ShoreTel announced our financial results for the third quarter of fiscal year 2012 today, which ended March 31, 2012.
ShoreTel’s consolidated results include eight days of operating results from ShoreTel’s cloud division, formerly known as M5 Networks, as the acquisition closed on March 23, 2012. For the third quarter of fiscal year 2012, consolidated revenue was $56.3 million, up 9 percent from the third quarter of fiscal year 2011. The GAAP net loss for the quarter was $(8.5) million, or $(0.17) per share and included a tax benefit of $1.0 million, compared with a GAAP net loss of $(2.4) million, or $(0.05) per share, in the third quarter of fiscal year 2011. Excluding acquisition-related transaction fees of $4.5 million, a tax benefit of $1.0 million, stock-based compensation expenses of $3.2 million, amortization of intangible assets of $0.4 million, and related tax adjustments, the non-GAAP net loss for the third quarter of fiscal year 2012 was $(1.5) million or $(0.03) per share. This compares with non-GAAP net income of $0.6 million, or $0.01 per share, in the third quarter of fiscal year 2011.
GAAP gross margin for the third quarter of fiscal year 2012 was 66.2 percent, compared with 68.0 percent in the third quarter of fiscal 2011. Non-GAAP gross margin, which excludes stock-based compensation expenses and amortization of intangible assets, was 67.2 percent in the third quarter of fiscal year 2012, compared with 68.6 percent in the third quarter of last year. Excluding the effects of the M5 acquisition, non- GAAP gross margins would have been 67.7 percent in the third quarter of fiscal 2012.
As of March 31, 2012, the company had $61.3 million in cash, cash equivalents and short-term investments after using $80.6 million in cash to fund a portion of the M5 acquisition.
“During the third quarter ShoreTel delivered steady growth year-over-year as well as strong gross margin expansion in our core premise business. We remain very optimistic about the continued strength of our unified communications offerings and emerging opportunities within both the mobility and cloud markets.
We are pleased to have completed the acquisition of M5 Networks during the quarter and are now focused on driving growth in our premise-based businesses and maximizing the potential of our cloud offering. We are also very pleased to see that the pipeline in our premise-based business is growing nicely – indicating that we can expect solid growth in our fourth fiscal quarter.”
- Peter Blackmore, president and CEO of ShoreTel
Highlights for the Third Quarter of Fiscal Year 2012
Completed the Acquisition of M5
On March 23, 2012, the company completed its acquisition of M5 Networks. The addition of M5’s hosted VoIP solution uniquely positions ShoreTel to offer both on-premise and hosted VoIP and UC solutions to its customers. The combination significantly accelerates ShoreTel’s entrance into the cloud market. Under the terms of the agreement, M5 shareholders received approximately $80.6 million in cash and 9.5 million shares of ShoreTel stock, which equates to a total of $134.3 million in initial consideration. Additionally, M5 shareholders may receive additional contingent consideration of up to $13.7 million. The contingent payments are payable over the two years after closing and are based upon the achievement of certain revenue performance milestones for the year ended Dec. 31, 2012. M5’s CEO, Dan Hoffman, is now heading ShoreTel’s Cloud Division as its president and general manager. Approximately 200 of M5’s employees joined ShoreTel as of March 23, 2012.
Signed Partnership Agreement for Telstra Business Systems Program
In February, ShoreTel and Telstra entered into a partnership agreement whereby Telstra will market and support ShoreTel’s IP telephony, unified communications (UC), contact center and mobility solutions in Australia. With over 20 Telstra Business Partners accredited to install ShoreTel’s solutions in the Australian market already, the company expects this number to grow as a result of the new partnership agreement.
Lowest Total Cost of Ownership Validated by External Third Party
In January, the company announced that the results of an Aberdeen Group study of 236 different businesses showed that ShoreTel had the lowest total cost of ownership (TCO) of unified communications solutions. Total cost of ownership is a key metric for assessing costs, benefits and risks of a UC solution, enabling organizations to properly evaluate competing solutions. Ultimately, ShoreTel’s brilliant simplicity is what enables ShoreTel to provide the lowest total cost of ownership in the industry.