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Summing Up the Year

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Yesterday we conducted our fiscal year end earnings call following our first full year as a public company, and it was extremely gratifying to share the good news about the terrific state of our company. Those of you interested in all the details can review the complete press release. I want to highlight just a couple of items here.

First, revenues were at an all-time high for the last quarter of the fiscal year, as were revenues for the entire fiscal year – 32 percent year over year revenue growth despite the ongoing economic challenges and in a North American IP Telephony market that grew approximately 10 percent in the same period.

Our customer base grew by 700 during the last quarter and for the full year grew from around 5,000 to more than 8,000. I can’t say enough about the dedication and execution of our distribution partners – with 52 percent quarter over quarter growth from our national partners and a 21 percent growth in sales from our largest regional partners.

Of particular note, we are beginning to experience great results from our new, proprietary Total Cost of Ownership Tool, which combines highly credible third-party data with specific customer configuration requirements to calculate, and then combine, 12 up-front and recurring telephony cost components into a single Total Cost of Ownership computation. We’ve heard from a number of partners who have successfully used the tool to win significant business against some of our competitors because it clearly demonstrates ShoreTel’s long-term cost advantage.

Still, more than anything else, I’m extremely pleased by our continued record customer satisfaction levels. Our ability to provide our customers a Unified Communications system that leads the industry in reliability, scalability, and ease of deployment, maintenance and use – all with the lowest total cost of ownership and world-class customer satisfaction – is growing our base of “raving fans,” who are spreading the word about their positive experiences with ShoreTel. This fuels our accelerated growth and is helping to put the wind at our backs.

We have grown and matured a lot as a company during this last year, and I’m confident that fiscal 2009 will prove to be even better.

John W. Combs