Crexendo Announces Fourth Quarter and Year Ended December 31, 2020 Results
Crexendo, a leading provider of cloud communications, reported a 16% increase in total revenue to $4.3 million for Q4 2020 compared to the previous year. The company achieved a GAAP net income of $7.2 million and a non-GAAP net income of $7.4 million. Full-year revenue rose 14% to $16.4 million, driven largely by a 16% growth in UCaaS service revenue. The company benefited from a $6 million income tax adjustment and $1 million PPP loan forgiveness. Operating expenses increased by 16% to $15.4 million, while cash balances significantly improved to $17.7 million.
- 16% increase in total revenue for Q4 2020 to $4.3 million.
- GAAP net income of $7.2 million for Q4 2020 compared to $228,000 in Q4 2019.
- Non-GAAP net income of $7.4 million for Q4 2020, up from $347,000 in Q4 2019.
- 14% increase in full-year revenue to $16.4 million.
- 16% growth in UCaaS service revenue year-over-year.
- Operating expenses rose 20% in Q4 2020 to $4.2 million.
- Web Services Segment service revenue declined 21% in Q4 2020.
PHOENIX, AZ / ACCESSWIRE / March 9, 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 fourth quarter and full year ended December 31, 2020.
Fourth Quarter Financial highlights:
16% increase in total revenue year-over-year to$4.3 million .- GAAP net income of
$7.2 million or$0.40 per basic common share and$0.37 per diluted common share. - Non-GAAP net income of
$7.4 million or$0.42 per basic common share and$0.39 per diluted common share.
Financial Results for the Fourth Quarter of 2020
Consolidated total revenue for the fourth quarter of 2020 increased
Consolidated service revenue for the fourth quarter of 2020 increased
- Cloud Telecommunications Segment UCaaS service revenue for the fourth quarter of 2020 increased
16% to$3.7 million compared to$3.2 million for the fourth quarter of 2019. - Web Services Segment service revenue for the fourth quarter of 2020 decreased
21% to$121,000 , compared to$154,000 for the fourth quarter of 2019.
Consolidated product revenue for the fourth quarter of 2020 increased
Consolidated operating expenses for the fourth quarter of 2020 increased
The Company reported net income of
Non-GAAP net income of
EBITDA for the fourth quarter of 2020 decreased to
Financial Results for the Year ended December 31, 2020
Consolidated total revenue for the year ended December 31, 2020 increased
Consolidated service revenue for the year ended December 31, 2020 increased
- Cloud Telecommunications Segment UCaaS service revenue for the year ended December 31, 2020 increased
16% to$14.0 million compared to$12.1 million for the year ended December 31, 2019. - Web Services Segment service revenue for the year ended December 31, 2020 decreased
17% to$542,000 , compared to$656,000 for the year ended December 31, 2019.
Consolidated product revenue for the year ended December 31, 2020 increased
Consolidated operating expenses for the year ended December 31, 2020 increased
The Company reported net income of
Non-GAAP net income was
EBITDA for the year ended December 31, 2020 was
Total cash, cash equivalents, and restricted cash at December 31, 2020 was
Cash provided by operating activities for the year ended December 31, 2020 of
Steven G. Mihaylo, Chief Executive Officer commented, "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."
Mihaylo added, "I am very excited with our results, we continue to generate positive income from operations as we continue to invest and grow our business. The significant increase in net income for the year is primarily related to the release of our valuation allowance on our deferred tax assets as a result of cumulative positive pretax income and projections of future taxable income. I was very pleased that consolidated total revenue for the year ended December 31, 2020 increased
Doug Gaylor, President and Chief Operating Officer, stated, "I share Steve's enthusiasm for our future and appreciation for the efforts of our team. We made some substantial improvements in 2020, we now have the ability to attract accretive acquisitions. We made substantial investments in our sales and marketing and we are pleased to have added Jon Brinton as our new Chief Revenue Officer who has been making further key sales additions. We continue to update our products and services, and I believe our organic growth will continue to be strong. I am extremely excited about the potential growth of our organization through accretive acquisitions."
