Sangoma Technologies Reports Strong Fiscal Year 2024 Results
Sangoma Technologies Delivers Robust Financial Results
Sangoma Technologies Corporation (TSX: STC; Nasdaq: SANG) has posted impressive results for its fourth quarter and the full fiscal year ending June 30, 2024. Renowned as a leader in cloud-based Communications as a Service, Sangoma continues to make strides in the competitive telecommunications landscape.
Key Financial Highlights
During the fiscal year 2024, Sangoma recorded a total revenue of $247.3 million. This figure aligns closely with the guidance provided, which estimated revenues between $246.5 million and $248.5 million. Furthermore, the company’s Adjusted EBITDA reached $42.6 million, aptly fitting within the anticipated range of $41.5 million to $43.5 million.
Product and Services Revenue Growth
A closer look at the revenue reveals that services revenue grew by 1.83% compared to the previous year. However, products revenue saw a decline due to a strategic de-emphasis on lower-margin offerings as part of Sangoma's transformative go-to-market strategy. The company is adapting to broader macroeconomic challenges while maintaining strong core revenue components.
Gross Margin Increase
Gross margin for fiscal 2024 improved significantly, climbing to approximately 70% of revenue, which is an increase from the 68% recorded in the previous year. This accrual is attributed to a favorable mix in services and products revenue, which reached 82% and 18%, respectively, compared to 79% and 21% last year.
Financial Strength and Cash Flow Management
Sangoma’s financial health remains robust. The company generated $11.7 million in operating cash flow for the fourth quarter, and a total of $44.2 million for the fiscal year, reflecting increases of 8% and 67% compared to prior periods. This strong cash flow has positioned Sangoma favorably, leading to a year-end cash balance of $16.2 million, buoyed by prudent cost-saving measures and efficient management of working capital.
Notably, operating cash flow as a percentage of Adjusted EBITDA for the fourth quarter reached a remarkable 105%, culminating in a fiscal year-end percentage of 104%, up from 60% in fiscal 2023.
Future Outlook for Fiscal Year 2025
Setting the stage for the future, Sangoma has provided guidance for fiscal 2025, projecting revenues between $250 million to $260 million. The company anticipates Adjusted EBITDA between $42 million to $46 million, accommodating $2.1 million in one-time costs associated with its ongoing enterprise resource planning initiatives. In addition, expectations for Q1 2025 are revenues between $61 million to $62 million, with Adjusted EBITDA forecasted at $9 million to $10 million.
Debt Management Strategies
The company has reported significant progress in managing its debt. In Q4 alone, Sangoma executed a debt repayment totaling $5.3 million, with total repayments for the quarter reaching $9.7 million. This initiative is part of a broader strategy aimed at reducing debt below $60 million by the end of fiscal 2025, strategically enhancing the company's financial flexibility and stability.
CEO Charles Salameh's Vision
CEO Charles Salameh expressed confidence in the company's transformation strategy, citing strong financial performance, the expertise of the leadership team, and a solid infrastructure as key elements driving Sangoma towards its growth objectives. The accomplishments of fiscal 2024 set a solid foundation for future reaching corporate goals.
About Sangoma Technologies Corporation
Sangoma has solidified its position as a premier business communications platform provider. Its diverse offerings, which encompass award-winning technologies like UCaaS and CCaaS, cater to over 100,000 customers and cover more than 2.7 million end-users. Recognized in the Gartner UCaaS Magic Quadrant for nine consecutive years, Sangoma remains dedicated to driving innovation in communication technology.
Frequently Asked Questions
What were Sangoma's total revenues for fiscal year 2024?
Total revenues for fiscal 2024 were $247.3 million.
How did Sangoma's gross margin change in fiscal 2024?
Gross margin improved to approximately 70%, up from 68% in the previous fiscal year.
What is the revenue forecast for Sangoma in fiscal year 2025?
Sangoma forecasts revenues between $250 million to $260 million for fiscal year 2025.
How did operating cash flow perform in fiscal 2024?
Operating cash flow was $11.7 million for Q4 and $44.2 million for the entire fiscal year, reflecting an 8% and 67% increase, respectively.
What is Sangoma's plan for managing its debt?
Sangoma aims to reduce its total debt to under $60 million by the end of fiscal 2025 through a series of planned repayments.
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