Attached files
| file | filename |
|---|---|
| 8-K - CURRENT REPORT - Crexendo, Inc. | cxdo_8k.htm |
Exhibit
99.1
Crexendo Announces Fourth Quarter and Year Ended December 31, 2020
Results
PHOENIX,
AZ—(Marketwired – March 9, 2021)
Crexendo,
Inc. (NASDAQ: CXDO), an award-winning premier provider of cloud
communications, UCaaS (Unified Communications as a Service), call
center, collaboration services, and other cloud business services
that are designed to provide enterprise-class cloud services to any
size business at affordable monthly rates, today reported financial
results for the fourth quarter and full year ended December 31,
2020.
Fourth Quarter Financial highlights:
●
16% increase in
total revenue year-over-year to $4.3 million.
●
GAAP net income of
$7.2 million or $0.40 per basic common share and $0.37 per diluted
common share.
●
Non-GAAP net income
of $7.4 million or $0.42 per basic common share and $0.39 per
diluted common share.
Financial Results for the Fourth Quarter of 2020
Consolidated
total revenue for the fourth quarter of 2020 increased 16% to $4.3
million compared to $3.7 million for the fourth quarter of
2019.
Consolidated
service revenue for the fourth quarter of 2020 increased 14% to
$3.8 million compared to $3.3 million for the fourth quarter of
2019.
●
Web Services
Segment service revenue for the fourth quarter of 2020 decreased
21% to $121,000, compared to $154,000 for the fourth quarter of
2019.
Consolidated
product revenue for the fourth quarter of 2020 increased 32% to
$526,000 compared to $397,000 for the fourth quarter of
2019.
Consolidated
operating expenses for the fourth quarter of 2020 increased 20% to
$4.2 million compared to $3.5 million for the fourth quarter of
2019.
The
Company reported net income of $7.2 million for the fourth quarter
of 2020, or $0.40 per basic common share and $0.37 per diluted
common share, compared to $228,000 or $0.02 per basic common share
and $0.01 per diluted common share for the fourth quarter of 2019.
The significant increase is due to an income tax benefit of $6.0
million from the release of our valuation allowance and $1.0
million in PPP loan forgiveness received during the fourth
quarter.
Non-GAAP
net income of $7.4 million for the fourth quarter of 2020, or $0.42
per basic common share and $0.39 per diluted common share, compared
to a non-GAAP net income of $347,000 or $0.02 per basic and diluted
common share for the fourth quarter of 2019.
EBITDA
for the fourth quarter of 2020 decreased to $185,000, compared to
$243,000 for the fourth quarter of 2019. Adjusted EBITDA for the
fourth quarter of 2020 increased to $431,000, compared to $349,000
for the fourth quarter of 2019.
Financial Results for the Year ended December 31, 2020
Consolidated
total revenue for the year ended December 31, 2020 increased 14% to
$16.4 million compared to $14.4 million for the year ended December
31, 2019.
Consolidated
service revenue for the year ended December 31, 2020 increased 14%
to $14.5 million compared to $12.7 million for the year ended
December 31, 2019.
●
Cloud
Telecommunications Segment UCaaS service revenue for the year ended
December 31, 2020 increased 16% to $14.0 million compared to $12.1
million for the year ended December 31, 2019.
●
Web Services
Segment service revenue for the year ended December 31, 2020
decreased 17% to $542,000, compared to $656,000 for the year ended
December 31, 2019.
Consolidated
product revenue for the year ended December 31, 2020 increased 9%
to $1.8 million compared to $1.7 million for the year ended
December 31, 2019.
Consolidated
operating expenses for the year ended December 31, 2020 increased
16% to $15.4 million compared to $13.3 million for the year ended
December 31, 2019.
The
Company reported net income of $7.9 million for the year ended
December 31, 2020, or $0.50 per basic common share and $0.46 per
diluted common share, compared to $1.1 million or $0.08 per basic
common share and $0.07 per diluted common share for the year ended
December 31, 2019. The significant increase is due to an income tax
benefit of $6.0 million from the release of our valuation allowance
and $1.0 million in PPP loan forgiveness received during the year
ended December 31, 2020.
