A Primer on Crexendo
Crexendo (CXDO) offers award winning CCaaS and UCaaS services on a single proprietary platform that now has over 6M users. Its wholesale segment (Software Solutions) is growing at 30%+, gaining market share on the two biggest players, Microsoft’s Metaswitch MaX UC product (which is leaving the market) and Cisco’s BroadSoft.
Below, you find our usual introduction to familiarize yourself with the company. Stay tuned for our Quick Take, a discussion of the financials and prospects for the shares.
Company Overview
Crexendo, Inc. is an award-winning software technology company and a premier provider of cloud communication platform software and Unified Communications as a Service (UCaaS) offerings. These services include voice, video, contact center, and managed IT services designed for businesses of all sizes. The company's cloud communications software solutions currently support over six million end users globally. This is achieved through an extensive network of over 235 cloud communication platform software subscribers and Crexendo's direct retail offering.
As of December 31, 2024, Crexendo had 185 employees, consisting of 179 full-time and 6 part-time staff. This includes 7 executives, 44 sales representatives/management, 9 in marketing, 33 engineers/IT support, 77 in operations/customer support, and 15 in accounting, finance, and legal.
Crexendo's services and products are categorized into two primary offerings:
Cloud Telecommunications Services: These services transmit calls using IP or cloud technology, converting voice signals into digital data packets for internet or cloud transmission. They provide basic features of traditional telephone services, plus a wide range of enhanced features. This platform allows users to access services and features via a single "identity" or telephone number, regardless of connection method (desktop device, mobile app). Services include hardware, software, and unified IP or cloud technology over high-speed internet. They are powered by Crexendo's proprietary implementation of standards-based Web and VoIP cloud technologies, built on a highly scalable complex infrastructure designed for efficiency, quality of service (QoS), and customer satisfaction. Many of these services are included in a basic monthly recurring fee, with advanced features like Automatic Call Recording and Call Center Features requiring additional monthly fees.
Software Solutions: This segment provides a comprehensive suite of unified communications (UC), video conferencing, collaboration, and contact center solutions. The platform enables service providers to customize packages with flexibility, profitability, and ease of use. Software and services can be sold separately or as bundled packages.
Crexendo generates recurring revenue from cloud telecommunications services, broadband Internet services, managed IT services, software license sales, and infrastructure as a service. Cloud telecommunications contracts typically have a thirty-six to sixty-month term. Revenues from product sales and sales-type leases are recognized at the time of sale or lease inception.
Operational Segments and Offerings
Cloud Telecommunications Services: This segment's offerings include:
Business Productivity Features: Such as dial-by extension and name, transfer, conference, call recording, unlimited calling to anywhere in the US and Canada, international calling, and toll-free services.
Individual Productivity Features: Including Caller ID, Call Waiting, Last Call Return, Music/Message-On-Hold, Voicemail, Unified Messaging, and Hot-Desking.
Group Productivity Features: Like Call Park, Call Pickup, Interactive Voice Response (IVR), Paging, Corporate Directory, Multi-Party Conferencing, Group Mailboxes, and web/mobile collaboration.
Call Center Features: Such as Automated Call Distribution (ACD), Call Monitor, Whisper and Barge, Automatic Call Recording, and Analytics.
Advanced Unified Communication Features: Including Find-Me-Follow-Me, Sequential Ring and Simultaneous Ring, and Voicemail transcription.
Mobile Features: Extension dialing, transfer, conference, and seamless hand-off between WiFi and cellular data (3G, 4G, 5G, LTE) via intelligent mobile applications like CrexMo, VIP Mobile, and Snap Mobile.
Traditional PBX Features: Busy Lamp Fields, System Hold, and Analog Device Gateways.
Expanded Desktop Device Selection: Entry-level phones, executive desktops, and DECT phones for roaming users.
Advanced Faxing Solution (cFax): Allows sending and receiving faxes from email clients, mobile phones, and desktops without a physical fax machine.
Web-based online portal for system administration, management, and provisioning.
Asynchronous communication tools: SMS/MMS, chat, and document sharing.
Video collaboration tools for video conferencing and meeting collaboration.
Software Solutions: Revenue is derived from software licenses, software maintenance support, and professional services. Key offerings include:
SNAPsolution: A comprehensive, IP-based platform offering a broad suite of UC services including hosted Private Branch Exchange (PBX), auto-attendant, call center, conferencing, and mobility. It features a single low-cost universal license for a full suite of VoIP/UC features, as opposed to per-feature pricing. The platform is licensed based on concurrent sessions, not per seat/per feature, enabling service providers to oversubscribe networks and drive down per-seat costs.
SNAPaccel: A Software-as-a-Service (SaaS) based software license, also referred to as subscription arrangements.
Subscription Maintenance and Support: Separately-priced maintenance service contracts and customer support, including software updates, telephone support, web-based support, and bug fixes. Support revenue is recognized ratably over the typical one-to-three-year term of the agreement.
Professional Services and Other: Consulting, technical support, resident engineer services, design services, and installation services. Revenue for these services is recognized upon completion and customer acceptance.
Technology & Infrastructure
Crexendo's success is rooted in its proprietary implementation of standard Web, IP, Cloud, Mobile, and Internet technologies. This technology infrastructure and virtual network operation center are built and managed on industry-standard computers, storage, networks, data, and platforms, ensuring greater efficiencies, scalability, and redundancy. The synergies between Web and Telecommunication protocols (TCP/IP, HTTP, XML, SIP) and innovations in computing provide a unique advantage in service delivery from their data centers.
