inContact Reports Fourth Quarter and Full Year 2015 Financial Results
- Record Software segment revenues of $40.5 million in Q4, up 34% year-over-year
- Consolidated revenue in Q4 of $61.5 million, up 24% year-over-year
- Full year 2015 adjusted EBITDA of over $13.8 million, up 173% year-over-year
- 144 contracts in Q4 and software bookings up 35% year-over-year
- Annualized Recurring Revenues up 42% year-over-year
- Q4 non-GAAP operating income of $1.3 million
SALT LAKE CITY – February 16, 2016 – inContact, Inc., the leading provider of cloud contact center software and contact center optimization tools, today reported record financial results for the fourth quarter and full year ended December 31, 2015.
Said Paul Jarman, inContact CEO, “In Q4, we enjoyed one of our strongest quarters in all areas of the business. Our software revenues grew 34% and new business activity was at record levels. Importantly, we demonstrated significant operating leverage with a substantial increase in operating margin. Adjusted EBITDA of $5.8 million for the quarter increased nearly 4-fold over the prior year. For the full year, adjusted EBITDA increased 173% to over $13.8 million. We continue to win the majority of competitive opportunities and further distanced ourselves from the competition with the advanced cloud features in our latest release.”
Continued Jarman, “During the quarter, we closed 144 total contracts, including 93 new logo customers and 51 expansion deals with existing customers. Software bookings were 35% above year ago results. Strong results from partners and an outstanding contribution from our direct sales force, enables us to increase guidance for 2016 results. We will continue to lead the cloud contact center industry in 2016.”
Software segment revenue totaled $40.5 million for the quarter ended December 31, 2015, an increase of 34% from $30.3 million in Q4 2014. Combined Software and Software-related Network connectivity revenue for the quarter ended December 31, 2015 was $60.1 million, an increase of 28% from $47.1 million for the quarter ended December 31, 2014. Approximately 97% of Network connectivity segment revenues were derived from contracts with customers utilizing our contact center software. Consolidated revenue for the quarter ended December 31, 2015 was $61.5 million versus $49.4 million for the same period in 2014, an increase of 24%.
For the year ended December 31, 2015, Software segment revenue totaled $143.7 million, an increase of 43% from $100.8 million for same period in 2014. For the year December 31, 2015, Network connectivity segment revenue totaled $78.3 million, an increase of 10% from $71.0 million for the same period in 2014. Consolidated revenue for the year ended December 31, 2015 was $222.0 million versus $171.8 million for the same period in 2014, an increase of 29%.
As of December 2015 our Annualized Monthly Recurring Software Revenue was $159.4 million, an increase of 42% from $112.6 million as of December 2014.
Software segment gross margin for the quarter ended December 31, 2015 was 60% versus 59% for the same period in 2014. Non-GAAP Software segment gross margin which represents the elimination of amortization of acquired intangible assets and stock-based compensation was 64% for the fourth quarter of 2015, versus 63% in the fourth quarter of 2014 (see reconciliation of non-GAAP measures below). Fourth quarter 2015 Network connectivity segment gross margin was 40% versus 36% for the same period in 2014.
Consolidated gross margin percentage was 53% in the fourth quarter of 2015 compared to 50% for the same period in 2014. Non-GAAP consolidated gross margin which represents the elimination of amortization of acquired intangible assets and stock-based compensation was 55% for the fourth quarter 2015 compared to 53% for the same period in 2014 (see reconciliation of non-GAAP measures below).
Operating expenses for the fourth quarter of 2015 were $34.6 million or 56% of total revenue versus $30.2 million or 61% of total revenue during the same period in 2014. Non-GAAP operating expenses which represents the elimination of amortization of acquired intangible assets and stock-based compensation for the fourth quarter of 2015 were $32.8 million or 53% of total revenue versus $28.8 million or 58% of total revenue during the same period in 2014 (see reconciliation of non-GAAP measures below).
