Crexendo, Inc.

Crexendo reported Q2 2026 revenue of $24.6 million, up 49% year over year. GAAP net income was $1.1 million, or $0.03 per diluted share, non-GAAP net income was $4.1 million, and adjusted EBITDA was $4.1 million, up 46% from the prior-year quarter. Service revenue increased 78% to $14.9 million, software solutions revenue increased 5% to $7.3 million, and product revenue increased 104% to $2.5 million. Gross margin was 67% for service, 70% for software solutions, 44% for product, and 66% consolidated. Cash and cash equivalents were $18.3 million at quarter-end, and operating activities provided $4.8 million in cash in the first six months, up 89% versus the prior-year period. Forward-looking commentary included year-to-date organic revenue growth of 11% in line with guidance for double-digit organic growth for the year, an expectation that adjusted EBITDA margin should remain around 17%, a belief that product revenue at a $2.5 million quarterly pace is maintainable with ESI, and a view that AI-related revenue could become meaningful in 2027.

Jeffrey Korn framed the quarter as evidence of stronger scale, operating leverage, and strategic optionality. He emphasized the jump in new platform logos, the durability of the “Sessions not Seats” model, and said the ESI acquisition is integrating exceptionally well and is already exceeding initial expectations. He also highlighted ongoing platform investment, including Volume 46 expected in Q2 2027 and an October user group meeting that he expects to be the largest in company history.

Ron Vincent focused on the operating leverage in the quarter and the quality of the financial execution. He pointed to $24.6 million of revenue, 49% growth, consolidated gross margin of 66% versus 61% in the prior quarter implied by the 500-basis-point improvement, operating margins of 4%, and adjusted EBITDA margin of 17%. He also said operating cash flow was $4.8 million for the first half, financing activities provided $8.4 million, and the company ended with $18.3 million in cash after $26.2 million was used for the ESI acquisition; he added that the 17% adjusted EBITDA margin should be maintainable.

Analysts pressed on why platform wins are accelerating, whether smaller initial deal sizes reflect economic caution, and how quickly CAIRO trials could convert into revenue. Management said the wins are broad-based across competitors, that customers are often starting with smaller licenses and then growing them, and that large deals can take years while smaller ones close faster; they expect some meaningful CAIRO revenue in 2027 as licensees and the EVP channel adopt it. Questions also focused on ESI’s outperformance, TSD booking strength, product margin, equipment financing receivables, and M&A appetite; management said ESI is performing above expectations, TSD sales rose 39% in the quarter and 42% year to date, CAIRO is designed to be margin-accretive, and the company has a pipeline of potential acquisitions but can only integrate one at a time.