So what: In the first quarter of fiscal year 2016, ShoreTel saw sales hold steady year over year, at $90.2 million. Adjusted earnings increased 29%, to $0.09 per diluted share. Your average Wall Street analyst would have settled for earnings of $0.04 per share, though they did nail ShoreTel's top-line revenues exactly.
Looking ahead, the maker of IP-based phone systems and other networked communications solutions expects to deliver roughly $90 million in third-quarter sales. Do take note, however, that the guidance comes with a fairly wide margin of error, ranging from $87 million to $93 million.
Now what: ShoreTel is busy rolling out partner programs, and extending the capabilities of their core communications software. In the second quarter, most of the sales growth came from a suite of cloud-based calling platforms. So-called hosted sales jumped 19% year over year.
Adding some much-needed stability to ShoreTel's quarterly results, the company is also moving many of its customers over to long-term contracts. Today, 51% of ShoreTel's revenues come from these long-term agreements, a 15% improvement from the year-ago period.
"We are now in the third and final phase of our strategic transformation and we continue to operate from a position of strength with momentum and accelerating results," said ShoreTel CEO Don Joos in a prepared statement.
Fellow IP telephony specialist 8x8 (NYSE:EGHT) also reported results on Thursday night, growing faster than ShoreTel, but only meeting and not beating Wall Street's targets. 8X8 shares rose as much as 8.5% on that report, and you almost have to believe that some of that jump came from ShoreTel's good news bleeding over into other IP-based telecom businesses.
Up next, Vonage Holdings (NYSE:VG) will publish its quarterly results on November 2. With no news of its own today, Vonage shares still rose as much as 3.6% on Friday. In short, investors are treating ShoreTel like an industry bellwether.