Crexendo NASDAQ: CXDO President and Chief Operating Officer Doug Gaylor said the cloud communications provider is operating at an annualized revenue run rate of about $100 million after reporting quarterly revenue of $24.6 million.
Speaking in a fireside chat hosted by Lytham Partners Managing Partner Robert Blum, Gaylor described Crexendo as a Unified Communications as a Service provider operating through two businesses: a wholesale software platform for telecommunications companies and a retail cloud communications offering for small and midsize businesses.
About 70% of Crexendo’s revenue comes from its retail business and roughly 30% comes from wholesale, Gaylor said. The company’s NetSapiens platform is licensed to more than 250 telecom providers, while Crexendo’s VIP offering uses the same platform to serve direct customers. Gaylor said Crexendo recently surpassed 8 million users supported across its platform.
Gaylor said Crexendo is the third-largest platform provider in the U.S. market behind Cisco’s BroadSoft business and Metaswitch, now owned by Alianza. He said the company added 11 new wholesale customer logos during the first six months of the year, compared with two in the same period a year earlier.
Of those 11 additions, four came from Metaswitch and one from Cisco, according to Gaylor. He attributed the opportunity partly to uncertainty surrounding the product roadmaps for competing platforms, while highlighting NetSapiens’ feature set, open architecture and application ecosystem.
Crexendo has 57 vendors in its ecosystem vendor program, which enables third parties to develop applications that integrate with the platform through application programming interfaces, Gaylor said. Thirteen of those vendors are developing artificial intelligence-related applications.
The company’s primary wholesale pricing differentiator is its “sessions, not seats” model, Gaylor said. Rather than charging service providers for every endpoint or phone seat, Crexendo charges based on concurrent use. He said the approach can provide savings of 35% to 50% for providers migrating from seat-based platforms, depending on usage patterns.
While some new licensees have begun with smaller initial commitments, Gaylor said expansion orders have been larger. In the second quarter, Crexendo added six new logos with an average total contract value of about $250,000, while seven upgrade orders averaged approximately $350,000. The company reported remaining performance obligations of $139 million, representing contracted revenue yet to be recognized from wholesale licensees and direct customers.
ESI acquisition contributes to results
Gaylor also discussed Crexendo’s March acquisition of Dallas-based Estech Systems Inc., or ESI, a longtime NetSapiens licensee. ESI had been a Crexendo licensee for more than 14 years and generated about $26 million in revenue, he said.
Crexendo paid approximately $35 million for ESI, representing 1.35 times trailing revenue and about 1.25 times forward revenue, according to Gaylor. ESI contributed $2.1 million in revenue during March, then generated an average of $2.3 million per month, or $6.9 million for the second quarter.
Gaylor said the acquisition was accretive and profitable in its first full quarter even after accounting for intangible amortization and acquisition costs. He added that ESI grew organically by about 8% in 2025 before the transaction.
The company sees its existing licensee community as a potential source of future acquisitions. Gaylor said Crexendo could pursue one, or potentially two depending on their size, acquisitions annually, though he does not expect another deal before year-end. He said a potential next acquisition could occur after the start of the following year.
AI offering begins generating revenue
Crexendo recently introduced CAIRO, short for Crexendo AI Receptionist and Orchestrator. Gaylor said the product uses AI to handle inbound business calls, respond to frequently asked questions, schedule or modify appointments, access calendar information and transfer callers to live employees when needed.
He said the service is designed to help small and midsize businesses reduce reliance on live call handling or traditional automated phone menus. CAIRO began generating revenue in the second quarter, Gaylor said.
According to Gaylor, the application costs approximately $150 per month, compared with an average Crexendo customer monthly bill of about $340. He said management expects adoption of the AI offering to increase over the next year.
Outlook
Gaylor said Crexendo has recorded 12 consecutive quarters of GAAP profitability and continues to pursue a strategy combining double-digit organic growth with acquisitions. The company had $18.3 million in cash on its balance sheet following the ESI acquisition, he said, adding that Crexendo had replenished approximately $6 million in cash during the most recent quarter.
Looking ahead, Gaylor said Crexendo aims to reach a $150 million revenue run rate by the end of 2028, supported by organic expansion, acquisitions and improving gross margins.
About Crexendo (NASDAQ:CXDO)
Crexendo, Inc NASDAQ: CXDO is a provider of cloud-based communications and collaboration solutions tailored to businesses of varying sizes. The company's flagship offering, CXsuite, integrates enterprise-grade voice, video conferencing, instant messaging, presence, and contact center functionality into a single platform delivered over the internet. By leveraging hosted infrastructure and a subscription-based model, Crexendo aims to reduce on-premises hardware costs and simplify management for IT teams and resellers.
Crexendo's product portfolio includes a multi-tenant cloud PBX, SIP trunking, session border controllers and an application programming interface (API) suite that allows partners and customers to embed real-time communications into custom workflows.
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