Crexendo Announces Third Quarter 2021 Results
Crexendo, a provider of UCaaS and CCaaS solutions, reported a remarkable 113% increase in total revenue for Q3 2021, totaling $8.8 million, compared to $4.1 million in Q3 2020. The company achieved a non-GAAP net income of $800,000, but experienced a GAAP net loss of $(125,000). Operating expenses rose by 120% due to acquisitions. For the nine months ending September 30, total revenue increased 58% to $19.1 million. The company emphasized cash flow management while planning for future growth and operational efficiencies.
- Total revenue increased 113% year-over-year to $8.8 million.
- Non-GAAP net income of $800,000 for Q3 2021.
- Record revenue of $8.8 million is highly impressive.
- EBITDA increased to $622,000 for Q3 2021.
- GAAP net loss of $(125,000) for Q3 2021.
- Operating expenses surged 120% to $8.8 million.
- Nine-month net loss of $(1.8) million compared to net income last year.
- Total cash decreased from $17.7 million in December 2020 to $7.7 million by September 30, 2021.
PHOENIX, AZ / ACCESSWIRE / November 9, 2021 / Crexendo, Inc. (NASDAQ:CXDO) is an award-winning premier provider of Unified Communications as a Service (UCaaS), Call Center as a Service (CCaaS), communication platform software solutions, and collaboration services designed to provide enterprise-class cloud communication solutions to any size business through our business partners, agents, and direct channels. Our solutions currently support over two million end users globally and was recently recognized as the fastest growing UCaaS platform in the United States. Today, the Company reported financial results for the third quarter ended September 30, 2021.
Third Quarter Financial highlights:
- Total revenue increased
113% year-over-year to$8.8 million . - Non-GAAP net income of
$800,000 and GAAP net loss of$(125,000) .
Financial Results for the Third Quarter of 2021
Consolidated total revenue for the third quarter of 2021 increased
Consolidated service revenue for the third quarter of 2021 increased
Consolidated software solutions revenue for the third quarter of 2021 of
Consolidated product revenue for the third quarter of 2021 increased
Consolidated operating expenses for the third quarter of 2021 increased
The Company reported net loss of
Non-GAAP net income of
EBITDA for the third quarter of 2021 increased to
Financial Results for the nine months ended September 30, 2021
Consolidated total revenue for the nine months ended September 30, 2021 increased
Consolidated service revenue for the nine months ended September 30, 2021 increased
Consolidated software solutions revenue for the nine months ended September 30, 2021 of
Consolidated product revenue for the nine months ended September 30, 2021 increased
Consolidated operating expenses for the nine months ended September 30, 2021 increased
The Company reported a net loss of
Non-GAAP net income of
EBITDA for the nine months ended September 30, 2021 decreased to a
Total cash, cash equivalents, and restricted cash at September 30, 2021 was
Cash used for operating activities for the nine months ended September 30, 2021 of
Steven G. Mihaylo, Chief Executive Officer commented, "This was an excellent quarter, and a testament to the incredible work undertaken by the entire team. The results exceeded my expectations. Consolidated total revenue increasing by
Mihaylo added, "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."
"The acquisition has already provided many benefits outside of the financial results. We are actively migrating customers to the Crexendo VIP platform which uses the best of the NetSapiens award winning platform and the Crexendo Ride the Cloud© award winning benefits, this will provide better service and reduce costs. The NetSapiens team is working with the Crexendo engineering team, whose backgrounds have focused on maximizing customer experience, to help provide additional benefits and enhancements to the entire NetSapiens community. I am thrilled by our progress and even more excited about our future. 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. I know this will be an exciting time for our shareholders, our employees, Crexendo Partners and end-user customers and the entire NetSapiens Partners/Licensees."
Doug Gaylor, President and Chief Operating Officer, stated, "I want to take this opportunity to thank every member of the combined team, without their hard work and commitment to making this merger work we could not have achieved these strong results. Every single one of us work tirelessly every day to maximize efficiencies, to increase shareholder value and to make the best experience possible for the NetSapiens Partners/Licensees and the Crexendo Partners and end-user customers. The teams worked together effectively on the highly successful NetSapiens User Group Meeting which occurred in October and afforded the Crexendo team the opportunity to meet a large number of the Partners/Licensees and understand their needs and concerns. This week we have most of the NetSapiens executive management team here in Phoenix working with the Crexendo team as we continue to learn from each other and work daily to improve the combined company. I am confident that this quarter's results will be just the first of many results that will impress our shareholders, our employees, and our customers."
