- Earnings call transcript Q3 2022

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Operator

Good day, everyone, and welcome to the Crexendo Third Quarter 2022 Earnings Call. [Operator Instructions] It is now my pleasure to turn the conference over to Mr. Steve Mihaylo. Please go ahead.

Steve Mihaylo

Thank you, Todd. everyone. afternoon, Good Chairman Mihaylo, of Crexendo. I’m and Steve CEO you want Crexendo QX welcome of to all to XXXX the I conference call.

safe by On Vincent, the harbor Buch, today and Korn, we a travel and he going our the are the After Doug will us, ask that, be will to give Jon read to and will his return was Jeff business will Counsel. statement. Gaylor, also me brief impacted call Brinton, but up read call our our safe would give questions. was I to General harbor COO; then provide our the CSO; the update, sales our some numbers, Jeff, Ron Anand statement? I’m Don CFO; open and please Jeff in weather. with comment, would and detail on with normally President Doug you understandably Florida

Jeff Korn

you, Investors Commission, materially risk in statements, made listeners will whether those Exchange actual to or the they year other the statements Reform harbor now Form risks fact Thank of exchanged XXXX Form future conference sir. Steve. forward-looking any publicly XXXX. be meaning believe, anticipate, for XXXX, estimate, for new may company’s of of that as fiscal Steve. and should expect, statements. of statements. and detail or aware statements All as factors results this Securities to call in statements, XX, include take fact similar call are with such forward-looking Securities forward-looking identifying information, Private statements and and The the discussed subject circumstances. call here XX-K than and safe statements on based of the the historical to obligation provides that back any to other this Act forward-looking uncertainties to of in statements forward-looking a Exchange forward-looking These such statements Securities Crexendo the Securities this Yes, contain XXXX events that a to are within want remind Act Act XX-Qs like I could update the I’d undertake Litigation revise opportunity turn and not are filings filed. to the any including result any December as in the or today. are ended does cause from differ assumptions Steve? will other

Steve Mihaylo

results Thank you, Jeff. the I’m about excited this quarter. very

very convinced time, of first the exceeded that’s it in I But million quarter, just we For the is am for compelling. $X beginning the revenue milestones. many

our string continue $X.XX in all, of non-GAAP expectations We diluted or per very exceeded and and $XXX,XXX net common achieving share. basic non-GAAP income of All by impressive. profit

Secondly, pleased Technology. of acquisition with I’m very the Allegiant the

very which work. received they’re exciting our part the particularly licensee acquisition, Crexendo part As that I community, the as we’re Allegiant to emphasize that does And a of acquisition we is family. is and margins licensee business of Acquiring to previously with improve service we could which compete us pond. a provider, is a offerings enables helps important additional it increase is not pursue Allegiant fishing us our as efficiencies, win remarkable internally part of want team valuable to to also for. so we happy and call This managed those

reality card at debt interest Doug cost. facing acquisition actually that higher We debt, which add unsustainable of the their rates. were company the to able and are a on and with in spiraling growth there are put are competitive without join very we will and describe in that which detail. hard future, to We acutely us industry who our credit our players aware have a now much acquire excited of to team We mortgaging growth the completed very the more have the Crexendo.

We And We be incurred earnings a paid the the avoided the Allegiant only highly of out note sure acquisition. am and have Crexendo were not existing we will of closed from in doing the be that carefully that. transaction Crexendo, would interest I have was if we the best customers, not it most that importantly, convinced the shareholders. and debt accretive fully would

be the employees, industry will working We to goal, and with shareholders. our in the is all on sides our together that integrating work and but service overriding customers and provide one best

done we consistently said what would have we We do.

will to improve continue We the business.

run convinced shareholders we expectations with we and that, that margins, sustained high company that have our to improve will and call I steady And will effectively. customers I turn results. to our Ron. the Ron? – continue impress to our more and our over am and lean this will With will very We continue for I our future. importantly,

