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Sangoma Technologies (TSE:STC)
:STC
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Sangoma Technologies
(TSX:STC)
Rating:64Neutral
Price Target:
C$8.50
▲( 8.42% 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$263.38M
Dividend YieldN/A
Average Volume (3M)20.90K
Price to Earnings (P/E)―
Beta (1Y)1.33
Revenue Growth-1.72%
EPS Growth76.81%
CountryCA
Employees671
SectorTechnology
Sector Strength78
IndustrySoftware - Infrastructure
Share Statistics
EPS (TTM)-0.06
Shares Outstanding33,594,410
10 Day Avg. Volume31,077
30 Day Avg. Volume20,903
Financial Highlights & Ratios
PEG Ratio-1.33
Price to Book (P/B)0.58
Price to Sales (P/S)0.00
P/FCF Ratio3.68
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
C$11.49Price Target Upside46.56% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering2
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 the sale of its diverse range of communication products and services. Key revenue streams include the sale of VoIP hardware and software, Unified Communications systems, SIP trunking services, and cloud-based communication solutions. The company also earns through subscription-based models for its cloud services, offering businesses a flexible and scalable communication infrastructure. Additionally, Sangoma benefits from strategic partnerships and collaborations with other technology providers, which enhance its market reach and product offerings. These partnerships often involve bundling Sangoma's products with complementary technologies, thereby expanding its customer base and increasing sales opportunities.
Sangoma Technologies Financial Statement Overview
Summary
Sangoma Technologies shows strengths in cash flow management and a solid equity base, but faces profitability challenges. The negative net profit margin and consistent net losses indicate ongoing operational difficulties. Revenue has been stable, but improvement in profitability metrics is needed to enhance financial position.Income Statement
Sangoma Technologies has demonstrated a mixed performance in its income statement. The TTM gross profit margin stands at 69.01%, showing strong cost management; however, the net profit margin is negative at -2.80% due to consistent net losses. The EBIT margin is also negative at -0.13%, indicating challenges in covering operational costs. Revenue has been relatively stable with a slight decline from the previous year. Despite a positive EBITDA margin of 18.23%, the company faces profitability challenges.62
Positive
Balance Sheet
The balance sheet reveals a moderate position with a debt-to-equity ratio of 0.27, suggesting manageable leverage. The equity ratio is robust at 68.86%, highlighting a strong equity base relative to assets. However, the return on equity is negative at -2.63%, reflecting challenges in generating returns for shareholders due to ongoing net losses.68
Positive
Cash Flow
Cash flow analysis indicates a positive trajectory with operating cash flow exceeding net income, resulting in a favorable operating cash flow to net income ratio of 7.57. Free cash flow increased by 23.36% in the TTM, showcasing effective cash management despite profitability issues. The free cash flow to net income ratio is strong, highlighting the company's cash-generating capability.74
Positive
| Breakdown | |||||
| TTM | Jun 2024 | Jun 2023 | Jun 2022 | Jun 2021 | Jun 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 241.24M | 247.28M | 252.53M | 224.35M | 134.96M | 96.22M | Gross Profit |
| 166.48M | 172.82M | 172.79M | 156.89M | 91.90M | 62.17M | EBIT |
| -322.59K | -1.06M | 52.00K | -5.51M | 6.43M | 7.50M | EBITDA |
| 43.97M | 42.29M | 45.20M | -77.43M | 29.77M | 16.66M | Net Income Common Stockholders |
| -6.77M | -8.66M | -29.03M | -110.78M | 618.58K | 2.86M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 18.39M | 16.23M | 11.16M | 12.70M | 22.09M | 19.95M | Total Assets |
| 414.07M | 400.64M | 442.75M | 498.53M | 540.12M | 128.67M | Total Debt |
| 99.56M | 89.11M | 115.16M | 122.61M | 89.17M | 49.14M | Net Debt |
| 81.17M | 72.88M | 104.00M | 109.91M | 67.08M | 29.19M | Total Liabilities |
| 153.16M | 140.91M | 176.63M | 204.72M | 164.12M | 73.91M | Stockholders Equity |
| 260.91M | 259.73M | 266.12M | 293.81M | 375.99M | 54.75M |
| Cash Flow | Free Cash Flow | ||||
| 41.13M | 33.33M | 15.22M | 15.95M | 12.87M | 6.82M | Operating Cash Flow |
| 51.25M | 44.25M | 26.49M | 21.06M | 15.70M | 8.72M | Investing Cash Flow |
| -10.12M | -10.91M | -11.27M | -55.82M | ― | ― | Financing Cash Flow |
| -34.62M | -28.26M | -16.77M | 25.37M | 96.41M | 33.08M |
Sangoma Technologies Technical Analysis
Neutral
7.84
Price Trends
7.11
Positive
8.19
Negative
8.18
Negative
Market Momentum
0.19
Positive
52.76
Neutral
19.87
