Crexendo Announces First Quarter 2021 Results
Crexendo, a cloud communications provider, reported a 17% year-over-year revenue increase to $4.5 million for Q1 2021. Service revenue rose 19% to $4.1 million, though GAAP net loss reached $(715,000). Non-GAAP net income was $308,000, consistent with previous year. Operating expenses surged 45% to $5.3 million, driven by acquisition-related costs. Despite a decline in product revenue and web services, CEO Steven Mihaylo expressed optimism about the upcoming merger with NetSapiens, which is expected to enhance service offerings and drive growth.
- Total revenue increased 17% year-over-year to $4.5 million.
- Service revenue rose 19% year-over-year to $4.1 million.
- UCaaS service revenue skyrocketed by 21% to $4.0 million.
- Non-GAAP net income of $308,000 was reported, consistent with the prior year.
- Strong pro forma revenue post-NetSapiens merger projected at $27.8 million for 2020.
- GAAP net loss of $(715,000), a decline from $140,000 net income in Q1 2020.
- Operating expenses increased by 45% to $5.3 million.
- Web services segment revenue decreased 26% to $116,000.
- Adjusted EBITDA decreased to $245,000 from $389,000.
PHOENIX, AZ / ACCESSWIRE / May 11, 2021 / Crexendo, Inc. (NASDAQ:CXDO), an award-winning premier provider of cloud communications, UCaaS (Unified Communications as a Service), call center, collaboration services, and other cloud business services that are designed to provide enterprise-class cloud services to any size business at affordable monthly rates, today reported financial results for the first quarter ended March 31, 2021.
First Quarter Financial highlights:
- Total revenue increased
17% year-over-year to$4.5 million . - Service revenue increased
19% year-over-year to$4.1 million . - GAAP net loss of
$(715,000) or a$(0.04) loss per basic and diluted common share. - Non-GAAP net income of
$308,000 or$0.02 per basic and diluted common share.
Financial Results for the First Quarter of 2021
Consolidated total revenue for the first quarter of 2021 increased
Consolidated service revenue for the first quarter of 2021 increased
- Cloud Telecommunications Segment UCaaS service revenue for the first quarter of 2021 increased
21% to$4.0 million compared to$3.3 million for the first quarter of 2020. - Web Services Segment service revenue for the first quarter of 2021 decreased
26% to$116,000 , compared to$156,000 for the first quarter of 2020.
Consolidated product revenue for the first quarter of 2021 decreased
Consolidated operating expenses for the first quarter of 2021 increased
The Company reported a net loss of
Non-GAAP net income of
EBITDA for the first quarter of 2021 decreased to
Total cash, cash equivalents, and restricted cash at March 31, 2021 was
Cash used for operating activities for the first quarter of 2021 of
Steven G. Mihaylo, Chief Executive Officer commented, "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. There were some very good markers for us this quarter, UCaaS service revenue for the first quarter of 2021 increased
Mihaylo added, "I am very excited that we will shortly be rolling out the NetSapiens platform to our Crexendo customers. I am convinced that the NetSapiens video collaboration solutions and mobility solutions used for teleconferencing and telecommuting, are the best in the industry. In the new work from anywhere world, this will be a substantial benefit to the Crexendo customers. NetSapiens was recently spotlighted in Frost & Sullivan's UCaaS (Unified Communications as a Service) report as the third-party platform vendor with the fastest growth rate in the North American market, and the report ranks NetSapiens at number 4 in UCaaS seats in the North American market. Our combined company pro forma consolidated revenue for 2020 of
Doug Gaylor, President and Chief Operating Officer, stated, "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. The combination of the talented resources from both organizations will make us a better and more complete Company to support over 1.7 million users. I share Steve's enthusiasm and look forward to the future."
Conference Call
The Company is hosting a conference call today, May 11, 2021 at 4:30 PM EST. The dial-in number for domestic participants is 888-506-0062 and 973-528-0011 for international participants. Please dial in five minutes prior to the beginning of the call at 4:30 PM EST and reference entry code 748152. A replay of the call will be available until May 18, 2021 by dialing toll-free at 877-481-4010 or 919-882-2331 for international callers. The replay passcode is 41164.
About Crexendo
Crexendo, Inc. is an award-winning premier provider of cloud communications, UCaaS (Unified Communications as a Service), call center, collaboration services, and other cloud business services that are designed to provide enterprise-class cloud services to any size business at affordable monthly rates.
