Crexendo, Inc.
For the period ended Jun 30, 2026. Filed Aug 4, 2026.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2026 · Filed Aug 4, 2026
CXDO$5.07+2.2%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2026-03-31; filed 2026-05-05.
0001654954-26-004365
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-06-30; filed 2026-08-04.
0001654954-26-007265
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 123 previous paragraphs and 162 current paragraphs.
69 unchanged; 43 reworded; 34 added; 11 removed; 0 previous and 16 current paragraphs rearranged.
Tables are not compared: 32 previous and 51 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (34)
Current report
The decrease in income/(loss) before income tax is primarily related to an increase in operating expenses of $8,142 and a decrease in other income/(expense) of $156, offset by an increase in revenue of $8,094. The increase in revenue is related to additional revenue of $6,963 contributed by our March 1, 2026 acquisition of ESI and an increase of $1,131 from organic growth from new and existing customers. The increase in operating expenses is primarily related to additional expenses of $7,380 contributed by our March 1, 2026 acquisition of ESI, an increase in cost of product revenue of $224 related to an increase in product revenue, an increase in third-party hosting services of $293, an increase in commission expenses of $262, offset by a decrease in other operating expenses of $17. The decrease in other income is primarily related to a decrease in interest income of $57, an increase in interest expense of $56, and a decrease in other income of $43.
Current report
Six months ended June 30, 2026 compared to six months ended June 30, 2025
Current report
Total Revenue
Current report
The increase in total revenue is due to acquired revenue contributed by our acquisition of ESI on March 1, 2026 of $9,062, an increase in organic product revenue of $1,317, an increase in software solutions revenue of $1,207, and an increase in organic service revenue of $1,161.
Current report
Income/(Loss) Before Income Tax
Current report
The following table reflects our income/(loss) before income tax for the six months ended June 30, 2026, compared to the six months ended June 30, 2025:
Current report
Income Tax Benefit/(Provision)
Current report
The following table reflects our income tax benefit/(provision) for the six months ended June 30, 2026, compared to the six months ended June 30, 2025:
Current report
The decrease in income tax provision is due to a decrease in taxable income for the six months ended June 30, 2026.
Current report
The increase in selling and marketing expense is primarily related to additional selling and marketing expense of $3,395 contributed by our March 1, 2026 acquisition of ESI and an increase in commission expense of $221 directly related to the increase in revenue, offset by a decrease in the amortization of customer relationship intangible assets of $34, a decrease in bad debt expense of $21, and a decrease in other selling and marketing expenses of $4.
Current report
The increase in general and administrative expenses is primarily related to additional general and administrative expense of $1,316 contributed by our March 1, 2026 acquisition of ESI, an increase in executive and administrative salaries, benefits, bonuses, and share-based compensation, of $296, an increase in legal expenses of $44, offset by a decrease in the amortization of capitalized software development costs of $58 and a decrease in other general and administrative expenses of $12.
Current report
The change in other income/(expense) is primarily related to a decrease in interest income of $67 and an increase in interest expense of $56, offset by an increase in additional other income/(expense) of $20.
Current report
Six months ended****June 30, 2026 compared to six months ended June 30, 2025
Current report
Service Revenue
Current report
Product Revenue
Current report
Remaining Performance Obligations (RPOs) represents the total contract value of all contracts signed, less revenue recognized from those contracts as of June 30, 2026 and 2025. RPO’s increased 97%, or $54,588 to $110,980 as of June 30, 2026 as compared to $56,392 as of June 30, 2025. Our March 1, 2026 acquisition of ESI contributed $49,762 of the increase in RPO’s as of June 30, 2026. Below is a table which displays the Cloud Telecommunications segment revenue remaining performance obligations as of January 1, 2026 and 2025, and June 30, 2026 and 2025, which we expect to recognize as revenue within the next thirty-six to sixty months (in thousands):
Current report
Cost of Service Revenue
Current report
The increase in cost of service revenue was primarily related to additional cost of service revenue of $1,959 contributed by our March 1, 2026 acquisition of ESI, an increase in data center hosting of $41, an increase in third-party telecommunications charges of $30, offset by a decrease in salaries, benefits, bonuses, share-based compensation of $315 and a decrease in other costs of service revenue of $5.
Current report
Cost of Product Revenue
Current report
The increase in cost of product revenue was primarily related to additional cost of product revenue of $604 contributed by our March 1, 2026 acquisition of ESI, and an increase in product revenue for the six months ended June 30, 2026.
Current report
The increase in selling and marketing expense is primarily related to additional selling and marketing expense of $4,419 contributed by our March 1, 2026 acquisition of ESI, an increase in commission expense of $425 directly related to the increase in revenue, and an increase in bad debt of $152 as the prior period was impacted by an adjustment to the reserve which significantly reduced bad debt in the prior period, offset by a decrease in other selling and marketing of $7.
Current report
Other income/(expense) primarily relates to interest expense and net foreign exchange gains or losses, offset by credit card cash back rewards. The following table reflects our other income/(expense) for the six months ended June 30, 2026, compared to the six months ended June 30, 2025:
Current report
The increase in cost of software solutions revenue is primarily related to an increase in third-party hosting service costs of $272 and an increase in salaries, benefits, bonuses, and share-based compensation of $213, offset by a decrease in other costs of software solutions revenue of $45 and a decrease in outsourced services of $26.
