Still moving towards hosted revenue model and exploring all options for business
Comms provider ShoreTel has reported its Q2 results, showing that while the average number of seats per customer has dropped from 52 to 48 in a year, reflecting a push in to the mid-market, it has lifted its recurring revenue as a percentage of total revenue from 52% to 61%, reporting an annual recurring revenue run rate of $216m.
Hosted revenues of $36.7m in the second quarter of fiscal 2017 were up 20% year-over-year and 3% sequentially. GAAP hosted gross margin for the second quarter of fiscal year 2017 was 51.8%, compared with 53.7% in the second quarter of fiscal year 2016. Non-GAAP hosted gross margin was 55.0% in the second quarter of fiscal 2017, compared with 57.3% in the second quarter of fiscal 2016. The total number of installed customer seats increased 26% over the second quarter of fiscal 2016 to approximately 259,000. Hosted revenue churn was 4.6% annualized in the second quarter of fiscal 2017.
As the strategic shift in revenue mix towards hosted revenue continued, second quarter of fiscal 2017 total revenue was $88.0 million, compared to $90.4 million in the second quarter of fiscal 2016 and $86.3 million in the prior quarter. GAAP net loss was $2.9 million.
"Our second quarter financial results reflect the execution of our strategic plan. Hosted revenues continue to represent the largest percentage of total revenues and product revenues were sequentially up," said Don Joos (above), president and CEO of ShoreTel. "The cost actions taken earlier this fiscal year drove sequentially improved financial results and cash flow from operations. We remain focused on product innovation as we introduced a number of technology advancements including video collaboration for Connect CLOUD, the expansion of multi-tenanted Connect CLOUD in the UK and our new Teamwork application, a team collaboration tool which leverages the ShoreTel Summit technology stack. At the same time, the board's Strategic Advisory Committee continues to be actively engaged in the evaluation of our alternatives."