Q2 2024 Crexendo Inc Earnings Call

Operator: Ladies and gentlemen, thank you for your patience. This call will begin at 4.32 Eastern Time. Thank you for your patience, and this call will begin at 4.32.

Operator: Ladies and gentlemen, thank you for your patience. This call will begin at 4:32 Eastern Time. Thank you for your patience, and this call will begin at 4:32 Eastern Time.

Ladies and gentlemen, thank you for your patience. This KOL will begin at 432 Eastern time. Thank you for your patience in this call will begin at 432 eastern time.

Hello.

Yeah.

No.

Speaker Change: Oh, Oh Oh.

Speaker Change: Hum.

Speaker Change: Hum.

Speaker Change: Hum.

Speaker Change: Right.

Speaker Change: Hello.

Speaker Change: Sure.

Speaker Change: No.

Speaker Change: No.

Speaker Change: [music].

Speaker Change: Okay.

Speaker Change: Thank you.

Speaker Change: Okay.

Speaker Change: Yeah.

Speaker Change: [music].

Speaker Change: Okay.

Speaker Change: [music].

Operator: Greetings and welcome to the Crescendo Incorporated 2nd quarter 2024 earnings call. At this time, all participants are on a listen-only mode, and a question-and-answer session will follow the form of presentation. If anyone should require operator assistance during today's conference, please press star zero on your telephone keypad. Please note this conference is being recorded.

Speaker Change: Yes.

Operator: Greetings, and welcome to the Crescendo Incorporated second quarter 2024 earnings call. At this time, all participants are in a listen-only mode, and a question and answer session will follow the formal presentation. If anyone should require operator assistance during today's conference, please press star zero on your telephone keypad. Please note that this conference is being recorded. I will now turn the conference over to your host. Mr. Jeff Korn, CEO of Crexendo Incorporated Sir, you may begin.

Speaker Change: Greetings.

Speaker Change: And welcome to the Crescendo incorporated second quarter 2024 earnings call.

Speaker Change: At this time all participants are in a listen only mode.

Speaker Change: A question and answer session will follow the formal presentation.

Speaker Change: If anyone should require operator assistance during todays conference. Please press star zero on your telephone keypad.

Operator: I will now turn the conference over to your host, Mr. Jeff Korn, CEO of Crescendo Incorporated. Sir, you may begin.

Speaker Change: Please note this conference is being recorded.

Speaker Change: I'll now turn the conference over to your host.

Speaker Change: Mr. Jeff Cohen CEO of Crescendo incorporated Sir you may begin.

Jeffrey Korn: Thank you, Ollie. And good afternoon, everyone. Welcome to Crexendo's Q2 2024 conference call. I'm, as Ollie just said, Jeff Korn, Chairman of the Board and CEO of Crexendo. On the call with me today are Doug Gaylor, our President and COO, Ron Vincent, our CFO, Jon Brinton, our CRO, and Anand Buch, our CSO. In a moment, Jon will read our Safe Harbor Statement. After that, I will give some brief comments on our performance for Q2 and a discussion of what I see happening with the business.

Jeffrey Korn: Thank you, Allie.

Jeffrey Korn: Good afternoon, everyone. Welcome to Crescendo's Q2 2024 conference call.

Jeff Cohen: Thank you Ali.

Jeff Cohen: Good afternoon, everyone welcome to Crescendo, <unk> Q2, 2024 conference call.

Jeffrey Korn: Ron will then provide more detail on the numbers before handing the call over to Doug to provide a business and sales update. After that, we will open the call up to questions. Jon, would you please read the Safe Harbor Statement? Thank you, Jeff.

Jeffrey Korn: I'm, as Ali, just said, Jeff Korn, Chairman of the Board and CEO of Crescendo. On the call with me today are Doug Gaylor, President and COO, Ron Vincent, RCFO, Jon Brinton, RCRO, and Anand Bush, RCSO.

Jeff Cohen: As Ali just said, Jeff Gordon Chairman of the board and CEO of Crescendo.

Speaker Change: On the call with me today are Doug Taylor, our President and C O O.

Speaker Change: Ron Vincent our CFO, John Britain, our CRO and on and Bush our CSL in a moment John will read our safe Harbor statement.

Jeffrey Korn: In a moment, Jon will read our safe harbor statement. After that, I will give some brief comments on our performance for Q2 and a discussion of what I see happening with the business. Ron will then provide more detail on the numbers before handing the call over to Doug to provide a business and sales update.

Speaker Change: After that I will give some brief comments on our performance for Q2, and a discussion of what I see happening with the business.

Speaker Change: Ron will then provide more detail on the numbers before handing the call over to Doug to provide a business and sales update after that we will open the call up to questions. John would you. Please read the safe Harbor statement.

Jeffrey Korn: After that, we will open the call up to questions.

Jon Brinton: Jon, would you please read the Safe Harbor statement? Thank you, Jeff. I want to take this opportunity to remind listeners that this call will contain forward-looking statements within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934. The Private Security's Litigation Reform Act of 1995 provides a safe harbor for such forward-looking statements. All statements made in this conference call, other than statements of historical fact, are forward-looking statements. Forward-looking statements include, but are not limited to words like Belize, expect, anticipate, estimate, will, and other similar statements of expectation identifying forward-looking statements.

Jon Brinton: Thank you, Jeff. I want to take this opportunity to remind listeners that this call will contain forward-looking statements within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934. The Private Securities Litigation Reform Act of 1995 provides a safe harbor for such forward-looking statements. Therefore, all statements made in this conference call, other than statements of historical fact, are forward-looking statements. Forward-looking statements include, but are not limited to, words like believe, expect, anticipate, estimate, will, and other similar statements of expectation identifying forward-looking statements.

John: Thank you Jeff.

John: Wanted to take this opportunity to remind listeners that this call will contain forward looking statements within the meaning of the Securities Act of 1933, and the Securities Exchange Act of $19 30 for the private Securities Litigation Reform Act of 1995 provides a safe harbor for such forward looking statements.

John: All statements made in this conference call other than statements of historical fact are forward looking statements forward. Looking statements include but are not limited to words like believe expect anticipate estimate will and other similar statements of expectation identifying forward looking statements.

Jon Brinton: Investors should be aware that any forward-looking statements are based on assumptions and are subject to risks and uncertainties that could cause actual results to differ materially from those discussed here today.

Jon Brinton: Investors should be aware that any forward-looking statements are based on assumptions and are subject to risks and uncertainties that could cause actual results to differ materially from those discussed here today. These risk factors are explained in detail in the company's filings with the Securities and Exchange Commission, including the Form 10-K for fiscal year ended December 31, 2023, and the Forms 10-Q as filed. Crexendo does not undertake any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. I'd now like to turn the call back to Jeff. Jeff?

John: Investors should be aware that any forward looking statements are based on assumptions and are subject to risks and uncertainties that could cause actual results to differ materially from those discussed here today.

Jon Brinton: These risk factors are explained in detail in the company's filings with the Securities and Exchange Commission, including the Form 10-K for the fiscal year ended December 31, 2023, and the Forms 10-QS filed. Crexendo does not undertake any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

John: These risk factors are explained in detail in the company's filings with the Securities and Exchange Commission, including the Form 10-K for fiscal year ended December 31, 2023, and the forms 10-Q as filed.

John: Crescendo does not undertake any obligation to publicly update or revise any forward looking statements, whether as a result of new information future events or otherwise.

Jeffrey Korn: I'd now like to turn the call back to Jeff. Jeff?

Jeffrey Korn: Thank you, Jon. I'm thrilled to share the outstanding results and strategic directions that highlight our most successful quarter yet as a technology telecom company. Let's dive right into our highlights. This quarter, we exceeded both our internal expectations as well as those of our analysts. I won't step on Ron's thunder, but our revenue number of 14.7 million, up 16% year over year, and our net income, up 220% year over year, is, in a word, remarkable. Crexendo maintained a streak of achieving gap profitability for the fourth consecutive quarter, which is only due to the hard work and dedication of everyone in the room with me, as well as the entire Crexendo team.

Jeffrey Korn: I'm thrilled to share the outstanding results and strategic direction that highlight our most successful quarter yet as a technology telecom company. Let's dive right into our highlights.

Jeff: I'd now like to turn the call back to Jeff Jeff.

Jeff: Thank you John.

Jeff: I'm thrilled to share the outstanding results and strategic direction that highlight our most successful quarter, yet as a technology Telecom company.

Jeffrey Korn: This quarter, we exceeded both our internal expectations as well as those of our analysts. I won't step on Ron's thunder, but our revenue number of $14.7 million, up 16% year-over-year, and our net income of 220% year-over-year is, in a word, remarkable. Crexendo maintained a streak of achieving gap profitability for the fourth consecutive quarter, which is only due to the hard work and dedication of everyone in the room with me, as well as the entire Crexendo team. I cannot tell you how lucky I consider myself to work every day with this tremendously talented team.

Jeff: Let's dive right into our highlights this quarter, we exceeded both our internal expectations as well as those of our analysts.

Jeff: I won't step on Ron's Thunder, but our revenue number of $14 7 million up 16% year over year, and our net income up 220% year over year isn't a word remarkable.

Ron: Crescendo maintained its streak of achieving GAAP profitability for the fourth consecutive quarter.

Jeffrey Korn: I cannot tell you how lucky I consider myself to work every day with this tremendously talented team. Everyone in Crexendo is focused on driving shareholder value, but also making sure we have the world's best technology for our wonderful licensees and our direct customers. It's been a remarkable period of growth and achievement, signaling a bright future ahead.

Jeff: Which is only due to the hard work and dedication of everyone in the room with me as well as the entire crescendo team.

Jeffrey Korn: Everyone at Crexendo is focused on driving shareholder value but also making sure we have the world's best technology for our wonderful licensees and our direct customers. It's been a remarkable period of growth and achievement signaling a bright future ahead. However, our philosophy remains rooted in continuous improvement. While it might be tempting to rest on our laurels, we recognize that satisfaction can breed complacency, and we are committed to pushing the boundaries further.

Ron: I cannot tell you how lucky I consider myself to work every day with this tremendously talented team.

Ron: Everyone at Crescendo was focused on driving shareholder value.

Ron: But also making sure we have the world's best technology for our <unk>.

