Interactive Intelligence and ShoreTel Boast Impressive Performance in 2013

Jan 31, 2014

Both ShoreTel and Interactive Intelligence reported their CY Q4 results this week and both have a lot to brag about, especially compared to some of the larger vendors in the enterprise communications space.

ShoreTel reported 9% y/y growth in premises revenues and 27% y/y growth in hosted IP telephony revenues. Some other success metrics included strong balance sheet and positive cash flow:

  • $57.3 million in cash and investments
  • net cash position up 117% since fiscal year start in July
  • cash flow from operations of $13.5 million

ShoreTel Sky reported a 40% y/y increase in the installed customer base, the addition of more than 200 new businesses, as well as an increase in average customer size. ShoreTel’s on-premises division added 1,100 new businesses in the last quarter of 2013 and saw an increase in international business.

Interactive Intelligence also reported impressive results as follows:

  • 2013 total orders up 30 percent year-over-year
  • cloud-based orders for 2013 up 87 percent year-over-year
  • cloud-based orders in 2013 were 50 percent of total orders, up from 35 percent in 2012
  • total 2013 revenues up 34 percent year-over-year to $318.2 million

Interactive Intelligence also reported a strong cash position and an increase in GAAP operating income.

Both companies have experienced significant growth over the past few years and have reported better 2013 results than many of their competitors in the enterprise communications market. It is hard to tell what exactly is driving their success, but a couple of factors come to mind:

- Both are small and nimble and have the ability to more easily adapt to evolving industry trends and broader macro-economic realities. They have been quick to introduce new products and solutions and have also excelled in execution, where some of their competitors have failed.

- Both vendors have also chosen to focus heavily on cloud communications as a growth opportunity acknowledging increasing demand for hosted IP communications solutions among business customers, especially among SMBs.

As growth rates in the premises-based communications market slow down and the market consolidates, ShoreTel and Interactive Intelligence appear well positioned to compete with their strong financials. The SMB customer segment presents particularly favorable growth opportunities for the two vendors, both because they have been successful in that segment with their premises solutions and because they can cater to growing demand for hosted solutions in that segment.

It is interesting to see how the enterprise communications landscape evolves in 2014 and the next 2 to 3 years. Some industry pundits expect Cisco and Microsoft to eventually dominate the premises-based market, but I strongly believe that customers like to have to more choices. The hosted market, on the other hand, is still very fragmented and stronger market participants such as ShoreTel and Interactive Intelligence can quickly gain a competitive edge against the numerous small providers that are lacking both brand recognition and resources to grow rapidly and serve their customers effectively.

What do you think about the future of the enterprise communications landscape?

Category : Cloud, Enterprise

Elka Popova


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