Specific technological functionalities include:
High-end desktop telephony devices.
Basic Business Telephony Features mirroring traditional PBX systems (e.g., extension dialing, DID, Hold/Resume, Auto-Attendant).
Advanced telephony features like Call Park, Call Pickup, Paging, and Call Recording.
Call Center Functionality with Agent Log In/Log Out, Whisper, Barge Call Recording, and reporting.
Unified Communications features such as Simultaneous Ring, Sequential Ring, Status-based Routing (Find-Me-Follow-Me), and mobile applications.
Crexendo’s Mobile Application for placing/receiving calls, transferring, and conferencing from mobile devices, offering access to visual voicemail and call logs.
End User Portal and Unified Messaging with Voicemail, Call Recording, and eFax inbox.
Collaboration products like group chat, SMS/MMS, document sharing, video, and web conferencing.
For Software Solutions technology, the platform includes a full suite of VoIP/UC features with one low-cost universal license, deployable in client data centers or on Crexendo's Managed Infrastructure as a Service. Key features include:
Carrier Grade with Geo-Redundant Reliability.
Scalability to support communication service providers of all sizes.
Video Conferencing and Collaboration with webinars, scheduling, meeting recordings, content/screen sharing, and chat.
Multi-Tenant Architecture to support multiple resellers, agents, and retail clients.
Contact Center as a Service (CCaaS): All-in-one cloud-native contact center with workforce engagement, call recording, employee performance management, quality assurance & monitoring, and reporting, analytics & insights.
Unified Communications as a Service (UCaaS): PBX functionality in the cloud, natively integrated with messaging, team collaboration, meetings, and contact center; unified mobile and device experience; full integration with Microsoft Teams; HD Audio; Call Transcription; Sentiment Analysis; Customizable Emergency Notifications; E911 Dynamic Routing; and Cradle to Grave Reporting.
Infrastructure as a Service: Designed to eliminate CAPEX and startup costs, reduce time to market, provide client's own SNAPsolution running in redundant Top-tier data centers (US and Europe), with multi-layer network security, access control, disaster recovery, and 5 "9"s service uptime reliability. This offloads operations, upgrades, and maintenance to Crexendo.
Research and Development (R&D)
Crexendo invested $5.55M in research and development for the year ended December 31, 2024. The majority of these expenditures were directed towards enhancements to cloud telecommunications products and services and continued development of software solutions products.
Competition
The market for cloud business communications services is large and increasingly competitive, and Crexendo anticipates this trend to continue. Competitors fall into several categories:
Traditional on-premise, hardware business communications providers: Such as Alcatel-Lucent, Avaya Inc., Cisco Systems, Inc., Mitel, NEC, and Siemens Enterprise Networks, LLC, some of which may now or in the future host their solutions through the cloud.
Software providers: Including Microsoft Corporation (Microsoft Teams) and BroadSoft, Inc. (acquired by Cisco Systems, Inc.), and their resellers.
Established communications providers that resell solutions: Like AT&T, Verizon, Lumen/CenturyLink, Cox, Charter, Comcast, TELUS, BT, and Vodafone, many of whom have significantly greater resources.
Other cloud companies: Such as 8x8, Inc., RingCentral, Inc., Amazon.com, Inc., DialPad, Inc., Fusion, Fuze, Sangoma, Intermedia, Inc., OOMA, Jive Communications, Inc., Microsoft Corporation, Mitel, Nextiva, Inc., Slack Technologies, Inc., Vonage Holdings Corp., and West Corporation.
Other large internet companies: Including Alphabet Inc., Facebook, Inc., Oracle Corporation, Zoom, and Salesforce.com, Inc., which might launch their own cloud-based business communication services or acquire companies in the future.
Established contact center providers: Such as Amazon.com, Inc., Aspect Software, Inc., Avaya Inc., Five9, Inc., Genesys Telecommunications Laboratories, Inc., and NewVoiceMedia.
For software solutions, the competitive landscape primarily includes other third-party UCaaS platform vendors (e.g., Cisco, Mitel, Microsoft, Ooma, Alianza) and third-party platforms hosted on service provider networks (e.g., 3CX, Ribbon, Avaya, NEC, Unify, Vodia).
Crexendo acknowledges relatively low barriers to entry in its business and that its proprietary technology does not inhibit competitors from entering its markets. The company expects new entrants to develop competing products and services. Crexendo believes it can compete successfully by relying on its infrastructure, marketing strategies, systems and procedures, and by adding additional products and services.
Intellectual Property
Crexendo's success is partly dependent on using and protecting its proprietary technology and other intellectual property. The company relies on a combination of copyright, trademark, and trade secret laws, as well as confidentiality procedures and licensing arrangements. Measures to protect IP include requiring employees and third parties to enter into confidentiality agreements. However, there is a risk that these measures may not be sufficient against unauthorized use or independent development of similar technologies by others. Crexendo also licenses certain software and internet tools from third parties. Disputes related to intellectual property are common in the software, internet technology, and telecommunication industries, and any such litigation could be costly and divert attention from the business.
Financial Highlights
Stay tuned for our Quick Take discussing the investment considerations