Ron Vincent

Thank Steve. you,

prior As had and revenue increased financial $X.X acquisition quarter. Service statements. over third statements, financial go million. Steve filed of Allegiant forma to I’ll for November quarter those $X.X to we to Today, some the encourage compared X% to mentioned, on we We for required closed to X% X. the compared with at X-K/A of million take a the revenue the look pro pro forma we increased third million the the year. total $X.X XXXX highlights quarter for million $X.X you

and the $X.X quarter X% year. compared for $XXX,XXX of to X% increased $XXX,XXX increased prior revenue Solutions to revenue to to million million product Software compared third the Our $X.X

telecom XX%. Our margins gross to increased service margins,

Our are the common to compared $X.X per the loss diluted loss year. of of quarter $X.XX loss to to common margin, quarter $X.XX diluted and expenses Solutions for compared net of the third a for XX% the million or operating quarter Software of XX%, prior a for $X.X $XXX,XXX basic share per margin quarter. the product reported quarter for and share and third year. net XX% basic or Consolidated million prior a increased for our The overall XX%, margins third the gross of gross $XXX,XXX company the

compared $X.XX net diluted basic and per compared as for per net quarter non-GAAP $X.XX diluted income, for and the $X.XX share or non-GAAP and basic $XX,XXX share $XXX,XXX common EBITDA prior share third third year. common Our to the $XXX,XXX for that’s of That’s quarter to is to $XXX,XXX prior basic $XXX,XXX compared the of common quarter the third per diluted $X the for of adjusted the Steve the increased prior to of our mentioned, for the million third the And year. quarter year. was quarter. income for EBITDA quarter

same million. period, compared year. the month nine increase came to million. the Service of for $XX.X $XX.X compared prior revenue period That’s $XX.X XX% increased For total $XX.X in at revenue to the to million X% a million

to compared year. same the prior increased That’s of Our XXX% to for the revenue Software $XX.X million. Solutions $X.X period million

for and for diluted nine month per compared a Non-GAAP basic income purposes, million a date September net share from year. similar $X.X XX% to prior to compared reason, to loss XXXX, ended of per of million $X.X million period same operating loss or for net million common and months the same XX, compared for $XX.X for Adjusted $XX.X the the EBITDA $XXX,XXX prior of year. and basic share $X.X XX, activity in same the per loss the included $X.X non-GAAP only of a nine of compared Product basic for months period per year. per months share nine same period $X.XX to $X.X the loss a $X.XX million The month period $X.X nine for of company nine million compared only was increased of $X.XX year. diluted diluted for to the $X.XX $X.X million period reported XX% the comparison and for compared the $X.X the $X.X net came September prior or $X.XX net months million to X. period million or of period common the prior of common income EBITDA share activity or four Operating the of nine expenses of year. XXXX. month ended basic of $X.XX common to million to million increased in diluted the For June month revenue four prior for the at acquisition period the the per loss

Cash Our $XXX,XXX nine million of used of $X.X the was $XX.X year. the for for equivalents to acquisition the nine million month activity of to prior the used at at as Cash to equipment for of million $X.X prior included cash, for the period investing the period $XXX,XXX month same period for for the activities for December compared compared compared property million of period purchases used which year, NetSapiens. cash September same XX. XX $X.X operating and

our President that, cash used sales the cash million prior to provided COO year. period talk and for same over to for $X.X I’ll activities activities operations. Our the it was month investing in the $XX,XXX With nine Gaylor, of by Doug compared to turn – of financing about period and activities

Doug Gaylor

strong which I about Thanks, extremely after quarterly Networks, performance Ron. QX will more color our our I’m on the very quarter. provide and in pleased Allegiant acquisition reviewing with of excited

QX per Our improve, million. QX up of is puts That our increasing $XX.X strong to on million, $XXX,XXX continue revenue $X.XX XX% earnings year-to-date $X.X share or of which to non-GAAP revenue number a over XXXX. at

Our non-GAAP earnings year-to-date of XX% up $X.X million year-over-year. is

to continue us assets As common comp our in generated hard cost leverage we we expenses a additional we is our and abilities opportunity non-GAAP that fantastic of quarter. growth to earnings. will effort come proof grow succeed. Allegiant non-GAAP of and team per leverage amortization thankful business we acquisition tremendous and with as based see of organization We to continue that Networks. resources mentioned, earnings to stock managing share amount and as intangible our And the a have our our Crexendo work of of from the very have the on strong have QX $X.XX and that and more we together deliver have strong previously we combined continues Very believe synergies efficiencies the employees to

and at grow very of strong to million is continues backlog QX. end Our the at $XX.X

in as are number direct Telecom backlog XX% the pleased the constantly Software and increase striving customers our of Services margins well and the end of with to services a Our continue previous improvements. to backlog segment, the we quarter. number Gross million backlog Software amounts gross improve as and $X.X represents and telecom our as we now are at Solutions from margins includes improve the are Solutions margins both quarter-over-quarter

UCaaS as licensees, business. We sales Unified platform continue stands as in bookings to to Service UCaaS our for add segment that licensees Communications utilize to new the and run a we see those Solutions continue Software their strong