Safe Harbor Statement
This press release contains forward-looking statements. The Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for such forward-looking statements. The words "believe," "expect," "anticipate," "estimate," "will" and other similar statements of expectation identify forward-looking statements. Specific forward-looking statements in this press release include information about Crexendo (i) being very excited about the progress being made and the direction it is headed; (ii) having fully expected to operate at a loss this quarter due to the expenses associated with the NetSapiens merger; (iii) believing that there were some very good markers for the quarter; (iv) believing that UCaaS service revenue and consolidated service revenue increases are very important and promising trends; (v) that the merger agreement with NetSapiens comprised a transformational quarter; (vi) should be able to close the NetSapiens merger by the end of this month; (vii) continuing to grow the business both organically and through acquisitions and this quarter being a testament to that plan; (VIII) being very excited about offering the NetSapiens platform to its customers; (ix) being convinced that the NetSapiens video collaboration tools are the best in the industry; (X) having accurately determined combined company pro forma consolidated revenue for 2020 of
For a more detailed discussion of risk factors that may affect Crexendo's operations and results, please refer to the company's Form 10-K for the year ended December 31, 2020, and quarterly Form 10-Qs as filed with the SEC. These forward-looking statements speak only as of the date on which such statements are made, and the company undertakes no obligation to update such forward-looking statements, except as required by law.
CONTACT:
Crexendo, Inc.
Doug Gaylor
President and Chief Operating Officer
602-732-7990
dgaylor@crexendo.com
CREXENDO, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(Unaudited, in thousands, except par value and share data)
March 31, 2021 | December 31, 2020 | ||||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 16,204 | $ | 17,579 | |||
Restricted cash | - | 100 | |||||
Trade receivables, net of allowance for doubtful accounts of | |||||||
as of March 31, 2021 and | 486 | 538 | |||||
Contract assets | 205 | 159 | |||||
Inventories | 419 | 504 | |||||
Equipment financing receivables | 298 | 286 | |||||
Contract costs | 442 | 421 | |||||
Prepaid expenses | 503 | 190 | |||||
Income tax receivable | 129 | 4 | |||||
Other current assets | 2 | - | |||||
Total current assets | 18,688 | 19,781 | |||||
Long-term equipment financing receivables, net | 880 | 906 | |||||
Property and equipment, net | 2,776 | 2,734 | |||||
Deferred income tax assets, net | 6,054 | 6,054 | |||||
Operating lease right-of-use assets | 135 | 1 | |||||
Intangible assets, net | 2,433 | 252 | |||||
Goodwill | 1,395 | 272 | |||||
Contract costs, net of current portion | 543 | 549 | |||||
Other long-term assets | 225 | 156 | |||||
Total Assets | $ | 33,129 | $ | 30,705 | |||
Liabilities and Stockholders' Equity | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 190 | $ | 56 | |||
Accrued expenses | 1,998 | 1,628 | |||||
Finance leases | 43 | 29 | |||||
Notes payable | 72 | 71 | |||||
Operating lease liabilities | 44 | 1 | |||||
Contigent consideration | 746 | - | |||||
Contract liabilities | 1,034 | 778 | |||||
Total current liabilities | 4,127 | 2,563 | |||||
Contract liabilities, net of current portion | 352 | 450 | |||||
Finance leases, net of current portion | 50 | 55 | |||||
Notes payable, net of current portion | 1,854 | 1,873 | |||||
Operating lease liabilities, net of current portion | 75 | - | |||||
Total liabilities | 6,458 | 4,941 | |||||
Stockholders' equity: | |||||||
Preferred stock, par value | - | - | |||||
Common stock, par value | |||||||
shares issued and outstanding as of March 31, 2021 and 17,983,177 shares issued | |||||||
and outstanding as of December 31, 2020 | 18 | 18 | |||||
Additional paid-in capital | 77,456 | 75,834 | |||||
Accumulated deficit | (50,803 | ) | (50,088 | ) | |||
Total stockholders' equity | 26,671 | 25,764 | |||||
Total Liabilities and Stockholders' Equity | $ | 33,129 | $ | 30,705 | |||
CREXENDO, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(Unaudited, in thousands, except per share and share data)
| Three Months Ended March 31, | ||||||||
| 2021 | 2020 | |||||||
Service revenue | $ | 4,139 | $ | 3,488 | ||||
Product revenue | 368 | 379 | ||||||
Total revenue | 4,507 | 3,867 | ||||||
Operating expenses: | ||||||||
Cost of service revenue | 1,259 | 970 | ||||||
Cost of product revenue | 225 | 220 | ||||||
Selling and marketing | 1,241 | 1,038 | ||||||
General and administrative | 2,254 | 1,188 | ||||||
Research and development | 350 | 270 | ||||||
Total operating expenses | 5,329 | 3,686 | ||||||
Income/(loss) from operations | (822 | ) | 181 | |||||
Other income/(expense): | ||||||||
Interest income | - | 1 | ||||||
Interest expense | (19 | ) | (9 | ) | ||||
