Financial Data and Key Metrics Changes - The company reported a consolidated revenue increase of 24% to $3.5 million for Q1 2019 compared to $2.8 million in Q1 2018 [15] - Net income for Q1 2019 was $239,000 or $0.02 per diluted common share, a significant improvement from a net loss of $63,000 in Q1 2018 [9][18] - Cash provided by operating activities increased by $294,000 compared to a net loss of $127,000 in Q1 2018 [12] - EBITDA for Q1 was $263,000 compared to a loss of $44,000 for the same period last year [19] Business Line Data and Key Metrics Changes - Cloud Telecommunications segment service revenue increased by 28% to $2.8 million compared to $2.2 million in Q1 2018 [16] - Web Services segment revenue decreased by 21% to $178,000 compared to $225,000 in Q1 2018 [16] - Product revenue increased by 32% to $484,000 compared to $366,000 in Q1 2018 [17] Market Data and Key Metrics Changes - The company highlighted that approximately 70% of the SMB and small enterprise market is still using legacy premise-based equipment, indicating significant growth opportunities [26] - The U.S. market for the company's services is estimated to be over $100 billion, with a worldwide market close to $1 trillion [30][35] Company Strategy and Development Direction - The company aims to expand its white label program, allowing partners to sell the Crexendo platform under their own branding, which is expected to enhance revenue opportunities [27] - The focus remains on achieving GAAP profitability through careful management of expenses and strategic growth [28] - The company is positioned to capitalize on the challenges faced by competitors, which may lead to increased partnership opportunities [56][62] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to continue growing and providing shareholder value, citing strong sales bookings and a healthy backlog [24][37] - The competitive landscape is seen as favorable, with many competitors facing significant challenges, allowing the company to attract new partners [56][62] - Management emphasized the importance of maintaining a stable cost structure while pursuing organic growth [95] Other Important Information - The company reported a cash balance of $2.2 million as of March 31, 2019, up from $1.9 million at the end of 2018 [20] - The company has a low attrition rate of 2% or less per year, indicating strong customer retention [37] Q&A Session Summary Question: What is the dollar value of the served market that you're going after? - The worldwide market is estimated to be close to $1 trillion, with the U.S. market being over $100 billion [30] Question: Can you explain the difference between service and product revenue? - Product revenue comes from the sale of physical devices, while service revenue is primarily recurring from telecom services [46] Question: Do you see any seasonality in your business? - Management does not see significant seasonality, as the need for phone systems is consistent throughout the year [53] Question: How is the backlog calculated and recognized? - Backlog consists of contracted obligations, and revenue is recognized monthly as services are provided [66] Question: Are there any M&A opportunities being considered? - The company is cautious about M&A, focusing on organic growth and only pursuing opportunities that make financial sense [69][74]
Crexendo(CXDO) - 2019 Q1 - Earnings Call Transcript