This for fit them users perfect were and to currently X.X new feature-rich the their logo the quarter, the logo Crexendo, win their During significant Cisco. from a made This replace new that announced to to licensee leap we that the Crexendo determined Cisco and growing. end due chose over supports replace Crexendo scalable platform. platform our new million that we older to pretty solutions platform BroadSoft

new and Mitel, pipeline others. strong, continues major see our platform for demand and of some high Our XxX licensees to we continue for like for appearing be as our to see we Avaya, challenges competitors

licensees Crexendo to they grow. as rapid they additional grow, add the to sessions continue businesses due cloud. of And to migration Our the

individual these to Contact monetize a and and help we a using attendees conference Crexendo our Our into our in-house new acronym solutions organic raise community. new of additional customer omnichannel analytics entire X-day company. also whole continues which even had has XXX and Miami further engineering reviews our services to Crexendo to more platform that XXX growth from from user team new last record new engagement over Service, the in We is group month Center representing attendance introduced applications as develop the introduced meeting application that and offerings, drive our The companies. at CCaaS to excitement

Our traction, with get starting Consulting groups are master now like produce which from part is Consulting strong TCG, and and partnerships Telarus, Telecom of pipeline OTG we growth these to partnerships. expect to and Group, agent sales

our onto VIP on has Our a as a uptime that grow QX. to of customer new with logos XXX% record warranty of guarantee Crexendo the phones lifetime platform Crexendo amount along we continues onboarded offering a all in

table. opportunities and new agent the in are funnel continue to partners to and add larger excited partners that about are We these bringing the agent the new

we of X. thrilled November all week of finalized a last of to you addition that, on Allegiant Networks reasons. number as in this acquisition So our know, agreement for about I’m

XXXX highly revenue highlight morning be million $X.X just Ron and The for First million will formas pro filed Allegiant’s XXXX first $XX that and for were six that the foremost acquisition this Crexendo. for of is fact the north at the today profitable. that of and mentioned months accretive

should deal very this and our have be and So bottom going positive a forward. very a on highly top line impact accretive both

sellers $X tremendous stock, of a which Our and X.X which aggressive win why for approximately acquisition total Crexendo. note of acquisition cash, Allegiant cost this Crexendo million of a consisted and is X.XXX was a million $X.X multiple shares very is for in million, million

determined share win customers that honored are our and We shareholders. will stakeholders, their that their that their and them joining a Crexendo and benefit know enthusiasm huge be and a was Allegiant for with this for and we Crexendo

Allegiant that licensees In as fishing of is we addition, one software commonly fish in stock to pond. platform refer our solutions our

strategy that because We acquisition the fishing our would licensees synergies using have are already been that pond by platform. highlighting of tremendous received on focus we acquiring these that our our

leading our organization to Allegiant’s higher that been managed able executive in XX was and aspect of for Allegiant relationship of a that exciting for team, deal application numerous the organization. the new the Crexendo that is Another services highly always top tremendous including infrastructure will myself, stickier a customer provides had their of very CEO and offer attractive will, their and and strong and that have organization include us. services, them have ability services this working that offerings achieved to customers has over with offerings we tremendous fact to the with ancillary security we solutions bring the to years, sell will much the Crexendo. be impressed And finally, UCaaS IT nationwide and success service building in and services, gain turn, have organization development Allegiant to accretive fact network a a be These services. they with with spend on our a

them we forward working to acquisition, Bryan Allegiant closely for XXXX. Crexendo. we looking with Dancer rate his this $XX $XX run million on integrate entire million team and with into be as And We’re will a to

very processes I last our So will stronger quarterly extremely addition both future our in the the and the force opportunity Allegiant the direction NetSapiens and synergies even an the industry. much excited Crexendo, and as I’m has stronger regarding on personnel acquisition that of created recognizing that call, confident the us I’m organization stronger much make from are and a mentioned Crexendo. we for about

We continue deliver on execute commitments. and our to

landed our getting we while, us by been of uplifting and non-GAAP If a organically you’ve know you track fulfilling commitments a record We fish fishing And NetSapiens. the successful largest a the NASDAQ. to pond. Then raise. profitability, with following platform our consistent that successfully have of we and first major out our strong made for a fastest-growing to did capital followed and third provider, that acquisition of now started we’ve

than deliver company product to brighter promises future The our continue and our and will for on to We greater and strong us our heights. take solutions to positioned are continues well for is high, to our our offerings demand ever. remain much

best our the best our delivering committed industry continue will shareholders. licensees and we and partners, our UCaaS in customers, delivering offering are to the We the for to our returns

now will comments. that, turn any it I with to over So further Steve for back

Steve Mihaylo

consistently for you, to all the our us? have emphasize we it I questions do like questions. any that promises met have Doug. I you At open this of time, for shareholders. to would up wanted you, Thank Todd, just to

Operator

question Yes, Instructions] sir. We’ll [Operator Josh first take from our Nichols.

Steve Mihaylo

Josh. Good afternoon,

Unidentified Analyst

is it going? How

Steve Mihaylo

Good, good. How you? are

Unidentified Analyst

of a synergies there half growth Good. are Good like shape you trending it’s going if are keeps news for acquisition. fair like that is look just to forward? that data the Or expectation and ramp you of up? the growing at well acquisition see It the first XXXX. potential year-over-year could about at historical about going things the just how the looking X% kind Is way think that that looks other

Steve Mihaylo

do had to that’s I’m to turn be to...? of not you the over his it and give for end an organic But answer, believe want give us. Allegiant and to our I audit answer. Doug, to of focused going Doug But then going my to we I’m low on you growth.

Doug Gaylor

Yes, growth. I think referring to Allegiant’s you’re

larger marketplace. City, They’ve loyalty Kansas reputation think And lot a opportunity with customers, Kansas size tremendous great Their has got handle we the they’ve Missouri amount XX and seats. their markets. in and or City, for average in and a of got got so yes, a Kansas that their Missouri of They’ve customers. the Kansas Allegiant growth. and is a They’re got tremendous stickiness about seat

when opportunity with take some talk customers, multiple these so services that they’ve a customers, those And we about their get spend got larger great of those larger offer to the especially to of they out of more customers.

also service and IT grow very that part offer very I’m from to by So to confident be to take customers get yes, per those managed I’m customers salespeople to organization. as able be the existing account able a that take that services continue going to sell revenue higher perspective network existing confident and to our average able direct services perspective we’re they to a And be to of the we’ll and service be able over our those to our customers out a turning to that of that well.

Steve Mihaylo

to And on would explain over call what to Buch sales his the he’s business. increase increasing doing over the to been have I we of there. end And sales like Josh,

know, from Ron months what said, we or four you about, six of… only As had months what,

Unidentified Analyst

period. months in Four included numbers year for prior comparative Yes. the

Steve Mihaylo

doing over Yes. And there’s lot there. we’ve Anand? a been

Anand Buch

as out notice Steve. the that Ron recent continue though launch in market even kind continue that of uplift will of about growth it’s you awareness well, you’ll in of of lot point – CCaaS side, revenue will a area as to we’re the that and continues grow. doing There’s the put what a is lot to Thanks, into to Software has kind recurring done. to actually side think you we’ve Allegiant the of his Doug’s terms team the of a yes, dig work share see has that a I the in on Solutions base the and more subscription Josh, put growth XX-Qs out,

So a aspect and recurring we side the services push perspective, synergies from continue then perspective continue both grow. across them you’ll managed from board, also continue subscription the professional revenue see as to technologies to see services of we kind the both out. a and But new to

Unidentified Analyst

acceleration I think like appreciate $XX the then that on were run acquisition at next a assuming And but the pursue, services an also what’s look rate, like least? Software guess I at I you million that $XX it. Solutions for at over that looking front. the primary of at million revenue just we you driver quarters, seeing growth last assume to doing couple of when revenue, we’re from mentioned I the year, the looking in

Steve Mihaylo

Yes.

jump and here for Josh. just me Let new recurring. both is minute, Most recurring licensees. all revenue a in And our of revenue is

So do that nickels to to anything, recurring $XX worth to that. million didn’t would expect to Doug, you’re we sell that? another to something to we we’re million add $XX you year, exceed going up revenue want our have we in If going find inch revenue. of and next

Doug Gaylor

No.

Steve’s right, think Josh. exactly I

at rock you combined just formas, both And and Group. to from the If look see the obviously, group, pro from growth group Software organic we Services Telecom the solid. the expect Allegiant Solutions very that’s

So that had organic the we if to you that’s number. layers get under there, higher much where

and We amount offerings. to So and executing. our our of for our products demand still in tremendous we’re our continue industry going a services see

that us hopefully from And will see blow those numbers those so we out. and to being able don’t and reach attain prohibit numbers anything

Unidentified Analyst

backlog quarter-over-quarter, just well actually backlog up you was what or say $XX.X in then housekeeping. that as the And that? the million is Thanks. Did

Doug Gaylor

up. was it Yes,

the was and QX, million $XX.X backlog at the from million was $X.X the quarter. previous up end at So of that

