Sangoma Technologies NASDAQ: SANG lowered its full-year fiscal 2026 revenue outlook and said its board has launched a structured strategic review, as management described a business increasingly split between growing communications infrastructure assets and more pressured software and UCaaS offerings.
On the company’s third-quarter investor call, Chief Executive Officer Charles Salameh said Sangoma now expects full-year revenue of CAD 204 million to CAD 205 million. Chief Financial Officer Larry Stock said the company expects adjusted EBITDA margin of 15% to 16% for the year.
Management attributed the revised outlook to several factors, including timing of revenue recognition on larger integrated deployments, geopolitical and trade-related disruptions in certain international markets, and ongoing pricing and monetization pressure in parts of Sangoma’s software and UCaaS portfolio.
Salameh said the company is “a business in transition,” with different parts of the portfolio moving in different directions. He said data networking and voice networking are growing ahead of the rest of the business, while applications remain under pressure in more commoditized segments.
Strategic Review Launched After Inbound Interest
Salameh said Sangoma’s board has initiated a structured strategic process, supported by a financial advisor, to evaluate alternatives aimed at ensuring the business’s full value is realized. He said the process follows increasing inbound interest and is “an active board-led process.”
During the Q&A session, Salameh said the company has received interest over the past year involving “all kinds of scenarios,” including mergers, partnerships and potential combinations of portfolios. He said the review is broader than a divestiture effort and that Sangoma continues to evaluate acquisitions as well.
Asked whether Sangoma would consider selling parts of the business, Salameh said that does not appear to be the most logical path because the company’s value is tied to its broader essential communications bundle. However, he said the board would entertain options that create shareholder value.
Infrastructure Businesses Outpace Applications
Management provided a more detailed breakdown of Sangoma’s portfolio, separating hardware, applications, data networking and voice networking to show where growth is occurring.
Stock said approximately 60% of revenue comes from applications, including UCaaS, CX and CPaaS technologies. He said that portfolio has declined at a low single-digit rate year to date, although trends are improving as the mix shifts toward larger, higher-quality deals.
About 30% of revenue comes from data networking and voice networking, including MSP access and carrier voice. Stock said those infrastructure businesses are growing in the mid-teens and are becoming more strategically important as usage scales.
Chief Operating Officer Jeremy Wubs said the MSP business is growing approximately 9% year over year, while voice infrastructure and advanced SIP trunking are growing approximately 19% year over year. Salameh said Sangoma’s data networking and voice networking segments were growing approximately 9% and 17%, respectively, year over year.
Management said AI is increasing the strategic importance of the infrastructure layer. Wubs said AI agents are already answering calls, booking appointments and following up with customers, creating demand for secure and trusted communications infrastructure that supports compliance and regulatory requirements such as PCI, HIPAA and STIR/SHAKEN.
Wubs said Sangoma has AI IVR and conversational receptionist agents in beta and is adding capabilities through select third-party integrations. He also said the company continues to evaluate targeted acquisitions in AI and security where they would strengthen its communications infrastructure.
Larger Deals Create Timing Challenges
Sangoma said its go-to-market model is shifting toward larger integrated deployments across distributed enterprises. Salameh said these contracts typically combine network, voice, security and applications into a managed framework and are often three to five years in duration.
Wubs said pipeline and backlog were relatively flat quarter over quarter, while bookings were lower after a strong second quarter. He said larger deal sizes can make booking patterns more variable.
Wubs cited several expansion examples, including a full-stack retail solution covering more than 350 locations. He said the contract started at CAD 150,000 in monthly recurring revenue, is about 15% implemented, and has already added CAD 50,000 in additional MRR, bringing the total to CAD 200,000. He also cited a national group of clinics that has expanded to 675 locations and CAD 144,000 of total MRR, with an additional 112 locations expected in the back half of the calendar year.
Wubs said larger deployments generally take six to eight months, and some can take eight to 12 months depending on customer readiness and site-level coordination. He said the pace of implementation affected third-quarter services revenue because some larger deals were less deployed than management had expected.
Churn improved to approximately 0.79%, better than Sangoma’s historical level of around 1%, which Wubs attributed to improvements in customer satisfaction and net promoter scores.
Third-Quarter Financial Results
- Revenue: CAD 51 million for the third quarter.
- Gross margin: 71%, compared with 74% in the second quarter.
- Adjusted EBITDA: CAD 7.5 million, or 15% of revenue.
- Net cash from operating activities: CAD 6 million, representing an 80% conversion rate from adjusted EBITDA.
- Free cash flow: CAD 3.6 million, or CAD 0.11 per diluted share.
- Debt: CAD 32.5 million outstanding at March 31, after approximately CAD 15.5 million of term debt repayment during the first three quarters of fiscal 2026.
- Cash: CAD 15.2 million at quarter end.
Stock said year-to-date conversion of adjusted EBITDA to net cash from operations was 87%, in line with expectations. He also said Sangoma repurchased about 196,000 shares during the quarter under its normal course issuer bid, bringing year-to-date repurchases to approximately 271,000 shares. The Toronto Stock Exchange approved renewal of the NCIB for an additional 12-month period after quarter end.
The gross margin decline reflected product mix, including a higher contribution from infrastructure services, and higher fulfillment costs in certain international regions, Stock said. He added that Sangoma is reallocating R&D and SG&A investments toward faster-growing areas, particularly infrastructure and AI-enabled capabilities.
International Markets Weigh on Outlook
Management said international revenue was pressured by macroeconomic and global trade-related issues. Stock said revenue from outside the U.S. declined by approximately CAD 300,000 quarter over quarter and CAD 660,000 year over year.
In response to analyst questions, Salameh said international headwinds were tied largely to disruptions affecting supply chains, shipping costs and customer order timing in markets including Asia, the Middle East, India and Italy. He said some customers have delayed orders because transportation and fulfillment costs have become prohibitive.
Salameh said the U.S. market, which accounts for about 90% of Sangoma’s revenue, is not showing the same pullback. Instead, he said the company’s main challenge in North America is forecasting the pace at which larger bundled contracts convert into revenue.
Management said the company will continue to focus investment on infrastructure-led growth while sustaining the application business. Salameh said the company is moving away from relying primarily on seat-based growth and toward infrastructure-led usage and consumption as voice, data and AI-agent traffic increase over time.
About Sangoma Technologies NASDAQ: SANG
Sangoma Technologies Corporation NASDAQ: SANG is a global provider of enterprise communications solutions that enable organizations to deploy voice, video, and data services across on-premises and cloud environments. The company's offerings include unified communications platforms, SIP-based telephony hardware, VoIP gateways, session border controllers, and related endpoints. Sangoma serves small and medium-sized businesses as well as larger enterprises, delivering solutions for IP telephony, collaboration, contact centers, and SIP trunking.
The company's product portfolio comprises software-based PBX systems such as PBXact and FreePBX, along with hardware appliances for secure and scalable connectivity.
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