Non-GAAP
net income was $8.7 million for the year ended December 31, 2020,
or $0.55 per basic common share and $0.50 per diluted common share,
compared to a non-GAAP net income of $1.6 million or $0.11 per
basic common share and $0.10 per diluted common share for the year
ended December 31, 2019.
EBITDA
for the year ended December 31, 2020 was $1.25 million compared to
$1.23 million for the year ended December 31, 2019. Adjusted EBITDA
for the year ended December 31, 2020 was $1.9 million compared to
$1.6 million for the year ended December 31, 2019.
Total
cash, cash equivalents, and restricted cash at December 31, 2020
was $17.7 million compared to $4.3 million at December 31,
2019.
Cash
provided by operating activities for the year ended December 31,
2020 of $647,000 compared to $1.6 million for the year ended
December 31, 2019. Cash used for investing activities for the year
ended December 31, 2020 of $921,000 compared to $72,000 used for
the year ended December 31, 2019. Cash provided by financing
activities for the year ended December 31, 2020 of $13.7 million
compared to $765,000 for the year ended December 31,
2019.
Steven
G. Mihaylo, Chief Executive Officer commented, “This was
clearly an important and transformational year for us. We stayed
true to our plan and the results prove the progress we have made.
First, we continued our streak of both GAAP and Non-GAAP
profitability, secondly, we organically up-listed to the Nasdaq
Capital Markets Exchange, we were then able complete our equity
offering in September of 2020 to raise additional capital and
finally we have been able to negotiate a substantial accretive
acquisition. We have grown the business organically and are now on
track to aggressively grow the business thru accretive
acquisitions.”
Mihaylo
added, “I am very excited with our results, we continue to
generate positive income from operations as we continue to invest
and grow our business. The significant increase in net income for
the year is primarily related to the release of our valuation
allowance on our deferred tax assets as a result of cumulative
positive pretax income and projections of future taxable income. I
was very pleased that consolidated total revenue for the year ended
December 31, 2020 increased 14% from the year ended December 31,
2019. Even more importantly Cloud Telecommunications Segment UCaaS
service revenue for the year ended December 31, 2020 increased 16%
compared to the year ended December 31, 2019. These trends,
together with our ability to also grow the business through
acquisitions bode exceptionally well for the future. We will
continue to invest in and to build the business. I want to
compliment our entire team on a job well done, I have never been
more enthusiastic about our future.”
Doug
Gaylor, President and Chief Operating Officer, stated, “I
share Steve’s enthusiasm for our future and appreciation for
the efforts of our team. We made some substantial improvements in
2020, we now have the ability to attract accretive acquisitions. We
made substantial investments in our sales and marketing and we are
pleased to have added Jon Brinton as our new Chief Revenue Officer
who has been making further key sales additions. We continue to
update our products and services, and I believe our organic growth
will continue to be strong. I am extremely excited about the
potential growth of our organization through accretive
acquisitions.”
Conference Call The Company is hosting a conference call
today, March 9, 2021 at 4:30 PM EST. The dial-in number for
domestic participants is 888-506-0062 and 973-528-0011 for
international participants. Please dial in five minutes prior to
the beginning of the call at 4:30 PM EST and reference entry code
412097. A replay of the call will be available until March 16, 2021
by dialing toll-free at 877-481-4010 or 919-882-2331 for
international callers. The replay passcode is 40139.
Access
to the conference call will also be available via audio webcast
through https://www.webcaster4.com/Webcast/Page/2223/40139.
No questions can be submitted through the webcast.
About Crexendo
Crexendo,
Inc. is an award-winning premier provider of cloud communications,
UCaaS (Unified Communications as a Service), call center,
collaboration services, and other cloud business services that are
designed to provide enterprise-class cloud services to any size
business at affordable monthly rates.