$XX.X of was QX, the at So at end million. it

Unidentified Analyst

you. Got it. Thank

Operator

you. Thank

comes Eric question next from Martinuzzi. Our

Unidentified Analyst

things is couple How quarter first doing, transaction. of Allegiant but and the on $X number the Steve? the is Congrats a a pond big fish per out are you of million getting here,

both So great those are milestones.

your able like execute business? guys into potential hitting your the as dive economic to are to uncertainty there far being wanted doesn’t in – take business – as Just impact look headwinds what’s legacy on it But impacted was to by on or you numbers. the your QX you’re because any

Steve Mihaylo

to going lockstep on comment I but Doug I’m in he and this that, let one. both on are

Doug Gaylor

ways traditional to they’re that efficient recession as typically say businesses manage are proof, more out to and cost productivity to going to XX% products our ways not offerings which, probably do is less moving save expensive recessionary to in challenged, give there to cloud being one find and our more them how the be as cloud at that efficiency, proof, look them save is premise-based to the but for the make their versions of I’m look them their business more close when expenses. they for will and at looking from best their to everybody And you Yes, because recession telecom going at XX% and they times, do money. more again, productive, is because and are

our tough ideally times economic economic think times. product as well I as for So good offering is suited

good any again, with be So I businesses if a COVID need we proof, think for us, is that to we have businesses infrastructure are, thing one recession think because especially that clear able I tremendously. but during will headwinds And suffered didn’t off post-COVID, not is stave communicate. that to

collaboration, those chat, right communicate contact via features don’t communicate customers. how communicate out be are so they why trying capabilities e-mail, added that’s via businesses to voice. omnichannel with figure via via we better today it And because do They And just media. a customers the social center like their now

and incorporated ways of going to of offering sell those customers communicate better and to give opportunities are we’ve their clients. with that’s today, because more products their capabilities our looking our for all only us more to customers So with into offerings and

Unidentified Analyst

flat? and slightly mild did of notice the QX. downside, from up, for the going a to there that expectation down What’s pick QX? I but Understood. it Is million only $X.X remain services revenue was

Steve Mihaylo

just thing Doug point said, anything, XXX%. agree, out going and answers anyone that one I I’m Before to

productivity a and possible provide close recession-proof as mobility. company is as We’re very mobility And to because important. we with

you we service handheld. just have a are. even video on like to would revenue? can on People conference of – your Ron, don’t You of phone, your our powerful off service how comment video And off realize cell

Ron Vincent

Yes.

net recurring anticipate service revenue. in don’t we declines So

our revenue continue to grow to quarter-over-quarter. expect We

our spiked But and of back that’s rate beginning calls, talked QX. about previous X.XX% can month, confirm were year we’ve in that As we the same the churn and average for our per and QX, rate to last in by churn down had this we year.

are have impact down So an levels, recurring churn going it be the we churn to going on back we so think and revenue But pre-COVID. pre-COVID like your can impact forward. was minimal is that to

And decrease, was in so would forward. service so. revenue minor increases we expect see a to our going It

Unidentified Analyst

enterprise Yes, continue kind just given was to build – the mentioned we that the press my it to that’s What’s Doug’s. to going remember changes But business, you in a for release is talked new it about or if or caught so be that’s large, and wanted and marketing remarks something needed a of can’t – in midsize in focus I pursue direction something, to the I that why eye. Steve’s you XXXX? markets.

Doug Gaylor

some of excel we a I direction. But acquisition market we’ve now and to obviously, capabilities Yes, accounts. go SMB with our is new our to where the definitely mean, at. Allegiant, not of some with new larger offerings got

but also looking capabilities. and for in that those markets lot markets. We’re contact enterprise center Those small a to on there’s not SMB, know small defocus omnichannel enterprise of going the enterprise are opportunity and we

and larger offerings opportunities. to account XX have that size advertised build today got our delusions build X,XXX don’t we’ve at portfolio, obviously we we Now to their market going stations to But average of take we’re any on got at in that want for But that want look those clients. be to we our that stations. on We that. We account want XX Allegiant customer grandeur is advertised that. that we’ve

and eye our going the our a market enterprise we guys product off have take But compete what the there enterprise we competency go is core out big excel in on SMB can ball because market. We’re of in and the we against there. now not to small that

next over have And some I you’ll accounts. big think some so see year, the on nice announcements us

Unidentified Analyst

we QX we’ve be should period $XX year at And about lastly, XXXX. months what QX? divide stead line us sort in acquisition, a impact and Okay. modeling – for just XX by there those couple obviously, year we’ve about got revenue of But before Allegiant full of a the for then the top on of got the of million throw home, kind impact the take for for what and thinking with

Doug Gaylor

forecasting our I those take guide at on and pro we end. have your those formas you until would information Yes. to for further utilize look a

Unidentified Analyst

Got for it. taking question. Thanks my

Operator

you. from our Chris Sakai question next Thank Research]. We’ll [Singular take

Steve Mihaylo

afternoon, Good Chris.

