ShoreTel Reports Financial Results for Third Quarter Fiscal Year 2011

/ Source: GlobeNewswire

SUNNYVALE, Calif., April 26, 2011 (GLOBE NEWSWIRE) -- ShoreTel® (Nasdaq:SHOR), the leading provider of brilliantly simple IP phone systems with fully integrated unified communications (UC), today announced financial results for the third quarter of fiscal year 2011, which ended March 31, 2011.

For the third quarter of fiscal year 2011, revenue was $51.6 million, up 8 percent sequentially from the second quarter of fiscal year 2011 and a 39 percent increase from the third quarter of fiscal year 2010. GAAP net loss was $(2.4) million, or $(0.05) per share, compared with a GAAP net loss of $(4.5) million, or $(0.10) per share, for the third quarter of fiscal year 2010. Excluding stock-based compensation expenses of $2.8 million, amortization of acquisition-related intangible assets of $0.2 million and related tax adjustments, the non-GAAP net income for the third quarter of fiscal year 2011 was $0.6 million, or $.01 per share, compared with a non-GAAP net loss of $(1.7) million, or $(0.04) per share, for the third quarter of fiscal year 2010.

GAAP gross margin for the third quarter of fiscal year 2011 was 68.0 percent, compared with 64.9 percent during the same quarter last year. Non-GAAP gross margin, which excludes stock-based compensation expenses, amortization of acquisition-related intangible assets and related tax adjustment, was 68.6 percent in the third quarter of fiscal year 2011, up from 67.2 percent in the prior quarter and 65.6 percent during the same quarter last year.

As of March 31, 2011, the company had $102.6 million in cash, cash equivalents and short-term investments with no debt.

"ShoreTel accelerated its strong growth during the third fiscal quarter, increasing revenue 39 percent year-over-year and achieving non-GAAP profitability one quarter earlier than expected," said Peter Blackmore, president and CEO of ShoreTel. "Results were driven by strength among our core customers and carrier partners and revenue from major accounts. Additionally, ShoreTel won a notable new partnership with Vodafone in Europe.

"To put our revenue growth into perspective, ShoreTel's quarterly revenue jumped from $40 million to $50 million in just three quarters, a fraction of the time it took the company to pass from $30 million to $40 million," Blackmore added.

Operational Highlights for the Third Quarter of Fiscal Year 2011

ShoreTel and Polycom Expand Technology Partnership

In February 2011, the company announced an expansion of its technology partnership with Polycom to further a shared mission of delivering advanced business communications systems based on open standards. The offering will provide customers the flexibility of an open and interoperable ShoreTel and Polycom solution that unifies and simplifies communication across voice and video and telepresence solutions. As a result, ShoreTel's IP telephony and UC solutions will combine with Polycom's telepresence systems to deliver a seamlessly integrated system with proven reliability, quality, simplicity and lower total cost of ownership, by using technologies like H.264 High Profile, which reduces bandwidth requirements for high definition video by up to 50 percent.

ShoreTel Partner Program Awarded CRN 2011 Five-Star Designation

For the second year in a row, ShoreTel was awarded the five-star designation in CRN's Partner Programs Guide. This ratings guide serves as the definitive list of vendors who have robust partner programs or products that service solution providers offer directly to the IT channel. CRN also highlighted ShoreTel as one of its " 2011 Need To Know: UC & VoIP Vendors " and recognized the ShoreTel Voice Switch 50 as " VoIP Product of the Year " for 2010.

Donald Joos Appointed Vice President of Global Services

Donald Joos was recently appointed vice president of global services. Reporting directly to ShoreTel's president and CEO, Peter Blackmore, Joos will play a critical role in the continued expansion of ShoreTel's world-class service to customers and partners around the world. Joos comes to ShoreTel from Avaya, where he spent nine years as a company vice president. In that role, he led the teams for channel transformation, integrations and global customer satisfaction, North American services, global implementation, and global customer care centers.

Business Outlook

The company is providing the following outlook for the quarter-ending June 30, 2011:

  • Revenue is expected to be in the range of $53.0 million to $56.0 million.
     
  • GAAP gross margin is expected to be in the range of 66 to 67 percent, including approximately $0.4 million in stock-based compensation expenses and amortization of acquisition-related intangibles. Non-GAAP gross margin is expected to be in the range of 67 to 68 percent.
  • GAAP operating expenses are expected to be in the range of $38 million to $39 million, which includes approximately $2.5 million in stock-based compensation expenses and amortization of acquisition-related intangibles. Non-GAAP operating expenses are expected to be in the range of $35.5 million to $36.5 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, amortization of acquisition-related intangibles and 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 April 26, 2011

ShoreTel will host a corresponding conference call and live webcast at 2:30 p.m. Pacific Daylight Time on April 26, 2011. To access the conference call, dial +1-888-389-5992 for the U.S. and Canada, or +1-719-325-2496 for international callers, and provide the operator with the conference identification number 7007057. 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 5:30 p.m. Pacific Daylight Time on April 26, 2011, until 5:30 p.m. Pacific Daylight Time on May 3, 2011, by dialing +1-888-203-1112 or +1-719-457-0820 for callers outside the U.S. and Canada, and entering the conference identification number 7007057.

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 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 pace of economic recovery, particularly in the United States, and the impact thereof on information technology spending, the success of our new channel strategy, the intense competition in our industry, our ability to attract, retain and ramp new sales personnel, 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, uncertainties inherent in the product development cycle, including unforeseen delays and unknown defects, uncertainty as to market acceptance of new products and services, the potential for litigation in our industry, and other risk factors set forth in ShoreTel's Form 10-K for the year ended June 30, 2010, as updated by Quarterly Reports on Form 10-Q during the year ending June 30, 2011.

About ShoreTel, Inc.

ShoreTel, Inc. (Nasdaq:SHOR) is the provider of brilliantly simple Unified Communication (UC) solutions based on its award-winning IP business phone system. We offer organizations of all sizes integrated voice, video, data, and mobile communications on an open, distributed IP architecture that helps significantly reduce the complexity and costs typically associated with other solutions. The feature-rich ShoreTel UC system offers the lowest total cost of ownership (TCO) and the highest customer satisfaction in the industry, in part because it is easy to deploy, manage, scale and use. Increasingly, companies around the world are finding a competitive edge by replacing business-as-usual with new thinking, and choosing ShoreTel to handle their integrated business communication. ShoreTel is based in Sunnyvale, Calif., and has regional offices in Austin, Texas, United Kingdom, and Sydney, Australia. For more information, visit .

CONTACT: Investor Contact: Tonya Chin 408-962-2573 tchin@shoretel.com Media Contact: Tricia Stream 408-962-2763 tstream@shoretel.com