Interactive Intelligence Group, a global provider of software and services for communications, collaboration and customer engagement, has announced financial results for the fourth quarter and full year ended 31 December 2014.
"The fourth quarter was a strong end to a pivotal year for the company," said Dr Donald E Brown, Interactive Intelligence founder and CEO. "While continuing to gain market share due to the robust demand for our cloud offerings, we effectively prepared to deliver our new multitenant PureCloud services in 2015. We took major steps toward our goal of becoming the leading provider of technology to optimise the customer experience, whether deployed on-premises or in the cloud, at companies of any size anywhere in the world. More major steps will be taken in the coming year, as we expect strong cloud-based revenue growth along with improved operational efficiencies.
"Our full-year results testify to the progress we are making on our strategy," Brown continued. "They show increasing numbers of new cloud customers and expanding footprints of existing deployments. Our results also show the traction we've achieved at the high end of the market, with a growing number of sizable orders, especially those over $1 million, and demonstrate the increased capacity and capabilities of our global sales channels. Behind these numbers are the delivery teams that steadily meet the challenge of deploying the increasing number of implementations, as well as the product development groups that continue to provide best-in-class technology addressing requirements across multiple industries and platforms."
Fourth-quarter 2014 financial highlights:
* Orders: Total orders increased 22% from the fourth quarter of 2013, with cloud-based orders up 42% to represent 55% of total orders. During the fourth quarter, 78 orders were over $250 000, including 21 orders over $1 million, compared to 63 orders over $250 000, including 15 orders over $1 million in the same quarter last year.
* Revenues: Total revenues were $92.6 million, up 2% from the 2013 fourth quarter. Recurring revenues, including support fees from on-premises license agreements and fees from cloud-based customers, increased 24% to $51.3 million and accounted for 55% of total revenues. Cloud-based revenues increased 78% to $18.9 million. Product revenues were $27.0 million and services revenues $14.3 million, compared to $34.9 million and $14.4 million, respectively, in the same quarter last year.
* Total unbilled and deferred revenues: The amount of unbilled future cloud-based revenues increased to $298.5 million from $183.5 million at the end of the 2013 fourth quarter and $269.9 million as of 30 September 2014. The combination of deferred and unbilled future cloud-based revenues grew to $409.2 million, up 37% from $299.4 million as of 31 December 2013.
* Operating income: GAAP operating income was $2.0 million, compared to $6.5 million in the 2013 fourth quarter. Non-GAAP* operating income was $5.6 million, compared to $9.3 million in the same quarter last year.
* Net income (loss): GAAP net loss was $(29.9) million, or $(1.42) per diluted share based on 21.0 million weighted average diluted shares outstanding, compared to GAAP net income in the same quarter of 2013 of $3.5 million, or $0.17 per diluted share based on 21.4 million weighted average diluted shares outstanding.
The GAAP net loss included a non-cash charge for income tax expense of $33.4 million to establish a valuation allowance which reduced the company's deferred tax assets. The company has incurred tax losses in recent periods due to the business model shift to the cloud that are projected to continue for a period of time. This non-cash charge reflects the company's assessment that the deferred tax assets will not be realisable in the near future, but has no effect on its ability to use deferred tax assets, such as loss carry forwards and tax credits, to reduce future tax payments. The company's non-GAAP results exclude the effects of this charge.
Non-GAAP net income for the fourth quarter was $5.5 million, or $0.26 per diluted share, compared to non-GAAP net income of $5.6 million, or $0.26 per diluted share, in the same quarter last year.
* Cash, cash equivalents and investments: Cash, cash equivalents, and investments totaled $61.7 million as of Dec. 31, 2014, compared to $107.8 million as of 31 December 2013.
* Cash flows: The company generated $1.3 million from operating activities in the fourth quarter and used $4.3 million for capital expenditures, including the continued expansion of its cloud infrastructure, and capitalised $7.3 million for PureCloud development costs.
* An explanation of GAAP to non-GAAP financial measures is included below under the heading "Non-GAAP Measures."
Full-year 2014 financial highlights:
* Orders: Total orders increased by 11% from 2013 and cloud-based orders were up 29% year-over-year. Cloud-based orders represented 59% of total orders during the full year of 2014. During 2014, 207 orders were signed over $250 000, including 52 orders over $1 million, compared to 192 orders over $250 000, including 48 orders over $1 million last year.
* Revenues: Total revenues were $341.3 million, an increase of 7% over 2013. Recurring revenues increased 27% to $187.4 million and accounted for 55% of total revenues. Cloud-based revenues increased 77% to $60.5 million. In 2014, product revenues were $99.2 million, and services revenues were $54.7 million, compared to $117.7 million and $52.6 million, respectively, in 2013.
* Operating income (loss): GAAP operating loss was $(17.8) million compared to GAAP operating income of $14.4 million in 2013. Non-GAAP operating loss in 2014 was $(1.5) million, compared to non-GAAP operating income of $26.0 million in 2013.
* Net income (loss): GAAP net loss was $(41.4) million, or $(1.98) per diluted share based on 20.9 million weighted average shares outstanding, compared to GAAP net income of $9.5 million, or $0.45 per diluted share based on 21.1 million weighted average diluted shares outstanding in 2013. The GAAP net loss included a non-cash income tax expense of $33.4 million related to establishment of a valuation allowance for deferred tax assets.
Non-GAAP net income in 2014 was $1.7 million, or $0.09 per diluted share, compared to non-GAAP net income of $16.7 million, or $0.79 per diluted share in 2013.
* Cash flows: The company used $1.7 million in cash flow for operations, $21.4 million for capital expenditures, which included continued expansion of its cloud infrastructure, $20.4 million for capitalised software costs, and $9.2 million for an acquisition.
Additional fourth-quarter 2014 and recent highlights:
* The company released PureCloud Directory?, a new cloud-based enterprise collaboration service, and the first to be delivered from the company's PureCloud platform in January 2015.
* Interactive Intelligence won the 2014 Cloud Computing Product of the Year Award for its PureCloud platform, as presented by Technology Marketing's Cloud Computing magazine.
* The company was listed by Software Magazine among its 2014 Software 500 ranking of the world's largest software and services suppliers, and broke into the top 200 with a ranking of 182nd.
* Frost & Sullivan recognised Interactive Intelligence with its 2014 EMEA Contact Centre Systems Company of the Year award.
* For the second consecutive year, Interactive Intelligence was honoured with Glassdoor's Employees' Choice Award as one of the Best Places to Work in the US.
* Jeff Plat'on was named the company's chief marketing officer bringing more than 20 years of marketing and product management experience including 12 years at Cisco Systems, where he helped develop worldwide go-to-market strategies.
Interactive Intelligence will host a conference call today at 4:30pm Eastern time (EST) featuring Dr Brown and the company's CFO, Stephen R Head. A live Q&A session will follow opening remarks.
To access the teleconference, 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.
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