Crexendo Announces Third Quarter 2023 Results
- Total revenue increased 52% year-over-year to $13.9 million
- Consolidated service revenue for the third quarter of 2023 increased 68%
- Non-GAAP net income of $3.3 million for the third quarter of 2023
- EBITDA for the third quarter of 2023 of $1.2 million compared to $0.1 million for the third quarter of 2022
- Adjusted EBITDA for the third quarter of 2023 of $2.1 million compared to $0.9 million for the third quarter of 2022
- Total cash and cash equivalents at September 30, 2023 was $7.7 million compared to $5.5 million at December 31, 2022
- Cash provided by operating activities for the nine months ended September 30, 2023 was $0.9 million compared to $(2.6) million used in operating activities in the nine months ended September 30, 2022
- Consolidated operating expenses for the third quarter of 2023 increased 40%
- The company reported net loss of $(0.4) million for the nine months ended September 30, 2023, compared to net loss of $(2.8) million for the nine months ended September 30, 2022
- Cash used in financing activities for the nine months ended September 30, 2023 was $(2.3) million compared to less than $(0.1) million used in financing activities for the nine months ended September 30, 2022
PHOENIX, AZ / ACCESSWIRE / November 9, 2023 / Crexendo, Inc. (NASDAQ:CXDO), an award-winning premier provider of cloud communication platform and services, video collaboration and managed IT services designed to provide enterprise-class cloud solutions to any size business, today announced financial results for the third quarter ended September 30, 2023.
Third Quarter Financial highlights:
- Total revenue increased
52% year-over-year to$13.9 million - GAAP net income of
$1.7 million , or$0.07 per basic common share and$0.06 per diluted common share - Non-GAAP net income of
$3.3 million , or$0.13 per basic common share and$0.12 per diluted common share
Financial Results for the Third Quarter of 2023 (in thousands, except per share data)
Consolidated total revenue for the third quarter of 2023 increased
Consolidated service revenue for the third quarter of 2023 increased
Consolidated software solutions revenue for the third quarter of 2023 increased
Consolidated product revenue for the third quarter of 2023 increased
Consolidated operating expenses for the third quarter of 2023 increased
The Company reported net income of
Non-GAAP net income of
EBITDA for the third quarter of 2023 of
Financial Results for the nine months ended September 30, 2023 (in thousands, except per share data)
Consolidated total revenue for the nine months ended September 30, 2023 increased
Consolidated service revenue for the nine months ended September 30, 2023 increased
Consolidated software solutions revenue for the nine months ended September 30, 2023 increased
Consolidated product revenue for the nine months ended September 30, 2023 increased
Consolidated operating expenses for the nine months ended September 30, 2023 increased
The Company reported net loss of
Non-GAAP net income of
EBITDA for the nine months ended September 30, 2023 of
Total cash and cash equivalents at September 30, 2023 was
Cash provided by operating activities for the nine months ended September 30, 2023 was
Management Commentary
"Crexendo had a very strong performance in the third quarter with
"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 APIs, 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."
Conference Call
Crexendo management will hold a conference call today, November 9, 2023, at 4:30 PM Eastern time to discuss these results.
Company CEO Jeff Korn, CFO Ron Vincent, and President and COO Doug Gaylor will host the call, followed by a question-and-answer period.
Dial-in Numbers:
Domestic Participants: 888-506-0062
International Participants: 973-528-0011
Participant Access Code 305599
Please dial in five minutes prior to the beginning of the call at 4:30 PM Eastern time and reference the Crexendo earnings call.
A replay of the call will be available until November 16, 2023 by dialing toll-free at 877-481-4010 or 919-882-2331 for international callers. The replay passcode is 49361.
About Crexendo
Crexendo, Inc. is an award-winning premier provider of cloud communication platform and services, video collaboration and managed IT services designed to provide enterprise-class cloud solutions to any size business.
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) having had a very strong performance in the third quarter and exceeding internal goals for the quarter; (ii) continuing the effective management of costs and completing the integration plans; (iii) believing that the third quarter was a remarkable quarter and that the moves made are gaining traction and making the company more effective and profitable; (iv) being very pleased and excited by our results and the traction with the results being a testament to the hard work and dedication by the team; (v) strong results continuing to reinforce why it is the third largest, and fastest growing Unified communications as a service (UCaaS) platform in the industry; (vi) working closely with its licensees to make certain the NetSapiens platform remains cutting edge and the best in the industry; (vii) completing the most successful User Group Meeting where enhanced APIs were introduced making third-party integration easier for customers, and that the integrations should also enable revenue sharing on approved software used by our licensees; (viii) continuing to see record demand and installations in our Telecommunication Services segment with expectations that demand will continue; (ix) continuing to invest in and improve offerings and services and continuing to work on selling larger opportunities and increasing organic sales while starting to review accretive acquisitions and being confident that the strong performance will continue and being encouraged by progress and extremely excited by the future.
