Nominee Votes For % of Votes For Votes Withheld % of Votes Withheld Allan Brett 19,628,628 99.73 53,736 0.27 Al Guarino 19,628,571 99.73 53,739 0.27 Marc Lederman 19,388,295 98.51 294,069 1.49 Giovanna Moretti 19,628,071 99.72 54,293 0.28 Charles Salameh 19,628,963 99.73 53,402 0.27 April Walker 19,625,679 99.71 56,685 0.29 Norman A. Worthington, III 19,619,187 99.68 63,177 0.32 ...

PresentationCharles SalamehCEO & Director Good morning, everyone, and welcome to the Annual General and Special Meeting of the Shareholders of Sangoma Technology Corporation. I'm Charles Salameh, Chief Executive Officer of Sangoma Technologies. And at the meeting today, we have management represented by Larry Stock, our Chief Financial Officer; Jeremy Webb, our Chief Operating Officer; and Samantha Reburn, our Chief Legal and Administrative Officer. On behalf of the Board, I'd like to thank those sharehold ...

Core Insights - Sangoma Technologies Corporation reported a quarterly loss of $0.06 per share, which was worse than the Zacks Consensus Estimate of a loss of $0.04, marking a 50% earnings surprise [1] - The company generated revenues of $50.82 million for the quarter ended September 2025, exceeding the Zacks Consensus Estimate by 1.13%, but down from $60.15 million a year ago [2] - The stock has underperformed significantly, losing approximately 30.7% year-to-date compared to the S&P 500's gain of 14.4% [3] Financial Performance - Over the last four quarters, Sangoma has surpassed consensus EPS estimates only once [2] - The current consensus EPS estimate for the upcoming quarter is -$0.02 on revenues of $50.61 million, and -$0.07 on revenues of $205.16 million for the current fiscal year [7] Market Outlook - The company's earnings outlook is critical for assessing future stock performance, with recent estimate revisions trending unfavorably, resulting in a Zacks Rank 4 (Sell) [6] - The Internet - Software industry, where Sangoma operates, is currently ranked in the top 28% of over 250 Zacks industries, indicating a relatively strong industry performance [8]

Financial Data and Key Metrics Changes - In Q1 2026, the company reported revenue of $50.8 million, adjusted EBITDA of $8.3 million with a margin of 16%, and free cash flow of $3.2 million [6][22][24] - Revenue decreased by $8.5 million from Q4, primarily due to the divestiture of the third-party hardware resale business, VoIP Supply [22] - Year-over-year revenue declined by $1.7 million, or 3%, excluding VoIP Supply revenue [22] - Gross profit was $36.8 million, with a gross margin of 72%, compared to 67% in Q4 [23][24] Business Line Data and Key Metrics Changes - Core revenue, which accounted for 74% of total revenue, decreased by 6% year-over-year, while adjacent revenue increased by 6% [23] - Services now account for 92% of total revenue, reinforcing the company's transformation to a predominantly MRR-driven model [23][25] - Monthly Recurring Revenue (MRR) bookings grew by 2.4% sequentially and 6.4% year-over-year [9] Market Data and Key Metrics Changes - The overall size of the pipeline remained steady, but new pipeline creation increased by 39% quarter-over-quarter [8][14] - The company saw a pickup in its higher-velocity volumetric business, which now represents 62% of the 90-day forward pipeline [8] - Retention remains strong, with blended churn holding near 1% [9] Company Strategy and Development Direction - The company is transitioning to a higher-margin recurring revenue model, which now represents over 90% of total revenue [6] - Investments of approximately $2 million in incremental SG&A are planned to accelerate customer acquisition and partner enablement [11][21] - The company is exploring selective AI-driven software acquisitions to strengthen its vertical focus in healthcare, hospitality, retail, and education [10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in meeting fiscal FY26 guidance, expecting sequential growth in Q2 and year-over-year growth in Q3 and Q4 [12][26] - The broader SMB market conditions may influence deal timing, but early Q2 activity is encouraging [12] - Management highlighted the importance of larger deal sizes and growing recurring revenue as indicators of entering a new phase of sustainable, profitable growth [12] Other Important Information - The company retired an additional $5.2 million in debt during Q1, ending with total debt of $42.8 million [20] - The capital allocation strategy focuses on leveraging strong cash generation to accelerate organic growth while maintaining flexibility for selective M&A [20][21] Q&A Session Summary Question: Growth investments and timelines for returns - Management indicated that the $2 million investment will focus on increasing field capacity and marketing to enhance brand coverage [30] Question: Pipeline tied to new partner relationships - Management noted a 6% increase in pipeline over the last six weeks and a 39% increase in new pipeline creation [33] Question: Decline in services and future expectations - Management acknowledged the decline in services but expects sequential growth starting in Q2 as older customer contracts complete [37] Question: Optimizations for targeting larger customers - Management highlighted improvements in product roadmap and a disciplined approach to pursuing large opportunities [45] Question: Average revenue per customer growth - Management attributed the 19% year-over-year increase in average revenue per customer to upselling and the effectiveness of the bundling strategy [58] Question: Gross margin expectations - Management indicated that gross margin was impacted by a higher mix of product revenue but expects improvement moving forward [61] Question: Backlog growth - Management stated that backlog was consistent quarter-over-quarter, with expectations for growth in upcoming quarters [69] Question: Large MRR opportunities - Management clarified that large MRR opportunities include both wholesale and bundled solutions, with significant deals already closed [74][75] Question: Total Addressable Market (TAM) expansion - Management confirmed that the new wholesale channel opens up significant TAM opportunities beyond traditional markets [80][81]

