SALT LAKE CITY, UT -- (Marketwire) -- 08/07/08 -- UCN, Inc. (NASDAQ: UCNN), innovator of
all-in-one hosted contact center software for intelligent routing and agent
improvement, today reported financial results for second quarter ended June
30, 2008.
SECOND QUARTER 2008 HIGHLIGHTS
-- Revenue for the SaaS segment increased 29% to $4.5 million in the
second quarter, as compared to $3.5 million in SaaS revenue during the same
period in 2007, bringing the total for the first half of 2008 to $8.9
million, a 59% increase from $5.6 million in SaaS segment revenue for the
same period in 2007.
-- Consolidated revenue for the quarter was $19.3 million, compared to
$20.0 million for the same period a year ago, bringing the total for the
first half of 2008 to $39.2 million.
-- Consolidated costs of revenue as a percentage of revenue for the
quarter improved by 2.0 percentage points to 53.7% from the same period in
2007.
-- Signed 29 new SaaS contracts during the quarter, including a Fortune
100 health care services provider and a Fortune 1000 energy services
company.
"We saw a significant increase in new contract closes from Q1 to Q2," said
Paul Jarman, UCN CEO. "The key drivers of this accelerated sales activity
include the need to solve multi-location challenges; the need to minimize
capital expenditures; the need to support at-home workers, and the
increasing acceptance of the SaaS model. I expect these key drivers,
combined with progress within our partner program and the upcoming release
of the inContact platform, will have a positive impact on UCN SaaS revenue
for the remainder of 2008 and provide accelerated SaaS revenue growth in
2009."
SECOND QUARTER FINANCIAL RESULTS
SaaS Segment Results
SaaS segment revenue totaled $4.53 million, an increase of 4% from $4.37
million in the previous quarter and a 29% increase from $3.50 million in
the same period in 2007.
The SaaS segment includes all monthly recurring revenue related to the
delivery of the company's software applications plus the associated
professional services and setup fees related to the software services
product features (referred to as SaaS). See discussion of "Segment
Reporting" below for further description of the current segment
presentation method and segment financial results.
Consolidated Results
Revenue for the quarter decreased by $0.7 million to $19.3 million, as
compared to $20.0 million for the same period in 2007 due to a decrease of
$1.7 million in Telecom segment revenue from expected attrition. The
company has focused more of its sales and marketing efforts on increasing
SaaS segment revenue, which increased $1.0 million compared to the same
period in 2007. Costs of revenue as a percentage of revenue improved by 2.0
percentage points to 53.7% during the quarter, as compared to the same
period in 2007. This decrease is due to an increase in higher margin SaaS
revenue primarily resulting from the addition of new customers. The
company's cost of revenue excludes certain costs such as depreciation and
amortization related to the production of revenue.
Net loss for the quarter was $3.2 million, or $0.10 per share, as compared
to a net loss of $1.6 million or $0.06 per share for the same period in
2007. The loss is attributable, in part, to depreciation and amortization
expense of $1.4 million and non-cash stock-based compensation expense of
$307,000. The increase in net loss was also the result of an investment in
payroll in the areas of general and administrative expenses and research
and development, primarily to support the growing SaaS segment.
Earnings before interest, taxes, depreciation and amortization (EBITDA) for
the second quarter was a negative $1.6 million, which includes $307,000 of
non-cash stock-based compensation expense. Year-to-date negative EBITDA
grew to $2.8 million and includes $685,000 of non-cash stock-based
compensation expense. EBITDA is a non-GAAP measure management believes
provides important insight into UCN's operating results (see reconciliation
of non-GAAP measures below).
FINANCIAL OUTLOOK
UCN provides the following guidance for the full year of 2008:
-- SaaS revenue (defined as software and related fees only, with no
telecom and related fees included) to range between $19 million and $20
million.
-- Consolidated revenue to range between $77 million and $80 million.
-- Consolidated costs of revenue expected to continue to decrease in
2008.
CONFERENCE CALL INFORMATION
UCN will host a conference call to discuss its second quarter 2008 results
later today at 4:30 p.m. Eastern Time (1:30 p.m. Pacific)
The call will be recorded and accessible as an audio file after the call
from UCN's investor page at www.ucn.net/investors. A replay of the call
will be available via telephone after 7:30 today and until August 14, 2008:
Toll-free replay number: 1-800-839-5244
International replay number: 1-402-220-2699
(No replay pass code required)
Safe Harbor Statement under the Private Securities Litigation Reform Act of
1995
All statements included in this press release, other than statements or
characterizations of historical fact, are forward-looking statements. These
forward-looking statements are based on UCN's current expectations,
estimates and projections about UCN's industry, management's beliefs, and
certain assumptions made by management, all of which are subject to change.
