MARKHAM, ONTARIO, May 27, 2019 – Sangoma Technologies Corporation (TSX VENTURE:STC), a trusted leader in delivering Unified Communications solutions, both in the cloud and on-premises, and the provider of the two most widely used open source communications software products in the world, today announced highlights of its third quarter unaudited results of fiscal 2019, ended March 31, 2019.
For the third quarter of fiscal 2019, sales were $28.92 million, 78% higher than in the same quarter last year and the seventeenth quarter in a row in which sales have grown from the prior year. For the first time, services revenue exceeded $10 million, continuing to grow in both absolute and relative terms.
|Q3 FY2019||Q3 FY2018||Change||Q2 FY2019||Change|
|Sales||$28.92 m||$16.24 m||78%||$29.22 m||1%|
|Gross profit||$17.90 m||$8.97 m||100%||$17.83 m||0%|
|Operating Expense||$16.15 m||$7.56 m||114%||$17.03 m||(5%)|
|Operating Income1||$1.74 m||$1.41 m||$0.79 m|
|Net Income||$1.07 m||$0.75 m||-$0.27 m|
|Net earnings per share (fully diluted)||($0.019)||$0.015||($0.005)|
|EBITDA1||$3.26 m||$1.90 m||72%||$2.40 m||36%|
1 Operating Income and EBITDA are metrics used by the Company to monitor its performance and the definitions may be found in the accompanying MD&A posted today at www.sedar.com.
“As we’ve shared previously, our third quarter would begin to show the impact of the integration work undertaken in December, with regards to our latest acquisition of Digium”, said Bill Wignall, President and CEO of Sangoma. “So I’m very pleased to see this quarter’s focus on cost alignment and EBITDA, begin to bear fruit. With spending adjusted in all three of our major cost centers (sales and marketing, R&D, and G&A), we spent about $1 million less in operating expenses, compared to our second quarter, almost exactly as planned. That has produced over $3 million in EBITDA for the first time, up 36% over our second quarter, also as anticipated. And while there remains considerable work to complete the re-configuration of our supply chain as part of the Digium integration, as previously communicated, we still expect that to be finished in the next few months.”
Gross profit was $17.90 million in the third quarter of fiscal 2019, at a gross margin of 62%, ahead of last year and helped by the addition of the Digium business.
Operating expenses were $16.15 million in the third quarter of fiscal 2019, 5% lower than for Q2, reflecting the actions taken in December and bringing the cost structure to the level consistent with going forward EBITDA expectations. Since the last quarterly results, Sangoma COO Tony Lewis has departed the company to pursue other interests and we thank him for his contribution to Sangoma. The COO position will not be replaced, as his duties are being absorbed by other members of the Sangoma executive team.
For the third quarter, EBITDA was $3.26 million, up by 72% over the same period in fiscal 2018.
Net income for the period was $1.07 million, the first time Sangoma has exceeded $1 million in a single quarter since the turnaround commenced in Fiscal 2010.
Sangoma finished the quarter with a healthy cash balance of $7.07 million and has generated $5.60 million of adjusted cash flow from operations to date. As previously communicated, working capital will be higher than normal over the next several months, as Sangoma re-configures its supply chain, consolidates some of its contract manufacturers, and optimizes warehousing facilities during this period.
Outlook for fiscal year 2019
Sangoma expects Q4 revenue and EBITDA to be in line with the Q3 results issued today. As a result, we expect to exceed the previously issued guidance of $100 million in revenue and $11 million in EBITDA for the full year fiscal 2019.
President and CEO, Bill Wignall, and CFO, David Moore will host a conference call on Wednesday May 29, 2019 at 8am Eastern Daylight Time to discuss the quarterly results. The dial-in number for the call is 1-800-319-4610 (International 1-604-638-5340). Investors are requested to dial in 5 to 10 minutes before the scheduled start time and ask to join the Sangoma call.