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Crexendo Reports Second Quarter 2016 Financial Results




PHOENIX, AZ — (Marketwired) — 08/02/16 — Crexendo, Inc. (OTCQX: CXDO), a hosted services company that provides hosted telecommunications services, broadband internet services and website hosting services for businesses, today reported financial results for its second quarter ended June 30, 2016.

Consolidated revenue for the second quarter of 2016 increased 20% to $2.3 million compared to $1.9 million for the second quarter of 2015.

Hosted Telecommunications Services Segment revenue for the second quarter of 2016 increased 35% to $1.9 million compared to $1.4 million for the second quarter of 2015.

Web Services Segment revenue for the second quarter of 2016 decreased 26% to $347,000, compared to $469,000 for the second quarter of 2015.

Consolidated operating expenses for the second quarter of 2016 increased 2% to $3.0 million compared to $3.0 million for the second quarter of 2015.

On a GAAP basis, the Company reported a $(778,000) net loss for the second quarter of 2016, or $(0.06) loss per diluted common share, compared to net loss of $(1.1) million or $(0.08) loss per diluted common share for the second quarter of 2015.

Non-GAAP net loss was $(507,000) for the second quarter of 2016, or $(0.04) loss per diluted common share, compared to a non-GAAP net loss of $(734,000) or $(0.06) loss per diluted common share for the second quarter of 2015.

EBITDA for the second quarter of 2016 was $(740,000) compared to $(1.0) million for the second quarter of 2015. Adjusted EBITDA for the second quarter of 2016 was $(525,000) compared to $(744,000) for the second quarter of 2015.

Consolidated revenue for the six months ended June 30, 2016 increased 19% to $4.4 million compared to $3.7 million for the six months ended June 30, 2015.

Hosted Telecommunications Services Segment revenue for the six months ended June 30, 2016 increased 35% to $3.7 million compared to $2.7 million for the six months ended June 30, 2015.

Web Services Segment revenue for the six months ended June 30, 2016 decreased 25% to $743,000, compared to $997,000 for the six months ended June 30, 2015.

Consolidated operating expenses for the six months ended June 30, 2016 decreased 2% to $6.1 million compared to $6.2 million for the six months ended June 30, 2015.

On a GAAP basis, the Company reported a $(1.6) million net loss for the six months ended June 30, 2016, or $(0.12) loss per diluted common share, compared to net loss of $(2.2) million or $(0.18) loss per diluted common share for the six months ended June 30, 2015.

Non-GAAP net loss was $(1.1) million for the six months ended June 30, 2016, or $(0.08) loss per diluted common share, compared to a non-GAAP net loss of $(1.4) million or $(0.11) loss per diluted common share for the six months ended June 30, 2015.

EBITDA for the six months ended June 30, 2016 was $(1.6) million compared to $(2.3) million for the six months ended June 30, 2015. Adjusted EBITDA for the six months ended June 30, 2016 was $(1.1) million compared to $(1.6) million for the six months ended June 30, 2015.

Total cash and cash equivalents, excluding restricted cash, at June 30, 2016 was $923,000 compared to $1.9 million at June 30, 2015.

Cash used for operating activities for the six months ended June 30, 2016 was $(710,000) compared to $(1.7) million for the six months ended June 30, 2015. Cash provided by investing activities for the six months ended June 30, 2016 was $11,000 compared to cash used for investing activities of $(20,000) for the six months ended June 30, 2015. Cash provided by financing activities for the six months ended June 30, 2016 was $125,000 compared to $629,000 for the six months ended June 30, 2015.

Steven G. Mihaylo, Chief Executive Officer commented, “I am pleased with our ongoing progress. We increased our revenue Q2 2016 over Q2 2015 and our backlog continues to grow. We have kept a lid on expenses, even with the substantial year over year increase in revenue, and we have not increased our costs year over year. Our ability to control our costs, while increasing our backlog is a strong indication of our ability to grow this business. We will continue to work to increase our Dealer Partner Channel and our Direct Sales Channel. We continue to provide service, technology and phones that provide exceptional value. We are the right solution to support customers who are moving their expensive legacy phone services to the cloud.”

Mihaylo added, “We continue to excel at providing solutions for enterprise customers. As I have discussed before our integrated sales process with engineering is particularly suited to providing enterprise solutions. Enterprise customers with multi-location instillations however do have a longer lag time from sale to recognizing revenue. We continue to work on improving and growing the business.”

The Company is hosting a conference call today, August 2, 2016 at 5:30 PM EST. The telephone dial-in number is 888-430-8709 for domestic participants and 719-325-2393 for international participants. The conference ID to join the call is 2637145. Please dial in five to ten minutes prior to the beginning of the call at 5:30 PM EST.

Crexendo, Inc. (OTCQX: CXDO) is a hosted services company that provides hosted telecommunications services, broadband internet services and website hosting services for businesses. Our services are designed to make enterprise-class hosting services available to any size businesses at affordable monthly rates.

This press release contains forward-looking statements. The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for such forward-looking statements. The words “believe,” “expect,” “anticipate,” “estimate,” “will” and other similar statements of expectation identify forward-looking statements. Specific forward-looking statements in this press release include information about Crexendo (i) being pleased with ongoing progress; (ii) keeping a lid on expenses even with the substantial year over year increase in revenue; (iii) ability to control costs and increasing backlog is a strong indication of the ability to grow business; (iv) continue working to increase Dealer Partner Channel and Direct Sales Channel; (v) providing service, technology and phones that provide exceptional value; (vi) being the right solution to support customers who are moving their expensive legacy phone services to the cloud; (vii) excelling at providing solutions for enterprise customers; (viii) integrated sales process with engineering being particularly suited to providing enterprise solutions; (ix) enterprise customers with multi-location instillations having a longer lag time from sale to recognizing revenue and (x) continuing to work on improving and growing the business.

For a more detailed discussion of risk factors that may affect Crexendo–s operations and results, please refer to the company–s Form 10-K for the year ended December 31, 2015 as well as Forms 10Q for 2016. These forward-looking statements speak only as of the date on which such statements are made and the company undertakes no obligation to update such forward-looking statements, except as required by law.

To evaluate our business, we consider and use non-generally accepted accounting principles (Non-GAAP) net income (loss) and Adjusted EBITDA as a supplemental measure of operating performance. These measures include the same adjustments that management takes into account when it reviews and assesses operating performance on a period-to-period basis. We consider Non-GAAP net income (loss) to be an important indicator of overall business performance because it allows us to evaluate results without the effects of share-based compensation, rent expense paid with common stock, interest expense paid with common stock, and amortization of intangibles. We define EBITDA as U.S. GAAP net income (loss) before interest income, interest expense, other income and expense, provision for income taxes, and depreciation and amortization. We believe EBITDA provides a useful metric to investors to compare us with other companies within our industry and across industries. We define Adjusted EBITDA as EBITDA adjusted for share-based compensation, and rent expense paid with stock. We use Adjusted EBITDA as a supplemental measure to review and assess operating performance. We also believe use of Adjusted EBITDA facilitates investors– use of operating performance comparisons from period to period, as well as across companies.

In our August 2, 2016 earnings press release, as furnished on Form 8-K, we included Non-GAAP net loss, EBITDA and Adjusted EBITDA. The terms Non-GAAP net loss, EBITDA, and Adjusted EBITDA are not defined under U.S. GAAP, and are not measures of operating income, operating performance or liquidity presented in analytical tools, and when assessing our operating performance, Non-GAAP net loss, EBITDA, and Adjusted EBITDA should not be considered in isolation, or as a substitute for net loss or other consolidated income statement data prepared in accordance with U.S. GAAP. Some of these limitations include, but are not limited to:

EBITDA and Adjusted EBITDA do not reflect our cash expenditures or future requirements for capital expenditures or contractual commitments;

they do not reflect changes in, or cash requirements for, our working capital needs;

they do not reflect the interest expense, or the cash requirements necessary to service interest or principal payments, on our debt that we may incur;

they do not reflect income taxes or the cash requirements for any tax payments;

although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will be replaced sometime in the future, and EBITDA and Adjusted EBITDA do not reflect any cash requirements for such replacements;

while share-based compensation is a component of operating expense, the impact on our financial statements compared to other companies can vary significantly due to such factors as the assumed life of the options and the assumed volatility of our common stock; and

other companies may calculate EBITDA and Adjusted EBITDA differently than we do, limiting their usefulness as comparative measures.

We compensate for these limitations by relying primarily on our U.S. GAAP results and using Non-GAAP net income (loss), EBITDA, and Adjusted EBITDA only as supplemental support for management–s analysis of business performance. Non-GAAP net income (loss), EBITDA and Adjusted EBITDA are calculated as follows for the periods presented.

In accordance with the requirements of Regulation G issued by the SEC, we are presenting the most directly comparable U.S. GAAP financial measures and reconciling the unaudited Non-GAAP financial metrics to the comparable U.S. GAAP measures.

Crexendo, Inc.
Steven G. Mihaylo
CEO
602-345-7777





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