Exhibit 99.1
Crexendo Announces Third Quarter 2020 Results
PHOENIX,
AZ—(Marketwired – November 10, 2020)
Crexendo,
Inc. (NASDAQ: CXDO), an award-winning premier provider of cloud
communications, UCaaS (Unified Communications as a Service), call
center, collaboration services, and other cloud business services
that are designed to provide enterprise-class cloud services to any
size business at affordable monthly rates, today reported financial
results for the third quarter ended September 30,
2020.
Third Quarter Financial highlights:
●
15% increase in
total revenue year-over-year to $4.1 million.
●
GAAP net income of
$131,000 or $0.01 per basic and diluted common share.
●
Non-GAAP net income
of $290,000 or $0.02 per basic and diluted common
share.
Financial Results for the Third Quarter of 2020
Consolidated
total revenue for the third quarter of 2020 increased 15% to $4.1
million compared to $3.6 million for the third quarter of
2019.
Consolidated
service revenue for the third quarter of 2020 increased 12% to $3.7
million compared to $3.3 million for the third quarter of
2019.
●
Web Services
Segment service revenue for the third quarter of 2020 decreased 19%
to $129,000, compared to $159,000 for the third quarter of
2019.
Consolidated
product revenue for the third quarter of 2020 increased 43% to
$489,000 compared to $343,000 for the third quarter of
2019.
Consolidated
operating expenses for the third quarter of 2020 increased 22% to
$4.0 million compared to $3.3 million for the third quarter of
2019.
The
Company reported net income of $131,000 for the third quarter of
2020, or $0.01 per basic and diluted common share, compared to
$334,000 or $0.02 per basic and diluted common share for the third
quarter of 2019.
Non-GAAP
net income of $290,000 for the third quarter of 2020, or $0.02 per
basic and diluted common share, compared to a non-GAAP net income
of $454,000 or $0.03 per basic and diluted common share for the
third quarter of 2019.
EBITDA
for the third quarter of 2020 decreased to $212,000, compared to
$361,000 for the third quarter of 2019. Adjusted EBITDA for the
third quarter of 2020 decreased to $348,000, compared to $468,000
for the third quarter of 2019.
Financial Results for the nine months ended September 30,
2020
Consolidated
total revenue for the nine months ended September 30, 2020
increased 13% to $12.1 million compared to $10.7 million for the
nine months ended September 30, 2019.
Consolidated
service revenue for the nine months ended September 30, 2020
increased 14% to $10.7 million compared to $9.4 million for the
nine months ended September 30, 2019.
●
Cloud
Telecommunications Segment UCaaS service revenue for the nine
months ended September 30, 2020 increased 16% to $10.3 million
compared to $8.9 million for the nine months ended September 30,
2019.
●
Web Services
Segment service revenue for the nine months ended September 30,
2020 decreased 16% to $421,000, compared to $502,000 for the nine
months ended September 30, 2019.
Consolidated
product revenue for the nine months ended September 30, 2020
increased 2% to $1.32 million compared to $1.29 million for the
nine months ended September 30, 2019.
Consolidated
operating expenses for the nine months ended September 30, 2020
increased 14% to $11.2 million compared to $9.8 million for the
nine months ended September 30, 2019.
The
Company reported net income of $779,000 for the nine months ended
September 30, 2020, or $0.05 per basic and diluted common share,
compared to $911,000 or $0.06 per basic and diluted common share
for the nine months ended September 30, 2019.
Non-GAAP
net income was $1.23 million for the nine months ended September
30, 2020, or $0.08 per basic common share and $0.07 per diluted
common share, compared to a non-GAAP net income of $1.24 million or
$0.09 per basic common share and $0.08 per diluted common share for
the nine months ended September 30, 2019.
EBITDA
for the nine months ended September 30, 2020 was $1.1 million
compared to $986,000 for the nine months ended September 30, 2019.
Adjusted EBITDA for the nine months ended September 30, 2020 was
$1.4 million compared to $1.3 million for the nine months ended
September 30, 2019.
Total
cash, cash equivalents, and restricted cash at September 30, 2020
was $15.5 million compared to $4.3 million at December 31,
2019.