Chris Sakai

Just wanted churn back ask pre-COVID to to do about levels stabilizing saying Where – levels. them you’re see down you at? are

Doug Gaylor

Yes. mean, pre-COVID, around bit little that monthly stabilize X% that we’ve the We about see or lower. hope to now, a were are got they maybe basis, them so I annually. again, area X.XX% we at on a X%

That with that was again, very attributed was that really majority that range. challenged to the for to year X.XX% We spike we’d like obviously to consistently that saw being So COVID. in SMB the just that high. But four in of market monthly. it effects were see again range I three or years think the really, last COVID of pre-COVID.

that, again, same other major think churn economy, that headwinds, I changes from are I the any it So see I don’t rates. it anticipate in our the back where seeing our think feeling mean, to in down spike I obviously, is, that a apart now but we large customers

anomaly, You a fluctuation like but there, see a onetime I spike that think big and I COVID don’t here small again. we’ll think a is and could see

Chris Sakai

is NetSapiens Okay. the migration And to then platform? how progressing customer

Doug Gaylor

progressing well. it’s Yes,

which VIP of VIP platform – was my We’ve now. platform, last is NetSapiens to that our migrated the accounts over over our over to So we’re got XX% we’re on count XX% at classic think I our platform running. probably XX,XXX seats

all new that on our lot migrations, but VIP is And going of so platform. a are customers obviously

is fact really a generating. maybe migration along, to only the due than that not that going slower it’s planned little revenue So

my had record, time. QX. in mentioned So we of amount We comments, installs as as new had we migrate a record have we a accounts I during

And over. so to implementing for logos when don’t our generating new we strategy have our are platform migration that implementation revenue, managers have focused migrate on

or time platform. and And so the them our try classic as have it’s offers we in we migrate NetSapiens current platform over

as So it’s XX%. those burden of as get We possible a quick to need major migrate us. customers not for and then over cost many as

schedule, We’re little much bit soon. but a not behind our

that another migrated XX majority customers we to probably of worth before I anticipate So get we got the of XX over. months’ those runway

Chris Sakai

the acquisition, the is on revenue Allegiant then And recurrent? from Allegiant of what percent Okay.

Doug Gaylor

That’s the basis. revenue XX% on a is of recurring Allegiant

very similar to our So model.

a basis. is a revenue higher is revenue But XX%. I at XX%, XX% about of think about our on the model little bit Allegiant recurring

Chris Sakai

answers. the for Thanks Okay.

Operator

come will Thank you. next take We’ll from Latimore. question our Mike

Steve Mihaylo

Mike. How are you?

Unidentified Analyst

Very fine. How are you?

Steve Mihaylo

Thanks. Very good.

Unidentified Analyst

here. are Allegiant execution, in base Congrats what percent buy some services? percent the logos, provides. of them of managed looking guess, they also then the the in could opportunities cross-sell of as your I And well? acquisition seeing what terms for UCaaS Interested these of time on strong the new that

Steve Mihaylo

I but Doug answer that, to it. answer going I’m to let know the

Doug Gaylor

Mike. Thanks,

So yes, or they that quite their data they plus think we Allegiant that plus for base, about service than offer. service more one services if service type services The have network telecom majority bit them, services. plus or telecom customers of have service peripheral have service the a telecom meaning of peripheral they

makes from customers much it So extremely them, customer. well stickier works that makes sticky a some and model and just got for for and very, have three customer. that very four that services a They’ve them

can we us. side services the UCaaS all today, So we all when customers have on to house, customers the out have our roll that how of think the from about Crexendo we that just direct direct of

data previously IT services. services or haven’t network or services infrastructure offered we or services So managed

can That out means SD-WAN about can Internet their and extremely can and type type XXX, can We offer services And Teams. we connectivity. offer them. we’re offer offer those that Office we offering so excited services. going We firewalls to

us add-ons be to we one great different the two, customers out able customers great, vendors. services. they that have, of just have five are to ancillary to of our those for so through because four, go every Right And have all now, three, them those

