32,417       32,092  
Deferred tax assets, net
     5,499       5,808  
Prepaid expenses
     7,754       5,976  
Other current assets
     5,039       3,935  
Total current assets
     136,239       112,790  
Property and equipment, net
     8,925       8,499  
Deferred tax assets, net
     6,870       6,505  
Other assets, net
     4,844       4,874  
Total assets
   $ 156,878     $ 132,668  
                 
Liabilities and Shareholders' Equity
                
Current liabilities:
                
Accounts payable and accrued liabilities
   $ 14,511     $ 11,903  
Accrued compensation and related expenses
     5,669       4,946  
Deferred product revenues
     4,950       5,567  
Deferred services revenues
     40,456       36,225  
Total current liabilities
     65,586       58,641  
Deferred revenue
     6,398       6,420  
Total liabilities
     71,984       65,061  
                 
Shareholders' equity:
                
Preferred stock
     -       -  
Common stock
     176       173  
Treasury stock
     (3,973 )     (6,242 )
Additional paid-in-capital
     100,199       92,815  
Accumulated deficit
     (11,508 )     (19,139 )
Total shareholders' equity
     84,894       67,607  
Total liabilities and shareholders' equity
   $ 156,878     $ 132,668  

 
 
 

Interactive Intelligence, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
Unaudited
             
   
Nine Months Ended
  
   
September 30,
  
   
2010
    
2009
  
             
Operating activities:
            
Net income
   $ 7,826     $ 6,123  
Adjustments to reconcile net income to net cash
                
provided by operating activities:
                
Depreciation
     3,107       3,139  
Stock-based compensation expense
     3,002       2,547  
Tax benefits from stock-based payment arrangements
     (4,528 )     (2,814 )
Deferred income tax
     (56 )     884  
Accretion of investment income
     (407 )     (172 )
Changes in operating assets and liabilities:
                
Accounts receivable
     (325 )     2,872  
Prepaid expenses
     (1,778 )     1,009  
Other current assets
     (1,104 )     (1,928 )
Other assets
     30       281  
Accounts payable and accrued liabilities
     7,143       1,969  
Accrued compensation and related expenses
     723       1,043  
Deferred product revenues
     (717 )     (1,349 )
Deferred services revenues
     4,309       (566 )
Net cash provided by operating activities
     17,225       13,038  
                 
Investing activities:
                
Sales of available-for-sale investments
     15,565       13,100  
Purchases of available-for-sale investments
     (34,678 )     (11,550 )
Purchases of property and equipment
     (3,540 )     (1,275 )
Acquisition of intangible and other assets, net of cash and
                
cash equivalents acquired
     -       (2,249 )
Net cash used in investing activities
     (22,653 )     (1,974 )
                 
Financing activities:
                
Proceeds from stock options exercised
     1,830       1,812  
Proceeds from issuance of common stock
     261       189  
Tax benefits from stock-based payment arrangements
     4,528       2,814  
Net cash provided by financing activities
     6,619       4,815  
                 
Net increase in cash and cash equivalents
     1,191       15,879  
Cash and cash equivalents, beginning of period
     48,497       34,705  
Cash and cash equivalents, end of period
   $ 49,688     $ 50,584  
                 
Cash paid during the period for:
                
Interest
   $ 1     $ -  
Income taxes
     716       533  
                 
Other non-cash item:
                
Purchases of property and equipment payable at end of period
   $ 22     $ 42