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, 2022, 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.
Contacts
Company Contact:
Crexendo, Inc.
Doug Gaylor
President and Chief Operating Officer
602-732-7990
dgaylor@crexendo.com
Investor Relations Contact:
Gateway Investor Relations
Matt Glover and Tom Colton
949-574-3860
CXDO@gateway-grp.com
CREXENDO, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(Unaudited, in thousands, except par value and share data)
| September 30, 2023 | December 31, 2022 | |||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 7,737 | $ | 5,475 | ||||
Trade receivables, net of allowance of | 3,873 | 3,297 | ||||||
Inventories | 472 | 679 | ||||||
Equipment financing receivables, net of allowance of | 812 | 635 | ||||||
Contract costs | 1,265 | 841 | ||||||
Prepaid expenses | 991 | 431 | ||||||
Other current assets | 468 | 674 | ||||||
Total current assets | 15,618 | 12,032 | ||||||
Contract assets, net of allowance of | 299 | 318 | ||||||
Long-term equipment financing receivables, net of allowance of | 1,670 | 1,255 | ||||||
Property and equipment, net | 756 | 3,315 | ||||||
Operating lease right-of-use assets | 1,170 | 1,081 | ||||||
Intangible assets, net | 24,348 | 26,725 | ||||||
Goodwill | 9,454 | 9,454 | ||||||
Contract costs, net of current portion | 1,874 | 1,304 | ||||||
Other long-term assets | 146 | 150 | ||||||
Total Assets | $ | 55,335 | $ | 55,634 | ||||
Liabilities and Stockholders' Equity | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 874 | $ | 1,206 | ||||
Accrued expenses | 5,053 | 4,890 | ||||||
Finance leases | 75 | 95 | ||||||
Notes payable | 452 | 420 | ||||||
Operating lease liabilities | 604 | 363 | ||||||
Income tax payable | 67 | 79 | ||||||
Contract liabilities | 2,971 | 3,338 | ||||||
Total current liabilities | 10,096 | 10,391 | ||||||
Contract liabilities, net of current portion | 205 | 247 | ||||||
Finance leases, net of current portion | 42 | 98 | ||||||
Notes payable, net of current portion | 708 | 2,605 | ||||||
Line of credit | - | 82 | ||||||
Operating lease liabilities, net of current portion | 597 | 752 | ||||||
Total liabilities | 11,648 | 14,175 | ||||||
Stockholders' equity: | ||||||||
Preferred stock, par value | - | - | ||||||
Common stock, par value | ||||||||
shares issued and outstanding as of September 30, 2023 and 25,670,773 shares issued | ||||||||
and outstanding as of December 31, 2022 | 26 | 26 | ||||||
Additional paid-in capital | 132,003 | 129,192 | ||||||
Accumulated deficit | (88,528 | ) | (87,946 | ) | ||||
Accumulated other comprehensive income | 186 | 187 | ||||||
Total stockholders' equity | 43,687 | 41,459 | ||||||
Total Liabilities and Stockholders' Equity | $ | 55,335 | $ | 55,634 | ||||
CREXENDO, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(Unaudited, in thousands, except per share and share data)
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
Service revenue | $ | 7,517 | $ | 4,473 | $ | 21,983 | $ | 13,427 | ||||||||
Software solutions revenue | 4,691 | 3,875 | 12,729 | 10,741 | ||||||||||||
Product revenue | 1,666 | 760 | 4,323 | 1,944 | ||||||||||||
Total revenue | 13,874 | 9,108 | 39,035 | 26,112 | ||||||||||||
Operating expenses: | ||||||||||||||||
Cost of service revenue | 3,173 | 1,375 | 9,312 | 4,249 | ||||||||||||
Cost of software solutions revenue | 1,327 | 1,141 | 3,805 | 3,933 | ||||||||||||
Cost of product revenue | 923 | 453 | 2,643 | 1,142 | ||||||||||||
Selling and marketing | 3,502 | 2,732 | 10,924 | 8,087 | ||||||||||||
General and administrative | 3,309 | 2,800 | 10,473 | 8,806 | ||||||||||||
Research and development | 1,276 | 1,151 | 3,605 | 2,684 | ||||||||||||
Total operating expenses | 13,510 | 9,652 | 40,762 | 28,901 | ||||||||||||
Income/(loss) from operations | 364 | (544 | ) | (1,727 | ) | (2,789 | ) | |||||||||
Other income/(expense): | ||||||||||||||||
Interest expense | (36 | ) | (19 | ) | (111 | ) | (57 | ) | ||||||||
