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Sangoma Technologies (TSE:STC)
TSX:STC
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Sangoma Technologies
(TSX:STC)
Rating:60Neutral
Price Target:
C$8.50
▲(10.53% Upside)
Positive Factors
Financial Management
Debt to cash flow ratio is nearing the target, indicating better financial management.
Future Performance
The focus is on the guidance for the next fiscal year, indicating confidence in future performance.
Strategic Moves
The company has sold Montney Infrastructure, contributing positively to its financial health.
Negative Factors
Sangoma Technologies (STC) vs. iShares MSCI Canada ETF (EWC)
Market Cap
C$257.66M
Dividend YieldN/A
Average Volume (3M)25.34K
Price to Earnings (P/E)―
Beta (1Y)1.21
Revenue Growth-1.72%
EPS Growth76.81%
CountryCA
Employees671
SectorTechnology
Sector Strength85
IndustrySoftware - Infrastructure
Share Statistics
EPS (TTM)-0.06
Shares Outstanding33,505,898
10 Day Avg. Volume34,615
30 Day Avg. Volume25,336
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)0.00
Price to Sales (P/S)0.00
P/FCF Ratio0.00
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
C$8.50Price Target Upside10.53% Upside
Rating ConsensusHold
Number of Analyst Covering0
Sangoma Technologies Business Overview & Revenue Model
Company DescriptionSangoma Technologies Corporation (STC) is a leading provider of hardware and software solutions for voice-over-IP (VoIP), unified communications (UC), and telecommunication systems. The company serves a diverse range of sectors, including small to medium-sized businesses, enterprises, and service providers. Sangoma's core products include IP phones, gateways, session border controllers, and cloud-based communication services.
How the Company Makes MoneySangoma Technologies generates revenue through multiple streams, primarily focusing on the sale of its unified communications products and services. Key revenue streams include the sale of VoIP hardware such as IP phones and gateways, as well as software licenses for its UC platforms. Additionally, Sangoma offers subscription-based cloud services, which provide a steady recurring revenue source. The company also earns through professional services, including consulting, training, and support. Strategic partnerships with service providers and value-added resellers further contribute to its earnings by expanding its market reach and customer base.
Sangoma Technologies Earnings Call Summary
Earnings Call Date:May 08, 2025
(Q3-2025)
| % Change Since: -7.24%|
Next Earnings Date:Sep 24, 2025
Earnings Call Sentiment Positive
The earnings call highlighted Sangoma's strong financial performance, efficient debt reduction, and successful completion of a major transformation project. The company demonstrated improved customer satisfaction and a growing large deal pipeline. However, challenges such as revenue decline due to strategic divestitures and volatility in the hardware resale business presented some headwinds.Q3-2025 Updates
Positive Updates
Strong Financial Performance
Sangoma delivered strong financial performance in Q3 with revenue of $58.1 million, adjusted EBITDA margins of 17%, and a cash conversion rate of 109% from adjusted EBITDA.
Debt Reduction Ahead of Schedule
Sangoma has paid down debt well ahead of schedule, with gross debt reduced to $53 million, and a trailing 12-month net debt to adjusted EBITDA ratio of about 0.88 times.
Successful Transformation and ERP Implementation
The major transformation project, Project Diamond, is complete. The new ERP system is online, promising efficiency gains and expected savings of $5 million over the next three years.
Improved Customer Satisfaction
Client satisfaction and NPS scores have improved significantly, with NPS scores up nearly 300% and client satisfaction scores up 23%. Customer churn remains low at 0.9%.
Increase in Large Deal Pipeline
The large deal pipeline, defined as opportunities with $10,000 or more MRR, has seen a 90% quarter-over-quarter increase.
Negative Updates
Revenue Decline Due to Divestiture
There was a slight revenue dip in Q3 due to the shift away from lower-margin hardware reselling, which led to a decrease in non-core products.
Impact of Tariff Announcements
Tariff announcements caused confusion, particularly affecting the hardware resale side of the business, leading to increased sales cycle volatility.
Challenges in Hardware Resale Business
The hardware resale business became too volatile due to macroeconomic issues, leading to the decision to classify it as non-core and held-for-sale.