Conference Call
The Company is hosting a conference call today, November 9, 2021 at 4:30 PM EST. The dial-in number for domestic participants is 877-545-0320 and 973-528-0002 for international participants. Please dial in five minutes prior to the beginning of the call at 4:30 PM EST and reference Crexendo earnings call. A replay of the call will be available until November 16, 2021 by dialing toll-free at 877-481-4010 or 919-882-2331 for international callers. The replay passcode is 43421.
About Crexendo
Crexendo, Inc. is an award-winning premier provider of Unified Communications as a Service (UCaaS), Call Center as a Service (CCaaS), communication platform software solutions, video conferencing and collaboration services designed to provide enterprise-class cloud communication solutions to any size business through our business partners, agents, and direct channels. Our solutions currently support over two million end users globally and was recently recognized as the fastest growing UCaaS platform in the United States.
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 excellent quarter with results exceeded expectations; (ii) believing consolidated total revenue increasing by
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)
September 30, 2021 | December 31, 2020 | |||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 7,701 | $ | 17,579 | ||||
Restricted cash | - | 100 | ||||||
Trade receivables, net of allowance for doubtful accounts of | ||||||||
as of September 30, 2021 and | 1,280 | 538 | ||||||
Contract assets | 209 | 159 | ||||||
Inventories | 479 | 504 | ||||||
Equipment financing receivables | 324 | 286 | ||||||
Contract costs | 519 | 421 | ||||||
Prepaid expenses | 650 | 190 | ||||||
Income tax receivable | 11 | 4 | ||||||
Total current assets | 11,173 | 19,781 | ||||||
Long-term trade receivables, net of allowance for doubtful accounts | ||||||||
of | 27 | - | ||||||
Long-term equipment financing receivables, net | 837 | 906 | ||||||
Property and equipment, net | 3,059 | 2,734 | ||||||
Deferred income tax assets, net | 8,883 | 6,054 | ||||||
Operating lease right-of-use assets | 732 | 1 | ||||||
Intangible assets, net | 23,237 | 252 | ||||||
Goodwill | 28,129 | 272 | ||||||
Contract costs, net of current portion | 696 | 549 | ||||||
Income tax receivable, net of current portion | 256 | - | ||||||
Other long-term assets | 287 | 156 | ||||||
Total Assets | $ | 77,316 | $ | 30,705 | ||||
Liabilities and Stockholders' Equity | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 624 | $ | 56 | ||||
Accrued expenses | 4,351 | 1,628 | ||||||
Finance leases | 130 | 29 | ||||||
Notes payable | 73 | 71 | ||||||
Operating lease liabilities | 490 | 1 | ||||||
Contigent consideration | 746 | - | ||||||
Contract liabilities | 1,831 | 778 | ||||||
Total current liabilities | 8,245 | 2,563 | ||||||
Contract liabilities, net of current portion | 1,053 | 450 | ||||||
Finance leases, net of current portion | 237 | 55 | ||||||
Notes payable, net of current portion | 1,818 | 1,873 | ||||||
Operating lease liabilities, net of current portion | 269 | - | ||||||
Total liabilities | 11,622 | 4,941 | ||||||
Stockholders' equity: | ||||||||
Preferred stock, par value | - | - | ||||||
Common stock, par value | ||||||||
shares issued and outstanding as of September 30, 2021 and 17,983,177shares issued | ||||||||
and outstanding as of December 31, 2020 | 22 | 18 | ||||||
Additional paid-in capital | 117,593 | 75,834 | ||||||
Accumulated deficit | (51,931 | ) | (50,088 | ) | ||||
Accumulated other comprehensive income | 10 | - | ||||||
Total stockholders' equity | 65,694 | 25,764 | ||||||
Total Liabilities and Stockholders' Equity | $ | 77,316 | $ | 30,705 | ||||
CREXENDO, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(Unaudited, in thousands, except per share and share data)
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
Service revenue | $ | 4,325 | $ | 3,654 | $ | 12,791 | $ | 10,747 | ||||||||
Software solutions revenue | 3,784 | - | 4,796 | - | ||||||||||||
