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inContact Inc. Reports Operating Results (10-Q)

May 04, 2012 | About:
10qk

10qk

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inContact Inc. (SAAS) filed Quarterly Report for the period ended 2012-03-31.

Incontact Inc has a market cap of $238.1 million; its shares were traded at around $5.33 with and P/S ratio of 2.7.

Highlight of Business Operations:

Total revenues increased $4.3 million or 20% to $25.7 million during the three months ended March 31, 2012 compared to revenues of $21.3 million during the same period in 2011. The increase relates to an increase of $3.0 million in Software segment revenue due primarily to our continued focus and investment in sales and marketing efforts of our all-in-one inContact portfolio of cloud-based software solutions and revenue related to minimum purchase commitments from a reseller. Telecom segment revenue increased $1.3 million as the increase of Telecom revenue associated with our inContact portfolio customers exceeded the attrition of our Telecom only customers.

Costs of revenue increased $1.8 million or 15% to $14.3 million during the three months ended March 31, 2012 compared to $12.5 million during the same period of 2011. Our gross margin increased two percentage points to 44% during the three months ended March 31, 2012 from 42% during the three months ended March 31, 2011. The increase in gross profit is primarily driven by reduced costs for providing Telecom revenue offset by increased Software costs of revenue. The increase in Telecom gross margin is due to increased efficiencies in call routing related to a 2011 investment in technology, which resulted in lower Telecom costs. Software gross margin decreased due to greater professional service and customer service personnel costs as we employ more personnel, including higher-paid employees with more developed skill sets to service larger mid-market and enterprise customers and to support resellers ahead of the anticipated revenue. The decrease in Software gross margin is also due to greater costs attributable to international infrastructure and call traffic and an increase in amortization of previously capitalized internal use software costs.

The Software segment revenue increased by $3.0 million or 32% to $12.3 million during the three months ended March 31, 2012 from $9.3 million during the same period in 2011. The increase is primarily a result of the selling and marketing efforts we have undertaken to expand the inContact portfolio of software services in the market and revenue related to minimum purchase commitments from a reseller. Software segment revenue includes revenue from professional services of $559,000 for the first quarter of 2012 compared to $503,000 for the first quarter of 2011.

Direct selling and marketing expenses in the Software segment increased $1.7 million or 40% to $5.8 million during the three months ended March 31, 2012 compared to $4.1 million during the same period in 2011. This increase is a result of headcount additions for employees focused on managing and enhancing our partner relationships. We also continue to develop the services provided in the Software segment by investing in research and development. During the three months ended March 31, 2012 we incurred $1.7 million in direct research and development costs compared to $1.2 million during the same period in 2011 and have capitalized an additional $1.4 million of costs incurred during the three months ended March 31, 2012 related to our internally developed software compared to $1.1 million during the three months ended March 31, 2011. Indirect expenses, which consist of overhead, such as compensation, rent, utilities and depreciation on property and equipment, increased $1.0 million or 35% to $3.8 million during the three months ended March 31, 2012 from $2.8 million for the same period in 2011 due to more indirect costs being allocated to the Software segment with the continued shift in revenue mix from the Telecom segment to the Software segment and the overall increase in indirect expenses.

Telecom segment revenue increased $1.4 million or 11% to $13.4 million during three months ended March 31, 2012 from $12.0 million for the same period in 2011. This increase is associated with the Telecom revenue from our inContact portfolio customers exceeding the attrition of our Telecom only customers. Our costs of revenue increased 4% due to the increase in revenue, but Telecom gross margin increased 5% due to increased efficiencies in call routing related to a 2011 investment in technology, which resulted in lower Telecom costs. Selling and marketing expenses increased $89,000 or 12% during the three months ended March 31, 2012 as compared to the same period in 2011, due to increased commissions as a result of increased revenue. Indirect expenses, which consist of overhead, such as compensation, rent, utilities and depreciation on property and equipment, increased $63,000 or 8% during the three months ended March 31, 2012 compared to the same period in 2011 as a result of an overall increase in indirect expenses.

Read the The complete Report

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10qk
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