CXDO - Earnings call transcript Q4 2018

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Operator

Good day, ladies and gentlemen, and welcome to the Crexendo Fourth Quarter and Year End 2018 Earnings Call. All lines have been placed on listen-only mode and the floor will be open for your questions and comments following the presentation. [Operator Instructions] At this time, it's my pleasure to turn the floor over to Mr. Steven G. Mihaylo, Chairman and CEO. yours. is floor the Sir,

Steve Mihaylo

conference general Thank will I Jeff ask our relative to granularity you, Chairman Harbor welcome I'm Safe Safe quarter. open Mihaylo, give General up am questions. and statement? will end afternoon, of to Doug I today update, comments read Gaylor, Counsel. business our the and and brief CEO of Ron Jeff statement. After good President XXXX the the to will year Harbor sales Jeff and will Crexendo to Ron to some that to everyone. With Crexendo. then me you are the Vincent, Steve provide COO; the the Tom then you to and would call. we CFO; I read call and provide all our numbers. going a Doug please want Korn,

Jeff Korn

listeners in sure, Act Steve. call XXXX want this are The forward-looking conference statements Litigation to the Reform will Act Act take made Yes, to Harbor for other I of within call XXXX. Exchange forward-looking meaning Securities Securities of that and contain of the this of statements the facts such statements. forward-looking remind Private of All statements provides historical a than statements. XXXX Securities Safe this opportunity

from in that forward-looking here factors actual of forward-looking the any assumptions December back of such risks identifying to a to any explained forward-looking uncertainties today. could filings otherwise. or statements statements in based like, undertake events, on risk believe, XXXX new Commission Securities Investors Crexendo XXst, as to aware Forward-looking discussed fiscal whether materially expectation are or with anticipate, and to results ended turn subject limited year and expect, will, The including but as words like publicly are cause result to are the differ Steve? other statements detail include I'd estimate, further does revise Steve. and Exchange should and XX-Qs not those Form statements any Form obligation filed. not are update that statements. call now XX-K for as company's and to information, the the be

Steve Mihaylo

a December ended Jeff. you, Service encouraging. very Cloud for increased bode December results in the year XXXX was for to This The Telecommunications increased very XX, very our Crexendo continued The XX, important for Thank is the that growth XXXX. with future. year the revenue XX% end segment well Cloud of year compared Communications promising

revenue for reduced We encouraging -- improvements on $X.XX XXXX basis, is common achieved we IQ, in had equity very we my Also it's metric explained -- like only have share year. the I've business. our again and loss before, nice the have XXXX. a positive shareholder earnings we XXXX. XX% With GAAP current year-over-year promising diluted XXXX. all Also I non-GAAP important compared the service is with run for that very ratio most by use our many other in We said, UCaaS cash As that here reviewing development the to achieved not that -- accomplishments. per

business to continue we to the industry. will what and and I organically. services continue their to year carefully. Crexendo We managed necessary I'm team proud provide for very UCaaS confidence still efforts. is every very high business XX, and increase the to of XX% to Crexendo and know degree the value. best in ended increase of managed expenses the continue to only grow the shareholder We XXXX by investments a We business have results convinced in the XXXX. the continue for work in make day December will products our I

make growth. it look not that, accelerate to do continue While our would monetize provide accretive some further most I'd over cost hard for to be sense to to as looked numbers. the granularity With the the more acquisitions opportunities Ron? will Ron to have at like economic we we turn to call to

Ron Vincent

Total XX% the for fourth to Thanks, prior for million, quarter increased the quarter revenue of for fourth for prior $X.X to Steve. million to quarter to million, compared quarter of of $X.X increased fourth reported XXXX million $X.X XXXX XX% the Service the revenue year. year. the $X.X fourth compared the

for the revenue the for to reported the year. million, compared $X.X segment to Telecommunications segment of XX% quarter to Cloud $XXX,XXX, fourth service Web XX% fourth to Services compared for $X.X increased prior quarter of year. the decreased million for the Our quarter revenue quarter the $XXXXXX prior

GAAP XXXX revenue to for quarter the of Consolidated On $XXX,XXX quarter diluted share just million fourth company reported of $X.X diluted income decreased XX% per a the for year. a or product expenses year. common per to net loss of for million, to to breakeven to share, compared $X,XXX the of compared fourth for quarter $XX,XXX year. the common prior $X.X fourth the fourth prior prior fourth breakeven XX% quarter of increased or the basis, quarter $XXX,XXX, for operating of XXXX net compared the the of the Our

total diluted increase the same pleased to was EBITDA quarter for of the prior to XX%. in EBITDA year. compared of was an for for year. of year, the diluted with per of the or annual Our $XX,XXX million, that's fourth compared $XXX,XXX for prior the an compared non-GAAP period $XXX,XXX same net $XX,XXX, $XX.X revenue year for the $X.XX the quarter Adjusted share, period prior million the a to prior per for the to reported $XX.X we compared year. income On period common $XXX,XXX, same was or of the share our the common for $X.XX $XXX,XXX basis, are quarter

an $X.X revenue year. in increased the prior to of see tremendous Telecommunications contributed contributed revenue million in that's compared increase year. million We to the compared The total segment. $XX.X Telecommunications Service year, segment to $XX.X XX% XX% to our the the Cloud for continue growth million, or $X.X XX% of for reported million prior

