Crexendo, Inc. (CXDO) research, news, and more from GeoInvesting

Company description

Thu, 14 Jun 2018 13:08:52 GMT

Crexendo, Inc., a cloud services company, provides cloud telecommunications services, broadband Internet services, and other cloud business services for businesses in North America and internationally. It operates in two segments, Cloud Telecommunications and Web Services. The Cloud Telecommunications segment provides telecommunications services that transmit calls using IP or cloud technology, which converts voice signals into digital data packets for transmission over the Internet or cloud; and broadband Internet services, as well as engages in the sale and lease of cloud telecommunications equipment. This segment offers hardware and software, and unified communication solutions for businesses using IP or cloud technology over high-speed Internet connection through various devices and user interfaces, such as desktop phones, and mobile and desktop applications. The Web Services segment provides Website hosting, telecom installation, and professional services. The company was formerly known as iMergent, Inc. and changed its name to Crexendo, Inc. in May 2011. Crexendo, Inc. was founded in 1995 and is headquartered in Tempe, Arizona.

Research

Wed, 04 Mar 2026 18:33:17 GMT

Crexendo, Inc. (NASDAQ:CXDO) ($6.49; $216.5M market cap) announced Q4 and full-year 2025 results:

Q4 sales of $18.1 million vs. $16.2 million in the prior year, in line with analyst estimates of $18.1 million
Q4 2025 adjusted EPS: $0.09 vs. $0.06 in the prior year, above analyst estimates of $0.08
FY sales of $68.2 million vs. $60.8 million in the prior year, above analyst estimates of $68.2 million
FY 2025 adjusted EPS: $0.36 vs. $0.26 in the prior year, above analyst estimates of $0.35
Acquisition of Estech Systems, LLC (ESI) (see yesterday’s take on this development)

Management Commentary:

"I am extremely pleased with our 2025 performance and proud of the team that delivered on our commitments of profitable double digit organic growth. This was our tenth consecutive GAAP profitable quarter and our 29th consecutive Non-GAAP profitable quarter. When the team and I assumed leadership in 2023, the company was burning about $100,000 per month. Today, we are consistently cash flow positive and have expanded both profitability and EBITDA. Our platform has scaled meaningfully and underscores our product leadership, operational discipline, and partner-first strategy. Further we committed to a disciplined strategy of driving profitable organic growth while pursuing accretive acquisitions, and having successfully delivered on the organic component, our exciting announcement on the acquisition of ESI this week demonstrates how we will now accelerate that growth through strategic M&A."

Korn added "Customer service remains a core differentiator. We continue to lead the industry in G2 customer satisfaction rankings based on verified reviews. At the same time, we are aggressively advancing our AI strategy. Early feedback on CAIRO, our AI operator, has been highly encouraging, and we believe it has the potential to transform the SMB market by enabling small businesses to operate with enterprise-grade capabilities. Our innovation was recognized for the second consecutive year with the Generative AI Product of the Year award, along with additional G2 awards across Platform AI and Contact Center categories. We also launched our Marketplace, which we believe will accelerate partner deployment of certified solutions, shorten time to value, expand ecosystem monetization, and create incremental revenue share opportunities. I highlight these results not as a reflection of past success, but as evidence of consistent execution. Based on this track record, I am confident we will continue to deliver and believe our most significant opportunities remain ahead of us."

Crexendo, Inc. provides cloud-based communication software and services, offering unified communications, video conferencing, collaboration tools, and contact center solutions.

Research

Tue, 03 Mar 2026 15:31:23 GMT

Crexendo, Inc. (NASDAQ:CXDO) ($6.41; $196.6M market cap) announced it completed the acquisition of Estech Systems, LLC (ESI):

Crexendo acquired ESI for $35 million, including $27.3 million cash and $7.7 million common stock.
The acquisition is expected to be immediately accretive to revenue and EBITDA and improve earnings and cash flow.
ESI generated approximately $26 million in 2025 revenue and supports over 6,200 retail accounts and 75,000 seats.
Crexendo expects cost synergies from facilities consolidation, licensing optimization, infrastructure consolidation, and Oracle Cloud Infrastructure migration.
Crexendo expects revenue synergies from cross-selling, expanded channel reach, and platform expansion.

Management Commentary:

"This acquisition is exactly the type of transaction we have been talking about for years," said Jeff Korn, Chairman and Chief Executive Officer of Crexendo. "ESI is a best-in-class organization with exceptional people, strong engineering capabilities, and a long history of success serving customers on our NetSapiens platform. By incorporating ESI into Crexendo, we are combining our strong double-digit organic growth with an accretive acquisition from our deep ‘fishing pond' of licensees. The result is a stronger, more scalable company with expanded capabilities for our customers, partners, and shareholders. I could not be more ecstatic about how this acquisition will positively affect our future growth and success and am excited to welcome the ESI team to Crexendo."

"We are incredibly excited to join the Crexendo team," said George Platt, President & CEO of Estech Systems, LLC. "Crexendo has been a trusted partner for many years, and this transaction allows us to deliver even greater value to our customers by combining our sales, engineering, and customer support expertise with Crexendo's scale, platform innovation, and resources. Together, we are building a stronger organization that is well positioned to serve our customers for decades to come. I would also like to thank our Founder, Eric Suder, for the immeasurable impact he has made on ESI's employees, their families, our customers, and the community"

Our Quick Take:

Management hinted at M&A throughout the past few quarters, and they finally delivered. This acquisition will get them to around $93M in revenue. Additionally, management expects significant synergies that will have a significant impact on EBITDA margins over the next 12-24 months. We will reach out to management to be a guest on a Management Briefing Update Skull Session.

Crexendo, Inc. provides cloud-based communication software and services, offering unified communications, video conferencing, collaboration tools, and contact center solutions.

Research

Thu, 29 Jan 2026 18:12:15 GMT

Crexendo, Inc. (NASDAQ:CXDO) ($6.88; $211.4M market cap) announced a licensing and collaboration agreement with Altigen Communications, Inc. (OTCQB:ATGN) ...

Altigen will license Crexendo’s NetSapiens hosted cloud communications platform.
The arrangement supports over seven million users and enables Altigen to deliver solutions while Crexendo focuses on platform innovation.

Management Commentary:

"This licensing relationship expands the reach of our platform through a team with deep communications expertise," said Doug Gaylor, President and Chief Operating Officer of Crexendo. "Altigen has decades of real-world PBX and UCaaS expertise and a strong reputation for customer delivery. Their proven deployment and support capabilities complement our focus on platform innovation and creates a compelling solution for customers. By working together, we can ensure customers benefit from a powerful, modern cloud platform combined with proven deployment and support capabilities."

"Licensing Crexendo's platform allows us to sharpen our focus on delivering value to customers and partners," said Joe Hamblin, President and Chief Operating Officer of Altigen Technologies. "Crexendo's continued investment in its hosted platform gives us confidence we can deliver modern, scalable solutions to the market."

Our Quick Take:

Listen to the related PodClip recorded by Maj this morning, here or below.

Research

Wed, 06 Aug 2025 04:00:00 GMT

Crexendo, Inc. (NASDAQ:CXDO) ($5.81; $168.7M market cap) announced Q2 2025 results:

Q2 2025 sales of $16.6 million vs. $14.7 million in the prior year and slightly ahead of analyst estimates of $16.1 million
Q2 2025 adjusted EPS: $0.09 vs. $0.07 in the prior year and ahead of analyst estimates of $0.06
Cash balance of $23.5M at June 30, 2025
Continued OCI migration and international data center closures

"Our strong second quarter performance underscores our continued momentum and laser-like focus on profitable growth," said Jeff Korn, Crexendo Chief Executive Officer and Chairman of the Board. "We achieved a 13% year-over-year increase in total revenue to $16.6 million, driven by particularly impressive 31% growth in our software solutions segment that continues to be our strategic moat around our business. This marks our eighth consecutive quarter of GAAP profitability and 27th consecutive quarter of Non-GAAP net income. Our $1.2 million in net income and $2.8 million in adjusted EBITDA are clear indicators of the strength and scalability of our business model. These results are especially notable as we continue to invest in infrastructure and in the expansion of our products and services to secure long-term success."

Korn added, "We continue to execute on our strategic priorities such as closing our international data centers and expanding our Oracle Cloud Infrastructure (OCI) presence while maintaining cost discipline and expanding margins. With a robust cash position of $23.5 million and increased cash flow from both operations and financing, we are well-positioned to support continued growth. We remain focused on accelerating telecom services revenue through disciplined, profitable sales initiatives and a targeted review of strategic, accretive acquisitions. I remain highly enthusiastic about our trajectory and the opportunities ahead as we expand our footprint, advance our software platform, embrace AI applications, and continue to enhance long-term shareholder value.”

Crexendo, Inc. provides cloud-based communication software and services, offering unified communications, video conferencing, collaboration tools, and contact center solutions.

Research

Wed, 07 May 2025 13:58:09 GMT

Crexendo, Inc. (NASDAQ:CXDO) ($5.35; $149.3M market cap) announced Q1 2025 results:

Q1 sales of $16.1 million vs. $14.3 million in the prior year
Q1 EPS of $0.08 (non-GAAP) vs. $0.06 (non-GAAP) in the prior year

Management Commentary:

"Our exceptional first quarter results for 2025 demonstrate the strength of our strategy, the resilience of our model, and the extraordinary execution of our team," said Jeff Korn, Crexendo Chief Executive Officer and Chairman of the Board. "We grew total revenue by 12% year-over-year to $16.1 million, fueled by a 33% increase in software solutions revenue. We surpassed 6 million users on our platform during the quarter, with software solutions gross margins expanding to 78%, up 500 basis points from Q1 2024 and 1,000 basis points sequentially. These results underscore the scalability of our model and our disciplined focus on profitable growth."