Current report
The change in other income/(expense) is primarily related a decrease in foreign exchange gains/(losses) of $36 and a decrease in other income of $28, offset by an increase in interest income of $11.
Current report
Six months ended****June 30, 2026 compared to six months ended June 30, 2025
Current report
Software Solutions Revenue
Current report
Remaining Performance Obligations (RPOs) represents the total contract value of all contracts signed, less revenue recognized from those contracts as of June 30, 2026 and 2025. RPO’s increased 3%, or $914 to $27,991 as of June 30, 2026 as compared to $27,077 as of June 30, 2025. Below is a table which displays the software solutions segment revenue remaining performance obligations as of January 1, 2026 and 2025, and June 30, 2026 and 2025, which we expect to recognize as revenue within the next thirty-six to sixty months (in thousands):
Current report
Cost of Software Solutions Revenue
Current report
The decrease in selling and marketing expense is primarily related to a decrease in marketing materials of $58 and a decrease in bad debt expenses of $54, offset by an increase in commission expense of $41 directly related to the increase in revenue, an increase in salaries, benefits, bonuses, and share-based compensation of $35, and an increase in other selling and marketing expenses of $9.
Current report
General and administrative expenses consist of salaries and benefits for executives, administrative personnel, amortization of trademark and trade name intangible asset, legal, rent, equipment, accounting and other professional services, and other administrative corporate expenses. The following table reflects our general and administrative expenses for the six months ended June 30, 2026, compared to the six months ended June 30, 2025:
Current report
The increase in general and administrative expenses is primarily related to an increase in salaries, benefits, bonuses, and share-based compensation of $278, an increase in bank and merchant fees of $107, and an increase in other general and administrative costs of $10.
Current report
Research and development expenses primarily consists of salaries, benefits, bonuses, share-based compensation, and outsourcing engineering services related to the development of our software solutions. The following table reflects our research and development expenses for the six months ended June 30, 2026, compared to the six months ended June 30, 2025:
Current report
The increase in research and development expenses is primarily related an increase in salaries, benefits, bonuses, and share-based compensation of $72 and an increase in other research and development expenses of $3.
Current report
Other income/(expense) primarily relates to interest expense, net foreign exchange gains or losses, and other income and expenses. The following table reflects our other expense for the six months ended June 30, 2026, compared to the six months ended June 30, 2025:
Removed paragraphs (11)
Previous report
Remaining Performance Obligations
Previous report
Selling and Marketing
Previous report
General and Administrative
Previous report
Research and Development
Previous report
Other Income/(Expense)
Previous report
Remaining Performance Obligations
Previous report
Selling and Marketing
Previous report
The decrease in selling and marketing expense is primarily related to a decrease in marketing materials and trade shows of $45 and a decrease in other selling and marketing expenses of $22.
Previous report
General and Administrative
Previous report
Research and Development
Previous report
Other Income/(Expense)
Reworded paragraphs (43)
Previous wording
Crexendo, Inc. is an award-winning software technology company that is a premier provider of cloud communication platform software and unified communications as a service (UCaaS) offering, including voice, video, contact center, premise systems, and managed IT services tailored to businesses of all sizes. Our cloud communications software solutions currently support over seven million end users globally, through an extensive network of over 240 cloud communication platform software subscribers and our direct retail offering. Our products and services can be categorized in the following offerings:
Current wording
Crexendo, Inc. is an award-winning software technology company that is a premier provider of cloud communication platform software and unified communications as a service (UCaaS) offering, including voice, video, contact center, and managed IT services tailored to businesses of all sizes. Our cloud communications software solutions currently support over six million end users globally, through an extensive network of over 245 cloud communication platform software subscribers and our direct retail offering. Our products and services can be categorized in the following offerings:
Previous wording
We believe that our Annualized Exit Monthly Recurring Subscriptions (“AERR”) is a leading indicator of our anticipated subscriptions revenues. We believe that trends in revenue are important to understanding the overall health of our business, and we use these trends to formulate financial projections and make strategic business decisions. Our AERR equals our Monthly Recurring Subscriptions multiplied by 12. Our Monthly Recurring Subscriptions equals the monthly value of all customer recurring charges at the end of a given month. For example, our Monthly Recurring Subscriptions at March 31, 2026 were $4,854. As such, our AERR at March 31, 2026 was $58,249 compared to $57,529 at December 31, 2025.
Current wording
We believe that our Annualized Exit Monthly Recurring Subscriptions (“AERR”) is a leading indicator of our anticipated subscriptions revenues. We believe that trends in revenue are important to understanding the overall health of our business, and we use these trends to formulate financial projections and make strategic business decisions. Our AERR equals our Monthly Recurring Subscriptions multiplied by 12. Our Monthly Recurring Subscriptions equals the monthly value of all customer recurring charges at the end of a given month. For example, our Monthly Recurring Subscriptions at June 30, 2026 were $6,763. As such, our AERR at June 30, 2026 was $81,153 compared to $53,874 at June 30, 2025.
