Moving to sales through Mitel's (NASDAQ:MITL) reseller partners is already having an effect on the bottom line in the United States, its Kanata-based chief financial officer said Friday.
Mitel chief financial officer Steve Spooner.
The local technology and services seller is seeing its average deal bump up to US$250,000 this year, from $40,000 last year, when doing deals down south.
This is because Mitel's channel partners have networks of their own and are able to sell services on top of the company's unified communications solution, which brings video, messaging, phone calls and other services in one package.
"When you have a more sophisticated sales organization, and when you bring on more sophisticated sales partners, they tend to go after the larger sales," said Steve Spooner in an interview with OBJ.
"Some of the more sophisticated customers who want to buy the software applications (also) appreciate ... the virtualization solution, in which we have significant leadership today."
The firm's strong quarterly results announced Thursday - which saw net income of US$4.4 million, reversing a net loss of $4.9 million last year - came after restructuring taken under the leadership of its chief executive, Richard McBee. He took the helm about a year ago.
The company has met or beat guidance in revenues and earnings in the last four or five quarters, Mr. Spooner said.
Mr. McBee declared that the company would no longer compete against its resellers and also restructured Mitel's business under three units led by general managers:
- Communications solutions, which includes software platforms, telephony and unified communications. Making up 85 per cent of Mitel's revenue, it saw seven per cent growth year-over-year in Q3 to $127 million.
- NetSolutions, which is business, cloud and mobile offerings. Around 75 per cent of that business comes from recurring revenue, since companies tend to buy these services on multi-year contracts. It is a stable counterpoint to the communications solutions business, but usually experiences slower growth; it posted one per cent growth year-over-year in Q3 to $20 million.
- DataNet/CommSource, a South Dakota-based unit that sources third-party complimentary voice and data products to sell to dealers.
On Thursday, Mitel announced it would divest itself of the latter business due to the shift to reseller partners, rather than selling its technology by itself as a "retail" sale. It did not disclose a potential buyer yet.
"That business unit was really providing third-party voice and data products complimentary to Mitel's product (that is) more needed for needed for a retail sales organization," Mr. Spooner said.
Around 60 per cent of Mitel's business is done in the U.S., with other major markets being Europe and the United Kingdom (25 to 30 per cent), Canada (roughly six per cent) and Asia-Pacific (three to four per cent).
With two of Mitel's largest markets coming in areas with depressed economies, Mitel is seeing a business opportunity selling to companies looking to streamline their costs, either through managing their technology through Mitel or finding a way to unite a more mobile workforce.
"Even with some of those macro issues, that's putting pressures on companies to cut (back) and continue to improve their service level to customers in a challenging environment."