Steve revenue the to increased year $X.X mentioned, reported service the as XX%, compared Cloud Telecommunications prior for million for segment $X.X million Our year. to

is Our Web for million revenue is one service XX% prior $XXX,XXX, the for to for until X% services Product year next. complete from to to million Product the revenue the the to and revenue $X increased million, revenue significantly to year. Services reported reported installation period commenced. prior Product decreased compared year. $X.X segment can deferred fluctuate $X.X compared

of We believe initially multi-location Large longer the backlog. be through is customer increase average growth and installed and Our in enterprise customers of to locations take seen complexity. within will completing the depending on sales number can cycle. weeks our install,

the loss months, increased anticipated share the per increase the segment which or for share, per in the prior year. to of year. of the of $XX,XXX President a the of $XX.X to million $XX.X increased income to XX% increase On provided net Gaylor for provided at year the $XXX,XXX compared Operating was Telecommunications next Our a prior revenue reported year. equivalents to the net Cash, increase is company was $X.XX compared for restricted diluted for at December prior that Non-GAAP breakeven year. $X.X to There equivalents. in a XX% was $XXX,XXX backlog, cash for of reported or utilized reported be activities sales or prior common company cash investing XXXX COO cash $X.X to financing EBITDA the common loss year the or at business XXXX, same for for per for XX million end and year. With $XX million turn prior was cash a over year for diluted compared activities $XX.X the share million our was prior a Operating in a the loss loss per and positive I'll million end it year. compared and a to update. million expenses net activities recognized common XX XX% and as by common XX, The to $XXX,XXX to Doug reported $X.XX and to within $XXX,XXX to for loss or compared at EBITDA of $XXX,XXX cash $XXX,XXX non-GAAP of equivalents. our share, year. $XX,XXX that, and of the to as $X,XXX the the $X.X prior diluted a year compared GAAP compared $X.XX loss Adjusted $XXX,XXX December diluted net for year, XX, for loss period. for $XXX,XXX loss basis, cash million,

Doug Gaylor

direct the on is partners which our opportunities record an leading regional as well quarter. key that the We've as successes in had partners, and equally strong Ron. nice continues and large the and partner inflection a more majority revenue, multi-location QX, cash of in comfortable at gets our anticipate six partners and total in bookings non-GAAP partners about sales organization figures accounts our channels. strong during partner existing business. as our these the QX a the momentum non-profit supply the our launched of year momentum sales of incentives more about added number company. year auto we partners to of bookings, multi-location growth our balances. are quarter and sales sales building will sales our base excited funnel I'm posted levels. of including increases our landing wrapped Thanks, the seeing for on we income in XX increase backlog, bookings and new telecom ahead. continue solution, included With office, which contract in the effects real help up bookings the residual should some we industrial we're in for from sales Crexendo The excited successes value over The estate with We our sales multiple metrics grow with with and as both in dealership, channel appreciable channel and

to Our December increase XXXX. for helped to backlog as the strong increase XX% bookings quarter a is our slightly Ron sales than more $XX which over million XX, mentioned, sales

our for sector watermark of we commissions we with increased instruments fact partners. XX% new and see along The us that core We margin platform in in for higher continue to a own improvement and margin telephone as Telecom manufacture design gross our high QX. allows our hit for our

income posted to the year. of post year $XX,XXX but to very income bookings for have net to successfully Our margins for non-GAAP momentum that $XXX,XXX negative improve. expect the the year $XX,XXX I'm to for continue of compared we -- us of and I and net net the a our non-GAAP increased pleased non-GAAP results loss allowed course improved prior over XXXX,

highlights in-house control as of million XX% numerous RPC dialer, $X.XX communicator, XXXX. engineering and the had cash group cash for and focus platform Crexendo's to net active texting, non-GAAP like year call by directory increase support, our cloud a provided December help the web chat, the thanks with features our also cost dialer that Product INTERNET Award, Our XXXX of TELEPHONY income capabilities winning Year campaign great enhancing on year XX, including to management capabilities. mobility system equivalents enhanced Crexendo's and outbound enhanced

