Mitel has record-breaking 2014 Q2

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Tom Pechloff
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Mitel reported record-breaking revenue of $288.7 million in the second quarter of 2014, the company announced Thursday.

Mitel's Richard McBee. (Supplied photo)

That is up dramatically from the $146.6 million in the same quarter of last year, before the firm’s January 2014 acquisition of Aastra Technologies.

Pro-forma revenue – calculated on the assumption Aastra had been part of Mitel last year – was actually down $4.3 million.

Cloud growth is continuing for the Ottawa-based communications company, which is now at 754,045 cloud seats compared with 431,886 from one year ago.

As of June 30, Mitel (NASDAQ: MITL) had $134.2 million in cash or cash equivalents, and CEO Rich McBee said the company plans to do two things with the money.

“One is to invest in growth, and that’s primarily M&A, or we’ll return it to the shareholders by paying down debt,” he said.

The company announced Thursday it was making a voluntary $25-million payment on its debt, a paydown Mr. McBee called “very significant.”

Net income came in at $800,000, down from $2.7 million in the second quarter last year, largely because of integration costs associated with the Aastra acquisition.

Mitel’s gross margin was down from 55 per cent to 52.6 per cent, due in part to Aastra being a lower gross margin business.

Mr. McBee said the acquisition has gone well for Mitel.

“The teams are working very well together. We are getting great momentum,” he said.

Mitel’s recent elevation from the visionary to the leader quadrant in the Gartner Magic Quadrant will keep that momentum going, Mr. McBee said.

Gartner is an independent research company, and Mr. McBee said Gartner’s product reviews are “probably the most recognized on a global basis.”

He said to be recognized in the same quadrant as the Ciscos and Microsofts of the world is a big deal, and much of the credit goes to the firm’s engineers and the innovation that is happening in Ottawa.

“In our sport, that’s like winning the gold medal. That’s what our team did,” he said.

He said many customers won’t even consider a company unless it is in the leaders quadrant.

Still, projections for the third quarter are on the cautious side, down to between $261 million and $276 million.

Mr. McBee said there are three reasons for the third-quarter projection. The company continues to focus on the transition from non-recurring to recurring revenue, it continues to restructure in Europe after the Aastra acquisition, and the European summer is always the slowest quarter.

Mitel was trading down 60 cents on the NASDAQ exchange at $9.84 a share in early afternoon trading Thursday.

 

Organizations: Mitel, Aastra Technologies

Geographic location: Ottawa, Europe

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