Product revenue | 701 | 489 | 1,509 | 1,317 | ||||||||||||
Total revenue | 8,810 | 4,143 | 19,096 | 12,064 | ||||||||||||
Operating expenses: | ||||||||||||||||
Cost of service revenue | 1,210 | 946 | 3,816 | 2,824 | ||||||||||||
Cost of software solutions revenue | 1,675 | - | 2,201 | - | ||||||||||||
Cost of product revenue | 461 | 314 | 972 | 797 | ||||||||||||
Selling and marketing | 2,070 | 1,051 | 5,106 | 3,151 | ||||||||||||
General and administrative | 2,983 | 1,351 | 7,918 | 3,585 | ||||||||||||
Research and development | 358 | 326 | 1,096 | 840 | ||||||||||||
Total operating expenses | 8,757 | 3,988 | 21,109 | 11,197 | ||||||||||||
Income/(loss) from operations | 53 | 155 | (2,013 | ) | 867 | |||||||||||
Other income/(expense): | ||||||||||||||||
Interest income | - | 1 | 1 | 3 | ||||||||||||
Interest expense | (24 | ) | (23 | ) | (64 | ) | (54 | ) | ||||||||
Other income/(expense), net | (17 | ) | 1 | (14 | ) | (28 | ) | |||||||||
Total other income/(expense), net | (41 | ) | (21 | ) | (77 | ) | (79 | ) | ||||||||
Income/(loss) before income tax | 12 | 134 | (2,090 | ) | 788 | |||||||||||
Income tax benefit/(provision) | (137 | ) | (3 | ) | 247 | (9 | ) | |||||||||
Net income/(loss) | $ | (125 | ) | $ | 131 | $ | (1,843 | ) | $ | 779 | ||||||
Earnings/(loss) per common share: | ||||||||||||||||
Basic | $ | (0.01 | ) | $ | 0.01 | $ | (0.09 | ) | $ | 0.05 | ||||||
Diluted | $ | (0.01 | ) | $ | 0.01 | $ | (0.09 | ) | $ | 0.05 | ||||||
Weighted-average common shares outstanding: | ||||||||||||||||
Basic | 21,596,415 | 15,244,804 | 19,757,658 | 15,058,192 | ||||||||||||
Diluted | 21,596,415 | 17,249,035 | 19,757,658 | 16,793,896 | ||||||||||||
CREXENDO, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(Unaudited, in thousands)
| Nine Months Ended September 30, | ||||||||
| 2021 | 2020 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
Net income/(loss) | $ | (1,843 | ) | $ | 779 | |||
Adjustments to reconcile net income/(loss) to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 931 | 197 | ||||||
Share-based compensation | 1,150 | 377 | ||||||
Non-cash operating lease amortization | (4 | ) | - | |||||
Changes in assets and liabilities: | ||||||||
Trade receivables | 199 | (248 | ) | |||||
Contract assets | (50 | ) | (72 | ) | ||||
Equipment financing receivables | 31 | (395 | ) | |||||
Inventories | 37 | 119 | ||||||
Contract costs | (245 | ) | (100 | ) | ||||
Prepaid expenses | (384 | ) | (191 | ) | ||||
Income tax receivable | (263 | ) | 4 | |||||
Other assets | 335 | (46 | ) | |||||
Accounts payable and accrued expenses | 228 | (25 | ) | |||||
Income tax payable | - | 5 | ||||||
Contract liabilities | (595 | ) | 19 | |||||
Net cash provided by/(used for) operating activities | (473 | ) | 423 | |||||
CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
Purchase of property and equipment | (91 | ) | (745 | ) | ||||
Acquisitions of assets and businesses, net of cash received | (10,505 | ) | (176 | ) | ||||
Net cash used for investing activities | (10,596 | ) | (921 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
Payment of contingent consideration | - | (54 | ) | |||||
Repayments made on finance leases | (71 | ) | (22 | ) | ||||
Proceeds from notes payable | - | 1,001 | ||||||
Repayments made on notes payable | (53 | ) | (39 | ) | ||||
Proceeds from exercise of options | 1,365 | 2,007 | ||||||
Taxes paid on the net settlement of stock options and RSUs | (160 | ) | - | |||||
Proceeds from issuance of common stock in connection with an offering | - | 8,778 | ||||||
Net cash provided by financing activities | 1,081 | 11,671 | ||||||
Effect of exchange rate changes on cash | 10 | - | ||||||
NET INCREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH | (9,978 | ) | 11,173 | |||||
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 | $ | 7,701 | $ | 15,453 | ||||
Cash used during the year for: | ||||||||
Income taxes, net | $ | (15 | ) | $ | - | |||
Interest expense | $ | (64 | ) | $ | (54 | ) | ||
