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Interactive Intelligence reports 2009 first quarter operating results

Non-GAAP operating income up 30%; cash and investment balances increase to $49.8 million.

Interactive Intelligence (Nasdaq: ININ), a global provider of unified IP business communications solutions, has announced operating results for the three months ended 31 March 2009.

The company reported revenue of $29.5 million, equal to the revenue for the first quarter of 2008.

Net income, on a generally accepted accounting principles (GAAP) basis, was $1.2 million, or diluted earnings per share (EPS) of $0.07, compared to $1.1 million, or EPS of $0.06 in the first quarter of 2008. Net income on a non-GAAP* basis was $2.9 million, or EPS of $0.16, compared to $2.9 million, or EPS of $0.15 for the same quarter of last year.

Cash and investment balances as of 31 March 2009 totalled $49.8 million with no debt.

“Although product revenues were a challenge in the first quarter of 2009, we had a number of positive outcomes,” said Interactive Intelligence founder and CEO, Dr Donald E Brown. “Our services revenues, including communications-as-a-service and managed services, showed strong growth and non-GAAP operating income was up 30%. Cash and investments increased nicely to nearly $50 million.

“Despite the cautious buying market, our performance enables continued focus on the long-term initiatives of our company, including the development and launch of our process automation solution, and further expansion of our services business.”

Additional first quarter operating results include:

* Consistent gross margins of 69% for 2009 and 2008;
* GAAP operating income of $2.3 million in 2009, compared to $1.5 million in 2008;
* Non-GAAP operating income of $3.1 million in 2009, compared to $2.4 million in 2008;
* Interest income of $108 000 in 2009, compared to $459 000 in 2008;
* Other expense principally related to foreign exchange losses on receivables of $298 000 in 2009, compared to a gain of $97 000 in 2008; and
* Cash flows from operations of $4.4 million in 2009, compared to $5.3 million in 2008.

Non-GAAP net income and EPS exclude charges for stock-based compensation of $847 000, or EPS of $0.05, and non-cash income tax expense of approximately $799 000, or EPS of $0.04 for the first quarter of 2009 and charges for stock-based compensation of $932 000, or EPS of $0.05, and non-cash income tax expense of $821 000, or EPS of $0.04 for the first quarter of 2008.

Non-financial highlights from the first quarter of 2009 include the following:

* Positioned in “Leaders' Quadrant” of the Gartner 2008 Contact Centre Infrastructure, Worldwide Magic Quadrant report;
* Rated “Top Unified Communications Vendor” by North American contact centres in the Datamonitor 2008 Contact Centre Investments in Developed Markets report;
* Received “Product of the Year” awards from Customer Interaction Solutions and INTERNET TELEPHONY magazines;
* Launched new communications system monitoring product to help customers improve operational efficiencies and increase reliability;
* Launched new packaged, fixed-price services;
* Announced integration with IBM Lotus Sametime; and
* Launched new “Unified IP Business Communications Technology” blog to reinforce industry thought-leadership and strengthen customer relationships.

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Interactive Intelligence

Interactive Intelligence (Nasdaq: ININ) is a global provider of unified business communications solutions for contact centre automation, enterprise IP telephony, and enterprise messaging. The company was founded in 1994 and has more than 3 000 customers worldwide. Interactive Intelligence is among Software Magazine's top 500 global software and services suppliers, is ranked among NetworkWorld's top 200 North American networking vendors, 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 2008 Contact Centre Infrastructure, Worldwide Magic Quadrant report. Interactive Intelligence employs approximately 600 people and is headquartered in Indianapolis, Indiana. It has six global corporate offices with additional sales offices throughout North 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: http://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 after 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 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 and Interactive Intelligence's management uses these non-GAAP results to compare its performance to its peers in the software 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 and increasingly complex third-party relationships; 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; and other factors described in the company's SEC filings, including the company's latest annual report on Form 10-K.

Interactive Intelligence 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.

Editorial contacts

Elanza Mouton
Red Ribbon Communications
(022) 433 4700
elanza@redribbon.za.com
Stephen R. Head
Interactive Intelligence
(+1) 317.715.8412
steve.head@inin.com