Why Shares of Interactive Intelligence Group Soared Today

Image source: Interactive Intelligence Group.

What: Shares of Interactive Intelligence Group (NASDAQ: ININ) soared on Tuesday following the company's second-quarter report. Interactive Intelligence beat analyst estimates for both revenue and earnings, pushing the stock 13% higher by 12:30 p.m. EDT.

So what: Interactive Intelligence reported second-quarter revenue of $108.8 million, up 13% year over year and about $5.5 million higher than the average analyst estimate. Recurring revenue jumped 22.6% to $66 million, while license and hardware revenue rose 1% to $29.7 million, and services revenue declined 15.7% to $13 million.

Cloud subscriptions rose 43% year over year during the second quarter, with its PureCloud product adding 204 new customers. "PureCloud is happening," said CEO Dr. Donald Brown in the company's earnings press release. "One number -- 204 -- the number of newly licensed PureCloudcustomers in the quarter, tells much of this story. We had 24 PureCloud customers at the end of last year. Six months later we had well over 300. This rapid growth reflects the considerable interest and demand we're seeing from both small and large businesses across all our major geographic markets."

Non-GAAP EPS came in at ($0.06), down from $0.01 during the prior-year period but $0.11 better than analysts were expecting. On a GAAP basis, EPS was -$0.46, down from -$0.24. A 21.5% increase in GAAP operating costs was responsible for the earnings decline.

Now what: While Interactive Intelligence's transition to the cloud continues to negatively affect profitability, the company is growing recurring revenue at an impressive pace. Tuesday's jump in the stock price adds to a spike last week triggered by a reportthat the company is exploring strategic alternatives. No update or confirmation was given in Interactive Intelligence's earnings press release.

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Timothy Green has no position in any stocks mentioned. The Motley Fool recommends Interactive Intelligence. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.