In its financial results for the fiscal fourth quarter and fiscal year 2015 (which ended June 30th) ShoreTel has posted record revenue and profitability in Q4 2015, with total revenue at $94.4m, up 7% on to the fourth quarter of fiscal 2014.
Non-GAAP net income, which excludes stock-based compensation charges, amortisation of acquisition-related intangibles, other adjustments and related tax changes, for the fourth quarter of fiscal year 2015 was a record $7.8 million, or $0.12 per diluted share.
This compares with a non-GAAP net income of $4.9 million, or $0.08 per diluted share, in the fourth quarter of fiscal 2014. GAAP net income was $4.8 million, or $0.07 per diluted share, in the fourth quarter of fiscal 2015, compared with a GAAP net income of $2.1 million, or $0.03 per diluted share, in the fourth quarter of fiscal 2014.
"Fiscal 2015 was a year of strategic investments, geographic expansion and a significant shift towards recurring revenue," said Don Joos, president and CEO of ShoreTel.
"We will rollout ShoreTel Connect later this quarter, and achieving this key milestone is an important step in realising our vision of delivering a single solution to all customers whether they choose to operate in the cloud, onsite or in a hybrid environment."
Mike Healy, SVP and CFO of ShoreTel, added: "During the fiscal year we continued to achieve revenue growth, expand our non-GAAP gross margins and generate record non-GAAP profitability which collectively strengthened our balance sheet. We are increasingly well positioned, competitively and financially, to execute our strategic plan in fiscal 2016."
Fourth Quarter of Fiscal 2015 Financial Highlights
Recurring revenues, which consist of all hosted and related services revenue plus support revenues, represented 48 percent of total revenue in the fourth quarter of fiscal 2015 and reached an annualised value of $180 million; an increase of 16 percent compared to the fourth quarter of fiscal 2014.
Non-GAAP total gross margin, which excludes stock-based compensation charges, amortization of acquisition-related intangibles and other adjustments, for the fourth quarter of fiscal year 2015, was 63.8 percent, compared with 61.1 percent in the year-ago period. GAAP gross margin for the fourth quarter of fiscal year 2015 was 63.2 percent compared with 59.6 percent in the fourth quarter of fiscal year 2014.
Hosted revenues of $28.5 million were up 19 percent year-over-year and 5 percent sequentially. Non-GAAP hosted gross margin increased to 51.6 percent in the fourth quarter of fiscal 2015, compared with 43.7 percent in the fourth quarter of fiscal 2014. GAAP hosted gross margin for the fourth quarter of fiscal year 2015 was 46.7 percent, compared with 39.4 percent in the fourth quarter of fiscal year 2014. The total number of installed customer seats increased 18 percent over the fourth quarter of fiscal 2014 to approximately 178,900. Hosted revenue churn dropped to approximately 4 percent annualized in the fourth quarter of fiscal 2015.
Product revenues of $47.2 million were flat year-over-year and up 20 percent sequentially. Non-GAAP product gross margin was 65.9 percent in the fourth quarter of fiscal 2015, compared with 64.6 percent in the fourth quarter of fiscal 2014. GAAP product gross margin for the fourth quarter of fiscal year 2015 was 67.8 percent, compared with 64.0 percent in the fourth quarter of fiscal year 2014. The fourth quarter 2015 GAAP gross margin includes a benefit of $0.9 million related to the settlement of a patent dispute previously reserved for in the fiscal third quarter of 2015.
Support and services revenues of $18.7 million were up 8 percent year-over-year and 2 percent sequentially. Non-GAAP support and service gross margin was 77.3 percent in the fourth quarter of fiscal 2015, compared with 75.9 percent in the fourth quarter of fiscal 2014. GAAP support and service gross margin for the fourth quarter of fiscal year 2015 was 76.8 percent, compared with 75.4 percent in the fourth quarter of fiscal year 2014.
As of June 30, 2015 the company had $90.2 million in cash, cash equivalents and short-term investments and no outstanding debt. The company generated $6.5 million in cash flow from operations in the quarter ended June 30, 2015.
Fiscal Year 2015 Financial Highlights
Total revenues for fiscal 2015 were $360.7 million, up 6 percent compared to fiscal 2014. Recurring revenues, which consist of all hosted and related services revenue plus support revenues, represented 47 percent of total revenue in fiscal 2015 compared to 42 percent in fiscal 2014.
Non-GAAP total gross margin, which excludes stock-based compensation charges, amortisation of acquisition-related intangibles and other adjustments, for the fiscal year 2015, was 62.6 percent, compared with 61.1 percent in fiscal year 2014. GAAP total gross margin for the fiscal year 2015 was 60.6 percent, compared with 59.4 percent in fiscal year 2014.
Hosted revenues for fiscal 2015 were $106.4 million, up 19.4 percent compared to fiscal 2014. Non-GAAP hosted gross margin was 47.3 percent in fiscal 2015, compared with 42.0 percent in fiscal 2014. GAAP hosted gross margin for the fiscal year 2015 was 42.4 percent, compared with 37.7 percent in the fiscal year 2014.
Product revenues for fiscal 2015 were $181.3 million, down 2 percent compared to fiscal 2014. Non-GAAP product gross margin was 65.9 percent in fiscal 2015, compared with 65.2 percent in fiscal 2014. GAAP product gross margin for the fiscal 2015 was 65.1 percent, compared with 64.6 percent in the fiscal 2014.
Support and services revenues for fiscal 2015 were $73.0 million, up 11 percent compared to fiscal 2014. Non-GAAP support and service gross margin was 76.8 percent in fiscal 2015, compared with 75.2 percent in fiscal 2014. GAAP support and service gross margin for the fiscal 2015 was 76.1 percent, compared with 74.3 percent in the fiscal 2014.
Non-GAAP net income for the fiscal year 2015 was a record $20.6 million, or $0.31 per diluted share. This compares with a non-GAAP net income of $14.7 million, or $0.23 per diluted share in fiscal 2014. GAAP net loss in fiscal 2015 was $4.3 million, or $0.07 per diluted share, compared with a GAAP net loss of $1.0 million, or $0.02 per diluted share in fiscal 2014. The fiscal 2015 GAAP net loss includes $10.2 million in unusual charges, $8.4 million in stock-based compensation charges and $7.0 million in amortisation of acquisition related intangibles.