Ron: Wonderful licensees and our direct customers.

Jeffrey Korn: However, our philosophy remains rooted in continuous improvement. While it might be tempting to rest on our laurels, we recognize that satisfaction can breed complacency. And we are committed to pushing the boundaries further. We have made significant strides in refining our teams and reporting structures. Through these enhancements and staffing processes and responsibilities, our organization is becoming more agile and effective. This ongoing endeavor is crucial as we adapt to the evolving market demands. The key factor in this quarter's success has been the increased efficiency of our customer support team. We've seen improved installation and response time. And we remain committed to elevating our service levels even further.

Ron: It's been a remarkable period of growth and achievement signaling a bright future ahead.

Ron: However, awful lot three remains rooted in continuous improvement.

Ron: It might be tempting to rest on our laurels, we recognize that satisfaction can breed complacency and.

Jeffrey Korn: We have made significant strides in refining our teams and reporting structure. Through these enhancements in staffing, processes, and responsibilities, our organization is becoming more agile and effective. This ongoing endeavor is crucial as we adapt to the evolving market demand. The key factor in this quarter's success has been the increased efficiency of our customer support team. We've seen improved installation and response times, and we remain committed to elevating our service levels even further.

Ron: And we are committed to pushing the boundaries further.

Ron: We have made significant strides in refining our teams and reporting structures through.

Ron: Through these enhancements and staffing processes and responsibilities our organization is becoming more agile and effective.

Ron: This ongoing endeavor is crucial as we adapt to the evolving market demands.

Ron: Key factor in this quarter success has been the increased efficiency of our customer support team.

Jeffrey Korn: These enhancements directly contributed to our strong performance metrics this quarter. We work every day to improve our operations. We have done an excellent job of improving margins. Part of this is improvements in pricing and the mix of sales, particularly in the MSB market, and also deemphasizing low margin high labor transactions. We also work very diligently on our top line revenue, and the results in both of those speak for themselves.

Jeffrey Korn: These enhancements directly contributed to our strong performance metrics this quarter. We work every day to improve our operations. We have done an excellent job of improving margins. Part of this is improvements in pricing and the mix of sales, particularly in the MSB market, and also deemphasizing low-margin, high-labor transactions. We also work very diligently on our top-line revenue, and the results in both of those speak for themselves. On the technology front, our migration schedule from our legacy classic platform to the VIP platform has been slower than anticipated, as we are taking extraordinary measures to assure a smooth migration, particularly with our larger accounts.

Ron: We've seen improved installation and response time.

Ron: And we remain committed to elevating our service levels even further.

Ron: These enhancement directly contributed to our strong performance metrics this quarter.

Ron: We work every day to improve our operations.

Ron: We have done an excellent job of improving margins.

Ron: Part of this is improvements in pricing and the mix of sales, particularly in the MSP market and also deemphasizing low margin high labor transactions.

Jeffrey Korn: On our technology front, our migration schedule from our legacy classic platform to the VIP platform has been slower than anticipated. As we are taking extraordinary measures to assure a smooth migration, particularly with our larger account. We have customers that have custom requirements and rightfully demand precision. And while this has delayed some processes, ensuring these migrations are seamless is paramount for retaining such valuable customers. I think a reasonable timeline is that the migration should be completed during Q1 2025. However, there is no room for ever, so completing it perfectly is the goal. We have invested heavily in Oracle Cloud Infrastructure for our next generation hosted services and NetSuite for our internal accounting needs.

Ron: We also work very diligently on our topline revenue and.

Ron: And the results in both of those.

Ron: Speak for themselves.

Ron: On our technology front, our migration schedule from our legacy classic platform to the VIP platform has been slower than anticipated.

Jeffrey Korn: We have customers that have custom requirements and rightfully demand precision. And while this has delayed some processes, ensuring these migrations are seamless is paramount for retaining such valuable customers. I think a reasonable timeline is that the migration should be completed during Q1 2025. However, there is no room for error, so completing it perfectly is the goal.

Ron: As we are taking extraordinary measures to assure a smooth migration, particularly with our larger accounts, we have customers that have customer requirements and rightfully demand precision.

Ron: And while this has delayed some processes ensuring these migrations are seamless is paramount for retaining such valuable customers.

Ron: I think a reasonable timeline is that the migration should be completed during Q1 2025.

Jeffrey Korn: We have invested heavily in Oracle Cloud Infrastructure for our next-generation hosted services and NetSuite for our internal accounting needs. Make no mistake; these are long-term investments in our future. A more robust accounting system is necessary for our now almost completely integrated company and to integrate future acquisitions. Using OCI is important as it provides the most advanced hosting infrastructure in the industry and will improve turn-up times and deployment options for some of our larger customers and customers we are attempting to attract.

Speaker Change: However, there is no room forever.

Ron: So completing it perfectly is the goal.

Jeffrey Korn: Make no mistake, these are long-term investments in our future. A more robust accounting system is necessary for our now almost completely integrated company and to integrate future acquisitions. Using OCI is important as it provides the most advanced hosting infrastructure in the industry and will improve turn-up times and deployment options for some of our larger customers and customers we are attempting to attract. OCI will also allow us to focus on what we do best, and that's developing our technology and services rather than managing data centers. While these investments have costs associated with them without current corresponding savings, they are necessary for our evolution and long-term profitability.

Ron: We've invested heavily in Oracle cloud infrastructure for our next generation hosted services and net suite for our internal accounting needs.

Ron: Make no mistake. These are long term investments in our future.

Ron: A more robust accounting system is necessary for our now almost completely integrated company and to integrate future acquisitions used.

Ron: Using OCI is important as it provides the most advanced hosting infrastructure in the industry and will improve turn up times and deployment options for some of our larger customers and customers we are attempting to attract.

Jeffrey Korn: OCI will also allow us to focus on what we do best, and that's developing our technology and services rather than managing data centers. While these investments have costs associated with them, without current corresponding savings, they are necessary for our evolution and long-term profitability.

Ron: OCI will also allow us to focus on what we do best and that's developing our technology and services rather than managing data centers.

Ron: While these investments have cost associated with them without core current corresponding savings they are necessary for our evolution and long term profitability.

Jeffrey Korn: We are fully intending to remain gap-profitable even while making these investments in our long-term future. Our software solutions division is growing rapidly and should be poised for substantial growth. We are the third largest platform provider in the United States, and we are well-positioned to capitalize on market opportunities, particularly as the number one in two competitors, Cisco and Microsoft, denigrate certain services and phase out other services. However, we face stiff competition from other players. It is essential for our long-term success to continue to invest in the platform so that we can expand our services and be able to meet the needs of every customer from the SMB market to the enterprise market.

Jeffrey Korn: We are fully intending to remain GAAP profitable even while making these investments for the long-term future. Our software solutions division is growing rapidly and should be poised for substantial growth. We are the third-largest platform provider in the United States, and we are well positioned to capitalize on market opportunities, particularly as the number one and two competitors, Cisco and Microsoft, degrade certain services and phase out other services. However, we face stiff competition from other players.

Ron: We are fully intending to remained GAAP profitable, even while making these investments and our long term future.

Ron: Our software solutions division is growing rapidly and should be poised for substantial growth.

Ron: We are the third largest platform provider in the United States, and we are well positioned to capitalize on market opportunities, particularly as the number one numbers, one and two competitors Cisco and Microsoft Denigrate.

Jeffrey Korn: It is essential for our long-term success to continue to invest in the platform so that we can expand our services and be able to meet the needs of every customer, from the SMB market to the enterprise market. The future is really tremendously exciting, and we must capitalize on these substantial opportunities. Internationally, we continue to see significant potential, especially in Europe, where cloud communications are less prevalent.

Ron: Certain services and stays out other services.

Speaker Change: However, we faced stiff competition from other players it is essential for our long term success to continue to invest in the platform. So that we can expand our services and be able to meet the needs of every customer from the SMB market to the enterprise market the.

Jeffrey Korn: The future is really tremendously exciting, and we must capitalize on the substantial opportunities. Internationally, we continue to see significant potential, especially in Europe where cloud communications are less prevalent. Our London office is gaining traction, and we anticipate strong growth in both Europe and the Pacific Rim. I am genuinely very pleased with our results of the European operations and the strong pipeline of opportunities that we have there.

Speaker Change: The future is really tremendously exciting and we must capitalize on the substantial opportunities.

Jeffrey Korn: Our London office is gaining traction, and we anticipate strong growth in both Europe and the Pacific Rim. I am genuinely very pleased with our results in the European operations and the strong pipeline of opportunities that we have. On the acquisition front, we remain cautious about high multiples driven by private equity but are constantly looking for strategic opportunities that align with our financial strategies and shareholder acquisition expectations. We will only do deals that make strategic sense and can be quickly agreed upon.

Speaker Change: Internationally, we continue to see significant potential, especially in Europe, where cloud communications are less prevalent our London office is gaining traction and we anticipate strong growth in both Europe and the Pacific rim.

Jeffrey Korn: On the acquisition front, we remain cautious about high multiples driven by private equity but are constantly looking for strategic opportunities that align with our financial strategies and shareholders' shareholder expectations. We will only do deals that make strategic sense and can be quickly accretive.

Speaker Change: I am genuinely very pleased with our results of the European operations and the strong pipeline of opportunities that we have there.

Speaker Change: On the acquisition front, we remain cautious about high multiples driven by private equity, but are constantly looking for strategic opportunities that align with our financial strategies and shareholders shareholder acquisition expectations.

Jeffrey Korn: In conclusion, our future looks incredibly promising. I am more optimistic than ever about our prospects. With continued focus on strategic execution, we are poised to further enhance our market position and shareholder value. Thank you for your ongoing commitment and support.

Ronald Vincent: In conclusion, our future looks incredibly promising. I am more optimistic than ever about our process. With continued focus on strategic execution, we are poised to further enhance our market position and shareholder value. Thank you for your ongoing commitment and support. We look forward to continual growth and achievements. And with that, I'll now turn the call over to Ron for more details on the financial numbers.

Speaker Change: We will only do deals that make strategic sense and can be quickly accretive.

Speaker Change: In conclusion, our future looks incredibly promising I am more optimistic than ever about our prospects with continued focus on strategic execution. We are poised to further enhance our market position and shareholder value.

