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Sangoma Technologies Corp Q3 F2020 Business Update

SANGOMA PROVIDES A BUSINESS UPDATE IN RESPONSE TO COVID-19

MARKHAM, ONTARIO, April 30, 2020Sangoma Technologies Corporation (TSX VENTURE:STC), a trusted leader in delivering Communications as a Service solutions for businesses of all sizes, service providers and OEMs, today provided an update on its business operations.

“Given the unprecedented global impact of Covid-19 on so many companies, and the fact that many of our shareholders have been asking for preliminary information about how Sangoma is being affected, we have decided  to provide this update covering current business operations and some preliminary financial highlights for our third quarter”, said David Moore, CFO of Sangoma. “Sangoma will announce our full financial results later in May, as usual for the third quarter.  This one-time preliminary update, due to the highly unusual global situation these days resulting from the coronavirus, will not set a precedent for other quarters in the future, when we expect to return to normal reporting cadence.”

Third quarter results were in line with our previously announced guidance on February 27th.  For the 9-month period ending March 31, 2020, Sangoma’s revenues exceeded $96 million, and third quarter revenues exceeded $36 million.  EBITDA exceeded $15 million for the same 9-month period, and $6 million for the third quarter.  

“We are extremely proud of these results, which is a testament to the hard work of our employees to continue driving forward during these challenging Covid times”, said Bill Wignall, President and CEO of Sangoma. “We believe that we are well positioned to weather the Covid-19 pandemic given our healthy profitability, positive cash flow, and strong balance sheet.  And given our preliminary Q3 results and our operations to date, we are cautiously optimistic that we are on track to meet our previously announced guidance for fiscal 2020 of $128 – $132 million for revenue and $19 – $21 million for EBITDA. However, given the uncertainties introduced by the Covid-19 pandemic, we cannot confirm our full 2020 guidance at this time. Instead, we will provide a formal update to guidance in late May, when we release full third quarter results, at which point we expect to have better visibility regarding the economic recovery in the various countries in which we operate . The entire executive team and board of directors would like to thank our employees, customers, and shareholders for your commitment, and we wish everyone good health during these challenging times.”

There continues to be uncertainty regarding the full impact, duration, magnitude and pace of recovery across our operations and markets, due to the evolving nature of the Covid-19 pandemic, and the global economic crisis (including varied governmental responses which may affect our operations, business and prospects).  Despite these uncertainties, as noted, Sangoma believes it is very well equipped to weather the storm, and we have taken several proactive steps in an attempt to better manage the challenges of the Covid-19 pandemic.  These include:

  • Sangoma continues to operate in as close to a ‘business as normal’ manner, as is possible under these conditions, because we are an “Essential Service” under most all government rulings.  We are thus exempt from the forced closures that so many other businesses are subject to.  Communications is always critical to business, and even more so with so many companies working remotely.  We are proud to continue providing our products and services to so many customers who count upon them, during these challenging times;
  • Successfully navigating the substantial impact from coronavirus on global supply chains during January and February.  Significant work by our operations teams ensured that virtually no customers were impacted in any material way.  Sangoma is now through that phase almost entirely;
  • Transitioning to a seamlessly reorganized work-from-home structure in over 20 countries and more than 20 states in the U.S., in order to serve our customers who count upon us every day for mission critical communications. This includes maintaining innovation, as demonstrated by the recent release of Sangoma’s new line of headsets and cloud-based video meeting service called ‘Sangoma-Meet’, both of which are essential parts of a remote worker’s toolset.  We are proud to offer Sangoma-Meet free of charge during this pandemic;
  • Ensuring the company is well positioned, financially, during this crisis.  Sangoma has maintained all principal and interest payments on its existing loans, continues to comfortably meet all debt covenants, and as of the end of April, has over $20 million in cash reserves to take advantage of opportunities that may arise, as well as being fully prepared for any further uncertainties during the Covid-19 pandemic.  This includes a proactive draw of $9.2 million on our swingline and revolver facilities during April, to strengthen our balance sheet.  We also moved decisively, taking prudent expense mitigation steps to appropriately control discretionary spending, as well as introducing new products and customer-focused initiatives to win new clients in need of enhanced communications during this crisis and to secure our existing customer base. Further details will be provided during our conference call described below.

These are just some of the many actions Sangoma has taken, and the advantages the company has, to withstand the current crisis and be well positioned to come out of it stronger than ever.  President and CEO, Bill Wignall, EVP Corporate Development, John Tobia, and CFO, David Moore will host a conference call on Friday May 1, 2020 at 8:00 am Eastern Daylight Time to discuss the fuller set of Sangoma’s responses to the Covid pandemic and to provide shareholders an opportunity to ask questions.  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 Unified Communications and Unified Communications as a Service (UCaaS) solutions for SMBs, Enterprises, OEMs, Carriers and service providers. Sangoma’s globally scalable offerings also include industry leading Voice-Over-IP solutions, which together provide seamless connectivity between traditional infrastructure and new technologies. Sangoma’s products and services are used in leading PBX, IVR, contact center, carrier networks and data-communication applications worldwide. Businesses can achieve enhanced levels of collaboration, productivity and ROI with Sangoma. Sangoma is the primary developer and sponsor of the Asterisk project, the world’s most widely used open source communications software and FreePBX, the world’s most widely used open source PBX software. Everything Connects, Connect with Sangoma!

Founded in 1984, Sangoma Technologies Corporation is publicly traded on the TSX Venture Exchange (TSX VENTURE: STC). Additional information on Sangoma can be found by visiting https://www.sangoma.com.

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 EBITDA, 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 this press release  include, but are not limited to risks and uncertainties associated with the Covid-19 pandemic, 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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