Crexendo Reports Robust Q2 2024 Results, Upbeat on Growth
Crexendo, Inc. has reported a significant increase in financial performance for Q2 2024, with revenues rising to $14.7 million, a 16% YoY increase, and net income surging by 220% YoY. The company, a leader in cloud communications, business messaging, and software solutions, has maintained GAAP profitability for the fourth consecutive quarter, surpassing both internal forecasts and analyst expectations.
Key Takeaways
- Q2 revenue increased by 16% YoY to $14.7 million.
- Net income rose by 220% YoY.
- Achieved GAAP profitability for the fourth consecutive quarter.
- Investing in Oracle cloud infrastructure and NetSuite.
- Software Solutions division experiencing 35% organic growth.
- Backlog grew by 39% YoY.
- Optimistic about European expansion.
Company Outlook
- Expects double-digit organic revenue growth for the full year.
- Strong backlog with $20.245 million remaining for 2024, and significant revenue queued through 2028.
- Focused on strategic acquisitions.
Bearish Highlights
- Cautious about high acquisition multiples in the current market.
Bullish Highlights
- Software Solutions segment growing rapidly.
- Benefiting from customer migration to the cloud and the NetSapiens platform.
- Strong gross margins in both Software Solutions and Telecom Services segments.
Misses
- No specific guidance provided for the breakdown of the backlog by domestic and international customers.
- No explicit full-year financial guidance beyond anticipating more than 10% growth.
Q&A Highlights
- Exploring opportunities from Microsoft's retreat from the telecom platform space.
- Potential growth in Australia and Europe.
Conclusion
Crexendo's Q2 2024 earnings call reflected strong growth with a focus on Software Solutions, strategic acquisitions, and international expansion. Crexendo is positioning itself for sustained profitability and market leadership. The company's financial health is reinforced by a solid cash position, with more cash than debt, indicating financial stability and potential for growth investment.
Financial Highlights
- Total revenue for Q2 up 16% to $14.7 million.
- Service revenue increased 10% to $8.1 million.
- Software Solutions revenue increased 35% to $5.3 million.
- Consolidated gross margins for Q2 were 63%.
- Net income of $588,000 for Q2.
- Non-GAAP net income was $2.1 million.
- Cash balance at $13.6 million as of June 30, increased from $10.3 million at December 31, 2023.
Operational Highlights
- Improved installation and response times.
- Investments in Oracle cloud infrastructure and NetSuite.
- Migration from Legacy Classic platform to VIP platform continuing, expected completion by Q1 2025.
- Continued growth in the Software Solutions division, UK office gains traction, opportunities in Europe.
Future Outlook
- Strong demand for Software Solutions and Telecom Services segments.
- International opportunities, cautious on acquisition multiples.
- Double-digit growth expected for the full year, with more than $20 million queued for 2024.
Q&A Summary
- Focus on both new customer wins and expansions within existing customer base.
- Continued strong margin expectations for Software Solutions.
- Future guidance includes over 10% growth with a cautious approach to acquisitions.
Closing Remarks
Crexendo is confident about its future, with strong financial performance and strategic growth plans. The company's focus on enhancing shareholder value through strategic execution remains steadfast.