"Our telecom services segment grew service revenue by 4%, although overall growth was impacted by a 22% decline in product revenue. We are strategically focused on accelerating telecom growth by leveraging our industry-leading customer service, working closely with both dealer partners and our direct sales teams. In addition, our transition to Oracle Cloud Infrastructure (OCI) remains on schedule, which we expect will further improve margins and reduce costs. With our expanding partner ecosystem, continued innovation, and targeted acquisition strategy, I remain highly confident in Crexendo's ability to deliver significant long-term shareholder value."

Crexendo, Inc. provides cloud-based communication software and services, offering unified communications, video conferencing, collaboration tools, and contact center solutions.

Research

Wed, 05 Mar 2025 20:43:56 GMT

Crexendo Inc. (NASDAQ:CXDO) ($5.77; $156.3M market cap), announced Q4 2024 results:

Sales of $16.2 million vs $14.2 million in the prior year; ahead of analyst estimates of $15.6 million
Company issued Non-GAAP EPS of $0.06 vs $0.06 in prior year and ahead of analyst EPS estimate of $0.05.

“We have substantial competitive advantages that we will continue to leverage to drive conversions to our platform and expand our market presence. Our relentless focus on innovation, customer service, and strategic growth is paying off, and I firmly believe the future has never been more exciting for Crexendo. We remain committed to investing in our technology, expanding our offerings, and delivering best-in-class solutions to our customers. I look forward to continued strong momentum as we build on our success in 2025 and beyond."

Crexendo, Inc. is an award-winning software technology company that is a premier provider of cloud communication platform and services, video collaboration and managed IT services tailored to businesses of all sizes.

Research

Tue, 12 Nov 2024 15:56:19 GMT

Crexendo Inc. (NASDAQ:CXDO) ($5.27; $142.8M market cap), announced that Akabis has selected Crexendo's NetSapiens Platform as its next-generation solution to replace their Microsoft Metaswitch platform following Microsoft's recent end-of-life (EOL) announcement for its Max-UC solution.

"Our NetSapiens Platform has quickly emerged as the top choice for service providers migrating from Metaswitch MaX UC, evidenced by Crexendo adding over 100,000 users each month. This remarkable growth is a testament to our focus on integrating AI at the core of our platform, enabling service providers to deliver exceptional cloud communications solutions to their clients. Together, we are set to redefine what is possible in telecommunications. As the third largest telecom software platform provider with the best technology and service in the industry we should be in a position to continue to add more and larger logos. The strength of our platform, people and our community are an unbeatable combination"

We feel this is significant in that it shows that CXDO is capturing UCaaS business abandoned by Microsoft.

Research

Thu, 07 Nov 2024 20:26:09 GMT

Crexendo Inc. (NASDAQ:CXDO) ($5.98; $159.7M market cap), announced Q3 2024 results:

Sales of $15.6 million vs $13.9 million in the prior year; ahead of analyst estimates of $15.1 million
Company issued Non-GAAP EPS of $0.06 vs $0.12 in prior year and ahead of analyst EPS estimate of $0.05. Our non-GAAP for last year was $0.07

"We recently concluded our most successful User Group Meeting (UGM), where the excitement was palpable. Our second codefest showcased impressive applications, particularly those leveraging AI, which our licensees can develop using our scalable, open APIs. Many of these applications will soon be available to all our licensees through our platform, enhancing our offerings and opening additional revenue-sharing opportunities. This is a very exciting time, with unprecedented interest in our software platform and strong demand for our phone services. I remain highly optimistic about our future growth and anticipate double-digit growth continuing through the fourth quarter and into 2025."

CXDO adjusted EPS has been hanging around 6 cents for some time. We would like to see EPS materially accelerate from this level. Three catalysts could help that occur:

The elimination of expenses from migrating the company’s legacy software platform offering to the NetSapiens’s platform, which should be completed soon.
Revenues from customers CXDO should be able to materialize due to Microsoft Corporation (NASDAQ:MSFT) offering a UCaaS solution.
Additional acquisitions

See our August 7, 2024 Management Briefing Skull Session with the company’s COO to learn more about these topics.

Research

Wed, 08 May 2024 14:42:09 GMT

Crexendo Inc. (NASDAQ:CXDO) ($4.65; $122.2M market cap), announced Q1 2024 results:

Sales of $14.3 million vs $12.5 million in the prior year; in line with estimates of $14.0 million
Company issued Non-GAAP EPS of $0.06 vs $0.02 in prior year and ahead of analyst EPS estimate of $0.05

“Our strong performance in the first quarter of 2024, coupled with the demand for our services positions us well for continued success. We are confident in our ability to sustain our growth momentum and capitalize on market opportunities, supported by our dedicated team and strong market positioning. I remain highly excited and enthusiastic about our future."

Surprisingly, the company also filed a shelf. Given the recent progress the company has made, we did not see this coming and we are somewhat perplexed by this decision. We had thought the company would make a few nip and tuck acquisitions that would not require them to raise capital. To be fair, on the Q2 conference call, management made the standard…” we won’t raise money at the current prices and will only do so for acquisitions…” statement:

Comments from conference call:

“The shelf is good for three years and gives us flexibility to determine when and if we use it and under what terms. We anticipate that if we use the shelf, it will be for future strategic investments, most likely in accretive acquisitions. It's just one more tool in our arsenal to effectively close deals that make sense.”

Research

Mon, 11 Mar 2024 15:18:41 GMT

Crexendo Inc. (NASDAQ:CXDO) ($5.99; $157.4M market cap) announced that Crexendo's Award Winning NetSapiens Platform has been chosen to power Reinvent's next generation white label UC&C (Unified Communications & Collaboration) offering to its community of reseller partners.

“We are pleased to have been selected to be the driving force behind Reinvent's Next-Gen UC&C services. We're not just providing tools; we're offering a transformative suite of resources that empowers reseller partners to navigate and excel in the dynamic and ever-changing world of cloud communications. This collaboration is a testament to our commitment to being at the forefront of innovation," added Jeff Korn, CEO of Crexendo, Inc. "The synergy between Crexendo and Reinvent is more than a collaboration; it is a shared commitment to shaping the future of communications. Together, we are architects of change, paving the way for reseller partners to survive and thrive in a market that demands adaptability and innovation."

Reinvent Telecom, a division of Saddleback Communications, operates a private-label communications platform that empowers its white-label wholesale and co-branded partners to transform their businesses into next-generation cloud-based communications service providers.

Research

Wed, 06 Mar 2024 19:10:15 GMT

Crexendo Inc. (NASDAQ:CXDO) ($1.75; $45.4M market cap), announced Q4 2023 results:

Sales of $14.2 million vs $11.4 million in the prior year ahead of estimates of $13.8 million
Company issued Non-GAAP EPS of $0.06 vs $0.09 in prior year and ahead of analyst EPS estimate of $0.04
Our non-GAAP EPS of $0.06 vs $0.03 in the prior year after adjusting for other income.

Overall, the earnings call was extremely bullish about maintaining and accelerating its growth:

“Looking ahead, we anticipate not only sustaining our double-digit organic growth, but also amplifying it through strategic acquisitions. The future is very, very bright for us. I, along with our dedicated team, I'm excited about the year ahead and our opportunities to continue our tremendous growth and success. We are committed to continual improvement and driving growth for our company, technological advancements for our customers and partners and value for all of our shareholders.”

Furthermore, management was very clear that they will make one or two accretive acquisitions in 2024.

Research

Tue, 13 Feb 2024 16:08:08 GMT

Crexendo Inc. (NASDAQ:CXDO) ($6.33; $164.7M market cap) announced it has entered into a strategic partnership agreement with TELCLOUD, a Communication Platform as a Service (CPaaS) Provider for Telecommunication Providers.

Together, they announced the launch of its new POTS (Plain old Telephone Service) Replacement platform powered by TELCLOUD.

“We're excited to introduce our new POTS Replacement powered by TELCLOUD to our community of over 220 platform partners., Local Exchange Carriers are currently imposing exorbitant price hikes on traditional dial tone, reaching up to a staggering 1000%, the market's appetite for a seamless and cost-effective alternative is growing exponentially. Our POTS Replacement offering emerges as a beacon of affordability and dependability, providing our partners with a strategic advantage in delivering advanced solutions to their clients."

Research

Tue, 19 Dec 2023 19:15:23 GMT

Crexendo Inc. (NASDAQ:CXDO) ($3.90; $101.5M market cap), a provider of cloud communications, UCaaS (Unified Communications as a Service) and other cloud business services announced rapid growth continues and that its cloud communication platform now supports over 4 million end users, up from 1.7 million in June 2021.

“We have seen a significant increase in the adoption of our offerings, and we only expect this trend to grow from here," said Crexendo CEO Jeff Korn. "We have continued to ramp up business development for new licensees as well as support for our growing community of licensees while also increasing the quality and capabilities of our platform. This very important metric, which follows our very strong third quarter earnings report, gives me substantial confidence in our strategic growth plan going into 2024. With the recent sale of our building and the subsequent elimination of debt on our balance sheet, the continued development of our platform, together with our strong organic growth as well as GAAP profitability, I believe our company is executing well on all fronts. We look forward to what the year ahead has in store, and we expect more of the same from a growth standpoint."

