Crexendo(CXDO) - 2024 Q3 - Quarterly Report

Revenue Performance - Total revenue for the three months ended September 30, 2024, was $15,627,000, representing a 13$13,874,000 in the same period of 2023[149] - Total revenue for the nine months ended September 30, 2024, was $44,598,000, a 14$39,035,000 in the same period of 2023[152] - Service revenue increased by $436,000, software solutions revenue increased by$1,169,000, and product revenue increased by $148,000 for the three months ended September 30, 2024[149] - Software solutions revenue for the three months ended September 30, 2024, was$5,860,000, compared to $4,691,000 in the same period of 2023[149] - Cloud telecommunications service revenue for the three months ended September 30, 2024, was$7,953, an increase of 6% from $7,517 in 2023[165] - Product revenue for the three months ended September 30, 2024, was$1,814, representing a 9% increase from $1,666 in 2023[166] - Service revenue for the nine months ended September 30, 2024, was$23,865, an increase of $1,882 or 9$21,983 in the same period of 2023[174] - Software solutions revenue for the nine months ended September 30, 2024, was $16,331,000, a 28$12,729,000 in the same period of 2023[195] Income and Expenses - The company reported a net income of $148,000 for the three months ended September 30, 2024, down from$1,704,000 in the same period of 2023[149] - Income/(loss) before income tax decreased by 89% to $194,000 for the three months ended September 30, 2024, compared to$1,737,000 in the same period of 2023[150] - The income tax provision for the three months ended September 30, 2024, was $(46,000), compared to$(33,000) in the same period of 2023, reflecting a 39% increase[151] - The income tax provision for the nine months ended September 30, 2024, was $(100), up from$(81) in 2023, reflecting a 23% increase[155] - Non-GAAP net income for the nine months ended September 30, 2024, was $5,736, compared to$5,067 in 2023, indicating a year-over-year increase of 13.2%[159] - Adjusted EBITDA for the nine months ended September 30, 2024, was $5,996, compared to$4,081 in 2023, reflecting a significant increase of 47%[161] Operating Expenses - The company experienced an increase in operating expenses of $1,982,000, primarily due to higher commission expenses and salaries[150] - Total operating expenses for the three months ended September 30, 2024, were$5,687,000, up from $4,400,000 in 2023, representing a 29$8,580, an increase of $1,013 or 13$7,567 in 2023[181] - General and administrative expenses decreased by $521 or 7$6,668 for the nine months ended September 30, 2024, compared to $7,189 in 2023[182] - Research and development expenses for the nine months ended September 30, 2024, were$661, a decrease of $246 or 27$907 in 2023[184] - Selling and marketing expenses for the three months ended September 30, 2024, were $2,976, an increase of$509 or 21% from $2,467 in 2023[170] - General and administrative expenses increased by 31$1,417,000 for the three months ended September 30, 2024, compared to $1,079,000 in 2023[192] - Research and development expenses rose by 40$1,339,000 for the three months ended September 30, 2024, compared to $959,000 in 2023[193] Cash Flow and Investments - As of September 30, 2024, the company had cash and cash equivalents of$15,451 million, up from $10,347 million as of December 31, 2023[203] - Net cash provided by operating activities for the nine months ended September 30, 2024, was$4,107 million, a significant increase of 363% compared to $887 million for the same period in 2023[204] - Net cash used in investing activities for the nine months ended September 30, 2024, was$0, compared to $3,792 million in proceeds from the sale of a corporate office building in the same period of 2023[207] - Net cash provided by financing activities for the nine months ended September 30, 2024, was$1,011 million, a turnaround from a net cash used of $2,324 million in the same period of 2023, representing a change of 144$2.0 million in cash, a $1.1 million promissory note, and 2,461,538 shares of common stock[211] - The outstanding balance of the related party note payable as of September 30, 2024, was$570 million, down from $843 million as of December 31, 2023[211] - The company entered into a consulting agreement with Steven G. Mihaylo, providing him with$14 million monthly for his services, totaling $168 million annually[212] Market Conditions - The company does not believe inflation has had a material effect on its financial condition or results of operations[216] - The company has not experienced significant foreign currency risk as its sales and operating expenses are predominantly denominated in U.S. dollars[214] Backlog - Backlog increased by 23$9,849, reaching $52,963 as of September 30, 2024, compared to$43,114 as of September 30, 2023[167] - The backlog increased by 20%, or $4,089, to$24,408,000 as of September 30, 2024, compared to $20,319,000 as of September 30, 2023[189]