Forward-looking statements can often be identified by words such as
"anticipates," "expects," "intends," "plans," "predicts," "believes,"
"seeks," "estimates," "may," "will," "should," "would," "could,"
"potential," "continue," "ongoing," similar expressions, and variations or
negatives of these words and include, but are not limited to, statements
regarding projected results of operations and management's future strategic
plans. These forward-looking statements are not guarantees of future
results and are subject to risks, uncertainties and assumptions that could
cause our actual results to differ materially and adversely from those
expressed in any forward-looking statement.
The risks and uncertainties referred to above include, but are not limited
to, risks associated with UCN's business model; our ability to develop or
acquire, and gain market acceptance for new products, including our new
sales and marketing and voice automation products, in a cost-effective and
timely manner; the gain or loss of key customers; competitive pressures;
its ability to expand operations; fluctuations in its earnings as a result
of the impact of stock-based compensation expense; interruptions or delays
in our hosting operations; breaches of our security measures; its ability
to protect our intellectual property from infringement, and to avoid
infringing on the intellectual property rights of third parties; and its
ability to expand, retain and motivate our employees and manage its growth.
Further information on potential factors that could affect our financial
results is included in UCN's Annual Report on Form 10-K, quarterly reports
of Form 10-Q, and in other filings with the Securities and Exchange
Commission. The forward-looking statements in this release speak only as of
the date they are made. UCN undertakes no obligation to revise or update
publicly any forward-looking statement for any reason.
UCN, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
June 30, December 31,
2008 2007
----------- -----------
ASSETS (Unaudited)
Current assets:
Cash and cash equivalents $ 3,723 $ 2,760
Short-term investments - 2,000
Accounts and other receivables, net of
allowance for uncollectible accounts
of $1,636 and $1,779, respectively 8,221 9,988
Other current assets 767 941
----------- -----------
Total current assets 12,711 15,689
Property and equipment, net 7,106 6,375
Intangible assets, net 5,179 6,813
Goodwill 2,512 2,155
Auction rate preferred securities 890 -
Other assets 429 336
----------- -----------
Total assets $ 28,827 $ 31,368
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt and capital
lease obligations $ 716 $ 781
Trade accounts payable 6,899 7,713
Accrued liabilities 2,753 2,120
Accrued commissions 1,301 1,470
Deferred revenue 934 338
----------- -----------
Total current liabilities 12,603 12,422
Long-term debt and capital lease obligations 3,119 746
Other long-term liabilities and deferred revenue 277 172
----------- -----------
Total liabilities 15,999 13,340
Total stockholders' equity 12,828 18,028
----------- -----------
Total liabilities and stockholders' equity $ 28,827 $ 31,368
=========== ===========
UCN, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - (Unaudited)
(in thousands except per share data)
Three months Six months
ended June 30, ended June 30,
------------------ ------------------
2008 2007 2008 2007
-------- -------- -------- --------
Revenue $ 19,285 $ 19,975 $ 39,166 $ 39,795
Operating expenses:
Costs of revenue (excluding
depreciation and amortization
shown separately below) 10,362 11,128 20,870 22,665
Selling and promotion 4,286 4,102 8,480 7,952
General and administrative 5,164 4,164 10,625 7,862
Depreciation and amortization 1,440 1,495 2,892 3,288
Research and development 1,078 447 2,036 875
-------- -------- -------- --------
Total operating expenses 22,330 21,336 44,903 42,642
-------- -------- -------- --------
Loss from operations (3,045) (1,361) (5,737) (2,847)
Other income (expense):
Interest income 11 3 31 18
Interest expense (113) (202) (168) (402)
-------- -------- -------- --------
Total other expense (102) (199) (137) (384)
-------- -------- -------- --------
Loss before income taxes (3,147) (1,560) (5,874) (3,231)
Income tax expense 3 2 6 5
-------- -------- -------- --------
Net loss $ (3,150) $ (1,562) $ (5,880) $ (3,236)
======== ======== ======== ========
Net loss per common share:
Basic and diluted $ (0.10) $ (0.06) $ (0.19) $ (0.12)
Weighted average common shares
outstanding:
Basic and diluted 31,039 28,166 31,033 27,243
Segment Reporting
Effective January 1, 2008, UCN's management changed the way it manages the
business and accordingly, UCN has changed the way it reports segments to
reflect sales based on its two primary product service segments. The new
segments are Software as a Service ("SaaS") and Telecom, which is different
than the previously reported Telecom segment.