added differentiate Crexendo who from our as We customers. standard these well also more Crexconnexe application of as CrexMo much every tool Offering our our collaboration for competition new types offerings. charge Crexendo account capabilities a for these traditionally mobile for offering as new

we backup allows services powered their our as to by successfully partners AWS, Crexendo. with And platform Amazon Services. platform enhanced also offering our launched white-label and our sell own Web We support

opportunity management Crexendo I to We're in just for you never point a as cloud, able matter on migrate of expanding positive still results see communication telecom to our has service these the our platform, were program the and was we the future cost, businesses positioned categories our cloud. transition these itself the XX% And focused if traditional rather using all help -- opportunity truly when with is of premise-based can make well So with to but improve and to partner of these for the cloud. UCaaS greater. described. Crexendo still solution. I've Market It's as to businesses U.S. inflection all unified ahead. metrics businesses they migrate looked approximately show the the to year XXXX momentum right And on an a strong as future continuing our has not in with

comments. on and in we for deliver. for will I'm I As plans strong XXXX, over additional to execute a will it that back to begin turn to now continue growth we we're position Steve any confident our

Steve Mihaylo

call you, any that Thank ready have. questions the Doug. Tom, for may on we're people

Operator

Chris Thank our question [Operator We'll you, sir. Instructions] take first Hellman. from

Unidentified Analyst

This is Greg Hellman [ph].

is to all, can partner any of and that you talk First that you've Cellular? sales had sales U.S. how example? doing reps are you for your on from coming What train whether relationship about their with general,

Doug Gaylor

question, that. Yes. appreciate I Thanks Greg. Great

relationship Cellular is Our doing fantastic. U.S.

last XXXX of announced excitement XXXX. and Fourth well strong with with that We and the was the sales that training kicked-off partnership year of a at had end gaining of sales momentum. approximately You're our lot throughout around aware stronger year we A offering U.S. the there. February quarter great them in Cellular. sales

we program their just we training agent also are to tell and agent rolling We their speak excited out to completed channel February. as for in channel our are doing

And excited that us. so about for the opportunities we're be hold will

Unidentified Analyst

just That's partners XX of did to the friend big national? regional partners any -- were those great. of kind partners And -- of this for they did are so or alluded small just also they that you've new any were

Doug Gaylor

a that size, had few them smaller MSBs, and were but or XX type offices on the a I regional the data presence. few we of we most we have were on QX brought would in out that quarter borrowers that came in multi-location and did multi-location that high in larger say of regional

So of smaller were majority bigger single individual But have site we a the locations. I quarter each would probably get say what larger partners. mix that nice

Unidentified Analyst

of the mean Okay. forward bring terms point operating point you this guess to incremental can percentage of at you this think line? sales in -- Well, sales then, I do from what I incremental

Doug Gaylor

in to on Bring line to that operating can the you expand question? respect --

Unidentified Analyst

It to adding the I point? Yes. -- guess Yes. margin this sales the that for you're contribution additional at works

Doug Gaylor

Yes.

stable. these points of basically hit being I GAAP So gets that today profitable that and breakeven customer very us mean are Every we've our because that now we QX. very in a non-GAAP we add for inflection add accretive every today, account costs

increase don't structure And large our to have in new cost so we customers. add a

So costs us customer end not point very for Every nice because a only very of the our very the customer here year. we inflection at stable. add becomes we've hit profitable are that some

many to So I cost a in to can add having quarters row without our infrastructure for much platform. additional customers add

that a So recurring becomes to lucrative residual we model that grow. very hit model continue point. breakeven why that's that we as accretive was becomes very And as revenue

Steve Mihaylo

Greg Mihaylo talking. this Steve is

expand what Another said. Doug I'd thing to like just on

actually down as Some get cost of go infrastructure our will we larger.

had a in fourth You may notice we XX% margin gross that quarter. the

it. how end the XX-plus-percent We be to know that in pretty we'll expand able But we going expand I'm margin. expect to don't much on confident at exactly gross forward XXXX. should on I year

get cost at infrastructure per as costs XX% such least to and go So, that's other because continue bandwidth and will larger. down as we

Unidentified Analyst

Thank that's Well, back very you. in Okay. queue. encouraging. I’ll get

Operator

[Operator Instructions] go Walsh, Investor. We'll Private Kevin to next

Unidentified Analyst

Hi, gentlemen. you QX Where is a any where in. us two months Could going? give on – color

any So surprises bad? I'm or good wondering

Steve Mihaylo

things pleased let, this to on way We we're I But will surprises. have the with Doug right I'm on elaborate say no going basically, we're budget, are that. going.