Cash
provided by operating activities for the nine months ended
September 30, 2020 of $423,000 compared to $1.2 million for the
nine months ended September 30, 2019. Cash used for investing
activities for nine months ended September 30, 2020 of $921,000
compared to $72,000 used for the nine months ended September 30,
2019. Cash provided by financing activities for the nine months
ended September 30, 2020 of $11.7 million compared to $374,000 for
the nine months ended September 30, 2019.
Steven
G. Mihaylo, Chief Executive Officer commented, “I am very
pleased with the increase in revenue. UCaaS service revenue
increased 14% for the third quarter of 2020 compared to the third
quarter of 2019. As I have indicated previously, the increase in
UCaaS revenue is the most important factor we use in monitoring the
business. The results were impacted by the current pandemic as we
believe we had some attrition of customers that did not remain
operating or otherwise decreased their service level. We are
however hopeful that we have seen the worst of COVID related
attrition. I am also pleased that we were able to continue our
streak of GAAP profitability. In addition, we had a substantial
increase in expenses for this quarter, both in regard to investing
in the business and initial listing fees associated with our up
listing to the Nasdaq Capital Markets in July. These investments
are however necessary and important for our future
growth.”
Mihaylo
added, “We are very pleased that we were able to close and
have a fully subscribed public offering. As part of that process
our team spoke to many investors who we believe are very excited
with the Crexendo story. We have substantially increased our
footprint with investors while increasing our investor base and our
stock float. We have built this Company the right way, by
methodically controlling expenses, followed by working toward
Non-GAAP profitability which was followed by GAAP profitability
which allowed us to then organically meet the stringent
requirements for a Nasdaq listing. Now that we have successfully
completed our public offering and raised the necessary capital, we
can aggressively focus on organic growth and accretive
acquisitions. We believe we have built the business to the point
where we can now focus on growth.”
Doug
Gaylor, President and Chief Operating Officer, stated, “Our
team continues to do a remarkable job day after day providing
industry leading products, services and support. We were recently
honored to receive the prestigious 15th annual Internet Telephony
excellence award. This as well as the numerous other awards we have
received, confirm that when you use our Ride the Cloud
Solutions® you get cutting edge solutions you can rely on
while in most cases saving a substantial amount of money. We
continue to focus and invest in sales and marketing so that we can
grow the Company organically while at the same time, as Steve
discussed, work aggressively to grow the Company through accretive
acquisitions.”
Conference Call
The
Company is hosting a conference call today, November 10, 2020 at
4:30 PM EST. The dial-in number for domestic participants is
844-369-8770 and 862-298-0840 for international participants.
Please dial in five minutes prior to the beginning of the call at
4:30 PM EST and reference Crexendo. A replay of the call will be
available until February 10, 2021 by dialing toll-free at
877-481-4010 or 919-882-2331 for international callers. The replay
passcode is 38142.
About Crexendo
Crexendo,
Inc. is an award-winning premier provider of cloud communications,
UCaaS (Unified Communications as a Service), call center,
collaboration services, and other cloud business services that are
designed to provide enterprise-class cloud services to any size
business at affordable monthly rates.
Safe Harbor Statement
This press release contains forward-looking statements. The Private
Securities Litigation Reform Act of 1995 provides a "safe harbor"
for such forward-looking statements. The words "believe," "expect,"
"anticipate," "estimate," "will" and other similar statements of
expectation identify forward-looking statements. Specific
forward-looking statements in this press release include
information about Crexendo (i) being pleased with the increase in
revenue; (ii) believing that the increase in UCaaS revenue is the
most important factor in monitoring the business; (iii) results
being impacted by the current pandemic with attrition of customers
that did not remain operating or otherwise decreased their service
level; (iv) being are hopeful that the worst of COVID related
attrition has occurred; (v) having a substantial increase in
expenses for this quarter, both in regard to investing in the
business and initial listing fees associated with up listing to the
Nasdaq Capital Markets in July; (vi) the investments being
necessary and important for future growth; (vii) being pleased that
it closed a fully subscribed public offering; (viii) investors
being very excited with the Crexendo story; (ix) having
substantially increased its footprint with investors while
increasing investor base and stock float; (x) having built this
Company the right way; (xi) being able to aggressively focus on
accretive acquisitions and engage in meaningful M&A activity;
(xi) team continuing to do a remarkable job providing industry
leading products, services and support; (xii) awards confirming
that when you use the Ride the Cloud Solutions® you get
cutting edge solutions which in most cases save a substantial
amount of money; (xiii) continuing to focus and invest in sales and
marketing so that it can organically while at the same time working
aggressively to grow thru accretive acquisitions.
