Investor Presentation - Doug Gaylor, President & COO Ron Vincent, CFO Presented By - Crexendo
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Investor Presentation
Presented By
Doug Gaylor, President & COO
Ron Vincent, CFO
September 9, 2021
Safe Harbor Statement This presentation includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements relate to, among other things, our history, business lines, business strategy, goals , plans and expectations concerning our business, market position and the growth of our business, business lines and future business plans in which we compete and the benefits that our customers will realize from our services. We use the words "anticipate", "believe", "could", "estimate", "expect", "intend", "may", "plan", "predict", "project", "will" and similar terms and phrases to identify forward-looking statements in this presentation. Although we believe the assumptions upon which these forward-looking statements are based are reasonable, any of these assumptions could prove to be inaccurate or plans could change based upon circumstances and the forward-looking statements based on these assumptions could be incorrect. Our operations involve risks and uncertainties, many of which are outside our control, and any one of which, or a combination of which, could materially affect our results of operations and whether the forward-looking statements ultimately prove to be correct. Actual results and trends in the future may differ materially from those suggested or implied by the forward- looking statements depending on a variety of factors, including risks to the business. These risks are explained in detail in our filings with the Securities and Exchange Commission (the “SEC”) including Form 10-K for fiscal year ended December 31, quarterly Form 10-Qs as filed with the SEC, and Definitive Proxy filed on April 26, 2021. 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. In addition, information related to our risks is contained and supplemented under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in our Annual Report on Form 10-K and Quarterly Reports on Form 10-Q and the definitive proxy. All future written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the previous statements. We undertake no obligation to update any forward-looking statements that may be made to reflect events or circumstances that occur, or that we become aware of, after the date of this presentation. This presentation contains certain information that has not been derived in accordance with generally accepted accounting principles (“GAAP"). Reconciliations of such information to the most directly comparable information derived in accordance with GAAP are contained in this presentation. This information should not be considered a substitute for any measures derived in accordance with GAAP.
Today’s Presenters
Doug Gaylor Ron Vincent
President & COO CFO
11 years with Crexendo 9 years with Crexendo
Prior Experience: Prior Experience:
Crexendo: Soaring Through The Cloud
• Finished 2020 with $16.4M in revenue and strong GAAP earnings of $7.9M
• Q2 2021 UCaaS Service Revenue increase of 20% and Consolidated Revenue increase of 43%
• Completed major acquisition of NetSapiens on June 1st, 2021
• NetSapiens is a UCaaS platform software solution provider that has over 2 Million users
currently utilizing their platform
• NetSapiens has over 175 Customers reselling their platform
• Disruptive “Sessions Not Seats” pricing model
• Acquisition price of approximately $50M consisting of $10M in cash and $40M in stock
• Accretive with positive EBITDA and operating cash flow
• 2020 Pro Forma Revenue $27.8M
• Introduced Crexendo VIP Platform powered by NetSapiens
• Won TMC 2021 Communications Solutions Product of the Year Award for our VIP Platform
Executive Summary: Crexendo At-A-Glance
Key Metrics Corporate Overview
Year Founded • 1999
Headquarters • Tempe, Arizona
$16.4M / $1.9M 88% MRR $409 Ticker Symbol • CXDO
Rev. / Adj. EBITDA % of Total Revenue Avg. MRR Exchange • Nasdaq - July 2020
(2020A) (2020A) Per Customer
Data Center • Phoenix, AZ • Las Vegas, NV
Locations • Dallas, TX • Grand Rapids, MI
57,000+ 2.0M + 195+ Executive Leadership
Active Direct Customers Total Seats Active NS Resellers
175+ 0.9% 45 Months
Active Direct Churn Rate Avg. Customer Steve Mihaylo Doug Gaylor Anand Buch Ron Vincent
CEO President & COO CSO CFO
Agent/Partners (Jan-May 2021) Account Tenure
4 $27.7M 118 David Wang Jon Brinton Jim Murphy Jeffrey Korn
Network PoPs Contracted Backlog Employees CTO CRO EVP General Counsel
(July 2021)
A Combined Company with
a Tremendous Future
Advanced Development Through In-House Comprehensive Voice, Video, Meeting,
Engineering and Third-Party Integrators Messaging & Mobile Solutions
Executive Management Team With
Leading Reseller and Partner Programs
Wealth of Telecom Experience and Success
Powerful Recurring Revenue Model Strong Balance Sheet & Revenue Growth
Rapidly Growing Global Platform Multiple Revenue Sources With
Supporting 2M + Users Cross Sell/Upsell Opportunity
Flexible Go-To-Market Offerings Flexibility and Ability to React Quickly
America’s Fastest-Growing Fast-Growing Tech Leader in the UCaaS
and Cloud Communications Space
