Core Insights - Crexendo (CXDO) reported $17.5 million in revenue for Q3 2025, marking an 11.9% year-over-year increase and a 2.71% surprise over the Zacks Consensus Estimate of $17.04 million [1] - The company achieved an EPS of $0.10, up from $0.06 a year ago, resulting in a 25% surprise over the consensus EPS estimate of $0.08 [1] Revenue Breakdown - Service revenue was $8.57 million, exceeding the estimated $8.47 million, reflecting a 7.8% increase year-over-year [4] - Product revenue was $1.41 million, slightly below the estimated $1.46 million, showing a significant decline of 22.4% compared to the previous year [4] - Software solutions revenue reached $7.52 million, surpassing the average estimate of $7.12 million, with a year-over-year growth of 28.3% [4] Stock Performance - Over the past month, Crexendo's shares have returned +9.2%, outperforming the Zacks S&P 500 composite's +2.1% change [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the broader market in the near term [3]

Core Insights - Crexendo (CXDO) reported quarterly earnings of $0.1 per share, exceeding the Zacks Consensus Estimate of $0.08 per share, and showing an increase from $0.06 per share a year ago, resulting in an earnings surprise of +25% [1] - The company achieved revenues of $17.5 million for the quarter ended September 2025, surpassing the Zacks Consensus Estimate by 2.71% and up from $15.63 million year-over-year [2] - Crexendo has consistently outperformed consensus EPS and revenue estimates over the last four quarters [2] Earnings Outlook - The future performance of Crexendo's stock will largely depend on management's commentary during the earnings call and the sustainability of the recent price movements [3][4] - The current consensus EPS estimate for the upcoming quarter is $0.08 on revenues of $17.83 million, and for the current fiscal year, it is $0.33 on revenues of $67.47 million [7] Industry Context - The Internet - Services industry, to which Crexendo belongs, is currently ranked in the top 37% of over 250 Zacks industries, indicating a favorable outlook compared to the bottom 50% [8] - The performance of Crexendo's stock may also be influenced by the overall industry outlook and trends in earnings estimate revisions [5][8]

Financial Data and Key Metrics Changes - Crexendo reported a 12% year-over-year revenue growth, reaching $17.5 million for Q3 2025 [14] - GAAP net income was $1.5 million, or $0.05 per share, compared to $100,000, or $0.01 per share, in Q3 2024 [15] - Non-GAAP net income increased to $3 million, or $0.10 per share, from $1.7 million, or $0.06 per share, in the same quarter last year [16] - EBITDA for the quarter was $2.1 million, up from $1 million in Q3 2024 [16] - Cash equivalents increased to $28.6 million from $18.2 million at the end of 2024 [16] Business Line Data and Key Metrics Changes - Software solutions revenue grew 28% year-over-year to $7.5 million [14] - Service revenue increased 8% to $8.6 million [14] - Product revenue decreased 25% to $1.4 million, but was slightly above the historical average [14] - Telecom services retail segment grew 2% organically, with telecom service revenue up 8% [20] Market Data and Key Metrics Changes - Remaining performance obligations increased to $87.9 million, up from $83.5 million at the end of June 2025 [15] - International revenue is growing rapidly, although it still represents less than 10% of total revenue [10] Company Strategy and Development Direction - The company is focused on organic growth and strategic M&A opportunities, with plans to close an acquisition by early next year [11] - Investments in AI-driven capabilities and Oracle Cloud Infrastructure are expected to enhance growth and operational efficiency [5][10] - The company aims to maintain its competitive advantage through superior customer service and innovative product offerings [9][20] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving double-digit growth through the next year [12] - The company is optimistic about the future, citing strong demand for its products and a talented workforce [11][26] - Management highlighted the importance of customer service as a differentiator in a commoditized market [20] Other Important Information - The company surpassed 7 million end users on its platform, marking a significant milestone [7] - The annual user group meeting in Miami was the most successful in history, with record attendance and excitement about innovations [6][8] Q&A Session Summary Question: Pipeline for new licensees and Q4 setup - Management indicated that growth in users can be estimated based on past performance, but specific numbers for new logos are still uncertain [31][32] Question: Measuring success of new AI products - Management plans to monitor adoption rates and will implement aggressive marketing strategies for existing and new customers [33][34] Question: Progress on migrating customers to OCI - Migration to OCI is expected to be completed by the end of Q1 2026 [36][37] Question: Drivers of service revenue growth - Positive market acceptance and execution by retail teams contributed to the 8% growth in service revenue [43][44] Question: Opportunities with AI receptionist technology - The AI receptionist is expected to appeal to a majority of small and mid-sized customers, potentially increasing average revenue per account significantly [49][50] Question: Insights on Version 46 of the platform - Version 46 is expected to be available for previews in Q1 2026, enhancing user interaction with the platform [54][56] Question: M&A strategy and potential acquisitions - The company prefers to acquire technology that integrates seamlessly with its existing platform but remains open to other opportunities if compelling [66][67] Question: Product gross margin decline - Management expects product gross margins to improve and return to historical averages in the upcoming quarters [78][79]