Gain on sale of property and equipment | 1,459 | - | 1,459 | - | ||||||||||||
Other income/(expense), net | (50 | ) | (165 | ) | 37 | (281 | ) | |||||||||
Total other income/(expense), net | 1,373 | (184 | ) | 1,385 | (338 | ) | ||||||||||
Income/(loss) before income tax | 1,737 | (728 | ) | (342 | ) | (3,127 | ) | |||||||||
Income tax benefit/(provision) | (33 | ) | 32 | (81 | ) | 315 | ||||||||||
Net income/(loss) | $ | 1,704 | $ | (696 | ) | $ | (423 | ) | $ | (2,812 | ) | |||||
Earnings per common share: | ||||||||||||||||
Basic | $ | 0.07 | $ | (0.03 | ) | $ | (0.02 | ) | $ | (0.13 | ) | |||||
Diluted | $ | 0.06 | $ | (0.03 | ) | $ | (0.02 | ) | $ | (0.13 | ) | |||||
Weighted-average common shares outstanding: | ||||||||||||||||
Basic | 25,995,507 | 22,620,703 | 25,901,686 | 22,439,575 | ||||||||||||
Diluted | 27,682,764 | 22,620,703 | 25,901,686 | 22,439,575 | ||||||||||||
CREXENDO, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(Unaudited, in thousands)
| Nine Months Ended September 30, | ||||||||
| 2023 | 2022 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
Net loss | $ | (423 | ) | $ | (2,812 | ) | ||
Adjustments to reconcile net loss to net cash provided by/(used in) operating activities: | ||||||||
Depreciation and amortization | 2,695 | 1,862 | ||||||
Share-based compensation | 3,112 | 2,762 | ||||||
Non-cash operating lease amortization | (3 | ) | (12 | ) | ||||
Gain on sale of property and equipment | (1,459 | ) | - | |||||
Allowance for credit losses | 44 | - | ||||||
Changes in assets and liabilities: | ||||||||
Trade receivables | (584 | ) | (1,851 | ) | ||||
Contract assets | 2 | (4 | ) | |||||
Equipment financing receivables | (770 | ) | (425 | ) | ||||
Inventories | 207 | 53 | ||||||
Contract costs | (994 | ) | (524 | ) | ||||
Prepaid expenses | (560 | ) | (638 | ) | ||||
Income tax receivable | - | (375 | ) | |||||
Other assets | 210 | 65 | ||||||
Accounts payable and accrued expenses | (169 | ) | (742 | ) | ||||
Income tax payable | (12 | ) | (24 | ) | ||||
Contract liabilities | (409 | ) | - | |||||
Net cash provided by/(used in) operating activities | 887 | (2,665 | ) | |||||
CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
Purchase of property and equipment | (92 | ) | (192 | ) | ||||
Proceeds from the sale of property and equipment | 3,792 | - | ||||||
Net cash provided by/(used in) investing activities | 3,700 | (192 | ) | |||||
CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
Repayments made on finance leases | (76 | ) | (86 | ) | ||||
Repayments made on notes payable | (2,143 | ) | (55 | ) | ||||
Proceeds from notes payable | 278 | - | ||||||
Proceeds from exercise of options | 93 | 576 | ||||||
Dividend payments | (130 | ) | (336 | ) | ||||
Taxes paid on the net settlement of stock options and RSUs | (264 | ) | (135 | ) | ||||
Borrowing on a line of credit, net | (82 | ) | - | |||||
Net cash used in financing activities | (2,324 | ) | (36 | ) | ||||
Effect of exchange rate changes on cash | (1 | ) | 246 | |||||
NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS | 2,262 | (2,647 | ) | |||||
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD | 5,475 | 7,468 | ||||||
CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD | $ | 7,737 | $ | 4,821 | ||||
Cash used during the year for: | ||||||||
Income taxes, net | $ | (91 | ) | $ | (96 | ) | ||
Interest expense | $ | (111 | ) | $ | (57 | ) | ||
Supplemental disclosure of non-cash investing and financing information: | ||||||||
Stock issued for the acquisition of Centric Telecom | $ | - | $ | - | ||||
Contingent consideration related to the acquisition of Centric Telecom | $ | - | $ | - | ||||
Stock issued in connection with the merger with NetSapiens | $ | - | $ | - | ||||
Stock options issued in connection with the merger with NetSapiens | $ | - | $ | - | ||||
Property and equipment financed through finance leases | $ | - | $ | - | ||||
Prepaid assets financed through finance leases | $ | - | $ | - | ||||
