Sangoma Technologies Corporation

Thank you for standing by. This is the conference operator. Welcome to the Sangoma Investor Conference Call. As a reminder, all participants are in listen-only mode, and the conference is being recorded. After the presentation, there will be an opportunity for analysts to ask questions. To join the question queue, you may press star, then one on your telephone keypad. Should you need assistance during the conference call, you may signal an operator by pressing star and zero. I would now like to turn the conference over to Samantha Reburn, Chief Legal Officer. Please go ahead, Ms. Reburn.

Thank you, operator. Hello, everyone, and welcome to Sangoma's fourth quarter and fiscal year-end 2024 investor call. We are recording the call and will make it available on our website for anyone who is unable to join us live. I'm here today with Charles Salameh, Sangoma's Chief Executive Officer, Jeremy Wubbs, Chief Operating and Marketing Officer, and Larry Stock, Chief Financial Officer, to take you through the results of the fourth quarter of fiscal year 2024, which ended on June 30, 2024. We will discuss the press release that was distributed earlier today, together with the company's financial statements and MD&A, which are available on CDAR+, EDGAR, and our website. As a reminder, Sangoma reports under International Financial Reporting Standards, IFRS, and during the call, we may refer to terms such as adjusted EBITDA, which is a non-IFRS measure but is defined in our MD&A. Before we start, I'd like to remind you that the statements made during the course of this call that are not purely historical are forward-looking statements regarding the company or management's intentions, estimates, plans, expectations, and strategies for the future. Because such statements deal with future events, they are subject to various risks and uncertainties, and actual results may differ materially from those projected in the forward-looking statements. Important factors that could cause actual results to differ materially from those in the forward-looking statements are discussed in the accompanying MD&A, our annual information form, and the company's annual audited financial statements posted on CDAR+, EDGAR, and our website. With that, I'll hand the call over to Charles.

