Crexendo(US:CXDO)2020-08-11 05:39Financial Data and Key Metrics Changes - Consolidated revenue for Q2 2020 increased 12% to $4.1 million compared to $3.6 million in Q2 2019 [17] - Service revenue for Q2 2020 increased 15% to $3.6 million compared to $3.1 million in Q2 2019 [17] - Net income for Q2 2020 was $508,000 or $0.03 per share, an increase from $338,000 or $0.02 per share in Q2 2019 [20] - Non-GAAP net income for Q2 2020 was $660,000 or $0.04 per share, compared to $447,000 or $0.03 per share in the same period of the prior year [21] - EBITDA for Q2 2020 was $568,000, up from $362,000 in the same period of the prior year [21] Business Line Data and Key Metrics Changes - Cloud-telecommunications segment service revenue for Q2 2020 increased 16% to $3.5 million compared to $3 million in Q2 2019 [18] - Product revenue for Q2 2020 decreased 4% to $449,000 compared to $467,000 in Q2 2019 [19] - Web service segment revenue decreased by 18% or $29,000 in Q2 2020 [18] Market Data and Key Metrics Changes - The company reported a sales backlog increase of $750,000 to $27.4 million during the quarter [34][80] - Cash, cash equivalents, and restricted cash balance at June 30, 2020, was $5.1 million, up from $4.3 million at December 31, 2019 [27] Company Strategy and Development Direction - The company aims to grow both organically and through creative acquisitions following its NASDAQ up listing [13][14] - Management believes the digital transformation accelerated by COVID-19 positions the company well to capitalize on the demand for cloud services [9][16] - The focus remains on maintaining profitability while investing in marketing and R&D to enhance offerings [36][38] Management's Comments on Operating Environment and Future Outlook - Management noted a rebound in sales after an initial slowdown due to COVID-19, with increased urgency from customers needing cloud technology [30][33] - The company expects to continue its growth momentum and is optimistic about the second half of the year [41][66] - Management highlighted the importance of adapting to the new normal of remote workforces and the ongoing demand for communication infrastructure [40][66] Other Important Information - The company has a strong balance sheet and is focused on increasing shareholder value while managing costs effectively [16][35] - Management indicated that they are continuously enhancing their platform with new features and capabilities [38] Q&A Session Summary Question: Inquiry about operating expenses and COVID impact - Management indicated that operating expenses have been managed carefully, with some increases year-over-year but overall focus on cost control [45] Question: Changes in sales cycle due to demand return - Management noted a significant rebound in sales in May and June as businesses recognized the need for better infrastructure to support remote work [48] Question: Marketing spend and ROI expectations - Management expressed confidence that increased marketing efforts could lead to higher revenue growth, aiming to push service revenue growth into the low 20% range [51][53] Question: Customer concentration and partner channel sales - Management acknowledged that while a few partners contribute significantly to sales, they are focused on improving performance across all partners [58] Question: Churn rates before and during COVID - Management reported a slight increase in churn rates during COVID but emphasized that they remain low historically [78] Question: Backlog status - The backlog increased by $750,000 to $27.4 million during the quarter [80] Question: Impact of promotions on gross margins - Management stated that promotions have not significantly impacted gross margins, as many are structured as deferred payments [86] Question: Acquisition strategy and market landscape - Management indicated that they are seeing more acquisition opportunities as smaller companies seek to combine with larger firms for stability [70][96]