Core Insights - Sangoma Technologies reported strong fiscal Q2 2026 results, with management indicating that performance was "right to plan" supported by robust bookings and sequential revenue growth [5] Financial Performance - Total revenue for the quarter was $51.5 million, reflecting a 1.2% sequential increase, with services accounting for 92% of total revenue [3][7] - Adjusted EBITDA was $8.3 million, representing 16% of revenue, consistent with the previous quarter [2][7] - Gross profit reached $38.2 million, with gross margin improving to 74%, up from 72% in Q1 and 68% year-over-year [2][7] - The company generated $10.1 million in net cash from operating activities, achieving a 122% conversion rate from adjusted EBITDA [1][7] - Free cash flow was reported at $8.0 million, or $0.24 per diluted share, showing sequential improvement [1][7] Strategic Initiatives - CEO Charles Salameh highlighted the early traction from the company's go-to-market strategy and investments aimed at growth, emphasizing improving bookings momentum and a focus on larger mid-market opportunities [4] - Management noted a significant increase in monthly recurring revenue (MRR) bookings, which grew 67% sequentially and 60% year-over-year [9] - The starting backlog for Q3 was up approximately 125% compared to the start of Q2, indicating stronger visibility into the second half of the year [10] Capital Management - Sangoma continued its capital return strategy, repurchasing approximately 196,000 shares in Q2 and retiring over 700,000 shares in total, while reducing total debt to $37.6 million [6][17] - The company ended Q2 with cash of $17.1 million, a 27% increase from June 30 [17] Guidance and Outlook - Sangoma tightened its fiscal 2026 guidance, now expecting revenue between $205 million and $208 million, with an adjusted EBITDA margin of 17% to 18% [21][18] - Management anticipates returning to year-over-year organic growth after adjusting for the divestiture of VoIP Supply, which contributed $6.4 million in revenue [18] Market Opportunities - The company is exploring M&A opportunities across various sizes and categories, focusing on adding value to its platform while maintaining discipline and balance sheet flexibility [19]

Core Insights - Sangoma Technologies Corporation reported a quarterly loss of $0.06 per share, matching the Zacks Consensus Estimate, with a year-over-year comparison also showing a loss of $0.06 per share, indicating an earnings surprise of -200.00% [1] - The company generated revenues of $51.45 million for the quarter ended December 2025, slightly exceeding the Zacks Consensus Estimate by 0.49%, but down from $59.11 million in the same quarter last year [2] - The stock has underperformed the market, losing approximately 3.3% year-to-date compared to the S&P 500's gain of 1.1% [3] Earnings Outlook - The future performance of Sangoma Technologies Corporation's stock will largely depend on management's commentary during the earnings call and the revisions of earnings estimates [3][4] - The current consensus EPS estimate for the upcoming quarter is $0.08, with expected revenues of $51.7 million, and breakeven projected on revenues of $206.1 million for the current fiscal year [7] Industry Context - The Internet - Software industry, to which Sangoma belongs, is currently ranked in the top 39% of over 250 Zacks industries, suggesting a favorable outlook compared to the bottom 50% [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5]

