Sangoma Technologies: Earnings Momentum and Operational Outperformance in a Competitive UCaaS Landscape
Sangoma Technologies' Full Year 2025 earnings report underscores a compelling narrative of operational resilience and strategic clarity in a maturing UCaaS market. Despite a 4.3% year-over-year revenue decline to $236.7 million, the company delivered a net loss of $5.0 million ($0.15 per share), a marked improvement from the $8.7 million ($0.26 per share) loss in FY 2024 [1]. This progress was driven by disciplined cost management, with operating expenses falling 6% to $163.0 million and adjusted EBITDA hitting $41.0 million—a 17% margin on revenue [1]. Sangoma's ability to maintain profitability amid a challenging macroeconomic environment positions it as a standout performer relative to peers.
Operational Outperformance: Churn and Recurring Revenue
Sangoma's operational metrics reveal a business model optimized for long-term sustainability. The company reported a churn rate of less than 1% for FY 2025, a figure that dwarfs industry benchmarks. For context, Zoom's Q4 2025 churn rate stood at 2.8% [2], while broader SaaS industry averages hover around 13.2% [3]. Sangoma's low churn is a testament to its high customer satisfaction and sticky product offerings, particularly in its core on-premises solutions and phone product lines, which saw sequential growth in Q3 and Q4 2025 [1].
Moreover, Sangoma's revenue composition is increasingly software and services-led, with over 90% of its business now recurring [1]. This aligns with the UCaaS sector's shift toward predictable revenue streams, a trend that enhances financial stability. By contrast, peers like 8x8EGHT-- Inc. face headwinds from legacy product transitions, as evidenced by its Fuze migration-related churn risks [4].
Peer Comparison: EBITDA Margins and Strategic Focus
While Sangoma's 17% adjusted EBITDA margin lags behind RingCentral's 22.6% non-GAAP operating margin in Q2 2025 [5], it outperforms 8x8's 11.3% non-GAAP margin for FY 2025 [6]. The disparity reflects differing strategic priorities: RingCentral's scale and AI-driven innovation drive higher margins, while Sangoma's focus on debt reduction and core product optimization prioritizes long-term flexibility.
Zoom's GAAP operating margin of 17.4% for FY 2025 [2] appears comparable to Sangoma's EBITDA margin, but Zoom's 2.8% churn rate highlights Sangoma's superior customer retention. Additionally, Sangoma's free cash flow of $32.9 million in FY 2025 [1]—despite a $29.9 million debt reduction—demonstrates robust liquidity, a critical advantage in a sector where capital allocation often determines long-term success.
Market Context and Strategic Positioning
The UCaaS market is projected to grow at a 15.18% CAGR through 2030, driven by remote work adoption and AI integration [7]. Sangoma's strategic divestiture of non-core assets, including the $4.5 million sale of its VoIP Supply business [1], has sharpened its focus on high-margin SaaS offerings. This contrasts with peers like RingCentralRNG--, which faces margin pressures from aggressive AI investments, and ZoomZM--, which balances growth with a higher churn burden.
Sangoma's FY 2026 guidance of $200–$210 million in revenue, with adjusted EBITDA margins targeting 17%–19% [1], signals confidence in its ability to scale efficiently. While the revenue decline in FY 2025 reflects a deliberate shift away from low-margin products, the company's operational discipline—evidenced by a 34% reduction in total debt to $47.9 million [1]—positions it to capitalize on market tailwinds.
Conclusion
Sangoma Technologies' FY 2025 results highlight a company that has successfully navigated a transitional phase by prioritizing profitability, customer retention, and debt reduction. While peers like RingCentral and Zoom leverage scale and innovation to drive growth, Sangoma's low-churn, high-recurring-revenue model offers a compelling alternative. As the UCaaS sector matures, Sangoma's operational rigor and strategic clarity could position it as a consolidator in a fragmented market.
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