inContact Inc. (SAAS, Financial) filed Quarterly Report for the period ended 2010-03-31.
Incontact Inc. has a market cap of $95.7 million; its shares were traded at around $2.75 with and P/S ratio of 1.2.
Costs of revenue decreased $1 million or 8% to $11.8 million during the three months ended March 31, 2010 compared to $12.8 million during the same period of 2009. As a result, our gross margin increased five percentage points to 44% during the three months ended March 31, 2010 from 39% during the three months ended March 31, 2009. The increase in gross profit is primarily driven by our transition in sales mix from our Telecom segment that has lower margins to our Software segment, which has much higher margins, and the increase in gross margin for the Telecom segment.
Other income increased $538,000 to $115,000 during the three months ended March 31, 2010 from an expense of $423,000 during the same period in 2009. Net interest expense decreased $118,000 for the first quarter of 2010 compared to the comparable period in 2009 due to a lower outstanding balance on our revolving credit agreement in 2010 as compared to 2009. The remaining increase of $420,000 is due to the change in fair value of our warrant liability (Warrants). During the three months ended March 31, 2010, the fair value of Warrants decreased $184,000 and the fair value of Warrants increased $236,000 during the three months ended March 31, 2009.
Direct selling and marketing expenses in the Software segment increased $274,000 or 10% to $2.9 million during the three months ended March 31, 2010 compared to $2.7 million during the same period in 2009. 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, 2010 we incurred $1 million in direct research and development costs compared to $930,000 during the same period in 2009 and have capitalized an additional $862,000 of costs incurred during the three months ended March 31, 2010 related to our internally developed software compared to $721,000 during the three months ended March 31, 2009. Indirect expenses, which consist of overhead, such as compensation, rent, utilities and depreciation on property and equipment, decreased $553,000 or 20% to $2.2 million during the three months ended March 31, 2010 from $2.7 million for the same period in 2009. This decrease primarily relates to our efforts to reduce overhead costs in the fourth quarter of 2009 and severance compensation charges for an executive officer terminated in the first quarter of 2009.
Our principal sources of liquidity are cash and cash equivalents and available borrowings under our revolving credit note, which expires in July 2011. At March 31, 2010, we had $10.6 million of cash and cash equivalents. In addition to our $10.6 million of cash and cash equivalents, subject to meeting covenant requirements, we have access to additional available borrowings under our revolving credit note with Zions entered into in July 2009. The available borrowings under the revolving credit note are $2.7 million at March 31, 2010, resulting in total cash and additional availability under the revolving credit note of $13.3 million at March 31, 2010. The balance of our revolving credit note at March 31, 2010 was $5.8 million. In April 2010, we paid $5.5 million of the $5.8 million balance.
We generated net income of $1.5 million during the three months ended March 31, 2010. Additionally, significant non-cash expenses affecting operations during the three months ended March 31, 2010 were $1.3 million of depreciation and amortization and $218,000 of stock-based compensation offset by a non-cash gain of $184,000 for the change in the fair value of certain warrants. Our operating activities provided cash flows of $2.7 million during the three months ended March 31, 2010.
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Incontact Inc. has a market cap of $95.7 million; its shares were traded at around $2.75 with and P/S ratio of 1.2.
Highlight of Business Operations:
Total revenues increased $118,000 or 1% to $21.1 million during the three months ended March 31, 2010 compared to revenues of $21 million during the same period in 2009. The increase relates to an increase of $1.5 million in Software segment revenue due to our focus on sales and marketing efforts on our all-in-one hosted inContact suite. This increase is offset by a decrease of $1.4 million in Telecom segment revenue due to expected attrition of our telecom-only customers and a loss of revenue from low-margin customers that we purposely moved off our network in the third quarter of 2009.Costs of revenue decreased $1 million or 8% to $11.8 million during the three months ended March 31, 2010 compared to $12.8 million during the same period of 2009. As a result, our gross margin increased five percentage points to 44% during the three months ended March 31, 2010 from 39% during the three months ended March 31, 2009. The increase in gross profit is primarily driven by our transition in sales mix from our Telecom segment that has lower margins to our Software segment, which has much higher margins, and the increase in gross margin for the Telecom segment.
Other income increased $538,000 to $115,000 during the three months ended March 31, 2010 from an expense of $423,000 during the same period in 2009. Net interest expense decreased $118,000 for the first quarter of 2010 compared to the comparable period in 2009 due to a lower outstanding balance on our revolving credit agreement in 2010 as compared to 2009. The remaining increase of $420,000 is due to the change in fair value of our warrant liability (Warrants). During the three months ended March 31, 2010, the fair value of Warrants decreased $184,000 and the fair value of Warrants increased $236,000 during the three months ended March 31, 2009.
Direct selling and marketing expenses in the Software segment increased $274,000 or 10% to $2.9 million during the three months ended March 31, 2010 compared to $2.7 million during the same period in 2009. 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, 2010 we incurred $1 million in direct research and development costs compared to $930,000 during the same period in 2009 and have capitalized an additional $862,000 of costs incurred during the three months ended March 31, 2010 related to our internally developed software compared to $721,000 during the three months ended March 31, 2009. Indirect expenses, which consist of overhead, such as compensation, rent, utilities and depreciation on property and equipment, decreased $553,000 or 20% to $2.2 million during the three months ended March 31, 2010 from $2.7 million for the same period in 2009. This decrease primarily relates to our efforts to reduce overhead costs in the fourth quarter of 2009 and severance compensation charges for an executive officer terminated in the first quarter of 2009.
Our principal sources of liquidity are cash and cash equivalents and available borrowings under our revolving credit note, which expires in July 2011. At March 31, 2010, we had $10.6 million of cash and cash equivalents. In addition to our $10.6 million of cash and cash equivalents, subject to meeting covenant requirements, we have access to additional available borrowings under our revolving credit note with Zions entered into in July 2009. The available borrowings under the revolving credit note are $2.7 million at March 31, 2010, resulting in total cash and additional availability under the revolving credit note of $13.3 million at March 31, 2010. The balance of our revolving credit note at March 31, 2010 was $5.8 million. In April 2010, we paid $5.5 million of the $5.8 million balance.
We generated net income of $1.5 million during the three months ended March 31, 2010. Additionally, significant non-cash expenses affecting operations during the three months ended March 31, 2010 were $1.3 million of depreciation and amortization and $218,000 of stock-based compensation offset by a non-cash gain of $184,000 for the change in the fair value of certain warrants. Our operating activities provided cash flows of $2.7 million during the three months ended March 31, 2010.
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