SUNNYVALE, CA, January 28, 2009 - ShoreTel, Inc., (NASDAQ: SHOR), a leading provider of Pure IP Unified Communications (UC) solutions, today announced financial results for the second quarter of fiscal year 2009, which ended December 31, 2008.
For the second quarter of fiscal year 2009, revenue was $35.3 million, a 16 percent increase over the second quarter of fiscal year 2008 and comparable to the record-high of $35.9 million in the prior quarter. GAAP net loss was $1.9 million, or $(0.04) per share, compared to GAAP net income of $1.8 million, or $0.04 per diluted share, reported in the second quarter of fiscal year 2008. GAAP net loss in the second quarter of fiscal year 2009 included $2.2 million in stock-based compensation expenses, compared to $1.7 million reported in the second quarter of fiscal year 2008.
Excluding the stock-based compensation expenses and related tax adjustments, non-GAAP net income for the second quarter of fiscal year 2009 was $226,000, or $0.01 per diluted share, compared to non-GAAP net income of $3.8 million, or $0.08 per diluted share, reported in the second quarter of fiscal year 2008, which included a tax benefit of $522,000.
GAAP gross margins for the second quarter of fiscal year 2009 were 63 percent, compared with 64 percent during the same quarter last year. GAAP gross margins in the second quarter of fiscal year 2009 included $239,000 in stock-based compensation expenses, compared to $147,000 in the second quarter of fiscal year 2008. Non-GAAP gross margins, which exclude stock-based compensation expenses, were 64 percent in the second quarter of fiscal year 2009, compared with 65 percent during the same quarter last year.
As of December 31, 2008, the company had $110 million in cash, cash equivalents and short-term investments and generated $1.5 million in operating cash flow during the quarter.
"Though we can't avoid being affected by an economic storm of this magnitude, ShoreTel continues to build momentum with strong sequential international revenue growth and continued focus on developing innovative solutions that help our customers cut costs without compromising performance," said John W. Combs, chief executive officer of ShoreTel. "While some of the industry giants once perceived as a 'safe bet' continue to falter, ShoreTel is on track in executing its strategic plan to gain new customers, capture additional market share and deliver world-class customer satisfaction."
Operational Highlights for the Second Quarter of Fiscal Year 2009
In October, the company announced enhancements to its global product offerings with the introduction of ShoreTel 8.1, which features global support for ShoreTel's Unified Communications desktop client, as well as new IP phones and ShoreGear switches to round out the product line. With the introduction of 8.1, ShoreTel now supports 12 languages and 25 countries worldwide, including India and Japan.
ShoreTel extended its Unified Communications solutions by integrating its enhanced ShoreTel Converged Conferencing 7.1 solution with the ShoreTel 8.1 Call Manager, improving communication by allowing users to quickly host audio and web conferences, chat via IM, and share documents seamlessly from the same interface they use for voice communications.
The company further extended its offering aimed at the mobile workforce with the introduction of its new VPN Phone, providing VPN secured remote access for telephones over the Internet for workers that use a remote location as their primary office.
In December, the company announced that its ShoreWare Call Manager suite received Citrix Ready certification from Citrix Systems, Inc., the global leader in application delivery infrastructure, certifying that features in the ShoreWare Call Manager Suite run seamlessly in the Citrix XenApp environment.
ShoreTel signed several new distribution agreements both domestically and internationally during the quarter, including Collins Communications in the United States; Business Technology Group (BTG), a reseller in New Zealand; and MTV Telecom®, a UK-based distributor of voice and data solutions, further extending ShoreTel's distribution network worldwide.
For the second year in a row, ShoreTel was awarded a CustomerSat Achievement in Customer Excellence (ACE) award for Overall Customer Satisfaction. Demonstrating ShoreTel's continuing commitment to customer service, the ACE awards certify, acknowledge, and celebrate outstanding achievement in Overall Customer Satisfaction and Technical Support Satisfaction. ShoreTel also won an ACE award for Technical Support Satisfaction, its first win in the category.
ShoreTel was named to Deloitte's Technology Fast 50 Program for Silicon Valley Internet, media, entertainment and communications companies. This program highlights the 50 fastest growing technology companies in the region, with rankings based on the percentage of revenue growth over five years.
The company is providing the following outlook for the quarter ending March 31, 2009:
- Revenue is expected to be in the range of $30 to $35 million.
- GAAP gross margins are expected to be in the range of 62 to 63 percent, including approximately $300,000 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 $24 to $25 million, which includes approximately $2.5 million in stock-based compensation expenses. Non-GAAP operating expenses are expected to be in the range of $21.5 to $22.5 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 and related tax adjustments, which are non-cash charges, 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 January 28, 2009
ShoreTel will host a corresponding conference call and live Webcast at 2:30 p.m. Pacific Standard Time on January 28, 2009. To access the conference call, dial 877-584-6502 for the U.S. and Canada or 706-679-0430 for international callers and provide the operator with the conference identification number 80328792. The Webcast will be available live in the Investor Relations section of the company's corporate Web site at www.shoretel.com, and via replay beginning approximately two hours after the completion of the call until the company's announcement of its financial results for the next quarter.
An audio replay of the call will also be available to investors beginning at approximately 4:30 p.m. Pacific Standard Time on January 28, 2009 until 11:59 p.m. Eastern Standard Time on February 4, 2009, by dialing 800-642-1687 or 706-645-9291 for callers outside the U.S. and Canada, and entering the conference identification number 80328792.
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 John W. Combs regarding ShoreTel's ability to execute on its strategic plan to gain new customers, capture additional market share and deliver world-class customer satisfaction 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 unknown impact of the significant global economic downturn, particularly in the United States, and the impact thereof on information technology spending, the intense competition in our industry, our reliance on third parties to sell and support our products, our dependence on key suppliers and other supply and manufacturing risks, our ability to control costs as we expand our business, uncertainty as to market acceptance of new products and services, costs of, and customer reaction to, our pending litigation and other risk factors set forth in ShoreTel's Form 10-K for the year ended June 30, 2008 and its 10-Q for the quarter ended September 30, 2008.
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 Sunnyvale, California, and has regional offices in the United Kingdom, Sydney, Australia and Munich, Germany. For more information, visit www.shoretel.com or call 1-877-80SHORE.