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:STC, the sentiment is Neutral. The current price of 7.84 is below the 20-day moving average (MA) of 8.00, above the 50-day MA of 7.11, and below the 200-day MA of 8.18, indicating a neutral trend. The MACD of 0.19 indicates Positive momentum. The RSI at 52.76 is Neutral, neither overbought nor oversold. The STOCH value of 19.87 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral 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 |
|---|---|---|---|---|---|---|---|
64 Neutral | C$263.38M | ― | -2.67% | ― | -1.72% | 76.81% | |
61 Neutral | $11.28B | 10.16 | -6.88% | 2.97% | 7.41% | -8.93% | |
| $2.26B | ― | -7.59% | ― | ― | ― | ||
49 Neutral | C$684.10M | ― | -39.72% | 0.74% | 2.47% | 19.37% | |
| $732.23M | 30.46 | -5.70% | ― | ― | ― | ||
| $10.47B | 98.87 | 29.51% | ― | ― | ― | ||
61 Neutral | C$662.69M | ― | -9.00% | ― | 8.86% | 56.67% |
* Technology Sector Average
Performance Comparison
TSE:STC
Sangoma Technologies
7.84
0.72
10.11%
BB
BlackBerry
3.76
0.91
31.93%
TSE:DND
Dye & Durham
10.18
-2.15
-17.44%
TIXT
TELUS International (CDA)
2.66
-3.09
-53.74%
TOITF
Topicus.com
126.00
44.02
53.70%
TSE:CVO
Coveo Solutions
6.89
-1.02
-12.90%
Sangoma Technologies Earnings Call Summary
Earnings Call Date:May 08, 2025
(Q3-2025)
| % Change Since: -5.43%|
Next Earnings Date:Sep 24, 2025
Earnings Call Sentiment Positive
The earnings call presented a largely positive outlook for Sangoma, with strong financial performance, completion of a major transformation, and improved customer metrics. While there were some challenges, such as a slight revenue dip and volatility in the hardware resale business, the company's strategic focus and achievements in debt reduction and cash flow generation indicate a strong position for future growth.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 operating cash flow conversion from adjusted EBITDA over 100%.
Completion of Project Diamond
The major transformation through project diamond is complete, providing Sangoma with the financial foundation and operational structures for future growth.
ERP System Implementation
The new ERP system is on track and online, expected to generate savings of approximately $5 million over the next three years.
Improvement in Customer Metrics
Client satisfaction and NPS scores improved significantly year-over-year, with NPS scores up nearly 300% and client satisfaction scores up 23%. Customer churn remains industry-leading at below 1%.
Debt Reduction Ahead of Schedule
Sangoma has paid down debt well ahead of schedule, reducing gross debt to $53 million from $55-$60 million target, and net debt to $35.8 million.
Strong Free Cash Flow
Generated $10.6 million in net cash from operating activities in Q3, with free cash flow per share at $0.25 in Q3 and $0.84 in the first three quarters.
Launch of Normal Course Issuer Bid (NCIB)
With debt lower than planned, Sangoma launched an NCIB, reinforcing belief in its intrinsic value.
Negative Updates
Slight Revenue Dip
A shift away from lower-margin hardware reselling resulted in a slight revenue dip in Q3, although it led to a sequential improvement in gross margins.
Third-party Hardware Resale Volatility
The third-party hardware resale business was volatile due to macro factors like tariffs, leading to its classification as held-for-sale assets.
Guidance Adjustment
Revenue guidance for fiscal 2025 was narrowed to $235 million to $238 million from $235 million to $240 million, with adjusted EBITDA reaffirmed at $40 million to $42 million.
Company Guidance
During Sangoma's third-quarter fiscal year 2025 investor call, the company reported robust financial performance with revenue amounting to $58.1 million. They achieved adjusted EBITDA margins of 17% and an operating cash flow conversion rate from adjusted EBITDA exceeding 100%. Sangoma also generated a strong free cash flow per share of $0.25 in Q3 and $0.84 across the first three quarters. The company has been aggressively paying down debt, surpassing their timeline with a gross debt reduction to $53 million. Additionally, Sangoma is pursuing a normal course issuer bid, reflecting confidence in its intrinsic value. The company is strategically shifting away from lower-margin hardware reselling to focus on higher-margin communications software, resulting in a slight revenue dip but improved gross margins. Client satisfaction and Net Promoter Scores (NPS) showed significant improvements, with NPS up nearly 300% and client satisfaction scores increasing by 23%. Customer churn remained low at 0.9%, and the large deal pipeline saw substantial growth. With these metrics underscoring Sangoma's strategic transformation and operational readiness, the company is poised for continued growth in its core MRR business.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
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
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.