For a
more detailed discussion of risk factors that may affect
Crexendo’s operations and results, please refer to the
company's Form 10-K for the year ended December 31, 2019, and
quarterly Form 10-Qs as filed with the SEC. These forward-looking
statements speak only as of the date on which such statements are
made, and the company undertakes no obligation to update such
forward-looking statements, except as required by law.
Contact
Crexendo,
Inc.
Doug
Gaylor
President
and Chief Operating Officer
602-732-7990
CREXENDO, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(In thousands, except par value and share data)
|
|
September 30,
2020
|
December 31,
2019
|
|
Assets
|
|
|
|
Current
assets:
|
|
|
|
Cash
and cash equivalents
|
$15,353
|
$4,180
|
|
Restricted
cash
|
100
|
100
|
|
Trade
receivables, net of allowance for doubtful accounts of
$50
|
|
|
|
as
of September 30, 2020 and $14 as of December 31, 2019
|
632
|
380
|
|
Contract
assets
|
94
|
22
|
|
Inventories
|
263
|
382
|
|
Equipment
financing receivables
|
253
|
143
|
|
Contract
costs
|
403
|
379
|
|
Prepaid
expenses
|
332
|
141
|
|
Income
tax receivable
|
-
|
4
|
|
Total
current assets
|
17,430
|
5,731
|
|
|
|
|
|
Long-term
trade receivables, net of allowance for doubtful
accounts
|
|
|
|
of
$0 as of September 30, 2020 and December 31, 2019
|
2
|
6
|
|
Long-term
equipment financing receivables, net
|
846
|
561
|
|
Property
and equipment, net
|
2,772
|
155
|
|
Operating
lease right-of-use assets
|
1
|
51
|
|
Intangible
assets, net
|
275
|
465
|
|
Goodwill
|
272
|
272
|
|
Contract
costs, net of current portion
|
512
|
436
|
|
Other
long-term assets
|
152
|
106
|
|
Total
Assets
|
$22,262
|
$7,783
|
|
|
|
|
|
Liabilities and Stockholders' Equity
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts
payable
|
$214
|
$86
|
|
Accrued
expenses
|
1,570
|
1,754
|
|
Finance
leases
|
31
|
30
|
|
Notes
payable
|
1,071
|
-
|
|
Operating
lease liabilities
|
-
|
50
|
|
Income
tax payable
|
5
|
-
|
|
Contigent
consideration
|
-
|
175
|
|
Contract
liabilities
|
783
|
791
|
|
Total
current liabilities
|
3,674
|
2,886
|
|
|
|
|
|
Contract
liabilities, net of current portion
|
450
|
423
|
|
Finance
leases, net of current portion
|
63
|
86
|
|
Notes
payable, net of current portion
|
1,891
|
-
|
|
Operating
lease liabilities, net of current portion
|
1
|
1
|
|
Total
liabilities
|
6,079
|
3,396
|
|
|
|
|
|
Stockholders'
equity:
|
|
|
|
Preferred
stock, par value $0.001 per share - authorized 5,000,000 shares;
none issued
|
—
|
—
|
|
Common
stock, par value $0.001 per share - authorized 25,000,000 shares,
17,536,891
|
|
|
|
shares
issued and outstanding as of September 30, 2020 and 14,884,755
shares issued
|
|
|
|
and
outstanding as of December 31, 2019
|
18
|
15
|
|
Additional
paid-in capital
|
73,414
|
62,400
|
|
Accumulated
deficit
|
(57,249)
|
(58,028)
|
|
Total
stockholders' equity
|
16,183
|
4,387
|
|
|
|
|
|
Total
Liabilities and Stockholders' Equity
|
$22,262
|
$7,783
|
CREXENDO, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(In thousands, except per share and share data)
