Crexendo(US:CXDO)2020-11-11 02:21Financial Data and Key Metrics Changes - Consolidated revenue for Q3 2020 increased 15% to $4.1 million compared to $3.6 million in Q3 2019 [13] - Service revenue for Q3 2020 increased 12% to $3.7 million compared to $3.3 million in Q3 2019 [13] - Net income for Q3 2020 was $131,000 or $0.01 per share, down from $334,000 or $0.02 per share in Q3 2019 [15] - Gross margin for Q3 2020 decreased to 70% from 72% in Q3 2019 [15] - Consolidated operating expenses for Q3 2020 increased 22% to $4 million compared to $3.3 million in Q3 2019 [15] Business Line Data and Key Metrics Changes - Cloud Telecommunications segment service revenue for Q3 2020 increased 14% to $3.5 million compared to $3.1 million in Q3 2019 [14] - Web Service segment service revenue for Q3 2020 decreased 19% to $130,000 compared to $160,000 in Q3 2019 [14] - Product revenue for Q3 2020 increased 43% to $489,000 compared to $343,000 in Q3 2019 [14] Market Data and Key Metrics Changes - For the nine-month period, consolidated revenue increased 13% to $12.1 million compared to $10.7 million for the same period in 2019 [16] - Service revenue for the nine-month period increased 14% to $10.7 million compared to $9.4 million in the same period of 2019 [16] - Telecom backlog grew by $1 million to $28.3 million, indicating strong demand for cloud migration [24][45] Company Strategy and Development Direction - The company is focused on growth, both organic and through acquisitions, with a strong emphasis on increasing sales and marketing investments [12][26] - The successful uplisting to NASDAQ and capital raise have positioned the company to pursue accretive acquisitions [11][26] - The company aims to maintain profitability while expanding its footprint in the UCaaS industry [27] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the future, citing the ongoing digital transformation accelerated by the COVID-19 pandemic [22][26] - The company has seen a decrease in customer churn, returning to pre-COVID levels, which is a positive sign for future growth [34] - Management believes that businesses are now better prepared for potential future COVID waves, which may sustain sales momentum [41] Other Important Information - The company raised $11.7 million in cash through financing activities, enhancing its cash position to $15.5 million [19] - The company received the 2020 Internet Telephony Excellence Award, recognizing its remote work capabilities [25] Q&A Session Summary Question: How many companies did you end the quarter with and hiring plans for the next 12 months? - Management indicated that hiring is critical, with plans to add channel managers and salespeople to support growth [29] Question: Actions on the bar business and timeline for revenue growth? - Management noted that 70% of businesses have yet to migrate to the cloud, indicating significant growth potential [31] Question: Current churn levels and customer performance? - Churn rates have returned to pre-COVID levels, which is promising for future stability [34] Question: Current M&A environment and potential opportunities? - Management reported increased M&A discussions and opportunities, with hopes for announcements within six months [36] Question: Trends in gross margins and revenue linearity through the quarter? - Management noted that promotional offers impacted product gross margins but expect a return to normal levels soon [39] Question: Marketing initiatives to offset pandemic headwinds? - The company launched a new website and initiated paid search and social media campaigns to drive lead generation [42]