Interactive Intelligence Reports 2014 Third-Quarter and Nine Months Ended Financial Results

Mobilk - Interactive Intelligence Group Inc. (Nasdaq: ININ), a global provider of software and services designed to improve the customer experience, has announced financial results for the three and nine months ended Sept. 30, 2014.

“This quarter showed further evidence of our success in generating more revenue from our cloud-based services,” said Dr. Donald E. Brown, Interactive Intelligence founder and CEO. “Orders for our cloud solutions not only doubled from the same quarter last year, but moved from less than half to over two-thirds of our total orders received. This growth and shift to the cloud occurred across all of our major geographic markets, and was more prominent among sales to new customers compared to existing follow-on sales.

“We continue to deploy our cloud solutions for new customers, which will contribute to increasing cloud revenues. We expect that the first release of our new multi-tenant PureCloud solution this quarter will further accelerate this trend,” Brown concluded.

Third-Quarter 2014 Financial Highlights:

-Orders: Total orders increased 46 percent from the third quarter of 2013, with cloud-based orders up 104 percent to represent 68 percent of total orders. In the third quarter of this year, 56 orders were signed over $250,000, including 12 orders over $1 million, compared to 47 orders over $250,000, including 12 orders over $1 million in the same quarter last year.

-Revenues: Total revenues were $89.5 million, up 15 percent from the 2013 third quarter. Recurring revenues, including support fees from on-premises license agreements and fees from cloud-based customers, increased 28 percent to $48.1 million and accounted for 54 percent of total revenues. Cloud-based revenues increased 70 percent to $14.7 million. Product revenues were $27.8 million and services revenues $13.6 million, compared to $26.9 million and $13.5 million, respectively, in the same quarter last year. 

-Total Deferred Revenues: As of Sept. 30, 2014, deferred revenues were $107.5 million, compared to $108.7 million at the end of the 2013 third quarter, and the amount of unbilled future cloud-based revenues increased to $265.9 million from $153.0 million at the end of the 2013 third quarter. The combination of deferred and unbilled future cloud-based revenues grew to $373.4 million, up 43 percent from $261.7 million at the end of the 2013 third quarter.

-Operating Income (Loss): GAAP operating loss was $(3.5) million, compared to GAAP operating income of $3.7 million in the 2013 third quarter. Non-GAAP* operating income was $0.5 million, compared to non-GAAP operating income of $6.7 million in the same quarter last year.

-Income Taxes: Income tax benefit was $1.3 million, with an estimated annual effective tax rate of 41.0 percent.

-Net Income (Loss): GAAP net loss was $(2.1) million, or $(0.10) per diluted share based on 20.9 million weighted average diluted shares outstanding, compared to GAAP net income in the same quarter of 2013 of $1.6 million, or $0.08 per diluted share based on 21.2 million weighted average diluted shares outstanding.  

Non-GAAP net income for the third quarter was $0.3 million, or $0.01 per diluted share, compared to non-GAAP net income of $4.1 million, or $0.20 per diluted share in the same quarter last year. 

-Cash, Cash Equivalents, and Investments: Cash, cash equivalents, and investments totaled $69.6 million as of Sept. 30, 2014, compared to $86.0 million as of June 30, 2014.

-Cash Flows: The company used $6.9 million for operating activities in the third quarter and $4.0 million for capital expenditures, including the continued expansion of its cloud infrastructure, and capitalized $5.1 million for PureCloud development costs.

* An explanation of GAAP to non-GAAP financial measures is included below under the heading “Non-GAAP Measures.”

Nine Months Ended 2014 Financial Highlights:

- Orders: Excluding the largest cloud-based order in the company’s history received during the second quarter of 2013, total orders increased by 34 percent and cloud-based orders were up 102 percent over the first nine months of 2013. Including this large cloud-based order, total orders increased 6 percent and cloud-based orders were up 24 percent. Cloud-based orders represented 61 percent of total orders during the first nine months of 2014. In this same period, 129 orders were signed over $250,000, including 31 orders over $1 million.

- Revenues: Total revenues were $248.8 million, an increase of 9 percent over the first nine months of 2013. Recurring revenues increased 28 percent to $136.1 million and accounted for 55 percent of total revenues. Cloud-based revenues increased 76 percent to $41.6 million. Product revenues were $72.2 million, down 13 percent, and services revenues were $40.5 million, up 6 percent compared to the first nine months of 2013.

- Operating Income (Loss): GAAP operating loss was $(19.8) million for the first nine months of 2014, compared to GAAP operating income of $7.9 million over the same period last year. Non-GAAP operating loss was $(7.1) million for the first nine months of 2014, compared to non-GAAP operating income of $16.7 million during the same period last year. The year-over-year decline was primarily due to lower than anticipated product revenues, combined with increased sales and marketing expenses to capture cloud market share, and increased research and development expenses to accelerate time-to-market of PureCloud.

- Net Income (Loss): GAAP net loss for the first nine months of 2014 was $(11.5) million, or $(0.55) per diluted share based on 20.9 million weighted average shares outstanding, compared to GAAP net income for the same period in 2013 of $6.0 million, or $0.29 per diluted share based on 21.0 million weighted average diluted shares outstanding. GAAP net income for the nine months ended Sept. 30, 2013 included an income tax benefit primarily driven by a change in transfer pricing implemented during the second quarter of 2013.

Non-GAAP net loss for the first nine months of 2014 was $(3.8) million, or $(0.18) per diluted share, compared to non-GAAP net income of $11.1 million, or $0.53 per diluted share during the same period in 2013. 

- Cash Flows: The company used $3.1 million in cash flow for operations, $17.1 million for capital expenditures, which included continued expansion of its cloud infrastructure, $9.6 million for PureCloud development costs, and $9.2 million for an acquisition.

Additional Third-Quarter 2014 and Recent Highlights:

- The latest version of Interactive Intelligence’s CIC 4.0 release was certified by the Joint Interoperability Test Command (JITC), which ensures compliance with the Department of Defense standards for faster government sales cycles and reduced deployment time.

- Interactive Intelligence was named by Collection Advisor Magazine among its 2014 top collection and dialer solutions. 

- Interactive Intelligence announced availability of its contact center and dialer software integrated with the new CallScripter™ application for improved customer service, increased agent productivity, and enhanced compliance.