SANGOMA REPORTS Q4 AND FULL YEAR RESULTS FOR FISCAL 2017

MARKHAM, ONTARIO, October 10, 2017 – Sangoma Technologies Corporation (TSX VENTURE:STC), a trusted leader in delivering Unified Communications solutions for SMBs, Enterprises, OEMs, and Service Providers, both on-premises and in the cloud, today announced highlights of its fourth quarter financial results and audited consolidated financial statements for the full year of fiscal 2017, ended June 30, 2017.

For the fourth quarter of fiscal 2017, sales were a record $7.68 million, 26% higher than the same quarter last year and 13% over the immediately preceding quarter. For the full year, revenue was $26.88 million, the highest in Sangoma’s history and 27% above last year.

Q4 FY2017 Q4 FY2016 Change FY2017 FY2016 Change
Sales $7.68 m $6.10 m 26% $26.88 m $21.19 m 27%
Gross profit $4.93 m $3.75 m 32% $17.53 m $14.41 m 22%
Operating Expense $4.52 m $3.83 m 18% $16.04 m $14.02 m 14%
Operating Income1 $0.41 m -$0.08 m $1.49 m $0.39 m
Net Income $0.17 m -$0.16 m $0.80 m $0.11 m
Net earnings per share (fully diluted) $0.005 ($0.005) $0.023 $0.004
EBITDA1 $0.70 m $0.19 m $2.61 m $1.43 m

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.

“The hard work over the past few years is visible in our fiscal 2017 results, with sales up 27% and EBITDA nearly doubling from last year”, said Bill Wignall, President and CEO of Sangoma. “The transition of the company to one with a full unified communications suite, available in both Cloud and Premise based versions, has laid the foundation for further expansion. Sales this quarter exceeded $7m for the first time, and Cloud-based services, software and support revenues continue to grow as an important part of our corporate strategy. I’m particularly pleased to see our operating margins continuing to strengthen, with EBITDA above 9% of sales this year, compared to about 7% in fiscal 2016. I’m pleased with the early impact of the VoIP Supply acquisition just after year end, and the company continues to seek further prudent acquisitions where appropriate. Overall, I’m excited by Sangoma’s consistent ability to build our business in this challenging environment of change and I am confident that we can maintain this progress.”

Gross profit was $17.53 million for the year. Gross margin was 65% for the year and 64% in the most recent quarter. The company continues to experience the expected margin pressure due to competitive pricing, products in its portfolio at various gross margins, and differing sales models and regions. We expect this trend to continue.

Operating expenses were $16.04 million in fiscal 2017, up 14% from fiscal 2016. These higher expenses result primarily from staff increases to handle the company’s growth in customers and revenue.

EBITDA was $2.61 million for fiscal 2017, up from $1.43 million in the prior year, and operating income was $1.49 million, up significantly from the $0.39 million in fiscal 2016, driven by the increased revenue.

Net income for the year ended June 30, 2017 was $0.80 million ($0.023 per share fully diluted), compared to net income of $0.11 million ($0.004 per share fully diluted) for the year ended June 30, 2016.

Sangoma continues to maintain a healthy balance sheet and finished the year with a cash balance of $6.76 million, of which $3.88 million was in preparation for the closing of the VoIP Supply acquisition on July 5, 2017. Adjusted cash flow from operations of $2.89 million was up 75% from the $1.67 million in fiscal 2016.

Outlook for fiscal year 2018
Sangoma’s Board of Directors expects fiscal 2018 revenue to be approximately $46 million and associated EBITDA to be about $4 million.

Conference Call
President and CEO, Bill Wignall, and CFO, David Moore will host a conference call on Friday October 13, 2017 at 2 p.m. Eastern Standard 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.

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