Crexendo Inc. Earnings Call: Growth Amid Challenges

Crexendo Inc. ((CXDO)) has held its Q1 earnings call. Read on for the main highlights of the call.

Crexendo Inc. recently held its earnings call, revealing a generally positive sentiment despite some challenges. The company showcased strong revenue growth, user expansion, and improved profitability, particularly in its software solutions segment. However, a decline in product revenue and challenges in the telecom segment were noted as areas needing attention. Overall, Crexendo’s performance and strategic initiatives were viewed positively, suggesting a promising outlook.

Revenue Growth

Crexendo reported a 12% year-over-year increase in total revenue, reaching $16.1 million. This growth was significantly driven by a 33% rise in software solutions revenue, highlighting the company’s successful focus on this segment.

User Milestone

A significant achievement for Crexendo was surpassing 6 million users on its software solutions platform during the quarter. This milestone underscores the platform’s growing popularity and market reach.

Gross Margin Improvement

The company saw a notable improvement in gross margins for its software solutions, which increased by 500 basis points to 78% compared to Q1 2024. This improvement reflects Crexendo’s efficiency and effective cost management.

Profitability

Crexendo reported strong profitability with a GAAP net income of $1.2 million and a non-GAAP net income of $2.6 million. Additionally, the adjusted EBITDA was reported at $2.6 million, indicating robust financial health.

Industry Recognition

The company received multiple industry awards, including the 2025 Product of the Year and the Hosted VoIP Excellence Award from Internet Telephony Magazine, enhancing its reputation and credibility in the market.

Partnership and Ecosystem Growth

Crexendo’s ecosystem vendor partner program is gaining momentum, setting the stage for significant future revenue. This growth in partnerships is expected to strengthen the company’s market position.

Decline in Product Revenue

Despite overall growth, Crexendo experienced a 22% decline in product revenue, dropping to $1.1 million from $1.3 million in the previous year’s first quarter. This decline highlights an area requiring strategic attention.

Challenges in Telecom Segment

The telecom services retail segment saw only a 1% organic growth, attributed to a proactive reduction in selling lower-margin opportunities. This reflects the challenges faced in this segment.

Gross Margin Decline in Service Revenue

Service revenue gross margin experienced a 3% decline quarter over quarter, settling at 57%. This decrease indicates potential areas for improvement in service operations.

Forward-Looking Guidance

During the earnings call, Crexendo provided optimistic guidance, forecasting continued double-digit revenue growth. The company emphasized its strategic focus on sustainable growth and profitability, particularly in the competitive UCaaS market. Future quarters are expected to benefit from strategic investments and market opportunities arising from industry disruptions.

In summary, Crexendo’s earnings call highlighted a positive overall sentiment, driven by strong revenue growth and strategic advancements in the software solutions segment. While challenges in product revenue and the telecom segment were noted, the company’s forward-looking guidance and strategic initiatives suggest a promising future.