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Sangoma Technologies’ Earnings Call Highlights Strong Performance

Sangoma Technologies’ Earnings Call Highlights Strong Performance

Sangoma Technologies ((TSE:STC)) has held its Q4 earnings call. Read on for the main highlights of the call.

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Sangoma Technologies recently held its earnings call, revealing a positive sentiment driven by strong financial performance and strategic advancements. The company showcased successful shifts towards high-margin recurring revenue models and highlighted promising partnerships. Despite some challenges, such as longer sales cycles and a heavy reliance on the U.S. market, the overall outlook remains favorable.

Exceeding Consensus Expectations

Sangoma Technologies reported impressive financial results for Q4 FY2025, with revenues reaching $59.4 million and adjusted EBITDA at $11.4 million, achieving a margin of 19%. These figures surpassed consensus expectations, underscoring the company’s robust financial health and operational efficiency.

Transformation and Revenue Mix Shift

Over the past two years, Sangoma has undergone a significant transformation, modernizing its systems and streamlining operations. This strategic shift has resulted in over 90% of its revenue now stemming from software-led recurring services, a notable increase from 79%.

Debt Reduction and Strong Cash Generation

The company successfully reduced its total debt to $47.9 million, exceeding its target, and generated $41.8 million in net cash from operating activities in fiscal 2025. This financial discipline highlights Sangoma’s commitment to strengthening its balance sheet and enhancing shareholder value.

Strategic Partnerships and Industry Expansion

Sangoma has forged key partnerships with industry leaders such as AWS, VTech Hospitality, and Quicklert, expanding its offerings in the hospitality, education, and healthcare sectors. These collaborations are expected to drive growth and broaden the company’s market reach.

Successful Divestiture of VoIP Supply

The company completed the sale of its VoIP Supply business for $4.5 million, allowing it to focus more sharply on its high-margin core platform products. This divestiture aligns with Sangoma’s strategy to concentrate on its most profitable areas.

Longer Sales and Implementation Cycles

In pursuing larger enterprise opportunities in FY 2025, Sangoma has encountered longer sales and implementation cycles. While this has delayed some expected revenue growth, the company remains optimistic about the long-term benefits of these larger deals.

Dependence on U.S. Market

Sangoma’s revenue is heavily reliant on the U.S. market, with international growth lagging due to a historical focus on hardware products. This dependence presents a challenge, but the company is working to diversify its market presence.

Forward-Looking Guidance

Looking ahead, Sangoma anticipates total revenue for fiscal 2026 to be between $200 million and $210 million, with gross margins improving to approximately 75%. The company also expects adjusted EBITDA margins to range from 17% to 19%, reflecting an improved business mix and strategic investments in growth initiatives.

In conclusion, Sangoma Technologies’ earnings call painted a positive picture of the company’s current performance and future prospects. With strong financial results, strategic partnerships, and a focus on high-margin recurring revenue models, Sangoma is well-positioned for continued success, despite some challenges in sales cycles and market dependence.

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