Financial Data and Key Metrics Changes - Revenue for Q2 2026 was $51.5 million, reflecting a sequential growth of 1.2% and a 2% decrease year-over-year on a like-for-like basis after excluding $6.4 million from the divested VoIP Supply [21] - Adjusted EBITDA was $8.3 million, maintaining a margin of 16%, with a strong conversion rate of adjusted EBITDA to operating cash flow at over 120% [6][18] - Free cash flow improved to $8 million, or $0.24 per diluted share, with a total debt reduction to $37.6 million from $60.4 million year-over-year [19][20] Business Line Data and Key Metrics Changes - Service revenue, which constitutes 92% of total revenue, grew 1% sequentially, driven by higher cloud services revenue [21] - Monthly Recurring Revenue (MRR) bookings increased significantly, up 67% sequentially and 60% year-over-year, indicating strong momentum in the mid-market strategy [7][13] - The churn rate improved to just under 1%, reflecting stability in the recurring revenue base [7][21] Market Data and Key Metrics Changes - The starting backlog for Q3 is up approximately 125% compared to the start of Q2, providing strong visibility into the second half of the year [18] - The company is seeing increased engagement with larger, more complex mid-market opportunities, which is expected to drive future growth [8][10] Company Strategy and Development Direction - The company is focusing on scaling its go-to-market engine, investing approximately $2 million in incremental SG&A to accelerate pipeline development and customer acquisitions [9][10] - The strategy emphasizes integrated solutions and fewer vendors, aligning with evolving customer expectations for dependable service in industry-specific contexts [10][11] - The company is positioned to pursue both organic growth and selective M&A opportunities, leveraging its strong balance sheet and operational discipline [10][20] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the trajectory of the business, highlighting the effectiveness of the go-to-market execution and the quality of the pipeline [13][18] - The company anticipates returning to year-over-year organic growth in Q3 and Q4, excluding the impact of the VoIP Supply divestiture [21][54] - Management is focused on reducing churn further, with a target of 0.85% [47][48] Other Important Information - The gross profit for Q2 was $38.2 million, with an improved gross margin of 74% compared to 72% in Q1 and 68% in the prior year [21] - The company repurchased approximately 196,000 shares during the quarter, reflecting confidence in long-term value [19] Q&A Session Summary Question: What are the key drivers behind the 67% quarter-over-quarter growth in MRR bookings? - Management attributed the growth to larger strategic deals and a healthy partner program that is facilitating the acquisition of larger clients [24][25] Question: Is the 67% growth sustainable, or is it a special quarter? - Management indicated that the growth is part of a broader trend as the company transitions from a transformational phase to a growth phase, with expectations for continued growth in bookings [26][28] Question: Can you elaborate on the wholesale activity and its potential for growth? - Management discussed the wholesale channel's potential to monetize large ecosystems, emphasizing the integration of services for carriers and healthcare organizations [29][30] Question: How is the partner ecosystem performing in terms of bookings growth? - Management noted that the majority of revenue is partner-driven, with a focus on strategic partners that are effectively selling integrated solutions [68] Question: What is the outlook for the on-prem component of the pipeline? - Management reported strong momentum in the on-prem business, particularly in small to medium-sized businesses, with expectations for continued growth [71][72] Question: How does the company plan to convert bookings to revenue? - Management explained that larger deals take time to roll out, but they have established processes to ensure efficient execution and revenue recognition [75][76]

