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…
Earnings analysis · 10-Q
CXDO earnings analysis
Filed August 4, 2026 · Our reading of the company's report
The latest report
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…
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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.
Gross and operating margin
How much of each revenue dollar the business keeps.
One point per quarterly or annual filing. Both margins are shares of that report's revenue.
From revenue to operating profit
Where each $100 of revenue went in this report.
Cost of sales, operating expenses, and what remained. Figures are rounded to whole dollars.
Where revenue came from
The business segments reported by the company.
Shares of the segments disclosed in this filing, largest first.
How we read each report
Our analysis across the last few reports.
Our model's reading of each filing, not the share price or the market's reaction. Annual and quarterly reports each occupy one position.
Reported figures
- Earnings per share
- $0.03
What stood out
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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.
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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.
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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.
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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.
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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.
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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%.
What to watch
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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.
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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.
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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.
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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.
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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.
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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.
Management's outlook
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.
Earlier filings 4
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 itself. Analysis can contain errors; check the source document for full context.