Crexendo(US:CXDO)2023-05-13 23:22Financial Data and Key Metrics Changes - Total revenue for Q1 2023 increased by 53% to $12.5 million compared to $8.2 million in Q1 2022, with the Allegiant acquisition contributing $3.1 million to this increase [12][40] - Organic revenue increased by $1.2 million, representing a 15% growth year-over-year [12] - Service revenue rose by 63% to $7.2 million, with Allegiant contributing $2.6 million [12] - Gross margins for telecom services were 57%, while overall gross margin was 59%, up from 67% in the prior year [13] - EBITDA loss decreased to $666,000 from $774,000 year-over-year, while adjusted EBITDA increased to $749,000 from $302,000 [14][40] - The company reported a net loss of $1.6 million for Q1 2023, compared to a net loss of $1.2 million in Q1 2022 [40] Business Line Data and Key Metrics Changes - Software Solutions segment revenue increased by 26% to $4.1 million, with organic growth contributing significantly [39] - Product revenue surged by 149% to $1.2 million, with Allegiant contributing $526,000 [39] - Telecom Services margins declined to 57% due to lower-margin contributions from Allegiant, but margins without Allegiant increased from 68% to 69% [19] Market Data and Key Metrics Changes - The company surpassed 3 million users on its platform, aiming to double the 1.7 million users from June 2021 by the end of Q2 2023 [18] - The backlog increased by 11% to $47.86 million, excluding Allegiant's backlog [83] Company Strategy and Development Direction - The company is focused on integrating acquisitions and optimizing operations to drive organic growth and improve profitability [9][10] - A hiring freeze has been implemented, with restrictions on discretionary spending to maintain financial stability amid economic uncertainties [34][52] - The integration of artificial intelligence into operations is underway to enhance efficiency and customer experience [11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's growth trajectory despite economic headwinds, noting that recessionary conditions could benefit the UCaaS industry as businesses seek cost-cutting solutions [43] - The company anticipates significant cost savings and operational efficiencies from ongoing integration efforts over the next three quarters [10][43] - Management remains focused on improving margins and driving shareholder value, with expectations for substantial long-term profitability [37] Other Important Information - The company is in the process of selling its corporate office in Tempe, which is expected to generate approximately $2 million in cash [36][53] - The company has received multiple awards for its technology, enhancing its reputation in the market [45] Q&A Session Summary Question: What is the outlook for the Software Solutions business? - Management indicated that the business is expected to grow from Q1 to Q2, with a mix of perpetual licenses and subscriptions driving revenue [50] Question: How will the hiring freeze affect growth? - Management stated that the hiring freeze is precautionary and that the current staff is sufficient to handle growth [79] Question: What is the current subscriber count and growth drivers? - The company reported over 3 million end users, with growth driven by new licensees and upgrades from existing ones [85] Question: What is the backlog for this quarter? - The backlog increased to $47.86 million, up 11% from the previous year, excluding Allegiant's backlog [83] Question: Have there been migrations from Avaya? - Management confirmed that there has been interest from Avaya customers, particularly due to challenges faced by Avaya [84]