Financial Performance - As of September 30, 2025, the Annualized Exit Monthly Recurring Subscriptions (AERR) was $56,100, an increase from $49,039 as of September 30, 2024, representing a growth of approximately 21%[178] - Total revenue for the three months ended September 30, 2025, was $17,497,000, representing a 12% increase from $15,627,000 in the same period of 2024[189] - Total revenue for the nine months ended September 30, 2025, was $50,106,000, a 12% increase from $44,598,000 in the same period of 2024[192] - Net income for the three months ended September 30, 2025, was $1,450,000, compared to $148,000 in the same period of 2024, marking a significant increase[188] - Non-GAAP net income for the three months ended September 30, 2025, was $3,034,000, compared to $1,700,000 in 2024[202] Revenue Breakdown - Software solutions revenue increased by $1,661,000 to $7,521,000 for the three months ended September 30, 2025, while service revenue rose by $616,000[189] - Service revenue for the three months ended September 30, 2025, increased to $8,607,000, representing an 8% increase from $7,953,000 in the same period of 2024[210] - Software solutions revenue increased by 28% to $7,521 million for the three months ended September 30, 2025, compared to $5,860 million in 2024, attributed to higher recurring software license and maintenance subscriptions[237] - Software solutions revenue increased by 31% to $21,364 million for the nine months ended September 30, 2025, compared to $16,331 million in the same period of 2024[246] Expenses and Costs - The company reported an increase in operating expenses of $3,148,000 for the nine months ended September 30, 2025, primarily due to higher salaries and benefits[193] - Cost of service revenue for the three months ended September 30, 2025, rose to $3,664,000, a 10% increase from $3,336,000 in 2024[213] - Selling and marketing expenses for the three months ended September 30, 2025, increased to $3,215,000, an 8% rise from $2,976,000 in 2024[216] - General and administrative expenses decreased to $1,928,000 for the three months ended September 30, 2025, down 15% from $2,278,000 in 2024[218] - Research and development expenses for the three months ended September 30, 2025, were $122,000, a decrease of 9% from $134,000 in 2024[219] Cash Flow and Financial Position - Net cash provided by operating activities increased by 69% to $6,950 million for the nine months ended September 30, 2025, compared to $4,107 million in 2024[259] - Cash and cash equivalents amounted to $28,573 million as of September 30, 2025, compared to $18,193 million as of December 31, 2024[258] - Other income increased significantly by 283% to $398 million for the nine months ended September 30, 2025, compared to $104 million in 2024, mainly from higher interest income[233] Customer Metrics - The Net Monthly Subscription Dollar Retention Rate was 99% for cloud telecommunications services and 102% for software solutions, indicating strong customer retention and growth potential[186] - The company supports over six million end users globally through more than 235 cloud communication platform software subscribers[162] - Remaining Performance Obligations (RPOs) increased by 11%, or $6,030, to $58,993,000 as of September 30, 2025, compared to $52,963,000 in 2024[212] Market and Operational Insights - The cloud telecommunications contracts typically have a term of 36 to 60 months, contributing to the company's recurring revenue model[165] - The company continues to invest in technology and CPaaS offerings to enhance competitiveness and profitability in the market[173] - The cloud telecommunications services include a range of essential and advanced features, providing significant value to customers without requiring capital investments[171] Other Financial Information - The income tax provision for the nine months ended September 30, 2025, was $(135,000), an increase of 35% from $(100,000) in 2024[194] - Basic earnings per share for the three months ended September 30, 2025, was $0.05, compared to $0.01 in the same period of 2024[188] - The company believes exposure to foreign currency fluctuation from operating expenses is immaterial, as costs do not constitute a significant portion of total expenses[273] - Inflation has not had a material effect on the company's business or financial condition, but significant inflationary pressures could harm operations[275]