Research

Fri, 10 Nov 2023 17:42:28 GMT

Crexendo Inc. (NASDAQ:CXDO) ($1.75; $45.4M market cap), a provider of cloud communications, UCaaS (Unified Communications as a Service) and other cloud business services, announced Q3 2023 results:

Sales of $13.9 million vs $9.1 million in the prior year ahead of estimates of $12.65 million
Company issued Non-GAAP EPS of $0.12 vs $0.03 in prior year and well ahead of analyst EPS estimate of $0.02
Our non-GAAP EPS is $0.07 vs $0.03 in the prior year

“Our strong results continue to reinforce why we are the third largest, and fastest growing Unified communications as a service (UCaaS) platform in the industry. We work closely with our licensees to make certain the NetSapiens platform remains cutting edge and the best in the industry. We just completed our most successful User Group Meeting where we rolled out enhanced .07APIs, making third-party integration easier for customers. These integrations will help accommodate the needs of our customers and should also enable us to receive revenue sharing on approved software used by our licensees. We continue to see record demand and installations in our Telecommunication Services segment and expect that demand to continue. We will continue to invest in and improve our offerings and services. We will continue to work on selling larger opportunities and increasing organic sales while again starting to review accretive acquisitions which could further accelerate our growth. I am confident that our strong performance will continue, and I am very encouraged by our progress and extremely excited by our future."

The Q3 conference call was extremely bullish, echoing the sentiment in the press release. If there is one slight negative - management is still not ready to unequivocally state that the Q3 results are the new run rate for the company.

An interesting discussion occurred when Maj brought up on the call regarding the price that OOMA paid for its acquisition of 2600Hz on October 23, 2023 that worked out to be around 5x sales.

According to management, it appears the company that OOMA bought is a smaller and inferior business than CXDO’s cloud communication platform powered by its Netsapiens offering.. CXDO is currently trading at a P/S of around 1.

Maj Soueidan, Geoinvesting, LLC - Co-Founder

“I got a quick question and it's kind of on the acquisition front really. I'm just curious what you're seeing out there in terms of pricing of some of maybe some candidates you might be looking for and what areas you might be looking to kind of acquire companies into. And I noticed that Ooma recently made an acquisition here on October 25, they bought a company, I guess, called 2600Hz. I don't know much about the company, but it seems [they paid] like 5x revenue, which I thought was interesting [compared to] what you guys are trading at today. I was wondering if you could talk about that -- what they bought, I don't know, is there any kind of comparison to what you guys do?”

Jeffrey G. Korn, Crexendo, Inc. - Chief Executive Officer

“Well, let me answer your second question first. And there is a lot of a similarity in that they are a platform provider as are we. And obviously, I'm very excited that [they are] a platform provider with falling revenues and not nearly as fast growing as we are. We are the fastest-growing platform in the country, the third largest, which is feature-rich and best of breed. So if a falling revenue platform provider can get [ 4.5x ] revenue, it's obviously exciting to me.

Nonetheless, obviously, we're not sitting here licking our chops. We're here doing our best job every day to go ahead. But if that's a precursor of what our value would be, that would be very exciting. But at this point, we really don't know if it's one-off or that's what the value of the platform is. But again, our job here is to continue to make this company [better] every day, continue to improve the platform, continue to improve the revenues and continue to keep it the fastest growing. And that obviously will increase our value, no matter what outside values are.”

On organic growth:

“First, I'd like to start by highlighting the organic growth of our telecom services segment, which saw an impressive 11% increase year-over-year. And that growth was fueled by a record number of installations generated by our partner and direct channels. Similarly, our software solutions segment or platform sales demonstrated exceptional results with organic growth of 21% driven by new logos, as well as upgrades from our growing licensee community.”

Maj discussed this acquisition on the Twitter Space event he hosted with his analyst, Jan Svenda and cloud communication expert Joe Hamblin yesterday at 3PM EST. You can listen to the replay here.

Research

Fri, 11 Aug 2023 16:52:18 GMT

Sales of $12.7 million vs $8.8 million in the prior year ahead of estimates of $11.8 million
Non-GAAP EPS of $0.04 vs $0.02 in prior year and in line with analyst EPS estimate of $0.01

“Our diligent cost management efforts are translating to strong improvements in profitability, including a return to cash flow positivity in the quarter. We also recently finalized the terms of the sale of our property in Tempe, which effectively will remove almost all of our outstanding debt and enables us to build on our already-strong cash position with an additional $2 million added to our balance sheet."

“In the second quarter we saw a record number of installs in our Telecommunication Services segment, fueled by significant partner and agent sales contributions. We also had a strong performance internationally, which bodes well for future growth in this key area of focus. Our master dealer channel is continuing to perform nicely as we're seeing strong contributions from our resellers creating more enterprise sales opportunities. Looking ahead, we will continue to judiciously invest in delivering innovative features to drive greater customer satisfaction as well as demand from the largely underpenetrated UCaaS market. I am very excited by our results, and I am confident that our strong performance will continue."

Research

Wed, 10 May 2023 15:21:56 GMT

Crexendo Inc. (NASDAQ:CXDO) ($1.54; $39.5M market cap), a provider of cloud communications, UCaaS (Unified Communications as a Service) and other cloud business services, announced Q1 2023 results:

Sales of $12.5 million vs $8.2 million in the prior year ahead of estimates of $11.2 million
Non-GAAP EPS of $0.02 vs $0.02 in prior year and in line with analyst EPS estimate of $0.02

“We remain concentrated on successfully integrating the acquired companies and are leading new initiatives designed to drive even greater organic growth and bottom line results for our combined organization. At the same time, we continue to make great strides in improving the operational efficiency of our business as we build a lean infrastructure that is capable of supporting our growth goals."

"Product-wise, we have continued to increase both the quality and quantity of our offerings, supporting our expanded sales efforts to drive additional revenues through new sales to new customers and add-on sales to existing customers. Entering the second quarter, we are prioritizing the profitability of the business and are cutting expenses where necessary to maintain a strong financial footing. We look forward to building on our momentum and further cementing our position as a leading provider in the UCaaS industry. I am convinced we are on the right track and our results will be very impressive."

Conference call highlights:

“We are focused on integrating the acquisition into both our corporate and direct operations and expect to see significant financial and operational efficiencies over the next 3 quarters.”

“We anticipate that the Allegiant backlog will include, be included in our Q2 report and will add significantly to our existing numbers.”

Takeaways

Yesterday's PodClip we published on CXDO, contained three major talking points:

That Q1 EPS results would be sequentially down, which they were.
That we wanted to see if the company could begin to start posting organic growth, which also occurred. Now, we need to see if the company can maintain this momentum, fueled by the third talking point of the PodClip.
Favorable shift in industry dynamics

Research

Tue, 21 Mar 2023 19:09:39 GMT

Crexendo Inc. (NASDAQ:CXDO) ($1.77; $45.4M market cap), a provider of cloud communications, UCaaS (Unified Communications as a Service) and other cloud business services, announced it has appointed Gateway Investor Relations, a leading strategic financial communications and capital markets advisory firm, to manage its expanded investor relations program initiatives and help provide corporate messaging and other consulting services to the Company.

The comments from new CEO Jeff Korn in the release summarized this update:

“Over the past year and a half we've dramatically changed the makeup and trajectory of our business," said Crexendo Chief Executive Officer Jeff Korn. "Entering 2023, we're operating from arguably our strongest-ever position, operationally and financially. Over the course of this year, we expect to recognize more synergies from our acquisitions and streamline our operations with the Allegiant team. Our financial performance should also take a strong step forward, both in terms of generating organic revenue growth as well as improved cash flow and profitability.”

Recall that despite the company posting really strong Q4 2022 results - non-GAAP EPS of $0.09 for the quarter - the stock price did not react positively, which came as a surprise to us. You can see our highlight of Q4 here.

Research

Wed, 15 Mar 2023 13:50:48 GMT

Crexendo Inc. (NASDAQ:CXDO) ($1.87; $47.2M market cap), a provider of cloud communications, UCaaS (Unified Communications as a Service) and other cloud business services, announced Q4 2022 results:

Sales of $11.4 million vs $9.0 million in the prior year ahead of estimates of $10.6 million
Non-GAAP EPS of $0.09 vs $0.02 in prior year and ahead of analyst EPS estimate of $0.03

“We finished the year strong and have considerable momentum behind our combined businesses as we head into 2023. In the fourth quarter we drove a 34% increase in consolidated revenue while continuing to grow on an organic basis as well. We substantially improved non-GAAP net income to $4.1 million, underscoring the inherent profitability of our operations once our performance can be viewed on a comparable basis.”

"We will continue recognizing synergies from our Software Solutions acquisition and will benefit from the integration and synergies from our recent Allegiant acquisition. As a combined organization, we expect to drive more new sales and to realize greater expansion revenue opportunities from our collective customer base. We will also improve our cost profile substantially as we aim to increase cash flow and profitability by the end of the year."

Conference Call Comments From New CEO:

“The stock prices will keep me up at night because I'm very concerned that somebody might try and make a run at us before we've had the opportunity to fully value and fully appreciate the value that I know is going to be unlocked here. So if we can get by without that happening, I'm very excited about our future.”

Key takeaways:

Very impressive quarterly Non-GAAP earnings of $0.09. Too early to assume that this will be a new run rate, but it’s very encouraging.
Large goodwill impairment charge due to the stock price being much lower compared to when the company used stock to acquire Net Sapiens in March 2021 . To be clear, this is different from the actual business (asset) of Net Sapiens being impaired due to underperformance.
Steve Mihaylo retires; CEO transition being handed to Jeffrey Korn, in-house counsel. We are somewhat surprised that the COO, ,Doug Gaylor was not appointed as the new CEO.
Steve Mihalylo's large ownership share in CXDO will not be transferred to siblings, but instead to a charity organization.
Board decided to eliminate its very small dividend, but plans to use funds to buyback stock
Company wIll focus on integrating acquisitions to fuel organic growth and increase gross margins as opposed to aggressively looking for new acquisitions.
CEO is worried about a hostile takeover at current prices
Organic growth (without the addition of acquisition completed in Q4) needs to be better. Could temper investor enthusiasm.
If Q4 EPS run-rate can be maintained, we think the stock could trade at a conservative P/E of 10x, translating to $4.00, with meaningful upside if organic growth resumes.

