How did SANG's Q3 2024 earnings surprise the market?

Sangoma Technologies' Q3 2024 earnings fell short of market expectations, as reflected in the company's reported financial results and market reactions. Here's a detailed analysis: 1. **Revenue and EPS Analysis**: - Sangoma Technologies estimated an EPS of -$0.04 and revenue of $61.16 million for Q3 2024. - The actual EPS was -$0.04, which matched the estimate, but the actual revenue was $61.05 million, slightly below the estimate. - The slight revenue shortfall, coupled with the negative EPS, contributed to the earnings miss. |code|Ticker|Name|Date|Total Revenue|Diluted EPS|market_code| |---|---|---|---|---|---|---| |SANG|SANG.O|Sangoma Technologies|2023 Q4|6.368E7||185| |SANG|SANG.O|Sangoma Technologies|2024 Q1|6.3028E7|-0.07|185| |SANG|SANG.O|Sangoma Technologies|2024 Q2|6.2276E7|-0.1|185| |SANG|SANG.O|Sangoma Technologies|2024 Q3|6.1046E7|-0.04|185| 2. **Market Reaction and Analysts' Perspective**: - Despite the revenue being slightly under expectations, the company's stock price fell by 6.6%. - Analysts were concerned about the decline in product revenue, which fell by 18% year-over-year in Q4, indicating challenges in this segment. - The net loss for Q4 was $1.7 million, or $0.05 per fully diluted share, which could have contributed to the negative sentiment. 3. **Full-Year Performance Context**: - Sangoma Technologies reported revenues of $247.3 million for FY 2024, which was within the guided range of $246.5 million to $248.5 million. - Adjusted EBITDA for FY 2024 was $42.6 million, exceeding the midpoint of the guided range. - The company's full-year performance was mixed, with strong revenue achievement but challenges in profitability and product revenue decline. 4. **Guidance and Future Prospects**: - For FY 2025, Sangoma Technologies guided revenue of $250 million to $260 million and adjusted EBITDA of $42 million to $46 million. - The company's robust pipeline and strong customer retention indicated a positive outlook, despite the current challenges. In conclusion, Sangoma Technologies' Q3 2024 earnings fell slightly short of market expectations due to a revenue shortfall and a negative EPS. However, the company's full-year performance showed resilience with revenue exceeding expectations and a strong adjusted EBITDA. The decline in product revenue and economic conditions posed challenges, but the company's guidance for FY 2025 suggests optimism.