Crexendo (NASDAQ:CXDO) President and COO Doug Gaylor outlined the company’s growth strategy, financial performance and artificial-intelligence product initiatives during a presentation at the LD Micro conference.
Gaylor said Crexendo operates as a unified communications-as-a-service, or UCaaS, provider, supplying cloud communications tools to businesses through both wholesale and retail channels. The company licenses its software platform to telecom and technology providers while also using the same platform to sell services directly to small and midsize businesses.
The wholesale operation accounts for about 30% of Crexendo’s revenue and includes 250 licensees that use its platform to serve their own customers. The retail segment represents roughly 70% of revenue and serves about 200,000 direct customers, according to Gaylor.
Platform Growth and Market Opportunity
Gaylor said Crexendo supports more than 8 million end users across its wholesale and retail operations, up from 7 million a year earlier. The company has been adding approximately 120,000 users per month, he said.
He described Crexendo as the third-largest telecom software platform provider behind Cisco and Metaswitch, which Microsoft owns. According to Gaylor, Microsoft’s prior announcement that it would end the Metaswitch platform, followed by a subsequent decision to sell it, encouraged some licensees to seek alternatives. He said Crexendo has gained customers from both Metaswitch and Cisco’s BroadSoft platform.
Crexendo added 11 new licensees during the first half of the year, Gaylor said, with nearly half coming from the two larger platforms. He also cited Frost & Sullivan’s designation of Crexendo as the fastest-growing UCaaS platform last year.
Gaylor said cloud adoption remains an opportunity for the company, estimating that 30% to 35% of U.S. businesses continue to use legacy, premises-based communications equipment. He cited Gartner projections for an accelerating transition to cloud-based systems over the next three years.
Financial Results and Outlook
The company reported $45 million in revenue for the first half of the year, while second-quarter revenue increased 49% from a year earlier, including the contribution from an acquisition. Gaylor said Crexendo generated 28% organic growth in its wholesale software segment during 2025, while its retail telecom-services operation has delivered organic growth of approximately 7% to 8% in recent years.
Crexendo has recorded 12 consecutive quarters of GAAP profitability, Gaylor said. The company’s remaining performance obligations, representing contracted revenue expected over the next five years, reached $139 million at the end of the second quarter, up 90% from the year-earlier period. He said approximately $45 million of that contracted revenue is already scheduled for 2027.
At the end of the second quarter, Crexendo had $18.3 million in cash, net cash of $13.4 million and $4.9 million in debt, according to Gaylor. He said the company ended the previous year with $31 million in cash before using $27 million in connection with its March acquisition.
Looking ahead, Gaylor said Crexendo expects to reach a $100 million annualized revenue run rate by the end of 2026, meeting a target it set three years ago. The company is targeting a $150 million run rate by the end of 2028 through a combination of organic expansion and acquisitions.
ESI Acquisition
In March, Crexendo acquired Dallas-based ESI, a long-time Crexendo software licensee. Gaylor said ESI generated approximately $26 million in revenue, had been in business for 35 years and had used Crexendo’s platform for about 14 years.
Crexendo paid $35 million for ESI, including approximately 78% in cash and 22% in stock, according to Gaylor. The acquisition added roughly 75,000 direct seats already operating on Crexendo’s platform.
Gaylor said buying existing licensees reduces integration complexity because their customers are already on Crexendo technology. He also expects cost savings from eliminating overlapping functions, combining benefit programs and moving ESI’s data-center operations to Oracle Cloud Infrastructure. He estimated data-center savings of $30,000 to $40,000 per month as ESI’s existing contracts expire.
The company views its licensee base as a potential source of future acquisitions, Gaylor said, noting that licensees seeking exit strategies may offer opportunities for accretive transactions.
AI Products and Customer Expansion
Gaylor identified artificial intelligence as a potential driver of higher revenue per customer. Crexendo launched its AI Receptionist Orchestrator, known as CAIRO, in January. The product is designed to answer calls, respond to frequently asked questions, schedule appointments and dispatch technicians.
He said the service can add about $120 per month to a customer’s bill, compared with an average retail customer payment of about $350 per month. Crexendo has also introduced CAIRO to its wholesale partners, and Gaylor said about 10% of licensees have begun selling the service to their end customers.
Another AI offering, conversational intelligence, can analyze recorded business calls and provide summaries covering call volumes, customer sentiment, positive feedback and complaints, Gaylor said.
Crexendo competes in the direct-business market with companies including RingCentral, Vonage and 8×8. Gaylor said the company seeks to differentiate itself through pricing, customer service and a comparable set of communications features.
About Crexendo (NASDAQ:CXDO)
Crexendo, Inc (NASDAQ: CXDO) is a cloud communications company that provides business voice, unified communications and contact center services. Its offerings are designed to help organizations manage voice, video, messaging, collaboration and customer interactions through internet-based platforms rather than traditional on-premises telephone systems.
The company’s products and services include hosted voice and business phone systems, unified communications as a service, contact center solutions, session initiation protocol (SIP) trunking and related telecommunications services.