Research

Fri, 11 Nov 2022 15:20:17 GMT

Crexendo Inc. (NASDAQ:CXDO) ($2.30; $51.9M market cap), a provider of cloud communications, UCaaS (Unified Communications as a Service) and other cloud business services, announced Q3 2022 results:

Sales of $9.1 million vs $8.8 million in the prior year ahead of estimates of $8.9 million
Non-GAAP EPS of $0.03 vs $0.03 in prior year and ahead of analyst ESP estimate of $0.02

"I am very pleased with our results, the results give us much to be excited about. This quarter we reached a very important milestone as we exceeded nine million dollars in revenue, which is a high-water mark for us. I am convinced that is only the beginning of additional impressive milestones. We have closed the acquisition of Allegiant Networks, which is a very strong telecom company that provides many advantages to us including providing a substantial presence in the mid-west. The acquisition of Allegiant is a continuation of our growth strategy and will make an instant impact as I know the acquisition is highly accretive.”

Conference call highlights:

“We're looking forward to working closely with Bryan Dancer and his entire Allegiant team as we integrate them into Crexendo. And with this acquisition, we will be on a $45 million to $50 million run rate for 2023…”

“…Yes. Let me jump in here for just a minute, Josh. Most of our revenue is recurring. And all new revenue is both recurring and licensees. So you're going to find that we're going to inch up our recurring revenue. If we didn't sell another nickel's worth of anything, we would have $45 million to $50 million in revenue next year, and we expect to exceed that”…

“…Yes. So this is, again, a very accretive acquisition for us. So if you look at the pro formas that we put out this morning, I mean, Allegiant was profitable on a stand-alone basis, and we anticipate with the synergies that we'll see out of the combination of the 2 organizations, they'll be even more profitable. And as we look at Crexendo, we're going to continue executing on our game plan. So yes, it's going to be accretive to the bottom line. And I have no doubt that you'll be impressed with what we were able to put to the bottom line going forward.”

Our takeaways of the recent acquisition of Allegiant Networks:

Allegiant Networks is doing over $10 million revenue as evidenced by the 8K.
It’s currently growing at about 10%.
Gross margins are around 70% and the company is profitable.
The company brings a CSAAS platform to Crescendo, moving up the timeline to introduce this type of platform to the market which is a hot growth area right now

Our overall summary of the quarter is a mixed one. The quarter showed weak growth of its organic business, but the good news is that CXDO beat analyst estimates, so this should not surprise the market.

The layering on of Allegiant will allow the company to post solid growth comparisons on a consolidated basis for the next 4 quarters, as new partnerships, recent large customer wins and reseller arrangements start to kick in to drive organic growth.

Research

Wed, 10 Aug 2022 04:00:00 GMT

Crexendo Inc. (NASDAQ:CXDO) ($2.75; $61.7M market cap), a provider of cloud communications, UCaaS (Unified Communications as a Service) and other cloud business services, announced Q2 2022 results:

Sales of $8.8 million vs $5.8 million in the prior year ahead of estimates of $8.3 million
Non-GAAP EPS of $0.02 vs $0.00 ahead of analyst ESP estimate of $0.01

“While our results were very good, we never lose sight of our obligation to improve the business every day and work on improving shareholder value. We will work tirelessly to control expenses, I am undertaking a review of every discretionary expense we have, and fully expect the team to manage expenses deliberately and to watch every penny we spend.

We also continue to work on marketing and sales, I have been very pleased with the quality of partners and master agents we have added recently, and I expect those initiatives to accelerate our sales particularly on the telecom side of the business. I remain very optimistic on our future. We have built the business carefully and methodically and have done so without mortgaging our future with debt that is not sustainable, and in the long run it is what I am convinced will make us successful. I expect our growth to continue both organically and through potential accretive acquisitions we are carefully considering…

…Our Management team is focused on these initiatives to continue to improve the business and grow our top and bottom lines. It is a very exciting time for Crexendo, and we are positioned well to continue executing our plans."

We are still waiting for the conference call transcript to be published.

Research

Fri, 20 May 2022 20:30:47 GMT

Crexendo Inc.(NASDAQ:CXDO) ($3.02; $67.7M market cap), a provider of cloud communications, UCaaS (Unified Communications as a Service) and other cloud business services, saw the CEO continue to buy stock on the open market. On the heels of a nearly $1 million purchase earlier this week, two more Form 4’s were filed yesterday showing CEO Steven Mihaylo added 25,000 shares on Wednesday at an average price of $3.09 and 30,991 yesterday at average price of $3.05.

Steven now owns about 49.4% of the company.

PodClips

Mon, 16 May 2022 19:21:03 GMT

In #PodClip on $CXDO, @majgeoinvesting touches upon the competitive landscape & market trends in cloud telecom industry, positive and cautious takeaways from company's latest Q1, a little #InfoArb, & valuation. Despite caveats, we still remain bullish.

Research

Fri, 13 May 2022 17:25:53 GMT

Crexendo Inc. (NASDAQ:CXDO) ($2.49; $55.4M market cap), a provider of cloud communications, UCaaS (Unified Communications as a Service) and other cloud business services announced Q1 2022 results:

Sales of $8.2 million vs $4.5 million in the prior year
EPS of $0.02 vs $0.02

“These numbers were particularly impressive considering that we faced headwinds in the first quarter, which do appear to be subsiding. We noted an increase in customers that contracted or closed their businesses toward the end of the year. In December it appeared that both customers and potential customers were spending less and delaying certain capital expenditures due to the uncertainty surrounding the economy, inflation, and supply chain issues. Product revenue was down quarter over quarter since the deferred purchasing decisions affected the sale of newer desktop devices. We believe these conditions are improving and we expect those effects to be short lived. We believe it is not a matter of if but when before most companies move to the cloud and Crexendo is particularly suited to benefit from that migration.”

My focus will be to continue to work on improving margins, manage expenses and improve our sales and marketing programs, all of which will benefit the Company, its customers, its employees and most importantly its shareholders. I continue to be highly confident that we will continue to grow the business both organically as well as through additional accretive acquisitions and stand behind my earlier expectation of growing the business this year by 40% to 50%. This is a very exciting time for Crexendo."

Research

Fri, 25 Mar 2022 04:00:00 GMT

3/25/2022 Research "Skull" Session Clip - Crexendo (CXDO)

Research

Tue, 22 Mar 2022 20:24:37 GMT

Crexendo Inc. (NASDAQ:CXDO) ($4.17; $90.4M market cap), a provider of cloud communications, UCaaS (Unified Communications as a Service) and other cloud business services announced Q4 2021 results:

Sales of $9.0 million vs $4.3 million in the prior year
Non-GAAP EPS of $0.02 vs $0.02

“I am very excited with our results, consolidated total revenue for the fourth quarter increasing 108% is a major milestone, I am also highly impressed that 2021 total revenue increased 71% year-over-year to $28.1 million. This is a very exciting metric, and I am convinced that this is only the beginning. With that said we are diligently working on improving margins by increasing efficiencies, targeting expenses and implementing price increases. I fully believe that we will continue to grow the business both organically as well as through additional accretive acquisitions. My expectation of growing the business by 40% to 50% has not changed. I have never been more excited about the future for Crexendo, our customers, our employees, and our shareholders."

A few conference call highlights:

Talking about recent partnership with Mavenir:

“I expect this will be the first of many partnerships that emerge from our world-class team. These types of partnerships are exciting as we are able to add products that round out our platform, make sales to enterprise customers easier while having our solution sold to new customers.”

On Backlog:

Our backlog continues to grow and is now north of $41.7 million at the end of the year. Our backlog number now includes the Software Solutions backlog amounts as well as our Crexendo Direct customers and represents a 46% increase over our backlog numbers at the end.

So for 2022, we're looking at just over $19 million in 2022. You'll see a 5-year runout schedule that shows that $41.7 million over the 5-year period.

Margins:

“So margins will be increasing this year and next year. And our goal is to get them to where they were prior to the acquisition.” (Target area of 65 to70%)

You can see our recent management morning briefing with COO Doug Gaylor here.

Interviews

Wed, 16 Mar 2022 16:21:44 GMT

3/16/2022 CXDO Morning Briefing with Doug Gaylor, President & COO

---

Research

Wed, 09 Feb 2022 17:52:17 GMT

“Crexendo's board declared the quarterly dividend after review of the company's financial position and expectations for 2022. Our cash position is strong, and we remain committed to growing the business both organically and through accretive acquisitions. We are convinced that we will maintain significant free cashflow to pay the dividend as well as make necessary investments in business development. My expectation of growing the business by 40% to 50% annually has not changed. I am highly confident in the future of Crexendo, and this dividend is an indication of my belief in the continued growth of Crexendo."

We view this as a very positive development for the Company. While the amount of the dividend is not large, it’s obvious that the company wants to instill confidence in its shareholders as the stock has fallen sharply, caught up in the crosshairs of the market correction impacting other technology companies.

Setting a regular dividend should start to help investors believe that the company will be able to maintain steady cash flows moving forward as it aggressively grows revenues.

Some of you might be thinking that the amount of the dividend is small, so is it really that big of a deal? Actually, we think a bigger dividend would not be as positive because it could indicate that returning cash flow to shareholders would offer a better return to shareholders vs reinvesting capital back into the company. We just think the company was trying to find a small way to let investors know, “hey, we’re going to grow revenue AND make money, something that a lot of our larger competitors can’t accomplish.”

We also wanted to note that while we have not been highlighting each form 4, CEO Seve Mihaylo has been purchasing 3k shares nearly every day of the year, which comes off the heels of his large purchases of over 120k shares in November and December of 2021.

We still view CXDO as one of our higher conviction model portfolio holdings and think the stock should more than double from current prices in the near term.

