Crexendo(CXDO) - 2025 Q2 - Quarterly Results

Financial Highlights Crexendo reported strong financial performance for both Q2 and the first half of 2025, driven by significant growth in software solutions revenue and substantial increases in profitability metrics Second Quarter 2025 Financial Highlights Crexendo reported strong financial performance for the second quarter of 2025, with consolidated total revenue increasing by 13% year-over-year, primarily driven by a significant 31% growth in software solutions revenue. The company achieved substantial increases in GAAP net income, Non-GAAP net income, EBITDA, and Adjusted EBITDA Q2 2025 Key Financial Metrics | Metric | Q2 2025 (in millions) | Q2 2024 (in millions) | Change (YoY) | | :-------------------------- | :-------------------- | :-------------------- | :----------- | | Total Revenue | $16.6 | $14.7 | +13% | | Service Revenue | $8.4 | $8.1 | +4% | | Software Solutions Revenue | $7.0 | $5.3 | +31% | | Product Revenue | $1.2 | $1.3 | -7% | | Operating Expenses | $15.4 | $14.1 | +10% | | Net Income (GAAP) | $1.2 | $0.6 | +100% | | Basic/Diluted EPS (GAAP) | $0.04 | $0.02 | +100% | | Non-GAAP Net Income | $2.9 | $2.1 | +38% | | Basic EPS (Non-GAAP) | $0.10 | $0.08 | +25% | | Diluted EPS (Non-GAAP) | $0.09 | $0.07 | +28.6% | | EBITDA | $2.0 | $1.4 | +43% | | Adjusted EBITDA | $2.8 | $2.2 | +27% | Six Months Ended June 30, 2025 Financial Highlights For the first six months of 2025, Crexendo maintained strong growth, with total revenue increasing by 13% year-over-year, largely propelled by a 32% rise in software solutions revenue. The company saw significant improvements in both GAAP and Non-GAAP profitability metrics, alongside a healthy increase in cash and cash equivalents H1 2025 Key Financial Metrics | Metric | H1 2025 (in millions) | H1 2024 (in millions) | Change (YoY) | | :-------------------------- | :-------------------- | :-------------------- | :----------- | | Total Revenue | $32.6 | $29.0 | +13% | | Service Revenue | $16.6 | $15.9 | +4% | | Software Solutions Revenue | $13.8 | $10.5 | +32% | | Product Revenue | $2.2 | $2.6 | -15% | | Operating Expenses | $30.4 | $27.9 | +9% | | Net Income (GAAP) | $2.4 | $1.0 | +140% | | Basic EPS (GAAP) | $0.08 | $0.04 | +100% | | Diluted EPS (GAAP) | $0.08 | $0.03 | +166.7% | | Non-GAAP Net Income | $5.5 | $4.1 | +34% | | Basic EPS (Non-GAAP) | $0.19 | $0.15 | +26.7% | | Diluted EPS (Non-GAAP) | $0.18 | $0.14 | +28.6% | | EBITDA | $3.9 | $2.7 | +44% | | Adjusted EBITDA | $5.5 | $4.3 | +29% | - Cash and Cash Equivalents increased to $23.5 million at June 30, 2025, from $18.2 million at December 31, 2024[13] - Cash provided by operating activities for the six months ended June 30, 2025, was $2.5 million, consistent with the prior year. Cash provided by financing activities significantly increased to $2.7 million from $0.8 million[14] Company Overview and Strategy Crexendo is a leading cloud communication software provider, focused on profitable growth through strategic initiatives like OCI expansion, cost discipline, and AI integration, serving over six million global users About Crexendo Crexendo, Inc. is an award-winning software technology company specializing in cloud communication platforms and unified communications as a service (UCaaS), including voice, video, contact center, and managed IT services for businesses. Its software solutions serve over six million end users globally through a network of subscribers and direct retail offerings - Crexendo is an award-winning software technology company and a premier provider of cloud communication platform and services, video collaboration, and managed IT services[1][18] - Core offerings include cloud communication platform software and Unified Communications as a Service (UCaaS) offerings such as voice, video, contact center, and managed IT services[18] - The company's cloud communications software solutions support over six million end users globally through an extensive network of over 235 cloud communication platform software subscribers and direct retail offerings[19] Management Commentary and Strategic Outlook CEO Jeff Korn emphasized Crexendo's continued momentum and focus on profitable growth, highlighting the software solutions segment as a strategic moat. The company achieved its eighth consecutive quarter of GAAP profitability and 27th consecutive quarter of Non-GAAP net income. Strategic priorities include expanding Oracle Cloud Infrastructure (OCI) presence, maintaining cost discipline, accelerating telecom services revenue, and pursuing accretive acquisitions, with a focus on embracing AI applications - CEO Jeff Korn stated that the strong second quarter performance underscores continued momentum and a laser-like focus on profitable growth, with software solutions segment growth being a strategic moat[15] - The company achieved its eighth consecutive quarter of GAAP profitability and 27th consecutive quarter of Non-GAAP net income[15] - Strategic priorities include closing international data centers, expanding Oracle Cloud Infrastructure (OCI) presence, maintaining cost discipline, accelerating telecom services revenue through profitable