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Interactive Intelligence Fiscal 2013 Q4 and Full Year Financials Point to a Rock Solid Contact Center and Cloud Business

January 30, 2014

Interactive Intelligence—which recently received TMC (News - Alert)'s Cloud Computing Magazine 2013 Cloud Computing Excellence Award—reported both full-year and Q4 results for its fiscal year that ended Dec. 31, 2013 yesterday. To say the least the company's performance remains outstanding, and recently launched initiatives—especially in the key area of cloud-based services, are proving to be extremely robust business efforts. The results in fact clearly point the way to anticipation of a huge 2014 for the company. We very much look forward to seeing Interactive execute on the game plan this year—we have high expectations for growth and ongoing market penetration.

Before looking at the overall numbers, let's highlight the cloud services results:

  • Cloud-based orders for 2013 were up 87 percent year-over-year.
  • Cloud-based orders in 2013 were 50 percent of total orders, up from 35 percent in 2012.
  • Deferred and unbilled future cloud-based revenues are up 65 percent year-over-year.

This is not trivial, and we're glad to see that Interactive is pursuing an aggressive cloud-services contact center path—and nicely capitalizing on it. Underlying these efforts is Interactive's huge focus on driving substantial improvement in its customers' contact center customer experiences—this is where most businesses can deliver real differentiators over competitors in establishing customer loyalty and the all-important "customer recommendation" for a business's services.

Overall, Interactive's financial results clearly point to Interactive following the right path for growing its business. Let's take a look at the key numbers for Q4 2013, followed by the company's full year results.

Interactive's Q4 2013

Total Q4 2013 revenue came in at $90.8 million. This represents a 29 percent increase compared to the company's 2012 Q4 results. The overall revenue breakdown is as follows:

  • Recurring revenue, which includes support fees from on-premises license agreements and fees from cloud-based customers, increased 25 percent to $41.5 million. Recurring revenue now accounts for 46 percent of total revenues;
  • Cloud-based revenues increased 61 percent to $10.6 million;
  • Product revenue was $34.9 million, up from $27.2 million year over year;
  • Services revenue was $14.4 million, compared to $10.2 million in Q4 2012.

Net income for Q4 2013 looks as follows:

  • On a GAAP basis net income for Q4 2013 reached $3.5 million, or $0.17 per. This represents solid growth relative to Q4 2012 GAAP net income of $2.3 million, or $0.11 per share;
  • On a non-GAAP basis, net income for Q4 2013 was $5.6 million, or $0.26 per share. This represents a slight dip from Q4 2012, when non-GAAP net income reached $5.7 million, or $0.28 per share.

Deferred revenues increased to $116 million, up from $91.9 million at the end of 2012. Unbilled future cloud-based revenue increased to $184.2 million from $89.6 million at the end of 2012. The combination of deferred revenues and future cloud-based revenues was $300.0 million, up 65 percent over $181.5 million at the end of 2012.

Cloud-based orders made up 47 percent of total orders in Q4 2013, up from 39 percent of total orders the previous year.

It is quite interesting to note that total orders for Q4 2013 decreased by 15 percent year-over-year - which Interactive attributes to what it says was an exceptionally strong 2012 fourth quarter. Interactive additionally notes that it signed 63 contracts over $250,000, including 15 over $1.0 million I Q4 2013, compared to 68 orders over $250,000, including 19 over $1.0 million in the same quarter last year. Claiming Q4 2012 was "exceptional" is certainly one way to look at it - we look forward to more such "exceptional" quarters.

image via shutterstock

Interactive's Full Year 2013 Results

Total full year 2013 revenue came in at $318.2 million, an increase of 34 percent over 2012. The overall full year revenue breakdown is as follows:

  • Total recurring revenue increased 25 percent to $148.0 million;
  • Cloud-based recurring revenue increased 55 percent year-over-year, and accounted for $34.2 million of total recurring revenue;
  • Product revenue was $117.7 million, compared to $88.6 million year over year;
  • Service revenue hit $52.6 million, compared to $30.4 million in 2012.

Full year 2013 net income looks as follows:

  • On a GAAP basis net income hit $9.5 million, or $0.45 per share. This compares to GAAP net income in 2012 of only $906,000, or $0.04 per share;
  • On a non-GAAP basis net income reached $16.7 million, or $0.79 per share. Unlike the dip exhibited for Q4 2013, full year non-GAAP net income increased substantially compared to non-GAAP net income in 2012 of $10.1 million, or $0.50 per diluted share.

Total orders increased 30 percent in 2013 compared to 2012 (keeping in mind that "exceptional 2012 Q4 quarter). Cloud-based orders, as we noted earlier, were up a significant 87 percent year-over-year. The company signed 192 contracts over $250,000, which included 48 orders over $1.0 million, up from 158 and 42, respectively, in 2012. Cloud-based orders were 50 percent of total orders, up from 35 percent in 2012.

For the full 2013year Interactive generated $27.4 million in cash flow from operations. The company used $20.8 million for capital expenditures and $6.1 million for internal use software.

Total cash, cash equivalents and investments totaled $107.8 million as of December 31, 2013, up from $80.6 at the end of 2012.

Interactive Intelligence founder and CEO, Dr. Donald Brown (News - Alert) noted that, "2013 was an excellent year for Interactive intelligence. We significantly increased orders, revenues, earnings and cash, while continuing to gain share and recognition in the contact center market. Looking forward, we are very optimistic about our position in the marketplace based on the breadth and strength of our offering. We remain committed to innovation, and plan to continue investing in research and development, as well as in our sales infrastructure."

Brown also provided some quick guidance for 2014, saying, "Based on our strong global pipeline of opportunities, we're expecting 2014 total order growth of 20 percent or more, which is on top of our better-than-expected 2013 order growth of 30 percent. In addition, we anticipate cloud-based total order growth to outpace that number, and to represent approximately 55 to 60 percent of total 2014 orders."

We're looking forward to it.

Look for cloud services to continue to move to center stage for Interactive—how well the company does here quarter by quarter in 2014 (by which we mean we are anticipating substantial growth ongoing throughout the year) will be critical for Interactive's long term success.




Edited by Ryan Sartor

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