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Interactive Intelligence reports 2010 fourth-quarter and full year results

February 1, 2011 • Top Stories

Interactive Intelligence (Nasdaq: ININ), a global provider of unified IP business communications solutions, has announced results for its fourth quarter and full year ended Dec. 31, 2010.

The company reported 2010 fourth-quarter revenues of $50.7 million, an increase of 41 percent from $35.9 million in the fourth quarter of 2009. Revenues for 2010 were $166.3 million, an increase of 27 percent from $131.4 million in 2009.

The financial results noted in this release and the accompanying financial statements, reflect a change in the company’s presentation of its revenues, with three revenue lines presented: product revenues; recurring revenues, which include support and cloud-based revenues; and services revenues, which include professional services and education.

Fourth-quarter 2010 financial results compared to fourth quarter 2009 results include:

- Product revenues of $25.0 million, up 38 percent from $18.1 million.

- Recurring revenues of $19.9 million, up 34 percent from $14.8 million.

- Services revenues of $5.7 million, up 91 percent from $3.0 million.

- Gross profit margin of 69.1 percent versus 69.9 percent.

Full-year 2010 financial results compared to full-year 2009 results include:

- Product revenues of $79.8 million, up 26 percent from $63.3 million.

- Recurring revenues of $68.7 million, up 23 percent from $55.8 million.

- Services revenues of $17.8 million, up 44 percent from $12.3 million.

- Gross profit margins of 69.5 percent versus 69.6 percent.

“Our fourth-quarter orders were very strong from both new and existing customers, with good contributions from North America, Europe and Australia,” said Interactive Intelligence founder and CEO, Dr. Donald E. Brown. “Particularly impressive was the increase in the number of our transactions of $250,000 or more, which jumped from 19 in the fourth quarter of 2009 to 31 in the fourth quarter of 2010. While order activity propelled product revenue growth, recurring revenues increased significantly as well. Services revenue growth was also notable.

“For the year we recorded a 25 percent increase in product orders from both new and existing customers, and a 150 percent-plus increase in our cloud-based orders,” Brown said. “We more than doubled the number of $1 million orders, from nine in 2009 to 19 in 2010, and the number of orders over $250,000, from 55 to 90. We plan to build on this momentum by continuing to focus on moving up-market,” Brown said.

For the fourth quarter of 2010, net income on a generally accepted accounting principles (GAAP) basis was $7.1 million, with diluted earnings per share (EPS) of $0.37, compared to net income of $2.5 million, with EPS of $0.14 in the fourth quarter of 2009. Net income on a non-GAAP* basis for the fourth quarter of 2010 was $10.4 million, with EPS of $0.54, compared to non-GAAP net income of $5.1 million and EPS of $0.28 in the fourth quarter of 2009.

For the fourth quarter of 2010, non-GAAP net income and EPS exclude purchase accounting-related adjustments of $388,000, or EPS of $0.02, charges for stock-based compensation of $974,000, or EPS of $0.05, and non-cash income tax expense of approximately $2.0 million, or EPS of $0.10. For the fourth quarter of 2009, non-GAAP net income and EPS exclude purchase accounting-related adjustments of $58,000, charges for stock-based compensation of $775,000, or EPS of $0.04, and non-cash income tax expense of $1.8 million, or EPS of $0.10.

Net income for 2010 on a GAAP basis was $14.9 million, with EPS of $0.79, compared to net income of $8.6 million, with EPS of $0.47 in 2009. Net income on a non-GAAP basis was $26.5 million, with EPS of $1.40, compared to non-GAAP net income of $18.2 million, and EPS of $1.00 in 2009.

For the full year of 2010, non-GAAP net income and EPS exclude purchase accounting-related adjustments of $475,000, or EPS of $0.03, charges for stock-based compensation of $4.0 million, or EPS of $0.21, and non-cash income tax expense of approximately $7.2 million, or EPS of $0.38. For 2009, non-GAAP net income and EPS exclude purchase accounting-related adjustments of $232,000, or EPS of $0.01, charges for stock-based compensation of $3.3 million, or EPS of $0.18, and non-cash income tax expense of $6.0 million, or EPS of $0.34.

“Looking forward, we see a healthy pipeline of business,” Brown said. “We expect 2011 revenues to be boosted by the next major release of our flagship all-in-one IP communications software suite, which is due for general availability in the first half of the year. We anticipate growth in our cloud-based orders, with increases in both recurring and services revenues. We currently expect total revenues for 2011 to increase by at least 20 percent, moving past the $200 million mark.

“Our growth strategy calls for continued investment in our cloud-based infrastructure, as well as research and development, and sales and marketing, in order to further capitalise on the momentum that we have built while achieving a non-GAAP operating margin of approximately 14 percent,” Brown concluded.

Other 2010 financial highlights include:

- Cash flows from operations of $28.7 million, up from $15.1 million in 2009.

- Deferred revenues totaling $54.1 million as of Dec. 31, 2010, up from $48.2 million as of Dec. 31, 2009.

- The acquisition of Latitude Software for net cash of $15.3 million in the fourth quarter.

- Cash and investment balances as of Dec. 31, 2010 totaling $85.9 million, up from $65.0 million as of Dec. 31, 2009, with no debt.

The company will host a conference call Friday, Jan. 28 at 8:30 a.m. Eastern time (EST), featuring Dr. Donald E. Brown, and the company’s CFO, Stephen R. Head. A live Q&A session will follow opening remarks.

To access the teleconference, please 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.

For more, visit ININ’s Press Office

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