Previous wording
Our key business metrics for the three months ended March 31, 2026 and March 31, 2025, were as follows (in thousands, except for percentages):
Current wording
Our key business metrics for the periods ended June 30, 2026 and June 30, 2025, were as follows (in thousands, except for percentages):
Previous wording
The increase in total revenue is due to acquired revenue contributed by our acquisition of ESI on March 1, 2026 of $2,099, an increase in product revenue of $1,117, an increase in software solutions revenue of $855, and increase in service revenue of $582.
Current wording
The increase in total revenue is due to acquired revenue contributed by our acquisition of ESI on March 1, 2026 of $6,963, an increase in organic service revenue of $579, an increase in software solutions revenue of $352, and an increase in organic product revenue of $200.
Previous wording
The increase in income tax provision is due to minimum state tax increases as a result of increased revenue.
Current wording
The decrease in income tax provision is due to a decrease in taxable for the three months ended June 30, 2026.
Previous wording
The decrease in income before income taxes is primarily related to an increase in operating expense of $5,363 offset by an increase in revenue of $4,653 and an increase in other income of $102. The increase in revenue is related to organic growth from existing customers and new customers, and acquired revenue contributed by our acquisition of ESI on March 1, 2026. The increase in operating expenses is primarily related to additional expenses of $2,130 contributed by our March 1, 2026 acquisition of ESI, an increase in cost of product revenue of $1,074, an increase in acquisition related expenses of $839, an increase in third-party hosting services of $601, an increase in commission expenses of $204, an increase in salaries, benefits, bonuses, and share-based compensation of $150, and an increase in other operating expenses of $365. The increase in other income is primarily related to an increase in interest income of $75, an increase in other income of $23, and a decrease in interest expense of $9.
Current wording
The decrease in income/(loss) before income tax is primarily related to an increase in operating expenses of $13,505 and a decrease in other income/(expense) of $54, offset by an increase in revenue of $12,747. The increase in revenue is related to additional revenue of $9,062 contributed by our March 1, 2026 acquisition of ESI and an increase of $3,685 from organic growth from new and existing customers. The increase in operating expenses is primarily related to additional expenses of $9,064 contributed by our March 1, 2026 acquisition of ESI, an increase in salaries, benefits, bonuses, and share-based compensation of $1,330, an increase in cost of product revenue of $1,144 related to an increase in product revenue, an increase in third-party hosting services of $894, an increase in commission expenses of $466, and an increase in other operating expenses of $607. The decrease in other income is primarily related to an increase in interest expense of $47 and a decrease in other income of $25, offset by an increase in interest income of $18.
Previous wording
(1) For the three months ended March 31, 2026 and 2025, employer payroll tax expense related to share-based compensation was $6 and $72, respectively.
Current wording
(1) For the three months ended June 30, 2026 and 2025, employer payroll tax expense related to share-based compensation was $79 and $63, respectively. For the six months ended June 30, 2026 and 2025, employer payroll tax expense related to share-based compensation was $85 and $135, respectively.
Previous wording
The increase in service revenue is due to an increase in telecommunications services fees of $479, an increase in fees, commissions, and other, recognized over time of $188, an increase in sales-type lease interest of $32, offset by a decrease in one-time fees, commission and other of $117. Additional service revenue of $1,797 contributed by our acquisition of ESI on March 1, 2026. A substantial portion of cloud telecommunications service revenue is generated through thirty-six to sixty month service contracts.
Current wording
The increase in service revenue is primarily related to additional service revenue of $5,915 contributed by our March 1, 2026 acquisition of ESI, an increase in telecommunications services fees of $503, an increase in fees, commissions, and other, recognized over time of $156, and an increase in sales-type lease interest of $23, offset by a decrease in one-time fees, commissions and other of $103. A substantial portion of Cloud Telecommunications service revenue is generated through thirty-six to sixty month service contracts.
Previous wording
Product revenue fluctuates from one period to the next based on timing of installations. Our typical customer installation is complete within 30-60 days. However, larger enterprise customers can take multiple months, depending on size and the number of locations. Product revenue is recognized when products have been installed and services commence. Additionally, product revenue can fluctuate due to the allocation of discounts or sales promotions across the performance obligations. Our March 1, 2026 acquisition of ESI contributed $302 of additional product revenue.
Current wording
Product revenue fluctuates from one period to the next based on sales bookings, the allocation of discounts or sales promotions across the performance obligations, and the timing of installations. Our typical customer installation is complete within 30-60 days. However, larger enterprise customers can take multiple months, depending on size and the number of locations. The increase in product revenue is primarily related to additional product revenue of $1,048 contributed by our March 1, 2026 acquisition of ESI, an increase in managed IT services and infrastructure as a service product revenue of $234, offset by a decrease in product revenue related to our cloud telecommunications services of $34.
