Exhibit
99.1
Crexendo Announces First Quarter 2021 Results
PHOENIX,
AZ—(Marketwired – May 11, 2021)
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 first quarter ended March 31, 2021.
First Quarter Financial highlights:
●
Total revenue
increased 17% year-over-year to $4.5 million.
●
Service revenue
increased 19% year-over-year to $4.1 million.
●
GAAP net loss of
$(715,000) or a $(0.04) loss per basic and diluted common
share.
●
Non-GAAP net income
of $308,000 or $0.02 per basic and diluted common
share.
Financial Results for the First Quarter of 2021
Consolidated
total revenue for the first quarter of 2021 increased 17% to $4.5
million compared to $3.9 million for the first quarter of
2020.
Consolidated
service revenue for the first quarter of 2021 increased 19% to $4.1
million compared to $3.5 million for the first quarter of
2020.
●
Web Services
Segment service revenue for the first quarter of 2021 decreased 26%
to $116,000, compared to $156,000 for the first quarter of
2020.
Consolidated
product revenue for the first quarter of 2021 decreased 3% to
$368,000 compared to $379,000 for the first quarter of
2020.
Consolidated
operating expenses for the first quarter of 2021 increased 45% to
$5.3 million compared to $3.7 million for the first quarter of
2020. During the first quarter of 2021, acquisition related
expenses accounted for $684,000 of the additional general and
administrative expenses.
The
Company reported a net loss of $(715,000) for the first quarter of
2021, or a $(0.04) loss per basic and diluted common share,
compared to $140,000 net income, or $0.01 per basic and diluted
common share for the first quarter of 2020.
Non-GAAP
net income of $308,000 for the first quarter of 2021, or $0.02 per
basic and diluted common share, compared to a non-GAAP net income
of $275,000 or $0.02 per basic and diluted common share for the
first quarter of 2020.
EBITDA
for the first quarter of 2021 decreased to $(721,000), compared to
$284,000 for the first quarter of 2020. Adjusted EBITDA for the
first quarter of 2021 decreased to $245,000, compared to $389,000
for the first quarter of 2020.
Total
cash, cash equivalents, and restricted cash at March 31, 2021 was
$16.2 million compared to $17.7 million at December 31,
2020.
Cash
used for operating activities for the first quarter of 2021 of
$(248,000) compared to $(288,000) used for the first quarter of
2020. Cash used for investing activities for the first quarter of
2021 of $(2,192,000) compared to $(528,000) used for the first
quarter of 2020. Cash provided by financing activities for the
first quarter of 2021 of $965,000 compared to $71,000 for the first
quarter of 2020.
Steven
G. Mihaylo, Chief Executive Officer commented, “I continue to be very excited
about the progress we are making and the direction we are headed.
While I would have preferred to continue our streak of
profitability, we fully expected to operate at a loss this quarter
due to the expenses associated with the NetSapiens merger. There
were some very good markers for us this quarter, UCaaS service
revenue for the first quarter of 2021 increased 21% compared to the
first quarter of 2020 and consolidated service revenue increased
19% year-over-year. These are very important and promising trends.
It was also a transformational quarter for us with the signing of
the merger agreement with NetSapiens. Our proxy is out to our
shareholders and we should be able to close the NetSapiens merger
hopefully by the end of this month. As I have said before, we will
continue to grow the business both organically and through
acquisitions, this quarter is a testament to our commitment to our
plan.”
Mihaylo
added, “I am very excited that we will shortly be rolling out
the NetSapiens platform to our Crexendo customers. I am convinced
that the NetSapiens video collaboration solutions and mobility
solutions used for teleconferencing and telecommuting, are the best
in the industry. In the new work from anywhere world, this will be
a substantial benefit to the Crexendo customers. NetSapiens was
recently spotlighted in Frost & Sullivan’s UCaaS (Unified
Communications as a Service) report as the third-party platform
vendor with the fastest growth rate in the North American market,
and the report ranks NetSapiens at number 4 in UCaaS seats in the
North American market. Our combined company pro forma consolidated
revenue for 2020 of $27.8 million nearly a 20% increase compared to
$23.3 million for 2019, this strong growth demonstrates why this
merger is a benefit for our shareholders. Additionally, the
NetSapiens community will benefit from our combined years of
experience which will be very helpful in continuing to improve the
offerings of both organizations. We will, as a joint team, continue
to operate the business effectively and efficiently. We carefully
monitor how we spend shareholder money, but we will do what is
necessary to make our soon to be combined company the best in the
industry. I could not be more excited about our
future.”