Research

Thu, 16 Dec 2021 11:44:32 GMT

Crexendo Inc. (NASDAQ:CXDO) ($5.14; $111.4M market cap), a provider of cloud communications, UCaaS (Unified Communications as a Service) and other cloud business services continues to see aggressive buying from CEO Steve Mihaylo. In a Form 4 filed yesterday, it shows that he added 75,000 shares at an average price of $5.20. These buys come on the heels of recent purchases totalling 45,000 shares over the last several weeks.

See our full coverage on CXDO here. CXDO is one of the 3 stocks highlighted in our post, “A Cloud Communication Stock Trio With Multibagger Returns Written All Over It”.

Research

Wed, 10 Nov 2021 16:03:00 GMT

CREXENDO INC (NASDAQ:CXDO) ($5.78; $124.6M market cap), a provider of cloud communications, UCaaS (Unified Communications as a Service) and other cloud business services announced Q3 2021 results:

Sales of $8.8 million vs $4.1 million in the prior year and ahead of analyst estimates of $7.9 million
Non-GAAP EPS of $0.03 vs $0.02 in the prior year and ahead of analyst estimates of a loss of $0.01

“We continue to execute our plans with precision. Over the last several years we have met every milestone we committed to including achieving profitability, organically up-listing to Nasdaq, being able to complete an offering and making a major accretive acquisition. We have done this without mortgaging the future of the Company or making risky gambles. We are meticulous in our planning and are still prioritizing increasing operational efficiencies across both NetSapiens and Crexendo. The teams are working closely together, we are targeting efficiencies and cross reporting to best use the teams to support both the NetSapiens Partners/Licensees and the Crexendo Partners and end-user customers...

...We will continue to grow the business organically and with appropriate accretive acquisitions. We work every day to increase shareholder value, to make this a better company and to improve the experience for our constituencies.”

On Monday we discussed how CXDO was a high conviction stock for us heading into this report. You can see Maj’s podcast interview where he discusses why CXDO is one of our high conviction plays here.

Research

Fri, 10 Sep 2021 19:26:36 GMT

CREXENDO INC (NASDAQ:CXDO) ($6.00; $129.3M market cap), a provider of cloud communications, UCaaS (Unified Communications as a Service) and other cloud business services sees CEO Steven Mihaylo buy 6000 shares on the open market at average price of $5.87.

We would like to see other insiders step up and join the CEO with open market purchases.

The company recently closed a major acquisition and is very bullish on its future opportunities. You can see our full coverage including a recent podclip of our fireside chat with COO Doug Gaylor here.

In related news, the company is presenting at the Colliers Institutional Investor Conference today, and has issued an 8k with the new investor presentation.

Research

Wed, 11 Aug 2021 18:04:59 GMT

CREXENDO INC (NASDAQ:CXDO) ($7.00; $150.7M market cap), a provider of cloud communications, UCaaS (Unified Communications as a Service) and other cloud business services announced Q2 2021 results:

Sales of $5.8 million vs $4.1 million in the prior year
Non-GAAP EPS of $0.00 vs $0.04 in the prior year

“This was a transformational quarter for us. First, we were able to close a major accretive acquisition. Secondly, we were able to increase our quarterly revenue 43% year over year which is very impressive, particularly when you consider that metric only includes one month of NetSapiens revenue. Finally, our telecom service revenue also increased 20% year over year which is also a very impressive metric. These results bode extremely well for our future…

...We expected a GAAP loss this quarter, particularly due to the acquisition related costs. We had substantial one-time acquisition costs, additional intangible asset amortization costs, and we also incurred costs related to the buildout and rollout of our VIP platform offering, scheduled upgrades to the Crexendo data center and additional employee costs particularly related to sales.”

Some takeaways from the conference call:

The company expects net and gross margins to improve
The company expects 50% growth over the next year or two
NetSapiens has 1.7 million end users and company expects to have 2 million end users in the next couple of months

Research

Tue, 15 Jun 2021 13:45:08 GMT

PodClip

Today, our friends at Little Grapevine are welcoming Crexendo Inc. (NASDAQ:CXDO) President and COO Doug Gaylor back for a fireside style Zoom call, with Maj Soueidan as the moderator. Although we know this is late notice, it appears that Little Grapevine will be able to accommodate anyone from GeoInvesting's premium base to attend the meeting. As these events are usually recorded, the replay will be available shortly afterwards on Crexendo's profile page at littlegrapevine.com .

Since CXDO is a select long of GeoInvesting's, we are eager to hear what Mr. Gaylor will have to say about current developments at the company.

Hope to see you there. Details are below, and at this link where you can find all upcoming virtual events occurring at GeoInvesting.

Date/Time: 6/15/2021, 1:00 PM Eastern Standard Time

Zoom Meeting Link
https://us02web.zoom.us/j/83044752902?pwd=Vm1QZjN3QmQvOXN4bGtTcUh3YlE1QT09

Meeting ID: 830 4475 2902
Passcode: 951125
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Meeting ID: 830 4475 2902
Find your local number: https://us02web.zoom.us/u/kdD684KBU7

Research

Wed, 12 May 2021 14:52:34 GMT

CREXENDO INC (NASDAQ:CXDO) ($5.29; $97.4M market cap), a provider of cloud communications, UCaaS (Unified Communications as a Service) and other cloud business services, announced Q1 2021 results:

Sales of $4.5 million vs $3.9 million in the prior year and slightly ahead of analyst estimates of $4.4
Non-GAAP EPS of $0.02 vs $0.02 in the prior year, ahead of analyst estimates of $0.01

I continue to be very excited about the progress we are making and the direction we are headed. While I would have preferred to continue our streak of profitability, we fully expected to operate at a loss this quarter due to the expenses associated with the NetSapiens merger...

...We will, as a joint team, continue to operate the business effectively and efficiently. We carefully monitor how we spend shareholder money, but we will do what is necessary to make our soon to be combined company the best in the industry. I could not be more excited about our future...

...I am thrilled about our merger with NetSapiens! Our management teams continue to work together closely, and we will hit the ground running after the merger is completed. Our combined synergies, offerings and experiences will prove to be a substantial benefit to all of our customers and our shareholders.

Research

Wed, 10 Mar 2021 18:56:14 GMT

CREXENDO INC (NASDAQ:CXDO) ($6.63; $119.0M market cap), a provider of cloud communications, UCaaS (Unified Communications as a Service) and other cloud business services, announced Q4 2020 results:

Sales of $4.3 million vs $3.7 million and in-line with analyst $4.2 million estimate
Non-GAAP EPS of $0.02 vs $0.02 and ahead of analyst estimates of $0.01 (Company issued non-GAAP EPS of $0.39, however that includes the $7 million tax benefit and PPP loan, items we would not include in non-GAAP EPS.)

"This was clearly an important and transformational year for us. We stayed true to our plan and the results prove the progress we have made. First, we continued our streak of both GAAP and Non-GAAP profitability, secondly, we organically up-listed to the Nasdaq Capital Markets Exchange, we were then able complete our equity offering in September of 2020 to raise additional capital and finally we have been able to negotiate a substantial accretive acquisition. We have grown the business organically and are now on track to aggressively grow the business thru accretive acquisitions."

The conference call stated that the company intends to file a proxy with full financial details of the acquired company, Netsapiens, but could not share much on the call until they file. They did mention that Netsapiens had revenues of $11 to $12 million last year compared to CXDO's annual rev of $16.4 million. Management also mentioned that the acquisition will be accretive and that they are expecting to complete even more significant acquisitions in the near future.

Yesterday’s note highlighted the acquisition and recent share exercise from the CEO. You can see that full note here.

Research

Mon, 08 Mar 2021 05:00:00 GMT

CREXENDO INC (OOTC:CXDO) ($6.28; $112.8M market cap), a provider of cloud communications, UCaaS (Unified Communications as a Service) and other cloud business services, announced the acquisition of NetSapins, “an award-winning, patented cloud-native communications platform delivered via a high availability, multi-tenant solution that can be consumed however the service providers prefer, in their cloud or the NetSapiens cloud, on a subscription or a purchase model. They currently support over 1.7 million users on their platform through a community of partners.”

Terms of the transaction:

“Crexendo will acquire NetSapiens through a merger for approximately Fifty Million Dollars, consisting of $10 Million in cash and the remainder in stock consideration (which will include both shares of common stock and stock options), Crexendo will be issuing approximately 6,462,036 total shares and options.”

Comments from management:

"I am very excited about our merger with NetSapiens and what this means for the combined company. Our senior management teams have been working together for some time and we have developed a superb working relationship and friendships. We have all come to believe that the combination of these two excellent companies will be a benefit for all customers, employees and most particularly Crexendo shareholders. The combined company will open up opportunities to provide excellence to our customers and to accelerate our growth."

Financials:

No financials were disclosed in the release. We are looking into the financial details of the acquired company.

In related news, in last night's weekly wrap up email we highlighted how CXDO CEO Steve Mihaylo exercised several stock options including some with strike prices above the then current price, showing his confidence in the company. Also should be noted that the company reports its Q4 2020 earnings tomorrow after the close. The full note is below.

As we pointed out, CXDO saw another Form 4 filing (inside transaction filing) from Steve Mihaylo, CEO. As you may know, we are primarily interested in insider buying that originates from open market purchases as opposed to “free” shares obtained through stock options, awards and grants. However, there are exceptions to rules. One of those instances is when we see insiders exercising their stock options early and/or above exercise prices. And this is what we have with Mihaylo’s Form 4s.

We noticed that Mihaylo exercised 235,444 shares ( $1 million) related to stock options well before their expiration dates, ranging from 2022 to 2027 as seen in column (M is the code for options exercises as opposed to P for direct buys)

Furthermore, 11,080 shares were exercised at slightly above the share price on the day he exercised them ($6.26 vs $5.87). We view Mihaylo’s early option exercise (as opposed to waiting to see if the stock goes up) as an extremely bullish signal. It sends a positive and confident message to investors.