Conference Call
The Company is hosting a conference call today, March 9, 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 412097. A replay of the call will be available until March 16, 2021 by dialing toll-free at 877-481-4010 or 919-882-2331 for international callers. The replay passcode is 40139.
Access to the conference call will also be available via audio webcast through https://www.webcaster4.com/Webcast/Page/2223/40139. No questions can be submitted through the webcast.
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) believing this was an important and transformational year; (ii) staying true to its plan and the results proving the progress made; (iii) being able to negotiate a substantial accretive acquisition; (iv) having grown the business organically and are now on track to aggressively grow the business thru accretive acquisitions; (v) being very excited with its results while continuing to generate positive income from operation and continuing to invest and grow the business; (vi) being pleased that consolidated total revenue for the year increased
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.
| December 31, | ||||||||
| 2020 | 2019 | |||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 17,579 | $ | 4,180 | ||||
Restricted cash | 100 | 100 | ||||||
Trade receivables, net of allowance for doubtful accounts of | ||||||||
as of December 31, 2020 and | 538 | 380 | ||||||
Contract assets | 159 | 22 | ||||||
Inventories | 504 | 382 | ||||||
Equipment financing receivables | 286 | 143 | ||||||
Contract costs | 421 | 379 | ||||||
Prepaid expenses | 190 | 141 | ||||||
Income tax receivable | 4 | 4 | ||||||
Total current assets | 19,781 | 5,731 | ||||||
Long-term trade receivables, net of allowance for doubtful accounts | ||||||||
of | - | 6 | ||||||
Long-term equipment financing receivables, net | 906 | 561 | ||||||
Property and equipment, net | 2,734 | 155 | ||||||
Deferred income tax assets, net | 6,054 | - | ||||||
Operating lease right-of-use assets | 1 | 51 | ||||||
Intangible assets, net | 252 | 465 | ||||||
Goodwill | 272 | 272 | ||||||
Contract costs, net of current portion | 549 | 436 | ||||||
Other long-term assets | 156 | 106 | ||||||
Total Assets | $ | 30,705 | $ | 7,783 | ||||
Liabilities and Stockholders' Equity | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 56 | $ | 86 | ||||
Accrued expenses | 1,628 | 1,754 | ||||||
Finance leases | 29 | 30 | ||||||
Notes payable | 71 | - | ||||||
Operating lease liabilities | 1 | 50 | ||||||
Contingent consideration | - | 175 | ||||||
Contract liabilities | 778 | 791 | ||||||
Total current liabilities | 2,563 | 2,886 | ||||||
Contract liabilities, net of current portion | 450 | 423 | ||||||
Finance leases, net of current portion | 55 | 86 | ||||||
Notes payable, net of current portion | 1,873 | - | ||||||
Operating lease liabilities, net of current portion | - | 1 | ||||||
Total liabilities | 4,941 | 3,396 | ||||||
Stockholders' equity: | ||||||||
Preferred stock, par value | - | - | ||||||
Common stock, par value | ||||||||
shares issued and outstanding as of December 31, 2020 and 14,884,755 shares issued | ||||||||
and outstanding as of December 31, 2019 | 18 | 15 | ||||||
Additional paid-in capital | 75,834 | 62,400 | ||||||
Accumulated deficit | (50,088 | ) | (58,028 | ) | ||||
Total stockholders' equity | 25,764 | 4,387 | ||||||
Total Liabilities and Stockholders' Equity | $ | 30,705 | $ | 7,783 | ||||
CREXENDO, INC. AND SUBSIDIARIES
| Year Ended December 31, | ||||||||
| 2020 | 2019 | |||||||
