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

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.