• Total Revenue (Q4 2024): Increased 15% to $16.2 million compared to $14.2 million in Q4 2023.
• Service Revenue (Q4 2024): Increased 4% to $8 million compared to $7.7 million in Q4 2023.
• Software Solutions Revenue (Q4 2024): Increased 32% to $7 million compared to $5.3 million in Q4 2023.
• Product Revenue (Q4 2024): Increased 4% to $1.2 million compared to $1.2 million in Q4 2023.
• Consolidated Gross Margin (Q4 2024): Increased by 2% to 61%.
• Net Income (Q4 2024): $507,000 or $0.02 per basic and diluted share, compared to $61,000 or $0.00 per share in Q4 2023.
• Non-GAAP Net Income (Q4 2024): $2 million or $0.07 per basic share and $0.06 per diluted share, compared to $1.6 million or $0.06 per share in Q4 2023.
• EBITDA (Q4 2024): $1.5 million compared to $916,000 in Q4 2023.
• Adjusted EBITDA (Q4 2024): $2.2 million compared to $1.7 million in Q4 2023.
• Total Revenue (FY 2024): Increased 14% to $60.8 million compared to $53.2 million in FY 2023.
• Service Revenue (FY 2024): Increased 7% to $31.8 million compared to $29.7 million in FY 2023.
• Software Solutions Revenue (FY 2024): Increased 30% to $23.4 million compared to $18 million in FY 2023.
• Net Income (FY 2024): $1.7 million or $0.06 per share, compared to a net loss of $362,000 or $0.01 loss per share in FY 2023.
• Non-GAAP Net Income (FY 2024): $7.7 million or $0.29 per basic share and $0.26 per diluted share, compared to $6.7 million or $0.26 per basic share in FY 2023.
• EBITDA (FY 2024): $5.2 million compared to $1.9 million in FY 2023.
• Adjusted EBITDA (FY 2024): $8.2 million compared to $5.7 million in FY 2023.
• Cash and Cash Equivalents (Dec 31, 2024): $18.2 million compared to $10.3 million on Dec 31, 2023.
• Cash Provided by Operating Activities (FY 2024): $6.3 million.
• Remaining Performance Obligation (End of 2024): $85.6 million, a 34% increase from the end of 2023.

• Warning! GuruFocus has detected 5 Warning Signs with CXDO.

Release Date: March 04, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Crexendo Inc (NASDAQ:CXDO) reported a 15% increase in total revenue for Q4 2024, reaching $16.2 million, compared to $14.2 million in the same quarter of the previous year.
• The software solutions segment experienced a significant 32% growth in revenue for the quarter, highlighting strong demand and market positioning.
• The company maintained GAAP profitability for the sixth consecutive quarter and non-GAAP net income for the 25th consecutive quarter, demonstrating consistent financial performance.
• Crexendo Inc (NASDAQ:CXDO) is the third-largest UCA platform provider, and the recent market disruptions from competitors like Microsoft and Cisco present substantial opportunities for market share growth.
• The company's backlog increased by 34% to $85.6 million, indicating a strong future revenue stream and robust demand for its offerings.

Negative Points

• The competitive landscape remains challenging, with Crexendo Inc (NASDAQ:CXDO) needing to continuously differentiate itself from larger competitors like Cisco and Microsoft.
• Despite strong growth, the company faces potential risks from market disruptions and the need to continually invest in R&D to maintain its competitive edge.
• The transition to Oracle Cloud Infrastructure (OCI) and closing of data centers, while cost-saving, involves execution risks and potential short-term disruptions.
• The company's pricing strategy, while competitive, may face pressure if competitors engage in aggressive pricing tactics.
• Crexendo Inc (NASDAQ:CXDO) must manage the integration and onboarding of new licensees effectively to capitalize on the opportunities presented by the disruptions in the market.

Q & A Highlights

Q: With cash reserves nearly doubling to $18 million, what are Crexendo's priorities for capital allocation? Are acquisitions, R&D, or share repurchases being considered? A: Jeffrey Korn, CEO: All options are on the table. We regularly evaluate acquisitions, particularly in our sector. The gap between buyer and seller valuations is narrowing, making acquisitions more feasible. We are open to acquiring a small AI company if it aligns with our strategy. Share repurchases are also a possibility if market conditions warrant it, as we believe the company is currently undervalued.

Q: Can you quantify the number of clients migrating from Microsoft and Cisco competitors, and what has the onboarding process been like? A: Doug Gaylor, COO: In 2024, we brought over 7 Microsoft Metaswitch licensees and 3 Cisco Broadsoft licensees. The evaluation timeframe for switching platforms varies, but we see a strong pipeline of opportunities due to disruptions from these competitors. The average software solutions licensee is valued at approximately $475,000, with some larger opportunities.

Q: How has the sales cycle been affected by Microsoft's Metaswitch acquisition? Are discussions with potential customers accelerating? A: Jeffrey Korn, CEO: The sales cycle varies; some customers are accelerating discussions due to concerns, while others are taking a wait-and-see approach. However, the industry disruption plays to our advantage, and we are confident in capturing a substantial share of these customers.

Q: Regarding the software solutions business, were there any seven-figure transactions this year? A: Jon Brinton, CRO: We did have some seven-figure transactions when considering the total contract value over the life of the licensee. These are outliers but occur regularly each year.

Q: With the $85 million backlog, how has the mix evolved since last year? A: Ronald Vincent, CFO: The backlog increased by 34%, with a 24% increase in telecom services backlog and a 58% increase from our software solutions division. This growth reflects strong bookings and future revenue potential.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.