services. up communications point it So selling it that to all now, contact how to one has be want call organization be is Allegiant that’s one data IT all point. able for And to consolidate the the Allegiant One, and of to huge of they a customers’ sold into because and they

we out. are excited extremely rolling about so And that

basis it Now stuff ask time, because we’ll But us we’ve that when about now, excited can larger help we additional to out offer us out with talk our you our a we referring can until network? with our it’s about internally being that that the salespeople and support much these been help on are able customers Can And on people. to other out smaller up services?” all excited, out you we roll basis. we that data how until are services “Hey, us a roll

we that in-house. Now can do

Unidentified Analyst

the Allegiant little the bigger average. guess, ground a kind a they Makes sense. they’re potentially are what CCaaS offering. of there bit seems know like kind tried have you you on fruitful forma, base, I a before? that’s omnichannel? prospects for Do pro It your of Have And CCaaS CCaaS for

Doug Gaylor

on Yes, the to us out has introduced that’s already they solutions with Allegiant actually got there. Mavenir a a home actually of relationship had Allegiant any releases, because you the we platform, because for something Avaya in platform had but and CCaaS how the have CCaaS them have that press Ozonetel run wouldn’t selling read with actually that’s been that CCaaS relationship that platform on and is a

introduced had, and were liked to have offering. they so and what we now as they our it and CCaaS the that’s so us, they platform And CCaaS started enamored

us already platform. got they’re they’ve CCaaS customers because using three already So steps that ahead of

And since it they’ve knowledge have us make product and much out. already that working easier platform, that already references a for the customers are the will we extremely enterprise going us need going now to and because to to so they’re roll take the omnichannel offering. help the excited it’s of an and of And lot level small CCaaS introduce that charge extremely got to enterprise good

Unidentified Analyst

side I quarter Great. not be any Or weaker or there one is the would is of of the last on the software guess And then natural average? there’s one business. than I case? guess seasonality, that Is kind stronger

Steve Mihaylo

Anand right I’m going to let He’s answer sitting here. that.

Anand Buch

So Steve. thanks, Yes.

need in to there’s of keep mind. So think you couple from that a seasonality a perspective, things I so

we to that are and then subscription there where think more And as more moving upgrading I folks are and services, folks OpEx-based point-in-time subscription-based more more fee to models. points start paying subscription revenue associated maintenance and then licensing. are migrate and towards with

or for that we if licensees other year-end, sense? we see make often before seasonality settle And end they that as more recurring are still But of so or surely starting typically, we’re like or to to with things purposes see quarter tax make year-end providers out with service that. the and need capital more purchases Does kind get that revenue.

Unidentified Analyst

of luck. Yes, sure. Great. Best lot. the Thanks a

Operator

you. Thank

comes next Kaufman Investments]. Our question from Michael [MK

Steve Mihaylo

Michael. afternoon, Good

Michael Kaufman

financial creative. like they’re great they your huge and companies future and going grow that that is And want And Doug, amounts and the pond for and been just think build how at key overpaid everything, Steve competitors team the opportunity to cross-sell has opportunities? on with on strategy, and and looking and buy from this debt. XxX we roll I you to very to fishing accretive sticking for I at Ring, And living stick discipline the company using analogy. up current creating congratulate the are profitable can drowning Hi, of

Steve Mihaylo

isn’t thank accretive firewall. can’t we’re of look by just made find pointing horribly as one the ahead Well, happen the happen. And our their as soon well, now. Chinese proactively of in soon first years to is have deal. talks is gets room, didn’t We But real behind XXX experience. rodeo. to that this This – for it, it going But – Crexendo gets department our as are our management going analysts probably out. accident. that realize undervalued you’re to people of of all as rather, we sales or obviously, And that right it And it stock they because you at there’s going We opportunities.

occur. So to one of Well, occur. things are of two going the both them will

companies. audit. cash going $X to or not it’s million more going And about going higher these of to we’re acquire have price. a million, And flow if to how going and $XX we’re stock we’re to need that’s this, We’re on an top under

start you’re more growth the all the organic bigger So acquisition the and we speeding up. bigger will the process get, The that of going to see.