Adjusted EBITDA for the fourth quarter of 2015 was $5.8 million versus $1.2 million during the same period in 2014. For the year, adjusted EBITDA was over $13.8 million, up 173% year-over-year. Adjusted EBITDA is a non-GAAP measure management believes provides important insight into our operating results (see reconciliation of non-GAAP measures below).
Net loss for the quarter ended December 31, 2015 was $3.8 million, or ($0.06) per basic and diluted share, as compared to net loss of $5.6 million or ($0.09) per basic and diluted share for the same period in 2014. Net loss for the year ended December 31, 2015 was $22.8 million, or ($0.37) per basic and diluted share, as compared to net loss of $10.6 million or ($0.18) per basic and diluted share for the same period in 2014. Net loss for the year ended December 31, 2014 was benefitted by a $9.4 million tax credit, associated with the Uptivity acquisition. Non-GAAP net loss for the quarter ended December 31, 2015 was $384 thousand, or ($0.01) per basic and diluted share, as compared to non-GAAP net loss of $2.9 million or ($0.05) per basic and diluted share for the same period in 2014. Non-GAAP net loss for the year ended December 31, 2015 was $9.1 million, or ($0.15) per basic and diluted share. Excluding the $9.4 million tax benefit, non-GAAP net loss for 2014 was $9.3 million or ($0.16) per basic and diluted share (see reconciliation of non-GAAP measures below).
During the last month we closed two technology acquisitions. We acquired intellectual property (including 5 patents) around advanced analytics technology from Attensity, Inc., a leading provider of text based analytics. A group of Attensity engineers from their Salt Lake City office have joined our team. We also acquired AC2, a New Jersey-based company focused on workforce optimization technology, which included another 5 patents to continue to augment our workforce optimization solutions. A small group of AC2 employees are joining our workforce optimization group in Columbus, Ohio.
In both cases, the companies were focused primarily on building new technologies to take to market. They have proven their solutions with mid-market and enterprise customers and built the technology in a multitenant cloud environment. We expect these acquisitions to make a meaningful contribution to revenues in 2017 and beyond, and we will be integrating this software into our product offerings and training our sales teams on these solutions throughout the year.
“These acquisitions add new talent, open additional revenue opportunities and enhance our competitive differentiation with cutting edge technology,” continued Jarman. “Our ability to simultaneously produce revenue growth and bottom-line performance is evidenced in the 2015 results and is foremost in our plans for 2016. inContact continues to deliver market leading growth, continuous innovation in customer experience technology, and increasing non-GAAP operating results.”
Guidance for 2016
In 2016, we expect Software segment revenues to be between $177.0 million and $183.0 million for the full year. This would represent 23% to 27% growth for software revenues. In 2016, we anticipate total revenues to be between $257.0 million and $263.0 million for the full year. We expect a net loss of ($0.35) to ($0.28) per share on a GAAP basis, and ($0.06) to ($0.09) per share on a non-GAAP basis. We expect adjusted EBITDA of $19.5 million to $21.0 million, and expect to be non-GAAP operating income profitable in 2016. This guidance reflects the expected net impact from our two recent acquisitions.
CONFERENCE CALL INFORMATION
We will host a conference call to discuss our fourth quarter 2015 financial results later today at 4:30 p.m. Eastern time (1:30 p.m. Pacific).
Dial-In Number: 1-866-952-1906
Conference ID#: INCONTACT
An audio file of the call will be available after February 16, 2016 on the inContact Investor Relations website at http://investor.incontact.com, in the Webcasts and Presentations section. A replay of the call will be available via telephone after 7:30 p.m. Eastern time today and until February 23, 2016.
Toll-free replay number: 1-877-870-5176
International replay number: + 1-858-384-5517
Replay Pin Number: 1233209
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995
All statements included in this press release, other than statements or characterizations of historical fact, are forward-looking statements. These forward-looking statements are based on inContact’s current expectations, estimates and projections about inContact’s industry, management’s beliefs, and certain assumptions made by management, all of which are subject to change. Forward-looking statements can often be identified by words such as “anticipates,” “expects,” “intends,” “plans,” “predicts,” “believes,” “seeks,” “estimates,” “may,” “will,” “should,” “would,” “could,” “potential,” “continue,” “ongoing,” similar expressions, and variations or negatives of these words and include, but are not limited to, statements regarding projected results of operations and management’s future strategic plans. These forward-looking statements are not guarantees of future results and are subject to risks, uncertainties and assumptions that could cause our actual results to differ materially and adversely from those expressed in any forward-looking statement.