Financial Data and Key Metrics Changes - In Q1 2026, the company reported revenue of $50.8 million, adjusted EBITDA of $8.3 million with a margin of 16%, and free cash flow of $3.2 million [6][22][24] - Revenue decreased by $8.5 million from Q4, primarily due to the divestiture of the third-party hardware resale business, VoIP Supply [22] - Year-over-year revenue declined by $1.7 million, or 3%, excluding $7.6 million from VoIP Supply [22] - Gross profit was $36.8 million, with a gross margin of 72%, compared to 67% in the previous quarter [23][24] Business Line Data and Key Metrics Changes - Core revenue, which accounted for 74% of total revenue, decreased by 6% year-over-year, while adjacent revenue increased by 6% [23] - Monthly Recurring Revenue (MRR) bookings grew by 2.4% sequentially and 6.4% year-over-year [9] - Larger strategic opportunities saw a 39% sequential increase in deals over $10,000 of MRR, which are 72% above the FY25 quarterly average [9] Market Data and Key Metrics Changes - The overall size of the pipeline remained steady, but new pipeline creation increased by 39% quarter-over-quarter [8] - The volumetric business now represents 62% of the 90-day forward pipeline, up from 55% in Q4 [8] - The company’s prem business grew over 60% year-over-year, benefiting from larger players exiting the segment [10] Company Strategy and Development Direction - The company is transitioning to a higher-margin recurring revenue model, which now represents over 90% of total revenue [6] - A new segment structure has been introduced, dividing revenue into core and adjacent categories to provide greater transparency [10] - The company plans to invest approximately $2 million in incremental SG&A to accelerate customer acquisition and partner enablement [11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in meeting fiscal FY26 guidance, expecting sequential growth in Q2 and year-over-year growth in Q3 and Q4 [12][26] - The management highlighted the importance of larger deal sizes and growing recurring revenue as indicators of entering a new phase of sustainable, profitable growth [12] - The company is exploring selective AI-driven software acquisitions to strengthen its vertical focus in various sectors [10] Other Important Information - The company continues to generate strong cash flow while strategically reinvesting in growth initiatives [10] - The capital allocation strategy includes paying down debt, reducing leverage, and returning value to shareholders through share repurchases [20][21] Q&A Session Summary Question: Growth investments and timing - Management indicated that the $2 million incremental growth spending will focus on increasing field capacity and marketing efforts to enhance brand coverage [28][30] Question: Pipeline tied to new partner relationships - Management reported a 6% increase in pipeline over the last six weeks and a 39% increase in new pipeline creation, indicating significant growth from new paths to market [32][33] Question: Decline in services revenue - Management acknowledged the decline in services revenue due to longer sales cycles but expects sequential growth starting in Q2 as older contracts complete [36][37] Question: Targeting larger customers - Management highlighted improvements in sales cycles and implementation timelines due to a disciplined approach and enhanced product offerings [44][46] Question: Average revenue per customer growth - The increase in average revenue per customer by 19% year-over-year was attributed to upselling and the effectiveness of the bundling strategy [58] Question: Gross margin expectations - Management noted that gross margin was impacted by a higher mix of product revenue but expects improvements as the year progresses [61][62] Question: Backlog growth - Management indicated that backlog remained consistent quarter-over-quarter, with expectations for growth in upcoming quarters [69][70] Question: Large MRR opportunities - Management clarified that large MRR opportunities include both wholesale solutions and bundled offerings, with significant deals already closed [73][74]

