ShoreTel Reports Financial Results for Third Quarter Fiscal Year 2009
Company Recognized as the World Leader in UC Desktop Solutions in the SMB Market
For the third quarter of fiscal year 2009, revenue was
GAAP gross margins for the third quarter of fiscal year 2009 were 63.8 percent, compared with 62.0 percent during the same quarter last year. GAAP gross margins in the third quarter of fiscal year 2009 included
As of
"In spite of the worldwide recession and declining growth in our industry, ShoreTel continues to gain market share," said
Operational Highlights for the Third Quarter of Fiscal Year 2009
PRODUCTS
ShoreTel continued its history of innovation by releasing several new products and capabilities to the market. In March, the company released ShoreTel 9, the newest version of its award-winning UC software. With expanded features for personalized communications, ShoreTel 9 enables mobile and desktop users to communicate more effectively--regardless of location--and increases individual productivity and customer satisfaction levels. New personalization features, including location-based services and individualized call-handling, let users create custom call-routing scenarios to ensure priority callers can always reach them. Additionally, ShoreTel 9 supports integration with Microsoft Office Communications Server (OCS) 2007.
Release 9 further extends ShoreTel's distributed architecture advantage with a significant enhancement to the unique N+1 redundancy model. Previously, customers were able to add a single switch at each location to provide complete redundancy at the site. With this most recent update, customers can now add just one switch, anywhere in the network, and their entire system has full redundancy. This can save customers with several locations a significant amount of investment while still offering them the highest levels of availability in the industry.
The company announced it has begun field trials of the ShoreTel plug-in for IBM Lotus Sametime. The ShoreTel plug-in provides Lotus Sametime users with telephony presence, click-to-dial and call-by-name capabilities, telephony call control with a click, and integrated call stacks.
ShoreTel introduced a new family of ShoreGear(R) Voice Switches that further extends the company's unique single-image distributed architecture to voicemail and auto-attendant applications. By integrating support for these capabilities into its switches, ShoreTel can offer customers a solution that reduces both the cost and complexity of deploying a highly reliable and robust voicemail and auto-attendant system across multiple locations.
The company released ShoreWare(R) Contact Center 5, the latest version of its contact center application suite designed to help organizations dramatically improve customer service and sales workflows. New features include increased capacity, hot-standby redundancy for disaster recovery, and new supervisory functions for managing agents and tracking customer service issues. Contact Center 5 fully supports integrated telephony services for web-based sales and customer service applications such as Salesforce.com. These web services were released to the ShoreTel DEVNET developer program for building cross-platform telephony enabled applications.
CUSTOMERS
The company announced it had been selected to provide enterprise UC systems to several professional sports organizations during the quarter including the Verizon Center, home of the NBA Washington Wizards and NHL Washington Capitals, with a 1,500 user deployment, the San Francisco Giants and AT&T Park, and the Frisco Rough Riders, a double-A affiliate of the Texas Rangers.
OTHER ACCOMPLISHMENTS
In its Q4 2008 Collaborative Applications Market Shares report, Synergy Research Group reported that ShoreTel achieved the No.1 market-share position worldwide for small and midsize businesses using its UC desktop. ShoreTel was also ranked sixth in market share for UC desktop units in large enterprises worldwide.
ShoreTel was honored with the Best in Show award among all vendors at VoiceCon 2009
In April, the company reached a settlement with Mitel in which ShoreTel and Mitel agreed to dismiss the lawsuits against each other, and entered into a cross-license of the patents at issue in the litigation. Other terms of the settlement are confidential. ShoreTel has recorded the full obligation related to this settlement in its financial statements for the quarter ended
Business Outlook
The company is providing the following outlook for the quarter ending
- Revenue is expected to be in the range of
$29 to $34 million . - GAAP gross margins are expected to be in the range of 62 to 63 percent, including approximately
$150,000 in stock-based compensation expenses. Non-GAAP gross margins are expected to be in the range of 63 to 64 percent. - GAAP operating expenses are expected to be in the range of
$20.5 to $21.5 million , which includes approximately$1.5 million in stock-based compensation expenses. Non-GAAP operating expenses are expected to be in the range of$19.0 to $20.0 million .
