Crexendo(CXDO) - 2024 Q2 - Quarterly Results

Financial Highlights Crexendo achieved significant financial growth in Q2 and H1 2024, marked by strong revenue increases, a turnaround to net income, and improved cash position Financial Results for the Second Quarter of 2024 Q2 2024 saw Crexendo's total revenue increase by 16% to $14.7 million, driven by 35% growth in Software Solutions, achieving a net income of $0.6 million Q2 2024 Key Financial Metrics (YoY) | Metric | Q2 2024 | Q2 2023 | Change | | :--- | :--- | :--- | :--- | | Total Revenue | $14.7M | $12.7M | +16% | | Service Revenue | $8.1M | $7.3M | +10% | | Software Solutions Revenue | $5.3M | $3.9M | +35% | | Product Revenue | $1.3M | $1.4M | -10% | | Net Income/(Loss) | $0.6M | ($0.5M) | +220% | | EPS (basic & diluted) | $0.02 | ($0.02) | +200% | | Non-GAAP Net Income | $2.1M | $1.1M | +91% | | Adjusted EBITDA | $2.2M | $1.2M | +78% | Financial Results for the Six Months Ended June 30, 2024 For H1 2024, total revenue grew 15% to $29.0 million, with Software Solutions up 30%, resulting in a net income of $1.0 million and increased cash balance Six Months 2024 Key Financial Metrics (YoY) | Metric | H1 2024 | H1 2023 | Change | | :--- | :--- | :--- | :--- | | Total Revenue | $29.0M | $25.2M | +15% | | Service Revenue | $15.9M | $14.5M | +10% | | Software Solutions Revenue | $10.5M | $8.0M | +30% | | Net Income/(Loss) | $1.0M | ($2.1M) | N/A | | EPS (basic) | $0.04 | ($0.08) | N/A | | Non-GAAP Net Income | $4.0M | $1.7M | +135% | | Adjusted EBITDA | $4.2M | $2.0M | +110% | - Cash and cash equivalents increased to $13.6 million at June 30, 2024, from $10.3 million at December 31, 2023[6] - Cash provided by operating activities was $2.5 million for the first six months of 2024, compared to cash used of $(0.7) million in the prior-year period[7] Management Commentary Management attributes strong Q2 2024 results, exceeding expectations, to robust software performance, effective cost management, and increased cash for future growth - Q2 2024 results exceeded analyst expectations, with consolidated revenue growing 16% YoY[8] - The software division was a key performer, with 35% growth, indicating strong market demand for its platforms[8] - A remarkable turnaround from a net loss of $(0.5) million in Q2 2023 to a net income of $0.6 million in Q2 2024 is attributed to effective cost management and operational efficiencies implemented in late 2023[9] - The company's cash balance increased to $13.6 million, providing flexibility for investment and strengthening its market position[9] Consolidated Financial Statements This section presents Crexendo's financial position, operational performance, and cash flows, highlighting key metrics from the balance sheet, income statement, and cash flow statement Condensed Consolidated Balance Sheets As of June 30, 2024, total assets reached $59.6 million, driven by increased cash, with total liabilities stable at $11.5 million and equity rising to $48.2 million Balance Sheet Highlights (in thousands) | Account | June 30, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Cash and cash equivalents | $13,611 | $10,347 | | Total current assets | $21,885 | $16,949 | | Total Assets | $59,639 | $56,160 | | Total current liabilities | $10,441 | $10,261 | | Total Liabilities | $11,451 | $11,547 | | Total stockholders' equity | $48,188 | $44,613 | Condensed Consolidated Statements of Operations Q2 2024 total revenue increased 16% to $14.7 million, resulting in an operating income of $0.6 million and net income of $0.6 million, or $0.02 per share Statement of Operations Summary (in thousands, except per share data) | Metric | Q2 2024 | Q2 2023 | H1 2024 | H1 2023 | | :--- | :--- | :--- | :--- | :--- | | Total revenue | $14,685 | $12,670 | $28,971 | $25,161 | | Gain/(loss) from operations | $580 | $(517) | $1,063 | $(2,091) | | Net income/(loss) | $588 | $(545) | $1,022 | $(2,127) | | EPS (Basic) | $0.02 | $(0.02) | $0.04 | $(0.08) | | EPS (Diluted) | $0.02 | $(0.02) | $0.03 | $(0.08) | Condensed Consolidated Statements of Cash Flows For H1 2024, cash from operating activities was $2.5 million, leading to a net increase in cash of $3.3 million and an end-of-period balance of $13.6 million Cash Flow Summary for Six Months Ended June 30 (in thousands) | Activity | 2024 | 2023 | | :--- | :--- | :--- | | Net cash provided by/(used for) operating activities | $2,486 | $(673) | | Net cash used for investing activities | $0 | $(92) | | Net cash provided by/(used for) financing activities | $778 | $(486) | | Net increase/(decrease) in cash | $3,264 | $(1,275) | | Cash and cash equivalents at end of period | $13,611 | $4,200 | Supplemental and Non-GAAP Information This section details segment performance and reconciles GAAP to Non-GAAP financial measures, including Non-GAAP net income and Adjusted EBITDA, for a comprehensive view of operational results Supplemental Segment Financial Data Q2 2024 segment performance shows Cloud Telecommunications Services with $9.4 million revenue and $0.1 million operating income, and Software Solutions with $5.3 million revenue and $0.5 million operating income Segment Performance for Q2 2024 vs Q2 2023 (in thousands) | Segment | Revenue (Q2'24) | Revenue (Q2'23) | Operating Income/(Loss) (Q2'24) | Operating Income/(Loss) (Q2'23) | | :--- | :--- | :--- | :--- | :--- | | Cloud telecommunications services | $9,360 | $8,740 | $120 | $(207) | | Software solutions | $5,325 | $3,930 | $460 | $(310) | Reconciliation of Non-GAAP Financial Measures This section reconciles GAAP net income to Non-GAAP net income of $2.1 million and Adjusted EBITDA of $2.2 million for Q2 2024, adjusting for non-cash items - The company uses Non-GAAP measures like Non-GAAP net income and Adjusted EBITDA to evaluate business performance, excluding effects of share-based compensation, amortization, and acquisition-related expenses[20] Reconciliation of GAAP Net Income to Non-GAAP Net Income (Q2 2024, in thousands) | Metric | Amount | | :--- | :--- | | U.S. GAAP net income | $588 | | Share-based compensation | $784 | | Amortization of intangible assets | $758 | | Non-GAAP net income | $2,130 | Reconciliation of GAAP Net Income to Adjusted EBITDA (Q2 2024, in thousands) | Metric | Amount | | :--- | :--- | | U.S. GAAP net income | $588 | | Depreciation and amortization | $836 | | Interest & other expense/(income) | $(35) | | Income tax provision | $27 | | EBITDA | $1,416 | | Share-based compensation | $784 | | Adjusted EBITDA | $2,200 |