Company Overview
Crexendo, Inc. (CXDO) is an award-winning software technology company that has established itself as a premier provider of cloud communication platform software and unified communication as a service (UCaaS) offerings. The company's comprehensive suite of solutions, including voice, video, contact center, and managed IT services, cater to businesses of all sizes, enabling them to seamlessly connect and collaborate in today's digital landscape.
History and Evolution
Founded in 1995 and headquartered in Phoenix, Arizona, Crexendo has a rich history of innovation and growth. The company was originally incorporated in the state of Nevada and started as a web hosting, domain registration, and e-commerce services provider. Over the next decade, Crexendo expanded its offerings to include cloud telecommunications services, software solutions, and managed IT services. In the early 2000s, the company faced challenges as it transitioned from its original business model to a cloud communications and software provider. This transition required significant investments in developing new technology platforms and infrastructure to adapt to the changing technology landscape.
Despite these challenges, Crexendo persevered and made strategic moves to strengthen its position in the market. In 2012, the company acquired Allegiant Networks, a cloud telecommunications services provider, which allowed Crexendo to expand its cloud communications offerings and customer base. This acquisition proved to be a transformative move, enabling Crexendo to position itself as a dominant force in the rapidly evolving UCaaS market.
Market Position and Growth
Over the past decade, Crexendo has experienced remarkable growth, cementing its reputation as a trusted partner for businesses seeking reliable and feature-rich communication solutions. The company's flagship offering, the NetSapiens platform, has become the third-largest and fastest-growing software platform in North America, according to industry analyst firm Frost & Sullivan. The platform currently supports over 5 million end-users globally, a testament to Crexendo's ability to deliver innovative and scalable solutions that meet the evolving needs of its diverse customer base.
Financials
Crexendo's financial performance has been consistently strong, with the company delivering profitable growth. In the most recent fiscal year (2023), Crexendo reported total revenue of $53.20 million, with a net loss of $362,000. The company generated operating cash flow of $3.50 million and free cash flow of $3.41 million.
For the latest reported quarter (Q3 2024), Crexendo generated revenue of $15.63 million, representing a 13% year-over-year increase. This top-line growth was driven by a 25% surge in the company's software solutions segment, as well as a 6% increase in service revenue and a 9% increase in product revenue. The company reported a net income of $148,000 for the quarter, with operating cash flow and free cash flow both at $1.62 million.
Crexendo operates through two main segments: Cloud Telecommunications Services and Software Solutions. For the nine months ended September 30, 2024, the company reported total revenue of $44.60 million, up 14% year-over-year. The Cloud Telecommunications Services segment generated $28.27 million in revenue, while the Software Solutions segment contributed $16.33 million. The company reported a net income of $1.17 million for this nine-month period.
Geographically, Crexendo generates 94% of its revenue from customers within the United States and 6% from customers in other parts of the world.
Liquidity
Crexendo maintains a strong balance sheet, with $15.45 million in cash and cash equivalents as of the latest reported quarter. The company's debt-to-equity ratio stands at 0.014, indicating a conservative approach to leverage. Crexendo has a current ratio of 2.14 and a quick ratio of 2.09, suggesting a healthy short-term liquidity position.
The company maintains a $700,000 line of credit that expires in February 2025, of which the full amount remains available as of September 30, 2024. This line of credit bears interest at 0.5% over the Wall Street Journal Prime Rate and is collateralized by all company assets, providing additional financial flexibility if needed.
Product Offerings and Revenue Streams
Crexendo's Cloud Telecommunications Services segment offers a wide range of features for businesses of all sizes. These include voice, data, and collaboration software services, broadband internet access, managed IT services, cloud server rental and support, managed security, cabling, software license sales, and support for premise-based PBX phone systems. The company generates recurring revenue from these services, typically through 39-to-90-month contracts, along with activation fees, flash fees, and other contracted and non-contracted fees.
The Software Solutions segment derives revenue from three primary sources: software licenses, software maintenance and support, and professional services. Key offerings include the SNAPsolution, a comprehensive IP-based platform providing a broad suite of unified communications services, and SNAPaccel, a software-as-a-service (SaaS) based software license offering. The company also generates revenue from subscription maintenance and support, as well as professional services such as consulting, technical support, and installation services.
Customer Satisfaction and Competitive Advantage
The company's commitment to excellence is further underscored by its industry-leading customer satisfaction ratings. Crexendo has been ranked number one in 18 different customer satisfaction categories by the influential G2 review platform, solidifying its reputation for providing exceptional service and support to its clients.
Crexendo's growth trajectory is further bolstered by its strategic investments in cutting-edge technologies. The company has made substantial investments in Oracle Cloud Infrastructure (OCI), which has provided it with a significant competitive advantage, particularly in the European market. Crexendo's ability to rapidly launch instances and deploy servers in any country, while ensuring compliance with local security standards, has enabled it to be highly responsive to customer demand and further strengthen its global footprint.
Moreover, Crexendo is leveraging the industry's shift towards cloud-based communication solutions to its advantage. The company has successfully attracted customers from industry giants like Cisco and Microsoft, who are increasingly faced with uncertainties surrounding their platform offerings. Crexendo's laser-focus on delivering best-in-class telecom solutions has positioned it as a trusted alternative for businesses seeking reliable and future-proof communication technologies.
Future Outlook
Looking ahead, Crexendo remains committed to its growth strategy, with plans to continue investing in its technology, customer support, and strategic acquisitions. The company expects to continue delivering double-digit organic growth through the end of 2024 and into 2025, building on its strong financial results and market position.
While Crexendo has maintained GAAP profitability for five consecutive quarters and non-GAAP net income for 24 consecutive quarters, the company notes that future acquisitions may impact GAAP profitability due to intangible costs. However, management believes they can find accretive acquisitions that will contribute to EBITDA growth.
The broader UCaaS market is growing at a CAGR of approximately 15-20% as businesses continue to migrate to cloud-based communications solutions, providing a favorable backdrop for Crexendo's continued expansion.
Despite the challenges posed by the evolving competitive landscape, Crexendo has demonstrated its ability to navigate the market with agility and innovation. The company's unwavering dedication to delivering exceptional cloud communication solutions, coupled with its robust financial position and strategic initiatives, positions it well to continue capitalizing on the growing demand for comprehensive UCaaS offerings in the years to come.