Safe Harbor Statement
This press release contains forward-looking statements. The Private
Securities Litigation Reform Act of 1995 provides a "safe harbor"
for such forward-looking statements. The words "believe," "expect,"
"anticipate," "estimate," "will" and other similar statements of
expectation identify forward-looking statements. Specific
forward-looking statements in this press release include
information about Crexendo (i) believing this was an important and
transformational year; (ii) staying true to its plan and the
results proving the progress made; (iii) being able to negotiate a
substantial accretive acquisition; (iv) having grown the business
organically and are now on track to aggressively grow the business
thru accretive acquisitions; (v) being very excited with its
results while continuing to generate positive income from operation
and continuing to invest and grow the business; (vi) being pleased
that consolidated total revenue for the year increased 14% from the
year ended December 31, 2019 and deeming important that Cloud
Telecommunications Segment UCaaS service revenue increased 16%
compared to the year ended December 31, 2019; (vii) the trends,
together with the ability to also grow the business through
acquisitions bode exceptionally well for the future; (viii)
continuing to invest in and to build the business (ix) never having
been more enthusiastic about our future; (x) having made some
substantial improvements in 2020 and now having the ability to
attract accretive acquisitions; (xi) making substantial investments
in our sales and marketing and being pleased to have added Jon
Brinton as our new Chief Revenue Officer who has been making
further key sales additions; (xii) continuing to update our
products and services; (xiii) believing its organic growth will
continue to be strong and; (xiv) being extremely excited about the
potential growth of our organization through accretive
acquisitions”.
For a
more detailed discussion of risk factors that may affect
Crexendo’s operations and results, please refer to the
company's Form 10-K for the year ended December 31, 2020, and
quarterly Form 10-Qs as filed with the SEC. These forward-looking
statements speak only as of the date on which such statements are
made, and the company undertakes no obligation to update such
forward-looking statements, except as required by law.
Contact
Crexendo,
Inc.
Doug
Gaylor
President
and Chief Operating Officer
602-732-7990
dgaylor@crexendo.com
CREXENDO, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(In thousands, except par value and share data)
|
|
December 31,
|
|
|
|
2020
|
2019
|
|
Assets
|
|
|
|
Current
assets:
|
|
|
|
Cash
and cash equivalents
|
$17,579
|
$4,180
|
|
Restricted
cash
|
100
|
100
|
|
Trade
receivables, net of allowance for doubtful accounts of
$21
|
|
|
|
as
of December 31, 2020 and $14 as of December 31, 2019
|
538
|
380
|
|
Contract
assets
|
159
|
22
|
|
Inventories
|
504
|
382
|
|
Equipment
financing receivables
|
286
|
143
|
|
Contract
costs
|
421
|
379
|
|
Prepaid
expenses
|
190
|
141
|
|
Income
tax receivable
|
4
|
4
|
|
Total
current assets
|
19,781
|
5,731
|
|
|
|
|
|
Long-term
trade receivables, net of allowance for doubtful
accounts
|
|
|
|
of
$0 as December 31, 2020 and $0 as of December 31, 2019
|
-
|
6
|
|
Long-term
equipment financing receivables, net
|
906
|
561
|
|
Property
and equipment, net
|
2,734
|
155
|
|
Deferred
income tax assets, net
|
6,054
|
-
|
|
Operating
lease right-of-use assets
|
1
|
51
|
|
Intangible
assets, net
|
252
|
465
|
|
Goodwill
|
272
|
272
|
|
Contract
costs, net of current portion
|
549
|
436
|
|
Other
long-term assets
|
156
