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Interactive Intelligence Posts 7.5 Percent Revenue Growth for Q2

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July 30, 2009

Interactive Intelligence Posts 7.5 Percent Revenue Growth for Q2

By Brendan B. Read, Senior Contributing Editor

In a strong sign that the business communications marketplace is growing as the downturn that had begun last year is bottoming out, Interactive Intelligence reported that its revenues grew 7.5 percent to $32.9 million for the second quarter of 2009, up from $30.6 million in the year-ago quarter. These results have situated the firm nicely to boost its revenues into 2010.

Stephen R. Head, the Indianapolis-based company’s chief financial officer, told TMCnet in an interview that a healthy percentage of the company’s product revenues come from current customers, either as product licenses or as maintenance and support fees.
“So we are not dependent on new customers each quarter for the majority of our revenue. While the recession has affected customers, we have a large installed base and there has been continued new product licensing,” Head said in an e-mail. “The reason we are winning is the superior architecture where we are the architecture of choice for a company. Part of the strength in revenues is that about 40 percent of total revenues are from support and maintenance agreements. We do provide critical software for companies and the annual renewals of support have continued to be strong.”
On the expense side, Head said, Interactive has taken actions to manage costs and reduce or hold expenses year-over-year, “while at the same time actually increasing the amount we are investing in product development.”
Thanks to mostly to strong sales and rising overall demand, Interactive Intelligence’s (News - Alert) generally accepted accounting principles-based operating income nearly trebled to $3 million in 2Q 09 from $1.3 million in 2Q 08. Non-GAAP operating income rose to $3.7 million from $2.2 million in the same quarter last year.
The firm’s GAAP net income in 2Q 09 took a similar leap to $2.1 million or diluted earnings per share of $0.12 from $845,000, or EPS of $0.04 in 2Q 08. Non-GAAP net income vaulted to $4.4 million, or EPS of $0.24 from $2.4 million, or EPS of $0.13 over the same period. Gross margins also grew, to 67.9 percent in 2Q 09, compared to 67.3 percent in 2Q 08.
The first half 2009 results are also impressive given the economy. Total revenues reached $62.4 million, a 3.8 percent increase over revenues of $60.1 million for the first half of 2008.
GAAP operating income in 1H 09 doubled to $5.4 million, up from $2.7 million over the same period. That for non-GAAP operating income hit $7.million, compared to $4.5 million in 1H 08.
Meanwhile GAAP net income hit $3.3 million, or EPS of $0.19 in 1H 09, up dramatically from $2 million, or EPS of $0.10 in 1H 08. Non-GAAP net income punched in at $7.2 million, or EPS of $0.41, compared to $5.3 million, or EPS of $0.28, for the same period last year. Gross margins widened to 68.6 percent from 68.3 percent for the first half of 2008.
And with results like these Interactive Intelligence saw its cash and investment balances increase to $54.1 million with no debt. That has given it the resources to develop and expand its product lines and make strategic acquisitions.
Part of the company’s product development involves its recently unveiled “Business Process Automation” software – an offering that, along with Interactive’s “Interaction Product Automation,” is expected to benefit the company in a number of ways.
“It further differentiates us from the competitors by using the communications platform as a launching pad for tightly integrated process automation using many of the same technologies we have been deploying for years – tracking, routing, escalating, and recording of events,” Head said.
As a result, Interactive drives both IPA revenue and additional CIC revenue by being selected for those contact center applications, he said.
“However, we are looking at using a subscription model for IPA revenue, rather than the perpetual licensing we have used for our other contact center and enterprise products,” he said. “What this means is that we have more predictable recurring revenues, but initially not as much revenue as we would recognize with a perpetual license. We have not provided any specific forecasts of the revenue we expect, so we are not in a position to comment on the earnings impact. But we believe that we will see strong adoption of IPA leading to higher and more predictable revenues which will translate into increasing earnings.”

Interactive Intelligence is a platinum sponsor of ITEXPO West — the biggest and most comprehensive IP communications event of the year. ITEXPO (News - Alert) West will take place in Los Angeles, Sept. 1 to 3, 2009, featuring three valuable days of exhibits, conferences, and networking opportunities you can’t afford to miss. Visit Interactive Intelligence at booth #413 in the exhibit hall. Don’t wait. Register now.

Brendan B. Read is TMCnet’s Senior Contributing Editor. To read more of Brendan’s articles, please visit his columnist page.

Edited by Michael Dinan

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