Doug
Gaylor, President and Chief Operating Officer, stated, “I am
thrilled about our merger with NetSapiens! Our management teams
continue to work together closely, and we will hit the ground
running after the merger is completed. Our combined synergies,
offerings and experiences will prove to be a substantial benefit to
all of our customers and our shareholders. The combination of the
talented resources from both organizations will make us a better
and more complete Company to support over 1.7 million users. I
share Steve’s enthusiasm and look forward to the
future.”
Conference Call
The
Company is hosting a conference call today, May 11, 2021 at 4:30 PM
EST. The dial-in number for domestic participants is 888-506-0062
and 973-528-0011 for international participants. Please dial in
five minutes prior to the beginning of the call at 4:30 PM EST and
reference entry code 748152. A replay of the call will be available
until May 18, 2021 by dialing toll-free at 877-481-4010 or
919-882-2331 for international callers. The replay passcode is
41164.
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 very excited about the
progress being made and the direction it is headed; (ii) having
fully expected to operate at a loss this quarter due to the
expenses associated with the NetSapiens merger; (iii) believing
that there were some very good markers for the quarter; (iv)
believing that UCaaS service revenue and consolidated service
revenue increases are very important and promising trends; (v) that
the merger agreement with NetSapiens comprised a transformational
quarter; (vi) should be able to close the NetSapiens merger by the
end of this month; (vii) continuing to grow the business both
organically and through acquisitions and this quarter being a
testament to that plan; (VIII) being very excited about offering
the NetSapiens platform to its customers; (ix) being convinced that
the NetSapiens video collaboration tools are the best in the
industry; (X) having accurately determined combined company pro
forma consolidated revenue for 2020 of $27.8 million; (iv)
believing the expected strong growth demonstrates why the merger is
a benefit for its shareholders; (XI) believing that the NetSapiens
community will benefit from the combined years of experience and
that such experience will be very helpful in continuing to improve
the offerings of both organizations; (xii) believing that as a
joint team it will continue to operate the business effectively and
efficiently; (xii) carefully monitoring how it spends shareholder
money and will however do what is necessary to make the combined
company the best in the industry; (xiii) not being more excited
about its future; (xiii) being thrilled about the merger with
NetSapiens; (xiv) combined management teams continue to work
together closely and we will hit the ground running after the
merger is completed; (xv) believing the combined synergies,
offerings and experiences will prove to be a substantial benefit to
its customers and its shareholders; and (xvi) believing that the
combination of the talented resources from both organizations will
make it a better and more complete Company.
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, 2020, 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
dgaylor@crexendo.com
CREXENDO, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(Unaudited, in thousands, except par value and share
data)
|
|
March 31,
2021
|
December 31,
2020
|
|
Assets
|
|
|
|
Current
assets:
|
|
|
|
Cash
and cash equivalents
|
$16,204
|
$17,579
|
|
Restricted
cash
|
-
|
100
|
|
Trade
receivables, net of allowance for doubtful accounts of
$20
|
|
|
|
as
of March 31, 2021 and $21 as of December 31, 2020
|
486
|
538
|
|
Contract
assets
|
205
|
159
|
|
