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Sangoma Technologies (TSE:STC)
TSX:STC
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Sangoma Technologies
(TSX:STC)
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Rating:60Neutral
Price Target:
C$8.50
▲(15.80% Upside)
Sangoma Technologies' overall score reflects its strategic achievements and financial stability but is tempered by ongoing profitability challenges and valuation concerns. The positive sentiment and guidance from the recent earnings call boost the outlook, while technical analysis and valuation metrics indicate caution.
Positive Factors
Debt Reduction
Reducing debt ahead of schedule enhances financial stability and flexibility, allowing Sangoma to allocate resources towards growth initiatives and strategic investments.
Customer Satisfaction
Improved customer satisfaction and NPS scores indicate strong customer loyalty and service quality, which can lead to higher retention rates and long-term revenue stability.
Cash Flow Generation
Strong cash flow generation provides Sangoma with the ability to reinvest in its business, fund new projects, and weather economic fluctuations, supporting long-term growth.
Negative Factors
Revenue Decline
Inconsistent revenue trends and declines can hinder Sangoma's ability to sustain growth and profitability, impacting its competitive position and market share over time.
Profitability Challenges
Ongoing profitability challenges, as indicated by negative net profit margins, may limit Sangoma's ability to invest in growth opportunities and improve shareholder value.
Third-party Hardware Resale Volatility
Volatility in the third-party hardware resale business can lead to unpredictable revenue streams and affect Sangoma's overall financial performance, necessitating strategic adjustments.
Sangoma Technologies (STC) vs. iShares MSCI Canada ETF (EWC)
Market Cap
C$232.64M
Dividend YieldN/A
Average Volume (3M)36.66K
Price to Earnings (P/E)―
Beta (1Y)1.16
Revenue Growth-4.34%
EPS Growth31.52%
CountryCA
Employees671
SectorTechnology
Sector Strength88
IndustrySoftware - Infrastructure
Share Statistics
EPS (TTM)-0.10
Shares Outstanding33,329,754
10 Day Avg. Volume51,941
30 Day Avg. Volume36,660
Financial Highlights & Ratios
PEG Ratio0.25
Price to Book (P/B)0.59
Price to Sales (P/S)0.62
P/FCF Ratio4.60
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
C$11.09Price Target Upside51.09% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering3
EPS Forecast (FY)N/A
Revenue Forecast (FY)N/A
Sangoma Technologies Business Overview & Revenue Model
Company DescriptionSangoma Technologies Corporation develops, manufactures, distributes, and supports voice and data connectivity components for software-based communication applications worldwide. The company offers Switchvox, a business phone system; PBXact, a phone system; Internet protocol (IP) phones; service provider and voice over Internet protocol gateways; Switchvox Cloud, a unified communications solution; SIPstation SIP Trunking, a hosted session initiation protocol trunking service; PBXact Cloud, a cloud based private branch exchange service; Asterisk and FreePBX, an open source IP PBX software; and FAXStation, a fax-over-IP solution. It also provides session border controllers; telephony and media transcoding cards; and open source communications software. The company serves small and medium sized businesses, enterprises, original equipment manufacturers, carriers, and service providers. Sangoma Technologies Corporation was founded in 1984 and is headquartered in Markham, Canada.
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:Nov 10, 2025
(Q1-2026)
| % Change Since: |
Next Earnings Date:Feb 05, 2026
Earnings Call Sentiment Neutral
The earnings call indicated a strong start to fiscal 2026 with significant achievements in recurring revenue growth, pipeline expansion, and strategic opportunity capture. However, challenges such as core revenue decline, temporary cash flow impacts, and lower-than-expected gross margins were also noted. Overall, the company appears to be on a positive trajectory with a balanced outlook.Q1-2026 Updates
Positive Updates
Strong Start to Fiscal 2026
Fiscal 2026 is off to a strong start with Q1 exceeding consensus analyst expectations. The recurring revenue model now represents over 90% of total revenue, setting a foundation for sequential growth in Q2 and continued improvement in the second half.
Increase in MRR Bookings and Strategic Opportunities
MRR bookings grew 2.4% sequentially and 6.4% year-over-year. Deals over $10,000 of MRR increased 39% sequentially and are 72% above the FY '25 quarterly average.
Growth in Pipeline and Booking Momentum
New pipeline creation increased 39% quarter-over-quarter. The overall size of the pipeline remains steady with a 6% increase in the last 6 weeks, instilling confidence in Q2 and beyond.
Strong Cash Flow and Debt Reduction
Generated $4.9 million in net cash from operating activities with a 60% conversion rate from adjusted EBITDA. Retired an additional $5.2 million in debt during the first quarter.
Negative Updates
Decline in Core Revenue
Core revenue, which accounted for 74% of total revenue, decreased 6% year-over-year due to longer sales cycles on larger MRR deals.
Temporary Impact on Free Cash Flow
Free cash flow was temporarily impacted by a $3.2 million negative change in working capital, primarily due to a technical issue in transitioning to a new payment processor.
