Crexendo (CXDO) 7 May 242024 Q1 Earnings call transcript

Greetings, and welcome to the Crexendo First Quarter 2024 Earnings Call. [Operator Instructions]Please note, this conference is being recorded.I will now turn the conference over to your host, Mr. Jeff Korn. Sir, you may begin.

Thank you, Olly, and good afternoon, everyone. QX Call. Crexendo the to XXXX Conference Welcome I'm and CEO. Chairman of of Directors the Board Jeff Korn,

Doug On with Jon more the our comments and the moment, After we'll the COO; and the for that, first to our Buch, Jon provide performance Ron Gaylor, statement? call Anand give safe Vincent, me will call on today handing I please numbers before open questions.Jon, will and provide read our quarter. business harbor harbor you CSO.In the detail then that, will on over the CFO; our Brinton, sales our call CRO; Doug our to a a are statement. After President safe read brief would Ron some update. to up

take Securities XXXX I of of statements meaning made Exchange Reform within Private statements. the All statements this to conference other call XXXX. Jeff. contain call of remind Act this the Act fact this you, statements. a want Act statements listeners and are than XXXX will Securities safe opportunity that Thank for forward-looking forward-looking forward-looking of Securities of in the The Litigation historical to harbor such provides

in risks limited not are revise back based Jeff. risk fiscal the forward-looking the on ended anticipate, Form statements here future forward-looking Securities of explained are undertake statements, uncertainties as today. that factors information, statements turn as and those differ discussed forward-looking statements. aware could Crexendo and but Forms to detail result materially December to obligation does update XX-K Jeff? any that filings a results words whether XX, with to and to for These expectation Commission, now Investors assumptions Exchange include, in other or statements like call new are like believe, expect, identifying to, and publicly the cause including to will or the any Forward-looking from estimate, similar of should are subject filed. actual be events any not XX-Q otherwise.I'd XXXX, the year the company's and

Jon. for of customer non-GAAP We Thank double-digit and in maintained profitability to $X.X the EBITDA $X.X adjusted bearing consecutive evident which across that solutions consecutive that we very the quarter will the GAAP its strong business.The and know spring XX% team excited in delivering laurels, customer and on our the first efforts GX first with to income customers.With all fruit combine Crexendo financial to entire telecom the organic service, cloud and that software best results customer third XXXX solid shows software XX categories of net as don't we quarter.This that million, as in work to very a in the industry. services certainly streak and million revenue, driven by has and solution for $XX.X report and business revenues are improve total we in continue for the our revenue increase looking value are the operational and certain of achieving fifth ways GAAP on who choice, non-GAAP quarter the This our on to communication is been to excellence and in in you, consecutive to in included of and which quarter reflects telecom that superb net million. of performance are report, our dedication of the multiple the GX's make for we categories. multiple near provide XXnd our the service. where by satisfaction shareholders software increase making both said, segment a cloud work #X was satisfaction QX services rest well be strive communication We Crexendo earnings performances segments.Our I'm in equated $XXX,XXX to there on XX% our growth the software rated income ranked we us solution that solutions, always year-over-year

substantial goal we we not and will year-end. rent leader.Last cost in ancillary Our optimistic Crexendo big remain communication us that be reductions.We effectively. really profitable create platform. users investments system we us. about can continues now make other premises was allow our our over value should our month a cost With cutting-edge aggressively reduction that result completing this business deliver to the move to savings will platforms, costs. the to is customers X.X This shareholders.The location. in strategic the of to from continue growth We advance transition cloud for with costs platform manage expenses, and our and month to We Classic together current vacate of migration announced to in however, maintaining said, million a The X continue new VIP by serve so on that for to the

are I steady report in continue the Competitive in Cloud fastest-growing us in at recent Award pace, to awarded Communications, users add UCaaS sight. industry. see in Frost platform for XXXX end We Excellence their & no the confirmed that and the a Sullivan, Strategy who we Leadership

of Sessions edge.We Our the also Not give a us Seats our NASDAQ the were business competitive of disruptive continues closing team and ringing honor given model to bell.

honor able joined video, had billboard. share was I had of offices. join exciting some Partner our their either licensees us by on Council person team -- of Times Square at and must the as the NASDAQ who to our we us it very Advisory or exceptional Our to employees meeting many that us with our flashed was images for in

day.Our meeting ways every was in is work that that rapidly to in That's to licensees Crexendo for market quarter also it get one Oracle me, a with to the really excels. stay But of adapting progressing a to their and thrill that us smoothly. sure with and particular, close Partner are the have Advisory constantly we and We we make our touch needs.

