Longview

What: Shares of cloud software and services provider Interactive Intelligence Group (NASDAQ:ININ) soared on Tuesday following the company's fourth-quarter earnings report. Interactive Intelligence beat analyst estimates for both revenue and earnings, driven by strong growth in recurring revenues. At 11:30 a.m. ET, the stock was up about 17.5%.

So what: Interactive Intelligence reported fourth-quarter revenue of $107.7 million, up 16.4% year over year and about $2.5 million higher than the average analyst estimate. Recurring revenue, which includes both cloud subscriptions and support fees, rose 24% year over year to $63.4 million. Cloud subscription revenue alone grew 53% to $29 million, while license and hardware revenue rose 2.4%, and services revenue increased by 16%.

Non-GAAP EPS came in at $0.12, down from $0.26 during the prior-year period, but $0.09 better than analyst expectations. On a GAAP basis, the company posted a net loss of $0.16 per share, compared to a loss of $1.42 per share during the fourth quarter of 2014. GAAP operating expenses grew by 23% year over year, quite a bit faster than revenue.

Now what: This jump in the stock price following Interactive Intelligence's earnings report comes after a difficult year for the stock. The company's stock price has slumped by about 40% over the past year, excluding Tuesday's gains, with investors likely concerned about slowing revenue growth and persistent losses. Even after Tuesday's gains, the stock has lost about two-thirds of its value since early 2014.

ININ Chart

ININ data by YCharts.

The company's shift to the cloud may be hurting its result in the short term, but CEO Donald Brown is optimistic about the company's strategy. "Looking forward, we're focused on becoming a high-velocity cloud company, not only developing new technology at a faster pace, but also accelerating every aspect of our go-to-market and delivery processes to optimize the opportunity in front of us. We'll continue to work to strengthen our position as the only provider of world-class customer engagement technology for multi-tenant cloud, private cloud, and on-premises implementations."

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.