Financial Data and Key Metrics Changes - Revenue for Q1 2026 was $50.8 million, a decrease of $8.5 million from Q4 2025, primarily due to the divestiture of the third-party hardware resale business [19] - Adjusted EBITDA was $8.3 million, representing a margin of 16%, with a temporary negative impact on free cash flow of $3.2 million due to working capital changes [5][18] - Free cash flow for the quarter was $3.2 million, or $0.10 per diluted share, with a net cash from operating activities of $4.9 million [17][18] - Total debt decreased to $42.8 million from $69.1 million year-over-year, with $5.2 million in debt retired during the quarter [18] Business Line Data and Key Metrics Changes - Core revenue, which accounted for 74% of total revenue, decreased by 6% year-over-year, while adjacent revenue increased by 6% [20] - Monthly Recurring Revenue (MRR) bookings grew 2.4% sequentially and 6.4% year-over-year, with larger deals over $10,000 MRR increasing by 39% sequentially [7][8] - Average revenue per customer increased by 19% year-over-year, driven by the bundling strategy [15][52] Market Data and Key Metrics Changes - The overall size of the pipeline remained steady, with new pipeline creation increasing by 39% quarter-over-quarter [6][12] - The blended churn rate held near 1%, indicating stability in the recurring revenue base [8] Company Strategy and Development Direction - The company is transitioning to a higher-margin recurring revenue model, which now represents over 90% of total revenue [5] - Investments of approximately $2 million in SG&A are planned to accelerate customer acquisition and partner enablement [10][19] - The introduction of a clearer performance view through two segments: core and adjacent, aims to enhance transparency in revenue mix evolution [9] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in meeting fiscal FY26 guidance of $200 million to $210 million in revenue, with expectations for sequential growth in Q2 and year-over-year growth in Q3 and Q4 [24] - The company is optimistic about the growth potential in the wholesale channel and AI-driven software acquisitions to strengthen vertical focus [9][10] Other Important Information - The company continues to generate strong cash flow while strategically reinvesting in growth initiatives and expanding partner ecosystems [9] - R&D investment remained consistent at $11.3 million, with 90% of R&D spend directed towards new product capabilities [23] Q&A Session Summary Question: Update on growth investments and timelines for returns - The $2 million investment will focus on increasing field capacity and marketing efforts to enhance brand coverage and partner recruitment [26][27] Question: Pipeline generation from new partner relationships - The pipeline has increased by 6% in the last six weeks, with significant growth in bookings and a balanced mix of business types [29][30] Question: Decline in services and expectations for sequential growth - The decline was anticipated due to the completion of contracts with smaller customers, with expectations for sequential growth starting in Q2 [33][35] Question: Optimizations for targeting larger customers - The company has improved its product roadmap and established a disciplined approach to pursuing larger opportunities, enhancing efficiency in deal execution [40][41] Question: Changes in the partner ecosystem and ongoing success metrics - The partner program has been realigned to focus on strategic partners, with ongoing training and support to drive growth [46][47]