Previous wording
Remaining Performance Obligations (RPOs) represents the total contract value of all contracts signed, less revenue recognized from those contracts as of March 31, 2026 and 2025. RPO’s increased 98%, or $53,442 to $108,125 as of March 31, 2026 as compared to $54,683 as of March 31, 2025. Our March 1, 2026 acquisition of ESI contributed $49,598 of the increase in RPO’s as of March 31, 2026. Below is a table which displays the Cloud Telecommunications segment remaining performance obligations as of January 1, 2026 and 2025, and March 31, 2026 and 2025, which we expect to recognize as revenue within the next thirty-six to sixty months (in thousands):
Current wording
Remaining Performance Obligations (RPOs) represents the total contract value of all contracts signed, less revenue recognized from those contracts as of June 30, 2026 and 2025. RPO’s increased 97%, or $54,588 to $110,980 as of June 30, 2026 as compared to $56,392 as of June 30, 2025. Our March 1, 2026 acquisition of ESI contributed $49,762 of the increase in RPO’s as of March 31, 2026. Below is a table which displays the Cloud Telecommunications segment revenue remaining performance obligations as of April 1, 2026 and 2025, and June 30, 2026 and 2025, which we expect to recognize as revenue within the next thirty-six to sixty months (in thousands):
Previous wording
Cost of service revenue consists primarily of fees we pay to third-party telecommunications carriers, broadband Internet providers, software providers, costs related to installations, contract labor costs, credit card processing fees, customer support salaries, benefits, bonuses, and share-based compensation. The following table reflects our cost of service revenue for the three months ended March 31, 2026, compared to the three months ended March 31, 2025:
Current wording
Cost of service revenue consists primarily of fees we pay to third-party telecommunications carriers, broadband Internet providers, software providers, costs related to installations, contract labor costs, customer support salaries, benefits, bonuses, and share-based compensation. The following table reflects our cost of service revenue for the three months ended June 30, 2026, compared to the three months ended June 30, 2025:
Previous wording
The increase in cost of service revenue was primarily related to additional cost of service revenue of $492 contributed by our March 1, 2026 acquisition of ESI, an increase in third-party telecommunications charges of $58, an increase in data center hosting of $20, and an increase in other cost of service revenue of $7 offset by a decrease in salaries, benefits, bonuses, and share-based compensation of $157 and a decrease in contract labor costs of $23.
Current wording
The increase in cost of service revenue was primarily related to additional cost of service revenue of $1,467 contributed by our March 1, 2026 acquisition of ESI, an increase in data center hosting costs of $21, and an increase in other cost of service revenue of $11, offset by a decrease in salaries, benefits, bonuses, and share-based compensation of $158 and a decrease in third-party telecommunication charges of $28.
Previous wording
The increase is directly related to an increase in product revenue for the quarter, and additional cost of product revenue of $154 contributed by our March 1, 2026 acquisition of ESI.
Current wording
The increase is directly related to an increase in product revenue for the quarter and additional cost of product revenue of $450 contributed by our March 1, 2026 acquisition of ESI.
Previous wording
Selling and marketing expenses consist primarily of direct and channel sales representative salaries, benefits, bonuses, and share-based compensation, partner channel commissions, amortization of costs to acquire contracts, travel expenses, lead generation services, trade shows, internal and third-party marketing costs, amortization of customer relationship intangible assets, the production of marketing materials, and sales support software. The following table reflects our selling and marketing expenses for the three months ended March 31, 2026, compared to the three months ended March 31, 2025:
Current wording
Selling and marketing expenses consist primarily of direct and channel sales representative salaries, benefits, bonuses, and share-based compensation, partner channel commissions, amortization of costs to acquire contracts, travel expenses, lead generation services, trade shows, internal and third-party marketing costs, amortization of customer relationship intangible assets, the production of marketing materials, bad debt expense, and sales support software. The following table reflects our selling and marketing expenses for the three months ended June 30, 2026, compared to the three months ended June 30, 2025:
Previous wording
General and administrative expenses consist of salaries, benefits, bonuses and share-based compensation for executives, administrative personnel, legal, rent, equipment, accounting and other professional services, investor relations, depreciation, amortization of intangible assets, and other administrative corporate expenses. The following table reflects our general and administrative expenses for the three months ended March 31, 2026, compared to the three months ended March 31, 2025:
Current wording
General and administrative expenses consist of salaries, benefits, bonuses and share-based compensation for executives, administrative personnel, legal, rent, equipment, accounting and other professional services, investor relations, rent expense, consulting fees, depreciation, amortization of intangible assets, and other administrative corporate expenses. The following table reflects our general and administrative expenses for the three months ended June 30, 2026, compared to the three months ended June 30, 2025:
Previous wording
Research and development expenses primarily consist of salaries, benefits, bonuses, and share-based compensation, and outsourced engineering services related to the development of new cloud telecommunications features and products. The following table reflects our research and development expenses for the three months ended March 31, 2026, compared to the three months ended March 31, 2025:
Current wording
Research and development expenses primarily consist of salaries, benefits, bonuses, and share-based compensation, outsourced engineering services related to the development of new cloud telecommunications features and products. The following table reflects our research and development expenses for the three months ended June 30, 2026, compared to the three months ended June 30, 2025:
Previous wording
Other income/(expense) primarily relates to interest income, interest expense, net foreign exchange gains or losses, gain on the sale of property and equipment, and credit card cash back rewards. The following table reflects our other income/(expense) for the three months ended March 31, 2026, compared to the three months ended March 31, 2025:
Current wording
Other income/(expense) primarily relates to interest income, interest expense, net foreign exchange gains or losses, and credit card cash back rewards. The following table reflects our other income/(expense) for the three months ended June 30, 2026, compared to the three months ended June 30, 2025:
Previous wording
The increase in general and administrative expenses is primarily related to an increase in executive and administrative salaries, benefits, bonuses, and share-based compensation, of $584, an increase in legal expenses of $338 related to the acquisition of ESI, and additional general and administrative expense of $393 contributed by our March 1, 2026 acquisition of ESI, offset by a decrease in other general and administrative expenses of $8.