As combination. winning you be I release sure today we out put am what a may a to have great seen, press will celebrate

of excited our very more for and us hosted expect more are substantial hosting have turnkey growth developments.We growth about and anticipate seek a as looking to are positive more the do We customers for even solution and more offering the them.

in of shelf Our on and on us I tremendous solutions team you registration, with to solution working industry EDGAR. the team would them the said, the hosted should should our like the which to find that top to improve will Oracle a our filing today able also.Lastly, industry.With make continue non-hosted in be recent best touch the keep we

use, it that is growth. commitment effectively terms. for our reiterate our corporate I've if tool us before make most the shelf, will personally and close good gives deals for for accretive sense.In just use in This one years is and likely immediate we it's determine be some we what and conclusion, strategic arsenal more We CEO.The future under a expectation shelf double-digit use organic our it this advocated for anticipate governance. I While investments, to flexibility to to to that in for acquisitions. It's want becoming X good even testament not if time to something is when

call be poised outstanding over Ron? provide The in for ability bright, excited.I'll to are to to the results Ron come. highlights. quarters some I'm the could more in deliver looks now continued and We financial confident turn success, to not future our and we

Thank you, afternoon, everyone. Good Jeff.

Some to first of the the $XX.X financial are year. highlights XX% prior of XXXX for as million to for the the follows.Total million, quarter first quarter quarter revenue compared increased $XX.X for

prior increased quarter to the of XX% the to for revenue the service for Our million, $X.X $X.X year. million first quarter compared

Software solutions growth the segment revenue in XX% the to to year. for quarter of $X.X $X.X million, contributed compared million first prior

an period $XXX,XXX to compared was quarter period. the first net for during XX%.Our the and the for quarter to the the of to income million, of $XXX,XXX Adjusted $XXX,XXX, for X% to $X.X $XX.X $XXX,XXX the segment XX% of the quarter at quarter prior Gaylor, as per EBITDA first per net net [ to of of per comments the $XX first cash was year. of basic for with see cash for XX%. financing a for to to decreased to first of basic the the used quarter, diluted for margins, mentioned, the for President QX $X.X and gross of million compared of compared million; prior margin, gross XX%; That's non-GAAP to million reported net loss solutions $X.X for QX turn activities year.We gross basic common approximately compared quarter; balances. activities to accounts X% common quarter that's million quarter a $XX.X the of per revenue business margin mostly compared came telecom $X,XXX $XXX,XXX for product X the share, over for gross income, million; Cash XXXX.We same loss the payables diluted the $X.XX million used December $X.XX gross for year.We the per for for the for investing $X.X expenses came quarter, the revenue and margin and common liabilities provided for on quarter. $XXX,XXX that's last in XX% compared of reported compared first of down XX% common activities and product year.Software activities strong quarter sales. strong first prior the that's a of quarter $X.X continue year.Overall XX% $X.XX it gross at accrued a and ] operating $X.XX to prior million, also by that's for per share quarter, compared the Our at in million, for now and $XXX,XXX $XX diluted a (sic) increased and additional for year.I share, the cash prior And Jeff the in in non-GAAP million of of diluted prior XX%. COO, Service year.We compared $X.XX Doug balance basic ended prior quarter, margins XX, to to QX to pay was for compared compared used in of $X.X the or prior year.We will operating to the $X.XX margin, That's or financing loss year.EBITDA investing income in of share overall to prior our quarter the -- the services XX% quarter

pleased We strong start XXXX. very to and Ron. in our momentum QX, had performance Thanks, very I'm another with

million net non-GAAP the quarter, Our $XXX,XXX or focus per acquisitions, managing of a and recognizing XX% $X.XX the consecutive managing GAAP results had significant is the quarter on $X.XX with quarter organically XXnd from profitable synergies and the on were to result our continue opportunity our growing income of revenues, our grow costs for allowing to had quarter, with year-over-year quarter, net and $X.XX to success non-GAAP increase for consecutive direct along And GAAP the we a in or net strong non-GAAP to our highlight this leverage basis, business. QX us fundamentals.We quickly of third our income the income.Our share, share. in for our