Revenue Performance - Revenue for the three-month period ended September 30, 2025, was $50,818,000, a decrease of 15.5% compared to $60,150,000 in the same period of 2024[4] - For the three-month period ended September 30, 2025, total revenues were $50,818,000, a decrease of 15.5% from $60,150,000 in the same period of 2024[70] - Product revenues were $3,940,000, down 62.3% from $10,457,000 in the prior year, while service revenues decreased by 5.5% to $46,878,000 from $49,693,000[70] - Revenue from the USA was $48,338,000, a decline of 15% compared to $56,753,000 in the previous year, while revenues from other regions fell to $2,480,000 from $3,397,000[71] Profitability and Loss - Gross profit for the same period was $36,805,000, down from $41,181,000, reflecting a gross margin of 72.3%[4] - Net loss for the three months ended September 30, 2025, was $2,337,000, compared to a net loss of $1,910,000 in 2024, indicating a 22.3% increase in losses year-over-year[4] - The company reported a loss before income tax of $2,863 for the three-month period ended September 30, 2025, compared to a loss of $2,253 in 2024[35] - Basic and diluted loss per share was $0.07 for the three-month period ended September 30, 2025, compared to $0.06 in the prior year[66] Cash Flow and Liquidity - Cash and cash equivalents increased to $15,683,000 as of September 30, 2025, from $13,494,000 at the end of June 2025, representing a 16.3% increase[3] - Operating cash flow for the three months ended September 30, 2025, was $4,938,000, significantly lower than $12,127,000 in the same period of 2024, a decline of 59.3%[7] - Total accounts payable and accrued liabilities amounted to $17,350 as of September 30, 2025, with significant liquidity maintained through stringent cash flow management[25] Assets and Liabilities - Total assets decreased to $336,833,000 as of September 30, 2025, down from $346,545,000 at the end of June 2025, a decline of 2.8%[3] - Total liabilities decreased to $134,446,000 as of September 30, 2025, compared to $141,826,000 at the end of June 2025, a reduction of 5.3%[3] - Shareholders' equity as of September 30, 2025, was $251,439,000, down from $254,195,000 at the end of June 2025, a decrease of 1.1%[3] Shareholder Information - The weighted average number of shares outstanding decreased to 33,243,223 for the three months ended September 30, 2025, from 33,402,422 in the same period of 2024[5] - The total number of shares outstanding at the end of the period was 33,329,755, a decrease from 33,537,684 in the same period of 2024[48] - Share-based compensation expense for the three-month period was $529,000, down from $728,000 in the same period of 2024[58] - The company did not grant any stock options during the three-month periods ended September 30, 2025, and 2024[59] - As of September 30, 2025, the company had 363,071 stock options outstanding, with a weighted average exercise price of $15.55[60] Cost Management - The company reported a restructuring and business integration cost of $563,000 for the three-month period ended September 30, 2025[4] - The company's interest expense (net) for the three months ended September 30, 2025, was $649, a decrease from $1,378 in the same period of 2024, showing a reduction of about 53.0%[19] - The interest costs incurred to service borrowing facilities for the three-month period ended September 30, 2025, were $739, down from $1,306 in 2024[39] - The company recorded a depreciation expense of $887 for the three months ended September 30, 2025, compared to $1,085 in the same period of 2024, reflecting a decrease of approximately 18.2%[30] - For the three-month period ended September 30, 2025, the amortization expense of intangible assets was $8,172, slightly down from $8,198 in the same period of 2024[33] Strategic Initiatives - The company initiated plans for the disposal of substantially all assets and liabilities from VoIP Supply LLC as part of its strategic realignment[72] - The company completed the sale of VoIP Supply LLC to PVG Technology Holdings for a total purchase price of $4,500[74] - The transaction was recorded as a receivable on June 30, 2025, and collected during the three months ended September 30, 2025[74] - The company entered into an automatic share purchase plan (ASPP) to facilitate share repurchases during blackout periods, recording a liability of $988,000 as of September 30, 2025[53] Credit and Risk Management - The expected credit loss provision decreased to $457 as of September 30, 2025, down from $496 as of June 30, 2025, indicating improved credit risk management[22] - The company's maximum exposure to credit risk for trade receivables was $13,516 as of September 30, 2025, with a notable portion of receivables aging over 90 days[22] - A 10% fluctuation in foreign currencies would have resulted in an approximate $42 impact on total comprehensive loss as of September 30, 2025[26] Other Financial Metrics - The company's lease obligations decreased to $7,845 as of September 30, 2025, from $8,208 as of June 30, 2025, indicating effective management of lease liabilities[32] - The fair value of interest rate swap assets as of September 30, 2025, was $204, down from $295 as of June 30, 2025[44] - The net inventory carrying value decreased to $7,550 as of September 30, 2025, from $8,227 as of June 30, 2025, reflecting a reduction of approximately 8.2%[29] - The net capitalized development costs as of September 30, 2025, were $8,441, compared to $8,438 as of June 30, 2025[34]

