Interactive Intelligence Inc. (ININ)
Q1 2009 Earnings Call
April 27, 2009 4:30 pm ET
Don Brown – Chairman, President and Chief Executive Officer
Steve Head – Chief Financial Officer, Vice President of Finance and Administration, Secretary and Treasurer
Paul Weber – Vice President of Sales for North America
Shyam Patil – Raymond James
Tavis McCourt – Morgan Keegan & Co.
Michael Latimore – Northland Securities
[Graham Rand – Faris Capital]
Craig Nankervis – First Analysis Corp.
Previous Statements by ININ
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Presenting with me on the call today is Steve Head our CFO and we're also joined by Paul Weber our Vice President of Sales for North America. After our discussion and concluding remarks, we'll have a Q&A session, at which time we'll be available to answer questions. And for any of you not able to ask questions today, please follow up with Steve after the call. I hope you've all received our Q1 earnings release by now. If not, it's up on our website. Before we get any further into the call, Steve will present the standard legal disclaimer.
Over the course of this conference call we will make predictive statements about our results, performance, plans, and objectives. In an effort to assist you in understanding our company, the enterprise software industry combined with the rapidly evolving uncertainties in the economic environment makes predictions challenging and problematic. These predictive statements are forward-looking statements under Federal Securities Laws.
Our actual results could differ materially as a result of a variety of potential risks and uncertainties. For more information you should look to our 2008 Form 10-K, which we filed with the SEC and which describes factors, risks and uncertainties that could cause our actual results to differ materially. The company disclaims any obligation or undertaking to update or revise any forward-looking statement.
Also, during this call we may refer to non-GAAP financial measures. These non-GAAP results eliminate the impact of non-cash stock option expense and non-cash income tax expense. Management uses these non-GAAP financial measures in analyzing the business.
And now Don will provide some overview comments on the quarter.
As usual, I'll start off with some general comments and then Steve will go into some detail on the numbers and then I'll come back with a little bit more of a company update and outlook and then we'll do the Q&A.
For the first quarter of 2009, we recognized revenues of $29.5 million about even with the first quarter last year. Overall, orders were down from the first quarter last year and as a result our recognized product revenues declined to $13.1 million from $14.8 million the first quarter last year. This decline was a result of a lower dollar amount of orders from both new and current customers, and was experienced in most of the major geographies in which we operate. We received orders from 59 new customers during the quarter.
We did not have any orders over $1 million and had nine orders over $250 million. We achieved record services revenues of $16.4 million, an increase of 12% over last year. Part of the disparity between the product and services revenues is explained by the fact that our communications as a service business is growing and those revenues are lumped in with services. We don't yet breakout such subscription revenues, but may decide to do so in the future if they continue to grow at the current rate. I will disclose, however, that we signed three significant communications as services deals in the quarter.
We are reporting non-GAAP income and EPS in the earnings release on a non-GAAP basis. Earnings for the first quarter were $2.9 million or $0.16 per diluted share compared to $2.9 million or $0.15 per diluted share for the first quarter of 2008. Even though earnings were the same amount, the diluted share count decreased principally because of the share repurchases in 2008. And actually, Steve, I think those numbers are wrong, aren’t they? Weren't those the GAAP numbers?
No, those are the non-GAAP numbers.
Oh, I'm sorry, okay. That's right, sorry. I guess I had better turn the call over to Steve now for some more detail on those numbers.
As usual, I'll comment on the operating performance then the balance sheet and cash flows. First, the two items that will impact the information we disclosed I've already mentioned them, but on a GAAP basis we recorded income tax expense of $878,000 in the first quarter of 2009.
Now, as we discussed in prior calls, most of the expenses used to reduce the recorded deferred tax asset and does not require cash payments. On a non-GAAP basis, our tax expense was only $79,000. Second, we recorded non-cash stock option expense of $847,000 for the first quarter of 2009, which compares to $932,000 in the first quarter of 2008.
Our partners continue to generate the majority of orders with about 80% of orders coming from the channel during the first quarter of 2009. As Don noted, we signed 59 new customers for the contact center enterprise messaging and IP PBX solutions. The overall average new customer order in the quarter was $90,000 with an average new customer order of $105,000 for the contact center and large enterprise IP PBX licenses.