Incontact 8K Results of Operations and Financial Condition | SAAS 4 Aug 16

Exhibit 99.1

inContact Reports Second Quarter 2016 Financial Results

•

Software revenues of $42.4 million in Q2

•

Consolidated revenue in Q2 of $63.8 million

•

Adjusted EBITDA in Q2 of $3.0 million

•

Annualized Recurring Software Revenues of $164.4 million

•

Closed 170 contracts in Q2

SALT LAKE CITY – Aug 4, 2016 – inContact, Inc. (NASDAQ: SAAS), the leading provider ofcloud contact center software andworkforce optimization tools, today reported financial results for the second quarter ended June 30, 2016.

“I’m pleased to report strong revenues and positive adjusted EBITDA in the second quarter of 2016,” said Paul Jarman, inContact CEO. “During the quarter we closed 170 total contracts, including 111 new logo customers and 59 expansion deals with existing customers.”

Revenue

Software segment revenue totaled $42.4 million for the quarter ended June 30, 2016, an increase of 24% from $34.1 million in Q2 2015. Consolidated revenue for the quarter ended June 30, 2016 was $63.8 million versus $53.1 million for the same period in 2015, an increase of 20%.

As of June 2016 our Annualized Monthly Recurring Software Revenue was $164.4 million, an increase of 33% from $124.0 million as of June 2015.

Gross Margin

Software segment gross margin for the quarter ended June 30, 2016 was 59% versus 58% for the same period in 2015. Non-GAAP Software segment gross margin which represents the elimination of amortization of acquired intangible assets and stock-based compensation was 63% for the second quarter of 2016, versus 62% in the second quarter of 2015 (see reconciliation of non-GAAP measures below). Second quarter 2016 Network connectivity segment gross margin was 37% versus 37% for the same period in 2015.

Consolidated gross margin percentage was 52% in the second quarter of 2016 compared to 50% for the same period in 2015. Non-GAAP consolidated gross margin which represents the elimination of amortization of acquired intangible assets and stock-based compensation was 54% for the second quarter 2016 compared to 53% for the same period in 2015 (see reconciliation of non-GAAP measures below).

Operating Expenses

Operating expenses for the second quarter of 2016 were $38.6 million or 61% of total revenue versus $32.2 million or 61% of total revenue during the same period in 2015. Non-GAAP operating expenses which represents the elimination of amortization of acquired intangible assets and stock-based compensation for the second quarter of 2016 were $36.8 million or 58% of total revenue versus $30.8 million or 58% of total revenue during the same period in 2015 (see reconciliation of non-GAAP measures below). The second quarter of 2016 operating expenses includes $2.5 million in non-recurring expenses, $1.9 million of which relates to our proposed merger with NICE-Systems Ltd. After adjusting for non-recurring items, operating expenses in the current quarter were $36.1 million or 57% of total revenues compared to 61% in the same period of 2015. On a non-GAAP basis, operating expenses as a percent of total revenues were 54% and 58% for Q2 2016 compared to Q2 2015, respectively.

Adjusted EBITDA

Adjusted EBITDA for the second quarter of 2016 was $3.0 million versus $1.4 million during the same period in 2015, an increase of 115%. Adjusted EBITDA, after adjustment for the $2.5 million in non-recurring operating expenses was $5.5 million, an increase of 292% versus our second quarter 2015 operating results. Adjusted EBITDA is a non-GAAP measure management believes provides important insight into our operating results (see reconciliation of non-GAAP measures below).

Net Loss

Net loss for the quarter ended June 30, 2016 was $7.4 million, or ($0.12) per basic and diluted share, as compared to net loss of $7.3 million or ($0.12) per basic and diluted share for the same period in 2015. Non-GAAP net loss for the quarter ended June 30, 2016 was $3.1 million, or ($0.05) per basic and diluted share, as compared to non-GAAP net loss of $3.4 million or ($0.06) per basic and diluted share for the same period in 2015. Net loss, after adjustment for the $2.5 million in non-recurring operating expenses was $4.9 million on a GAAP basis and $0.6 million on a non-GAAP basis (see reconciliation of non-GAAP measures below).

Guidance for 2016

Given the announcement made on May 18, 2016 regarding the Company’s entry into a definitive agreement to be acquired by NICE-Systems Ltd., we will not be providing financial guidance for the third quarter or full year 2016. The company’s previously issued financial guidance should no longer be relied upon.

CONFERENCE CALL INFORMATION

There will be no earnings call held in conjunction with this release. Please visithttp://investor.incontact.com for the latest inContact releases and information.

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 inContact’s current expectations, estimates and projections about inContact’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 inContact’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 inContact’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. inContact undertakes no obligation to revise or update publicly any forward-looking statement for any reason.