Use of Non-GAAP Financial Measures
ShoreTel reports all financial information required in accordance with generally accepted accounting principles (GAAP), but it believes that evaluating its ongoing operating results may be difficult to understand if limited to reviewing only GAAP financial measures. Many investors have requested that ShoreTel disclose this non-GAAP information because it is useful in understanding the company's performance as it excludes non-cash and other special charges that many investors feel may obscure the company's true operating performance. Likewise, management uses these non-GAAP financial measures to manage and assess the profitability of its business and does not consider stock-based compensation expenses, litigation settlements, other special charges and related tax adjustments, in managing its core operations. ShoreTel has provided a reconciliation of non-GAAP financial measures in the tables of this press release. Investors are encouraged to review the related GAAP financial measures and the reconciliation of these non-GAAP financial measures with their most directly comparable GAAP financial measure.
Conference Call Details for
ShoreTel will host a corresponding conference call and live Webcast at
An audio replay of the call will also be available to investors beginning at approximately
Legal Notice Regarding Forward-Looking Statements
ShoreTel assumes no obligation to update the forward-looking statements included in this release. This release contains forward-looking statements within the meaning of the "safe harbor" provisions of the federal securities laws, including, without limitation, statements by
About ShoreTel, Inc.
ShoreTel, Inc., (NASDAQ: SHOR) is a leading provider of Pure IP unified communications solutions. ShoreTel enables companies of any size to seamlessly integrate all communications-voice, video, messaging and data -with their business processes. Independent of device or location, ShoreTel's distributed software architecture eliminates the traditional costs, complexity and reliability issues typically associated with other solutions. ShoreTel continues to deliver the highest levels of customer satisfaction, ease of use and manageability while driving down the overall total cost of ownership. ShoreTel is headquartered in
Investor Contact: Tonya Chin
408-962-2573
tchin@shoretel.com
(TABLES TO FOLLOW)
SHORETEL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)
(Unaudited)
As of As of As of
March 31, December 31, June 30,
2009 2008 2008
---- ---- ----
ASSETS
Current assets:
Cash and cash
equivalents $89,521 $87,901 $68,672
Short-term investments 18,627 21,847 34,139
Accounts receivable -
net 19,264 23,265 21,909
Inventories 9,664 9,459 12,008
Prepaid expenses and
other current assets 5,368 5,681 5,063
----- ----- -----
Total current
assets 142,444 148,153 141,791
Property and equipment -
net 3,458 3,590 3,649
Other assets 4,956 3,390 2,357
-------- -------- --------
Total assets $150,858 $155,133 $147,797
======== ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $5,596 $4,957 $5,952
Accrued liabilities
and other 5,162 4,860 4,420
Accrued employee
compensation 5,644 7,560 5,547
Deferred revenue 14,709 16,541 13,879
------ ------ ------
Total current
liabilities 31,111 33,918 29,798
Long-term liabilities:
Long-term deferred
revenue 6,338 5,780 4,786
Other long-term
liabilities 3,120 - -
----- ---- ----
Total liabilities 40,569 39,698 34,584
------ ------ ------
Stockholders' equity:
Common stock 203,638 201,802 195,520
Deferred stock
compensation (76) (97) (142)
Accumulated deficit (93,273) (86,270) (82,165)
------- ------- -------
Total stockholders'
equity 110,289 115,435 113,213
------- ------- -------
Total liabilities
and stockholders'
equity $150,858 $155,133 $147,797
======== ======== ========
SHORETEL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except per share amounts)
(Unaudited)
Three Months Ended Nine Months Ended
March 31, March 31,
------------- -------------
2009 2008 2009 2008
---- ---- ---- ----
Revenue:
Product $24,691 $26,610 $83,801 $80,992
Support and services 6,546 4,879 18,631 13,033
----- ----- ------ ------
Total revenues 31,237 31,489 102,432 94,025
Cost of revenue
Product (1) 8,623 9,322 28,720 27,450
Support and services (1) 2,682 2,649 8,516 6,988
----- ----- ----- -----
Total cost
of revenue 11,305 11,971 37,236 34,438
------ ------ ------ ------
Gross profit 19,932 19,518 65,196 59,587
Gross profit % 63.8% 62.0% 63.6% 63.4%
Operating expenses:
Research and
development (1,2) 7,476 7,064 23,630 19,528
Sales and marketing (1,2) 11,344 10,309 34,140 27,435
General and
administrative (1,2) 5,210 4,909 15,145 13,110
Litigation Settlement 4,110 - 4,110 -
----- ----- ----- ------
Total operating expenses 28,140 22,282 77,025 60,073
------ ------ ------ ------
Loss from operations (8,208) (2,764) (11,829) (486)
Other income, net 149 951 567 3,351
------ ------ ------- -----
Income (loss) before (provision
for) benefit from income taxes (8,059) (1,813) (11,262) 2,865
(Provision for) Benefit
from income taxes 1,056 99 154 (185)
----- -- --- ----
Net income (loss) $(7,003) $(1,714) $(11,108) $2,680
======= ======= ======== ======
Net income (loss) per share
available to common stockholders:
Basic $(0.16) $(0.04) $(0.25) $0.06
Diluted (3) $(0.16) $(0.04) $(0.25) $0.06
Shares used in computing net income
(loss) per share available to
common stockholders:
Basic 43,793 42,651 43,576 42,223
Diluted (3) 43,793 42,651 43,576 44,941
(1) Includes stock-based
compensation as follows:
Cost of product revenue $22 $19 $80 $44
Cost of support and
services revenue 136 164 533 352
Research and development 521 602 2,042 1,348
Sales and marketing 613 690 2,409 1,713
General and administrative 528 690 1,672 1,486
--- --- ----- -----
$1,820 $2,165 $6,736 $4,943
====== ====== ====== ======
(2) Includes restructuring
charge as follows:
Research and development 124 - 124 -
Sales and marketing 278 - 278 -
General and administrative 99 - 99 -
--- --- --- ---
$501 $- $501 $-
==== == ==== ==
(3) Diluted net income per share and share count reflect the weighted
average number of common shares used in the
basic net income per share calculation plus the effects of all
potentially dilutive securities. Potentially dilutive securities
were not included in the compilation of diluted net loss per share for
the periods which had a net loss because to do so
would have been anti-dilutive.
