UCN reports first quarter 2008 results

UCN, Inc innovator of all-in-one hosted contact center software for intelligent routing and agent improvement 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.

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)

Date - 09/05/2008

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