Jeffrey Korn: We look forward to continual growth and achievements, and with that, I will now turn the call over to Ron for more details on the financial numbers.

Ronald Vincent: Ron. Jeff.

Speaker Change: Thank you for your ongoing commitment and support.

Ronald Vincent: Good afternoon, everyone. As Jeff mentioned, we had a wonderful quarter with total revenue for the quarter of 16% to 14.7 million compared to 12.7 million for the second quarter of the prior year. Our service revenue increased 10% to 8.1 million compared to 7.3 million in the prior second quarter of the prior year. Software solutions revenue for the quarter increased 35% to 5.3 million compared to 3.9 million for the second quarter of the prior year. Our product revenue decreased 10% to 1.3 million compared to 1.4 million for the second quarter of the prior year.

Ronald Vincent: Good afternoon, everyone. As Jeff mentioned, we had a wonderful quarter with total revenue for the quarter up 16% to $14.7 million compared to $12.7 million for the second quarter of the prior year. Our service revenue increased 10% to $8.1 million compared to $7.3 million in the second quarter of the prior year. Software solutions revenue for the quarter increased 35% to $5.3 million compared to $3.9 million in the second quarter of the prior year. Our product revenue decreased 10% to $1.3 million compared to $1.4 million for the second quarter of the prior year, as we continue to focus on higher gross margin product offerings.

Speaker Change: Look forward to continued growth and achievements and with that I'll now turn the call over to Ron for more details on the financial numbers Ron Thank.

Ron: Thanks, Jeff Good afternoon, everyone.

Ron: As Jeff mentioned.

Ron: We had a wonderful quarter with total revenue for the quarter up 16% to $14 7 million compared to $12 7 million for the second quarter of the prior year, our service revenue increased 10% to $8 1 million compared to $7 3 million in.

Speaker Change: In the prior second quarter of the prior year software solutions revenue for the quarter increased 35% to $5 3 million compared to $3 9 million for the second quarter of the prior year.

Ronald Vincent: As we continue to focus on higher gross margin product offerings, consolidated gross margins for the quarter for 63%. That's compared to 58% for the second quarter of the prior year. Our software solutions, gross margins for the quarter were 73%. That's compared to 67% for the second quarter of the prior year. Our telecom service segment, gross margins for the quarter were 58%. That's compared to 55% in the second quarter of the prior year. That's driven by service revenue gross margins of 60%. That's up from 58% in the second quarter of the prior year, and our product margins increased to 46% from 38% in the second quarter of the prior year.

Ronald Vincent: Consolidated gross margins for the quarter were 63%, that's compared to 58% for the second quarter of the prior year. Our software solutions gross margins for the quarter were 73%. That's compared to 67% for the second quarter of the prior year. Our telecom service segment gross margins for the quarter were 58 percent. That's compared to 55 percent in the second quarter of the prior year. That's driven by service revenue gross margins of 60 percent.

Speaker Change: Our product revenue decreased 10% to $1 3 million compared to $1 4 million for the second quarter of the prior year.

Speaker Change: As we continue to focus on higher gross margin product offerings Consol.

Speaker Change: Consolidated gross margins for the quarter were 63% as compared to 58% for the second quarter of the prior year, our software solutions gross margins for the quarter were 73% as compared to 67% for the second quarter of the prior year.

Ronald Vincent: That's up from 58 percent in the second quarter of the prior year. And our product margins increased to 46 percent from 38 percent in the second quarter of the prior year. Operating expenses increased 7% to $14.1 million compared to $13.2 million for the second quarter of the prior year. To put this into perspective, we have added 12.5 FTEs and 10 outsourced resources compared to the second quarter of the prior year. Therefore, we continue to invest in our product and our services.

Speaker Change: Telecom service segment gross margins for the quarter were 58% as compared to 55% in the second quarter of the prior year is driven by service revenue gross margins of 60% that's up from 58% in the second quarter of the prior year and our project product margins increased to 46.

Ronald Vincent: Operating expenses increased 7% to 14.1 million compared to 13.2 million for the second quarter of the prior year. To put this into perspective, we have added 12.5 FTEs and 10 outsource resources compared to the second quarter of the prior year. As we continue to invest in our product and our services, net income of 588,000 for the quarter. That's 2 cents per basic and diluted comment share compared to a net loss of 544,000 and a 2 cent loss per basic and diluted comment share for the second quarter of the prior year. Non-GAAP net income was 2.1 million for the quarter.

Speaker Change: Sent from 38% in the second quarter of the prior year.

Speaker Change: Operating expenses.

Speaker Change: Increased 7% to $14 1 million compared to $13 2 million for the second quarter of the prior year.

Speaker Change: To put this into perspective.

Douglas Gaylor: Net income of $588,000 for the quarter. That's $0.02 per basic and diluted common share compared to a net loss of $544,000 and a two cent loss per basic and diluted common share for the second quarter of the prior year. $2.1 million for the quarter; that's $0.08 per basic and $0.07 per diluted common share compared to a non-GAAP net income of $1.1 million, or $0.04 per basic and diluted common share for the second quarter of the prior year.

Speaker Change: We have added $12 five ftes and 10 outsource resources compared to the second quarter of the prior year. So as we continue to invest in our product and our services.

Speaker Change: Net income of 588000 for the quarter, that's two cents per basic and diluted common share compared to a net loss of 544000.

Ronald Vincent: That's 8 cents per basic and 7 cents per diluted comment share. Compared to non-GAAP net income of 1.1 million or 4 cents per basic and diluted common share for the second quarter of the prior year.

Speaker Change: And to set loss per basic and diluted common share for the second quarter of the prior year.

Speaker Change: non-GAAP net income.

Ronald Vincent: Our EBITDA for the quarter was 1.4 million. That's compared to 383,000 for the second quarter of the prior year. And our adjusted EBITDA for the quarter was 2.2 million. That's compared to 1.2 million for the second quarter of the prior year.

Douglas Gaylor: Our EBITDA for the quarter was $1.4 million; that's compared to $383,000 for the second quarter of the prior year. And our adjusted EBITDA for the quarter was $2.2 million; that's compared to $1.2 million for the second quarter of the prior year. Our cash balance at June 30th was $13.6 million, as compared to $10.3 million at December 31st. Cash provided by operating activities for the six-month period was $2.5 million compared to cash used for operating activities of $673,000 in the prior year.

Speaker Change: $2 1 million for the quarter, that's eight per basic and <unk> <unk> per diluted common share.

Speaker Change: Compared to a non-GAAP net income of $1 1 million or four cents per basic and diluted common share for the second quarter of the prior year.

Speaker Change: Our EBITDA for the quarter was $1 4 million as compared to 383000 for the second quarter of the prior year.

Ronald Vincent: Our cash balance at June 30 was 13.6 million. That's compared to 10.3 million at December 31, 2023.

Speaker Change: And our adjusted EBITDA for the quarter was $2 2 million as compared to $1 2 million for the second quarter of the prior year.

Ronald Vincent: Cash provided by operating activities for the six-month period of 2.5 million compared to cash used for operating activities of 673,000 in the prior year. Cash used for investing activities for the six-month period was meal and for the period compared to 92,000 for the same period of the prior year. And cash provided by financing activities was 778,000 compared to cash used for investing activities of 486,000 for the same period of the prior year.

Speaker Change: Our cash balance at June 30.

Speaker Change: $13 6 million as compared to $10 3 million at December 31, 2023.

Douglas Gaylor: Cashews for investing activities for a six-month period were nil for the period compared to $92,000 for the same period of the prior year. And cash provided by financing activities was $778,000 compared to cash used for investing activities of $486,000 for the same period of the prior year. I will now turn it over to Doug Gaylor, our President and COO, for additional comments on sales and operations.

Speaker Change: Cash provided by operating activities for the six months period of $2 5 million compared to cash used for operating activities of 673000 in the prior year.

Speaker Change: Cash used for investing activities for the six months period was nil for.

Speaker Change: For the period compared to 92000 for the same period of the prior year.

Douglas Gaylor: I will now turn it over to Doug Gaylor, President and COO, for additional comments on sales and operations. Thanks, Ron. Q2 is a great quarter for Crexendo, and I'm very pleased with our results for the quarter and for the first half of 2024. Our organic growth rate of 16% year of a year in Q2 and 15% organic growth for the first half of the year, along with our fourth consecutive gap profitable quarter, with a direct result of our focus on growing the top line organically and managing the fundamentals of the business. Our strong gap net income of 588,000 for the quarter, or two cents a share, and our non-gap net income of 2.1 million for the quarter, or eight cents a share, highlight that we are executing on our business plans extremely well.

Speaker Change: And cash provided by financing activities was 778000 compared to cash used for investing activities of 486000 for the same period of the prior year.

Douglas Gaylor: Thanks, Ron. Q2 was a great quarter for Crescendo, and I'm very pleased with our results for the quarter and for the first half of 2024. Our organic growth rate of 16% year-over-year in Q2 and 15% organic growth for the first half of the year, along with our fourth consecutive profitable quarter, were the direct result of our focus on growing the top line organically and managing the fundamentals of the business. Our strong GAAP net income of $588,000 for the quarter, or $0.02 a share, and our non-GAAP net income of $2.1 million for the quarter, or $0.08 a share, highlight that we are executing on our business plans extremely well.

Doug <unk>: I will now turn it over to Doug <unk>, our president and CEO for additional comments on sales and operations.

Doug Taylor: Thanks, Ron Q2 was a great quarter for Crescendo and I'm very pleased with our results for the quarter and for the first half of 2020 for our organic.

Doug Taylor: Growth rate of 16% year over year in Q2, and 15% organic growth for the first half of the year, along with our fourth consecutive GAAP profitable quarter with a direct result of our focus on growing the top line organically and managing the fundamentals of the business.

Douglas Gaylor: This is our 23rd consecutive quarter with non-GAAP net income, and our results for the quarter continue to highlight our improvements in our processes, our procedures and sales, as well as our success in managing costs and maximizing synergies from all of our business segments. The strong results also contributed to our strong positive cash flow for the quarter, which our cash position increased 223% year over year and 23% from the prior quarter. We continue to see significant organic growth in both segments of our business for the quarter. What is particularly exciting is that our software solution segment achieved 35% organic growth, which propelled us to a combined 16% organic growth rate for the quarter.