The risks and uncertainties referred to above include, but are not limited to, risks associated with inContact’s business model; our ability to develop or acquire, and gain market acceptance for new products, including our new sales and marketing and voice automation products, in a cost-effective and timely manner; the gain or loss of key customers; competitive pressures; its ability to expand operations; fluctuations in its earnings as a result of the impact of stock-based compensation expense; interruptions or delays in our hosting operations; breaches of our security measures; its ability to protect our intellectual property from infringement, and to avoid infringing on the intellectual property rights of third parties; and its ability to expand, retain and motivate our employees and manage its growth. Further information on potential factors that could affect our financial results is included in inContact’s annual report on Form 10-K, quarterly reports of Form 10-Q, and in other filings with the Securities and Exchange Commission. The forward-looking statements in this release speak only as of the date they are made. inContact undertakes no obligation to revise or update publicly any forward-looking statement for any reason.
We operate under two business segments: Software and Network connectivity. The Software segment includes all revenue related to the delivery of our software applications, plus the associated professional services and setup fees and revenue related to quarterly minimum purchase commitments through July 2014, from a related party reseller. The Network connectivity segment includes all voice and data long distance services provided to customers.
For segment reporting, we classify operating expenses as either “direct” or “indirect.” Direct expense refers to costs attributable solely to either selling and marketing efforts or research and development efforts. Indirect expense refers to costs that management considers to be overhead in running the business. Management evaluates expenditures for both selling and marketing and research and development efforts at the segment level without the allocation of overhead expenses, such as rent, utilities and depreciation on property and equipment.
Operating segment revenues and profitability for the three and twelve months ended December 31, 2015 and 2014 were as follows (in thousands):
RECONCILIATION of NON-GAAP MEASURES:
“Adjusted EBITDA” is Earnings Before deductions for Interest, Taxes, Depreciation and Amortization and Stock-Based Compensation. The “Non-GAAP” measures represent the elimination of amortization of acquired intangible assets and stock-based compensation. Neither are measures of financial performance under generally accepted accounting principles (GAAP). The Adjusted EBITDA and the Non-GAAP measures are provided for the use of the reader in understanding our operating results and are not prepared in accordance with, nor does it serve as an alternative to GAAP measures and may be materially different from similar measures used by other companies. While not a substitute for information prepared in accordance with GAAP, management believes that this information is helpful for investors to more easily understand our operating financial performance. Management also believes these measures may better enable an investor to form views of our potential financial performance in the future. These measures have limitations as analytical tools, and investors should not consider these measures in isolation or as a substitute for analysis of our results prepared in accordance with GAAP
(1) The one-time, non-cash, $9.4 million tax benefit associated with the Uptivity acquisition, has been eliminated in the full year 2014 reconciliation, to enhance comparability.
inContact is the cloud contact center software leader, making it easier and affordable for organizations around the globe to create stand-out customer experiences while at the same time meeting their key business metrics. inContact continuously innovates in the cloud and is the only provider to offer a complete cloud customer interaction platform that is purpose built for enterprise and government organizations who operate in multiple divisions, locations and global regions. Named as Market Leader in the 2015 Ovum Decision Matrix and winner of the 2014 CRM Magazine Rising Star Award, inContact has deployed over 2,200 cloud contact center instances. To learn more, visit www.incontact.com.
inContact® is the registered trademark of inContact, Inc.
CONTACT: Investor Contact: Edward Keaney, Market Street Partners, 1-415-445-3238, firstname.lastname@example.org, or General Contact: Cheryl Andrus, inContact, Director Corporate Communications, 1-801-320-3646, email@example.com