Thank you, Sam, and good afternoon to everyone listening in. Really appreciate you taking the time to join us and for your support and interest in Sangoma. Hard to believe, but this month marks my first anniversary as Sangoma's CEO. As I said before, when I joined, I saw the potential to unlock value by integrating our strong portfolio of assets and focusing the organization on delivering a full-stack solution of essential IT communication products and services to the SMB market. Over the past year, we've embarked on a transformative journey to realize this vision. We've assembled the right leadership team, streamlined our operations, re-engaged with our partners, upgraded our systems and processes, and revamped our go-to-market. All the while, we bolstered our financial health and built flexibility into our model to put Sangoma on a scalable path to growth. I'm extremely proud of how the team has executed in the fourth quarter and throughout the fiscal year. We ended the year right on plan, and I love it when a plan comes together. With revenues of $247.3 million, which fell squarely within our guided range of $246.5 million and $248.5 million, our adjusted EBITDA of $42.6 million that was above the midpoint of our guided range of $41.5 million to $43.5 million, and adjusted EBITDA margins of 17%, and net cash generated by operating activities of $44.2 million, representing cash conversion from adjusted EBITDA of 104%. Sangoma is now fully prepared to execute its FY25 operating plan with confidence. Our strategic focus for FY25 is built upon the foundation of the transformation efforts successfully implemented in FY24. With a robust pipeline of initiatives, we are positioned to deliver on quarter-on-quarter sequential growth throughout FY25. These initiatives, coupled with our detailed operating plan, set the stage for sustained momentum and continued expansion as we capitalize on the opportunities ahead. Our strategic plan for FY25 is centered around capitalizing on the three key vectors of growth, which I spoke about in our Q3 earnings call. With our strong balance sheet and differentiated offerings, we are now positioned to execute on the more strategic elements of our business through organic growth, inorganic expansion, and market and channel development. As the market is rapidly evolving, companies like Sangoma are now well positioned to leverage their strength to seize the rich opportunities that are emerging. We are already seeing promising trends in AI, security, and SD-WAN, which can efficiently integrate into our portfolio through both build and buy models, driving sustained growth in the years ahead. In the next phase of our transformation, we'll focus on a set of software, hardware, and applications that distinguish Sangoma as a communications platform provider at its core. Our ability to address the essential IT communication needs of the SMB market, including the increasingly sophisticated mid-market, sets us apart, driving demand for multiple products and services across the entire portfolio. These areas provide high recurring revenue for our business and foster long-term relationships that yield greater customer lifetime value. Reducing churn remains a top priority for our business. Throughout our transformation, we have successfully maintained churn rates below 1%. Now, by prioritizing exceptional client experiences, we continue to make significant strides in further reducing churn, aiming for industry-leading retention rates. This focus not only strengthens our customer relationships, but also positions us for sustainable long-term growth. This is shown through the appointment of a full-time chief client officer, Joel Kappes, who is spearheading the programs around customer operations, that Jeremy will speak about in a moment. Now, by building on a steady foundation, we will look to drive top-line improvements. We are already seeing signs of stabilization in previously challenged areas of the business, such as our product business. Amid an uncertain macroeconomic backdrop, additionally, we're observing early positive results from our go-to-market, channel management, and brand revitalization initiatives. I've talked in the past about our plans to bundle products and services. This isn't just about grouping and cross-selling products. It's about delivering comprehensive solutions to address industry-specific needs. For example, our CX hybrid and cloud UCAS solutions are all HIPAA compliant, enabling us to meet the communication needs of large, multi-site healthcare organizations. Our solutions also comply with international privacy standards, opening up market opportunities in the European Union, Canada, and Australia. Through our proprietary technology platforms, We control the end-to-end delivery of services and adhere to strict data and security standards, allowing us to cater to specific industry requirements, including the public sector. Now, moving on to capital allocation. Our high-quality conversion of EBITDA to cash flow and strong balance sheet provides us with financial flexibility to pursue various strategic paths for maximizing value creation. Currently, our priority is debt repayment. As I announced in July, we accelerated debt repayment in the fourth quarter, aiming to reduce Sangoma's debt position to $55 to $60 million by the end of the fiscal 2025 year. We also continue to self-fund our transformational activities, including R&D spending and the completion of our ERP programs in early 2025, which again, Jeremy and Larry will discuss further in their remarks. A key benefit of the ERP program will be our enhanced ability to quickly integrate bolt-on acquisitions efficiently and and drive greater synergies and return on investments. With our debt-to-trailing EBITDA ratios expected to fall well below our capacity at less than 1.5 times, we'll be in a strong financial position to pursue inorganic growth opportunities through non-dilutive means that align with our core platform strategy. We are at the early stage of building a pipeline, and we believe market conditions will continue to favor us as we move into the next calendar year. Now, before I turn it over to Jeremy to update you on the operational progress, I wanted to take a moment to acknowledge and welcome the addition of April Walker to our Board of Directors during this last fourth quarter. April brings a wealth of technology expertise and insights into the areas of customer success and digital transformation, having previously held the role of Senior Vice President of Customer Success at Salesforce. At Sangoma, we are deeply committed to fostering a diverse and inclusive environment across the workplace, management levels, and on our boards. By actively promoting and supporting a wide range of voices and experiences, we ensure that our team is equipped to tackle the challenges with creativity and insight. I am both proud and honored to have such a seasoned team around me. Now, as we close out 2024, I am incredibly proud of the remarkable progress Sangoma has made. This has been a year of transformation, resilience, and growth, and I'm confident that the foundations that we've built positions us strongly for FY25. Our team's hard work, our strategic initiatives, and the commitment to innovation have put us on a clear path towards sustainable success. Moving into our pivot to growth year, Sangoma remains a compelling investment opportunity with a well-defined path towards sustainable value creation. We are leveraging our strong financial foundation and executing a detailed operating plan that positions us to capitalize on market opportunities. I have immense confidence in our ability to deliver value to our key stakeholders our customers, our employees, and our shareholders. And I truly believe the best is yet to come for Sangoma. With that, I'm going to turn it over to Jeremy to dive deeper into our operating activities this past quarter. Okay, Jay, over to you. Thanks, Charles.