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)
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 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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