Our we segments worked believe in we together of to had processes the entire company business efficiencies both to and more and business quarter. improve growth make for growth.We team cost organic we continue see tirelessly will synergies our our as continue and our more significant efficient,

strong growth outstanding platform quarter. was to platform our experiencing achieved the licensees surge from North The on small software X.X our they and user during continue cloud. XX% licensees software additional allowed users as migration the to And double enterprise-level And organic sales increase telecom the partners X% quarter Crexendo.Our rate Frost and their growth XXXX Leadership organic eclipse services compared services nearly segment a XX% Award million highlights our year-over-year, grow. demand services.The Strategy benefit agents offerings combined are by growth awarding segment the solutions on while organic the see demand further to organic saw Our highlighting our from their our rate partnerships services telecom during rapid mark channel to in organically, rate X% spend do, growth our segment in XXXX, and they and the continue rapid Crexendo midsize growth saw & us XXXX. our grew to for we our segment growing our XX% in an at the industry Sullivan us average.Our and and from our growth master of and highlighted which and need for products our with American was agent solutions QX to quarter.The we for rate by the continue businesses XX% XX%

prospects satisfaction basis, solutions highlighted of GX.com.Our revenue our Our growth and service nice on customers we backlog their a by increase XX% our and $XX.X and have our partners, of from to our great in guarantee was share is uptime channel channel sell XX because XXXX. best-in-class see results.And who leading and existing our confidence million, continue from of our partners to and the in services customer first QX awards review QX customer now grow that site, at continues from further an to place industry XXX%

product number integrations, margins, from acquisition a of increase our strong next our margins gross saw to backlog stream.We our future Allegiant without compared the MSP recently delivering services have end margins With be platform, [ edge year.We offerings. in artificial and released lower on continues seeing be of can product solutions by growth that integrate end continue over scale focus customers our really building to our end months, QX software quarter-over-quarter that increased we're software on our and ] contract being third-party more growth. complement in with in from to XX% And remarkably revenue acquisitions deployed that Crexendo. still version growth QX will direction AI-type solutions sliding gross platform that solutions last leading synergistic our XX.X telecom a been opportunities and margins in services services user our platform. compared in for and our the we and quarter affected up at at remaining solutions next telecom successful, API the of more expand in service it's applications XX%, near our XXXX afford.As focuses intelligence But and our our and we've significant And of our the segment.And nice the result software XX% of momentum, margins. more had the of future couldn't and future.We strong the to to business telecom enhance to our at on indicator that, mentioned gross to inorganic is previously, our the on a our were user I and Our we're from organic past that We're in they sum of opportunity margins on about to first XX% of XXXX. from and lot XX%, our started recognized end enhanced the also use seeing efforts improving telecom proactively services. hundreds looking margins the our be XX% will developers for and With our continue a optimistic the acquisition to we're and nice a values end every on XX regards every on are developed excited gross

inorganic our and Jeff continued also still managing ensure our the rapid CPaaS and and and success.I'll for execute will growth our the UCaaS, offerings demand well future and for and our comments. is product the by sector it our committed increasing continued to and and delivering to organic that that's solutions, best user turn great growth expenses.Our highlights and and to enhancements for end shareholders, to our further over in that evident around and that there our partners growth our back best CCaaS developments AI demand return customers for plan continue now any continues.We're We offerings on margins

time, I any further have don't At this comments.

to questions, like the to please. I'd call Olly, So open up

coming with America. from is question Northland Capital first Mike Our Instructions] Latimore, [Operator

the results backlog Great the level? same also the and what Great. about in And growth gross The here right. the strong little here. time at talk up nicely to happened a a sustainable that you is moved can service margin there? sequentially. guess, All bit see I

typically, low Well, QX. in in that historically, was the it segment XX%, our seen around we've gross XX%. bounces XX% But anywhere from margins

XX%. [ very range. ] and XX% strong. we quarter strong that very with So a solutions? in think to Software the maintainable it's at XX% it had growth, it's XX% We is But

Great. about you little master have guess, bit? that can in I it a And mentioned XX% I portfolio. then a pretty master These broad was the the, agent talk they channel. agents, the think growth you

on their a And are mix of those highlights how with You clearly outperforming little there. kind give you're maybe working channels.

