2013-10-31 08:27:43 - 32 Per Cent Cloud Revenue Growth Year-Over-Year Record Non-GAAP Profitability
ShoreTel® (NASDAQ: SHOR), the leading provider of brilliantly simple unified communications solutions, today announced financial results for the first quarter of its fiscal year 2014, which ended 30 September 2013.
For the first quarter of fiscal 2014, total revenue was US$84.3 million, an increase of 12 per cent compared to the first quarter of fiscal 2013. Non-GAAP net income, which excludes stock-based compensation charges, amortisation of acquisition-related intangibles, other charges and related tax adjustments, for the first quarter of fiscal year 2014, was US$4.0 million, or US$0.07 per share. This compares with a non-GAAP net loss of US$2.1 million, or US$0.04 per share, in the first quarter of fiscal 2013. GAAP net loss was US$1.0 million, or US$0.02 per share, in
the first quarter of fiscal 2014, compared with a GAAP net loss of US$8.0 million, or US$0.14 per share, in the first quarter of fiscal 2013.
“Our first quarter results continued to reflect our focused execution and the strength of our business model said Don Joos, President and CEO of ShoreTel. “In addition to the strong revenue growth and record non-GAAP profitability, I am also excited about the go-to-market and product roadmap initiatives on the horizon that we expect to be catalysts for growth going forward. Our progress in the first quarter and our ability to execute our operational plan has set the foundation for the rest of our fiscal 2014
First Quarter of Fiscal 2014 Financial Highlights
Recurring revenue, which consists of cloud monthly recurring revenue and premise support revenues, reached an annualised value of US$121 million; an increase of 22 per cent compared to the first quarter of fiscal 2013, and represented 36 per cent of total revenues in the first quarter of fiscal 2014.
Non-GAAP gross margin, which excludes stock-based compensation charges, amortisation of acquisition-related intangibles and other charges, for the first quarter of fiscal year 2014 was 62.3 per cent, compared with 62.9 per cent in the year-ago quarter. GAAP gross margin for the first quarter of fiscal year 2014 was 60.7 per cent, compared with 61.2 per cent in the first quarter of fiscal year 2013.
In the first quarter of fiscal 2014 the company generated US$14.2 million in cash flow from operations, reduced its debt obligations by US$11.0 million and had US$56.0 million in cash, cash equivalents and short-term investments as of 30 September 2013.
Line of Business Results
ShoreTel Sky hosted revenues of US$20.7 million were up 8 per cent sequentially and 32 per cent year-over-year. Non-GAAP gross margins on hosted revenue were 43.4 per cent in the first quarter of fiscal 2014, compared with 46.7 per cent in the first quarter of fiscal 2013. The total number of installed customer seats increased 44 per cent over the first quarter of fiscal 2013 to approximately 126,000. Annualised revenue churn remains low at approximately 4 per cent.
Premise revenues of US$63.5 million represent a 7 per cent increase year-over-year and a 4 per cent decrease sequentially. Product revenues grew 4 per cent year-over-year and Support and Services revenues grew 18 per cent year-over-year. Non-GAAP gross margins in the premise business were 68.5 per cent in the first quarter of fiscal 2014, compared with 67.2 per cent in the first quarter of fiscal 2013.
Select Operational Metrics
In September ShoreTel began shipping its ShoreTel Dock, the industry’s first and only business-grade docking station that transforms iPhones® and iPads® into desk phones when paired with ShoreTel Mobility, fusing the convenience of mobile devices with the power of a business communications system for both ShoreTel premise and ShoreTel Sky customers.
At the Midsize Enterprise Summit (MES) West 2013 XCellence Awards, which were sponsored by XChange Events, the ShoreTel Dock was recognised in the category of Most Innovative Technology Vendor and also for Best Boardroom Case Study Presentation which focused on the Dock and ShoreTel Mobility.
ShoreTel Receives “Strong Positive” Rating in Gartner’s Unified Communications for SMB Report
For the fourth year in a row ShoreTel has received a “Strong Positive the highest possible rating, in Gartner’s report titled “MarketScope for Unified Communications for the SMB Market, North America The MarketScope report focuses on the premises-based Unified Communications market for small-and-midsized-businesses (those having between 20 and 499 employees) and provides specific guidance for users who are deploying or have deployed products or services.
ShoreTel Sky Honored for Delivering Exceptional IP Communications Solutions
TMC, a global, integrated media company, honoured ShoreTel and its ShoreTel Sky® cloud-based communications solution with the 2013 Internet Telephony Excellence Award presented by INTERNET TELEPHONY® magazine.
ShoreTel’s cloud solution, ShoreTel Sky, is relied upon by more than 2,900 companies. Whether clients need just the basics for a single location, or a sophisticated contact centre solution with application integration, the ShoreTel Sky solution meets their needs. The pairing of innovative technology with expert professionals focused on delivering an outstanding customer experience is why ShoreTel Sky is one of the top-rated UCaaS solutions on the market today.
