Crexendo revenue jumps 44% to $25.2 million in third quarter
Key Facts
Crexendo said on November 3 that total revenue rose 44% year over year to $25.2 million in the third quarter of 2026, while GAAP net income fell to $1.1 million, or $0.03 per share, from $1.5 million and $0.05 per share a year earlier. By contrast, non-GAAP net income was $4 million, or $0.12 per share, compared with $3.034 million and $0.10 per share in the year-earlier period. Adjusted EPS topped the consensus estimate of $0.11, while actual revenue was close to the $25.18 million estimate. The results show a divergence between revenue growth and lower accounting net income, alongside an increase in adjusted earnings. The company said adjusted earnings before interest, taxes, depreciation and amortization were $4 million, versus $2.9 million in the third quarter of 2025.
Services led revenue growth, with revenue rising 75% to $15.1 million from $8.6 million a year earlier. Software solutions revenue rose 2% to $7.7 million from $7.5 million. Product revenue was $2.4 million, up 78% year over year. The differing growth rates across these categories indicate that quarterly expansion was concentrated more heavily in services and products, while software solutions growth remained limited. For the nine months ended September 30, revenue rose 41% to $70.5 million from $50.1 million in the same period of 2025.
On its customer base, the company added five new licensees in the third quarter, bringing additions since the start of the year to 16, compared with 14 licensees for all of 2025. Crexendo said in an August announcement that it had added 11 licensees in the first half of 2026, making the total number of additions reported since the start of the year five higher at the end of the third quarter. Remaining performance obligations were $139.6 million, up 59% from a year earlier. Chief Executive Jeff Korn said the annualized revenue run rate reached $100 million in the third quarter, a target the published article said had been set for the end of 2026 three years ago. The company also said its cloud communications solutions support more than 8 million end users globally through a network of more than 250 cloud communications platform subscribers, in addition to its direct retail offering.
The stock's move did not match the strength of adjusted revenue in trading after the announcement. Shares rose 1.59% during the regular session on November 3 to $5.76, then fell 2.75% after the close to $5.602, according to coverage attributed to Reuters. The stock had closed at $5.67 in the November 2 session, before the results were announced. These prices distinguish the regular-session performance from after-hours trading, where the decline followed the stock's advance during the session. Against market expectations, adjusted EPS beat the estimate, while revenue came in at $25.2 million versus a forecast of $25.18 million.
Looking ahead, management is targeting annual organic growth in the double digits, after organic growth reached 9.1% year to date through the third quarter, according to the article published after the results announcement. The company also included the release of NetSapiens Flow in its plans for the first half of 2027, with management saying the product could support upselling, capacity upgrades and adoption of third-party applications across the ecosystem. In its annual statement, Crexendo said it expects to complete the largest platform upgrade in its history during the first or second quarter of 2027, and believes the update could support new licensee acquisition, customer upgrades and expansion within its existing customer base. The company said in its second-quarter report that its acquisition of ESI contributed $6.963 million to the year-over-year increase in quarterly revenue, compared with $1.131 million from organic growth; in its third-quarter results statement, it reported that ESI integration was proceeding smoothly and that the NetSapiens Flow preview had received an exceptional response. The company scheduled its annual shareholders meeting for December 2, 2026.