You can read more about the “secret codes” that can help you decipher how insider shares are obtained by reviewing material we created on this subject.

Selected Disclosures on Above-mentioned Stock(s):

Long CXDO

GeoTeam's Longs

Other Select Longs

Active Mock Portfolios

Favorite Stocks: CXDO

Research

Wed, 11 Nov 2020 17:03:58 GMT

CREXENDO INC (OOTC:CXDO) ($6.91; $117.4M market cap), a provider of cloud communications, UCaaS (Unified Communications as a Service) and other cloud business services, announced Q3 2020 results:

Sales of $4.1 million vs $3.6 million in the prior year and in line with analyst estimates of $4.1 million
Non-GAAP EPS of $0.02 vs non-GAAP EPS of $0.03 in the prior year and in line with analyst estimates of $0.02.

“We are very pleased that we were able to close and have a fully subscribed public offering. As part of that process our team spoke to many investors who we believe are very excited with the Crexendo story. We have substantially increased our footprint with investors while increasing our investor base and our stock float. We have built this Company the right way, by methodically controlling expenses, followed by working toward Non-GAAP profitability which was followed by GAAP profitability which allowed us to then organically meet the stringent requirements for a Nasdaq listing. Now that we have successfully completed our public offering and raised the necessary capital, we can aggressively focus on organic growth and accretive acquisitions. We believe we have built the business to the point where we can now focus on growth."

The quarter was in line with our expectations, and now we anticipate the management will begin to step up its growth initiatives, including:

driving organic growth through more aggressive marketing
completing an accretive acquisition in the near future.

To bring you up to speed on our past coverage on CXDO, please visit this link.

Call to Action

Thu, 24 Sep 2020 16:38:39 GMT

**Call To Action - Added To Our Long Position In CXDO

This morning CREXENDO INC (OOTC:CXDO), a cloud services company providing cloud telecommunications services, broadband Internet services, and other cloud business services for businesses in North America and internationally, announced the pricing of its recently announced stock offering at $5.50 per share. In our Monday email, we mentioned that we would look to add to our long position if shares pulled back. This morning we added in the pre market at around the $5.50 level.

We are viewing this pullback as a gift and believe the proceeds from this offering will be used to consummate an accretive acquisition in the near term.

Research

Mon, 21 Sep 2020 04:00:00 GMT

CREXENDO INC (OOTC:CXDO) ($7.51; $113.9M market cap), a provider of cloud communications, UCaaS (Unified Communications as a Service) and other cloud business services, announced a public offering of 3.5 million shares - 1.75 million newly issued shares and 1.75 million from an existing shareholder. The press release states that the use of proceeds will be for:

“general corporate purposes, including working capital, sales and marketing activities, product development, general and administrative matters, and capital expenditures.”

The S-1/A filed today has a bit more color in the use of proceeds section:

“We currently intend to use the net proceeds to us from this offering primarily for general corporate purposes, including working capital, sales and marketing activities, product development, general and administrative matters, and capital expenditures, although we do not currently have any specific plans with respect to use of proceeds for such purposes. We also may use a portion of the net proceeds to acquire complementary businesses, products, services, or technologies, or to pay down a portion of our outstanding indebtedness. However, we do not have agreements, commitments, or plans for any specific acquisitions or debt repayments at this time.”

The offering comes as no surprise as it was discussed in prior earnings calls. CXDO has mentioned several times it has been looking for accretive acquisitions. Given the comments in the S-1, we feel this offering could lead to an acquisition in the near future.

We will be looking to add to our position if shares pull back hard on the offering.

Research

Tue, 11 Aug 2020 18:22:22 GMT

CREXENDO INC (OOTC:CXDO) ($9.30; $140.1M market cap), a provider of cloud communications, UCaaS (Unified Communications as a Service) and other cloud business services, announced Q2 2020 results:

Sales of $4.1 million vs $3.6 million in the prior year
Non-GAAP EPS of $0.04 vs $0.03 in the prior year

"We have built Crexendo to take advantage of the digital transformation that is now occurring. I believe the need for our services has never been greater and that we should benefit from the additional demand created by the pandemic for our products and services. We have methodically managed the business in steps, we first worked to build the best products and services; we then made sure we managed costs; we then worked to achieve Non-GAAP profitability followed by GAAP profitability. Those actions led to our being able to organically list on the Nasdaq exchange...

...While we still face the headwinds of COVID-19, I believe they have been less of a factor this quarter than in the first quarter. We believe we have seen a decrease in Q2 from COVID related customer downgrades and business closures... I am convinced we will grow the business, and we have the ability to be on the forefront of the new digital transformation as customers adapt. We now believe that our stock is poised to enable us to add to our growth with accretive acquisitions. We will also continue to work to grow the business organically. Our entire team works every day to increase shareholder value."

Conference call highlights:

Organic growth and accretive acquisitions:

“We believe the NASDAQ listing gives us both the ability and currency [Audio Gap] In the future, we expect to continue to grow this business both organically and through accretive acquisitions...

...But I think, as Doug said earlier, organically, we should be able to grow at about 20% or more. And my goal is to grow on an acquisition and accretive acquisition basis by at least that much. So we're going to get a lot bigger, but it's going to take several years going forward.”

Gross Margins:

“We are able to consistently sustain healthy gross margin since we have a very stable cost structure and since we own our intellectual property that is the foundation of our offering. Our continual focus on cost management within the organization helped us maintain profitability. This is a core message within our organization and has every employee focused on productivity and efficiency”

From Q&A:

“As you know, our gross margins improved about 2 [Technical Difficulty] quarter-over-quarter. And I would expect that as we get larger, our gross margins will increase, not decrease. No, they're not going to increase as much, probably. But or a 1% increase per quarter as possible because our fixed expenses are pretty known. And as we get larger, more of that falls to the bottom line and more of it will be in the [Technical Difficulty] margins.”

Mindful about dilution:

"Caller:

Are you considering a stock offering and if you had a stock offering, even at a 1 million shares would be, let's say, $10 million to $12 million, would that cash be we do put that -- be able to put that cash to work to drive sales faster?

Steven G. Mihaylo, Crexendo, Inc. - Chairman of the Board & CEO

Well, let me answer that. And then I thank Jeff Korn and maybe the entire team would like to chime in. But obviously, today's volatility was caused by short sellers. That's the only explanation for. So we need to have a slightly larger float. And in order to get a larger float, you're going to need to sell a little bit of stock. But I'm very, very keen on having anti-dilutive efforts here."

On valuation:

“ I'd like to add to that. On a valuation basis, we're probably less than half of the valuation of our larger as Doug pointed out, most of them are losing money. If you take 59 or RingCentral specifically, their cash flowing a little bit, but they're losing on a GAAP basis. And from the standpoint of valuation, we're at about 40% or 45% of their value. So there's a lot more headspace with Crescendo than any of those competitors.”

In late July we published an in depth look on CXDO as it enters what we feel is a growth inflection point. We are feeling more and more confident that CXDO will approach premium EV/Sales multiples of leaders such as Ringcentral, Inc. (NYSE:RNG) and Five9, Inc. (NASDAQ:FIVN) which trade at multiples of around 20. While we do expect the company to raise money through the issuance of additional shares, we believe this would occur in conjunction with an accretive acquisition. So, we actually believe the stock could rise if an offering should occur.

Research

Wed, 29 Jul 2020 04:00:00 GMT

It’s been roughly 10 months since Arham Khan wrote a detailed pre-COVID pitch on Crexendo, Inc. (OOTC:CXDO) where he laid out a number of reasons why the valuation scenarios of the stock (based on peers and industry growth) substantiated as much as $5.42 per share at the time the stock was trading at $3.50. He originally wrote a shorter version of the pitch in February 2019, after which we saw it fitting to initiate a small position in early August of 2019 and compliment that with an RFT (Reasons For Tracking) of our own Since then, the stock hit a high of $7.51 (today), healthily surpassing Arham’s price target.

Obviously, a lot has happened since then, and in light of how the coronavirus is speeding up the adoption of UCaaS, another detailed update was in order, especially to help newer members better understand why the company was also included in our Favorite Model portfolio in November 2019.

Maj offers up his own personal experience with some of the upper management of CXDO, elucidating on the persistent insider buying by CXDO CEO Steve Mihaylo, and expands on his own take of the widespread adoption of UCaaS, the cost savings Unified Communications offers as a whole, industry analysis and growth inflection.

Please see the new CXDO article here and feel free to comment!

Research

Wed, 06 May 2020 16:27:59 GMT

CREXENDO INC (OOTC:CXDO) ($6.25; $93.1M market cap), a provider of cloud communications, UCaaS (Unified Communications as a Service) and other cloud business services, announced Q1 2020 results:

Sales of $3.9 million vs $3.5 million in the prior year
Non-GAAP EPS of $0.02 vs $0.02 in the prior year
Cloud revenue

Even though quarterly sales were up only 11% YoY and 5%, sequentially vs Q4 2019, we still think the quarter was a good one, given COVID-19. The most important metric, cloud revenue, grew YoY and sequentially 18% and 3%, respectively. Overall revenue growth was negatively impacted by concessions the company is giving current and new customers to help them weather the COVID-19 crisis.

Press Release Commentary:

“We believe our business is uniquely positioned to withstand the economic uncertainties in this period. We also believe that the effects of COVID-19 on our business will be short term and that as economic conditions start to improve, we will strongly capitalize on the new business order of people working remotely for the long term. Our products are designed and completely effective in allowing seamless transition from office to home and back. I continue to be extremely optimistic about our future and I am overly excited about our long-term growth and strong balance sheet."