Inventories
|
419
|
504
|
|
Equipment
financing receivables
|
298
|
286
|
|
Contract
costs
|
442
|
421
|
|
Prepaid
expenses
|
503
|
190
|
|
Income
tax receivable
|
129
|
4
|
|
Other
current assets
|
2
|
-
|
|
Total
current assets
|
18,688
|
19,781
|
|
|
|
|
|
Long-term
equipment financing receivables, net
|
880
|
906
|
|
Property
and equipment, net
|
2,776
|
2,734
|
|
Deferred
income tax assets, net
|
6,054
|
6,054
|
|
Operating
lease right-of-use assets
|
135
|
1
|
|
Intangible
assets, net
|
2,433
|
252
|
|
Goodwill
|
1,395
|
272
|
|
Contract
costs, net of current portion
|
543
|
549
|
|
Other
long-term assets
|
225
|
156
|
|
Total
Assets
|
$33,129
|
$30,705
|
|
|
|
|
|
Liabilities and Stockholders' Equity
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts
payable
|
$190
|
$56
|
|
Accrued
expenses
|
1,998
|
1,628
|
|
Finance
leases
|
43
|
29
|
|
Notes
payable
|
72
|
71
|
|
Operating
lease liabilities
|
44
|
1
|
|
Contigent
consideration
|
746
|
-
|
|
Contract
liabilities
|
1,034
|
778
|
|
Total
current liabilities
|
4,127
|
2,563
|
|
|
|
|
|
Contract
liabilities, net of current portion
|
352
|
450
|
|
Finance
leases, net of current portion
|
50
|
55
|
|
Notes
payable, net of current portion
|
1,854
|
1,873
|
|
Operating
lease liabilities, net of current portion
|
75
|
-
|
|
Total
liabilities
|
6,458
|
4,941
|
|
|
|
|
|
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,
18,424,602
|
|
|
|
shares
issued and outstanding as of March 31, 2021 and 17,983,177 shares
issued
|
|
|
|
and
outstanding as of December 31, 2020
|
18
|
18
|
|
Additional
paid-in capital
|
77,456
|
75,834
|
|
Accumulated
deficit
|
(50,803)
|
(50,088)
|
|
Total
stockholders' equity
|
26,671
|
25,764
|
|
|
|
|
|
Total
Liabilities and Stockholders' Equity
|
$33,129
|
$30,705
|
CREXENDO, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(Unaudited, in thousands, except per share and share
data)
|
|
Three Months Ended March 31,
|
|
|
|
2021
|
2020
|
|
Service
revenue
|
$4,139
|
$3,488
|
|
Product
revenue
|
368
|
379
|
|
Total
revenue
|
4,507
|
3,867
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
Cost
of service revenue
|
1,259
|
970
|
|
Cost
of product revenue
|
225
|
220
|
|
Selling
and marketing
|
1,241
|
1,038
|
|
General
and administrative
|
2,254
|
1,188
|
|
Research
and development
|
350
|
270
|
|
Total
operating expenses
|
5,329
|
3,686
|
|
|
|
|
|
Income/(loss)
from operations
|
(822)
|
181
|
|
|
|
|
|
Other
income/(expense):
|
|
|
|
Interest
income
|
-
|
1
|
|
Interest
expense
|
(19)
|
(9)
|
|
Other
income/(expense), net
|
2
|
(30)
|
|
Total
other income/(expense), net
|
(17)
|
(38)
|
|
|
|
|
|
Income/(loss)
before income tax
|
(839)
|
143
|
|
|
|
|
|
Income
tax benefit/(provision)
|
124
|
(3)
|
|
|
|
|
|
Net
income/(loss)
|
$(715)
|
$140
|
|
|
|
|
|
Earnings
per common share:
|
|
|
|
Basic
|
$(0.04)
|
$0.01
|
|
Diluted
|
$(0.04)
|
$0.01
|
|
|
|
|
|
Weighted-average
common shares outstanding:
|
|
|
|
Basic
|
18,189,783
|
14,905,599
|
|
Diluted
|
18,189,783
|
16,262,886
|
CREXENDO, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(Unaudited, in thousands)
|
|
Three Months Ended March 31,
|
|
|
|
2021
|
2020
|
|
CASH
FLOWS FROM OPERATING ACTIVITIES
|
|
|
|
Net
income/(loss)
|
$(715)
|
$140
|
|
Adjustments
to reconcile net income/(loss) to net cash provided by
operating activities:
|
|
|
|
Depreciation
and amortization
|
101
|
103
|
|
Share-based
compensation
|
282
|
105
|
|
Changes
in assets and liabilities:
|
|
|
|
Trade
receivables
|
174
|
(54)
|
|
Contract
assets
|
(46)
|
(6)
|
|
Equipment
financing receivables
|
14
|
(102)
|
|
Inventories
|
97
|
153
|
|
Contract
costs
|
(15)
|
(20)
|
|
Prepaid
expenses
|
(309)
|
(323)
|
|
Income
tax receivable
|
(125)
|
3
|
|
Other
assets
|
(8)
|
(50)
|
|
Accounts