Current wording
The increase in general and administrative expenses is primarily related to an increase in additional general and administrative expense of $1,709 contributed by our March 1, 2026 acquisition of ESI, an increase in executive and administrative salaries, benefits, bonuses, and share-based compensation of $880, an increase in legal expenses of $382 related to the acquisition of ESI, offset by a decrease in the amortization of capitalized software development costs of $58 and a decrease in other general and administrative expenses of $20.
Previous wording
The increase in research and development expenses is primarily related to additional research and development expense of $90 contributed by our March 1, 2026 acquisition of ESI and an increase in other research and development expenses of $9, offset by a decrease in salaries, benefits, bonuses, share-based compensation of $20.
Current wording
The increase in research and development expenses is primarily related to additional research and development expense of $373 contributed by our March 1, 2026 acquisition of ESI and an increase in other research and development expenses of $15, offset by a decrease in salaries, benefits, bonuses, share-based compensation of $26.
Previous wording
The change in other income/(expense) is primarily from an increase in interest income of $64 and a decrease in interest expense of $9 and additional other income/(expense) of $1 contributed by our March 1, 2026 acquisition of ESI, offset by a decrease in other income of $6
Current wording
The change in other income/(expense) is primarily from an increase in interest expense of $47 and a decrease in interest income of $3, offset by an increase in additional other income/(expense) of $15.
Previous wording
Operating Results of our Software Solutions segment (in thousands):
Current wording
Operating Results of Software Solutions segment (in thousands):
Previous wording
Remaining Performance Obligations (RPOs) represents the total contract value of all contracts signed, less revenue recognized from those contracts as of March 31, 2026 and 2025. RPOs increased 1%, or $190 to $27,456 as of March 31, 2026, as compared to $27,266 as of March 31, 2025. Below is a table which displays the Software solutions segment remaining performance obligations as of January 1, 2026 and 2025, and March 31, 2026 and 2025, which we expect to recognize as revenue within the next thirty-six to sixty-months (in thousands):
Current wording
Remaining Performance Obligations (RPOs) represents the total contract value of all contracts signed, less revenue recognized from those contracts as of June 30, 2026 and 2025. RPO’s increased 3%, or $914 to $27,991 as of June 30, 2026 as compared to $27,077 as of June 30, 2025. Below is a table which displays the software solutions segment revenue remaining performance obligations as of April 1, 2026 and 2025, and June 30, 2026 and 2025, which we expect to recognize as revenue within the next thirty-six to sixty months (in thousands):
Previous wording
Selling and marketing expenses consist primarily of sales and marketing salaries, benefits, bonuses, commissions, share-based compensation, travel expenses, lead generation services, trade shows, third-party marketing services, the production of marketing materials, annual user group meeting costs, and sales support software. The following table reflects our selling and marketing expenses for the three months ended March 31, 2026, compared to the three months ended March 31, 2025:
Current wording
Selling and marketing expenses consist primarily of sales and marketing salaries, benefits, bonuses, commissions, share-based compensation, travel expenses, lead generation services, trade shows, third-party marketing services, the production of marketing materials, annual user group meeting costs, bad debt expenses, and sales support software. The following table reflects our selling and marketing expenses for the three months ended June 30, 2026, compared to the three months ended June 30, 2025:
Previous wording
The increase in selling and marketing expense is primarily related to additional selling and marketing expense of $1,024 contributed by our March 1, 2026 acquisition of ESI, an increase in commission expense of $204 directly related to the increase in revenue, an increase in bad debt of $178 related to a large decrease in our provision for the three months ended March 31, 2025, an increase in marketing costs of $40, offset by a decrease in other sales and marketing expense of $14.
Current wording
The increase in selling and marketing expense is primarily related to an increase in commission expense of $41 directly related to the increase in revenue, an increase in salaries, benefits, bonuses, and share-based compensation of $35, and an increase in other selling and marketing costs of $4, offset by a decrease in bad debt expense of $40.