|
|
Three Months Ended September 30,
|
Nine Months Ended September 30,
|
||
|
|
2020
|
2019
|
2020
|
2019
|
|
Service
revenue
|
$3,654
|
$3,259
|
$10,747
|
$9,414
|
|
Product
revenue
|
489
|
343
|
1,317
|
1,294
|
|
Total
revenue
|
4,143
|
3,602
|
12,064
|
10,708
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
Cost
of service revenue
|
946
|
836
|
2,824
|
2,587
|
|
Cost
of product revenue
|
314
|
172
|
797
|
664
|
|
Selling
and marketing
|
1,051
|
1,003
|
3,151
|
2,865
|
|
General
and administrative
|
1,351
|
1,040
|
3,585
|
3,051
|
|
Research
and development
|
326
|
215
|
840
|
624
|
|
Total
operating expenses
|
3,988
|
3,266
|
11,197
|
9,791
|
|
|
|
|
|
|
|
Income
from operations
|
155
|
336
|
867
|
917
|
|
|
|
|
|
|
|
Other
income/(expense):
|
|
|
|
|
|
Interest
income
|
1
|
1
|
3
|
4
|
|
Interest
expense
|
(23)
|
(1)
|
(54)
|
(9)
|
|
Other
income/(expense), net
|
1
|
(2)
|
(28)
|
6
|
|
Total
other income/(expense), net
|
(21)
|
(2)
|
(79)
|
1
|
|
|
|
|
|
|
|
Income
before income tax
|
134
|
334
|
788
|
918
|
|
|
|
|
|
|
|
Income
tax provision
|
(3)
|
0
|
(9)
|
(7)
|
|
|
|
|
|
|
|
Net
income
|
$131
|
$334
|
$779
|
$911
|
|
|
|
|
|
|
|
Earnings
per common share:
|
|
|
|
|
|
Basic
|
$0.01
|
$0.02
|
$0.05
|
$0.06
|
|
Diluted
|
$0.01
|
$0.02
|
$0.05
|
$0.06
|
|
|
|
|
|
|
|
Weighted-average common shares outstanding:
|
|
|
|
|
|
Basic
|
15,244,804
|
14,663,151
|
15,058,192
|
14,507,696
|
|
Diluted
|
17,249,035
|
15,629,647
|
16,793,896
|
15,444,063
|
CREXENDO, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(In thousands)
|
|
Nine Months Ended September 30,
|
|
|
|
2020
|
2019
|
|
CASH
FLOWS FROM OPERATING ACTIVITIES
|
|
|
|
Net
income
|
$779
|
$911
|
|
Adjustments
to reconcile net income to net cash provided by operating
activities:
|
|
|
|
Depreciation
and amortization
|
197
|
69
|
|
Share-based
compensation
|
377
|
293
|
|
Changes
in assets and liabilities:
|
|
|
|
Trade
receivables
|
(248)
|
(11)
|
|
Contract
assets
|
(72)
|
(2)
|
|
Equipment
financing receivables
|
(395)
|
(342)
|
|
Inventories
|
119
|
108
|
|
Contract
costs
|
(100)
|
(68)
|
|
Prepaid
expenses
|
(191)
|
(157)
|
|
Income
tax receivable
|
4
|
(2)
|
|
Other
assets
|
(46)
|
14
|
|
Accounts
payable and accrued expenses
|
(25)
|
224
|
|
Income
tax payable
|
5
|
-
|
|
Contract
liabilities
|
19
|
120
|
|
Net
cash provided by operating activities
|
423
|
1,157
|
|
|
|
|
|
CASH
FLOWS FROM INVESTING ACTIVITIES
|
|
|
|
Purchase
of property and equipment
|
(745)
|
(72)
|
|
Acquisition
of customer relationship assets
|
(176)
|
-
|
|
Net
cash used for investing activities
|
(921)
|
(72)
|
|
|
|
|
|
CASH
FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
Payment
of contingent consideration
|
(54)
|
-
|
|
Repayments
made on finance leases
|
(22)
|
(21)
|
|
Proceeds
from notes payable
|
1,001
|
-
|
|
Repayments
made on notes payable
|
(39)
|
(52)
|
|
Proceeds
from exercise of options
|
2,007
|
447
|
|
Proceeds
from issuance of common stock in connection with an
offering
|
8,778
|
-
|
|
Net