Douglas Gaylor: This was our 23rd consecutive quarter with non-GAAP net income, and our results for the quarter continue to highlight our improvements in our processes, our procedures, and sales, as well as our success in managing costs and maximizing synergies from all of our business sectors. These strong results also contributed to our strong positive cash flow for the quarter, which saw our cash position increase 223% year-over-year and 23% from the prior quarter.

Speaker Change: Our strong GAAP net income of 588000 for the quarter or two cents a share and our non-GAAP net income of $2 1 million for the quarter or eight cents a share.

Speaker Change: Highlight that we are executing on our business plans extremely well. This was our 20 <unk> third consecutive quarter with non-GAAP net income in our results for the quarter continue to highlight our improvements in our processes or procedures and sales as well as our success in managing cost and maximizing synergies from all of our business segments.

Douglas Gaylor: We continue to see significant organic growth in both segments of our business for the quarter. What is particularly exciting is that our software solutions segment achieved 35% organic growth, which propelled us to a combined 16% organic growth rate for the quarter, providing a solid indication that the continued strong demand for our products and services continues. The 35% organic growth rate in our software solution segment has us closing in on the 5 million user mark on our platform, which I anticipate we should eclipse this quarter.

Speaker Change: These strong results also contributed to our strong positive cash flow for the quarter with our cash position increased 223% year over year and 23% from the prior quarter.

Douglas Gaylor: Providing a solid indication that the continued strong demand for our products and services continues. The 35% organic growth rate in our software solution segment has us closing in on the 5 million user mark on our platform that I anticipate we should eclipse this quarter. The rapid growth we are experiencing on our platform is a combination of our existing licensees continue to success together with strong new logos coming on board as they leave our largest to competitors Cisco and Microsoft. Microsoft recently announced end of life of their MetaSwitch Max UC platform and has signaled a retreat from their platform business, with recent cuts in their MetaSwitch division fueling many opportunities for Crescendo.

Speaker Change: We continue to see significant organic growth in both segments of our business for the quarter. What is particularly exciting is that our software solutions segment achieved 35% organic growth, which propelled us to a combined 16% organic growth rate for the quarter, providing a solid indication that the continued strong demand for our products and services continues.

Douglas Gaylor: The rapid growth we are experiencing on our platform is a combination of our existing licensees' continued success, together with strong new logos coming on board as they leave our largest two competitors, Cisco and Microsoft. Microsoft recently announced the end of life of their Metaswitch Max UC platform and has signaled a retreat from their platform business with recent cuts in their Metaswitch division, fueling many opportunities for Crescendo.

Speaker Change: The 35% organic growth rate in our software solutions segment as is closing in on the 5 million user Mark on our platform that I anticipate we should eclipse this quarter. The rapid growth. We are experiencing on our platform is a combination of our existing licensees continued success together with strong new logos coming onboard.

Douglas Gaylor: Our crescendo licensees and agents continue to benefit from the rapid migration by small and mid-size and enterprise level businesses to the cloud. And as our licensees continue to grow, they need additional services and increase their spend with Crescendo. As Jeff previously mentioned, we continue to see strong demand for our software solutions internationally as well and added two more new logos out of our UK office during the quarter. Our telecom services segment, including product revenue, grew at 7% organically for the quarter. We've made a conscious effort to focus less on low margin product revenue, and that's our services portion for the segment reached double digit growth at 10%, offset by the decline in product revenue growth.

Douglas Gaylor: Our Crexendo licensees and agents continue to benefit from the rapid migration by small and midsize and enterprise-level businesses to the cloud, and as our licensees continue to grow, they need additional services and increase their spend with Crexendo. As Jeff previously mentioned, we continue to see strong demand for our software solutions internationally as well, and added two more new logos out of our UK office during the quarter. Our telecom services segment, including product revenue, grew at 7% organically for the quarter. We've made a conscious effort to focus less on low-margin product revenue, and thus, our services portion for the segment reached double-digit growth at 10%, offset by the decline in product revenue growth.

Douglas Gaylor: We continue to see strong demand for our offerings from our channel partners and saw a 14% growth rate in sales for the quarter. From our channel resellers, highlighted by a 41% growth in sales from our telecom service brokers, also known as master agents. And those numbers are up significantly compared to Q2 of 2023. Our channel partners sell our services to their prospects and customers on a revenue share basis. And we continue to see nights growth from our existing channel partners. Our channel partners have strong relationships with us and have strong confidence in our solutions because of our 100% uptime guarantee and our best in class customer service and customer satisfaction results that continues to lead all of our competitors as the highest ranked VoIP provider in the industry on review sites like G2.com.

Douglas Gaylor: We continue to see strong demand for our offerings from our channel partners and saw a 14% growth rate in sales for the quarter from our channel resellers, highlighted by a 41% growth in sales from our telecom service brokers, also known as master agents, and those numbers are up significantly compared to Q2 of 2023. Our channel partners sell our services to their prospects and customers on a revenue-share basis, and we continue to see nice growth from our existing channel partners.

Douglas Gaylor: Our channel partners have strong relationships with us and have strong confidence in our solutions because of our 100% uptime guarantee and our best-in-class customer service and customer satisfaction results that continue to lead all of our competitors as the highest-ranked VoIP provider in the industry on review sites like g2.com. Our largest independent channel partners saw a 41% increase in sales year-over-year, and that's, again, due to our successful partnerships enhancing their customer offerings.

Speaker Change: Sir up significantly compared to Q2 of 2023.

Speaker Change: Our channel partners sell our services to their prospects and customers on a revenue share basis, and we continue to see nice growth from our existing channel partners. Our channel partners have strong relationships with us and have strong confidence in our solutions because of our 100% uptime guarantee and our best in class customer service and customer satisfaction results.

Douglas Gaylor: Our largest independent channel partner is off 41% increase in sales year over year, and that's again due to our successful partnerships and answering their customer offerings. Our backlog continues to grow and is now at 71.16 million, an increase of 39% from Q2 of 2023, which is a strong indicator of our future success. As a reminder, our backlog number is the sum of the remaining contract values for our telecom services and our software solutions customers that will be recognized on a sliding scale over the next 60 months. Our gross margins remain strong, and our software solutions segment at 73% and our telecom service gross margins remain steady from Q1 at 58%.

Speaker Change: That continues to lead all of our competitors is the highest ranked Voip provider in the industry on review sites like <unk> Dot com.

Douglas Gaylor: Our backlog continues to grow and is now at 71.16 million, an increase of 39 percent from Q2 of 2023, which is a strong indicator of our future success. As a reminder, our backlog number is the sum of the remaining contract values for our telecom services and our software solutions customers that will be recognized on a sliding scale over the next 60 months. Our gross margins remain strong in our software solutions segment at 73 percent, and our telecom service gross margins remain steady from Q1 at 58 percent. However, telecom service gross margins continue to be affected by lower margins from our Legion acquisition, which has lower margins under MSP services.

Speaker Change: Our largest independent channel partner saw 41% increase in sales year over year, and Thats again due to our successful partnerships enhancing their customer offerings.

Speaker Change: Our backlog continues to grow and is now at 71, $1 6 million an increase of 39% from Q2 of 2023, which is a strong indicator of our future success.

Speaker Change: As a reminder, our backlog number is the some of the remaining contract values for our telecom services and our software solutions customers that will be recognized on a sliding scale over the next 60 months.

Douglas Gaylor: Telecom services, gross margins continue to be affected by lower margins from our Legion acquisition that has lower margins on their MSP services, and as we have already mentioned, we're working on increasing those margins by being more selective on product sales there. We continue to enhance our offerings with software updates and additions to our platform that continues to expand our product offerings. We recently released new AI offerings that allow customers to automatically create marketing on-hold messages, auto-attendant greetings, et cetera, using artificial intelligence or AI, placing the need for expensive third-party services to perform the same functions.

Douglas Gaylor: And, as we have already mentioned, we're working on increasing those margins by being more selective in product sales there. We continue to enhance our offerings with software updates and additions to our platform that continue to expand our product offerings. We recently released new AI offerings that allow customers to automatically create marketing on hold messages, auto-attendant greetings, etc. using artificial intelligence or AI, replacing the need for expensive third-party services to perform the same function.

Speaker Change: Our gross margins remained strong in our software solutions segment at 73% and our Telecom service gross margins remained steady from Q1 at 58%.

Speaker Change: Telecom services gross margins continued to be affected by lower margins from our Allegiant acquisition that has lower margins under MSP services.

Speaker Change: And as we already mentioned, we're working on increasing those margins by being more selective on product sales there we.

Douglas Gaylor: Our enhanced API 2.0 integration applications allow for more artificial intelligence applications to be developed and deployed on our platform. We have hundreds of third-party developers building solutions to integrate on our platform, and we are on the leading edge in regards to delivering AI solutions every day end users can use on a daily basis, and they can implement those immediately. As we have mentioned previously, our past acquisitions have been remarkably successful, and we are proactively looking for our next synergistic acquisition to complement our organic growth. We're optimistic that our efforts will result in the significant and organic growth opportunities in the future.

Douglas Gaylor: Our enhanced API 2.0 integration applications allow for more artificial intelligence applications to be developed and deployed on our platform. We have hundreds of third-party developers building solutions to integrate on our platform, and we are on the leading edge in regards to delivering AI solutions that everyday end users can use on a daily basis, and they can implement those immediately. As we have mentioned previously, our past acquisitions have been remarkably successful, and we are proactively looking for our next synergistic acquisition to complement our organic growth.

Douglas Gaylor: We're optimistic that our efforts will result in significant inorganic growth opportunities in the future. The first half of 2024 has been really strong for us, and we continue to see a lot of momentum and demand for our products and services. We continue to execute well on our business plans for organic growth, increasing our margins, positive cash flow, and managing expenses. Our rapid end-user growth highlights that there is still great opportunity for our growth, and I'm very excited about our direction and the ability to continue to deliver the best solution for our customers and the best returns for our shareholders. I'll now turn it back over to Jeff for any further comments. Thank you.