Doug Walter

give don't momentum had and bookings We obviously. Kevin we that Yeah. forward QX in But is guidance into strong QX. continuing sales

XXXX. is So potential we're for where the excited about very heading

Unidentified Analyst

get bottom to drop What another takes of $X.XX to take line. feel the net say would million let's $X of income revenue? trying – million, for it I scale do to I'm Can to a $X it type Okay. of what

Steve Mihaylo

you're us You trying make well. forward forward to is to know that The get things a going statement Kevin most here. are say I'm going to

some way the As pleased overall, and be you of about Doug months to white-label going Generally, near six another be a eight that doing that of example. add And developing at white-label That's I'll this license. We we're to very probably customers. stock year the of I'll the an spend beginning product or going. talked buyer. things with the could been next continue months six year category to time to you buyer next we'll a the the to or customers. end give switch our along also know, spent all necessary just I've the software have so a We're year. are

our We're expanding we're So customers. after bigger tremendously. sales going

growth acquisition for I going acquisition we next the normalized year. Then, acquisitions on to growth All expect the And of frankly, positive. in between growth. are the these world get organic more seeing start and to very front go in things you're as

you over UCaaS see revenue our area. of to or And say for that's from all XX% in we of see income, revenue. should the I which think you're of XXXX, growth our see growth of our I the And going service UCaaS. I'd expanding that's But was know, better expect forward. XX% as our kind growth in I revenue kind the have than expect what came in monthly going to to recurring

Unidentified Analyst

trying just others Well, Okay. it an upward from you from inquiries or on buy Are since slope great. getting of us Crexendo but to curiosity. you that's about you're you to Not asking or do here? anything any out

Steve Mihaylo

talk a don't And be we've very just it's got will Kevin. that about forward insider people considered on make here. I'd than to I statement I small more this want But say an can't might anybody be Obviously, call insider a that And group. information. and anything normal. still

Unidentified Analyst

answer for all time I my questions. have. That's Thank you to Okay. taking

Steve Mihaylo

welcome, a Have You're Kevin. good day.

Operator

call have We Kaufman Instructions] [Operator a do with in Investment. MK from coming Michael

Michael Kaufman

Am on? I

Operator

Yes.

Steve Mihaylo

evening Good on. hope in East up you're warm. afternoon bundled Yes, back and Good the Coast. keeping Michael. you're I

Michael Kaufman

low-hanging them do all because to cost because would sounds guys And an thinks -- group we're wouldn't Miami, up invited on. was exact have Well, us service. there to together. away question our the to phone a I'm The unhappy afternoon. we contract installation just you're is just We anything Board. that's quote actually want out it are the although the it's lot to something of right always everybody here not discount. paying more. even the another and Board because doing a President you $XX,XXX don't XX-year don't little amount. acquisitions is buy has contract a condo can have terribly mind some doing we And to we're it's giant pulling is fruit? the We and you that's that to problem and a need We a $XX,XXX in with better, -- lay and things do providing things the question but in the go these Good days with there so easy like a a But

you really stream is somewhat out we're a And month. that to really get it's So, instead we a quickly fund together want only our acquisitions situations want Because a the the put small sales case, you about sense give a force like to things service. Might giant things a question just the and seven accelerate XX-year cost growth? some you kick for make it's incentive just would buyout you months like where amount in to that the and so little payback then incumbent that of you to the $X,XXX the do of opportunity revenue, got… where penalty be

Steve Mihaylo

Yes, Michael. hey,

that opportunity. be of We to assured, Doug are is we're here. it's at in talking about working interested something business. all already aware we ought offline really rest -- But

Doug Gaylor

I'm I we shout a so the account this later take give familiar or can offline with you tomorrow. and afternoon can that Michael, Yes and

Michael Kaufman

also. it's just upset, Yes, a other obviously upset if have the competitor who who not But must even the be conceptual we're framework. about same is. I'm talking people competitor

Doug Gaylor

up hopefully and you Absolutely. you. follow-up we No solution for definitely, I'll with can strategize good come give a and

Michael Kaufman

a a chance keep Thanks buying lot and and when get good stocks Okay. to. I luck I

Steve Mihaylo

Thank you, sir.

Doug Gaylor

it. Appreciate

Michael Kaufman

Thank you.

Operator

turn remarks. no there you time further over questions. back call are closing the this for any at I'll Mihaylo Mr. to

Steve Mihaylo

than complete our good generally that you and team talk end I'm And you this to remarks and I closing we're is say very happy have in evening very With very next management no stable. by the you. I'm speaking. wish encouraged progress all which a quarter. total to confidence other we're call conference Thank to that have and I going making.

Doug Gaylor

everybody. you Thank

Operator

does you gentlemen, and today's participation. Ladies teleconference. conclude for thank We your this

time You a this may great now disconnect your and day. lines at have

Crexendo (CXDO) 5 Mar 192018 Q4 Earnings call transcript