cash provided by financing activities
|
11,671
|
374
|
|
|
|
|
|
NET
INCREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED
CASH
|
11,173
|
1,459
|
|
|
|
|
|
CASH,
CASH EQUIVALENTS, AND RESTRICTED CASH AT THE BEGINNING OF THE
PERIOD
|
4,280
|
1,949
|
|
|
|
|
|
CASH,
CASH EQUIVALENTS, AND RESTRICTED CASH AT THE END OF THE
PERIOD
|
$15,453
|
$3,408
|
|
|
|
|
|
Cash
used during the year for:
|
|
|
|
Income
taxes, net
|
$-
|
$(9)
|
|
Interest
expense
|
$(54)
|
$(9)
|
|
Supplemental
disclosure of non-cash investing and financing
information:
|
|
|
|
Purchase
of property and equipment with a note payable
|
$2,000
|
$-
|
|
Adjustment
to intangible assets and contingent consideration of customer
relationship asset acquisition
|
$(121)
|
$-
|
|
Deferred
offering costs, in accounts payable and accrued expenses but not
yet paid
|
$(145)
|
$-
|
CREXENDO, INC. AND SUBSIDIARIES
Supplemental Segment Financial Data
(In thousands)
|
|
Three Months Ended September 30,
|
Nine Months Ended September 30,
|
||
|
|
2020
|
2019
|
2020
|
2019
|
|
Revenue:
|
|
|
|
|
|
Cloud
telecommunications
|
$4,014
|
$3,443
|
$11,643
|
$10,206
|
|
Web
services
|
129
|
159
|
421
|
502
|
|
Consolidated
revenue
|
4,143
|
3,602
|
12,064
|
10,708
|
|
|
|
|
|
|
|
Income
from operations:
|
|
|
|
|
|
Cloud
telecommunications
|
124
|
276
|
739
|
692
|
|
Web
services
|
31
|
60
|
128
|
225
|
|
Total
operating income
|
155
|
336
|
867
|
917
|
|
Other
income/(expense), net:
|
|
|
|
|
|
Cloud
telecommunications
|
(20)
|
2
|
(47)
|
(2)
|
|
Web
services
|
(1)
|
(4)
|
(32)
|
3
|
|
Total
other income/(expense), net
|
(21)
|
(2)
|
(79)
|
1
|
|
Income
before income tax provision:
|
|
|
|
|
|
Cloud
telecommunications
|
104
|
278
|
692
|
690
|
|
Web
services
|
30
|
56
|
96
|
228
|
|
Income
before income tax provision
|
$134
|
$334
|
$788
|
$918
|
Use of Non-GAAP Financial Measures
To
evaluate our business, we consider and use non-generally accepted
accounting principles (Non-GAAP) net income and Adjusted EBITDA as
a supplemental measure of operating performance. These measures
include the same adjustments that management takes into account
when it reviews and assesses operating performance on a
period-to-period basis. We consider Non-GAAP net income to be an
important indicator of overall business performance because it
allows us to evaluate results without the effects of share-based
compensation and amortization of intangibles. We define EBITDA as
U.S. GAAP net income before interest income, interest expense,
other income and expense, provision for income taxes, and
depreciation and amortization. We believe EBITDA provides a useful
metric to investors to compare us with other companies within our
industry and across industries. We define Adjusted EBITDA as EBITDA
adjusted for share-based compensation. We use Adjusted EBITDA as a
supplemental measure to review and assess operating performance. We
also believe use of Adjusted EBITDA facilitates investors’
use of operating performance comparisons from period to period, as
well as across companies.
