Sangoma Technologies (STC) AI Stock Analysis

• Market Cap: C$284.47M
• Dividend Yield: N/A
• Average Volume (3M): 21.85K
• Price to Earnings (P/E): ―
• Beta (1Y): 1.20
• Revenue Growth: -1.46%
• EPS Growth: 40.89%
• Country: CA
• Employees: 671
• Sector: Technology
• Sector Strength: 88
• Industry: Software - Infrastructure
• EPS (TTM): 0.01
• Shares Outstanding: 33,505,898
• 10 Day Avg. Volume: 12,818
• 30 Day Avg. Volume: 21,849
• PEG Ratio: 0.25
• Price to Book (P/B): 0.59
• Price to Sales (P/S): 0.62
• P/FCF Ratio: 4.60
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: C$10.39
• Price Target Upside: 42.13% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 4

• Rating: 60 Neutral
• Price Target: C$8.50 ▲(16.28% 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 Business Overview & Revenue Model

Company Description

Sangoma 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 Money

Sangoma 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 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.

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.

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.

Breakdown	TTM	Dec 2023	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	238.26M	252.53M	247.28M	224.35M	167.34M	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	―	―
Financing Cash Flow	-37.56M	-16.77M	-28.26M	25.37M	96.41M	33.08M

Sangoma Technologies Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 7.31
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

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 7.31 is below the 20-day moving average (MA) of 7.94, below the 50-day MA of 8.00, and below the 200-day MA of 8.24, indicating a bearish trend. The MACD of -0.03 indicates Positive momentum. The RSI at 39.65 is Neutral, neither overbought nor oversold. The STOCH value of 59.37 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for TSE:STC.

Sangoma Technologies Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
CVO	69 Neutral	882.83M	-28.52	-18.58%	―	10.09%	-8.79%
TOI	63 Neutral	13.48B	82.18	21.34%	―	20.69%	40.43%
STC	60 Neutral	C$284.47M	―	-1.99%	―	-1.46%	40.89%
BB	57 Neutral	3.29B	-53.81	-11.03%	―	-8.84%	70.97%
DND	55 Neutral	585.06M	-3.75	0.00%	0.87%	2.47%	19.37%
TIXT	55 Neutral	1.70B	-3.23	-22.61%	―	5.06%	-638.59%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%

Sangoma Technologies Corporate Events

Sangoma Technologies Announces Meeting Results

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.