Financial Data and Key Metrics Changes - Revenue for Q2 2026 was $51.5 million, reflecting a sequential growth of 1.2% and a 2% decrease year-over-year on a like-for-like basis after excluding $6.4 million from the divested VoIP Supply [21] - Adjusted EBITDA was $8.3 million, maintaining a margin of 16%, with a strong conversion rate of adjusted EBITDA to operating cash flow at over 120% [6][18] - Free cash flow improved sequentially to $8 million, or $0.24 per diluted share, with a total debt reduction to $37.6 million from $60.4 million a year ago [19][20] Business Line Data and Key Metrics Changes - Service revenue, which constitutes 92% of total revenue, grew 1% sequentially, driven by higher cloud services revenue [21] - Monthly Recurring Revenue (MRR) bookings grew significantly, up 67% sequentially and 60% year-over-year, indicating strong momentum in the mid-market strategy [7][13] - The churn rate improved to just under 1%, reflecting stability in the recurring revenue base [7][21] Market Data and Key Metrics Changes - The starting backlog for Q3 is up approximately 125% compared to the start of Q2, providing strong visibility into the second half of the year [18] - The company is seeing increased engagement with larger, more complex mid-market opportunities, which is expected to lead to higher long-term value and stronger recurring revenue [8][10] Company Strategy and Development Direction - The company is focusing on scaling its go-to-market engine and investing in pipeline development, customer acquisitions, and partner enablement [9][10] - There is a strategic shift towards fewer vendors and more integrated solutions, with an emphasis on serving the mid-market [10][11] - The company is committed to maintaining a balanced approach to capital allocation, reducing debt, and pursuing selective M&A opportunities aligned with its strategy [9][20] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the trajectory of the business, highlighting the effectiveness of the go-to-market execution and the quality of the pipeline [13][18] - The company anticipates returning to year-over-year organic growth in Q3 and Q4, excluding the impact of the VoIP Supply divestiture [21][54] - Management is focused on reducing churn and enhancing customer retention as part of its revenue strategy [48] Other Important Information - The company has committed approximately $2 million in incremental SG&A to accelerate growth initiatives [9] - The gross margin improved to 74%, up from 72% in Q1 and 68% in the prior year, indicating a favorable revenue mix [21] Q&A Session Summary Question: What are the key drivers behind the 67% quarter-over-quarter growth in MRR bookings? - Management attributed the growth to larger strategic deals and a healthy partner program that is effectively targeting larger logos [24][25] Question: Is the 67% growth sustainable, or is it a special quarter? - Management indicated that the growth is part of a transition into a growth phase, with expectations for continued growth in the booking pipeline [26][28] Question: Can you elaborate on the wholesale activity and its potential for growth? - Management discussed the wholesale channel's role in monetizing large ecosystems, emphasizing the integration of services for larger clients [29][30] Question: How is the partner ecosystem performing in terms of bookings growth? - Management noted that the majority of revenue is partner-driven, with a focus on strategic partners and the effectiveness of bundled solutions [68] Question: What is the outlook for the on-prem component of the pipeline? - Management reported strong momentum in the on-prem business, particularly in small to medium-sized businesses, with expectations for continued growth [71][72] Question: How does the company plan to convert bookings to revenue? - Management explained that larger deals take time to roll out, but they have established a disciplined project management process to ensure timely revenue recognition [75][76]

Financial Data and Key Metrics Changes - Revenue for Q2 2026 was $51.5 million, reflecting a sequential growth of 1.2% and a service revenue growth of 1% [5][23] - Adjusted EBITDA was $8.3 million with a margin of 16%, and free cash flow improved to $8 million, or $0.24 per diluted share [6][21] - Gross profit reached $38.2 million, with a gross margin improvement to 74% compared to 72% in Q1 and 68% in the prior year [23][24] Business Line Data and Key Metrics Changes - Monthly Recurring Revenue (MRR) bookings grew significantly, up 67% sequentially and 60% year-over-year, indicating strong momentum in the mid-market strategy [7][27] - The company saw a sequential improvement in churn rate, with blended churn holding just under 1%, reflecting stability in the recurring revenue base [8][50] Market Data and Key Metrics Changes - The starting backlog for Q3 is up approximately 125% compared to the start of Q2, providing strong visibility into the second half of the year [20] - The wholesale channel is gaining traction, with a notable contract for a nationwide cloud voice and messaging solution, contributing to a 10% increase in trunking solutions revenue [18][34] Company Strategy and Development Direction - The company is focusing on scaling its go-to-market engine, investing approximately $2 million in incremental SG&A to accelerate pipeline development and customer acquisitions [10][12] - The strategic priority is to pursue larger, integrated solutions for mid-market customers, reflecting a shift in customer buying behavior towards fewer vendors and more comprehensive solutions [11][12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the trajectory of the go-to-market engine, emphasizing the importance of larger strategic deals and the effectiveness of the partner ecosystem [14][20] - The company anticipates continued growth in bookings and revenue, with a tightened guidance for fiscal 2026 expecting revenue between $205 million and $208 million [25][57] Other Important Information - The company repurchased approximately 196,000 shares during Q2, reflecting confidence in long-term business value [21] - Total debt was reduced to $37.6 million from $60.4 million in the previous year, indicating a commitment to deleveraging [22] Q&A Session Summary Question: What are the key drivers behind the 67% quarter-over-quarter growth in MRR bookings? - The growth is primarily tied to larger strategic deals and a healthy new partner program that has facilitated the acquisition of larger clients [27][28] Question: Is the 67% growth sustainable, or is it a special quarter? - The company expects continued growth as it has transitioned from a transformational phase to a growth phase, with a focus on larger deals [29][30] Question: Can you elaborate on the wholesale activity and its potential for growth? - The wholesale channel is being leveraged to monetize large ecosystems, with significant opportunities in healthcare and carrier partnerships [33][34] Question: How is the partner ecosystem performing in terms of bookings growth? - The majority of revenue is partner-driven, with new strategic partners contributing significantly to bookings growth [72][73] Question: What is the outlook for churn reduction? - Management aims to reduce churn further, targeting a rate of 0.85% through proactive customer engagement and upselling strategies [50][51]