Company Guidance
During Sangoma's third-quarter fiscal year 2025 investor call, the company provided guidance indicating strong financial performance with a revenue of $58.1 million. They achieved an adjusted EBITDA margin of 17% and an operating cash flow conversion from adjusted EBITDA exceeding 100%. Free cash flow per share was $0.25 for the quarter and $0.84 for the first three quarters. Sangoma is actively paying down debt, reducing it to $35.8 million, achieving a net debt to adjusted EBITDA ratio of 0.88 times. The company reaffirmed its fiscal year guidance, targeting a revenue range of $235 million to $238 million and adjusted EBITDA between $40 million and $42 million. Sangoma's strategic shift from lower-margin hardware reselling to focus on higher-margin communication software has resulted in improved gross margins. The company also highlighted significant improvements in client satisfaction and Net Promoter Scores, along with maintaining a low customer churn rate of 0.9%.Sangoma Technologies Financial Statement Overview
Summary
Sangoma Technologies shows robust gross profit margins and positive cash flow growth. However, the company is still facing consistent net losses and revenue fluctuations, which are significant challenges despite a stable balance sheet with manageable debt levels.Income Statement
Sangoma Technologies exhibits inconsistent revenue trends with a significant decline in revenue from 2023 to TTM. The gross profit margin remains robust at 68.6% in TTM, but the net profit margin is negative, reflecting ongoing losses. EBIT and EBITDA margins have shown improvement, but the company remains unprofitable.55
Neutral
Balance Sheet
The balance sheet shows a moderate debt-to-equity ratio at 0.24 in TTM, indicating manageable leverage. The equity ratio is strong at 70.6%, highlighting financial stability. However, declining stockholders' equity due to consistent net losses is a concern.60
Neutral
Cash Flow
The company has positive free cash flow growth, with a 9.35% increase from the previous year. The operating cash flow to net income ratio is strong, indicating effective cash generation from operations despite net losses. However, the reliance on financing activities in prior years raises sustainability concerns.65
Positive
| Breakdown | Jun 2024 | Jun 2023 | Jun 2022 | Jun 2021 | Jun 2020 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 247.28M | 252.53M | 224.35M | 134.96M | 96.22M |
| Gross Profit | 172.82M | 172.79M | 156.89M | 91.90M | 62.17M |
| EBITDA | 42.29M | 45.20M | -77.43M | 29.77M | 16.66M |
| Net Income | -8.66M | -29.03M | -110.78M | 618.58K | 2.86M |
Balance Sheet | |||||
| Total Assets | 400.64M | 442.75M | 498.53M | 540.12M | 128.67M |
| Cash, Cash Equivalents and Short-Term Investments | 16.23M | 11.16M | 12.70M | 22.09M | 19.95M |
| Total Debt | 89.11M | 115.16M | 122.61M | 89.17M | 49.14M |
| Total Liabilities | 140.91M | 176.63M | 204.72M | 164.12M | 73.91M |
| Stockholders Equity | 259.73M | 266.12M | 293.81M | 375.99M | 54.75M |
Cash Flow | |||||
| Free Cash Flow | 33.33M | 15.22M | 15.95M | 12.87M | 6.82M |
| Operating Cash Flow | 44.25M | 26.49M | 21.06M | 15.70M | 8.72M |
| Investing Cash Flow | -10.91M | -11.27M | -55.82M | ― | ― |
| Financing Cash Flow | -28.26M | -16.77M | 25.37M | 96.41M | 33.08M |
Sangoma Technologies Technical Analysis
Negative
7.69
Price Trends
8.07
Negative
7.78
Negative
8.30
Negative
Market Momentum
-0.05
Positive
39.18
Neutral
14.71
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:STC, the sentiment is Negative. The current price of 7.69 is below the 20-day moving average (MA) of 7.93, below the 50-day MA of 8.07, and below the 200-day MA of 8.30, indicating a bearish trend. The MACD of -0.05 indicates Positive momentum. The RSI at 39.18 is Neutral, neither overbought nor oversold. The STOCH value of 14.71 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for TSE:STC.
Sangoma Technologies Peers Comparison
Overall Rating
UnderperformOutperform
Sector (61)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
69 Neutral | C$850.93M | ― | -17.77% | ― | 10.09% | -8.79% | |
61 Neutral | $35.48B | 7.36 | -10.33% | 1.90% | 8.86% | -10.35% | |
60 Neutral | C$257.66M | ― | -2.67% | ― | -1.72% | 76.81% | |
| ― | $2.22B | ― | -1.76% | ― | ― | ― | |
55 Neutral | C$699.92M | ― | -39.72% | 0.74% | 2.47% | 19.37% | |
| ― | $1.07B | 30.46 | -20.44% | ― | ― | ― | |
| ― | $10.59B | 90.11 | 27.12% | ― | ― | ― |
* Technology Sector Average
Performance Comparison
TSE:STC
Sangoma Technologies
7.69
0.53
7.40%
BB
BlackBerry
3.75
1.43
61.64%
TSE:DND
Dye & Durham
10.20
-3.29
-24.39%
TIXT
TELUS International (CDA)
3.86
0.24
6.63%
TOITF
Topicus.com
127.74
33.81
35.99%
TSE:CVO
Coveo Solutions
8.86
2.59
41.31%
Sangoma Technologies Corporate Events
Sangoma Technologies Announces Meeting Results
Nov 19, 2024
Sangoma Technologies Corporation announced that all seven nominees were elected as directors at their annual general and special meeting. Additionally, key resolutions, including the appointment of KPMG LLP as auditors and the approval of the Employee Share Purchase Plan, were passed with overwhelming support. These results demonstrate strong shareholder confidence in the company’s leadership and strategic initiatives.
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.