Douglas Gaylor: The first half of 2024 has been really strong for us, and we continue to see a lot of momentum and demand for our products and services. We continue to execute well on our business plans for organic growth and increasing our margins, positive cash flow, and managing expenses. Our rapid end user growth highlights that there is still great opportunity for our growth, and I'm very excited about our direction and the ability to continue to deliver the best solutions for our customers and the best returns for our shareholders.

Douglas Gaylor: I'll now turn it back over to Jeff for any further comments. Thank you, Doug, and Ollie. I don't have any further comments.

Jeffrey Korn: Thank you, Doug. And, Ollie, I don't have any further comments. Let's open the call to questions.

Operator: Let's open the call up to questions.

Operator: Thank you.

Operator: Thank you. At this time, we will be conducting our question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. You may press star 2 if you would like to remove your question from the queue. And for participants using speaker equipment, it may be necessary to pick up your handset before pressing the start key. One moment, please, while we pause for questions. Thank you. Our first question is from Mike Latimore with Northland Capital Markets. Your line is live.

Operator: At this time, we will be conducting our question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question key. You may press star two if you would like to remove your question from the key. And for participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we pull for questions.

Speaker Change: Okay.

Speaker Change: If you would like to ask a question. Please press star one on your telephone keypad.

Operator: Thank you.

Mike Lassemauer: Our first question is coming from Mike Lassemauer with Northland Capital Markets. Your line is...

Speaker Change: A confirmation tone will indicate your line is in the question queue.

Speaker Change: You May press Star two if you would like to remove your question from the queue.

Michael Latimore: Hi Mike. How are you? I'm good.

Mike Lassemauer: Thank you. Thanks, Scott.

Michael Latimore: Thanks a lot. Good evening. Congratulations on the great results here. Cash flow from operations looks great, and organic growth is excellent.

Speaker Change: And for participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.

Mike Lassemauer: Good evening. Congrats on the great results here. Cash flow from operations looks great. And Korgianna Gross is excellent. So congrats on that.

Speaker Change: One moment, please while we poll for questions.

Speaker Change: Thank you.

Mike Lassemauer: I guess I had a question around your software business. You know, the growth rates accelerated from like 21% to 25%, you know, over the last few quarters. Can you frame that a little bit more? You know, what are you seeing from, you know, new versus existing, you know, selling software versus subscription within there? Maybe some actions you're on, like these, are taking on their part and pricing. Just a little more kind of contact would be great because that's a pretty big acceleration.

Michael Latimore: So congrats on that. I guess I had a question about your software business. You know, the growth rates accelerated from like 21 percent to 25 percent to 35 percent, you know, over the last few quarters. Can you frame that a little bit more? You know, what are you seeing from, you know, new versus existing, you know, selling software versus subscription within there? Maybe some actions you or your own licensees are taking on their part in pricing. Just a little more context would be great because that's a pretty big acceleration.

Speaker Change: Our first question is coming from Mike Latimore with Northland Capital markets. Your line is nice.

Speaker Change: Hi, Mike How're here, Thanks, a lot good.

Speaker Change: Good evening.

Mike Latimore: Congrats on the Great result, here cash flow from operations look great in.

Speaker Change: Organic growth is.

Speaker Change: Excellent so congrats on that.

Speaker Change: I guess I had a question around your software business.

Speaker Change: The growth rates accelerated growing 21% to 25% to 35% and over the last few quarters.

Jon Brinton: Mike, I'm going to give that to Jon and Anand to answer, and we'll start with Jon.

Jon Brinton: Mike, I'm going to get that to Jon and Amin to answer. We'll start with Jon. Yeah, I might get you doing today. I'll tell you that good, good. We are seeing continued growth and success in a couple areas. I mean, one, you know, when we talk about the compounding of the user growth, I think you really understand. We're partnered with some great entrepreneurial companies and larger carriers that are driving at a great growth rate. They continue to excel, leveraging our software, and that leads them to purchase upgrades and things like that from us in the future.

Jon Brinton: I'm Mike. How are you doing today?

Speaker Change: Yes can you frame that a little bit more.

Speaker Change: You know what are you seeing from new versus existing.

Speaker Change: Selling software versus subscription with them there maybe.

Jon Brinton: I'll tell you that it is good. Good. We are seeing continued growth and success in a couple areas. I mean, one, when we talk about compounding and user growth, I think you really understand. We're partnered with some great entrepreneurial companies and larger carriers that are driving at a great growth rate. They continue to excel, leveraging our software, and that leads them to purchase upgrades and things like that from us in the future.

Speaker Change: Maybe it's an accident your own license either taking on their part and pricing just a little more.

Speaker Change: The context would be great because that's a pretty big acceleration.

Jon Brinton: And we've had a healthy funnel in that area. We are seeing an influx and interest, as Doug indicated and Jeff indicated from both Cisco Broadworks partners and Microsoft Metaswitch partners and others who have bases that they're concerned about the long-term future for them. So they are looking at moving to our platform, and we're getting some traction with those type of partners. And, you know, we just continue to grow in our ecosystem and the additional services that we can sell to our partners as well.

Anand Buch: And we've had a healthy funnel within that area. We are seeing an influx and interest is dug indicated from and Jeff indicated from both Cisco Broadworks partners and Microsoft Meta switch partners and others who have bases that they're concerned about the long term future for them. So they are looking at moving to our platform, and we're getting some traction with those type of partners. And, you know, we've, we just continue to grow also in our ecosystem and the additional services that we can sell to our partners as well. So, you know, across that area, just generally across that business, now there is a bit of lumpiness to that.

Jon Brinton: So, you know, across that area, just generally across that business now, there is a bit of lumpiness to that. So I wouldn't, you know, build that into the model necessarily for thirty-five percent software solutions growth. But we do believe we're going to continue to have strong double-digit growth in that part of the business. And I don't know if you have anything you want to add to that. And Ron had a look of relief on his face when he told you not to build that into your model.

Anand Buch: So I wouldn't, you know, like build that into the model necessarily for 35% software solutions growth. But we do believe we're going to continue to have strong double-digit growth in that part of the business. And I don't know on it if you have anything you want to add to that. And Ron had a look of relief on his face when he told you not to build that into your model. I mean, I think John, John, John nailed it pretty well. I think just to emphasize the other area. Yeah, I think the, you know, the idea is to, and we've spoken about this before to Mike, is to kind of get a little bit more predictable with the shift from perpetual to licensing.

Anand Buch: I mean, I think Jon nailed it.

Ronald Vincent: It's a little lumpy, like what John said, but we're also seeing quite a bit of growth in the ecosystem revenue that comes from all of the other services that we add on top of the platform. So it is a it's a bit across the board. And like Jeff said, I sighed a little bit of relief not to build that 35% into your model. We do, we do just as a follow-on. We do provide the breakdown on point in time versus recurring revenue in the queue. And if you look at that, you do see that the recurring has continued to build consistently a quarter of a quarter, and we're very pleased about that.

Speaker Change: So and we've spoken about this before too Mike.

Mike Latimore: Mike as to kind of get a little bit more predictable with the shift from perpetual to to licensing it's a little lumpy like what John said, but we're also seeing quite a bit of growth in the ecosystem revenue that comes from all of the other services that we add on top of the platform. So.

Anand Buch: We do, just as a follow-on, we do provide the breakdown on point-in-time versus recurring revenue in the Q, and if you look at that, you do see that the recurring revenue has continued to build consistently quarter over quarter, and we're very pleased.

Ronald Vincent: That's great. Okay. Excellent. And the gross margin on the software business remained very healthy. Is that something that is fairly consistent going forward here, sustainable, or what I'm going to write a little bit? The short answer is yes, but I'll let Ron give you more detail. As we focus on gross margin, we've been able to leverage our existing staff. And as I mentioned in my comment, you know, compared to Q2 of the prior year, between consultants that we use, third-party resources for customer service and engineering-related work, as well as the addition of 12.5 FTEs, we've continued to invest in our team to leverage that team for this growth that we have been experiencing recently.

Michael Latimore: Okay. Excellent. And the gross margin on the software business remained very healthy. Is that something that is fairly consistent going forward here, sustainable, or will that move around a little bit?

Speaker Change: It is a it's a bit across the board and like Jeff said I side, a little bit of relief not to build that 35% until we.

Speaker Change: We do we have just as a follow on we do provide the breakdown on point in time versus recurring revenue in the Q and if you look at that you do see that the recurring has continued to build consistently quarter over quarter and we're very pleased about that.

Ronald Vincent: The short answer is yes, but I'll let Ron give you more detail. Yeah, I'm done.

Ronald Vincent: Yes, Mike, as we focus on gross margin, we've been able to leverage our existing staff. And as I mentioned in my comment, you know, compared to Q2 of the prior year, between consultants that we use, third-party resources for customer service and engineering-related work, as well as the addition of 12.5 FTEs, we continue to invest in our team to leverage that team for this growth that we have been experiencing recently.

Speaker Change: Okay. Okay. Okay.

Speaker Change: Excellent.

Speaker Change: Gross margin on the software business remained very healthy is that.

Speaker Change: Something that is.

Speaker Change: Fairly consistent going forward here sustainable or will that move around a little bit.

Speaker Change: The short answer is yes, but I'll, let Ron give you more detail.

Speaker Change: Yes.

Ron: As we are as we focus on gross margin, we've been able to leverage our existing staff and as I mentioned in my comments.

Michael Latimore: But it's a very high-margin business. Software is typically anywhere between 75% and 80% margin. And so coming in at 73% margin, we're starting to see that increase. Quarters ago, we were lagging, and we were in the low 60s, and now we're up to 73% margin. We think we can continue to improve on that.

Mike Lassemauer: So, but there is a very high margin business; it's, you know, software typically anywhere between 75 and 80 percent margins. And so, coming into 73 percent margin, we're certain to see that increase. Quoters ago, we were, we were lagging and we were in the low 60s, and now we're up to 73 percent margin. We think we can continue to improve on that. Yeah, next one. Okay, congrats again. That's the lock this year. Thanks, Mike. Thank you, Mike.

Ron: Compared to Q2 of the prior year.

Speaker Change: Tween.

Michael Latimore: Next one. Okay, congrats again. Best of luck this year.

Josh Nichols: Thanks, Mike. Thank you, Mike. Thank you. Our next question is coming from Josh Nichols with B-Riley. Your line is live.

