Crexendo (NASDAQ:CXDO) executives highlighted a year of double-digit organic growth, sustained GAAP profitability, and a newly announced acquisition during the company’s fourth-quarter and full-year 2025 earnings call. Management also emphasized continued investment in artificial intelligence, security, and infrastructure as the company works to scale its cloud communications platform and expand its reach through channel partners and M&A.
2025 results: double-digit growth and a 10th consecutive profitable GAAP quarter
Chairman and CEO Jeff Korn said he was “extremely pleased” with the company’s 2025 performance, pointing to what he described as profitable double-digit organic growth and consistent positive operating cash flow. Korn noted that when he became CEO in 2023, Crexendo was not GAAP profitable and was “burning approximately $100,000 per month,” with revenue around $53 million at the time.
President and COO Doug Gaylor said the fourth quarter also represented the company’s 29th consecutive quarter of non-GAAP net income. Gaylor added that the company surpassed both the 6 million and 7 million end-user milestones on its software platform during 2025.
Segment performance, margins, and backlog
CFO Ron Vincent detailed quarterly and full-year results by revenue category. In the fourth quarter, service revenue increased 8% to $8.6 million, software solutions revenue increased 18% to $8.3 million, and product revenue decreased 6% to $1.1 million.
Vincent said fourth-quarter service revenue gross margin improved 300 basis points year-over-year to 60%, while software solutions gross margin decreased 500 basis points to 63%. Consolidated gross margin for the quarter was 60%, down 100 basis points year-over-year. Operating expenses increased 8% to $16.9 million, and operating margin improved to 6% from 4% a year earlier.
For the full year, software solutions revenue rose 27% to $29.7 million, service revenue increased 6% to $33.8 million, and product revenue declined 16% to $4.7 million. Consolidated gross margin increased 1 percentage point year-over-year to 63%. Vincent reported adjusted EBITDA of $11.2 million, or 17% of total revenue, up from $8.2 million (13.5%) the prior year.
Crexendo ended 2025 with $31.4 million in cash and cash equivalents, up from $18.2 million at the end of 2024. Cash provided by operating activities totaled $9.3 million, and the company reported non-GAAP free cash flow of $9.3 million, representing a 14% free cash flow margin.
Both Vincent and Gaylor highlighted Remaining Performance Obligations (RPO), which Vincent said increased to $89.1 million, compared with $85.6 million at December 31, 2024. Gaylor described RPO as a backlog measure reflecting remaining contract values recognized over the next 60 months.
ESI acquisition: terms, expected contribution, and planned synergies
Management devoted significant time to the acquisition of Estech Systems (ESI), a NetSapiens licensee that the company announced the day before the call. Korn said the transaction positions Crexendo to move toward $100 million in annual revenue and reflects the company’s strategy of pairing organic growth with “disciplined” accretive acquisitions.
Crexendo agreed to acquire ESI for $35 million, consisting of $27.3 million in cash and $7.7 million in common stock. Korn said the purchase price represents approximately 1.35x ESI’s unaudited 2025 revenue. Management described ESI as founded in 1987, headquartered in Plano, Texas, and employing about 85 people.
Korn said ESI generated approximately $26 million in 2025 (unaudited). He added that if those results are confirmed in audit, they would imply about $2.23 million of income and that roughly 80% of revenue is recurring UCaaS, with UCaaS gross margins averaging about 86% and most customers on five-year contracts. The deal is expected to close March 1, 2026, and Korn said it is expected to increase Crexendo’s revenue, earnings, and cash flow after closing. He also said Crexendo plans to provide audited financial statements and pro forma financial information in a Form 8-K after ESI’s audit is completed.
Executives cited both cost and revenue synergy opportunities, including:
- Facilities consolidation and licensing optimization
- Cross-utilization of employees and coordinated back-office functions
- Network expense improvements and migration to Oracle Cloud Infrastructure (OCI)
- Cross-selling opportunities, expanded channel reach, and platform expansion
When asked about EBITDA margin impact from the acquisition, Korn said the company could not discuss ESI EBITDA margins until the audit is completed due to SEC guidelines.
Platform investments, OCI migration progress, and AI product momentum
Korn said Crexendo has been making “deliberate and meaningful investments” beginning in 2025 and continuing into 2026 across engineering talent, AI optimization, and security infrastructure, calling the work strategic to protect customers and support long-term growth.
Gaylor said the company has completed the migration of all hosted infrastructure licensees to OCI and expects to have the last legacy NetSapiens data centers decommissioned later in the month, which he said should help improve margins going forward.
On AI, management repeatedly pointed to CAIRO, the company’s AI Receptionist Orchestrator released in January. Gaylor said early adoption could increase Crexendo’s average retail revenue per account—currently about $350 per month—by more than 25%. Executives said CAIRO is applicable to “almost all” customers, though they noted it is too early to provide sales projections. Chief Revenue Officer Jon D. Brinton added that the AI receptionist is also being made available to NetSapiens platform licensees through Crexendo’s ecosystem program and has seen strong interest.
Gaylor also highlighted Crexendo’s broader AI lineup, including AI call recording with sentiment analysis and a contact center AI product “powered by ChatGPT.” Korn said the company received its Generative AI Product of the Year award for the second consecutive year and reported 42 additional G2 Winter 2026 awards.
Demand commentary: licensees, channel partners, and 2026 organic growth outlook
In the software solutions segment, Gaylor said Crexendo saw 14 upgrade orders from existing licensees and won five new logos in the fourth quarter; for the year, he said the company delivered more than 40 upgrade orders and won 14 new logos. Brinton said interest remains strong among potential partners, particularly those coming from legacy platforms with lower investment levels, and cited Crexendo’s commercial “sessions, not seats” model, AI applications, and roadmap as differentiators.
On the retail services side, Gaylor said the telecom services retail segment grew 5% organically in the quarter, and telecom services revenue grew 8% organically, offset by a reduction in product revenue as the company intentionally pulled back on lower-margin opportunities. He also said master agent technology service distributors posted a 46% year-over-year increase in sales bookings, and management highlighted AppDirect as a newly added technology service distributor partner.
Looking ahead, Korn told analysts he is still “gearing for” double-digit organic growth in 2026 while continuing to make necessary platform and security investments. Vincent added that the company does not anticipate large capital improvements that would materially impact free cash flow conversion in 2026.
About Crexendo (NASDAQ:CXDO)
Crexendo, Inc (NASDAQ: CXDO) is a provider of cloud-based communications and collaboration solutions tailored to businesses of varying sizes. The company’s flagship offering, CXsuite, integrates enterprise-grade voice, video conferencing, instant messaging, presence, and contact center functionality into a single platform delivered over the internet. By leveraging hosted infrastructure and a subscription-based model, Crexendo aims to reduce on-premises hardware costs and simplify management for IT teams and resellers.
Crexendo’s product portfolio includes a multi-tenant cloud PBX, SIP trunking, session border controllers and an application programming interface (API) suite that allows partners and customers to embed real-time communications into custom workflows.
