CXDO earnings analysis
What we found in CXDO's 10-Q: the parts that mattered, the offsets in the same document, and what the company said about what comes next.
Our reading of the filing · Free to read, no account needed
Crexendo delivered Q2 revenue of $24.646 million, up 49% year over year and above Q1 2026 revenue of $20.710 million, led by the ESI acquisition and continued organic growth. Gross margin improved to 65.7%, but operating margin fell to 4.3% from 6.7% a year ago as acquisition-related costs drove operating expenses higher; GAAP diluted EPS declined to $0.03 from $0.04. First-half operating cash flow rose to $4.788 million, although the ESI transaction reduced cash to $18.289 million from $31.378 million at year-end. No quantitative forward revenue or EPS guidance was included in the 10-Q.
The parts that mattered.
Pulled out of the filing itself, with the figures the company reported.
- Revenue grew 49% year over year
- Q2 revenue rose 49% year over year to $24.646 million from $16.552 million, and increased sequentially from $20.710 million in Q1 2026. The $8.094 million year-over-year increase included $6.963 million of ESI acquisition revenue and $1.131 million of organic growth.
- Gross margin expanded sequentially and year over year
- Gross margin expanded to 65.7% from 63.4% a year earlier and 61.4% in Q1 2026, as revenue of $24.646 million exceeded combined service, product and software cost of revenue of $8.457 million.
- Cloud segment and contracted backlog accelerated
- Cloud Telecommunications revenue increased 81% to $17.319 million, including service revenue up 78% to $14.868 million and product revenue up 104% to $2.451 million. Segment RPOs nearly doubled to $110.980 million from $56.392 million.
- Software recurring subscriptions offset license mix
- Software Solutions revenue grew 5% to $7.327 million, driven by a $1.042 million increase in recurring license and maintenance subscriptions, partly offset by a $0.703 million decline in perpetual-license revenue.
- First-half operating cash flow strengthened
- Operating cash flow increased 89% to $4.788 million for the first six months from $2.533 million, supported by $1.629 million of net income, $3.066 million of depreciation and amortization, and $1.636 million of share-based compensation.
- Recurring-revenue base expanded materially
- Annualized exit recurring revenue increased 51% to $81.153 million from $53.874 million, while consolidated net dollar subscription retention was 99%.
And the other side of it.
The offsets in the same document — the things a summary that only listed the good news would have left out.
- Earnings and operating margin compressed
- Profitability lagged revenue growth: GAAP diluted EPS declined to $0.03 from $0.04 year over year, and operating margin contracted to 4.3% from 6.7%. Income before tax fell 16% to $1.076 million despite the $8.094 million revenue increase.
- Acquisition-related cost base pressured earnings
- ESI added $6.963 million of quarterly revenue but also $7.380 million of quarterly operating expenses. Selling and marketing expense rose 115% to $6.638 million and general and administrative expense rose 81% to $3.544 million.
- Acquisition reduced cash and added borrowing
- Cash and cash equivalents fell $13.089 million to $18.289 million at June 30, 2026 from $31.378 million at December 31, 2025. Investing cash outflow was $26.209 million in the first half, primarily for the March 1, 2026 ESI acquisition, while the company issued $5.000 million of notes payable.
- Receivables and other working capital consumed cash
- Working-capital demands remain a cash-flow sensitivity: trade receivables increased $0.894 million, contract costs increased $0.583 million, prepaid expenses increased $0.553 million, and accounts payable/accrued expenses decreased $0.298 million during the first half.
- New patent litigation creates contingent exposure
- ReadyComm filed patent litigation on March 5, 2026 alleging infringement of U.S. Patent No. 9,179,011 and seeking damages and fees. The company has recorded no reserve because it does not believe loss is probable, but states the outcome cannot presently be predicted.
- No formal risk-factor update in this 10-Q
- Item 1A did not add or revise enumerated risk factors; it incorporates the 2025 Form 10-K risk factors by reference. The filing nevertheless identifies the new March 5, 2026 ReadyComm case as a currently disclosed legal uncertainty.
What they reported.
What the company itself reported, taken out of the document.
- Earnings per share
- $0.03
- Gross margin
- 65.7%
- Operating margin
- 4.3%
- Segment
- Cloud Telecommunications Services revenue: $17.319 million, up $7.742 million (81%) year over year.
- Segment
- Software Solutions revenue: $7.327 million, up $0.352 million (5%) year over year.
What they said about what is next.
The 10-Q provides no quantitative revenue or EPS outlook. Management states it believes existing liquidity and operations will meet cash requirements for at least the next 12 months.
The filing reads about the same as the one before it.
What came before.
- 10-Q · May 5, 2026
- Crexendo's Q1 2026 results show strong revenue growth of 29% year-over-year, reaching $20.7 million, and an EPS of $0.10, exceeding expectations and indicating positive momentum. However, the increase in operating…
- 10-K · March 3, 2026
- Crexendo reported full-year 2025 revenue of $68,167,000, up from $60,838,000 in 2024 (an increase of $7,329,000), with adjusted EBITDA rising to $11,205,000 from $8,157,000 and income (loss) before income tax improving…
- 10-Q · August 5, 2025
- Crexendo reported Q2 2025 revenue of $16,552,000, up from $14,685,000 in Q2 2024 and up modestly versus Q1 2025 (Q1 implied $16,057,000). Gross margin held near 63.4% while operating margin expanded year‑over‑year to…
- 10-Q · May 6, 2025
- Crexendo reported Q1 revenue of $16.06M (up $1.77M or 12.4% vs. Q1 2024) driven primarily by Software Solutions. Gross margin expanded to 65.3% and operating income rose to $1.15M (7.2% op margin) while net income was…
This is our reading of a public filing, not the filing. Read the original on SEC.gov · Educational only. Nothing here is investment advice.
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