payable and accrued expenses
|
291
|
(290)
|
|
Contract
liabilities
|
11
|
53
|
|
Net
cash used for operating activities
|
(248)
|
(288)
|
|
|
|
|
|
CASH
FLOWS FROM INVESTING ACTIVITIES
|
|
|
|
Purchase
of property and equipment
|
(29)
|
(528)
|
|
Business
acquisition
|
(2,163)
|
-
|
|
Net
cash used for investing activities
|
(2,192)
|
(528)
|
|
|
|
|
|
CASH
FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
Repayments
made on finance leases
|
(11)
|
(8)
|
|
Repayments
made on notes payable
|
(18)
|
(5)
|
|
Proceeds
from exercise of options
|
1,146
|
84
|
|
Taxes
paid on the net settlement of stock options
|
(152)
|
-
|
|
Net
cash provided by financing activities
|
965
|
71
|
|
|
|
|
|
NET
DECREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED
CASH
|
(1,475)
|
(745)
|
|
|
|
|
|
CASH,
CASH EQUIVALENTS, AND RESTRICTED CASH AT THE BEGINNING OF THE
PERIOD
|
17,679
|
4,280
|
|
|
|
|
|
CASH,
CASH EQUIVALENTS, AND RESTRICTED CASH AT THE END OF THE
PERIOD
|
$16,204
|
$3,535
|
|
|
|
|
|
Cash
used during the year for:
|
|
|
|
Income
taxes, net
|
$(1)
|
$-
|
|
Interest
expense
|
$(19)
|
$(9)
|
|
Supplemental
disclosure of non-cash investing and financing
information:
|
|
|
|
Purchase
of property and equipment with a note payable
|
$-
|
$2,000
|
|
Stock
issued for the acquisition of Centric Telecom
|
$346
|
$-
|
|
Contingent
consideration related to the acquisition of Centric
Telecom
|
$746
|
$-
|
CREXENDO, INC. AND SUBSIDIARIES
Supplemental Segment Financial Data
(Unaudited, in thousands)
|
|
Three Months Ended March 31,
|
|
|
|
2021
|
2020
|
|
Revenue:
|
|
|
|
Cloud
telecommunications
|
$4,391
|
$3,711
|
|
Web
services
|
116
|
156
|
|
Consolidated
revenue
|
4,507
|
3,867
|
|
|
|
|
|
Income/(Loss)
from operations:
|
|
|
|
Cloud
telecommunications
|
(817)
|
129
|
|
Web
services
|
(5)
|
52
|
|
Total
operating income/(loss)
|
(822)
|
181
|
|
Other
income/(expense), net:
|
|
|
|
Cloud
telecommunications
|
(17)
|
(6)
|
|
Web
services
|
-
|
(32)
|
|
Total
other income/(expense), net
|
(17)
|
(38)
|
|
Income/(Loss)
before income tax provision:
|
|
|
|
Cloud
telecommunications
|
(834)
|
123
|
|
Web
services
|
(5)
|
20
|
|
Income/(Loss)
before income tax provision
|
$(839)
|
$143
|
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, acquisition related expenses and amortization of
intangibles. We define EBITDA as U.S. GAAP net income/(loss) 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 acquisition related
expenses and 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
May 11, 2021 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/(loss) 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/(Loss) to Non-GAAP Net
Income
(Unaudited, in thousands, except for per share and share
data)
|
|
Three Months Ended March 31,
|
|
|
|
2021
|
2020
|
|
U.S.
GAAP net income/(loss)
|
$(715)
|
$140
|
|
Share-based
compensation
|
282
|
105
|
|
Acquisition
related expenses
|
684
|
-
|
|
Amortization
of intangible assets
|
57
|
30
|
|
Non-GAAP
net income
|
$308
|
$275
|
|
|
|
|
|
Non-GAAP
earnings per common share:
|
|
|
|
Basic
|
$0.02
|
$0.02
|
|
Diluted
|
$0.02
|
$0.02
|
|
|
|
|
|
Weighted-average
common shares outstanding:
|
|
|
|
Basic
|
18,189,783
|
14,904,599
|
|
Diluted
|
19,484,148
|
16,262,886
|
Reconciliation of U.S. GAAP Net Income/(Loss) to EBITDA to Adjusted
EBITDA
(Unaudited, in thousands)
|
|
Three Months Ended March 31,
|
|
|
|
2021
|
2020
|
|
U.S.
GAAP net income/(loss)
|
$(715)
|
$140
|
|
Depreciation
and amortization
|
101
|
103
|
|
Interest
expense
|
19
|
9
|
|
Interest
and other expense/(income)
|
(2)
|
29
|
|
Income
tax provision/(benefit)
|
(124)
|
3
|
|
EBITDA
|
(721)
|
284
|
|
Acquisition
related expenses
|
684
|
-
|
|
Share-based
compensation
|
282
|
105
|
|
Adjusted
EBITDA
|
$245
|
$389
|