Crexendo, Inc.

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, 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:

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 eight million end users globally, through an extensive network of over 250 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 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.

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 September 30, 2026 were $7,099. As such, our AERR at September 30, 2026 was $85,176 compared to $56,100 at September 30, 2025.

Previous 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.

Current wording

The increase in total revenue is due to acquired revenue contributed by our acquisition of ESI on March 1, 2026 of $6,801, an increase in organic service revenue of $531, an increase in organic product revenue of $179, and an increase in software solutions revenue of $174.

Previous wording

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 wording

The decrease in income/(loss) before income tax is primarily related to an increase in operating expenses of $7,908 and a decrease in other income/(expense) of $126, offset by an increase in revenue of $7,685. The increase in revenue is related to additional revenue of $6,801 contributed by our March 1, 2026 acquisition of ESI and an increase of $884 from organic growth from new and existing customers. The increase in operating expenses is primarily related to additional expenses of $7,086 contributed by our March 1, 2026 acquisition of ESI, an increase in salaries, benefits, bonuses, and share-based compensation of $729, an increase in commission expense of $272, and an increase in other operating expenses of $9, offset by a decrease in outsourced labor of $188. The decrease in other income is primarily related to an increase in interest expenses of $78 and a decrease in interest income of $75, offset by an increase in other income of $27.

Previous wording

The decrease in income tax provision is due to a decrease in taxable for the three months ended June 30, 2026.

Current wording

The decrease in income tax provision is due to a decrease in taxable income for the three months ended September 30, 2026.

Previous wording

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 wording

Total revenue consists of service revenue, software solutions revenue, and product revenue. The following table reflects our service revenue for the nine months ended September 30, 2026, compared to the nine months ended September 30, 2025:

Previous wording

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 wording

The increase in total revenue is due to acquired revenue contributed by our acquisition of ESI on March 1, 2026 of $15,863, an increase in organic service revenue of $1,692, an increase in organic product revenue of $1,496, and an increase in software solutions revenue of $1,381.

Previous wording

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 wording

The following table reflects our income/(loss) before income tax for the nine months ended September 30, 2026, compared to the nine months ended September 30, 2025:

Previous 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.

Current wording

The decrease in income/(loss) before income tax is primarily related to an increase in operating expenses of $21,413 and a decrease in other income/(expense) of $180, offset by an increase in revenue of $20,432. The increase in revenue is related to additional revenue of $15,863 contributed by our March 1, 2026 acquisition of ESI and an increase of $4,569 from organic growth from new and existing customers. The increase in operating expenses is primarily related to additional expenses of $16,150 contributed by our March 1, 2026 acquisition of ESI, an increase in salaries, benefits, bonuses, and share-based compensation of $2,314, an increase in cost of product revenue of $1,209 related to an increase in product revenue, an increase in third-party hosting services of $947, an increase in commission expenses of $696, and an increase in other operating expenses of $97. The decrease in other income is primarily related to an increase in interest expense of $125 and a decrease in interest income of $57, offset by an increase in other income of $2.

Previous wording

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 wording

The following table reflects our income tax benefit/(provision) for the nine months ended September 30, 2026, compared to the nine months ended September 30, 2025:

Previous wording

The decrease in income tax provision is due to a decrease in taxable income for the six months ended June 30, 2026.

Current wording

The decrease in income tax provision is due to a decrease in taxable income for the nine months ended September 30, 2026.

Previous wording

To evaluate our business, we consider and use non-generally accepted accounting principles (“Non-GAAP”) net income 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 to be an important indicator of overall business performance because it allows us to evaluate results without the effects of share-based compensation and related taxes, acquisition related expenses, changes in fair value of contingent consideration, amortization of intangibles, and goodwill and long-lived asset impairment. We define EBITDA as U.S. GAAP net income/(loss) before interest expense, interest income and other expense/(income), the gain/(loss) on the sale of property and equipment, goodwill and long-lived asset impairments, provision/(benefit) 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 acquisition related expenses, changes in fair value of contingent consideration and share-based compensation and related taxes. 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.

