Sangoma Technologies (STC) Q2 2025 earnings summary

Executive summary

• Focused on sustainable, profitable growth and long-term value creation, with a strategic shift toward high-margin, recurring revenue streams and away from low-margin, transactional hardware resale.

• Net cash from operating activities rose 29.7% year-over-year, exceeding 100% of Adjusted EBITDA for the fourth consecutive quarter.

• Adjusted EBITDA margin improved to 17.1% of revenue, up from 16.3% in the previous quarter.

• Debt reduction target of $55–60 million achieved two quarters ahead of schedule, with total debt at $60 million.

• Strategic priorities include portfolio expansion, organic growth, recurring revenue solutions, operational efficiency, and disciplined financial management.

Financial highlights

• Q2 FY25 revenue was $59.1 million, down $1 million sequentially due to a $1.2 million decline in third-party product resales; other business areas grew quarter-over-quarter.

• Gross profit was $40.5 million, with gross margin steady at 68–68.5%.

• Adjusted EBITDA improved 3% sequentially to $10.1 million (17.1% of revenue), with margin rising to 17%.

• Net cash from operating activities was $11.9 million in Q2, up 30% year-over-year; YTD net cash from operations reached $24 million, up 41%.

• Net loss narrowed to $1.9 million from $3.2 million year-over-year.

Outlook and guidance

• FY25 revenue guidance lowered to $235–$240 million (from $250–$260 million) due to strategic exit from low-margin hardware resale.

• Adjusted EBITDA guidance revised to $40–$42 million (from $42–$46 million), with margin expected to improve to 17% and a long-term target of 20%.

• Strategic focus on core platform and recurring revenue, with anticipated improvements in gross profit and Adjusted EBITDA margins.