The related Q1 conference call was loaded with commentary worth reading:

“I continue to be extremely optimistic about our future and I am overly excited about our long-term growth and strong balance sheet. We have, as I discussed before, started to increase our investment in the business. I believe this is essential for us to continue to grow. We are mindful of current economic conditions and we will do as we have always done; watch every penny of shareholder money very carefully and only spend money when it makes sense for the business. We have always been careful and will not spend more than is absolutely necessary.”

“We have applied for listing on NASDAQ as we have now met all the organic requirements. We believe the business has grown to where listing on a national exchange makes sense. We are not certain how long this review will take; particularly in the current situation but we expect to receive a positive response and will, of course, keep you updated as to the status.”

“In addition to organic growth, we believe that we can accelerate our growth through accretive acquisitions. We are always looking at targets and will continue to do so even while doing that we will not lose the focus of sales and service and products. The current crisis has actually increased our M&A activity. We work everyday to increase and maximize shareholder value.”

“When the U.S. began enacting stay-at-home measures in March, our customer service lines exploded with existing customers seeking help on how to transform their business to remote functioning organization. Fortunately for Crexendo customers, in most instances, it was as easy as bringing your phone home and plugging it in. Further, the benefits of using Crexendo's platform, our collaboration tools saw a 172% increase in usage in March and our [software] downloads and utilization were up 54% just in March. We're still compiling the total's for April and anticipate even higher utilization of these remote capabilities. I've always stated that it is not a matter of if businesses move their communications to the Cloud, but rather when and the onset of this pandemic I feel will hasten the migration of businesses that were stuck using their old legacy systems to migrate to the Cloud even quicker.”

“Despite all of the headwinds in the economy, I expect our success and momentum to continue and results to improve.”

“UCaaS will be stronger than ever and the migration from older premise-based equipment to the Cloud, which was already forecast to have its strongest year ever in 2020 even before the effects of the pandemic, will only intensify as the countries businesses start rebounding.”

In early August we disclosed our long position and offered our quick Reasons for Tracking (RFT). On April 20, 2020 we disclosed we added to our long position as shares broke out to new highs.

Research

Mon, 20 Apr 2020 18:49:56 GMT

Added To Our Long Position In CXDO

Shares of CREXENDO INC (OOTC:CXDO) ($5.15; $76.7M market cap), a provider of cloud communications and UCaaS services broke out to new highs on heavy volume on Friday. The stock hit a new 52 week high of $5.30 on over 165,000 shares traded versus average volume of 7,000.

In early August we disclosed our long position and offered our quick Reasons for Tracking (RFT). Geoinvesting contributor Arham Khan also published a detailed research report on the company in October 2019.

Research

Wed, 04 Mar 2020 18:18:42 GMT

CREXENDO INC (OOTC:CXDO) ($4.70; $69.1M market cap), a provider of cloud communications, UCaaS (Unified Communications as a Service) and other cloud business services, announced Q4 2019 results:

Sales of $3.7 million vs $3.1 million in the prior year
Non-GAAP EPS of $0.02 vs $0.01 in the prior year

“Our cash position has more than doubled with total cash, cash equivalents, and restricted cash being $4.3 million at the end of 2019 compared to $1.9 million at the end of 2018. I am also pleased with both the increase in our current ratio to 2.0 to 1 and that our shareholders equity increased by 119% in 2019..

...These results have not changed our attitude toward how we manage cash, we are very prudent. We have started to make necessary investments in the business so we can sustain the growth, but we still watch every penny of shareholder money and spend it carefully and strategically. We believe the market for and need for UCaaS services has never been greater, and we further believe we are in a unique position to capitalize on that market. I am convinced that our services, products and technology are the top in the industry. I know customers who use our Ride the Cloud® UCaaS services will be both impressed and, in most instances, save a substantial amount of money from what they currently spend. We will continue to work to grow shareholder value.”

Conference call highlights (extremely bullish):

The company will take a more active role looking for acquisition candidates to help fuel growth;
Will increase marketing spend;
Noted that it has not seen any disruption in supply chain from China but is monitoring the situation carefully;
Launched some nice incentives in Q1, which they anticipate will help continue growth and momentum in the channel;
Believes in great position to deliver revenue and income growth in 2020;
Started its process to uplist to NASDAQ

Research

Wed, 06 Nov 2019 15:39:58 GMT

In early August we disclosed our long position in CREXENDO INC (OOTC:CXDO) ($3.87; $56.9M market cap) a provider of cloud communications and offered our quick reasons for tracking and yesterday we added the stock to our Favorite Model Portfolio.

Yesterday after the close the company announced its Q3 2019 results:

Sales of $3.6 million vs $3.0 million in the prior year
Non-GAAP EPS of $0.03 vs $0.00 in the prior year

Steven G. Mihaylo, Chief Executive Officer commented, "I am very excited that we have continued to be profitable on a GAAP basis. This marks our third quarter in a row of GAAP profitability. We have taken what is essentially a start-up and are turning it into a successful mature model. We have made tremendous improvements with the business and our results speak to that. I have full confidence we will continue to execute. I am particularly impressed with our Cloud Telecommunications Segment UCaaS service revenue which increased 24% compared to the third quarter of 2018. Something that I find highly impressive is the improvement in net income of $911,000 for the nine months ended September 30, 2019, or $0.06 per basic and diluted common share, compared to a net loss of $(0.02) loss per basic and diluted common share for the nine months ended September 30, 2018.. We also continue to make substantial gains in total cash, cash equivalents, and restricted cash which as of September 30, 2019 was $3.4 million compared to $1.9 million at December 31, 2018. These are very good results, and I believe that our results will continue to improve.

Mihaylo added, "We continue to do an excellent job with our cash management. We also manage our expenses very carefully. Our team works tirelessly to continue to make the award winning Crexendo Ride the Cloud© technology and services second to none in the industry. I am highly impressed with our products our team and particularly our customer first attitude. We work every day to provide the best customer experience and to improve shareholder value. Our cash improved dramatically, our current ratio improved, our gross margins expanded and our shareholder equity almost doubled; all while our expenses increased at a much lower rate than our revenue grew. I expect these improvements to continue for the foreseeable future."

Overall, the call was more bullish than most. Key takeaways from the call included:

The company intends to uplist organically.
If the company were to offer shares, it would be a minimal amount and in our opinion, this plan would only be executed concurrent with an accretive acquisition.
Management hinted at making several acquisitions over the next 18 months.
They recently announced a partnership with UCaaS cloud provider RingCentral and hardware VoIP equipment manufacturer Avaya. These synergies will actually create opportunities for Crescendo. Previous to the partnership with Avaya, Avaya was attempting to create its own UCaaS Cloud platform for its customers who were using its equipment with on-premises solutions. Instead of continuing in this direction, Avaya decided to partner with RingCentral to bring cloud communication services to its customers. However, this partnership is not exclusive and now opens the door for cloud communication providers like Crescendo and even Altigen (OTC:ATGN) to approach Avaya's customers.

Conference call highlights:

“Our current ratio improved, our gross margins expanded, and we've talked about that in the past, and our shareholder equity had a substantial increase. When you consider this happened with our expenses increasing at a much lower rate than our revenue growth, you realize we had a very good reason to be proud. I expect these improvements to continue for the foreseeable future.”

“We continue to expand our partner program and have seen nice increases in sales as well as increases in partners reselling our platform. We are launching additional incentives and marketing programs in Q4 to continue that momentum and are excited about the opportunities being pursued as the new partners joining the Crexendo team”

“Our backlog continues to grow and increase 17% year-over-year to $25.3 million. Our installations are strong, and we are very pleased with the momentum we are seeing.”

“As I have previously stated, we have reached an inflection point for the company where we can concentrate on consistent growth and GAAP profitability. We've now had 3 consecutive strong quarters of revenue growth and GAAP earnings, and we are focused on increasing those trends and investing more in our sales programs and marketing initiatives. By reinvesting our positive cash flow in the sales and marketing efforts, we can accelerate future sales growth. The industry still has tremendous growth opportunity with estimates at 65% to 70% of the business market still is using legacy permits based equipment. It's not a matter of if these businesses migrate to the cloud but rather when, and we are in a prime position to assist in their migration to the cloud.”

Conference call transcript provided by Sentieo.

Call to Action

Tue, 05 Nov 2019 14:57:21 GMT

Adding CXDO To Our Favorite Stock Model Portfolio

In early August we disclosed our long position in CREXENDO INC (OOTC:CXDO) ($3.50; $51.4M market cap) a provider of cloud communications and offered our quick reasons for tracking.

Earlier this month, Arham Khan, a Geoinvesting Research contributor published an article, “Crexendo, Inc: The Most Fundamentally Sound Cloud Communication Company” explaining why he felt shares are between $4.29 and $5.42 today.

Today, we are adding CXDO to our favorite stock model portfolio, betting on management ability to continue to execute its growth plan.

Please note that CXDO is slated to report its Q3 2019 results after the close today.

Research

Wed, 07 Aug 2019 16:22:29 GMT

CREXENDO INC (OOTC:CXDO) ($3.35; $48.2M market cap) a provider of cloud communications, was highlighted in yesterday’s email. We disclosed we were looking to establish a position and late in the day yesterday we offered our quick reasons for tracking. Yesterday after the close, CXDO announced its Q2 2019 results:

Sales of $3.6 million vs $3.0 million in the prior year
Non-GAAP EPS of $0.03 vs $0.01 in the prior year

“I am very pleased with the results we announced today. The improvements and hard work we have undertaken are continuing to positively impact our results. We have now reported back to back quarters of substantial GAAP profit. We reported net income of $338,000 for the second quarter of 2019, or $0.02 per diluted common share, compared to $47,000 or breakeven per diluted common share for the second quarter of 2018. Cloud Telecommunications Segment UCaaS service revenue increased 28% for the six months ended June 30, 2019 compared to the prior year. Additionally, our balance sheet continues to improve with a current ratio of 1.84 at the end of the quarter. These results are highly encouraging. However, we are not sitting back and congratulating ourselves, we are continuing to work to make improvements in our sales process, strengthen our infrastructure and making sure that we provide the best products, services and customer interface in the industry. ”

Conference call highlights:

We continue to see strong sales bookings from both our partner and direct channels. During the quarter, we secured more than half a dozen opportunities with total contract value greater than $100,000, many of these sales were multi-location opportunities, which is one of the target markets that Crexendo's ride the cloud solution is particularly effective with.