UCaaS Platform! Award Winning Collaboration Offering
With Award-Winning Technology! for Video, Screen Share, & Webinars
Recognized by Frost & Sullivan in 2021 as the fastest-growing
UCaaS platform in North America! Unparalleled Executive Telecom Team
with 200+ Years Experience
World Class, Cloud-Hosted System
Built for Small and Medium Businesses
Disruptive Sessions Not Seats Pricing
Model
Poised for Rapid Growth
The Way We Communicate Has Changed
UCaaS Market Size UCaaS Market Adoption
CLOUD MIGRATION PLANS *
($ in mm’s)
(% respondents)
$24,800
$30,000
$25,000
$15,800
$20,000
Video Instant Customer Enterprise
Conferencing Messaging & Experience IP
$15,000 Presence Management Telephony
$10,000 CURRENTLY DEPLOYED IN THE CLOUD
$5,000 54% 44% 42% 39%
$0 WILL BE MOVED TO THE CLOUD WITHIN THE NEXT TWO YEARS
2019E 2024P
Source: MarketsandMarkets 29% 35% 38% 38%
9.5% The global UCaaS market is expected to
grow from $15.8 billion to $24.8 billion 61% Approximately 61% of businesses in
U.S. still operating with antiquated,
between 2019 and 2024(1) premise-based systems
*Frost & Sullivan 2021
Crexendo’s Go-To-Market Sales Approach
Crexendo Partner/Agent Sales:
Direct Sales NetSapiens Platform Resellers
Revenue Share Model
• Traditional Telecom Resellers • UCaaS Companies
• Direct Crexendo Sales
• Managed Service Providers • MSP’s
representatives selling
(MSP’s) • LEC’s/RLEC’s
SMB and Small Enterprise
• B2B Companies • White Label Resellers
Customers
• Master Agents • Enterprise Clients
Future Growth Drivers
New Reseller Logos
& Platform Upgrades
Agents/Partners
Potential Acquisition
Roll-Up Strategy
Future Applications Enterprise and
and Partnerships Major Accounts
Global Key
Market ExpansionGlobal Presence: Growing Opportunity
Majority of Revenue and Customers
Currently in USA
• US Crexendo Agents: 175+
• US NetSapiens Resellers: 195+ 195+
5
175+
Emerging International Markets
• United Kingdom: 5
1
• Australia: 4
• New Zealand: 1
• Phillipines: 1 4
1Growing Financial Profile
Telecommunications Segment Revenue (1) Gross Margin %(1)
2018 2019 2020 2021 YTD 2018 2019 2020 2021 YTD
($ in 000’s)
$15,961 80% 70% 72% 73% 69%
$18,000 $13,780
$15,500 $11,083 $10,286 60% 50% 48%
47%
$13,000 39% 37%
$10,500 40%
$8,000
$5,500 20%
$3,000
$500 0%
Service Product Software Sol Service Product SW Soultions
Operating Margin (1) (2) Churn Rate(3)
2018 2019 2020 2021 YTD 2018 2019 2020
8%
6%
8% 1.00% 0.82%
6%
4% 0.67%
2% 0.80% 0.59%
0%
-2% -2%
-4% 0.60%
-6%
-8%
-10% 0.40%
-12%
-14% 0.20%
-16%
-18%
-20% 0.00%
-22% -20%
(1) YTD numbers as of Q2 2021 (2) 2021 YTD Includes $1,061,000 of NetSapiens acquisition related expenses. (3) Average monthly percentage for period.Growing Financial Profile
Non-GAAP Income (Loss) & Net Income (Loss) (1) (2) Adjusted EBITDA (1) (2)
($ in 000’s) 2018 2019 2020 2021 YTD ($ in 000’s) 2018 2019 2020 2021 YTD
8,700 $1,900
$10,000 $1,628
7,900 $2,000
$8,000
$1,500
$6,000
$4,000 $1,000
1,5911,139 $324
287 $92
$2,000 345 $500
$-
(223)
$-
$(2,000) Non-GAAP Income (loss) Net Income (loss) (1,718)
Backlog (1) Expected Backlog Revenue Recognition
($ in 000’s) ($ in 000’s) 2021 2022 2023 2024 2025 2026
Jun '18 Jun '19 Jun '20 Jun '21
27,349 27,227 $10,500
$30,000 24,772
20,774 $8,500
$25,000
$20,000 $6,500
$15,000 $4,500
$10,000
$2,500
$5,000
$500 Service Revenue Product Revenue
$-
(1) YTD numbers as of Q2 2021 (2) 2021 YTD Includes $1,061,000 of NetSapiens acquisition related expenses.The Future of Business Communications
Video Interactions Phone
• VIP Communications • Cloud-Based UCaaS Platform • The Platform for
Solution for Business Powered by NetSapiens How You Work TodayThe VIP Difference
A Better Communications Solution For Business
Video Interactions Phone Contact Center Integrations
Collaborate in HD Streamline workflows Use the device of your Powerful, native Integrate into
quality with up to through Voice Mail, SMS, choice for HD business customer experience over 30 leading
200 attendees. Chat, and more. communications. management tools. SaaS applications
Dependability Efficiency Recognition Simplicity
The 100% Uptime Streamline your Leverage a Easy, portal-based
Guarantee assures communications to recognized, award- management and
rock-solid reliability. work more effectively. winning platform. intuitive interface.Industry-Leading 100% Uptime Guarantee
and Lifetime Warranty
• The VIP Platform is hosted in the world’s highest-
rated geo-redundant data centers that are Tier 5,
Exascale sites powered by 100% green energy
• We back our user experience with 100% US-based
support available 24/7/365
• Secure and reliable – our software is trusted by
over 2.0 million users globally
Conference, Cordless
CX540 CX530 T57W and AccessoriesInvestment Highlights: Meeting Our
Commitments and Delivering Results
Organically Up-listed to Nasdaq
ATTRACTIVE INVESTMENT
OPPORTUNITY Successfully Raise Capital to Fuel Future Growth
Acquire Accretive Acquisition Targets
High Long-Term Recurring
Growth Contracts Revenue Recently Added to Russell MicroCap Index
Combined 20% Revenue Growth in 2020
Strong Industry Roll-Up Nearly 100% Customers and Resellers on Long Term Contracts
Cash Flow Low Churn Acquisition
Potential
2.0 M + End Users and GrowingQuestions?
Thank You!
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