Josh Nichols: Thank you. Our next question is coming from Josh Nichols with B-Riley.

Josh Nichols: Your line is high.

Josh Nichols: Josh, how are you doing? I'm doing great, and it's great to see some strong report from top to bottom. One thing I just want to touch on just because this is like the biggest sequential increase I've seen in the backlog for a while going, I think we say 71 is about two million. Yeah, 71, 71.15 million. Who's counting? But we are there. Yeah.

Josh Nichols: It's great to see such a strong report from top to bottom. One thing I just want to touch on is... This is like the biggest. Michael Nichols, Joichi Sakai, Eric Martinuzzi, Anand Buch, Douglas Gaylor, Jeffrey Korn, Ronald

Douglas Gaylor: Yeah, 71.15 million. Ah, who's coming? But, uh, we are there. Yeah.

Douglas Gaylor: I'm kind of curious, like, what's driving such a rapid acceleration in the backlog growth, and if you could give us some context into that or the services that are building into that, that'd be great. Yeah, obviously, as you know, the backlog number consists of all of our contractual obligations, and most of our customers are on 36 or 60-month agreements. And so, as we continue to have strong sales, those numbers go into our backlog immediately.

Douglas Gaylor: I'm kind of curious, like what's driving such a rapid acceleration in the backlog growth, and if you could provide some context into that or the services that are building into that, that'd be great. Yeah, obviously, as you know, the backlog number consists of all of our contractual obligations, and most of our customers are on 36 or 60 month agreements. And so, as we continue to have strong sales, those numbers go into our backlog immediately. And so that number just continues to compound because of the strong sales that we've got both upper solution segment and the telecom services segment.

Douglas Gaylor: And so that number just continues to compound because of the strong sales that we've got both in the software solutions segment and in the telecom services segment. So that number, you know, as we continue to grow that number, I think I said it was up 39% year over year. That's great growth. And that's because strong sales on both segments continue to add to that backlog number.

Douglas Gaylor: So that number, you know, as we continue to grow that number, I think I said it was up 39 percent year over year. That's great growth, and that's because strong sales on both segments continue to add to that backlog number.

Douglas Gaylor: And then just curious, I appreciate the context about the software piece, healthy double-digit growth. I understand it's a little bit lumpy, and the queue's not out yet, I think, but what's the breakdown in terms of recurring versus point in time for that's just trying to build in expectations for the future. Yeah, so on the software solution side, 74 percent is recurring revenue and versus our one time. Appreciate it, thank you guys. Thank you.

Josh Nichols: And then just curious, I appreciate the context about the software piece, healthy double-digit growth. I understand it's a little bit lumpy, and the cue is not out yet, I think. But what's the breakdown in terms of recurring versus point in time for that? Just trying to build in expectations for the future.

Douglas Gaylor: Yeah, so on the software solution side, 74% is recurring revenue, and Versus is one time.

Speaker Change: And then just curious.

Speaker Change: I appreciate the context about the software piece healthy double digit growth I understand it's a little bit lumpy in the Q is not out yet I think but whats the.

Josh Nichols: I appreciate it. Thank you, guys.

Ryan Kuntz: Thank you. Our next question is coming from Ryan Kuntz with Needham & Company. Your line is live.

Ryan Koontz: Our next question is coming from Ryan Coons with Needham on Company.

Speaker Change: Breakdown in terms of recurring versus point in time for that just trying to build in expectations for the future.

Ryan Koontz: Your line is Hi, Ryan, how are you? Hey, I'm great. Quick clarification: I didn't hear your response to Mike's question about your growth and software solutions, if you saw more of that coming from customer expansions or new customer wins. It's actually both, but Ron can give you more detail on that. Yeah, during the quarter, we had four new logos that were added to our partner, and we had eight upgrade orders. Nice.

Ryan Kuntz: Hey, I'm great. Any clarification, if I could, I didn't hear your response to Mike's question about your growth in software solutions, if you saw more of that coming from customer expansions or new customers...

Speaker Change: So on the software solutions side, 74% is recurring revenue.

Speaker Change: And then versus our one time.

Speaker Change: I appreciate it thank you guys.

Ronald Vincent: It's actually both, but Ron can give you more detail on that. Yeah, during the quarter, we had four new logos that were added to our partner, and we had eight upgrade orders.

Speaker Change: Thank you guys.

Keith: Thanks Keith.

Speaker Change: Our next question is coming from Ryan Koontz with Needham <unk> Company. Your line is live.

Brian: Brian how are you.

Brian: Hey, great.

Ryan Koontz: And on the step of the growth margins, can you remind me kind of where you are and your migration over to Oracle there? What percentage is done, and yet that sound like there's some further opportunity to see some gross margin left on the solution side? Ryan, it's a very small number at this point because we just started the integration with Oracle. We're putting a few new customers on it to make sure we understand their platform and we could do it seamlessly. You really won't see much of a migration till Q1 or Q2 of next year.

Douglas Gaylor: And on the step up in gross margins, can you remind me kind of where you are in your migration over to Oracle there? You know, what percentage is done? And it sounds like there's some further opportunity to see some gross margin lift on the solution side.

Ryan Koontz: Quick clarification, if I could I didn't hear your response to Mike's question about your growth in software solutions have you saw.

Speaker Change: More of that coming from customer expansions or new new customer wins.

Douglas Gaylor: Ryan, it's a very small number at this point because we just started the integration with Oracle. We're putting a few new customers on it to make sure we understand their platform and we can do it seamlessly. You really won't see much of a migration until Q1 or Q2 of next year.

Brian: Its actually both but Ron can give you more detail on that during the quarter we had.

Ron: Four new logos that were added to our partner.

Ron: And we had eight.

Ron: Upgrade orders.

Ron: Alright.

Ryan Koontz: I see, got it.

Douglas Gaylor: And what's the competitive environment like there? Obviously, it's tilting very much in your favor with your success.

Ryan Koontz: And what's the competitive environment like there? Obviously tilting very much in your favor with your success, I'm guessing. And how big is that Meta Switch install base that you can go after yesterday? Early large, we think that there's probably 500 or so licensees out there on the MetaSwitch platform. You know, when Microsoft bought them four years ago, they spent about $278 acquiring MetaSwitch. So it's a fairly decent size organization. And Microsoft's announcement of retreating out of the telecom platform space just creates opportunity for us. So we're excited about it. I think we brought on in the last six or nine months, quite a few MetaSwitch licensees that are migrated over to the Crescendo platform.

Douglas Gaylor: And how big is that Metaswitch install base that you can go after? Do you estimate?

Douglas Gaylor: Fairly large. We think that there are probably 500 or so licensees out there on the Metaswitch platform. You know, when Microsoft bought them four years ago, they spent about $270 million acquiring Metaswitch. So it's a fairly decent-sized organization. And, you know, Microsoft's announcement of retreating from the telecom platform space just creates opportunities for us, so we're excited about it. I think we've brought on board in the last six or nine months quite a few Metaswitch licensees that have migrated over to the Crexendo platform. So we're extremely excited about their removal from that part of the business or their retreat from that part of the business and the opportunities it's going to create for us.

Ryan Kuntz: Got it. Thanks.

Ryan Koontz: So we're extremely excited about, you know, their removal from that part of the business or their retreat from that part of the business, and the opportunities it's going to create for us. Got it.

Douglas Gaylor: And can you remind me what kind of technology and R&D synergy there is between the software solutions side and your subscription VoIP side? Is it all built on the same base, or are you still kind of pulling it together? What's that roadmap look like between the two sides of the business?

Ryan Koontz: Thanks. And can you remind me how much kind of technology and our decent energy? There is between the software solutions side and your subscription void side. Is it all built on the same base, or are you still kind of pulling together?

Ryan Koontz: What's that roadmap look like between the two sides of the business? It's all on the same Net Sapiens platform that is our platform software platform solution is also branded as our VIP platform for direct end user business. And we've got 90% of our customers that are on the VIP platform today. We still have some of our classic customers on our older platform that we're migrating over to the VIP platform. And we anticipate this, Jeff mentioned earlier, all of that migration to be complete by the end of Q1. So when we look at that, you know, we're just getting our last customers off of our classic platform and giving them the nice upgrade to the VIP platform, which gives them enhanced capabilities and handsfeatures for the same price.

Douglas Gaylor: Yeah, it's all on the same platform; the NetSapiens platform that is our platform, the software platform solution, is also branded as our VIP platform for our direct end user business. And we've got 90% of our customers that are on the VIP platform today. We still have some of our classic customers on our older platform that are migrating over to the VIP platform, and we anticipate, as Jeff mentioned earlier, all of that migration to be complete by the end of Q1.

Douglas Gaylor: So when we look at that, you know, we're just getting our last customers off of our classic platform and giving them a nice upgrade to the VIP platform, which gives them enhanced capabilities and enhanced features for the same price.

Douglas Gaylor: And the synergies between the two are not an unimportant thing that you mentioned. One of the things we liked when we acquired NetSapiens was the fact that all of a sudden, our retail engineers would be working hand-in-hand with the wholesale engineers who really understand what drives market needs. So it's been a very synergistic opportunity.

Ryan Koontz: And the synergies between the two is not an unimportant thing that you mentioned. One of the things we liked when we acquired NetSapiens was the fact that all of the sudden our retail engineers would be working hand in hand with the wholesale engineers who really understand what drives market needs. So it's been a very synergistic opportunity. We eat our own dog food. All of the Crescendo customers are going to be on the same platform. And that's why we work every day to make sure the platform is second to none.

Douglas Gaylor: All of the Crexendo customers are going to be on the same platform, and that's why we work every day to make sure the platform is second to none.

Ryan Koontz: Perfect.

Ryan Kuntz: Perfect. Just one last housekeeping one.

Ryan Koontz: Just one last housekeeping one. I kind of read between the lines in terms of your expanded backlogs; seems like maybe your new contracts are kind of increasing in duration. Are you doing a little more, a little more of five-year deals and threes than you were previously, maybe? Yeah, most of our software solutions, licensees are on three-year agreements, but the turn-on that is almost negligible, so very little turn on the licensee platform side of the house. On the direct end user customers, on the retail customers, probably the higher majority of those customers are on 60-month contracts; that's where they get the best pricing terms with us.