|
106
|
|
Total
Assets
|
$30,705
|
$7,783
|
|
|
|
|
|
Liabilities and Stockholders' Equity
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts
payable
|
$56
|
$86
|
|
Accrued
expenses
|
1,628
|
1,754
|
|
Finance
leases
|
29
|
30
|
|
Notes
payable
|
71
|
-
|
|
Operating
lease liabilities
|
1
|
50
|
|
Contingent
consideration
|
-
|
175
|
|
Contract
liabilities
|
778
|
791
|
|
Total
current liabilities
|
2,563
|
2,886
|
|
|
|
|
|
Contract
liabilities, net of current portion
|
450
|
423
|
|
Finance
leases, net of current portion
|
55
|
86
|
|
Notes
payable, net of current portion
|
1,873
|
-
|
|
Operating
lease liabilities, net of current portion
|
-
|
1
|
|
Total
liabilities
|
4,941
|
3,396
|
|
|
|
|
|
Stockholders'
equity:
|
|
|
|
Preferred
stock, par value $0.001 per share - authorized 5,000,000 shares;
none issued
|
—
|
—
|
|
Common
stock, par value $0.001 per share - authorized 25,000,000 shares,
17,983,177
|
|
|
|
shares issued and outstanding as of December 31, 2020 and
14,884,755 shares issued
|
|
|
|
and
outstanding as of December 31, 2019
|
18
|
15
|
|
Additional
paid-in capital
|
75,834
|
62,400
|
|
Accumulated
deficit
|
(50,088)
|
(58,028)
|
|
Total
stockholders' equity
|
25,764
|
4,387
|
|
|
|
|
|
Total
Liabilities and Stockholders' Equity
|
$30,705
|
$7,783
|
CREXENDO, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(In thousands, except per share and share data)
|
|
Year Ended December 31,
|
|
|
|
2020
|
2019
|
|
Service
revenue
|
$14,544
|
$12,745
|
|
Product
revenue
|
1,843
|
1,691
|
|
Total
revenue
|
16,387
|
14,436
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
Cost
of service revenue
|
3,837
|
3,456
|
|
Cost
of product revenue
|
1,110
|
895
|
|
Selling
and marketing
|
4,153
|
3,862
|
|
General
and administrative
|
5,107
|
4,235
|
|
Research
and development
|
1,189
|
853
|
|
Total
operating expenses
|
15,396
|
13,301
|
|
|
|
|
|
Income
from operations
|
991
|
1,135
|
|
|
|
|
|
Other
income/(expense):
|
|
|
|
Interest
income
|
3
|
6
|
|
Interest
expense
|
(76)
|
(12)
|
|
Extinguishment
of PPP debt
|
1,007
|
-
|
|
Other
income/(expense), net
|
(26)
|
16
|
|
Total
other income/(expense), net
|
908
|
10
|
|
|
|
|
|
Income
before income tax
|
1,899
|
1,145
|
|
|
|
|
|
Income
tax benefit/(provision)
|
6,041
|
(6)
|
|
|
|
|
|
Net
income
|
$7,940
|
$1,139
|
|
|
|
|
|
Earnings
per common share:
|
|
|
|
Basic
|
$0.50
|
$0.08
|
|
Diluted
|
$0.46
|
$0.07
|
|
|
|
|
|
Weighted-average
common shares outstanding:
|
|
|
|
Basic
|
15,767,874
|
14,570,286
|
|
Diluted
|
17,420,476
|
15,559,863
|
CREXENDO, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(In thousands)
|
|
Year Ended December 31,
|
|
|
|
2020
|
2019
|
|
CASH
FLOWS FROM OPERATING ACTIVITIES
|
|
|
|
Net
income
|
$7,940
|
$1,139
|
|
Adjustments
to reconcile net income to net cash provided by operating
activities:
|
|
|
|
Depreciation
and amortization
|
258
|
94
|
|
Deferred
tax asset
|
(6,054)
|
-
|
|
Extinguishment
of PPP debt
|
(1,001)
|
-
|
|
Share-based
compensation
|
623
|
399
|
|
Changes
in assets and liabilities:
|
|
|
|
Trade
receivables
|
(152)
|
43
|
|
Contract
assets
|
(137)
|
(10)
|
|
Equipment
financing receivables
|
(488)
|
(453)
|
|
Inventories
|
(122)
|
(112)
|
|
Contract
costs
|
(155)
|
(102)
|
|
Prepaid
expenses
|
(49)
|
103
|
|
Income
tax receivable
|
-
|
(3)
|
|
Other
assets
|
(50)
|
11
|
|
Accounts
payable and accrued expenses
|
20
|
378
|
|
Contract
liabilities
|
14
|
151
|
|
Net
cash provided by operating activities
|
647
|
1,638
|
|
|
|
|
|
CASH
FLOWS FROM INVESTING ACTIVITIES
|
|
|
|
Purchase
of property and equipment
|
(745)
|
(72)
|
|
Acquisition
of customer relationships
|
(176)
|
-
|
|
Net
cash used for investing activities
|
(921)
|
(72)
|
|
|
|
|
|
CASH
FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
Payment
of contingent consideration
|
(54)
|
-
|
|
Repayments
made on finance leases
|
(32)
|
(28)
|
|
Proceeds
from notes payable
|
1,001
|
-
|
|
Repayments
made on notes payable
|
(56)
|
(56)
|
|
Proceeds
from exercise of options
|
2,043
|
849
|
|
Proceeds
from issuance of common stock
|
10,771
|
-
|
|
Net
cash provided by financing activities
|
13,673
|
765
|
|
|
|
|
|
NET
INCREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED
CASH
|
13,399
|
2,331
|
|
|
|
|
|
CASH,
CASH EQUIVALENTS, AND RESTRICTED CASH AT THE BEGINNING OF THE
YEAR
|
4,280
|
1,949
|
|
|
|
|
|
CASH,
CASH EQUIVALENTS, AND RESTRICTED CASH AT THE END OF THE
YEAR
|
$17,679
|
$4,280
|
|
|
|
|
|
Supplemental
disclosure of cash flow information:
|
|
|
|
Cash
used during the year for:
|
|
|
|
Income
taxes, net
|
$(12)
|
$(9)
|
|
Interest
expense
|
$(70)
|
$(12)
|
|
Supplemental
disclosure of non-cash investing and financing
information:
|
|
|
|
Purchase
of property and equipment with a note payable
|
$2,000
|
$-
|
|
Adjustment
to intangible assets and contingent consideration of customer
relationship asset acquisition
|
$(121)
|
$-
|
|
Extinguishment
of PPP debt
|
$(1,001)
|
$-
|
|
Contingent
consideration related to intangible asset acquisition
|
$-
|
$175
|
|
Purchase
of intangible assets included in accrued expenses
|
$-
|
$176
|
CREXENDO, INC. AND SUBSIDIARIES
Supplemental Segment Financial Data
(In thousands)
|
|
Three Months Ended December 31,
|
Year Ended December 31,
|
||
|
|
2020
|
2019
|
2020
|
2019
|
|
Revenue:
|
|
|
|
|
|
Cloud
telecommunications
|
$4,202
|
$3,574
|
$15,845
|
$13,780
|
|
Web
services
|
121
|
154
|
542
|
656
|
|
Consolidated
revenue
|
4,323
|
3,728
|
16,387
|
14,436
|
|
|
|
|
|
|
|
Income
from operations:
|
|
|
|
|
|
Cloud
telecommunications
|
110
|
172
|
849
|
864
|
|
Web
services
|
14
|
46
|
142
|
271
|
|
Total
operating income
|
124
|
218
|
991
|
1,135
|
|
Other
income/(expense), net:
|
|
|
|
|
|
Cloud
telecommunications
|
986
|
-
|
939
|
(2)
|
|
Web
services
|
1
|
9
|
(31)
|
12
|
|
Total
other income/(expense), net
|
987
|
9
|
908
|
10
|
|
Income
before income tax benefit/(provision):
|
|
|
|
|
|
Cloud
telecommunications
|
1,096
|
172
|
1,788
|
862
|
|
Web
services
|
15
|
55
|
111
|
283
|
|
Income
before income tax benefit/(provision)
|
$1,111
|
$227
|
$1,899
|
$1,145
|
Use of Non-GAAP Financial Measures
To
evaluate our business, we consider and use non-generally accepted
accounting principles (“Non-GAAP”) net income and
Adjusted EBITDA as a supplemental measure of operating performance.
These measures include the same adjustments that management takes
into account when it reviews and assesses operating performance on
a period-to-period basis. We consider Non-GAAP net income to be an
important indicator of overall business performance because it
allows us to evaluate results without the effects of share-based
compensation and amortization of intangibles. We define EBITDA as
U.S. GAAP net income before interest income, interest expense,
other income and expense, provision for income taxes, and
depreciation and amortization. We believe EBITDA provides a useful
metric to investors to compare us with other companies within our
industry and across industries. We define Adjusted EBITDA as EBITDA
adjusted for share-based compensation. We use Adjusted EBITDA as a
supplemental measure to review and assess operating performance. We
also believe use of Adjusted EBITDA facilitates investors’
use of operating performance comparisons from period to period, as
well as across companies.
In our
March 9, 2021 earnings press release, as furnished on Form 8-K, we
included Non-GAAP net income, EBITDA and Adjusted EBITDA. The terms
Non-GAAP net income, EBITDA, and Adjusted EBITDA are not defined
under U.S. GAAP, and are not measures of operating income,
operating performance or liquidity presented in analytical tools,
and when assessing our operating performance, Non-GAAP net income,
EBITDA, and Adjusted EBITDA should not be considered in isolation,
or as a substitute for net income or other consolidated income
statement data prepared in accordance with U.S. GAAP. Some of these
limitations include, but are not limited to:
●
EBITDA and Adjusted
EBITDA do not reflect our cash expenditures or future requirements
for capital expenditures or contractual commitments;
●
they do not reflect
changes in, or cash requirements for, our working capital
needs;
●
they do not reflect
the interest expense, or the cash requirements necessary to service
interest or principal payments, on our debt that we may
incur;
●
they do not reflect
income taxes or the cash requirements for any tax
payments;
●
although
depreciation and amortization are non-cash charges, the assets
being depreciated and amortized will be replaced sometime in the
future, and EBITDA and Adjusted EBITDA do not reflect any cash
requirements for such replacements;
●
while share-based
compensation is a component of operating expense, the impact on our
financial statements compared to other companies can vary
significantly due to such factors as the assumed life of the
options and the assumed volatility of our common stock;
and
●
other companies may
calculate EBITDA and Adjusted EBITDA differently than we do,
limiting their usefulness as comparative measures.
We
compensate for these limitations by relying primarily on our U.S.
GAAP results and using Non-GAAP net income, EBITDA, and Adjusted
EBITDA only as supplemental support for management’s analysis
of business performance. Non-GAAP net income, EBITDA and Adjusted
EBITDA are calculated as follows for the periods
presented.
Reconciliation of Non-GAAP Financial Measures
In
accordance with the requirements of Regulation G issued by the SEC,
we are presenting the most directly comparable U.S. GAAP financial
measures and reconciling the unaudited Non-GAAP financial metrics
to the comparable U.S. GAAP measures.
Reconciliation of U.S. GAAP Net Income to Non-GAAP Net
Income
(Unaudited)
|
|
Three Months Ended December 31,
|
Year Ended December 31,
|
||
|
|
2020
|
2019
|
2020
|
2019
|
|
|
(In
thousands)
|
(In
thousands)
|
||
|
U.S.
GAAP net income
|
$7,161
|
$228
|
$7,940
|
$1,139
|
|
Share-based
compensation
|
246
|
106
|
623
|
399
|
|
Amortization
of intangible assets
|
23
|
13
|
92
|
53
|
|
Non-GAAP
net income
|
$7,430
|
$347
|
$8,655
|
$1,591
|
|
|
|
|
|
|
|
Non-GAAP
earnings per common share:
|
|
|
|
|
|
Basic
|
$0.42
|
$0.02
|
$0.55
|
$0.11
|
|
Diluted
|
$0.39
|
$0.02
|
$0.50
|
$0.10
|
|
|
|
|
|
|
|
Weighted-average common shares outstanding:
|
|
|
|
|
|
Basic
|
17,877,481
|
14,755,818
|
15,767,874
|
14,570,286
|
|
Diluted
|
19,251,448
|
15,929,874
|
17,420,476
|
15,559,863
|
Reconciliation of U.S. GAAP Net Income to EBITDA to Adjusted
EBITDA
(Unaudited)
|
|
Three Months Ended December 31,
|
Year Ended December 31,
|
||
|
|
2020
|
2019
|
2020
|
2019
|
|
|
(In
thousands)
|
(In
thousands)
|
||
|
U.S.
GAAP net income
|
$7,161
|
$228
|
$7,940
|
$1,139
|
|
Depreciation
and amortization
|
61
|
25
|
258
|
94
|
|
Interest
expense
|
22
|
3
|
76
|
12
|
|
Interest
and other expense/(income)
|
(1,009)
|
(12)
|
(984)
|
(22)
|
|
Income
tax provision/(benefit)
|
(6,050)
|
(1)
|
(6,041)
|
6
|
|
EBITDA
|
185
|
243
|
1,249
|
1,229
|
|
Share-based
compensation
|
246
|
106
|
623
|
399
|
|
Adjusted
EBITDA
|
$431
|
$349
|
$1,872
|
$1,628
|