Current wording

To evaluate our business, we consider and use non-generally accepted accounting principles (“Non-GAAP”) net income 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 to be an important indicator of overall business performance because it allows us to evaluate results without the effects of share-based compensation and related taxes, acquisition related expenses, changes in fair value of contingent consideration, amortization of intangibles, and goodwill and long-lived asset impairment. We define EBITDA as U.S. GAAP net income/(loss) before interest expense, interest income and other expense/(income), the gain/(loss) on the sale of property and equipment, goodwill and long-lived asset impairments, benefit/(provision) for income tax, 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 acquisition related expenses, changes in fair value of contingent consideration and share-based compensation and related taxes. 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.

Previous 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.

Current wording

(1) For the three months ended September 30, 2026 and 2025, employer payroll tax expense related to share-based compensation was $10 and $33, respectively. For the nine months ended September 30, 2026 and 2025, employer payroll tax expense related to share-based compensation was $95 and $168, respectively.

Previous 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.

Current wording

The increase in service revenue is primarily related to additional service revenue of $5,914 contributed by our March 1, 2026 acquisition of ESI, an increase in telecommunications services fees of $271, an increase in fees, commissions, and other, recognized over time of $205, an increase in one-time fees, commissions and other of $34, and an increase in sales-type lease interest of $21.

Previous 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.

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 $887 contributed by our March 1, 2026 acquisition of ESI, an increase in product revenue related to our cloud telecommunications services of $178, and an increase in managed IT services and infrastructure as a service product revenue of $1.

Previous 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):

Current wording

Remaining Performance Obligations (RPOs) represents the total contract value of all contracts signed, less revenue recognized from those contracts as of September 30, 2026 and 2025. RPO’s increased 89%, or $52,472 to $111,465 as of September 30, 2026 as compared to $58,993 as of September 30, 2025. Our March 1, 2026 acquisition of ESI contributed $49,958 of the increase in RPO’s as of September 30, 2026. Below is a table which displays the Cloud Telecommunications segment revenue remaining performance obligations as of July 1, 2026 and 2025, and September 30, 2026 and 2025, which we expect to recognize as revenue within the next thirty-six to sixty months (in thousands):

Previous wording

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 wording

The increase in cost of service revenue was primarily related to additional cost of service revenue of $1,525 contributed by our March 1, 2026 acquisition of ESI, offset by a decrease in outsourced labor of $150, a decrease in third-party telecommunication charges of $123, and a decrease in other costs of service revenue of $6.

Previous 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.

Current wording

The increase in cost of product revenue is directly related to an increase in product revenue for the quarter and additional cost of product revenue of $488 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, 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:

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, and sales support software. The following table reflects our selling and marketing expenses for the three months ended September 30, 2026, compared to the three months ended September 30, 2025:

Previous wording

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 wording

The increase in selling and marketing expense is primarily related to additional selling and marketing expense of $3,436 contributed by our March 1, 2026 acquisition of ESI, an increase in commission expense of $272 directly related to the increase in revenue, and an increase of other selling and marketing expenses of $9.

Previous wording

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 wording

The increase in general and administrative expenses is primarily related to additional general and administrative expense of $1,340 contributed by our March 1, 2026 acquisition of ESI, an increase in executive and administrative salaries, benefits, bonuses, and share-based compensation of $143, an increase in accounting software costs of $47 associated with service contract fees for our new accounting system, an increase in telecommunication annual taxes and fees of $27, and an increase in other general and administrative expenses of $45.

Previous 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:

Current 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 September 30, 2026, compared to the three months ended September 30, 2025:

Previous 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.

Current wording

The increase in research and development expenses is primarily related to additional research and development expense of $297 contributed by our March 1, 2026 acquisition of ESI and a decrease in salaries, benefits, bonuses, and share-based compensation of $50.