Previous wording
General and administrative expenses consist of salaries, benefits, bonuses and share-based compensation for executives and administrative personnel, amortization of trademark and trade name intangible assets, legal, rent, equipment, accounting and other professional services, consulting fees, bank and merchant fee, and other administrative corporate expenses. The following table reflects our general and administrative expenses for the three months ended March 31, 2026, compared to the three months ended March 31, 2025:
Current wording
General and administrative expenses consist of salaries and benefits for executives, administrative personnel, amortization of trademark and trade name intangible assets, legal, rent, equipment, accounting and other professional services, and other administrative corporate expenses. The following table reflects our general and administrative expenses for the three months ended June 30, 2026, compared to the three months ended June 30, 2025:
Previous wording
The increase in general and administrative expenses is primarily related to an increase in salaries, benefits, bonuses, share-based compensation, of $136, an increase in bank and merchant fees of $60, an increase in the amortization of intangible assets of $28, and an increase in other general and administrative expenses of $6.
Current wording
The increase in general and administrative expenses is primarily related to an increase in salaries, benefits, bonuses, and share-based compensation of $142, an increase in bank and merchant fees of $51, and an increase in other general and administrative expenses of $39, offset by a decrease in the amortization of capitalized software of $67.
Previous wording
Research and development expenses primarily consist of salaries, benefits, bonuses, share-based compensation, and outsourcing engineering services related to the development of our software solutions. The following table reflects our research and development expense for the year end March 31, 2026, compared to the year ended March 31, 2025:
Current wording
Research and development expenses primarily consists of salaries, benefits, bonuses, share-based compensation, and outsourcing engineering services related to the development of our software solutions. The following table reflects our research and development expenses for the three months ended June 30, 2026, compared to the three months ended June 30, 2025:
Previous wording
The decrease in research and development expenses is primarily related a decrease in outsourced engineering services expenses of $30 and a decrease in other research and development expenses of $5.
Current wording
The increase in research and development expenses is primarily related an increase in salaries, benefits, bonuses, and share-based compensation of $79 and an increase in outsourced engineering services expenses of $31.
Previous wording
Other income/(expense) primarily relates to net foreign exchange gains or losses and other income and expenses. The following table reflects our other income/(expense) for the three months ended March 31, 2026, compared to the three months ended March 31, 2025:
Current wording
Other income/(expense) primarily relates to interest expense, net foreign exchange gains or losses, and other income and expenses. The following table reflects our other expense for the three months ended June 30, 2026, compared to the three months ended June 30, 2025:
Previous wording
The increase in software solutions revenue is primarily related to an increase in recurring software license and maintenance and support subscriptions of $1,056, offset by a decrease in perpetual software license revenue of $117 and a decrease in professional services and other revenue of $84.
Current wording
The increase in software solutions revenue is primarily related to an increase in recurring software license and maintenance and support subscriptions of $2,090, offset by a decrease in perpetual software license revenue of $827 and a decrease in professional services and other revenue of $56.
Previous wording
The increase in cost of software solutions revenue is primarily related to an increase in third-party hosting service costs of $581, an increase in salaries, benefits, bonuses, share-based compensation, and headcount of $192, an increase of outsource services of $168, and an increase in other cost of software solutions revenue of $5.
Current wording
The increase in cost of software solutions revenue is primarily related to an increase in third-party hosting service costs of $853, an increase in salaries, benefits, bonuses, and share-based compensation of $406, and an increase of outsourced services of $142, offset by a decrease in other cost of software solutions revenue of $41.
Previous wording
The change in other income/(expense) is primarily related to an increase in other income of $34 and an increase in interest income of $10, offset by a decrease in foreign exchange gains/(losses) of $10.
Current wording
The change in other income/(expense) is primarily related to a decrease in foreign exchange gains/(losses) of $45, offset by an increase in interest income $20 and an increase in other income of $6.
Previous wording
Liquidity is a measure of our ability to access sufficient cash flows to meet the short-term and long-term cash requirements of our business operations. We finance our operations primarily through services, software solutions, and product sales to our customers. As of March 31, 2026 and December 31, 2025, we had cash and cash equivalents of $7,249 and $31,378, respectively. Changes in cash and cash equivalents are dependent upon changes in, among other things, working capital items such as contract liabilities, contract costs, accounts payable, accounts receivable, prepaid expenses, and various accrued expenses, as well as purchases of property and equipment, asset acquisitions, business combinations, and changes in our capital and financial structure due to debt repayments and issuances, stock option exercises, sales of equity investments and similar events. We believe that our operations along with existing liquidity sources will satisfy our cash requirements for at least the next 12 months.
Current wording
Liquidity is a measure of our ability to access sufficient cash flows to meet the short-term and long-term cash requirements of our business operations. We finance our operations primarily through services, software solutions, and product sales to our customers. As of June 30, 2026 and December 31, 2025, we had cash and cash equivalents of $18,289 and $31,378, respectively. Changes in cash and cash equivalents are dependent upon changes in, among other things, working capital items such as contract liabilities, contract costs, accounts payable, accounts receivable, prepaid expenses, and various accrued expenses, as well as purchases of property and equipment, asset acquisitions, business combinations, and changes in our capital and financial structure due to debt repayments and issuances, stock option exercises, sales of equity investments and similar events. We believe that our operations along with existing liquidity sources will satisfy our cash requirements for at least the next 12 months.
