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January 28, 2011

Interactive Intelligence Posts Strong Fourth Quarter, Year End Results

By Susan J. Campbell, TMCnet Contributing Editor

Unified IP business communications solutions provider and ITEXPO East 2011 Platinum sponsor Interactive Intelligence, has announced results for its fourth quarter and the full year, which ended Dec. 31, 2010. Results showed fourth quarter and year-end increases for the company, demonstrating strong momentum in its market space.

According to published results, Interactive Intelligence (News - Alert) posted fourth quarter revenues of $50.7 million, representing an increase of 41 percent from $35.9 million in the fourth quarter of 2009. Revenues for all of 2010 were $166.3 million, an increase of 27 percent from the 2009 revenue of $13.4 million.

“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, in a statement. “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.

The financial results actually reflect a change in the way the company presents its revenues. Three revenue lines have been presented, including product revenues, recurring revenues such as support and cloud-based revenues, and services revenues such as professional services and education.

In the fourth-quarter 2010, Interactive Intelligence enjoyed the following results, as compared with 2009:

  • $25.0 million in product revenues, an increase of 38 percent from $18.2 million;
  • $19.9 million in recurring revenues, up 34 percent from $14.8 million;
  • $5.7 million in services revenues, an increase of 91 percent from $3.0 million;
  • 69.1 percent in gross margin profit, versus 69.9 percent in 2009.

In the full-year of 2010, financial results as compared to full-year 2009 results:

  • $79.8 million in product revenues, up 26 percent from $63.3 million;
  • $68.7 million in recurring revenues, an increase of 23 percent from $55.8 million;
  • $17.8 million in services revenues, an increase of 44 percent from $12.3 million;
  • 69.5 percent gross profit margins, versus 69.6 percent.

“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.

Net income for Interactive Intelligence on a generally accepted accounting principles (GAAP) basis for the fourth quarter was $7.1 million, and diluted earnings per share (EPS) as $0.37. On a non-GAAP basis, net income for the quarter was $10.4 million, with EPS of $.054. Net income for all of 2010 on a GAAP basis was $14.9 million, with EPS of $0.79. Net income on a non-GAAP basis was $26.5 million, with EPS of $1.40.

“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.”

Brown also noted that the company’s growth strategy calls for continued investment in its cloud-based infrastructure, research and development, and sales and marketing. Interactive Intelligence hopes to capitalize on the momentum that they have built while achieving non-GAAP operating margin of roughly 14 percent.

The company hosted a conference call Friday, Jan. 28 at 8:30 a.m. Eastern time (EST), featuring Brown, and the company’s CFO, Stephen R. Head.

A live Q&A session followed opening remarks. The entire teleconference will be broadcast live on the company's investor relations' page.

Interactive Intelligence is a Platinum sponsor of ITEXPO East 2011. To be held Feb. 2-4 in Miami, ITEXPO (News - Alert) is the world’s premier IP communications event. Visit Interactive Intelligence in booth #607. Don’t wait. Register now.


Susan J. Campbell is a contributing editor for TMCnet and has also written for eastbiz.com. To read more of Susan’s articles, please visit her columnist page.

Edited by Tammy Wolf



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