Ryan Kuntz: I kind of read between the lines in terms of your expanded backlog. Sounds like maybe your new contracts are kind of increasing in duration. Are you doing a little more five-year deals and threes than you were previously, maybe?

Douglas Gaylor: Yeah, most of our software solutions licensees are on three-year agreements, but the churn on that is almost negligible. So, very little churn on the licensee platform side of the house. On the direct end-user customers, on the retail customers, probably the higher majority of those customers are on 60-month contracts. That's where they get the best pricing terms with us. Secondly, to that would be 36-month contracts

Speaker Change: We eat our own dog food all of the crescendo customers are going to be on the on the same platform and that's why we work everyday to make sure that the platform is second to none.

Speaker Change: Perfect just one last housekeeping, one I kind of read between the lines in terms of your expanded backlog. It sounds like maybe your your your new contracts and require kind of increasing and duration are you doing a little more a little more of a five year deals and threes than you were previously maybe.

Ryan Koontz: Second early to that would be 36-month contracts. Great.

Ryan Kuntz: Great. Thanks for all that. It's really helpful. I'll jump off.

Ryan Koontz: Thanks for all that. It's really helpful.

Ryan Koontz: I'll jump off. Thank you. Thanks, Ryan. Thank you.

Operator: Thank you. Thanks, Ryan. Thank you. Our next question is coming from...

Operator: Thank you. Our next question is coming from Mark Hagen with Lake Street Capital. Your line is: Hi, Mark. How are you doing today? Hey, great. Thank you for taking my questions. I was just wondering if we could put some color around the...

Mark Hagen: Our next question is coming from Mark Hagen with Lake Street Capital. Your line is there.

Speaker Change: Yes, most of our software solutions licensees are on three year agreements.

Speaker Change: The churn on that is almost negligible so very little churn on the licensee platform side of the house on the direct end user customers on the retail customers.

Mark Hagen: Hi, Mark. How are you doing? Great. Thank you for taking my question. I was just wondering if you could put a color around the Legacy Phoenix data center and kind of wear that. My understanding was it was going away and with the OCI investments.

Speaker Change: Probably the higher majority of those customers are on 60 month contracts, that's where they get the best pricing terms with us secondarily to that would be 36 month contracts.

Douglas Gaylor: as well. It's a two-step process, or it may morph to a one-step, but we're moving everybody off of our classic platform onto our VIP platform, which is on our hosted one, which will be morphed over to hosted two. But as we said, by the end of Q1, we do not expect to be running a separate legacy platform.

Jeffrey Korn: As well, it's a two-step process, or it may morph to a one-step, but we're moving everybody off of our classic platform onto our VIP platform, which is on our hosted one, which will be morphed over to hosted two. But, as we said, by the end of Q1, we do not expect to be running a separate legacy platform. Perfect. I thought I'd get the answer a little early, but I just want to make sure. Thanks for the question. No problem. You're welcome. Thank you.

Speaker Change: Great. Thanks for all that is really helpful I'll jump off.

Brian: Thank you thanks, Brian.

Speaker Change: Thank you. Our next question is coming from Mark Hagan with Lake Street Capital. Your line is open.

Speaker Change: Hi, Mark how are you doing.

Mark Hagan: Hey, great. Thank you for taking my question. So I was just wondering if you could.

Mark Hagan: Put any color around the legacy Phoenix, datacenter and kind of where that.

Mark Hagan: My understanding was it was going away in <unk> with <unk> investments.

Operator: Thank you. Our next question is coming from Chris Sakai with Singular Research.

Chris Sakai: Our next question is coming from Chris Sakai with Singular Research. Your line is nice.

Chris Sakai: Your line is live. Hello, Chris. Good afternoon.

Chris Sakai: Hello, Chris. Good afternoon. Yes, I good afternoon. Just wanted to get an idea about, you know, you've got software solutions, revenue growth, and margin growth. You know, what sort of, how can we, what should we be expecting in the next quarter as far as that's concerned? We expect continual growth, growth crisis on and on and on, explain previously. We're not going to commit to 35 percent growth, but all trends look for continual strong growth in that market. I don't have a number for you, but it'll be less than 35, but it'll be a damn good number.

Chris Sakai: Yes, hi. Good afternoon. I just wanted us to get an idea about, you know... You've got software solutions, revenue growth, and margin growth. You know, what sort of, how can we, what should we be expecting in the next quarter, as far as that's concerned?

Jeffrey Korn: We expect continual growth, Chris, as Anand and Jon explained previously. We're not going to commit to 35% growth, but all trends look for continual strong growth in that market. I don't have a number for you, but it'll be less than 35, but it'll be a damn good number.

Chris Sakai: Do you foresee one day that software solutions would outpace telecom services? Absolutely. If you look at the growth rate that we're seeing now, software solutions is growing at, you know, three times the rate of our retail division. So there's just a lot of pent-up demand for service providers looking for a platform. So we see that that segment of the business continues to grow. And so right now, it's, you know, close to 40 percent of the total revenue stream. You know, within a year or two, it could be the majority.

Douglas Gaylor: Do you foresee one day that software solutions will outpace telecom services? Absolutely.

Douglas Gaylor: Yeah, if you look at the growth rate that we're seeing now, software solutions are growing at, you know, three times the rate of our retail division. So there's just a lot of pent-up demand for service providers looking for a platform. So we see that that segment of the business continues to grow. And so right now, it's, you know, close to 40% of the total revenue stream. Within a year or two, it could be the majority.

Chris Sakai: Okay, interesting.

Anand Buch: Okay, interesting. And how is the expansion in Australia going?

Anand Buch: And how is expansion in Australia going? It's, I will add on an answer, that is, it's going, you know, it's a, it's a harder market for us, but we're making some great inroads. Yeah, I mean, I think, as Jeff spoke to, our UK operation actually handles our international operation. We've actually added another resource on the street, even in Australia, because we continue to see some more existing partners grow. We've had a handful of partners that were there. And then a number of the logos that Ron referred to as well do come from that region. There's a lot of interesting change.

Anand Buch: It's, I will let Anand answer that. It's going, you know, it's a harder market for us, but we're making some great inroads. Yeah, I mean, as Jeff spoke, our UK operation actually handles our international operation. We've actually added another resource on the street, even in Australia, because we continue to see some of our existing partners grow. We had a handful of partners that were there, and then a number of the logos that Ron referred to as well come from that region.

Anand Buch: There's a lot of interesting change. Any of these international markets have consumed the product ever so slightly differently, so we have to keep an eye on that. But at the core, it's still the same core platform, the core licensing and whatnot. And then, as Jeff mentioned as well, some of these larger service providers were also operating in those regions, or larger platform providers, specifically folks like Cisco and Broadsoft, and we're seeing quite a bit of interest there. And you probably read some of the partners that have actually moved over from Broadsoft. So we continue to see good progress in those areas.

Anand Buch: Any of these international markets have consumed the product ever so slightly differently. So we have to keep an eye on that, but at the core, it's still the same core platform, the core licensing and whatnot. And then, as Jeff mentioned as well, some of these larger service providers, we're also operating in those regions, or larger platform providers, specifically folks like Cisco and BroadSoft. And we're seeing quite a bit of interest there. And you probably read some of the partners that have actually moved over from BroadSoft. So we continue to see good progress in those areas.

Chris Sakai: Okay, great. Thanks.

Chris Sakai: Thank you, Chris. Thank you.

Egor Tomashevich: Thank you. Our next question is coming from Egor Tomashevich with Freedom Broker.

Igor Tomachek: Our next question is coming from Igor Tomacheck with Freedom Broker. Your line is live. Hi, Igor. Good afternoon. Ryan, thanks.

Egor Tomashevich: I. E. G. O. R. H. R. E. this afternoon. Fine, thanks. I just wanted to ask about your future plans. Maybe, given your strong performance for the first half of the year, maybe you could give us some guidance about your full year guidance.

Igor Tomachek: And just wanted to ask about your future plans. Maybe give me a strong performance for the first couple of years. Maybe you can give us some guidance about your pooling of guidance. For those of you mentioned, sorry if you've said WD. I'm sorry, Igor, you were breaking up. Apparently you don't have a Crescendo telephone. If you could repeat the question, we would appreciate it. Yeah, thank you. So I was talking about the poolier guidance previously you mentioned that you would expect double-digit. Are going to grow maybe something change. Nothing has changed except I expect it'll be, you know, more than the low double digits, more than 10%.

Egor Tomashevich: I'm sorry if you're right. I'm sorry, Igor, you were breaking up. Apparently, you don't have a Crexendo telephone. If you could repeat the question, we would appreciate it.

Egor Tomashevich: So I was talking about your four-year guidance. Previously, you mentioned that you would expect double-digit organic revenue growth. Maybe something has changed?

Jeffrey Korn: Nothing has changed except I expect it'll be, you know, more than the low double digits, more than 10%. We're not ready to give specific guidance, but nothing has changed in our expectation of double-digit or better growth.

Igor Tomachek: You know, we're not ready to give specific guidance, but nothing has changed in our expectation of double-digit or better growth.

Igor Tomachek: I think that is.

Egor Tomashevich: And I also wanted to ask a little bit more details about your Oracle partnership. Maybe you can give some numbers on the magnitude of the cost benefits you expect.

Jeffrey Korn: And also wanted to ask a little bit more details about your Oracle partnership. Maybe you can give us some numbers on the magnitude of cause benefits you expected. Well, as I indicated before, it's where we're testing and learning the process. We expect to move over the course of next year all of our hosted customers over to the OCI platform. So that we no longer have to maintain any data centers, which will be a huge cost savings for us. And as I said, it has ancillary benefits as it increases our response time and increases the amount of time in which we can set up the connection.

Jeffrey Korn: Well, as I indicated before, we're testing and learning the process. We expect to move all of our hosted customers over to the OCI platform over the course of next year, so that we no longer have to maintain any data centers, which will be a huge cost savings for us. And as I said, it has ancillary benefits as it increases our response time and increases the amount of time in which we can set up the connection. So it'll be a win-win. But over the course of next year, we expect to be closing all the data centers and moving everything over to OCI.

Speaker Change: <unk> low double digits more than 10%.

Speaker Change: We're not ready to give specific guidance, but nothing has changed in our expectation of double digit or better growth.