Core Insights - Sangoma Technologies Corporation reported solid first quarter results for Fiscal 2026, demonstrating the strength of its recurring revenue model and reaffirming its guidance for the fiscal year [2][4]. Financial Performance - Total revenue for the first quarter was $50.8 million, with a sequential growth expected in Q2. Excluding $7.6 million from VoIP Supply, LLC, revenue decreased by 3% year-over-year on a like-for-like basis [5]. - Average revenue per customer increased by 19% year-over-year, and bookings rose by 6%, supporting the growth outlook for the remainder of the year [5]. - Gross profit was $36.8 million, representing 72% of total revenue, an increase from 67% in the previous quarter, driven by a shift towards higher-margin recurring services [5]. - Operating expenses decreased by 9% year-over-year to $38.5 million, reflecting efficiency gains from transformation activities [5]. - The company reported a net loss of $2.3 million, compared to a net loss of $1.9 million in the same quarter last year [5]. - Adjusted EBITDA was $8.3 million, representing 16% of total revenue, consistent with historical seasonal patterns [5]. Guidance and Strategic Direction - Sangoma reaffirmed its guidance for Fiscal 2026, expecting total revenue in the range of $200 - $210 million, compared to $209 million in Fiscal 2025, excluding the contribution from VoIP Supply [4]. - The company is focused on expanding its software and services portfolio and deepening relationships with its global customer and partner base [2]. Shareholder Value and Capital Management - Free cash flow for the first quarter was $3.2 million, with net cash provided by operating activities at $4.9 million, representing 60% of Adjusted EBITDA [5]. - The company has repurchased over 700,000 shares under its Normal Course Issuer Bid, including 195,949 shares repurchased after the end of the first quarter [5].

Core Points - Sangoma Technologies Corporation, a leader in Communications as a Service solutions, will release its first quarter fiscal year 2026 results on November 10, 2025 [1] - A conference call is scheduled for the same day at 5:30 PM Eastern Time [1]

Sangoma (NasdaqGS:SANG) 2025 Conference Summary Company Overview - **Company**: Sangoma Technologies Corporation - **Market Cap**: Approximately $250 million - **Industry**: Telecommunications and Unified Communications as a Service (UCaaS) Key Points and Arguments Leadership and Strategy - **CEO Background**: Charles, the new CEO, has extensive experience in leading large P&Ls at major companies like Bell Canada, Hewlett Packard, and Infosys, focusing on enterprise modernization and cloud migration [3][4] - **Transformation Focus**: The CEO joined Sangoma to integrate its various acquisitions and unlock value, as the company had previously acquired 11 companies but struggled with integration [9][10] Market Dynamics - **Mid-Market Growth**: The mid-market segment is identified as the fastest-growing cohort in global IT spending, accounting for 44% of total IT expenditure. This segment is increasingly seeking integrated solutions to avoid vendor sprawl [6][7] - **Ransomware Threats**: There has been a 67% increase in ransomware attacks targeting the mid-market, highlighting the need for comprehensive security solutions [5] Product Offering - **Integrated Solutions**: Sangoma offers a complete suite of essential components for businesses, including voice, data, video, security, and hardware, all proprietary and high-margin [11][19] - **Bundling Strategy**: The company is moving towards bundling its services to provide a single vendor solution, which reduces total cost of ownership (TCO) for customers [16][19] Financial Performance - **Debt and Cash Flow**: The company reduced its debt from approximately $110 million to around $40 million and increased cash flow from $19 million to nearly $33 million [11] - **EBITDA Growth**: Sangoma's EBITDA margin has improved to between 17% and 19% [11][12] Partner Ecosystem - **Pinnacle Partner Program**: Sangoma has restructured its partner channel from 5,000 partners to a more focused group of 1,000 strategic partners, enhancing support and incentivizing sales through recurring revenue models [22][24] - **Competitive Advantage**: The company differentiates itself by providing superior support and service compared to competitors, many of whom are struggling with component-based offerings [26][28] Future Growth and Acquisitions - **Growth Phase**: Sangoma is transitioning into a growth phase, focusing on increasing bookings and revenue through larger, multi-year contracts [30][31] - **Acquisition Strategy**: The company is looking to acquire AI-enabled SaaS companies and expand geographically, particularly in Canada and the UK, to enhance its integrated offerings [39][40] Operational Improvements - **Cost Management**: The CEO highlighted that labor costs are a significant variable cost, which will decrease as the company integrates its operations and implements AI technology for automation [37][38] Additional Important Insights - **Customer Support**: Emphasis on high-quality customer support is crucial for retaining clients, especially in the face of increasing competition and service outages in the industry [27][29] - **Market Positioning**: Sangoma aims to position itself as a mini system integrator, providing comprehensive communication solutions rather than just individual components [19][26] This summary encapsulates the key insights from the Sangoma conference, highlighting the company's strategic direction, market opportunities, and operational improvements.