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MARKHAM, ONTARIO, September 27, 2023 – Sangoma Technologies Corporation (TSX: STC; Nasdaq: SANG) (“Sangoma” or the “Company”), a trusted leader in delivering cloud- based Communications as a Service solutions for companies of all sizes, today announced its fourth quarter financial results and audited consolidated financial statements for the fiscal year ended June 30, 2023.
| US $000 | Q4 FY2023 | Q4 FY2022 | Change | FY2023 | FY2022 | Change | |||
| Sales | $63,680 | $66,301 | (4)% | $252,530 | $224,352 | 13% | |||
| Gross profit | $42,241 | $44,461 | (5)% | $172,791 | $156,888 | 10% | |||
| Operating expenses1 | $43,708 | $45,714 | (4)% | $175,740 | $162,772 | 8% | |||
| Net loss | $(23,630) | $(99,247) | $(29,026) | $(110,780) | |||||
| Net loss per share (fully diluted) | $(0.72) | $(2.99) | $(0.88) | $(3.52) | |||||
| Adjusted EBITDA2 | $10,860 | $11,129 | (2)% | $44,394 | $42,124 | 5% | |||
| Net cash provided by operating activities | $10,855 | $9,547 | $26,487 | $21,057 | 5% | ||||
Revenue for the fourth quarter of fiscal 2023 was $63.68 million, a decrease from the prior year of 4%. Annual revenue for fiscal 2023 eclipsed the $250 million mark coming in at $252.53 million, a 13% increase over the prior fiscal year.
Sangoma continues to maintain a healthy balance sheet, finishing the quarter and the fiscal year with net cash provided by operating activities of $10,855 and $26,487, respectively on June 30, 2023, reflecting a strong quarterly progression of cash flow throughout fiscal 2023. Sangoma continues to remain comfortably within its debt covenants.
“Our fourth quarter brings to a close both a successful and transitional year for Sangoma and I remain proud of our team for delivering record revenue results for our customers and shareholders during fiscal year 2023,” said Norm Worthington, Sangoma Board Chairman. “We crossed the $250 million revenue mark, which is a milestone for the Company, as we continue to grow and transform from a pure Product to a cloud-based Services company. Services represented 79% of our total sales this quarter, up from 74% in the same quarter of last year and we remain committed to delivering strong organic growth going forward. Adjusted EBITDA2 for the quarter of $10.86 million, representing about 17% of revenue, again demonstrating our dedication to deliver results with profitability. While analyzing the
past to understand our challenges and reflect on opportunities, the end of our fiscal year is also a time to look forward. To achieve that future, I am happy to turn the strategic and operational reigns over to Charles Salameh, our new CEO, and Jeremy Wubs, our first COO. We look forward with great optimism to a Sangoma under their strong and enthusiastic leadership.”
Operating expenses1 were $175.74 million for the fiscal year, up from $162.77 million last year by about 8%, and $43.71 million for the quarter, down from $45.71 million in the same quarter last year by about 4%. The year over year increase reflects the addition of the NetFortris team while the quarter over quarter decrease reflects the realization of various cost initiatives.
Net loss for the fourth quarter was $23.63 million, and for the year was $29.03 million, both significantly affected by a one-time, non-cash goodwill impairment charge of $22.51 million. This goodwill impairment resulted primarily from, among other factors, a significant increase in the discount rate as a result of macroeconomic factors, which other companies in our industry sector have also experienced, during the latter months of fiscal 2023.
Outlook for fiscal year 2024
The Company will be suspending the issuance of forward-looking earnings guidance for fiscal 2024. This decision comes as part of a strategic transformation led by the Company’s new CEO, Charles Salameh to position Sangoma for long-term success and sustainable growth.
“While maintaining profitable growth in fiscal 2024, we will embark on a transformative journey, to focus on executing a set of strategic initiatives that deliver value to our customers and shareholders. This will provide a strong foundation for expanding our addressable markets and optimizing our product portfolio and operations, in order to enable the Company to respond to and capitalize on evolving market dynamics,” said Charles Salameh, Sangoma CEO.
Conference call
Sangoma will host a conference call on Wednesday, September 27, 2023, at 5:30 pm ET to discuss these results. The dial-in number for the call is 1-800-319-4610 (International 1-604-638-5340). Participants are requested to dial in 5 minutes before the scheduled start time and ask to join the Sangoma call.
1 Operating Expenses consist of sales and marketing, research and development, general and administration and foreign exchange (gain) loss.
2 Adjusted EBITDA is a non-IFRS financial measure used by the Company to monitor its performance and definitions of these terms along with reconciliation to the closest IFRS measure may be found in the accompanying MD&A on page 18 posted today at www.sedar.com and www.sec.gov.