I'll little start that, of have with Jon a bit then little color. and I'll a more bit add

them a worked we've a So right, Mike, competitive of we got we've master that couple out work extremely with extremely, agents there's the of close And that lot with. there, you're surveys probably satisfaction out all customer so factors and out apart our that we other our GX.com competitors of from customer there. there the believe out highlighting there.And us on sets really

choice somebody's these pick have customer got So fact hat satisfaction from hang the to going agents highlight master although on anybody, we've they're their they're going to best recommendation, to there. out the if that the

helped a so seen benefits of Crexendo on on get do them.So of with the over of a once that to us the And business But add and success sold improve that's some lot those hooked, get Crexendo over see course agents.It you a takes repeat recognize they're them the to out agents of those work really want little year? we last of of these to then we've we the competition. Jon, color sales lot

of lot supports to continue drive this through you ratings, mentioned, and, programs type see tell as we going Mike, and team when and it's GX partner so opportunity. would this customer channel. we've the that that just area we some you for growth to of great continue an invested I over to this And the satisfaction Doug we're great run in, is growth the we area an that in that, couple a take last years. a have this of

we've in awesome that this bit, got partners continued the we're and there. So program a are people supporting we've expanded success to those excited involved see

Great. the me And last Okay. business. software for then one just on

talked of expecting steady kind count you think about subscriber I there. growth

mostly As the expect. of you is kind from replacement forward, just that coming increasing Maybe talk that opportunities your about going it base? source be are look growth to you there Or here? of

Mike, it's you. that Anand I'll general, But in answer both. let for

that or exactly Mike, service at at we if the then pretty from industry providers are right. a and And themselves at I our logos kind off different migrating growing of average. they look that people twice the on have, mean, they're XXX-plus you the yes, same grow average, we dramatically have that's they into time, obviously, bring on, variety cap strategies new of platform. the

the reality both, So it's and actually is see continue we that. to

Now depending on But a is with providers. been multiple for with have us ramp that just their obviously, the is, migrating function the new already they're bringing their pace. play of in how folks and/or what new years increasing steadily that logos, strategy on are are

Mike, Jon to something. hold wants on. add

before and time. and see choosing talked customers we good to some BroadSoft now Mike, migrate as us that, Anand growth And have partners Cisco having bases. to really Microsoft them discussed, to larger we about in of over legacy add just Metaswitch to the I'd tend success who

using So there's shift organic growth that there's we're partners share what formula of part the but in is the that there we have, there. for of the that opportunity some is base

towards more is time? it Do the share skew you shift going think over similar Or [indiscernible]? to be balance will that

using the we formula of -- And of at to us that comments the do existing providers. migration organic same and legacy growing at benchmarked double & Well, some in Sullivan growth about from market. then see from rate we us mentioned Frost that the continuing

Riley. Josh is with coming question from next B. Our Nichols,

capitalize The it ask year-over-year bit remainder slightly for GAAP you maybe some more back consistent opportunities? you're on think growth because OpEx the first want but the some I quarter in expansion. was know how profitable to to Great the I with to thinking profitability. see balancing briefly of nice another company about a little the has quarter, are on just about of year. profitability curious I investing these to really on But versus got call. just thinking touched you down margin I'm

that acquisitions, GAAP we will if double-edge Obviously, the costs start profitability. us a will it's of intangible we Well, out doing -- associated knock sword. with

we not we While quarter-to-quarter the that investments solidify and consistently are the we would GAAP would runs there would to that different investments position, into to or make, from make make our we to needed hope challenge make was something the if investment. to a business, investments do going profitability. But that game-changer we

the XX-plus piece just at that then margins margin getting you year the of year? bit sustainable for could you looking the then business but supported end could gross overall, of think XX%. of percent very healthy, over here, to impact platform on by if level terms you margin. of kind remainder the kind the software north of is a everyone getting potential do that And the in two, of of by what One elaborate services savings. do And VIP is, have Very, little this NetSapiens the think also

So I'll speak to the margins.