sales initiatives, and reviewing strategic, accretive acquisitions. The company also plans to advance its software platform and embrace AI applications[15] Consolidated Financial Statements The consolidated financial statements reflect Crexendo's strong asset growth, robust revenue and net income increases, and improved cash flow from financing activities for Q2 and H1 2025 Condensed Consolidated Balance Sheets As of June 30, 2025, Crexendo's total assets increased to $71.36 million from $64.94 million at December 31, 2024, primarily driven by a significant rise in cash and cash equivalents and trade receivables. Total liabilities slightly decreased, contributing to a notable increase in total stockholders' equity Condensed Consolidated Balance Sheets (in thousands) | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | Change | | :-------------------------------- | :----------------------------- | :------------------------------- | :----- | | Total Assets | $71,363 | $64,938 | +$6,425 | | Cash and cash equivalents | $23,450 | $18,193 | +$5,257 | | Trade receivables, net | $5,620 | $4,352 | +$1,268 | | Total Liabilities | $13,062 | $13,525 | -$463 | | Total Stockholders' Equity | $58,301 | $51,413 | +$6,888 | Condensed Consolidated Statements of Operations Crexendo demonstrated robust revenue growth for both the second quarter and the six months ended June 30, 2025, largely fueled by its software solutions segment. This strong top-line performance translated into substantial increases in GAAP net income and earnings per share across both periods Q2 2025 Condensed Consolidated Statements of Operations (in thousands) | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Change (YoY) | | :-------------------------- | :---------------------------------------------- | :---------------------------------------------- | :----------- | | Total Revenue | $16,552 | $14,685 | +13% | | Software solutions revenue | $6,975 | $5,325 | +31% | | Total operating expenses | $15,449 | $14,105 | +10% | | Net income/(loss) | $1,232 | $588 | +109.5% | | Basic EPS | $0.04 | $0.02 | +100% | | Diluted EPS | $0.04 | $0.02 | +100% | H1 2025 Condensed Consolidated Statements of Operations (in thousands) | Metric | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | Change (YoY) | | :-------------------------- | :-------------------------------------------- | :-------------------------------------------- | :----------- | | Total Revenue | $32,609 | $28,971 | +13% | | Software solutions revenue | $13,843 | $10,471 | +32% | | Total operating expenses | $30,356 | $27,908 | +9% | | Net income/(loss) | $2,403 | $1,022 | +135.1% | | Basic EPS | $0.08 | $0.04 | +100% | | Diluted EPS | $0.08 | $0.03 | +166.7% | Condensed Consolidated Statements of Cash Flows For the six months ended June 30, 2025, net cash provided by operating activities remained stable year-over-year. However, cash provided by financing activities saw a substantial increase, primarily due to proceeds from the exercise of options, resulting in a significant overall net increase in cash and cash equivalents H1 2025 Condensed Consolidated Statements of Cash Flows (in thousands) | Metric | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | Change (YoY) | | :------------------------------------------ | :-------------------------------------------- | :-------------------------------------------- | :----------- | | Net cash provided by operating activities | $2,533 | $2,486 | +1.9% | | Net cash used for investing activities | $(18) | $0 | N/A | | Net cash provided by financing activities | $2,696 | $778 | +246.5% | | Net increase in cash and cash equivalents | $5,257 | $3,264 | +61.1% | | Cash and cash equivalents at period end | $23,450 | $13,611 | +72.3% | Non-GAAP Financial Measures and Reconciliations This section details Crexendo's use of Non-GAAP financial measures, including reconciliations for Non-GAAP net income, EBITDA, and Adjusted EBITDA, highlighting their purpose and inherent limitations Use of Non-GAAP Financial Measures Crexendo utilizes Non-GAAP net income and Adjusted EBITDA as supplemental measures to assess operating performance, making adjustments for items such as share-based compensation, acquisition-related expenses, and amortization of intangibles. The company acknowledges that these non-GAAP measures have limitations, including not reflecting cash expenditures, working capital changes, interest, taxes, or asset replacements, and may not be comparable across different companies - Non-GAAP net income and Adjusted EBITDA are used as supplemental measures to evaluate operating performance, adjusting for share-based compensation, acquisition expenses, changes in fair value of contingent consideration, amortization of intangibles, and goodwill/long-lived asset impairment[32] - EBITDA is defined as U.S. GAAP net income/(loss) before interest expense, interest income and other expense/(income), gain/(loss) on sale of property and equipment, goodwill/long-lived asset impairments, provision/(benefit) for income taxes, and depreciation and amortization[32] - Limitations of Non-GAAP measures include not reflecting cash expenditures, working capital