The 10-second takeaway
For the quarter ended Dec. 31 (Q2), ShoreTel beat expectations on revenues and beat expectations on earnings per share.
Compared to the prior-year quarter, revenue improved significantly and GAAP loss per share dropped. The non-GAAP profit was a surprise, as analysts had predicted a loss.
Gross margins contracted, operating margins expanded, net margins grew.
ShoreTel booked revenue of $58.0 million. The nine analysts polled by S&P Capital IQ expected to see revenue of $55.7 million. Sales were 22% higher than the prior-year quarter's $47.7 million.
Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions.
Non-GAAP EPS came in at $0.03. The eight earnings estimates compiled by S&P Capital IQ averaged -$0.01 per share on the same basis. GAAP EPS were -$0.05 for Q2 against -$0.08 per share for the prior-year quarter.
Source: S&P Capital IQ. Quarterly periods. Figures may be non-GAAP to maintain comparability with estimates.
For the quarter, gross margin was 65.4%, 110 basis points worse than the prior-year quarter. Operating margin was -3.9%, 380 basis points better than the prior-year quarter. Net margin was -4.4%, 330 basis points better than the prior-year quarter.
Next quarter's average estimate for revenue is $58.0 million. On the bottom line, the average EPS estimate is $0.00.
Next year's average estimate for revenue is $231.0 million. The average EPS estimate is $0.02.
The stock has a five-star rating (out of five) at Motley Fool CAPS, with 120 members out of 128 rating the stock outperform, and eight members rating it underperform. Among 33 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 33 give ShoreTel a green thumbs-up, and give it a red thumbs-down.
Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on ShoreTel is buy, with an average price target of $9.22.
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Seth Jayson had no position in any company mentioned here at the time of publication. You can view his stock holdings here. He is co-advisor of Motley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.