In This Article:
Release Date: May 06, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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Crexendo Inc (NASDAQ:CXDO) reported a 12% year-over-year increase in total revenue, reaching $16.1 million.
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The software solutions revenue grew by 33%, with gross margins in this segment increasing by 500 basis points to 78%.
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The company achieved GAAP profitability for the seventh consecutive quarter, with a net income of $1.2 million.
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Crexendo Inc (NASDAQ:CXDO) surpassed 6 million users on its software solutions platform, indicating strong demand.
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The company is strategically investing in innovation and infrastructure, including a migration to Oracle Cloud Infrastructure, expected to drive cost savings and margin expansion.
Negative Points
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Product revenue declined by 22% to $1.1 million compared to the previous year.
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Service revenue gross margin decreased by 3% quarter over quarter to 57%.
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The telecom market remains highly competitive, with some competitors engaging in unsustainable pricing practices.
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Operating expenses increased by 8% to $14.9 million, impacting overall profitability.
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There is uncertainty in the market due to macroeconomic factors, although Crexendo Inc (NASDAQ:CXDO) has not yet seen a measurable weakening in demand.
Q & A Highlights
Q: Jeff, you mentioned sustainable double-digit growth. Is this guidance relevant for the entire year 2025 or specifically for Q2? A: Jeff Korn, CEO: The guidance is for year-over-year growth. While there can be quarterly variances, we are confident in achieving a minimum of 10% year-over-year growth.
Q: Are there any changes in competitor behavior regarding aggressive pricing and incentives? A: Jeff Korn, CEO: The behavior remains similar to 2024. We believe these practices are unsustainable, and we continue to focus on profitable growth by delivering superior service and customer experience.
Q: Can you provide more details on the impressive software gross margin improvement and its sustainability? A: Ron Vincent, CFO: The margin improvement is driven by increased revenue in the software solutions division. While we had a great quarter, we target a 73-75% range for the full year.
Q: How is the acquisition of Metaswitch by Allianza affecting the market, and what are you seeing in terms of competition? A: Jeff Korn, CEO: We haven't seen significant changes yet. Our differentiated model and service level continue to attract interest, and we are confident in winning more business due to our superior product and flexibility.