Published:
UCN Reports First Quarter 2008 Results
UCN Reports First Quarter 2008 Results
SaaS Segment Revenue Increases 104 Percent Year-Over-Year
UCN, Inc. (NASDAQ: UCNN), innovator of
all-in-one hosted contact center software for intelligent routing and agent
improvement, today reported financial results for first quarter ended March
31, 2008.
FIRST QUARTER 2008 HIGHLIGHTS
-- Consolidated revenue for the quarter was $19.9 million, compared to
$19.8 million for the same period a year ago.
-- Consolidated costs of revenue as a percentage of revenue for the
quarter improved by 5.4 percentage points to 52.9% from the same period in
2007.
-- Instituted a new financial reporting structure that separates Software
as a Service ("SaaS") revenue (defined as software revenue and related
fees with no telecom revenue or related fees) from telecom revenue, thereby
providing better comparability to other software companies, as well as
greater transparency and clarity of the company's financial statements.
-- Revenue for the SaaS segment increased 104% to $4.4 million in the
quarter, as compared to $2.2 million in SaaS revenue during the same period
in 2007.
-- Signed 16 new SaaS contracts during the quarter, which included two
Fortune 500 companies, a third company that committed to a pre-payment of
$593,000, and another company that committed to $1.2 million in SaaS
revenues over a three-year period.
-- 90% of the SaaS contracts closed during the current quarter were one,
two or three-year terms, versus month-to-month contracts. This compares to
the previous quarter, where 76% of all software services agreements were
term contracts.
"This quarter was highlighted by an improvement in the overall quality of
customers wins as indicated by the number of significant enterprise wins,
the increase in the monthly minimum for SaaS revenue per contract, as well
as our transition to term contracts," said Paul Jarman, UCN CEO. "Given the
new contract activity we have experienced in April, the second quarter
looks to be on track for strong new contract growth. We believe the
adoption rate for hosted contact center infrastructure solutions may
actually accelerate, as it becomes more difficult for companies to fund
capital equipment investments
-- as opposed to operational hosted expense
-- in these uncertain credit market conditions."
FIRST QUARTER FINANCIAL RESULTS
SaaS Segment Results
The SaaS segment revenue totaled $4.4 million, an increase of 9% from $4.0
million in the previous quarter and a 104% increase from $2.2 million in
the same period in 2007. Excluding the Q1 2008 revenue contribution of
$1.1 million from the BenchmarkPortal and ScheduleQ acquisitions, SaaS
segment revenue increased $1.7 million or 106% compared to the first
quarter 2007. The increase is a result of the selling and promotional
efforts the company has undertaken to expand these services in the market.
For the quarter, the SaaS segment revenue of $4.4 million includes $256,000
of non-recurring services such as setup and professional services, which is
in an increase of $63,000 in non-recurring services from the same period in
2007.
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). 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 increased by $0.1 million to $19.9 million as
compared to $19.8 million for the same period 2007. This increase is
comprised primarily of significant increases in SaaS segment revenue, which
increased $2.2 million or 104% over the first quarter of 2007. Costs of
revenue as a percentage of revenue improved by 5.4 percentage points to
52.9% during the quarter, as compared to the same period in 2007, due to an
increase in higher margin SaaS revenue mainly resulting from new customers.
The company's costs of revenue do not include certain costs such as
depreciation and amortization related to the production of revenue.
Net loss for the quarter was $2.7 million, or $0.09 per share, as compared
to a net loss of $1.7 million or $0.06 per share for the same period in
2007. The loss is attributable primarily to depreciation and amortization
expense of $1.5 million, non-cash, stock-based compensation of $378,000,
and one-time expenses of $575,000 related mainly to the internal
investigation in Q1 and unusual facility costs.
The primary difference between the $2.7 million loss in Q1 2008 and the
$1.7 million loss in Q1 2007 is an investment in payroll in the areas of
general and administrative expenses, selling and promotion, and research
and development, primarily in support of the SaaS segment, and the above
mentioned one-time expenses.
Earnings before interest, taxes, depreciation and amortization (EBITDA) is
a non-GAAP measure that management believes provides important insight into
UCN's operating results (see reconciliation of non-GAAP measures below).
Included in the negative EBITDA of $1.2 million for the quarter were
non-cash stock-based compensation expense of $378,000, and one-time
expenses of $575,000 related mainly to the internal investigation, as well
as facility costs.
FINANCIAL OUTLOOK
UCN provides the following guidance for the full year of 2008:
-- Software as a Service revenue (defined as software and related fees
only, with no telecom and related fees included) remains within the
previously stated range of $23 million to $26 million.
-- Consolidated revenue is expected to range between $81 million and $88
million.
-- Consolidated costs of revenue are expected to continue to decrease
throughout 2008.
CONFERENCE CALL INFORMATION
UCN will host a conference call to discuss its first quarter 2008 results
later today at 4:30 p.m. Eastern (1:30 p.m. Pacific)
Dial-In Number: 1-800-895-0231
International: 1-785-424-1054
Conference ID#: 7UCN
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 after 7:30 p.m. on the same day and until June 15, 2008:
Toll-free replay number: 1-800-839-2461
International replay number: 1-402-220-7219
(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 our current expectations, estimates
and projections about our industry, management's beliefs, and certain
assumptions made by us, 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 our 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;
our ability to expand operations; fluctuations in our earnings as a result
of the impact of stock-based compensation expense; interruptions or delays
in our hosting operations; breaches of our security measures; our ability
to protect our intellectual property from infringement, and to avoid
infringing on the intellectual property rights of third parties; and our
ability to expand, retain and motivate our employees and manage our growth.
Further information on potential factors that could affect our financial
results is included in our 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. We undertake no obligation to revise or update
publicly any forward-looking statement for any reason.
