ShoreTel to cut channel into burgeoning cloud business

Hosting sales give IP telephony firm's FY12 figures a healthy sheen, but margins somewhat on the slide

A burgeoning hosted business helped ShoreTel post more solid growth in its recently completed fiscal year, but the IP telephony firm's gross margins are being eaten into.

For the three months to the end of June, the vendor's revenue grew 38.8 per cent year on year to $78.5m (£50m). Product sales were up 12.8 per cent to $51.1m, while support and services turnover spiked 16.7 per cent to $13.1m.

The bulk of the quarterly top-line growth came from the $14.3m contributed by hosting services, which was all greenfield revenue. Across the full year, ShoreTel's global turnover rose 23.2 per cent to $246.6m. However, FY12 gross margin stood at 64.3 per cent, compared with 66.7 per cent in the prior year. In Q4, margins were 60.9 per cent, compared with 65.6 per cent in Q411.

In an earnings call with analysts, the vendor's chief executive Peter Blackmore indicated that channel partners have thus far been able to cash in on ShoreTel's early hosting success through participation in a referral programme.

"Many of them are now waiting for a selling programme with cloud, which we plan to announce at our partner conference which is coming up in November, and then we see also synergies such as porting mobility to cloud. That has only just started, but there is leverage there," he added.