CREXENDO, INC. AND SUBSIDIARIES
Supplemental Segment Financial Data
(In thousands)
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
Revenue: | ||||||||||||||||
Cloud telecommunications services | $ | 9,183 | $ | 5,233 | $ | 26,306 | $ | 15,371 | ||||||||
Software solutions | 4,691 | 3,875 | 12,729 | 10,741 | ||||||||||||
Consolidated revenue | 13,874 | 9,108 | 39,035 | 26,112 | ||||||||||||
Income/(loss) from operations: | ||||||||||||||||
Cloud telecommunications services | 73 | (639 | ) | (1,312 | ) | (2,236 | ) | |||||||||
Software solutions | 291 | 95 | (415 | ) | (553 | ) | ||||||||||
Total operating income/(loss) | 364 | (544 | ) | (1,727 | ) | (2,789 | ) | |||||||||
Other income/(expense), net: | ||||||||||||||||
Cloud telecommunications services | 1,425 | (17 | ) | 1,360 | (52 | ) | ||||||||||
Software solutions | (52 | ) | (167 | ) | 25 | (286 | ) | |||||||||
Total other income/(expense), net | 1,373 | (184 | ) | 1,385 | (338 | ) | ||||||||||
Income/(loss) before income tax provision: | ||||||||||||||||
Cloud telecommunications services | 1,498 | (656 | ) | 48 | (2,288 | ) | ||||||||||
Software solutions | 239 | (72 | ) | (390 | ) | (839 | ) | |||||||||
Income/(loss) before income tax provision | $ | 1,737 | $ | (728 | ) | $ | (342 | ) | $ | (3,127 | ) | |||||
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, changes in fair value of contingent consideration, amortization of intangibles, and goodwill and long-lived asset impairment. We define EBITDA as U.S. GAAP net income/(loss) before interest expense, interest income and other expense/(income), goodwill and long-lived asset impairments, provision/(benefit) 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, changes in fair value of contingent consideration 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, 2023 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 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, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
U.S. GAAP net income/(loss) | $ | 1,704 | $ | (696 | ) | $ | (423 | ) | $ | (2,812 | ) | |||||
Share-based compensation | 843 | 851 | 3,112 | 2,762 | ||||||||||||
Acquisition related expenses | - | 8 | 1 | 31 | ||||||||||||
Amortization of intangible assets | 793 | 550 | 2,377 | 1,649 | ||||||||||||
Non-GAAP net income | $ | 3,340 | $ | 713 | $ | 5,067 | $ | 1,630 | ||||||||
Non-GAAP earnings per common share: | ||||||||||||||||
Basic | $ | 0.13 | $ | 0.03 | $ | 0.20 | $ | 0.07 | ||||||||
Diluted | $ | 0.12 | $ | 0.03 | $ | 0.18 | $ | 0.06 | ||||||||
Weighted-average common shares outstanding: | ||||||||||||||||
Basic | 25,995,507 | 22,620,703 | 25,901,686 | 22,439,575 | ||||||||||||
Diluted | 27,682,764 | 25,285,848 | 27,544,993 | 25,491,062 | ||||||||||||
| Reconciliation of U.S. GAAP Net Loss to EBITDA to Adjusted EBITDA | ||||||||||||||||
| (Unaudited, in thousands) | ||||||||||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
U.S. GAAP net income/(loss) | $ | 1,704 | $ | (696 | ) | $ | (423 | ) | $ | (2,812 | ) | |||||
Depreciation and amortization | 887 | 623 | 2,695 | 1,862 | ||||||||||||
Interest expense | 36 | 19 | 111 | 57 | ||||||||||||
Gain on the sale of property and equipment | (1,459 | ) | - | (1,459 | ) | - | ||||||||||
Other, net | 50 | 165 | (37 | ) | 281 | |||||||||||
Income tax provision/(benefit) | 33 | (32 | ) | 81 | (315 | ) | ||||||||||
EBITDA | 1,251 | 79 | 968 | (927 | ) | |||||||||||
Acquisition related expenses | - | 8 | 1 | 31 | ||||||||||||
Share-based compensation | 843 | 851 | 3,112 | 2,762 | ||||||||||||
Adjusted EBITDA | $ | 2,094 | $ | 938 | $ | 4,081 | $ | 1,866 | ||||||||
SOURCE: Crexendo, Inc.
View source version on accesswire.com:
https://www.accesswire.com/801336/crexendo-announces-third-quarter-2023-results
FAQ
What are Crexendo, Inc.'s Q3 2023 financial results?
What were the highlights of the financial results for the third quarter of 2023?
What is the outlook for Crexendo, Inc. based on the financial results?
