Sangoma Reports Results for Third Quarter of Fiscal 2013

MARKHAM, ONTARIO–(Marketwired – May 22, 2013) – Sangoma Technologies Corporation (TSX VENTURE:STC), a leading provider of hardware and software components that enable or enhance IP Communications Systems for both voice and data, today announced highlights of its unaudited consolidated interim financial statements under IFRS for the third quarter of fiscal 2013, ended March 31, 2013.

Sales for the third quarter of fiscal 2013 were $3.2 million, an increase of approximately 15% from $2.8 million in the immediately preceding second quarter, although still down from the prior year.

“I am encouraged with the improvement this quarter, after a somewhat disappointing second quarter,” said Bill Wignall, President and CEO of Sangoma. “There are several positive signals emerging over recent months, including revenue strengthening, significant customer wins, good uptake of the newer products including SBCs and Lync Express, and some substantial new partners joining the Sangoma network. We know that our revenue is lumpier these days than in the past, for all the reasons we’ve explained previously, but I’m cautiously optimistic that our fourth quarter will show continued progress on the top line. Although Sangoma produced a modest operating loss this quarter, we generated positive cash and added to our cash balance. There is still much hard work to be done as we continue to strive for growth by transitioning away from relying on TDM products, into a company that can grow revenue via its new products. This transition is an extremely challenging one for a company with Sangoma’s resources, especially compared to our larger competitors, but I’m very proud of our progress, even if it’s taken a bit longer than we may have hoped at times. We have utilized a highly focused R&D program and roadmap, to launch an incredible number of exciting new products over the past year or two, and we are now nearing the point where we can feel confident that Sangoma has caught up in our product portfolio and started to lead in some key product categories. That should make it possible to tighten both expense and cash management slightly over the next couple of quarters.”

Q3 FY2013 Q2 FY2013 Change Q3 FY2012 Change
Sales $ 3.2 m $ 2.8 m 15 % $ 3.6 m (12 %)
Gross profit $ 2.0 m $ 1.9 m 6 % $ 2.4 m (17 %)
Operating Expense $ 2.2 m $ 2.2 m (2 %) $ 2.3 m (7 %)
Operating Income1 -$0.2 m -$0.3 m $ 0.1 m
Net income -$0.1 m -$0.3 m $ 0.1 m
Net earnings per share (fully diluted) (0.005 ) (0.009 ) 0.003
EBITDA1 $ 0.0 m -$0.2 m $ 0.2 m
1 Sales for the third quarter of fiscal 2013 were $3.2 million, an increase of approximately 15% from $2.8 million in the immediately preceding second quarter, although still down from the prior year.

Gross profit was $2.0 million for the quarter or 63% of revenue, which is slightly lower than margins in recent quarters, purely as result of the mix of products sold this quarter.

Total operating expense for the third quarter was $2.2 million, down 7% from the same quarter of the last fiscal year, and down 2% from the immediately preceding quarter.

Operating loss was $0.2 million for the quarter, an improvement from last quarter but still lower than the operating profit of $0.1 million during the same quarter last year.

Net loss for the quarter ended March 31 2013 was $0.1 million (-$0.005 per share fully diluted), compared to net income of $0.1 million ($0.003 per share fully diluted) for the same quarter last year.

For the nine months of fiscal 2013 to date, Sangoma’s revenue is about 11% lower than the same period of fiscal 2012, driven mostly by soft second quarter sales. Net loss of $0.4 million is lower than the net income of $0.7 million earned in the first nine months of fiscal 2012, resulting from the lower revenue and gross margin as well as the impact of a $0.4 million foreign exchange gain realized in the second quarter of last year not repeating this year. Total operating expense was otherwise approximately flat with the prior year and has stabilized as expected.

Sangoma continues to have a very strong balance sheet, with working capital of $10.8 million on March 31, 2013 as compared to $11.4 million on June 30, 2012, and a solid cash balance that has increased from $3.4 million at the end of last quarter to $3.5 million as of March 31.

President and CEO, Bill Wignall, and CFO, David Moore will host a conference call on Friday May 24, 2013 at 11.30 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.

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