Sangoma's Q3 2025 Earnings Call: Churn Rate Improvements and Acquisition Strategies Under Scrutiny

Earnings DecryptMonday, May 19, 2025 6:31 am ET
2min read
Churn rate and customer retention, investment in acquisitions are the key contradictions discussed in Sangoma Technologies' latest 2025Q3 earnings call.



Strong Financial Performance:
- Sangoma delivered $58.1 million in revenue for Q3, with an adjusted EBITDA margin of 17% and operating cash flow conversion from adjusted EBITDA exceeding 100%.
- The strong financial performance was driven by consistent improvements in cash generation and disciplined operational execution, supported by the company's transformation strategy.

Transformation and Growth Strategy:
- Sangoma completed its major transformation project, ”Project Diamond,” which involved operational improvements and system modernizations, resulting in a streamlined organizational structure and enhanced efficiency.
- The transformation is expected to support a multipronged growth strategy focused on organic expansion, strategic acquisitions, and geographic growth.

Focus on Core Platforms and Margin Improvement:
- The company shifted away from lower-margin hardware reselling, leading to a sequential improvement in gross margins despite a slight revenue dip.
- This strategic move aimed to reduce reliance on lower-margin offerings and enhance profitability by focusing on high-margin core communication software and services.

Acquisition and Integration Strategy:
- Sangoma launched a normal course issuer bid (NCIB), reflecting its confidence in its intrinsic value and long-term growth potential.
- The company plans to pursue strategic acquisitions to expand its footprint and identifies opportunities for inorganic growth, supported by its strong financial position and cost of capital reduction.