SANGOMA REPORTS RESULTS FOR THE SECOND QUARTER OF FISCAL 2021

Quarterly revenue up 9% while EBITDA expands 32% to over $6.8 million

MARKHAM, ONTARIO, February 4, 2021 – Sangoma Technologies Corporation (TSX VENTURE:STC), a trusted leader in delivering cloud-based Communications as a Service (“CaaS”) solutions for companies of all sizes, today announced highlights of its unaudited condensed interim consolidated financial statements for the second quarter of its fiscal year 2021 ended December 31, 2020.

For the second quarter of fiscal 2021, sales were $35.32 million, 9% higher than in the same quarter last year, and EBITDA was an all-time record $6.84 million, up 32% over the same quarter last year.

chart data for report

“This was another strong quarter for Sangoma, with total sales up 9% from the same quarter last year and our all important Services revenue growing almost 25% over the second quarter of fiscal 2020,” said Bill Wignall, President and CEO of Sangoma. “The solid revenue, reliable gross margin, and expense controls undertaken during the pandemic has delivered our highest quarterly EBITDA ever. As the crisis begins to subside, we will begin to prudently open up spending slightly again, which should bring EBITDA back closer to the range expected in our fiscal 2021 guidance, of around 17%. And of course, this all follows our very exciting announcement last week, of the definitive agreement to acquire Star2Star.”

Gross profit was $23.46 million in the second quarter of fiscal 2021, 10% higher than in fiscal 2020 and with similar gross margin at 66% of revenue.
Operating expenses were $19.68 million in the second quarter of fiscal 2021, up 3% from the second quarter of fiscal 2020, increasing at a rate slower than Sangoma’s revenue growth, as planned.

EBITDA was a record $6.84 million in the second quarter, up by almost one-third from the $5.19 million in the same quarter last year.

Net income for the second quarter ended December 31, 2020 was $2.46 million.

Sangoma continues to maintain a strong balance sheet and finished the quarter with a cash balance of $92.28 million. Working capital closed at $83.43 million as of December 31, 2020 and Adjusted Cash Flow from operations at $6.32 million for the quarter.

Outlook for fiscal year 2021
Sangoma has earlier provided guidance for 2021 of between $143 and $147 million in revenue and between $24 and $26 million in EBITDA. The company is maintaining
those ranges, given second quarter results.

Cyber attack update
Since disclosing the cyber attack in December 2020, Sangoma has been working with a highly experienced group of third-party cybersecurity experts to conduct a fulsome and comprehensive investigation into the incident. The company has provided regular public updates regarding its progress and Sangoma now expects to complete the investigation and report the results this month. As stated in the company’s press release of January 12, while we continue to investigate the incident, we are confident that none of our products or services were impacted, and Sangoma does not expect the cyber attack will have a material impact on sales or on opportunities in the company’s pipeline.

Acquisition of StarBlue Inc. (“StarBlue”)
As requested by the TSX Venture Exchange, the Company wishes to clarify the leadership and governance of Sangoma after the closing of the acquisition of StarBlue.
Bill Wignall will remain as President and CEO of Sangoma and, subject to Shareholder approval of a new Control Person in accordance with TSX-V policies, the resulting
Sangoma board of directors (the “Board”) shall consist of five directors, with Norman Worthington of StarBlue becoming Chairman and with Marc Lederman of NewSpring
Capital, an institutional investor in Star2Star Holdings, LLC (“S2S Holdings”), also joining the Board. The nomination of Norman Worthington and Marc Lederman is
pursuant to a right granted to the sellers’ representative in the stock purchase agreement. S2S Holdings, as sellers’ representative, has exercised this right on behalf of the sellers. With this clarification, the TSX Venture Exchange has confirmed that trading in Sangoma’s common shares will resume effective at the opening on or about Monday, February 8, 2021 in accordance with the TSX Venture Exchange bulletin issued today.

Conference Call
President and CEO, Bill Wignall, Executive Vice President Corporate Development, John Tobia and CFO, David Moore will host a conference call on Friday February 5,
2021 at 11:00 am 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.

About Sangoma Technologies Corporation
Sangoma Technologies is a trusted leader in delivering value-based Communications as a Service (CaaS) solutions for businesses of all sizes. Sangoma’s cloud-based Services include Unified Communication (UCaaS) business communications, Meetings as a Service (MaaS), Communications Platform as a Service (CPaaS), Trunking as a Service (TaaS), Fax as a Service (FaaS), Device as a Service (DaaS), and Access Control as a Service (ACaaS), Managed Internet Access, Managed Security, Managed SD-WAN. In addition, Sangoma offers a complete line of communications Products, including premise-based UC systems, a full line of desk phones and headsets, and a complete connectivity suite (gateways/SBCs/telephony cards). Sangoma’s products and services are used worldwide in leading UC, PBX, IVR, contact centers, carrier networks, office productivity, and data communication applications. Sangoma is also the primary developer and sponsor of Asterisk and FreePBX, the world’s two most widely used open-source communication software projects.
Cautionary Statement Regarding Forward Looking Statements

This press release contains forward-looking statements, including statements regarding the future success of our business, development strategies and future opportunities. Forward-looking statements include, but are not limited to, statements concerning estimates of future revenue, expected expenditures, expected future production and cash flows, and other statements which are not historical facts. When used in this document, the words such as “could”, “plan”, “estimate”, “expect”, “intend”, “may”, “potential”, “should” and similar expressions indicate forward-looking statements. Readers are cautioned not to place undue reliance on forward-looking statements, as there can be no assurance that the plans, intentions or expectations upon which they are based will occur. By their nature, forward-looking statements are based on the opinions and estimates of management on the date that the statements are made and involve numerous assumptions, known and unknown risks and uncertainties, both general and specific, that contribute to the possibility that the predictions, forecasts, projections and other events contemplated by the forward-looking statements will not occur or will differ materially from those expected. Although Sangoma believes that the expectations represented by such forward-looking statements are reasonable based on the current business environment, there can be no assurance that such expectations will prove to be correct as these expectations are inherently subject to business, economic and competitive uncertainties and contingencies. Some of the risks and other factors which could cause results to differ materially from those expressed in the forward-looking statements contained in the management’s discussion and analysis include, but are not limited to changes in exchange rate between the Canadian Dollar and other currencies, the variability of sales between one reporting period and the next, changes in technology, changes in the business climate in one or more of the countries that Sangoma operates in, changes in the regulatory environment, the rate of adoption of the company’s products in new markets, the decline in the importance of the PSTN and new competitive pressures. The forward-looking statements contained in this press release are expressly qualified by this cautionary statement and Sangoma undertakes no obligation to update forward-looking statements if circumstances or management’s estimates or opinions should change except as required by law. Readers are directed to Sangoma’s filings on SEDAR with respect to Management’s Discussion and Analysis of Financial Results for the basis of Sangoma’s reconciliation of EBITDA to net income as calculated under IFRS.

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Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
Sangoma Technologies Corporation

David Moore
Chief Financial Officer
(905) 474-1990 Ext. 4107
dsmoore@sangoma.com
www.sangoma.com

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