Michael Kaufman

million Well, rate. run you’re already at $XX

this value crazy, So sure going come. the like is and is thing growing I’m to

Steve Mihaylo

It is. It is.

you. Thank correct. You’re

Michael Kaufman

I you accretive on and thing the debt again, the focusing keep best, whole is to just limited So this acquisitions and the and fundamentals. doing wish just

Steve Mihaylo

our on that have one. you promise Well,

Doug Gaylor

Michael. Thanks,

Michael Kaufman

you. Thank

Operator

Thank you.

comes Gilmore. Edward from question next Our

Unidentified Analyst

revenues able and gross addition afternoon, anticipated for you’ve and next be historically and call that One hit of year quarter. I and the this you expect had run to Allegiant? taking Good on the Do questions. mentioned Steve maintain margins that that had rate. quick for the Doug Doug with helping on us you’ll same Thanks two my acquisition last the the to team. focus congrats additional

Steve Mihaylo

I to I’m in asked glad question that? is about up on why but gross gross higher our management Doug, And one tired see that margin. I’m you of expand don’t because talking margins. comes it, that would like And every meetings you of

Doug Gaylor

being better. more those so look the anticipate margins, at Yes. we leverage can manage costs we larger We able have, grow you get, as our Ed, to we the

from providers back can So will infrastructure data same that getting We just this in and get The we to months, Microsoft to discounts better that services. of pricing. a margins. couple relationships before and go our those were leverage that help they’ve the other with Allegiant, services providers bigger acquisition, and strong last lot some got even able we of we’re of fact with acquired

margins. confident Solutions we’re our that So our the and to see be Services in from growth you’ll I’m margins. an grow confident a on of the QX. margins bit QX going And gross to in increase Telecom segment We continue to saw I’m able to both to little continue that Software

Unidentified Analyst

Doug, XXXX? And Okay. run to rate income, line and then revenue this you additional in see is Great. that. going for bottom the that there to on ultimately net do Thanks flow

Doug Gaylor

Yes.

very us. So again, for a accretive this is, acquisition

was basis, we’ll you out the two combination synergies as Crexendo, plan. anticipate the Allegiant on with continue we if formas the And of executing they’ll mean, that even our see pro the look morning, stand-alone more of profitable. be that look profitable and we’re at So to out put organizations, game I we we at this on a going

going accretive doubt we to I that you’ll it’s yes, put be going impressed be line bottom with were to the So able the what And forward. bottom line. to to no have

Unidentified Analyst

stock in wasn’t the on the was And ask Doug. then price enjoyed anticipate the kind purchases? last Thanks, of question, the you your is following curious if kind just seen. And over and role going you I touched the active you Okay. you. additional I’ve Steve, since but Thank summer market right, price. this, of to very

Steve Mihaylo

Yes, you’re welcome.

let bought to answer to a stock, I’m open I I has Just crack own is of new shareholders my well, Look, the advice counsel against market, other and some on so open going have it. next so you’re anyway right And who the me. market. it – from sitting said, shareholders which everyone at much

recognize addition about out shares of shares, we the X.XXX first We million with have this rodeo. there. now isn’t have our XX that And – about it’s of float million time somebody

needs buy before, this doing have And my around We done stock me, what been we’re there more and going keep any counsel nobody it. to is and here. to telling based on

and exercising keep because is stock that it our keep they know and stock people exercising their undervalued Although options everything will we be higher.

Jeff Korn

feels for And be if himself open he just stock to appropriate. purchasing an has it’s in precluded not Steve clear, period

Steve Mihaylo

I’ve us Edward, I’m kid to birthday we the planning going getting answered in of you. hope the here us there being way, starting up are years. your And forever. Thank Jeff coming some a laughing. Well, But I’m by jester. He got do estate and question? because none I I up, to court about keeps be

Unidentified Analyst

again, your did. comes Happy it thanks birthday You answers. And Jeff, when for up.

Steve Mihaylo

It’s you. days. Thank you. Thank two another for not

Doug Gaylor

Todd, any other questions?

Operator

At no questions. we have time, this further

Steve Mihaylo

World was in when I of their ended wasn’t it the War because we country George that we poppies said take poppy. in going you in UK? Poppy All if wearing Veterans of do gave right. he Well, showing lives this might everyone, is First what no, all to and line a reason Day, appreciate add call was lot it you, we it. President. a people any thank the around the remember Bob but Washington fields. I’m him for out really poppy line, I freedom Ronald wasn’t I’m that my Day. tomorrow that Hope’s is when did the enjoy we it around and they for of Reagan up, or wear

we wish to all right, and the fourth probably announce the spring good a spring, going stay and to we’ll in winter, you in fall warm, I’m talk that, Vincent? with a beginning good quarter Mr. So when you

Ron Vincent

Thanks. for you, Thanks Okay. everybody. Thank the joining call.

Steve Mihaylo

Good bye.

Operator

thank your call. you today’s participation. We This does for conclude

may any time. You at disconnect

Crexendo (CXDO) 12 Nov 222022 Q3 Earnings call transcript