needs, interest/tax payments, cash requirements for asset replacements, and potential inconsistencies in calculation compared to other companies[33][38] Reconciliation of Non-GAAP Net Income Non-GAAP net income for Q2 2025 was $2.86 million ($0.10 basic EPS), a 34% increase from Q2 2024. For the six months ended June 30, 2025, Non-GAAP net income was $5.53 million ($0.19 basic EPS), up 36.1% year-over-year, primarily adjusted for share-based compensation and amortization of intangible assets Q2 2025 Reconciliation of Non-GAAP Net Income (in thousands) | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Change (YoY) | | :------------------------------------ | :---------------------------------------------- | :---------------------------------------------- | :----------- | | U.S. GAAP net income/(loss) | $1,232 | $588 | +109.5% | | Share-based compensation and related taxes | $825 | $788 | +4.7% | | Amortization of intangible assets | $801 | $758 | +5.7% | | Non-GAAP net income | $2,858 | $2,134 | +34.0% | | Non-GAAP basic EPS | $0.10 | $0.08 | +25.0% | | Non-GAAP diluted EPS | $0.09 | $0.07 | +28.6% | H1 2025 Reconciliation of Non-GAAP Net Income (in thousands) | Metric | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | Change (YoY) | | :------------------------------------ | :-------------------------------------------- | :-------------------------------------------- | :----------- | | U.S. GAAP net income/(loss) | $2,403 | $1,022 | +135.1% | | Share-based compensation and related taxes | $1,623 | $1,526 | +6.4% | | Amortization of intangible assets | $1,507 | $1,518 | -0.7% | | Non-GAAP net income | $5,533 | $4,066 | +36.1% | | Non-GAAP basic EPS | $0.19 | $0.15 | +26.7% | | Non-GAAP diluted EPS | $0.18 | $0.14 | +28.6% | Reconciliation of EBITDA and Adjusted EBITDA EBITDA for Q2 2025 increased to $1.96 million from $1.42 million in Q2 2024, while Adjusted EBITDA rose to $2.78 million from $2.20 million. For the six months, EBITDA grew to $3.88 million (from $2.74 million) and Adjusted EBITDA reached $5.50 million (from $4.27 million), with share-based compensation being a primary adjustment Q2 2025 Reconciliation of EBITDA and Adjusted EBITDA (in thousands) | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Change (YoY) | | :-------------------------- | :---------------------------------------------- | :---------------------------------------------- | :----------- | | U.S. GAAP net income/(loss) | $1,232 | $588 | +109.5% | | EBITDA | $1,959 | $1,416 | +38.3% | | Adjusted EBITDA | $2,784 | $2,204 | +26.3% | H1 2025 Reconciliation of EBITDA and Adjusted EBITDA (in thousands) | Metric | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | Change (YoY) | | :-------------------------- | :-------------------------------------------- | :-------------------------------------------- | :----------- | | U.S. GAAP net income/(loss) | $2,403 | $1,022 | +135.1% | | EBITDA | $3,880 | $2,739 | +41.7% | | Adjusted EBITDA | $5,503 | $4,265 | +29.0% | Supplemental Information This section provides details on the Q2 2025 earnings conference call, the company's safe harbor statement regarding forward-looking information, and key contact details Conference Call Details Crexendo management hosted a conference call on August 5, 2025, to discuss the second quarter results, featuring CEO Jeff Korn, CFO Ron Vincent, and President/COO Doug Gaylor. Replay access was provided for those unable to attend the live call - A conference call was held on August 5, 2025, at 4:30 PM Eastern time to discuss the results[16] - The call was hosted by CEO Jeff Korn, CFO Ron Vincent, and President and COO Doug Gaylor[16] - A replay of the call was available until August 12, 2025, with specific dial-in and passcode information provided[17] Safe Harbor Statement This section outlines the company's forward-looking statements, which are protected under the Private Securities Litigation Reform Act of 1995. It advises readers to refer to the company's SEC filings for detailed risk factors and clarifies that Crexendo is not obligated to update these statements unless required by law - The press release contains forward-looking statements, identified by words like "believe," "expect," "anticipate," and "estimate," which are protected under the Private Securities Litigation Reform Act of 1995[20] - Specific forward-looking statements include beliefs about continued momentum, software solutions growth as a strategic moat, business model strength, investment in infrastructure, execution of strategic priorities (e.g., OCI expansion, cost discipline, acquisitions, AI applications), and a robust cash position[20] - Readers are directed to the company's Form 10-K and quarterly Form 10-Qs filed with the SEC for a more detailed discussion of risk factors. The company undertakes no obligation to update these statements, except as required by law[21] Company Contact Contact information for Crexendo, Inc. is provided, specifically for Doug Gaylor, the President and Chief Operating Officer - Contact for Crexendo, Inc. is Doug Gaylor, President and Chief Operating Officer[22] - Contact details include phone: 602-732-7990 and email: dgaylor@crexendo.com[22]