The SaaS segment includes all monthly recurring revenue related to the
delivery of our software applications plus the associated professional
services and setup fees related to the software services product features
(referred to as SaaS). The new SaaS segment no longer includes any telecom
revenue. SaaS software includes:
-- Skills-based routing,
-- Automated call distribution ("ACD"),
-- Self-service menus,
-- Speech recognition based automated interactive voice response,
-- Database integration with the contact handling technology,
-- Multimedia contact management (voice, fax, email, chat),
-- Management reporting features,
-- Performance optimization benchmarking,
-- Custom call routing and call flow design,
-- Workforce scheduling, simulation and forecasting,
-- Customer satisfaction tracking and scoring,
-- New hire screening and on-line training tools, and
-- One-time professional services and setup fees.
Prior to January 1, 2008, UCN managed and reported its financial results
based on two customer segments: inContact and Telecom. The inContact
segment included all product revenues from customers using any inContact
services as well as their long distance voice and data services. The
previous Telecom segment included all voice and data long distance services
provided to customers not utilizing any inContact services.
Operating segment revenues and profitability for the three and six months
ended June 30, 2008 and 2007 were as follows (in thousands):
Three months ended Three months ended
June 30, 2008 June 30, 2007
------------------------- -------------------------
Consol- Consol-
Telecom SaaS idated Telecom SaaS idated
------- ------- ------- ------- ------- -------
Revenue (1) $14,752 $ 4,533 $19,285 $16,471 $ 3,504 $19,975
Costs of revenue
(excluding depreciation
and amortization shown
separately below) 10,251 111 10,362 11,058 70 11,128
Selling and promotion 1,311 2,975 4,286 1,683 2,419 4,102
General and
administrative 3,116 2,048 5,164 2,995 1,169 4,164
Depreciation and
amortization 724 716 1,440 800 695 1,495
Research and
development - 1,078 1,078 - 447 447
------- ------- ------- ------- ------- -------
Loss from
operations $ (650) $(2,395) $(3,045) $ (65) $(1,296) $(1,361)
======= ======= ======= ======= ======= =======
Six months ended Six months ended
June 30, 2008 June 30, 2007
------------------------- -------------------------
Consol- Consol-
Telecom SaaS idated Telecom SaaS idated
------- ------- ------- ------- ------- -------
Revenue (2) $30,263 $ 8,903 $39,166 $34,149 $ 5,646 $39,795
Costs of revenue
(excluding depreciation
and amortization shown
separately below) 20,666 204 20,870 22,555 110 22,665
Selling and promotion 2,720 5,760 8,480 3,656 4,296 7,952
General and
administrative 6,542 4,083 10,625 5,889 1,974 7,862
Depreciation and
amortization 1,437 1,455 2,892 2,002 1,285 3,288
Research and
development - 2,036 2,036 - 875 875
------- ------- ------- ------- ------- -------
Loss from
operations $(1,102) $(4,635) $(5,737) $ 47 $(2,894) $(2,847)
======= ======= ======= ======= ======= =======
(1) SaaS segment revenue includes professional services revenue of $218,000
and $256,000 for the three months ended June 30, 2008 and 2007,
respectively.
(2) SaaS segment revenue includes professional services revenue of $474,000
and $449,000 for the six months ended June 30, 2008 and 2007,
respectively.
Reconciliation of Non-GAAP Measures:
"EBITDA," which is calculated as Earnings Before deductions for Interest,
Taxes, Depreciation and Amortization, is not a measure of financial
performance under generally accepted accounting principles (GAAP). EBITDA
is provided for the use of the reader in understanding UCN's operating
results and is not prepared in accordance with, nor does it serve as an
alternative to GAAP measures and may be materially different from similar
measures used by other companies. While not a substitute for information
prepared in accordance with GAAP, management believes that this information
is helpful for investors to more easily understand our operating financial
performance. Management also believes this measure may better enable an
investor to form views of UCN's potential financial performance in the
future. This measure has limitations as an analytical tool, and investors
should not consider EBITDA in isolation or as a substitute for analysis of
our results prepared in accordance with GAAP.
Three months ended June 30,
----------------------------
2008 2007
------------- -------------
Net loss $ (3,150) $ (1,562)
Depreciation and amortization 1,440 1,495
Interest income and expense, net 102 199
Income tax expense 3 2
------------- -------------
EBITDA $ (1,605) $ 134
============= =============
Six months ended June 30,
----------------------------
2008 2007
------------- -------------
Net loss $ (5,880) $ (3,236)
Depreciation and amortization 2,892 3,288
Interest income and expense, net 137 384
Income tax expense 6 5
------------- -------------
EBITDA $ (2,845) $ 441
============= =============
UCN Contact:
Aaron Glauser
Communications Director
801-320-3468 Email Contact
Investor Contact:
Liolios Group Inc
Scott Liolios or Ron Both
949-574-3860 Email Contact
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