MARKHAM, ONTARIO, February 6, 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 unaudited consolidated financial statements in Canadian dollars for the second quarter of fiscal 2017, ended December 31, 2016.
For the second quarter of fiscal 2017, sales were a record $6.57 million, 29% higher than in the same quarter last year making this the eighth quarter in a row that Sangoma has grown significantly and consistently, over the same quarter in the prior year.
| Q2 FY2017 | Q2 FY2016 | Change | Q1 FY2017 | Change | |
| Sales | $6.57 m | $5.08 m | 29% | $5.82 m | 13% |
| Gross profit | $4.35 m | $3.67 m | 19% | $3.77 m | 15% |
| Operating Expense | $3.86 m | $3.53 m | 9% | $3.64 m | 6% |
| Operating Income1 | $0.49 m | $0.14 m | $0.13 m | ||
| Net Income | $0.29 m | $0.08 m | $0.06 m | ||
| Net earnings per share (fully diluted) | $0.009 | $0.002 | $0.002 | ||
| EBITDA1 | $0.76 m | $0.41 m | 85% | $0.42 m | 80% |
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.
“After another solid result last quarter, Sangoma’s second quarter dramatically underlines the financial benefit we’ve been expecting from the work done over the last several years.” said Bill Wignall, President and CEO of Sangoma. “While sales from new products and recurring revenue/software/service continue to grow nicely, it is especially gratifying to see the operating leverage we’ve discussed over the past few quarters, beginning to play out in a substantial way. With sales and gross profit now growing faster than spending, a trend we expect to continue, we see the rewards in expanding EBITDA margins. This is precisely the impact we expected our business plan to deliver, and so it is particularly encouraging to see EBITDA at over $3/4 million this quarter. I am pleased that this consistent trajectory and the continued growth of recurring revenue has enabled our Board to support the issuance of forward guidance for the first time, as laid out below.”
Gross profit was $4.35 million for the second quarter, 19% above that of the same quarter last year, and gross margin was 66% of sales, slightly better than in the first quarter, and in line with our expectations.
Operating expenses were $3.86 million for the second quarter, 9% higher than in the same quarter of fiscal 2016, but growing at a slower rate than revenue and gross profit.
EBITDA was $0.76 million for second quarter of fiscal 2017, almost double the $0.41 million earned in the same quarter last year. Operating income was $0.49 million, three fold higher than in recent quarters.
Net income for the quarter ended December 31, 2016 was $0.29 million ($0.009 per share fully diluted), compared to net income of $0.08 million ($0.002 per share fully diluted) for the quarter ended December 31, 2015.
Sangoma finished the quarter with a cash balance of $2.28 million having generated $0.46 million from operations and spent $0.55 million on an acquisition during the quarter. As of December 31, 2016 the company had healthy working capital of $6.20 million.
Outlook for fiscal years 2017 and 2018
After a careful review of Sangoma’s results, Sangoma’s Board of Directors has decided that it is appropriate to commence providing limited forward guidance, to help investors better understand the company’s future prospects. Sangoma will update guidance only when there is a material change in the expected results and investors are reminded that actual results for future periods may vary materially from the guidance presented.
Sangoma is establishing its initial guidance as follows: For the fiscal year 2017, Sangoma expects revenue of approximately $25 million with EBITDA of about $2.4 million. Further, for fiscal 2018 Sangoma expects revenue to grow about 15-20% and for EBITDA to exceed 10% as a percentage of sales.
Conference Call
President and CEO, Bill Wignall, and CFO, David Moore will host a conference call on Thursday February 9, 2017 at 12 noon 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.