Speaker Change: Okay got it.

Speaker Change: And also wanted to ask.

Operator: So it'll be a win-win. But over the course of next year, we expect to be closing all the data centers and moving everything over to OCI. Okay. Thank you. Once again, if you have any questions, please press star one on your phone at this time.

Speaker Change: Little bit more details about your Oracle publishing maybe you can give us some numbers on magnitude.

Egor Tomashevich: Okay, I'm out of questions. Thank you, sir. Thank you, Igor.

Speaker Change: Called the benefits do you expect.

Speaker Change: Well as I indicated before it's it's we're tests, we're testing and learning the process.

Speaker Change: We expect to move over the course of next year all of our hosted customers over to the OCI platform. So that we no longer have to maintain any data centers, which will be a huge cost savings for us and as I said it has ancillary benefits is that it increases our our response time and increases the amount of time in which we can see.

Sam McColgan: Our next question is coming from Sam McHolgan with Breakout Investors. Your line is live. Yeah. Thanks, Sam. That's really important. Yeah, yeah. Very good. Thank you. Yeah, really important. You guys are really killing it. Great improvement. You know, revenue, gross margins, everything. Lovely to see off X coming down. Great cash flows, balance sheet. You know, you're killing on all cylinders, I think.

Sam: Hi Sam, how are you?

Speaker Change: Set up the connection so it'll be a win win but over the course of next year, we expect to be closing all the data centers and moving everything over to OCI.

Speaker Change: Okay. Thank you.

Speaker Change: Couple questions.

Sam McColgan: Just one question from me on top of everything else we got asked, which is when you're looking at your backflow, I was just curious in terms of how it breaks down in terms of kind of domestic versus international, if you can give any kind of that. I'm not sure we have that handy, but I'll let Ron answer that. Yeah, currently we, but we disclose our backlog by segment. We don't have a backlog disclosure by us versus international. Consider adding that to feature reporting. As I mentioned prior, Sam, International has begun beginning to become a material part of our business, which will trigger certain reporting requirements.

Speaker Change: Thank you Sir thank you.

Speaker Change: Thank you.

Speaker Change: Once again, if you have any questions. Please press star one on your phone at this time.

Sam McColgan: Next question is coming from some mccolgan with breakout investors your line is <unk>.

Ronald Vincent: I'm not sure we have that handy, but I'll let Ron answer that.

Ronald Vincent: Currently, we disclose our backlog by segment. We don't have a backlog disclosure by U.S. versus international, and I'll consider adding that to future reporting. As I mentioned earlier, Sam, international is beginning to become a material part of our business, which will trigger certain reporting requirements. So that one, not necessarily, but it is something that we will track and we should be able to start answering for you.

Speaker Change: Yeah.

Speaker Change: Hi, Thanks, guys, Dan how are you feeling.

Dan: Yes, yes, okay very good thank you.

Speaker Change: Yes, it's really important that you guys are really killing it.

Speaker Change: Great improvement revenue gross margins and everything Leslie to see Opex coming down with great cash flows balance sheet.

Ronald Vincent: So that one, not necessarily, but it is something that we won't track, and we should be able to start answering for you. And to just give you a little color on that, Sam, so at the halfway part of this year, we currently have 20 million 245,000 in backlog remaining for this year, for 2024, for 2025. We already have 24 million in backlogs queued up for revenue for 2025. And then that number is 15 million 172 for 2026, 8 million 589 for 2027, and a little bit over 3 million for 2028. So you can see how that backlog is critical for our future success. You know, 2025 already having 24 million in revenue queued up.

Ronald Vincent: And to just give you a little color on that, Sam, so at the halfway part of this year, we currently have 20,245,000 in backlog remaining for this year and for 2024. For 2025, we already have 24 million in backlog queued up for revenue for 2025. And then that number is 15,172,000 for 2026, 8,589,000 for 2027, and a little bit over 3 million for 2028. So you can see how that backlog is critical for our future success, with 2025 already having 24 million in revenue queued up for us.

Ronald Vincent: for it. Yeah, that was a brilliant number for the backlog.

Sam: Yeah, those are brilliant numbers for the backlog, and thanks for sharing, and I look forward to hearing the breakdown maybe in the future. So, yeah, thanks again, guys. Well done. Thank you, Sam. That's all from me.

Sam McColgan: And thanks for sharing, and I look forward to hearing the breakdown, maybe in the future. Yeah, thanks again, guys. Well done. Thank you, sir. Thank you.

Operator: Thank you. Our next question is coming from Michael Kaufman with MK Investments. Your line is live.

Michael Kaufman: Our next question is coming from Michael Kaufman with MK Investments. Your line is nice.

Michael Kaufman: Oh, Michael, how are you this afternoon? How are you doing, Jeff? I am doing great. Thank you. Ron, I want to really thank you for an incredibly balanced attack on the business opportunity. And all of the metrics, as people have said before, seem to be perfectly aligned and running in the right direction. And two areas of it, this is the best kept secret in Wall Street, I think, in terms of the opportunity and how perfectly you're attacking it.

Michael Kaufman: How are you doing, Jeff, Doug, and Ron? I want to really thank the team for an incredibly balanced attack on the business opportunity. And all of the metrics, as people have said before, seem to be perfectly aligned and running in the right direction. And two areas of interest. This is the best-kept secret on Wall Street, I think, in terms of the opportunity and how perfectly you're attacking it, and I'm wondering what you might be doing in terms of generating more outside exposure for the company in terms of investors.

Michael Kaufman: And I'm wondering what you might be doing in terms of generating more outside exposure for the company in terms of investors. And the other thing is that you were talking about some possible small tuck-in acquisitions. Now that really small companies in the financial environment really don't see an exit strategy. And there might be an opportunity, not the companies that think they're worth the moon, but really small companies with strategically either in the geography or somewhere else makes sense to just tack on.

Michael Kaufman: And the other thing is that you were talking about some possible small tuck-in acquisitions now that really small companies in this financial environment really don't see an exit strategy, and there might be an opportunity, not the companies that think they're worth the moon, but really small companies with a strategic either in the geography or somewhere else makes sense to just tackle.

Jeffrey Korn: All right, Mike. First, let me thank you for the compliments to both me and the team. It is much appreciated. Secondarily, let me go with your last question regarding acquisitions. Even small tuck-in, as I mentioned in my comments, private equity at the moment is paying multiples that are just not supported by Wall Street Sanders in our steel. So that's making it difficult. Now, private equity does not have much of an interest in some of our smaller licensees in the two to $5 million range. So you would think that would make it a better multiple. But at the moment, even the small licensees are looking at what the larger licensees are being paid, and they have that multiple in their head.

Jeffrey Korn: All right, Mike. First, let me thank you for the compliments to both me and the team. It is much appreciated.

Jeffrey Korn: Secondarily, let me go with your last question regarding acquisitions. Even small tuck-ins, as I mentioned in my comments, private equity at the moment is paying multiples that are just not supported by Wall Street Sanders in our field. So that's making it difficult.

Jeffrey Korn: Now, private equity does not have much of an interest in some of our smaller licensees in the $2 million to $5 million range. So you would think that would make it a better multiple, but at the moment, even the small licensees are looking at what the larger licensees are being paid, and they have that multiple in their heads. Eventually, all acquisitions on Wall Street will become rational, and we believe the market will come back to us, and people will understand what a rational multiple is.

Jeffrey Korn: Eventually, all acquisitions in Wall Street become rational. We believe the market will come back to us, and people will understand what a rational multiple is. We also have the advantage for somebody who wants to sell. We could make a portion of the purchase price in stock, and they can ride with us in the future, and to the acceleration we expect. But we're keeping our eyes open, and if we see the right tuck-in acquisition, we will grab it. But we are not going to do an acquisition for the sake of an acquisition, or get anything that is not going to be creative, or enhance our numbers, or enhance our business.

Jeffrey Korn: We also have the advantage for somebody who wants to sell. We can make a portion of the purchase price in stock, and they can ride with us in the future and at the acceleration we expect. But we're keeping our eyes open, and if we see the right tuck-in acquisition, we will grab it, but we are not going to do an acquisition for the sake of an acquisition or get anything that is not going to be accretive or enhance our numbers or enhance our business. I applaud your strategy.

Jeffrey Korn: On the other part of the question, Mike, on getting our message out there, we continue to do investment conference after investment conference. We've got summertime; there's not as many investor conferences going on, but they're starting to get queued up over the course of the next two months. You'll see us up in New York City quite a few times with different investor conferences, telling our story to investors. And then, over the course of the next couple of days, we've got quite a few virtual meetings lined up with a lot of retail sites that have picked up on Crescendo's story and are trying to get it out there to the masses.

Douglas Gaylor: And on the other part of the question, Mike, about getting our message out there, we continue to do investment conference after investment conference. We've got summertime; there are not as many investor conferences going on, but they're starting to get queued up over the course of the next two months. You'll see us up in New York City quite a few times for different investor conferences, telling our story to investors. And then, over the course of the next couple of days, we've got quite a few virtual meetings lined up with a lot of retail sites that have picked up on Crexendo's story and are trying to get it out there to the masses. So the more times we continue to tell the story, the more people will pick up on the fact that we are a diamond in the rough and appreciate you acknowledging that.

Michael Kaufman: So the more times we continue to tell the story, the more people will pick up on the fact that we are a diamond in the rough, and appreciate you acknowledging.

Michael Kaufman: Best of luck, I'm sure you'll do a great job and, so far, you've exceeded all my expectations. Wow, if only I could get

Thank you very much for having me.

Jeffrey Korn: Well, if only I could get somebody to tell me that at home, but thank you, Michael.

Operator: Thank you. As we have no further questions in the queue at this time, I will hand it back to Mr. Korn for any closing comments.

Jeffrey Korn: I again want to thank everybody for joining us and for the questions and for your support. I again want to thank the team with me here in this room and the team in all of our offices who are working every day to make sure these results continue and that we make all of our investors and customers proud. So we'll look forward to talking to you about our Q3 results. And have a great afternoon!

Operator: Thank you. This concludes today's call, and you may disconnect your lines at this time, and we thank you for your participation.

Speaker Change: Okay.

Speaker Change: Thank you. This concludes today's call and you may disconnect. Your lines at this time and we thank you for your participation.