Other income/(expense), net | 2 | (30 | ) | |||||
Total other income/(expense), net | (17 | ) | (38 | ) | ||||
Income/(loss) before income tax | (839 | ) | 143 | |||||
Income tax benefit/(provision) | 124 | (3 | ) | |||||
Net income/(loss) | $ | (715 | ) | $ | 140 | |||
Earnings per common share: | ||||||||
Basic | $ | (0.04 | ) | $ | 0.01 | |||
Diluted | $ | (0.04 | ) | $ | 0.01 | |||
Weighted-average common shares outstanding: | ||||||||
Basic | 18,189,783 | 14,905,599 | ||||||
Diluted | 18,189,783 | 16,262,886 | ||||||
CREXENDO, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(Unaudited, in thousands)
| Three Months Ended March 31, | ||||||||
| 2021 | 2020 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
Net income/(loss) | $ | (715 | ) | $ | 140 | |||
Adjustments to reconcile net income/(loss) to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 101 | 103 | ||||||
Share-based compensation | 282 | 105 | ||||||
Changes in assets and liabilities: | ||||||||
Trade receivables | 174 | (54 | ) | |||||
Contract assets | (46 | ) | (6 | ) | ||||
Equipment financing receivables | 14 | (102 | ) | |||||
Inventories | 97 | 153 | ||||||
Contract costs | (15 | ) | (20 | ) | ||||
Prepaid expenses | (309 | ) | (323 | ) | ||||
Income tax receivable | (125 | ) | 3 | |||||
Other assets | (8 | ) | (50 | ) | ||||
Accounts payable and accrued expenses | 291 | (290 | ) | |||||
Contract liabilities | 11 | 53 | ||||||
Net cash used for operating activities | (248 | ) | (288 | ) | ||||
CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
Purchase of property and equipment | (29 | ) | (528 | ) | ||||
Business acquisition | (2,163 | ) | - | |||||
Net cash used for investing activities | (2,192 | ) | (528 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
Repayments made on finance leases | (11 | ) | (8 | ) | ||||
Repayments made on notes payable | (18 | ) | (5 | ) | ||||
Proceeds from exercise of options | 1,146 | 84 | ||||||
Taxes paid on the net settlement of stock options | (152 | ) | - | |||||
Net cash provided by financing activities | 965 | 71 | ||||||
NET DECREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH | (1,475 | ) | (745 | ) | ||||
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT THE BEGINNING OF THE PERIOD | 17,679 | 4,280 | ||||||
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT THE END OF THE PERIOD | $ | 16,204 | $ | 3,535 | ||||
Cash used during the year for: | ||||||||
Income taxes, net | $ | (1 | ) | $ | - | |||
Interest expense | $ | (19 | ) | $ | (9 | ) | ||
Supplemental disclosure of non-cash investing and financing information: | ||||||||
Purchase of property and equipment with a note payable | $ | - | $ | 2,000 | ||||
Stock issued for the acquisition of Centric Telecom | $ | 346 | $ | - | ||||
Contingent consideration related to the acquisition of Centric Telecom | $ | 746 | $ | - | ||||
CREXENDO, INC. AND SUBSIDIARIES
Supplemental Segment Financial Data
(Unaudited, in thousands)
| Three Months Ended March 31, | ||||||||
| 2021 | 2020 | |||||||
Revenue: | ||||||||
Cloud telecommunications | $ | 4,391 | $ | 3,711 | ||||
Web services | 116 | 156 | ||||||
Consolidated revenue | 4,507 | 3,867 | ||||||
Income/(Loss) from operations: | ||||||||
Cloud telecommunications | (817 | ) | 129 | |||||
Web services | (5 | ) | 52 | |||||
Total operating income/(loss) | (822 | ) | 181 | |||||
Other income/(expense), net: | ||||||||
Cloud telecommunications | (17 | ) | (6 | ) | ||||
Web services | - | (32 | ) | |||||
Total other income/(expense), net | (17 | ) | (38 | ) | ||||
Income/(Loss) before income tax provision: | ||||||||
Cloud telecommunications | (834 | ) | 123 | |||||
Web services | (5 | ) | 20 | |||||
Income/(Loss) before income tax provision | $ | (839 | ) | $ | 143 | |||
Use of Non-GAAP Financial Measures
To evaluate our business, we consider and use non-generally accepted accounting principles ("Non-GAAP") net income and Adjusted EBITDA as a supplemental measure of operating performance. These measures include the same adjustments that management takes into account when it reviews and assesses operating performance on a period-to-period basis. We consider Non-GAAP net income to be an important indicator of overall business performance because it allows us to evaluate results without the effects of share-based compensation, acquisition related expenses and amortization of intangibles. We define EBITDA as U.S. GAAP net income/(loss) before interest income, interest expense, other income and expense, provision for income taxes, and depreciation and amortization. We believe EBITDA provides a useful metric to investors to compare us with other companies within our industry and across industries. We define Adjusted EBITDA as EBITDA adjusted for acquisition related expenses and share-based compensation. We use Adjusted EBITDA as a supplemental measure to review and assess operating performance. We also believe use of Adjusted EBITDA facilitates investors' use of operating performance comparisons from period to period, as well as across companies.