About inContact

inContact (NASDAQ:SAAS) is the cloud contact center software leader, with the most complete, easiest and most reliable solution to help organizations achieve their customer experience goals. inContact continuously innovates in the cloud and is the only provider to offer a complete solution that includes the customer interaction cloud, an expert service model and the broadest partner ecosystem. Recognized as a market leader by Gartner, IDC, Frost & Sullivan, Ovum and DMG, inContact supports over 6 billion interactions per year for enterprise, midmarket, government organizations and business process outsourcers (BPOs) who operate in multiple divisions, locations and global regions. To learn more, visitwww.incontact.com.

inContact^® is the registered trademark of inContact, Inc.

CONTACT: Investor Contact: Edward Keaney, Market Street Partners, 1-415-445-3238, ekeaney@marketstreetpartners.com, or General Contact: Cheryl Andrus, inContact, Director Corporate Communications, 1-801-320-3646, cheryl.andrus@incontact.com

INCONTACT, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS - (Unaudited)

(in thousands)


	June 30,		December 31,
	2016		2015
ASSETS
Current assets:
Cash and cash equivalents	$	37,864	$	29,050
Restricted cash		—		81
Investments		54,812		75,109
Accounts and other receivables, net of allowance for uncollectible accounts of $1,781 and $2,555, respectively		37,384		37,185
Other current assets		8,365		9,243

Total current assets		138,425		150,668
Property and equipment, net		52,542		42,569
Intangible assets, net		28,351		19,232
Goodwill		49,016		39,247
Other assets		3,184		2,421

Total assets	$	271,518	$	254,137

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Trade accounts payable	$	16,212	$	11,607
Accrued liabilities		15,757		12,828
Accrued commissions		4,581		4,615
Current portion of deferred revenue		14,270		11,530

Total current liabilities		50,820		40,580
Deferred revenue		6,824		6,082
Deferred rent and lease incentive obligation		6,381		3
Deferred tax liability, net		348		230
Long-term debt		84,122		81,985

Total liabilities		148,495		128,880
Total stockholders’ equity		123,023		125,257

Total liabilities and stockholders’ equity	$	271,518	$	254,137

INCONTACT, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

(in thousands, except per share data)


	Three Months						Six Months
	Ended June 30,						Ended June 30,
	2016			2015			2015			2014
Net revenue:
Software	$	42,360		$	34,052		$	83,908		$	66,518
Network connectivity		21,438			19,019			42,277			37,891

Total net revenue		63,798			53,071			126,185			104,409

Costs of revenue:
Software		17,274			14,360			33,939			28,057
Network connectivity		13,486			11,983			26,922			23,794

Total costs of revenue		30,760			26,343			60,861			51,851

Gross profit		33,038			26,728			65,324			52,558

Operating expenses:
Selling and marketing		18,117			16,264			36,327			31,739
Research and development		9,220			7,040			17,829			13,693
General and administrative		11,274			8,871			19,949			17,949

Total operating expenses		38,611			32,175			74,105			63,381

Loss from operations		(5,573	)		(5,447	)		(8,781	)		(10,823	)
Other income (expense):
Interest expense		(1,819	)		(1,768	)		(3,582	)		(2,202	)
Interest income		172			58			326			58
Other expense		(5	)		(1	)		(6	)		—

Loss before income taxes		(7,225	)		(7,158	)		(12,043	)		(12,967	)
Income tax benefit (expense)		(194	)		(132	)		2,396			(311	)

Net loss	$	(7,419	)	$	(7,290	)	$	(9,647	)	$	(13,278	)

Net loss per common share:
Basic and diluted	$	(0.12	)	$	(0.12	)	$	(0.15	)	$	(0.22	)
Weighted average common shares outstanding:
Basic and diluted		62,649			61,501			62,456			61,263

INCONTACT, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - (Unaudited)

(in thousands)


	Six Months Ended June 30,
	2016			2015
Cash flows from operating activities:
Net loss	$	(9,647	)	$	(13,278	)
Adjustments to reconcile net loss to net cash from operating activities:
Depreciation of property and equipment		6,472			4,877
Amortization of software development costs		4,042			3,192
Amortization of intangible assets		2,506			2,599
Amortization of deferred debt issuance costs		193			296
Stock-based compensation		4,538			4,210
Loss on disposal of property and equipment		1,296			72
Interest accretion		1,944			921
Amortization of investment premium		476			—
Deferred income taxes		(2,548	)		—
Changes in operating assets and liabilities, net of business acquisitions:
Accounts and other receivables, net		(100	)		(2,311	)
Other current assets		943			(1,400	)
Other non-current assets		(763	)		192
Trade accounts payable		4,029			1,144
Accrued liabilities		2,877			1,253
Accrued commissions		(34	)		441
Deferred rent and lease incentive obligation		6,382			(185	)
Deferred revenue		3,226			3,166