In our
November 10, 2020 earnings press release, as furnished on Form 8-K,
we included Non-GAAP net income, EBITDA and Adjusted EBITDA. The
terms Non-GAAP net income, EBITDA, and Adjusted EBITDA are not
defined under U.S. GAAP, and are not measures of operating income,
operating performance or liquidity presented in analytical tools,
and when assessing our operating performance, Non-GAAP net income,
EBITDA, and Adjusted EBITDA should not be considered in isolation,
or as a substitute for net income or other consolidated income
statement data prepared in accordance with U.S. GAAP. Some of these
limitations include, but are not limited to:
●
EBITDA and Adjusted
EBITDA do not reflect our cash expenditures or future requirements
for capital expenditures or contractual commitments;
●
they do not reflect
changes in, or cash requirements for, our working capital
needs;
●
they do not reflect
the interest expense, or the cash requirements necessary to service
interest or principal payments, on our debt that we may
incur;
●
they do not reflect
income taxes or the cash requirements for any tax
payments;
●
although
depreciation and amortization are non-cash charges, the assets
being depreciated and amortized will be replaced sometime in the
future, and EBITDA and Adjusted EBITDA do not reflect any cash
requirements for such replacements;
●
while share-based
compensation is a component of operating expense, the impact on our
financial statements compared to other companies can vary
significantly due to such factors as the assumed life of the
options and the assumed volatility of our common stock;
and
●
other companies may
calculate EBITDA and Adjusted EBITDA differently than we do,
limiting their usefulness as comparative measures.
We compensate
for these limitations by relying primarily on our U.S. GAAP results
and using Non-GAAP net income, EBITDA, and Adjusted EBITDA only as
supplemental support for management’s analysis of business
performance. Non-GAAP net income, EBITDA and Adjusted EBITDA are
calculated as follows for the periods presented.
Reconciliation of Non-GAAP Financial Measures
In
accordance with the requirements of Regulation G issued by the SEC,
we are presenting the most directly comparable U.S. GAAP financial
measures and reconciling the unaudited Non-GAAP financial metrics
to the comparable U.S. GAAP measures.
Reconciliation of U.S. GAAP Net Income to Non-GAAP Net
Income
(Unaudited)
|
|
Three Months Ended September 30,
|
Nine Months Ended September 30,
|
||
|
|
2020
|
2019
|
2020
|
2019
|
|
|
(In
thousands)
|
|
(In
thousands)
|
|
|
U.S.
GAAP net income
|
$131
|
$334
|
$779
|
$911
|
|
Share-based
compensation
|
136
|
107
|
377
|
293
|
|
Amortization
of intangible assets
|
23
|
13
|
69
|
40
|
|
Non-GAAP
net income
|
$290
|
$454
|
$1,225
|
$1,244
|
|
|
|
|
|
|
|
Non-GAAP
earnings per common share:
|
|
|
|
|
|
Basic
|
$0.02
|
$0.03
|
$0.08
|
$0.09
|
|
Diluted
|
$0.02
|
$0.03
|
$0.07
|
$0.08
|
|
|
|
|
|
|
|
Weighted-average
common shares outstanding:
|
|
|
|
|
|
Basic
|
15,244,804
|
14,663,151
|
15,058,192
|
14,507,696
|
|
Diluted
|
17,249,035
|
15,629,647
|
16,793,896
|
15,444,063
|
Reconciliation of U.S. GAAP Net Income to EBITDA to Adjusted
EBITDA
(Unaudited)
|
|
Three Months Ended September 30,
|
Nine Months Ended September 30,
|
||
|
|
2020
|
2019
|
2020
|
2019
|
|
|
(In
thousands)
|
|
(In
thousands)
|
|
|
U.S.
GAAP net income
|
$131
|
$334
|
$779
|
$911
|
|
Depreciation
and amortization
|
57
|
25
|
197
|
69
|
|
Interest
expense
|
23
|
1
|
54
|
9
|
|
Interest
and other expense/(income)
|
(2)
|
1
|
25
|
(10)
|
|
Income
tax provision
|
3
|
-
|
9
|
7
|
|
EBITDA
|
212
|
361
|
1,064
|
986
|
|
Share-based
compensation
|
136
|
107
|
377
|
293
|
|
Adjusted
EBITDA
|
$348
|
$468
|
$1,441
|
$1,279
|