margins XX% quarter. So a gross nice the overall improvement prior at over is

QX, back If we you were XX%. look to at

the So we've XX-plus services a we the XX%, in revenue is as well think our telecom XX% bounced to expansion and margin seen solutions. product software to be.And we've both spot as right revenue, around

range. we amount, we're and across the range, So it low sustainable XX% why think that somewhere in that's a that's seeing XX% board,

customers track. over we We've in platforms, success huge now. by significant get on right center with for XX% the migration it up end And cost as on And probably Classic And the that the off closing platform. pickup data And XX%, Josh, when we we'll to the see we cost in here final X have Phoenix savings dual data our it, we migrated pick anticipate, X migrated on of got as we won't on extra of completely to some because said, resources our migration going office for great that the anticipate us will the being of our Classic centers, continuing manage system.So front, completely there. get required running year. we're Jeff the to VIP our of

engineers strictly of that, and we morph Classic be are we able which too. the working to over top the have system, on on mention, or staff will to VIP that hosted, to Not

will it distribution savings. staff us on top the better So cost give of all

about we're that. very excited So

next from Instructions] [Operator Eric with question Lake Our Martinuzzi, is Street. coming

had question. a I

talked a be sequentially the that expectation squirrely, growth. see I know But XXXX, software pipeline? in especially side. would about little QX QX You've can up anticipating based versus on sometimes the be on what bit double-digit solutions quarter-to-quarter is you the

It's growth for early quarter answer we perfectly as in to over I double-digit honest. year. fully a little us the the expect that, to said, be But

As cycle, a the particularly right, looking you're growth. on for much But I'm variance of quarter-to-quarter. what the have quite software the longer solutions that's from at side confident because we some double-digit pipeline see sales we in still year,

wanted the completely then didn't potential I to gross service? see I part we -- what And Okay. cloud could relationship. And impacting? of margin know a then business What that as this benefit, the Oracle whether is it's I understand customer or

all going the over Well, it for hosting they Essentially, be are solutions software shouldn't of on the strictly affect side taking customer business. to service. the us. It's

will upfront, a as costs substantial there over years. we cost the initial While are some us this be go to savings

We all we data are have large managing centers staff a the have. who

reliable customer-centric.So to move some much them things. game-changer of enable and that we service. customer-facing like in providing staff they expect moving have something it will a us to can will doing to with be be have to We to available troubleshoot, completely more things where VIP, Classic those will That, be we to deal

other masters they're are at And the some security. of benefits

good And providing watches they it. do rest at you to provide going going we want are. as continue at They and, to a have to going not a services work. are.So add the in they staff to world do the anything distribution the was the be as are other at. they're We're they country it. the We're the good decided of to platform. We're that have what great They're We platform to are that? we be better ancillary what than of soon.Anand, top hopefully, we who

a yet growth [ we even in the able to and we markets, there us quickly. about markets. haven't seeing markets This we're scalable. fairly them It's bring penetrate the ] be When international talk international of allows to up international lot touched that very

want to Jon, did you add anything?

on quickly that we're I No, Doug the we do marketplace. I demand I head. it mean, a that's see to from hit and doing driver very for expansion able very to be And and big the based efficiently, scale is on think what right I important. think it very, the think

question Singular is Chris from next coming Sakai, Our with Research.

comment And ask of the help used? possibly wanted international are potential that to sort is already and expansion? international Just you most being seeing about the the with. this expansion OCI where will Where for

out we So Amsterdam we in have obviously, in it, already Chris, see where both data centers and London.

We have U.K. in customers out Germany, in the

We we APAC last footprint talked expansion, into well time as also Australian of in about now this I see markets these and think some and well, as other areas.

markets. existing infrastructure allows So what into easily essence, particular localized our out very Oracle those us to do extend is, in

time way, the do because the all an of up will of they installation the services in we speed that provide. amount by considerably And can they

and parts game-changer also competing will in other a world. of beneficial and be that for So particularly Europe us the

you. Thank

Korn questions have. further for over time, may no any you on remarks Mr. have at back it we hand will to I the closing this As lines

thank to and and I everybody. our look excited have work talking everybody you to you, and to announce we attention. the Thank sleeves announced want did thank we're get keep running.So their roll to and for Olly. just Good to we We're you very results. call, all try soon time today. very results finish and our as this And we we going as afternoon, to back when forward QX this much, again, continue up to train

disconnect this time. lines We Thank thank your and you concludes at conference your you. call, you participation. This may today's for