Sangoma Announces Third Quarter Fiscal 2025 Results

MARKHAM, Ontario--(BUSINESS WIRE)--Sangoma Technologies Corporation (TSX: STC; Nasdaq: SANG) (“Sangoma” or the “Company”), a trusted industry leader uniquely offering businesses a choice of on-premises, cloud-based, or hybrid Communications as a Service solutions, today announced its third quarter financial results and unaudited condensed consolidated interim financial statements for the three and nine month periods ended March 31, 2025.

"This quarter reflects our continued focus and disciplined execution of strategic priorities, highlighted by the completion of a significant transformation phase. With this foundation now firmly in place, Sangoma is equipped with the financial strength, operational structure, and capabilities to fully embrace its next chapter — a multi-pronged growth journey,” said Charles Salameh, Chief Executive Officer. “We delivered robust free cash flow and exceeded our capital allocation target ahead of schedule, while core platform and on-premises revenues increased for a second consecutive quarter. These results reflect the durability of our business model, the traction of our go-to-market strategy, and our ability to gain market share as peers pull back. With this solid foundation in place, Sangoma is well-positioned to accelerate growth and expand profitability."

Third Quarter of Fiscal 2025 Highlights:

• Total Revenue of $58.1 million declined $1.0 million or 2% from the second quarter of fiscal 2025, primarily due to a decrease in our non-core products, while in total, core platform products and services revenue increased sequentially for the second consecutive quarter.
• Revenue from core on-premises solutions and phone product lines increased quarter-over-quarter, reflecting the effectiveness of targeted go-to-market campaigns and strategic share gains following competitor exits from the on-premises market.
• Gross profit of $40.0 million, or 69% of total revenue.
• Operating expenses¹ were $40.6 million, down approximately 5% over the same quarter of prior year.
• Adjusted EBITDA² of $9.8 million representing 17% of total revenue.
• Strategic enterprise resource planning ("ERP") spend of $0.4 million in the quarter, bringing Adjusted EBITDA² for the third quarter to $10.2 million without this investment.
• Quarterly churn remains industry-leading at less than 1%.
• Net loss slightly increased to $1.4 million ($0.04 loss per share fully diluted) compared to $1.3 million ($0.04 loss per share fully diluted) in the third quarter of Fiscal 2024.
• Net cash provided by operating activities of $10.6 million in the third quarter and $34.7 million for the first three quarters of fiscal 2025, an improvement of 7% over the same three quarters in the prior year.
• Net cash provided by operating activities as a percentage of Adjusted EBITDA² for the third quarter reached 109%, exceeding 100% for the fifth straight quarter.
• Free Cash Flow² in the third quarter of $8.4 million ($0.25 per share fully diluted) and $28.2 million ($0.84 per share fully diluted) for the first three quarters of fiscal 2025.
• Full repayment of the Company’s Term Loan 1, reducing total debt to approximately $53 million at the quarter's end, surpassing the Company's previously announced Fiscal 2025 capital allocation target of reducing debt to $55 - $60 million well ahead of schedule.
• Cash at the end of the third quarter of fiscal 2025 was $17.3 million, reflecting a strong quarterly progression of operating cash flow, primarily due to increased efficiency initiatives and effective net working capital management.
• More than 155,000 shares have been repurchased for cancellation under the Company's Normal Course Issuer Bid launched on March 27, 2025.

Guidance for Fiscal 2025³

Sangoma is reaffirming and narrowing its revenue guidance from $235 - $240 million to $235 - $238 million and reaffirming its Adjusted EBITDA² guidance of $40 - $42 million, at approximately 17% of revenue given the results for the first three quarters of Fiscal 2025.

Conference call

Sangoma will host a conference call on Thursday, May 8, 2025, at 5:30 pm ET to discuss these results. The dial-in number for the call is 1-833-752-3740 (International +1-647-846-8617). Participants are requested to dial in 5 minutes before the scheduled start time and ask to join the Sangoma Technologies call.

¹ Operating Expenses consist of sales and marketing, research and development, general and administration and amortization of intangible assets.
² Adjusted EBITDA and Free Cash Flow are non-IFRS financial measures used by the Company to monitor its performance. Please see the section entitled “Non-IFRS Measures and Reconciliation of Non-IFRS Measures” in this press release for how we define “Adjusted EBITDA” and "Free Cash Flow".
³ The information in this section is forward-looking. Please see the section entitled “Cautionary Statement Regarding Forward-Looking Information” in this press release.

About Sangoma Technologies Corporation

Sangoma (TSX: STC; Nasdaq: SANG) is a leading business communications platform provider...www.sangoma.com.

Cautionary Statement Regarding Forward Looking Statements

This press release contains forward-looking statements...

Readers are cautioned not to place undue reliance on forward-looking statements...

Non-IFRS Measures and Reconciliation of Non-IFRS Measures

This press release contains references to non-IFRS measures...

“Adjusted EBITDA” means earnings before income taxes...

"Free Cash Flow" means cash provided by operating activities less cash used for purchases of property and equipment and capitalized development costs.

The IFRS measure most directly comparable to Free Cash Flow presented in our financial statements is net cash provided by operating activities.

The following table reconciles Free Cash Flow to net cash provided by operating activities for the periods indicated: