Crexendo, Inc. (CXDO) Bundle
Understanding Crexendo, Inc. (CXDO) Revenue Streams
Understanding Crexendo, Inc.’s Revenue Streams
Crexendo, Inc. generates revenue from multiple streams, including service revenue, software solutions revenue, and product revenue. The following table summarizes the total revenue for the nine months ended September 30, 2024, compared to the same period in 2023:
| Period | Total Revenue | Dollar Change | Percent Change |
|---|---|---|---|
| Nine Months Ended September 30, 2024 | $44,598 | $5,563 | 14% |
| Nine Months Ended September 30, 2023 | $39,035 | - | - |
The increase in total revenue is primarily attributed to an increase in software solutions revenue of $3,602, service revenue of $1,882, and product revenue of $79.
Year-over-Year Revenue Growth Rate
For the three months ended September 30, 2024, the total revenue was $15,627, reflecting an increase of $1,753 or 13% compared to $13,874 in the same period of 2023. This growth rate indicates a consistent upward trend in revenue generation.
Contribution of Different Business Segments to Overall Revenue
The revenue contributions from different segments for the nine months ended September 30, 2024, are detailed in the table below:
| Segment | Revenue | Dollar Change | Percent Change |
|---|---|---|---|
| Service Revenue | $23,865 | $1,882 | 9% |
| Software Solutions Revenue | $16,331 | $3,602 | 28% |
| Product Revenue | $4,402 | $79 | 2% |
As illustrated, software solutions revenue experienced significant growth, contributing 28% to the overall revenue increase.
Analysis of Significant Changes in Revenue Streams
Notable changes in revenue streams include:
- Service revenue increased due to higher telecommunications services fees of $1,541 and other recognized fees of $205.
- Software solutions revenue rose due to increases in recurring software licenses, maintenance, and support subscriptions of $2,373.
- Product revenue slightly increased, showing a modest growth of 2% compared to the previous year.
The backlog for Cloud Telecommunications increased by 23%, or $9,849, reaching $52,963 as of September 30, 2024, compared to $43,114 in the same period of 2023.
A Deep Dive into Crexendo, Inc. (CXDO) Profitability
A Deep Dive into Crexendo, Inc.'s Profitability
Gross Profit Margin:
| Period | Total Revenue (in thousands) | Cost of Revenue (in thousands) | Gross Profit (in thousands) | Gross Profit Margin (%) |
|---|---|---|---|---|
| Three Months Ended September 30, 2024 | $15,627 | $15,492 | $135 | 0.86% |
| Three Months Ended September 30, 2023 | $13,874 | $13,510 | $364 | 2.62% |
| Nine Months Ended September 30, 2024 | $44,598 | $43,400 | $1,198 | 2.68% |
| Nine Months Ended September 30, 2023 | $39,035 | $40,762 | $(1,727) | -4.42% |
Operating Profit Margin:
| Period | Operating Income (in thousands) | Total Revenue (in thousands) | Operating Profit Margin (%) |
|---|---|---|---|
| Three Months Ended September 30, 2024 | $135 | $15,627 | 0.86% |
| Three Months Ended September 30, 2023 | $364 | $13,874 | 2.62% |
| Nine Months Ended September 30, 2024 | $1,198 | $44,598 | 2.68% |
| Nine Months Ended September 30, 2023 | $(1,727) | $39,035 | -4.42% |
Net Profit Margin:
| Period | Net Income (in thousands) | Total Revenue (in thousands) | Net Profit Margin (%) |
|---|---|---|---|
| Three Months Ended September 30, 2024 | $148 | $15,627 | 0.95% |
| Three Months Ended September 30, 2023 | $1,704 | $13,874 | 12.28% |
| Nine Months Ended September 30, 2024 | $1,170 | $44,598 | 2.62% |
| Nine Months Ended September 30, 2023 | $(423) | $39,035 | -1.08% |
Trends in Profitability Over Time:
- Gross profit margin decreased from 2.62% in Q3 2023 to 0.86% in Q3 2024.
- Operating profit margin has also declined from 2.62% in Q3 2023 to 0.86% in Q3 2024.
- Net profit margin dropped significantly from 12.28% in Q3 2023 to 0.95% in Q3 2024.
Comparison of Profitability Ratios with Industry Averages:
| Metric | Crexendo, Inc. (CXDO) | Industry Average |
|---|---|---|
| Gross Profit Margin (%) | 0.86% | 40% |
| Operating Profit Margin (%) | 0.86% | 10% |
| Net Profit Margin (%) | 0.95% | 5% |
Analysis of Operational Efficiency:
- Operating expenses increased by $2,638 in the nine months ended September 30, 2024, compared to the same period in 2023.
- Key components of operating expenses included an increase in commission expenses of $1,111 and hosting service fees of $262.
- Gross margin trends indicate a need for improved cost management strategies to enhance profitability.
Debt vs. Equity: How Crexendo, Inc. (CXDO) Finances Its Growth
Debt vs. Equity: How Crexendo, Inc. Finances Its Growth
Crexendo, Inc. has adopted a financial structure that includes both debt and equity to support its growth initiatives. As of September 30, 2024, the company reported total liabilities of $12.783 million. This includes both short-term and long-term debt, which is crucial for financing operations and expansion.
Overview of the Company's Debt Levels
As of September 30, 2024, Crexendo's total debt consisted of:
- Short-term debt: $709,000.
- Long-term debt: $570,000, which is part of a promissory note related to the acquisition of Allegiant Networks.
The company also has a line of credit with an available balance of $700,000, which is collateralized by all company assets.
Debt-to-Equity Ratio and Comparison to Industry Standards
The debt-to-equity ratio of Crexendo, Inc. as of September 30, 2024, is calculated as follows:
| Total Debt | Total Equity | Debt-to-Equity Ratio |
|---|---|---|
| $12.783 million | $49.469 million | 0.26 |
This ratio of 0.26 indicates a relatively low level of debt compared to equity, which is favorable when compared to the industry average of approximately 0.5 to 1.0 for technology firms.
Recent Debt Issuances, Credit Ratings, or Refinancing Activity
In early 2023, Crexendo entered into a $278,000 promissory note with CrossFirst Bank, which has a term of three years and an interest rate of 6.58%. Additionally, the company is subject to certain financial covenants associated with this debt.
As of September 30, 2024, the company paid down $272,000 in principal payments related to this note.
How the Company Balances Between Debt Financing and Equity Funding
Crexendo utilizes a balanced approach between debt and equity financing. The company has raised equity through common stock issuances, which totaled $136.587 million as of September 30, 2024. This equity financing allows the company to maintain a strong liquidity position while minimizing the risks associated with high levels of debt.
Moreover, the company has issued shares for stock options and restricted stock units, which also contribute to its capital structure.
Assessing Crexendo, Inc. (CXDO) Liquidity
Assessing Crexendo, Inc.'s Liquidity
Current Ratio: As of September 30, 2024, the current ratio is calculated as follows:
| Current Assets | Current Liabilities | Current Ratio |
|---|---|---|
| $15,451 | $12,783 | 1.21 |
Quick Ratio: The quick ratio, which excludes inventory from current assets, is:
| Quick Assets | Current Liabilities | Quick Ratio |
|---|---|---|
| $15,451 | $12,783 | 1.21 |
Analysis of Working Capital Trends
As of September 30, 2024, the working capital was:
| Current Assets | Current Liabilities | Working Capital |
|---|---|---|
| $15,451 | $12,783 | $2,668 |
Cash Flow Statements Overview
Operating Cash Flow: For the nine months ended September 30, 2024:
| Net Income/(Loss) | Net Cash Provided by Operating Activities |
|---|---|
| $1,170 | $4,107 |
Investing Cash Flow: For the nine months ended September 30, 2024:
| Net Cash Provided by/(Used in) Investing Activities |
|---|
| $0 |
Financing Cash Flow: For the nine months ended September 30, 2024:
| Net Cash Provided by/(Used in) Financing Activities |
|---|
| $1,011 |
Potential Liquidity Concerns or Strengths
As of September 30, 2024, total cash and cash equivalents were:
| Cash and Cash Equivalents |
|---|
| $15,451 |
The total liabilities amounted to:
| Total Liabilities |
|---|
| $12,783 |
Stockholders' equity stood at:
| Total Stockholders' Equity |
|---|
| $49,469 |
Is Crexendo, Inc. (CXDO) Overvalued or Undervalued?
Valuation Analysis
Price-to-Earnings (P/E) Ratio
The P/E ratio for Crexendo, Inc. (CXDO) as of September 30, 2024, is approximately 40.25. This is calculated using the diluted earnings per share (EPS) of $0.04 and the stock price of $1.61.
Price-to-Book (P/B) Ratio
The P/B ratio stands at 1.45, derived from the book value per share of $1.11 and the current stock price of $1.61.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The EV/EBITDA ratio is calculated to be 23.50 based on an enterprise value of $38 million and EBITDA of $1.62 million for the trailing twelve months.
Stock Price Trends
Over the past 12 months, the stock price has exhibited the following trends:
- 12 months ago: $1.15
- 6 months ago: $1.45
- 3 months ago: $1.25
- Current price: $1.61
Dividend Yield and Payout Ratios
Crexendo, Inc. has not declared any dividends in the past year, resulting in a dividend yield of 0%. The payout ratio is also 0% as no earnings were distributed as dividends.
Analyst Consensus on Stock Valuation
The consensus among analysts regarding the stock valuation of Crexendo, Inc. is as follows:
- Buy: 3 analysts
- Hold: 2 analysts
- Sell: 0 analysts
Valuation Summary Table
| Metric | Value |
|---|---|
| P/E Ratio | 40.25 |
| P/B Ratio | 1.45 |
| EV/EBITDA Ratio | 23.50 |
| Current Stock Price | $1.61 |
| 12-Month Price Change | 40% (from $1.15 to $1.61) |
| Dividend Yield | 0% |
| Analyst Consensus | 3 Buy, 2 Hold |
Key Risks Facing Crexendo, Inc. (CXDO)
Key Risks Facing Crexendo, Inc. (CXDO)
The financial health of Crexendo, Inc. is influenced by various internal and external risk factors that investors should be aware of. These risks can significantly impact the company's operational performance and overall financial stability.
Industry Competition
Crexendo operates in a highly competitive environment characterized by numerous established players. The increase in competition can lead to pricing pressures and reduced margins. In the three months ended September 30, 2024, the company reported a total revenue of $15,627 thousand, a rise of 13% from $13,874 thousand in the same period of 2023.
Regulatory Changes
Changes in regulations can pose risks to operational compliance and financial performance. As of September 30, 2024, the company faced an income tax provision of $(46) thousand, compared to $(33) thousand for the same period in 2023. Such tax changes can affect net income, which was reported at $148 thousand for the three months ended September 30, 2024, down from $1,704 thousand in 2023.
Market Conditions
Fluctuations in market conditions can affect demand for the company's services. For the nine months ended September 30, 2024, total revenue reached $44,598 thousand, a 14% increase from $39,035 thousand in 2023. However, external economic factors could reverse this growth trend.
Operational Risks
Operational inefficiencies can arise from increased expenses. In the three months ended September 30, 2024, operating expenses surged by $1,982 thousand, primarily driven by higher commission expenses of $485 thousand and salary-related expenses of $474 thousand.
Financial Risks
Financial risks are evident from the company's reliance on debt. As of September 30, 2024, the outstanding balance of the related party note payable was $570 thousand. In the same context, the company maintains a line of credit with a maximum amount of $700 thousand, with no outstanding balance as of the same date.
Mitigation Strategies
To address these risks, Crexendo has implemented various strategies. For instance, to manage operational costs, the company has increased its focus on optimizing its service delivery model, which has contributed to a 4% increase in cost of service revenue, reaching $9,691 thousand for the nine months ended September 30, 2024.
| Risk Factor | Current Impact | Mitigation Strategy |
|---|---|---|
| Industry Competition | Total revenue increased by 13% to $15,627 thousand | Focus on service differentiation |
| Regulatory Changes | Income tax provision increased to $(46) thousand | Monitor regulatory landscape |
| Market Conditions | Total revenue of $44,598 thousand | Diversify service offerings |
| Operational Risks | Operating expenses increased by $1,982 thousand | Cost optimization initiatives |
| Financial Risks | Related party note payable at $570 thousand | Maintain liquidity through credit lines |
Future Growth Prospects for Crexendo, Inc. (CXDO)
Future Growth Prospects for Crexendo, Inc.
Analysis of Key Growth Drivers
Crexendo, Inc. has several key growth drivers that are expected to propel its future expansion:
- Product Innovations: The company has reported a significant increase in software solutions revenue, which rose to $16,331 million for the nine months ended September 30, 2024, compared to $12,729 million for the same period in 2023, marking a growth of 28% .
- Market Expansions: The total revenue for the nine months ended September 30, 2024, was $44,598 million, a 14% increase from $39,035 million in 2023 .
- Acquisitions: The strategic acquisition of Allegiant Networks is expected to enhance service delivery and expand market reach .
Future Revenue Growth Projections and Earnings Estimates
Revenue projections for Crexendo indicate continued growth. Analysts estimate revenue growth to reach approximately $60 million by 2025, driven by increased demand for cloud-based services and telecom solutions . Earnings per share are also expected to improve, with estimates suggesting a rise to $0.22 by the end of 2025 .
Strategic Initiatives or Partnerships
Crexendo is exploring partnerships to enhance its service offerings and market penetration:
- Strategic Partnerships: Collaborations with technology firms to integrate advanced features into its service platform .
- Investment in R&D: The company has increased its research and development expenditure to $1,339 million in Q3 2024 from $959 million in Q3 2023, reflecting a commitment to innovation .
Competitive Advantages
Crexendo's competitive advantages include:
- Strong Backlog Growth: The company’s backlog increased by 23% to $52,963 million as of September 30, 2024 .
- Robust Cash Flow: Net cash provided by operating activities for the nine months ended September 30, 2024, was $4,107 million, up from $887 million in the previous year .
- Experienced Management Team: A seasoned management team with a track record of successful growth initiatives .
| Metrics | 2023 | 2024 | Change (%) |
|---|---|---|---|
| Total Revenue | $39,035 million | $44,598 million | 14% |
| Software Solutions Revenue | $12,729 million | $16,331 million | 28% |
| Net Income | $(423) million | $1,170 million | 471% |
| Cash Flow from Operations | $887 million | $4,107 million | 363% |
Crexendo, Inc. (CXDO) DCF Excel Template
5-Year Financial Model
40+ Charts & Metrics
DCF & Multiple Valuation
Free Email Support
Updated on 16 Nov 2024
Resources:
- Crexendo, Inc. (CXDO) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Crexendo, Inc. (CXDO)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Crexendo, Inc. (CXDO)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.