Revenue Growth - Total revenue for Q3 2025 increased 12% year-over-year to $17.5 million, up from $15.6 million in Q3 2024[3] - Service revenue for Q3 2025 rose 8% to $8.6 million compared to $8.0 million in Q3 2024[3] - Software solutions revenue surged 28% to $7.5 million, up from $5.9 million in Q3 2024[4] - The company reported a 31% increase in software solutions revenue for the nine months ended September 30, 2025, totaling $21.4 million[8] - Total revenue for Q3 2025 was $17,497,000, representing a 12% increase from $15,627,000 in Q3 2024[26] - Service revenue increased to $8,569,000 in Q3 2025, up 8% from $7,953,000 in Q3 2024[26] - Software solutions revenue grew by 28% to $7,521,000 in Q3 2025, compared to $5,860,000 in Q3 2024[26] Net Income and Earnings - GAAP net income for Q3 2025 was $1.5 million, or $0.05 per share, compared to $0.1 million, or $0.01 per share in Q3 2024[5] - Non-GAAP net income for Q3 2025 was $3.0 million, or $0.10 per share, compared to $1.7 million, or $0.06 per share in Q3 2024[6] - Net income for the nine months ended September 30, 2025, was $3,853,000, a significant increase from $1,170,000 in the same period of 2024[26] - Basic earnings per share for Q3 2025 was $0.05, compared to $0.01 in Q3 2024[27] Cash and Cash Equivalents - Total cash and cash equivalents increased to $28.6 million as of September 30, 2025, from $18.2 million at December 31, 2024[14] - Cash and cash equivalents at the end of Q3 2025 were $28,573,000, up from $15,451,000 at the end of Q3 2024[29] - The company reported a net cash provided by operating activities of $6,950,000 for the nine months ended September 30, 2025, compared to $4,107,000 in the same period of 2024[29] Operating Expenses - Operating expenses for Q3 2025 increased 5% to $16.2 million compared to $15.5 million in Q3 2024[5] - Operating expenses totaled $16,192,000 in Q3 2025, an increase from $15,492,000 in Q3 2024[26] Other Financial Metrics - Adjusted EBITDA for Q3 2025 was $2,943,000, up from $1,761,000 in Q3 2024, reflecting a 67% increase[38] - Total other income for Q3 2025 was $188,000, compared to $59,000 in Q3 2024, indicating improved financial performance[26] User Growth and Strategic Outlook - The company surpassed 7 million users on the Crexendo platform, indicating strong growth and market presence[16] - Management expressed confidence in continued growth driven by investments in AI-driven capabilities and strategic M&A opportunities[16]

Core Insights - Gamma Communications plc and Crexendo, Inc. have announced a strategic cooperation aimed at accelerating international growth for service providers globally [1] - Both companies have chosen Oracle Cloud Infrastructure (OCI) to enhance their platforms and provide secure, scalable cloud services worldwide [1] Company Overview - Gamma Communications is recognized as a leading provider of technology-based communication solutions across Europe [1] - Crexendo is identified as a premier provider of cloud communication platform software [1] Strategic Cooperation - The partnership between Gamma and Crexendo is focused on expanding their reach and capabilities in the international market [1] - The collaboration is expected to benefit service providers by leveraging the strengths of both companies [1] Technology Infrastructure - The selection of Oracle Cloud Infrastructure (OCI) indicates a commitment to utilizing advanced cloud technology for service delivery [1] - OCI will support both companies in delivering secure and scalable cloud services, enhancing their operational efficiency [1]

Core Insights - Crexendo, Inc. has selected NUSO as a preferred carrier for its cloud communications platform [1] - NUSO has increased its investment and commitment to Crexendo's NetSapiens Platform in both the US and Europe [1] Company Overview - Crexendo, Inc. is recognized as a leading software technology company specializing in cloud communication platform software and UCaaS offerings [1] - The company's services include voice, video, contact center, and managed IT services tailored for businesses of all sizes [1] Industry Context - The partnership with NUSO highlights the growing trend of collaboration among cloud communication service providers to enhance service delivery [1] - The expansion of NUSO's investment in Crexendo's platform indicates a positive outlook for cloud communication technologies in the US and European markets [1]

Core Insights - Crexendo, Inc. is a leading provider of cloud communication platform software and UCaaS offerings, including voice, video, contact center, and managed IT services tailored for businesses of all sizes [1] - SNOM has been announced as an official Event Sponsor for Crexendo's 2025 NetSapiens Platform User Group Meeting, marking the third consecutive year of sponsorship [1] - The User Group Meeting will take place in Miami Beach, Florida, from October 27th to 30th, and will gather cloud communications service providers, technology innovators, ecosystem partners, and industry analysts globally [1]

Core Insights - Crexendo, Inc. has announced record participation for its upcoming NetSapiens platform User Group Meeting, indicating strong interest and engagement within its community [1] - All sponsorship opportunities for the event have been sold out, highlighting the increasing demand for the NetSapiens platform [1] - The high attendance reflects the accelerating global adoption of the NetSapiens platform and the strengthening of its global community of partners and providers [1]

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