Net cash provided by (used in) operating activities		25,832			5,189

Cash flows from investing activities:
Decrease in restricted cash		81			—
Sales and maturities of available for sale investments		50,781			986
Purchases of available for sale investments		(30,868	)		(64,122	)
Capitalized software development costs		(7,159	)		(4,418	)
Purchases of property and equipment		(13,846	)		(8,196	)
Business acquisitions, net of cash acquired		(18,446	)		—
Payments made on deposits		—			(19	)

Net cash used in investing activities		(19,457	)		(75,769	)

Cash flows from financing activities:
Proceeds from exercise of options		2,599			2,294
Proceeds from sale of stock under employee stock purchase plan		826			806
Principal payments under debt and capital lease obligations		—			(11,824	)
Purchase of treasury stock		(986	)		(538	)
Payments under revolving credit agreement		—			(11,000	)
Proceeds from issuance of convertible notes, net		—			111,190

Net cash provided by financing activities		2,439			90,928

Net (decrease) increase in cash and cash equivalents		8,814			20,348

Cash and cash equivalents at the beginning of the period		29,050			32,414

Cash and cash equivalents at the end of the period	$	37,864		$	52,762

SEGMENT REPORTING

We operate under two business segments: Software and Network connectivity. The Software segment includes all revenue related to the delivery of our software applications, plus the associated professional services and setup fees. The Network connectivity segment includes all voice and data long distance services provided to customers.

For segment reporting, we classify operating expenses as either “direct” or “indirect.” Direct expense refers to costs attributable solely to either selling and marketing efforts or research and development efforts. Indirect expense refers to costs that management considers to be overhead in running the business. Management evaluates expenditures for both selling and marketing and research and development efforts at the segment level without the allocation of overhead expenses, such as rent, utilities and depreciation on property and equipment.

Operating segment revenues and profitability for the three months ended June 30, 2016 and 2015 were as follows (in thousands):


	Three Months Ended June 30, 2016									Three Months Ended June 30, 2015
				Network									Network
	Software			Connectivity			Consolidated			Software			Connectivity			Consolidated
Net revenue	$	42,360		$	21,438		$	63,798		$	34,052		$	19,019		$	53,071
Costs of revenue		17,274			13,486			30,760			14,360			11,983			26,343

Gross profit		25,086			7,952			33,038			19,692			7,036			26,728

Gross margin		59	%		37	%		52	%		58	%		37	%		50	%
Operating expenses:
Direct selling and marketing		16,244			837			17,081			14,668			936			15,604
Direct research and development		8,482			—			8,482			6,659			—			6,659
Indirect		12,378			670			13,048			8,695			1,217			9,912

Loss from operations	$	(12,018	)	$	6,445		$	(5,573	)	$	(10,330	)	$	4,883		$	(5,447	)


	Six Months Ended June 30, 2016									Six Months Ended June 30, 2015
				Network									Network
	Software			Connectivity			Consolidated			Software			Connectivity			Consolidated
Net revenue	$	83,908		$	42,277		$	126,185		$	66,518		$	37,891		$	104,409
Costs of revenue		33,939			26,922			60,861			28,057			23,794			51,851

Gross profit		49,969			15,355			65,324			38,461			14,097			52,558

Gross margin		60	%		36	%		52	%		58	%		37	%		50	%
Operating expenses:
Direct selling and marketing		32,669			1,694			34,363			28,654			1,759			30,413
Direct research and development		16,448			—			16,448			12,952			—			12,952
Indirect		21,727			1,567			23,294			17,730			2,286			20,016

Loss from operations	$	(20,875	)	$	12,094		$	(8,781	)	$	(20,875	)	$	10,052		$	(10,823	)

RECONCILIATION of NON-GAAP MEASURES:

“Adjusted EBITDA” is Earnings Before deductions for Interest, Taxes, Depreciation and Amortization and Stock-Based Compensation. The “Non-GAAP” measures represent the elimination of amortization of acquired intangible assets and stock-based compensation. Neither are measures of financial performance under generally accepted accounting principles (GAAP). The Adjusted EBITDA and the Non-GAAP measures are provided for the use of the reader in understanding our operating results and are 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 these measures may better enable an investor to form views of our potential financial performance in the future. These measures have limitations as analytical tools, and investors should not consider these measures in isolation or as a substitute for analysis of our results prepared in accordance with GAAP.

Reconciliation of Adjusted EBITDA to Net loss applicable to

common stockholders as it is presented on the Condensed Consolidated

Statements of Operations for inContact, Inc.