Sangoma Announces Fourth Quarter and Fiscal Year 2025 Results

Executive Summary

• Sangoma Technologies reported its fourth quarter and full-year fiscal 2025 financial results, showing sequential revenue growth and improved profitability metrics.
• The company completed the sale of its VoIP Supply subsidiary for $4.5 million and accelerated vendor payments due to an ERP transition, significantly boosting fourth-quarter free cash flow.
• Management provided guidance for fiscal 2026, projecting total revenue between $200-$210 million and an Adjusted EBITDA margin of 17%-19%.

Key Details

• Q4 Fiscal 2025 Financials:
  • Total Revenue: $59.4 million (up 2% or $1.3 million from Q3 FY2025).
  • Gross Profit: $40.0 million (67% of revenue).
  • Operating Expenses: $39.1 million (down 6% or $2.5 million year-over-year).
  • Net Income: $0.2 million ($0.01 EPS fully diluted), compared to a Net Loss of $1.7 million in the prior year quarter.
  • Adjusted EBITDA: $11.4 million (19% margin), the highest level in the last 8 quarters.
  • Free Cash Flow: $4.8 million ($0.14 per share fully diluted).
  • Net Cash Provided by Operating Activities: $7.1 million (63% of Adjusted EBITDA).
  • Note: Due to a one-time acceleration of $3.0 million in vendor payments from an ERP transition, adjusted net cash from operations was $10.1 million (89% of Adjusted EBITDA) and free cash flow was $7.8 million ($0.22 per share).
• Fiscal 2025 Full Year Financials:
  • Total Revenue: $236.7 million (within the guided range of $235-$238 million).
  • Gross Profit: $161.7 million (68% of revenue).
  • Operating Expenses: $163.0 million (down 6% or $10.9 million year-over-year).
  • Net Loss: $5.0 million ($0.15 EPS fully diluted), compared to a Net Loss of $8.7 million in the prior fiscal year.
  • Adjusted EBITDA: $41.0 million (17% margin), at the midpoint of the guided range ($40-$42 million).
  • Free Cash Flow: $32.9 million ($0.98 per share fully diluted).
  • Net Cash Provided by Operating Activities: $41.8 million (102% of Adjusted EBITDA).
  • Note: Adjusted for the one-time $3.0 million vendor payment acceleration, fiscal year net cash from operations was $44.8 million and free cash flow was $35.9 million ($1.07 per share).
  • Total Debt: $47.9 million at year-end, a ~40% reduction from the prior year, surpassing the target of reducing debt to $55-$60 million.
  • Cash on Hand: $13.5 million at year-end.
• Strategic Updates & Divestitures:
  • Completed the sale of VoIP Supply LLC for a total aggregate purchase price of $4.5 million, settled in cash subsequent to year-end, securing a multiple of approximately 4x Adjusted EBITDA.
  • More than 500,000 shares repurchased for cancellation under the Normal Course Issuer Bid launched on March 27, 2025.
  • Recurring revenue (software and services) now represents more than 90% of the business.
  • Quarterly churn remains industry-leading at less than 1%.
• Fiscal 2026 Guidance:
  • Total Revenue: Expected range of $200 - $210 million (compared to $209 million in FY2025 excluding VoIP Supply).
  • Adjusted EBITDA Margin: Expected range of 17%-19%.
• Conference Call:
  • Scheduled for Wednesday, September 17, 2025, at 5:30 pm ET.

Notable Quotes

• "Fiscal 2025 was a year of transformation and disciplined execution for Sangoma, and our Q4 results reflect the strength of those efforts. Revenue and Adjusted EBITDA came in above the midpoint of our guided range, while free cash flow generation remained strong, as we completed the strategic shift toward software and services-led recurring revenue, now representing more than 90% of our business,” said Charles Salameh, Chief Executive Officer.