ShoreTel Announces Progress with Sales Partners in New Zealand and Australia; Expanded Operations in Canada
In August 2013, ShoreTel announced the expansion of its partnership with Express Data into New Zealand as part of the company’s growth plans in the region. Following on a successful partnership in Australia, Value Added Distributor Express Data will now extend its reach into New Zealand, offering ShoreTel’s unified communications, mobility and contact centre applications to its resellers that have strong capabilities in the voice and data networking spaces.
Also in August 2013, ShoreTel announced that its recently appointed channel reseller, Go Systems, won two Unified Communications roll-outs in Australia with Cunninghams Real Estate, one of Sydney's largest independent property managers, and Lockley Land Titles, a leading Sydney surveying company.
In September 2013, ShoreTel announced its support of the growing customer base in Canada as it opened a new head office, executive briefing centre and training centre in Toronto.
ShoreTel is providing the following outlook for its fiscal second quarter of 2014 ending 31 December 2013:
• Revenue is expected to be in the range of US$80 million to US$86 million.
• GAAP gross margin is expected to be in the range of 59.5 per cent to 60.5 per cent. Non-GAAP gross margin, which excludes approximately US$1.3 million in stock-based compensation charges, amortisation of acquisition-related intangibles and other charges, is expected to be in the range of 61 per cent to 62 per cent.
• GAAP operating expenses are expected to be in the range of US$50.5 million to US$51.5 million. Non-GAAP operating expenses, which exclude approximately US$3.0 million in stock-based compensation charges, amortisation of acquisition-related intangibles and other charges are expected to be in the range of US$47.5 million to US$48.5 million.
Conference Call Information
The Company hosted a corresponding conference call and live webcast at 2:00 p.m. Pacific Time on Wednesday, 30 October 2013. An audio telephonic replay of the conference call will also be available beginning approximately one hour after the completion of the call until 7 November 2013 by dialing +1-877-344-7529 for callers in the U.S. or +1-412-317-0088 for callers outside the U.S. and providing the conference identification number of 10035277.
Use of Non-GAAP Financial Measures
ShoreTel reports all required financial information in accordance with generally accepted accounting principles in the United States 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 charges, other non-recurring adjustments and related tax adjustments, that many investors feel may obscure the company’s true operating performance. Likewise, management uses these non-GAAP measures to manage and assess the profitability of its business and does not consider stock-based compensation charges and amortisation charges related to acquisition-related intangible assets and the related tax adjustments, which are non-cash charges, or other non-recurring items in managing its core operations. ShoreTel has provided a reconciliation of non-GAAP financial measures following the text of this press release. Investors are encouraged to review the related GAAP financial measures and the reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measure.
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 harbour” provisions of the federal securities laws, including, without limitation, statements by Don Joos, statements regarding future growth and statements in the “Business Outlook” section regarding ShoreTel’s anticipated future revenues, gross margins, operating expenses and other financial information. The forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected. The risks and uncertainties include the intense competition in our industry, our reliance on third parties to sell and support our products, our ability to grow our ShoreTel Sky business, our ability to maintain our premise business in a profitable manner, supply and manufacturing risks, our ability to control costs as we expand our business, increased risk of intellectual property litigation by entering into new markets, our ability to attract, retain and ramp new sales personnel, uncertainties inherent in the product-development cycle, uncertainty as to market acceptance of new products and services, the potential for litigation in our industry, the uncertain impact of global economic conditions and the impact of the U.S. budget discussion, including impact on customers’ purchasing decisions, and other risk factors set forth in ShoreTel’s Form 10-K for the year ended 30 June 2013.
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ShoreTel, Inc. (NASDAQ: SHOR) is a leading provider of brilliantly simple business communications solutions. Costly complexity is eliminated by design from its award-winning, all-in-one premise and cloud-based unified communications offerings, including business phones, collaboration, mobility and contact center applications. Recognized for its industry-leading customer experience and support, ShoreTel enables users to communicate and collaborate no matter the time, place or device, for low cost and minimal demand on IT resources. ShoreTel is headquartered in Sunnyvale, Calif., and has regional offices and partners worldwide. For more information, visit www.shoretel.com.
ShoreTel, ShoreTel Sky and the ShoreTel logo are trademarks or registered trademarks of ShoreTel, Inc. in the United States and/or other countries. iPad® and iPhone® are trademarks of Apple Inc. All other trademarks, trade names and service marks herein are the property of their respective owners.
Director, Investor Relations
Asia-Pacific Connections for ShoreTel
+65 6334 9045
Condensed Consolidated Balance Sheets
Condensed Consolidated Statements of Operations
GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation Footnotes
Reconciliation of GAAP to Non-GAAP for Q2 Predictions