SHORETEL, INC.
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(Amounts in thousands, except per share amounts)
(Unaudited)
Three Months Ended Nine Months Ended
March 31, March 31,
------------- -------------
2009 2008 2009 2008
---- ---- ---- ----
GAAP gross profit $19,932 $19,518 $65,196 $59,587
Stock-based compensation
inlcuded in cost of revenue 158 183 613 396
--- --- --- ---
Non-GAAP gross profit $20,090 $19,701 $65,809 $59,983
======= ======= ======= =======
GAAP gross profit % 63.8% 62.0% 63.6% 63.4%
Stock-based compensation 0.5% 0.6% 0.6% 0.4%
--- --- --- ---
Non-GAAP gross profit % 64.3% 62.6% 64.2% 63.8%
==== ==== ==== ====
Total GAAP operating expenses $28,140 $22,282 $77,025 $60,073
Stock-based compensation
included in operating expenses (1,662) (1,982) (6,123) (4,547)
Litigation settlement (4,110) - (4,110) -
Restructuring charge
included in operating expenses (501) - (501) -
Cancellation of contractual
obligation included in Sales
and marketing (273) - (273) -
---- ---- ---- -----
Total non-GAAP
operating expenses $21,594 $20,300 $66,018 $55,526
======= ======= ======= =======
GAAP net income (loss)
available to stockholders: $(7,003) $(1,714) $(11,108) $2,680
Adjustments for non-GAAP items 6,704 2,165 11,620 4,943
Tax effect of non-
GAAP adjustments (517) (152) (575) (66)
---- ---- ---- ---
Non-GAAP net income (loss)
available to stockholders $(816) $299 $(63) $7,557
===== ==== ==== ======
GAAP diluted net income
(loss) per share (a): $(0.16) $(0.04) $(0.25) $0.06
Adjustments for non-GAAP items 0.15 0.05 0.26 0.11
Tax effect of non-
GAAP adjustments (0.01) 0.00 (0.01) 0.00
----- ---- ----- ----
Non-GAAP diluted net income
(loss) per share (a): $(0.02) $0.01 $0.00 $0.17
====== ===== ===== =====
Shares Used in Non-GAAP
diluted per share calculation 43,793 44,496 43,576 44,941
(a) Diluted net income per share and share count reflect the weighted
average number of common shares used in the basic net income per share
calculation plus the effects of all potentially dilutive securities.
Potentially dilutive securities were not included in the compilation
of diluted net loss per share for the periods of net loss because to
do so would have been anti-dilutive.
SHORETEL, INC.
RECONCILIATION OF GAAP TO NON-GAAP Q4 PROJECTIONS
(Amounts in thousands)
(Unaudited)
Three Months Ending
June 30, 2009
------------
High Low
---- ---
GAAP gross profit % 63.0% 62.0%
Adjustments for stock-based compensation 1.0% 1.0%
--- ---
Non-GAAP gross profit % 64.0% 63.0%
==== ====
Total GAAP operating expenses $21,500 $20,500
Adjustments for stock-based compensation $(1,500) $(1,500)
Total non-GAAP operating expenses $20,000 $19,000
======= =======
SOURCE ShoreTel, Inc.
RELATED LINKS
http://www.shoretel.com
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