All of these metrics also helped increase our cash balances for the quarter by nearly 20% over the previous quarter and by over $650,000 for the first half of the year. Further highlighting the inflection points that the company has reached. Our backlog continues to grow and increased 19% year-over-year averaging $1 million increase per quarter over that period. Our installations are strong and we are very pleased with the momentum we are seeing.

Arham Khan, a Geoinvesting Research contributor, will soon provide further analysis on the company. We look forward to it.

Reasons For Tracking

Tue, 06 Aug 2019 20:07:02 GMT

Reasons Why We Are Starting to Track CXDO:

1. Experienced CEO in the communication management industry

Mr. Steven G. Mihaylo, Ph.D., is Chairman of the Board, Chief Executive Officer of Crexendo Inc. Mr. Mihaylo is the former Chairman and Chief Executive Officer of Inter-Tel, Incorporated (Inter-Tel), which he founded in 1969 and where he continued to serve until 2007. Mr. Mihaylo led the development of Inter-Tel from providing business telephone systems to offering complete managed services and software that help businesses facilitate communication and increase customer service and productivity. Before selling Inter-Tel to Francisco Partners, a private equity firm, for approximately $720 million in 2007, Mr. Mihaylo grew the business to nearly $500 million in annual sales. Inter-tel was a public company before it was acquired, trading under the symbol INTL.

2. Significant open market purchases by the CEO who now owns 71% of the Company.

You can view all his purchases here, but here is a snapshot that highlights that most of his recent purchases were transacted on the open market:

3. Shuttering Underperforming Assets

The company completed its public offering at the end of 2009 as a provider of software, technology and web hosting services to businesses that wanted to set up on-line stores. The eventually decided that it should exit this business to concentrate on building a communication management business (software and hardware), where Mihaylo had significant experience.

4. Shift To Recurring Revenue Model With Good Visibility

In 2011 CXDO shifted its business model to a recurring revenue (SaaS) model:

“We have historically sold our content management and website building tool as a perpetual software license. During 2011, we transitioned from selling a perpetual software license to a “Software as a Service” (“SaaS”) model.”

The company now generates a significant recurring revenue ( 85%) stream with high visibility due to the 3 to 5 year contract structure of customer contracts. Until the last few years, the revenue run off from the legacy business was masking the strides made in the new business

5. Major Contract

On December 6, 2017 CXDO signed a contract with U.S. Cellular

"We are very honored that U.S. Cellular has chosen Crexendo as its vendor of choice to offer our cloud-based telecommunication services to its customers and prospects. U.S. Cellular choosing to offer our award-winning services is a major accomplishment for us and supports my belief that Crexendo provides the best cloud-based business telephone solutions in the industry. The Crexendo patented Ride the Cloud® technology will provide industry-leading solutions, productivity enhancements, and significant cost savings to U.S. Cellular's business and government customers."

6. Profitability

CXDO Recently turned profitable which we believe should continue to be the case as the recurring revenue model continues to gain steam. Here is a historical financial snapshot:

Caveats

Hardware - Hardware currently makes up 15% of Revenue. The company generates decent margins on hardware, but also offers a lifetime warranty. So, hardware sales are kind of one-and-done sales (unless the customer grows). Overtime, we don't think the hardware sales will be a major factor in the company's revenue and will eventually taper off as desktop phones become less popular.
Customer Concentration from U.S. Cellular Relationship

We hope to get some more clarity on how the company's growth prospects on its Q2 conference call to be held August 6, 2019 at 5:30 PM EST (today, after the market close). We will also be looking for any new information on visibility and backlog.

Research

Tue, 06 Aug 2019 14:33:34 GMT

Looking To Establish A Small Long Position In CXDO

CREXENDO INC (OOTC:CXDO) ($3.30; $47.5M market cap) - We have been tracking CXDO for several years now, originally coming across the Company as we looked for competitors in our early stage due diligence on Altigen Communications (OOTC:ATGN). CXDO is a cloud services company that provides telecommunications services, broadband Internet services, and other cloud services for businesses in North America and internationally.

We were able to the company’s management last week and left the interview with the feeling that the Company can continue/build upon its strong Q1 2019 results reported in late April. Initiating a small position in the stock prior to its upcoming Q2 2019 results is not out of the question for us, but shares are fairly illiquid.

Update to morning email note:

Crexendo is a cloud communications service provider. It is a ‘cousin,’ so to speak, of Altigen. We have covered Altigen since January 2015 and asked Premium GeoInvesting contributor, Arham Kahn, to write a detailed report on the company in February 2019. In his report, Arham actually compared ATGN to CXDO. You can see Arham’s ATGN research report and financial model here. We also prepared a slide presentation on ATGN, detailing our history with the stock and its transformation from a hardware, on-premise unified communication provider to an asset light cloud service provider.

Arham’s report delineated that cloud computing revolutionized software technology. Companies like Adobe (ADBE) and Microsoft (MSFT) divorced hardware, making it convenient and cheaper to the end user. However, small business enterprises (SMEs) have been slow to ditch on-premise hardware heavy communication solutions and adopt cloud communication solutions. However, it appears that SMEs are ready to make the shift and are quickly beginning to adopt more cost effective cloud solutions. Companies such as Altigen (ATGN), RingCentral (RNG), Crexendo (CXDO), and Avaya (AVYA) all vie for businesses who are now selecting software providers for their communications. Larger, unprofitable companies in the space trade for upwards of 12x Sales and ludicrous EBIT multiples.

Based on a price to sales and enterprise value to sales multiples of 2.7 and 2.8 respectively, we believe that ATGN is the cheapest in the field of comps we have looked at. But, CXDO’s P/S of 3.8 and EV/S 4.6 multiple also lags the pack. We surmise that part of the reason for this is that 15% revenue is generated from hardware desktop phone equipment sales.

Because Arham is familiar with the space, we have asked him if he could prepare a detailed report on CXDO. He will need a little more time to dissect the story. For now, we wanted to bring you an outline of some of the

Reasons Why We Are Starting to Track CXDO (that Arham will expand upon):

1. Experienced CEO in the communication management industry

Mr. Steven G. Mihaylo, Ph.D., is Chairman of the Board, Chief Executive Officer of Crexendo Inc. Mr. Mihaylo is the former Chairman and Chief Executive Officer of Inter-Tel, Incorporated (Inter-Tel), which he founded in 1969 and where he continued to serve until 2007. Mr. Mihaylo led the development of Inter-Tel from providing business telephone systems to offering complete managed services and software that help businesses facilitate communication and increase customer service and productivity. Before selling Inter-Tel to Francisco Partners, a private equity firm, for approximately $720 million in 2007, Mr. Mihaylo grew the business to nearly $500 million in annual sales. Inter-tel was a public company before it was acquired, trading under the symbol INTL.

2. Significant open market purchases by the CEO who now owns 71% of the Company.

You can view all his purchases here, but here is a snapshot that highlights that most of his recent purchases were transacted on the open market:

3. Shuttering Underperforming Assets

4. Shift To Recurring Revenue Model With Good Visibility

In 2011 CXDO shifted its business model to a recurring revenue (SaaS) model:

“We have historically sold our content management and website building tool as a perpetual software license. During 2011, we transitioned from selling a perpetual software license to a “Software as a Service” (“SaaS”) model.”

5. Major Contract

On December 6, 2017 CXDO signed a contract with U.S. Cellular

"We are very honored that U.S. Cellular has chosen Crexendo as its vendor of choice to offer our cloud-based telecommunication services to its customers and prospects. U.S. Cellular choosing to offer our award-winning services is a major accomplishment for us and supports my belief that Crexendo provides the best cloud-based business telephone solutions in the industry. The Crexendo patented Ride the Cloud® technology will provide industry-leading solutions, productivity enhancements, and significant cost savings to U.S. Cellular's business and government customers."

6. Profitability

CXDO Recently turned profitable which we believe should continue to be the case as the recurring revenue model continues to gain steam. Here is a historical financial snapshot:

Caveats

Hardware - Hardware currently makes up 15% of Revenue. The company generates decent margins on hardware, but also offers a lifetime warranty. So, hardware sales are kind of one-and-done sales (unless the customer grows). Overtime, we don't think the hardware sales will be a major factor in the company's revenue and will eventually taper off as desktop phones become less popular.
Customer Concentration from U.S. Cellular Relationship

Research

Thu, 14 Jun 2018 15:12:07 GMT

CREXENDO INC (OOTC:CXDO) ($2.70; $38.6M market cap) a cloud services company that provides telecommunications services, broadband Internet services, and other cloud services for businesses in North America and internationally. In our June 11, 2018 email we offered a summary from our LD Micro conference visit. You can see that email here. We are adding CXDO to the list of companies from the LD that we plan to dive into a bit deeper.

On May 8, 2018 the Company reported strong Q1 2018 results with:

Sales of $2.4 million vs $2.0 million in the prior year
Non-GAAP breakeven vs a loss of $0.01

Quotes from management:

“good quarterly results are only part of the process. We are working diligently on processes to grow our sales and improve our results. While I am encouraged with the quarter we are working every day with both the partner channel and direct sales channel to raise the bar higher. These are encouraging signs, we continue to improve our partnership with U.S. Cellular, as well as other strategic Partners and have added additional resources to help those Partners grow. I share Steve's optimism and our team is working every day to deliver value to our shareholders and customers."