Gross Margin Lower Than Expected
Gross margin was 72% of revenue, lower than the previous quarter's 76% without VoIP Supply, primarily due to a higher attachment of product to recurring revenue offerings.
Company Guidance
During Sangoma's first quarter of fiscal year 2026 investor call, the company reported strong financial metrics and outlined a positive outlook for the year. Sangoma achieved $50.8 million in revenue, $8.3 million in adjusted EBITDA with a 16% margin, and $3.2 million in free cash flow, despite a temporary $3.2 million negative change in working capital. The company's recurring revenue model now represents over 90% of total revenue, setting the stage for sequential growth in Q2 and year-over-year growth in Q3 and Q4. Key performance indicators such as pipeline, bookings, conversion, and churn were highlighted, with new pipeline creation up 39% quarter-over-quarter and monthly recurring revenue (MRR) bookings growing 2.4% sequentially and 6.4% year-over-year. Additionally, deals over $10,000 of MRR increased 39% sequentially and are 72% above the fiscal year 2025 quarterly average. Retention remains strong, with blended churn near 1%. The company plans to invest approximately $2 million in SG&A to accelerate customer acquisition and partner enablement, while maintaining a disciplined capital allocation strategy. Looking ahead, Sangoma reaffirmed its fiscal year 2026 guidance of $200 million to $210 million in revenue and an adjusted EBITDA margin of 17% to 19%, forecasting sequential growth through the year and emphasizing the company's entry into a new phase of sustainable, profitable growth.Sangoma Technologies Financial Statement Overview
Summary
Sangoma Technologies presents a mixed financial picture. The company has strong gross margins and positive cash flows, but its consistent net losses and fluctuating revenues pose challenges. The balance sheet reflects financial stability with manageable debt levels, but ongoing profitability issues may impact future growth and stability.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 | TTM | Dec 2023 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 238.26M | 252.53M | 247.28M | 224.35M | 131.38M | 131.42M |
| Gross Profit | 163.51M | 172.79M | 172.82M | 156.89M | 96.05M | 62.17M |
| EBITDA | 43.03M | 19.95M | 42.29M | -77.43M | 29.77M | 20.12M |
| Net Income | -6.93M | -29.03M | -8.66M | -110.78M | 227.51K | 2.11M |
Balance Sheet | ||||||
| Total Assets | 361.44M | 442.75M | 400.64M | 498.53M | 540.12M | 128.67M |
| Cash, Cash Equivalents and Short-Term Investments | 16.67M | 11.16M | 16.23M | 12.70M | 22.09M | 19.95M |
| Total Debt | 62.30M | 115.16M | 89.11M | 122.61M | 89.17M | 49.14M |
| Total Liabilities | 106.18M | 176.63M | 140.91M | 204.72M | 164.12M | 73.91M |
| Stockholders Equity | 255.26M | 266.12M | 259.73M | 293.81M | 375.99M | 74.78M |
Cash Flow | ||||||
| Free Cash Flow | 36.46M | 15.22M | 33.33M | 15.95M | 12.87M | 6.82M |
| Operating Cash Flow | 46.36M | 26.49M | 44.25M | 21.06M | 15.70M | 8.72M |
| Investing Cash Flow | -9.90M | -11.27M | -10.91M | -55.82M | -109.89M | -30.67M |
| Financing Cash Flow | -37.56M | -16.77M | -28.26M | 25.37M | 96.41M | 33.08M |
Sangoma Technologies Technical Analysis
Positive
7.34
Price Trends
7.18
Positive
7.62
Negative
7.59
Negative
Market Momentum
0.06
Negative
53.21
Neutral
75.91
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:STC, the sentiment is Positive. The current price of 7.34 is above the 20-day moving average (MA) of 7.17, above the 50-day MA of 7.18, and below the 200-day MA of 7.59, indicating a neutral trend. The MACD of 0.06 indicates Negative momentum. The RSI at 53.21 is Neutral, neither overbought nor oversold. The STOCH value of 75.91 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for TSE:STC.
Sangoma Technologies Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
65 Neutral | C$10.63B | 4,197.37 | -0.05% | ― | 25.22% | -97.97% | |
61 Neutral | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% | |
60 Neutral | C$558.40M | -18.49 | -18.09% | ― | 12.20% | -8.46% | |
60 Neutral | C$232.64M | -33.35 | -2.18% | ― | -4.34% | 31.52% | |
55 Neutral | C$357.35M | -2.31 | ― | 2.35% | 2.47% | 19.37% | |
55 Neutral | ― | ― | -20.44% | ― | 5.06% | -638.59% | |
53 Neutral | $3.48B | ― | 2.66% | ― | -13.61% | 89.73% |
* Technology Sector Average
TSE:STC
Sangoma Technologies
7.34
-1.36
-15.63%
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TELUS International (CDA)
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0.67
12.41%
TSE:TOI
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127.60
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9.06%
TSE:CVO
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-21.16%
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.