In our May 11, 2021 earnings press release, as furnished on Form 8-K, we included Non-GAAP net income, EBITDA and Adjusted EBITDA. The terms Non-GAAP net income, EBITDA, and Adjusted EBITDA are not defined under U.S. GAAP, and are not measures of operating income, operating performance or liquidity presented in analytical tools, and when assessing our operating performance, Non-GAAP net income, EBITDA, and Adjusted EBITDA should not be considered in isolation, or as a substitute for net income/(loss) or other consolidated income statement data prepared in accordance with U.S. GAAP. Some of these limitations include, but are not limited to:
- EBITDA and Adjusted EBITDA do not reflect our cash expenditures or future requirements for capital expenditures or contractual commitments;
- they do not reflect changes in, or cash requirements for, our working capital needs;
- they do not reflect the interest expense, or the cash requirements necessary to service interest or principal payments, on our debt that we may incur;
- they do not reflect income taxes or the cash requirements for any tax payments;
- although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will be replaced sometime in the future, and EBITDA and Adjusted EBITDA do not reflect any cash requirements for such replacements;
- while share-based compensation is a component of operating expense, the impact on our financial statements compared to other companies can vary significantly due to such factors as the assumed life of the options and the assumed volatility of our common stock; and
- other companies may calculate EBITDA and Adjusted EBITDA differently than we do, limiting their usefulness as comparative measures.
We compensate for these limitations by relying primarily on our U.S. GAAP results and using Non-GAAP net income, EBITDA, and Adjusted EBITDA only as supplemental support for management's analysis of business performance. Non-GAAP net income, EBITDA and Adjusted EBITDA are calculated as follows for the periods presented.
Reconciliation of Non-GAAP Financial Measures
In accordance with the requirements of Regulation G issued by the SEC, we are presenting the most directly comparable U.S. GAAP financial measures and reconciling the unaudited Non-GAAP financial metrics to the comparable U.S. GAAP measures.
| Reconciliation of U.S. GAAP Net Income/(Loss) to Non-GAAP Net Income (Unaudited, in thousands, except for per share and share data) | |||||||||||
| Three Months Ended March 31, | |||||||||||
| 2021 | 2020 | ||||||||||
U.S. GAAP net income/(loss) | $ | (715 | ) | $ | 140 | ||||||
Share-based compensation | 282 | 105 | |||||||||
Acquisition related expenses | 684 | - | |||||||||
Amortization of intangible assets | 57 | 30 | |||||||||
Non-GAAP net income | $ | 308 | $ | 275 | |||||||
Non-GAAP earnings per common share: | |||||||||||
Basic | $ | 0.02 | $ | 0.02 | |||||||
Diluted | $ | 0.02 | $ | 0.02 | |||||||
Weighted-average common shares outstanding: | |||||||||||
Basic | 18,189,783 | 14,904,599 | |||||||||
Diluted | 19,484,148 | 16,262,886 | |||||||||
Reconciliation of U.S. GAAP Net Income/(Loss) to EBITDA to Adjusted EBITDA (Unaudited, in thousands) | ||||||||
| Three Months Ended March 31, | ||||||||
| 2021 | 2020 | |||||||
U.S. GAAP net income/(loss) | $ | (715 | ) | $ | 140 | |||
Depreciation and amortization | 101 | 103 | ||||||
Interest expense | 19 | 9 | ||||||
Interest and other expense/(income) | (2 | ) | 29 | |||||
Income tax provision/(benefit) | (124 | ) | 3 | |||||
EBITDA | (721 | ) | 284 | |||||
Acquisition related expenses | 684 | - | ||||||
Share-based compensation | 282 | 105 | ||||||
Adjusted EBITDA | $ | 245 | $ | 389 | ||||
SOURCE: Crexendo, Inc.
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FAQ
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