UCN, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands) - unaudited
March 31, December 31,
2008 2007
------------ ------------
ASSETS
Current assets:
Cash and cash equivalents $ 3,548 $ 2,760
Short-term investments - $ 2,000
Accounts and other receivables, net of allowance
for uncollectible accounts of $1,655 and $1,779,
respectively 8,824 9,988
Other current assets 993 941
------------ ------------
Total current assets 13,365 15,689
Property and equipment, net 6,768 6,375
Intangible assets, net 5,979 6,813
Goodwill 2,339 2,155
Auction rate preferred securities 890 -
Other assets 345 336
------------ ------------
Total assets $ 29,686 $ 31,368
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt and capital
lease obligations $ 594 $ 781
Trade accounts payable 7,852 7,713
Accrued liabilities 3,082 2,120
Accrued commissions 1,343 1,470
Deferred revenue 345 338
------------ ------------
Total current liabilities 13,216 12,422
Long-term debt and capital lease obligations 683 746
Other long-term liabilities and deferred revenue 192 172
------------ ------------
Total liabilities 14,091 13,340
Total stockholders' equity 15,595 18,028
------------ ------------
Total liabilities and stockholders'
equity $ 29,686 $ 31,368
============ ============
UCN, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - (Unaudited)
(in thousands except per share data)
Three months ended
March 31,
------------------
2008 2007
-------- --------
Revenue $ 19,881 $ 19,820
Operating expenses:
Costs of revenue (excluding depreciation
and amortization shown separately below) 10,508 11,537
Selling and promotion 4,194 3,850
General and administrative 5,461 3,699
Depreciation and amortization 1,452 1,792
Research and development 958 428
-------- --------
Total operating expenses 22,573 21,306
-------- --------
Loss from operations (2,692) (1,486)
Other income (expense):
Interest income 20 15
Interest expense (55) (200)
-------- --------
Total other expense (35) (185)
-------- --------
Net loss before income taxes (2,727) (1,671)
Income tax benefit/(expense) 3 3
Net loss $ (2,730) $ (1,674)
======== ========
Net loss per common share:
Basic and diluted $ (0.09) $ (0.06)
Weighted average common shares outstanding:
Basic and diluted 31,026 26,309
Segment Reporting
Effective January 1, 2008, UCN's management changed the way it manages the
business and accordingly, UCN is changing 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 quarter ended March
31, 2008 and all 2007 quarters (as restated), were as follows (in
thousands):
Three Months Ended March 31, 2008
SaaS Telecom Consolidated
---------- ----------- ----------
Revenue $ 4,370 $ 15,511 $ 19,881
Costs of revenue (excluding
depreciation and
amortization shown separately below) 93 10,415 10,508
Selling and promotion 2,785 1,409 4,194
General and administrative 2,035 3,426 5,461
Depreciation and amortization 739 713 1,452
Research and development 958 - 958
---------- ----------- ----------
Loss from operations $ (2,240) $ (452)$ (2,692)
========== =========== ==========
Three Months Ended March 31, 2007
SaaS Telecom Consolidated
---------- ----------- ----------
Revenue $ 2,142 $ 17,678 $ 19,820
Costs of revenue (excluding
depreciation and
amortization shown separately below) 40 11,497 11,537
Selling and promotion 1,877 1,973 3,850
General and administrative 805 2,894 3,699
Depreciation and amortization 590 1,202 1,792
Research and development 428 - 428
---------- ----------- ----------
Loss from operations $ (1,598) $ 112 $ (1,486)
========== =========== ==========
Three Months Ended June 30, 2007
SaaS Telecom Consolidated
---------- ---------- ----------
Revenue $ 3,504 $ 16,471 $ 19,975
Costs of revenue (excluding
depreciation and
amortization shown separately below) 70 11,058 11,128
Selling and promotion 2,419 1,683 4,102
General and administrative 1,169 2,995 4,164
Depreciation and amortization 695 800 1,495
Research and development 447 - 447
---------- ---------- ----------
Loss from operations $ (1,296) $ (65) $ (1,361)
========== ========== ==========
Three Months Ended
September 30, 2007
SaaS Telecom Consolidated
---------- ---------- ----------
Revenue $ 3,832 $ 15,796 $ 19,628
Costs of revenue (excluding
depreciation and
amortization shown separately below) 82 10,849 10,931
Selling and promotion 2,356 1,527 3,883
General and administrative 1,698 2,876 4,574
Depreciation and amortization 712 741 1,453
Research and development 674 - 674
---------- ---------- ----------
Loss from operations $ (1,690) $ (197) $ (1,887)
========== ========== ==========
Three Months Ended
December 31, 2007
SaaS Telecom Consolidated
---------- ---------- ----------
Revenue $ 3,996 $ 16,604 $ 20,060
Costs of revenue (excluding
depreciation and
amortization shown separately below) 86 10,532 10,618
Selling and promotion 2,636 1,642 4,278
General and administrative 1,735 3,089 4,824
Depreciation and amortization 712 761 1,473
Research and development 959 - 959
---------- ---------- ----------
Loss from operations $ (2,132) $ 40 $ (2,092)
========== ========== ==========
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, we believe that this information is
helpful for investors to more easily understand our operating financial
performance. We also feel this measure may better enable an investor to
form views of our 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.
Reconciliation of EBITDA to Net loss as it is presented on
the Consolidated Statements of Operations for UCN, Inc. (unaudited)
(in thousands)
Three months ended
March 31,
---------------------
2008 2007
---------- ----------
Net loss $ (2,730) $ (1,674)
Depreciation and amortization 1,452 1,792
Interest income and expense, net 35 185
Income tax expense 3 3
---------- ----------
EBITDA $ (1,240) $ 306
========== ==========
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Copyright © 2008, NewsBlaze,
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