Supplemental disclosure of non-cash investing and financing information: | ||||||||
Stock issued for the acquisition of Centric Telecom | $ | 346 | $ | - | ||||
Contingent consideration related to the acquisition of Centric Telecom | $ | 746 | $ | - | ||||
Stock issued in connection with the merger with NetSapiens | $ | 16,942 | $ | - | ||||
Stock options issued in connection with the merger with NetSapiens | $ | 22,120 | $ | - | ||||
Property and equipment financed through finance leases | $ | 273 | $ | - | ||||
Prepaid assets financed through finance leases | $ | 14 | $ | - | ||||
Purchase of property and equipment with a note payable | $ | - | $ | 2,000 | ||||
Adjustment to intangible assets and contingent consideration of customer relationship asset acquisition | $ | - | $ | (121 | ) | |||
Deferred offering costs, in accounts payable and accrued expenses but not yet paid | $ | - | $ | (145 | ) | |||
CREXENDO, INC. AND SUBSIDIARIES
Supplemental Segment Financial Data
(Unaudited, in thousands)
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
Revenue: | ||||||||||||||||
Cloud telecommunications services | $ | 5,026 | $ | 4,143 | $ | 14,300 | $ | 12,064 | ||||||||
Software solutions | 3,784 | - | 4,796 | - | ||||||||||||
Consolidated revenue | 8,810 | 4,143 | 19,096 | 12,064 | ||||||||||||
Income/(loss) from operations: | ||||||||||||||||
Cloud telecommunications services | (253 | ) | 155 | (2,004 | ) | 867 | ||||||||||
Software solutions | 306 | - | (9 | ) | - | |||||||||||
Total operating income/(loss) | 53 | 155 | (2,013 | ) | 867 | |||||||||||
Other income/(expense), net: | ||||||||||||||||
Cloud telecommunications services | (22 | ) | (21 | ) | (58 | ) | (79 | ) | ||||||||
Software solutions | (19 | ) | - | (19 | ) | - | ||||||||||
Total other income/(expense), net | (41 | ) | (21 | ) | (77 | ) | (79 | ) | ||||||||
Income/(loss) before income tax provision: | ||||||||||||||||
Cloud telecommunications services | (275 | ) | 134 | (2,062 | ) | 788 | ||||||||||
Software solutions | 287 | - | (28 | ) | - | |||||||||||
Income/(loss) before income tax provision | $ | 12 | $ | 134 | $ | (2,090 | ) | $ | 788 | |||||||
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 November 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/(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 September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
U.S. GAAP net income/(loss) | $ | (125 | ) | $ | 131 | $ | (1,843 | ) | $ | 779 | ||||||
Share-based compensation | 415 | 136 | 1,150 | 377 | ||||||||||||
Acquisition related expenses | 4 | - | 1,065 | - | ||||||||||||
Amortization of intangible assets | 506 | 23 | 773 | 69 | ||||||||||||
Non-GAAP net income | $ | 800 | $ | 290 | $ | 1,145 | $ | 1,225 | ||||||||
Non-GAAP earnings per common share: | ||||||||||||||||
Basic | $ | 0.04 | $ | 0.02 | $ | 0.06 | $ | 0.08 | ||||||||
Diluted | $ | 0.03 | $ | 0.02 | $ | 0.05 | $ | 0.07 | ||||||||
Weighted-average common shares outstanding: | ||||||||||||||||
Basic | 21,596,415 | 15,244,804 | 19,757,658 | 15,058,192 | ||||||||||||
Diluted | 26,196,240 | 17,249,035 | 22,481,104 | 17,249,035 | ||||||||||||
Reconciliation of U.S. GAAP Net Income/(Loss) to EBITDA to Adjusted EBITDA
(Unaudited, in thousands)
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
U.S. GAAP net income/(loss) | $ | (125 | ) | $ | 131 | $ | (1,843 | ) | $ | 779 | ||||||
Depreciation and amortization | 569 | 57 | 931 | 197 | ||||||||||||
Interest expense | 24 | 23 | 64 | 54 | ||||||||||||
Interest and other expense/(income) | 17 | (2 | ) | 13 | 25 | |||||||||||
Income tax provision/(benefit) | 137 | 3 | (247 | ) | 9 | |||||||||||
EBITDA | 622 | 212 | (1,082 | ) | 1,064 | |||||||||||
Acquisition related expenses | 4 | - | 1,065 | - | ||||||||||||
Share-based compensation | 415 | 136 | 1,150 | 377 | ||||||||||||
Adjusted EBITDA | $ | 1,041 | $ | 348 | $ | 1,133 | $ | 1,441 | ||||||||
SOURCE: Crexendo, Inc.
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FAQ
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