SHORETEL INC 
By Company Delivers Solid Revenue Growth of 16 Percent Year over Year
For the second quarter of fiscal year 2009, revenue was
Excluding the stock-based compensation expenses and related tax adjustments, non-GAAP net income for the second quarter of fiscal year 2009 was
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
As of
"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
Operational Highlights for the Second Quarter of Fiscal Year 2009
PRODUCTS
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
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.
PARTNERSHIPS
ShoreTel signed several new distribution agreements both domestically and internationally during the quarter, including Collins Communications in
ACCOMPLISHMENTS/AWARDS
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.
Business Outlook
The company is providing the following outlook for the quarter ending
-- 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
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
(TABLES TO FOLLOW)
SHORETEL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)
(Unaudited)
As of As of As of
December 31, September 30, June 30,
2008 2008 2008
---- ---- ----
ASSETS
Current assets:
Cash and cash
equivalents $87,901 $79,436 $68,672
Short-term investments 21,847 27,671 34,139
Accounts receivable -
net 23,265 20,116 21,909
Inventories 9,459 9,964 12,008
Prepaid expenses and
other current assets 5,681 5,132 5,063
----- ----- -----
Total current
assets 148,153 142,319 141,791
Property and equipment -
net 3,590 3,762 3,649
Other assets 3,390 3,416 2,357
-------- -------- --------
Total assets $155,133 $149,497 $147,797
======== ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $4,957 $5,403 $5,952
Accrued liabilities
and other 4,860 4,532 4,420
Accrued employee
compensation 7,560 5,515 5,547
Deferred revenue 16,541 15,462 13,879
------ ------ ------
Total current
liabilities 33,918 30,912 29,798
------ ------ ------
Long-term liabilities:
Long-term deferred
revenue 5,780 5,065 4,786
----- ----- -----
Total liabilities 39,698 35,977 34,584
------ ------ ------
Stockholders' equity:
Common stock 201,802 197,965 195,520
Deferred stock
compensation (97) (120) (142)
Accumulated deficit (86,270) (84,325) (82,165)
------- ------- -------
Total stockholders'
equity 115,435 113,520 113,213
------- ------- -------
Total liabilities
and stockholders'
equity $155,133 $149,497 $147,797
======== ======== ========
SHORETEL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except per share amounts)
(Unaudited)
Three Months Six Months
Ended Ended
December 31, December 31,
------------ ------------
2008 2007 2008 2007
---- ---- ---- ----
Revenue:
Product $29,096 $26,257 $59,110 $54,382
Support and services 6,239 4,304 12,085 8,154
----- ----- ------ -----
Total revenues 35,335 30,561 71,195 62,536
Cost of revenue
Product (1) 10,111 8,724 20,097 18,128
Support and services (1) 2,920 2,180 5,834 4,339
----- ----- ----- -----
Total cost of revenue 13,031 10,904 25,931 22,467
------ ------ ------ ------
Gross profit 22,304 19,657 45,264 40,069
Gross profit % 63.1% 64.3% 63.6% 64.1%
Operating expenses:
Research and development (1) 8,368 6,257 16,154 12,464
Sales and marketing (1) 11,648 8,804 22,796 17,126
General and administrative (1) 3,925 4,478 9,935 8,201
----- ----- ----- -----
Total operating expenses 23,941 19,539 48,885 37,791
------ ------ ------ ------
Income (loss) from operations (1,637) 118 (3,621) 2,278
Other income (loss), net (14) 1,197 418 2,400
------ ----- ------ -----
Income (loss) before (provision
for) benefit from income taxes (1,651) 1,315 (3,203) 4,678
(Provision for) Benefit from
income taxes (294) 522 (902) (284)
---- --- ---- ----
Net income (loss) $(1,945) $1,837 $(4,105) $4,394
======= ====== ======= ======
Net income (loss) per share
available to common stockholders:
Basic $(0.04) $0.04 $(0.09) $0.10
Diluted (2) $(0.04) $0.04 $(0.09) $0.10
Shares used in computing net
income (loss) per share available to
common stockholders:
Basic 43,622 42,140 43,470 42,011
Diluted (2) 43,622 45,021 43,470 44,974
(1) Includes stock-based
compensation as follows:
Cost of product revenue $36 $17 $58 $25
Cost of support and services
revenue 203 130 397 188
Research and development 799 492 1,521 746
Sales and marketing 823 572 1,796 1,023
General and administrative 343 502 1,144 796
--- --- ----- ---
$2,204 $1,713 $4,916 $2,778
====== ====== ====== ======
(2) 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 three months
and six months ended December 31, 2008, 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 Six Months
Ended Ended
December 31, December 31,
------------ ------------
2008 2007 2008 2007
---- ---- ---- ----
GAAP gross profit $22,304 $19,657 $45,264 $40,069
Stock-based compensation in
product cost of revenue (a) 36 17 58 25
Stock-based compensation in
support and services cost of
revenue (a) 203 130 397 188
--- --- --- ---
Non-GAAP gross profit $22,543 $19,804 $45,719 $40,282
======= ======= ======= =======
GAAP gross profit % 63.1% 64.3% 63.6% 64.1%
Stock-based compensation (a) 0.7% 0.5% 0.6% 0.3%
--- --- --- ---
Non-GAAP gross profit % 63.8% 64.8% 64.2% 64.4%
==== ==== ==== ====
Total GAAP operating expenses $23,941 $19,539 $48,885 $37,791
Stock-based compensation
included in research and
development (a) (799) (492) (1,521) (746)
Stock-based compensation
included in sales and
marketing (a) (823) (572) (1,796) (1,023)
Stock-based compensation
included in general and
administrative (a) (343) (502) (1,144) (796)
---- ---- ------ ----
Total non-GAAP
operating expenses $21,976 $17,973 $44,424 $35,226
======= ======= ======= =======
GAAP net income (loss)
available to stockholders: $(1,945) $1,837 $(4,105) $4,394
Adjustments for stock-based
compensation (a) 2,204 1,713 4,916 2,778
Tax effect of non-GAAP
adjustments (a) (33) 252 (58) 85
--- --- --- --
Non-GAAP net income available to
stockholders $226 $3,802 $753 $7,257
==== ====== ==== ======
GAAP diluted net income (loss)
per share (b): $(0.04) $0.04 $(0.09) $0.10
Adjustments for stock-based
compensation (a) 0.05 0.03 0.11 0.06
Tax effect of non-GAAP
adjustments (a) 0.00 0.01 0.00 0.00
---- ---- ---- ----
Non-GAAP diluted net income per
share (b): $0.01 $0.08 $0.02 $0.16
===== ===== ===== =====
(a) Due to the nature of the variables that impact the Company's
valuation of stock-based compensation, some of which are outside the
control of management, and the non-cash nature of stock-based
compensation charges, these expenses are excluded by management when
evaluating the Company's core operating results.
(b) 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 three months and six months
ended December 31, 2008, because to do so would have been
anti-dilutive.
SHORETEL, INC.
RECONCILIATION OF GAAP TO NON-GAAP Q3 PROJECTIONS
(Amounts in thousands)
(Unaudited)
Three Months
Ending
March 31, 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 $25,000 $24,000
Adjustments for stock-based compensation $(2,500) $(2,500)
Total non-GAAP operating expenses $22,500 $21,500
======= =======
Investor Contact:
Tonya Chin
408-962-2573
tchin@shoretel.com
SOURCE ShoreTel, Inc.