Service revenue | $ | 14,544 | $ | 12,745 | ||||
Product revenue | 1,843 | 1,691 | ||||||
Total revenue | 16,387 | 14,436 | ||||||
Operating expenses: | ||||||||
Cost of service revenue | 3,837 | 3,456 | ||||||
Cost of product revenue | 1,110 | 895 | ||||||
Selling and marketing | 4,153 | 3,862 | ||||||
General and administrative | 5,107 | 4,235 | ||||||
Research and development | 1,189 | 853 | ||||||
Total operating expenses | 15,396 | 13,301 | ||||||
Income from operations | 991 | 1,135 | ||||||
Other income/(expense): | ||||||||
Interest income | 3 | 6 | ||||||
Interest expense | (76 | ) | (12 | ) | ||||
Extinguishment of PPP debt | 1,007 | - | ||||||
Other income/(expense), net | (26 | ) | 16 | |||||
Total other income/(expense), net | 908 | 10 | ||||||
Income before income tax | 1,899 | 1,145 | ||||||
Income tax benefit/(provision) | 6,041 | (6 | ) | |||||
Net income | $ | 7,940 | $ | 1,139 | ||||
Earnings per common share: | ||||||||
Basic | $ | 0.50 | $ | 0.08 | ||||
Diluted | $ | 0.46 | $ | 0.07 | ||||
Weighted-average common shares outstanding: | ||||||||
Basic | 15,767,874 | 14,570,286 | ||||||
Diluted | 17,420,476 | 15,559,863 | ||||||
| Year Ended December 31, | ||||||||
| 2020 | 2019 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
Net income | $ | 7,940 | $ | 1,139 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 258 | 94 | ||||||
Deferred tax asset | (6,054 | ) | - | |||||
Extinguishment of PPP debt | (1,001 | ) | - | |||||
Share-based compensation | 623 | 399 | ||||||
Changes in assets and liabilities: | ||||||||
Trade receivables | (152 | ) | 43 | |||||
Contract assets | (137 | ) | (10 | ) | ||||
Equipment financing receivables | (488 | ) | (453 | ) | ||||
Inventories | (122 | ) | (112 | ) | ||||
Contract costs | (155 | ) | (102 | ) | ||||
Prepaid expenses | (49 | ) | 103 | |||||
Income tax receivable | - | (3 | ) | |||||
Other assets | (50 | ) | 11 | |||||
Accounts payable and accrued expenses | 20 | 378 | ||||||
Contract liabilities | 14 | 151 | ||||||
Net cash provided by operating activities | 647 | 1,638 | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
Purchase of property and equipment | (745 | ) | (72 | ) | ||||
Acquisition of customer relationships | (176 | ) | - | |||||
Net cash used for investing activities | (921 | ) | (72 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
Payment of contingent consideration | (54 | ) | - | |||||
Repayments made on finance leases | (32 | ) | (28 | ) | ||||
Proceeds from notes payable | 1,001 | - | ||||||
Repayments made on notes payable | (56 | ) | (56 | ) | ||||
Proceeds from exercise of options | 2,043 | 849 | ||||||
Proceeds from issuance of common stock | 10,771 | - | ||||||
Net cash provided by financing activities | 13,673 | 765 | ||||||
NET INCREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH | 13,399 | 2,331 | ||||||
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT THE BEGINNING OF THE YEAR | 4,280 | 1,949 | ||||||
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH AT THE END OF THE YEAR | $ | 17,679 | $ | 4,280 | ||||
Supplemental disclosure of cash flow information: | ||||||||
Cash used during the year for: | ||||||||
Income taxes, net | $ | (12 | ) | $ | (9 | ) | ||
Interest expense | $ | (70 | ) | $ | (12 | ) | ||
Supplemental disclosure of non-cash investing and financing information: | ||||||||
Purchase of property and equipment with a note payable | $ | 2,000 | $ | - | ||||
Adjustment to intangible assets and contingent consideration of customer relationship asset acquisition | $ | (121 | ) | $ | - | |||
