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SEC Filings

10-Q
INCONTACT, INC. filed this Form 10-Q on 11/09/2016
Entire Document
 

 

Network Connectivity Segment Results

The following is a tabular presentation and comparison of our Network connectivity segment condensed consolidated operating results for the three and nine months ended September 30, 2016 and 2015 (in thousands, except percentages):

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2016

 

 

 

2015

 

 

$ Change

 

 

% Change

 

 

 

2016

 

 

 

2015

 

 

$ Change

 

 

% Change

 

Net revenue

$

22,796

 

 

$

19,369

 

 

$

3,427

 

 

 

18%

 

 

$

65,073

 

 

$

57,260

 

 

$

7,813

 

 

 

14%

 

Costs of revenue

 

12,805

 

 

 

12,278

 

 

 

527

 

 

 

4%

 

 

 

39,727

 

 

 

36,072

 

 

 

3,655

 

 

 

10%

 

Gross profit

 

9,991

 

 

 

7,091

 

 

 

2,900

 

 

 

 

 

 

 

25,346

 

 

 

21,188

 

 

 

4,158

 

 

 

 

 

Gross margin

 

44

%

 

 

37

%

 

 

 

 

 

 

 

 

 

 

39

%

 

 

37

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Direct selling and

   marketing

 

843

 

 

 

895

 

 

 

(52

)

 

(6%)

 

 

 

2,536

 

 

 

2,654

 

 

 

(118

)

 

(4%)

 

Indirect

 

807

 

 

 

1,109

 

 

 

(302

)

 

(27%)

 

 

 

2,376

 

 

 

3,395

 

 

 

(1,019

)

 

(30%)

 

Income from

   operations

$

8,341

 

 

$

5,087

 

 

$

3,254

 

 

 

 

 

 

$

20,434

 

 

$

15,139

 

 

$

5,295

 

 

 

 

 

 

Three Months Ended September 30, 2016 and 2015

Network connectivity segment revenue increased $3.4 million or 18% to $22.8 million during the three months ended September 30, 2016 compared to $19.4 million for the same period in 2015 due to the increase of Network connectivity revenue associated with our inContact suite customers exceeding the attrition of our Network connectivity-only customers. Network connectivity gross margin increased seven percent primarily due to nonrecurring credits received from vendors and by the elimination of temporary costs of duplicated facilities and network connection expenses, incurred during the migration of one of our data centers.

Selling and marketing expenses decreased $0.1 million or 6% during the three months ended September 30, 2016 compared to $0.9 million for the same period in 2015 driven by sourcing of internal leads as opposed to referral partners.  Indirect expenses, which consist of overhead, such as allocated general and administrative expense, rent, utilities and depreciation on property and equipment decreased $0.3 million or 27% during the three months ended September 30, 2016 compared to $1.1 million for the same period in 2015 primarily related to the decreasing allocation of expenses to the network connectivity segment and the pass thru of regulatory fees previously not collected.

Nine Months Ended September 30, 2016 and 2015

Network connectivity segment revenue increased $7.8 million or 14% to $65.1 million during the nine months ended September 30, 2016 compared to $57.3 million for the same period in 2015 due to the increase of Network connectivity revenue associated with our inContact suite customers exceeding the attrition of our Network connectivity-only customers. Network connectivity gross margin increased two percent primarily due to nonrecurring credits received from vendors and by the elimination of temporary costs of duplicated facilities and network connection expenses, incurred during the migration of one of our data centers.

Selling and marketing expenses decreased $0.1 million or 4% during the nine months ended September 30, 2016 compared to $2.7 million for the same period in 2015 driven by sourcing of internal leads as opposed to referral partners.  Indirect expenses, which consist of overhead, such as allocated general and administrative expense, rent, utilities and depreciation on property and equipment decreased $1.0 million or 30% during the nine months ended September 30, 2016 compared to $3.4 million for the same period in 2015 primarily related to the decreasing allocation of expenses to the network connectivity segment and the pass thru of regulatory fees previously not collected.

 

LIQUIDITY AND CAPITAL RESOURCES

Current Financial Condition

Our principal sources of liquidity are cash and cash equivalents and short-term investments. At September 30, 2016, we had $40.9 million of cash and cash equivalents and $38.3 million of short-term investments. As of July 1, 2016, we allowed our $15.0 million Revolving Credit Agreement with Zions First National Bank to expire, as such that facility ceased to be a source of potential liquidity. No amounts were outstanding on the Revolving Credit Agreement at expiration, and the expiry of the facility was made voluntarily by us.  

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