Sangoma Technologies (STC) Q2 2026 earnings summary

Executive summary

• Fiscal Q2 2026 delivered strong sequential revenue growth of 1% to $51.5 million, with one of the highest booking quarters in recent history, reflecting traction in the go-to-market strategy and investments in growth initiatives.

• Service revenue grew 1% sequentially, with recurring revenue momentum and improved churn rates, indicating a stable and expanding customer base.

• The company is seeing larger, more strategic mid-market deals, with bookings and pipeline quality improving and a focus on verticals and wholesale channels.

• Strategic exit from low-margin, non-recurring resale activity via sale of VoIP Supply, LLC, impacting year-over-year revenue comparison.

• Focus on profitability, capital discipline, and strengthening software and services mix.

Financial highlights

• Q2 revenue was $51.5 million, up 1.2% sequentially; service revenue comprised 92% of total revenue and grew 1% sequentially.

• Gross profit reached $38.2 million, with gross margin improving to 74% from 72% in Q1 and 68% in the prior year period.

• Adjusted EBITDA was $8.3 million (16% margin), with over 120% conversion to operating cash flow; free cash flow was $8 million, or $0.24 per diluted share.

• Net cash from operating activities was $10.1 million (122% conversion from adjusted EBITDA); year-to-date conversion was 91%.

• Total debt reduced to $37.6 million from $60.4 million a year ago; quarter-end cash was $17.1 million, up 27% from June 30.

Outlook and guidance

• Fiscal 2026 revenue guidance tightened to $205–$208 million, with adjusted EBITDA margin expected at 17–18%.

• Sequential revenue growth expected in Q3, with a return to year-over-year organic growth after adjusting for the VoIP Supply divestiture.

• Margins are expected to remain stable despite a higher product mix in Q3.

• Guidance assumes continued sequential growth, stable macroeconomic conditions, and successful execution of go-to-market initiatives.

• Assumptions include stable supply chain, customer demand, and access to capital.