Extinguishment of PPP debt | $ | (1,001 | ) | $ | - | |||
Contingent consideration related to intangible asset acquisition | $ | - | $ | 175 | ||||
Purchase of intangible assets included in accrued expenses | $ | - | $ | 176 | ||||
| Three Months Ended December 31, | Year Ended December 31, | |||||||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||||||
Revenue: | ||||||||||||||||
Cloud telecommunications | $ | 4,202 | $ | 3,574 | $ | 15,845 | $ | 13,780 | ||||||||
Web services | 121 | 154 | 542 | 656 | ||||||||||||
Consolidated revenue | 4,323 | 3,728 | 16,387 | 14,436 | ||||||||||||
Income from operations: | ||||||||||||||||
Cloud telecommunications | 110 | 172 | 849 | 864 | ||||||||||||
Web services | 14 | 46 | 142 | 271 | ||||||||||||
Total operating income | 124 | 218 | 991 | 1,135 | ||||||||||||
Other income/(expense), net: | ||||||||||||||||
Cloud telecommunications | 986 | - | 939 | (2 | ) | |||||||||||
Web services | 1 | 9 | (31 | ) | 12 | |||||||||||
Total other income/(expense), net | 987 | 9 | 908 | 10 | ||||||||||||
Income before income tax benefit/(provision): | ||||||||||||||||
Cloud telecommunications | 1,096 | 172 | 1,788 | 862 | ||||||||||||
Web services | 15 | 55 | 111 | 283 | ||||||||||||
Income before income tax benefit/(provision) | $ | 1,111 | $ | 227 | $ | 1,899 | $ | 1,145 | ||||||||
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 and amortization of intangibles. We define EBITDA as U.S. GAAP net income 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 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 March 9, 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 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 to Non-GAAP Net Income
(Unaudited)
| Three Months Ended December 31, | Year Ended December 31, | |||||||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||||||
| (In thousands) | (In thousands) | |||||||||||||||
U.S. GAAP net income | $ | 7,161 | $ | 228 | $ | 7,940 | $ | 1,139 | ||||||||
Share-based compensation | 246 | 106 | 623 | 399 | ||||||||||||
Amortization of intangible assets | 23 | 13 | 92 | 53 | ||||||||||||
Non-GAAP net income | $ | 7,430 | $ | 347 | $ | 8,655 | $ | 1,591 | ||||||||
Non-GAAP earnings per common share: | ||||||||||||||||
Basic | $ | 0.42 | $ | 0.02 | $ | 0.55 | $ | 0.11 | ||||||||
Diluted | $ | 0.39 | $ | 0.02 | $ | 0.50 | $ | 0.10 | ||||||||
Weighted-average common shares outstanding: | ||||||||||||||||
Basic | 17,877,481 | 14,755,818 | 15,767,874 | 14,570,286 | ||||||||||||
Diluted | 19,251,448 | 15,929,874 | 17,420,476 | 15,559,863 | ||||||||||||
Reconciliation of U.S. GAAP Net Income to EBITDA to Adjusted EBITDA
(Unaudited)
| Three Months Ended December 31, | Year Ended December 31, | |||||||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||||||
| (In thousands) | (In thousands) | |||||||||||||||
U.S. GAAP net income | $ | 7,161 | $ | 228 | $ | 7,940 | $ | 1,139 | ||||||||
Depreciation and amortization | 61 | 25 | 258 | 94 | ||||||||||||
Interest expense | 22 | 3 | 76 | 12 | ||||||||||||
Interest and other expense/(income) | (1,009 | ) | (12 | ) | (984 | ) | (22 | ) | ||||||||
Income tax provision/(benefit) | (6,050 | ) | (1 | ) | (6,041 | ) | 6 | |||||||||
EBITDA | 185 | 243 | 1,249 | 1,229 | ||||||||||||
Share-based compensation | 246 | 106 | 623 | 399 | ||||||||||||
Adjusted EBITDA | $ | 431 | $ | 349 | $ | 1,872 | $ | 1,628 | ||||||||
Contact:
Crexendo, Inc.
Doug Gaylor
President and Chief Operating Officer
602-732-7990
dgaylor@crexendo.com
SOURCE: Crexendo, Inc.
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