The following is a summary of the Sangoma Technologies Corporation (SANG) Q1 2025 Earnings Call Transcript:

Financial Performance:

• Revenue for Q1 was slightly below guidance at $60.2 million.

• Maintained a strong adjusted EBITDA at the high end of the guidance range, amounting to $9.8 million, representing 16% of revenue.

• Net cash from operating activities increased significantly by 55% over the prior year to $12.1 million, with a high cash conversion rate of 124% of adjusted EBITDA.

• Debt was reduced by $8.7 million during the quarter, with total debt now at $69.1 million and a net debt-to-EBITDA ratio of approximately 1.2x.

• Maintaining full-year revenue guidance within the range of $250 million to $260 million and adjusted EBITDA between $42 million to $46 million.

Business Progress:

• Expanded and relaunched the Pinnacle Partner Program to focus on top 400 strategic partners.

• Implemented a national Market Development Fund program to enhance execution and co-selling with partners.

• Notable deals include a $250,000 CCD deal with a property management company and a $470,000 CCD deal with a large restaurant chain.

• Experiencing increased activity and opportunities through the premise-based business, particularly after NEC exit from the market.

• Transitioning towards a higher service-product mix while managing a shift in inventory to reflect current market demands.

Opportunities:

• Continuing to pivot towards growth with a focus on organic expansion, channel expansion, and inorganic growth through mergers and acquisitions.

• The exit of NEC from the premise-based communications market provides a substantial opportunity to capture a share of this market segment.

• Stronger focus on service-oriented business models, which will potentially dominate revenue streams, shifting from an 80-20 to an 83-17 service-to-product ratio.

Risks:

• External market disruptions like hurricanes Helene and Milton impacted operations, indicating vulnerability to natural disasters and other unforeseen events.

• Revenue for Q1 came slightly below guidance, suggesting potential volatility or challenges in deal closures and market conditions.

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