Previous 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:

Current 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 September 30, 2026, compared to the three months ended September 30, 2025:

Previous wording

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 wording

The change in other income/(expense) is primarily related to a decrease in interest income of $86 and an increase in interest expense of $78, offset by an increase in additional other income/(expense) of $19.

Previous wording

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 wording

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 nine months ended September 30, 2026, compared to the nine months ended September 30, 2025:

Previous wording

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 wording

The increase in service revenue is primarily related to additional service revenue of $13,626 contributed by our March 1, 2026 acquisition of ESI, an increase in telecommunications services fees of $1,253, an increase in fees, commissions, and other, recognized over time of $549, and an increase in sales-type lease interest of $76, offset by a decrease in one-time fees, commissions and other of $186.

Previous wording

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 wording

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 nine months ended September 30, 2026, compared to the nine months ended September 30, 2025:

Previous 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 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 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 related to an increase in product revenue of $2,237 contributed by our March 1, 2026 acquisition of ESI, an increase in managed IT services and infrastructure as a service product revenue of $1,228, and an increase in product revenue related to our cloud telecommunications services of $268.

Previous 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 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 wording

Remaining Performance Obligations (RPO’s) represents the total contract value of all contracts signed, less revenue recognized from those contracts as of September 30, 2026 and 2025. RPO’s increased 89%, or $52,472 to $111,465 as of September 30, 2026 as compared to $58,993 as of September 30, 2025. Our March 1, 2026 acquisition of ESI contributed $49,958 of the increase in RPO’s as of September 30, 2026. Below is a table which displays the Cloud Telecommunications segment revenue remaining performance obligations as of January 1, 2026 and 2025, and September 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, 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 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 nine months ended September 30, 2026, compared to the nine months ended September 30, 2025:

Previous wording

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 wording

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 nine months ended September 30, 2026, compared to the nine months ended September 30, 2025:

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 six months ended June 30, 2026, compared to the six months ended June 30, 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, and sales support software. The following table reflects our selling and marketing expenses for the nine months ended September 30, 2026, compared to the nine months ended September 30, 2025:

Previous wording

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 wording

The increase in selling and marketing expense is primarily related to additional selling and marketing expense of $7,855 contributed by our March 1, 2026 acquisition of ESI, an increase in commission expense of $696 directly related to the increase in revenue, an increase in bad debt of $133 as the prior period was impacted by an adjustment to the reserve which significantly reduced bad debt in the prior period, and an increase in other selling and marketing of $22.

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 six months ended June 30, 2026, compared to the six months ended June 30, 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, depreciation, amortization of intangible assets, and other administrative corporate expenses. The following table reflects our general and administrative expenses for the nine months ended September 30, 2026, compared to the nine months ended September 30, 2025:

Previous 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.

Current wording

The increase in general and administrative expenses is primarily related to an increase in additional general and administrative expense of $3,049 contributed by our March 1, 2026 acquisition of ESI, an increase in executive and administrative salaries, benefits, bonuses, and share-based compensation of $1,024, an increase in legal expenses of $522 related to the acquisition of ESI, offset by a decrease in the amortization of capitalized software development costs of $71 and a decrease in other general and administrative expenses of $29.

Previous 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 six months ended June 30, 2026, compared to the six months ended June 30, 2025:

Current 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 nine months ended September 30, 2026, compared to the nine months ended September 30, 2025:

Previous wording

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 wording

The increase in research and development expenses is primarily related to additional research and development expense of $670 contributed by our March 1, 2026 acquisition of ESI offset by a decrease in salaries, benefits, bonuses, share-based compensation of $61.

Previous wording

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 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 nine months ended September 30, 2026, compared to the nine months ended September 30, 2025:

Previous 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.

Current wording

The change in other income/(expense) is primarily from an increase in interest expense of $125 and a decrease in interest income of $89, offset by an increase in additional other income/(expense) of $34.