Previous wording
Cash provided by or used in operating activities is driven by our net income/(loss), adjustments to reconcile to net cash provided by or used in operating activities, the timing of customer collections, as well as the amount and timing of disbursements to our vendors, the amount of cash we invest in personnel, marketing, and infrastructure costs to support the anticipated growth of our business. The following table reflects our net cash provided by/(used in) operating activities for the three months ended March 31, 2026, compared to the three months ended March 31, 2025:
Current wording
Cash provided by or used in operating activities is driven by our net income/(loss), adjustments to reconcile to net cash provided by or used in operating activities, the timing of customer collections, as well as the amount and timing of disbursements to our vendors, the amount of cash we invest in personnel, marketing, and infrastructure costs to support the anticipated growth of our business. The following table reflects our net cash provided by/(used in) operating activities for the six months ended June 30, 2026, compared to the six months ended June 30, 2025:
Previous wording
The net cash provided by operations for the three months ended March 31, 2026 was primarily driven by our net income of $609, non-cash expenses for depreciation and amortization of $1,169, share-based compensation of $721, an increase in accounts payable and accrued expenses of $248, a decrease in other assets of $256, a decrease in equipment financing receivables of $225, offset by an increase in trade receivables of $1,195, an increase in contract costs of $319, an increase in prepaid expenses of $180.
Current wording
The net cash provided by operations for the six months ended June 30, 2026 was primarily driven by our net income of $1,629, non-cash expenses for depreciation and amortization of $3,066, share-based compensation of $1,636, an increase in contract liabilities of $428, and a decrease in other assets of $215, offset by an increase in trade receivables of $894, an increase in contract costs of $583, an increase in prepaid expense of $553, and a decrease in accounts payable and accrued expenses of $298.
Previous wording
The net cash provided by operations for the three months ended March 31, 2025 was primarily driven by our net income of $1,171, non-cash expenses for depreciation and amortization of $771, share-based compensation of $726, and a decrease in trade receivables of $292, offset by a decrease in accounts payable and accrued expenses of $695, a decrease in contract liabilities of $334, an increase in equipment financing receivables of $241, an increase in contract costs of $192, and an increase in inventory of $183.
Current wording
The net cash provided by operating activities for the six months ended June 30, 2025 was primarily driven by our net income of $2,403, non-cash expenses for depreciation and amortization of $1,627, and share-based compensation of $1,488, offset by a an increase in trade receivables of $1,268, an increase in prepaid expenses of $421, an increase in equipment financing receivables of $396, an increase in contract costs of $231, an increase in inventory of $225, and an increase in income tax receivable of $152.
Previous wording
Cash provided by or used in investing activities is driven by the purchase of property and equipment, business combinations, and asset acquisitions. The following table reflects our net cash provided by/(used in) investing activities for the three months ended March 31, 2026, compared to the three months ended March 31, 2025:
Current wording
Cash provided by or used in investing activities is driven by the purchase of property and equipment, business combinations, and asset acquisitions. The following table reflects our net cash provided by/(used in) investing activities for the six months ended June 30, 2026, compared to the six months ended June 30, 2025:
Previous wording
The net cash used in investing activities for the three months ended March 31, 2026 relates to the acquisition of ESI completed on March 1, 2026.
Current wording
The net cash used in investing activities for the six months ended June 30, 2026 relates to the acquisition of ESI completed on March 1, 2026.
Previous wording
Cash provided by or used in financing activities is driven by the proceeds from the exercise of options, taxes paid on the net settlement of stock options and RSUs, payments of contingent consideration, proceeds from finance leases and notes payable, repayments made on finance leases and notes payable, proceeds and repayments on line of credit, and proceeds from the issuance of common stock in connection with an offering. The following table reflects our net cash provided by financing activities for the three months ended March 31, 2026, compared to the three months ended March 31, 2025:
Current wording
Cash provided by or used in financing activities is driven by the proceeds from the exercise of options, taxes paid on the net settlement of stock options and RSUs, payments of contingent consideration, proceeds from finance leases and notes payable, repayments made on finance leases and notes payable, proceeds and repayments on line of credit, and proceeds from the issuance of common stock in connection with an offering. The following table reflects our net cash provided by/(used in) financing activities for the six months ended June 30, 2026, compared to the six months ended June 30, 2025:
Previous wording
Net cash provided by financing activities for the three months ended March 31, 2026, primarily relates to cash received from the exercise of stock options of $307, offset by repayments made on notes payable of $114 and the payments of employee tax withholdings from the net settlement of stock options and RSUs of $132.
Current wording
Net cash provided by financing activities for the six months ended June 30, 2026 primarily relates to cash received from the proceeds from the issuance of note payables of $5,000, which is offset by debt issuance costs of $147, and cash received from the exercise of stock options of $4,025, offset by repayments made on notes payable of $114, the payments of employee tax withholdings from the net settlement of stock options and RSUs of $417, and repayments made on finance leases of $1.
Showing the first 40 of 43 pairs. Open the source sections for the rest.