Group 1 - The article discusses the typical scenario for value investors where a company engages in aggressive, debt-financed acquisitions, leading to market fatigue and a subsequent decline in stock value [1] - The focus is on identifying mispriced opportunities in the market, particularly in cyclical industries, energy, industrials, and under-followed mid-cap companies [1] - The investment strategy emphasizes cash flow durability, balance sheet strength, and the risks associated with different capital structures, aiming to find companies whose fundamentals are stabilizing or improving despite negative market sentiment [1]

Core Insights - Sangoma Technologies Corporation has been recognized by CRN for its leadership in the IT vendor space, specifically highlighting Susan Leveritt's role as Channel Chief and SVP of Global Sales [1] Company Recognition - Susan Leveritt has been included in the 2026 CRN Channel Chiefs list, which honors influential leaders in the IT channel [1] - This recognition underscores Sangoma's commitment to providing diverse Communications as a Service solutions, including on-premises, cloud-based, and hybrid options [1]

Core Viewpoint - Sangoma Technologies Corporation is set to release its second quarter fiscal year 2026 results on February 4, 2026, after market close [1] Group 1 - The company offers a range of Communications as a Service solutions, including on-premises, cloud-based, and hybrid options [1] - A conference call is scheduled for February 4, 2026, at 5:30 PM Eastern Time to discuss the results [1]

Core Points - The voting results for various nominees indicate a high level of support, with most nominees receiving over 99% of votes in favor [1][2] Group 1: Nominee Voting Results - Allan Brett received 19,628,628 votes for, representing 99.73% of the total votes, with 53,736 votes withheld, accounting for 0.27% [1] - Al Guarino also garnered 19,628,571 votes for, which is 99.73% of the total, with 53,739 votes withheld, or 0.27% [1] - Giovanna Moretti achieved 19,628,071 votes for, translating to 99.72%, with 54,293 votes withheld, representing 0.28% [1] - Charles Salameh received 19,628,963 votes for, which is 99.73%, with 53,402 votes withheld, or 0.27% [1] - Marc Lederman had 19,388,295 votes for, equating to 98.51%, with 294,069 votes withheld, representing 1.49% [1] Group 2: Additional Nominee Voting Results - April Walker received 19,625,679 votes for, which is 99.71%, with 56,685 votes withheld, accounting for 0.29% [2] - Norman A. Worthington, III garnered 19,619,187 votes for, representing 99.68%, with 63,177 votes withheld, or 0.32% [2]

Core Points - The Annual General and Special Meeting of the Shareholders of Sangoma Technology Corporation is being held, with CEO Charles Salameh leading the meeting [1] - Management team present includes CFO Larry Stock, COO Jeremy Webb, and Chief Legal and Administrative Officer Samantha Reburn [1] - The meeting acknowledges shareholders who attended and those who submitted proxies in advance [2] Meeting Procedures - Only registered shareholders or their proxies are entitled to participate in the business of the meeting, including voting and asking questions [3] - Questions can be submitted via instant messaging by registered shareholders or duly appointed proxy holders, with a focus on procedural matters or motions before the meeting [4]