Rearranged current paragraphs (16)
Current report — wording carried from elsewhere
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Current report — wording carried from elsewhere
Total revenue consists of service revenue, software solutions revenue and product revenue. The following table reflects our service revenue for the six months ended June 30, 2026, compared to the six months ended June 30, 2025:
Current report — wording carried from elsewhere
The increase in research and development expenses is primarily related to additional research and development expense of $283 contributed by our March 1, 2026 acquisition of ESI.
Current report — wording carried from elsewhere
Cloud telecommunications service revenue consists primarily of fees collected for cloud telecommunications services, professional services, interest from sales-type leases, reselling broadband Internet services, managed IT service, and administrative fees. The following table reflects our service revenue for the six months ended June 30, 2026, compared to the six months ended June 30, 2025:
Current report — wording carried from elsewhere
The increase in cost of service revenue was primarily related to additional cost of service revenue of $7,712 contributed by our March 1, 2026 acquisition of ESI, an increase in telecommunications services fees of $982, an increase in fees, commissions, and other, recognized over time of $344, and an increase in sales-type lease interest of $55, offset by a decrease in one-time fees, commissions and other of $220.
Current report — wording carried from elsewhere
Product revenue consists primarily of fees collected from the sale of desktop phone devices, third-party equipment, and device as a service. The following table reflects our product revenue for the six months ended June 30, 2026, compared to the six months ended June 30, 2025:
Current report — wording carried from elsewhere
Product revenue fluctuates from one period to the next based on sales bookings, the allocation of discounts or sales promotions across the performance obligations, and the timing of installations. Our typical customer installation is complete within 30-60 days. However, larger enterprise customers can take multiple months, depending on size and the number of locations. The increase in product revenue related to an increase in product revenue of $1,350 contributed by our March 1, 2026 acquisition of ESI, an increase in managed IT services and infrastructure as a service product revenue of $1,227, and an increase in product revenue related to our cloud telecommunications services of $90.
Current report — wording carried from elsewhere
Cost of service revenue consists primarily of fees we pay to third-party telecommunications carriers, broadband Internet providers, software providers, costs related to installations, contract labor costs, third-party software, customer support salaries, benefits, bonuses, and share-based compensation. The following table reflects our cost of service revenue for the six months ended June 30, 2026, compared to the six months ended June 30, 2025:
Current report — wording carried from elsewhere
Cost of product revenue consists of the costs associated with desktop phone devices and third-party equipment. The following table reflects our cost of product revenue for the six months ended June 30, 2026, compared to the six months ended June 30, 2025:
Current report — wording carried from elsewhere
Selling and marketing expenses consist primarily of direct and channel sales representative salaries, benefits, bonuses, and share-based compensation, partner channel commissions, amortization of costs to acquire contracts, travel expenses, lead generation services, trade shows, internal and third-party marketing costs, amortization of customer relationship intangible assets, the production of marketing materials, and sales support software. The following table reflects our selling and marketing expenses for the six months ended June 30, 2026, compared to the six months ended June 30, 2025:
Current report — wording carried from elsewhere
General and administrative expenses consist of salaries, benefits, bonuses and share-based compensation for executives, administrative personnel, legal, rent, equipment, accounting and other professional services, investor relations, depreciation, amortization of intangible assets, and other administrative corporate expenses. The following table reflects our general and administrative expenses for the six months ended June 30, 2026, compared to the six months ended June 30, 2025:
Current report — wording carried from elsewhere
Research and development expenses primarily consist of salaries, benefits, bonuses, and share-based compensation, outsourced engineering services related to the development of new cloud telecommunications features and products. The following table reflects our research and development expenses for the six months ended June 30, 2026, compared to the six months ended June 30, 2025:
Current report — wording carried from elsewhere
The increase in software solutions revenue is primarily related to an increase in recurring software license and maintenance and support subscriptions of $1,042 and an increase in professional services and other revenue of $13, offset by a decrease in perpetual software license revenue of $703.
Current report — wording carried from elsewhere
Software solutions revenue consists primarily of software license fees, subscription maintenance and support, professional services, and annual user group meeting fees. Software licenses are billed by the number of concurrent sessions a customer has purchased or subscribes to. Subscription maintenance and support is ongoing and provides for software updates and improvements, support for add-on modules, bug fixes, and other general maintenance items. Professional services and other revenues consist of professional services such as the installation of software and integration of other modules, training and implementation as well as custom mobile branding. The following table reflects our service revenue for the six months ended June 30, 2026, compared to the six months ended June 30, 2025:
Current report — wording carried from elsewhere
Cost of software solutions revenue consists primarily of salaries, benefits, bonuses, and share-based compensation, amortization expense for developed technologies intangible assets, cost of data center hosting, third-party software, annual user group meeting costs, and outsourced services required to install and support software solutions. The following table reflects our cost of service revenue for the six months ended June 30, 2026, compared to the six months ended June 30, 2025:
Current report — wording carried from elsewhere
Selling and marketing expenses consist primarily of sales and marketing salaries, benefits, bonuses, commissions, share-based compensation, travel expenses, lead generation services, trade shows, third-party marketing services, the production of marketing materials, annual user group meeting costs, and sales support software. The following table reflects our selling and marketing expenses for the six months ended June 30, 2026, compared to the six months ended June 30, 2025: