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 1 on your telephone keypad. Should you need assistance during the conference call, you may signal an operator by pressing star and 0. 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 third quarter of fiscal year 2025 investor call. We are recording the call, and we 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. Charles will provide a high-level overview of the quarter. Jeremy and Larry will take you through the operating results for the third quarter of fiscal year 2025, which ended on March 31, 2025. Following their presentation, we will open the floor for Q&A with analysts. 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 and free cash flow, which are non-IFRS measures, but 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, unaudited condensed consolidated interim financial statements, 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.

Good afternoon, everyone, and thanks for joining us today. Let's just start with the quarter. Sangoma delivered really strong financial performance in Q3 with revenue of $58.1 million, adjusted EBITDA margins of 17%, and operating cash flow conversion from adjusted EBITDA of over 100% once again. Generated strong free cash flow per share, and while Larry will walk you through the full numbers shortly, I'm proud to say that we're seeing consistent, meaningful improvements in our cash generation. This underpins both the value of and the strategic potential for our company. We're also continuing to pay down debt well ahead of schedule, further strengthening our balance sheet and creating greater flexibility for our capital allocation priorities. Now, as I emphasized last quarter, financial strength creates optionality, and today that optionality is real, supporting the execution of our growth strategies with confidence. After 15 months of focused execution, I'm excited to say that the major transformation we committed to through Project Diamond is now complete. Of course, continuous improvement is part of any great company, but the heavy lifting we set out to accomplish is finally behind us. Today, Sangoma has a financial foundation, the operational structures, processes, and competencies to fully move into our next phase, a multi-pronged growth strategy. Simply put, Sangoma has never been stronger or in a better position to tackle this growth. I want to spend a few moments talking about the operational readiness for that growth. I'm thrilled to share that our new ERP system is on track and online, and we're finalizing the user acceptance testing in April, as promised. This was a major milestone and critical component of our transformation that sets the stage for both organic and inorganic growth, as well as providing enhanced visibility across the entire business. I've been speaking a lot about the ERP systems, and I'm very proud of what the team has done here. The efficiency gains we expect to realize from our modern ERP system will be a source of operating leverage with expected savings of approximately $5 million over the next three years. We self-funded the entire ERP system implementation since the beginning of this transformation. We've also streamlined our processes, upgraded team competencies, and sharpened our value propositions to better position Sangoma as a communications partner of choice for small medium enterprises globally. Last quarter, I told you we start moving away from the lower margin hardware reselling to focus Sangoma as a pure play communications software company, delivering significantly higher margins and predictability. We've done exactly that. We have accelerated the divestiture of our known core assets, improving profitability and sharpening our focus. These assets have been classified as held for sale on the balance sheets, and we've seen strong interest from potential buyers. As expected, this shift resulted in a slight revenue dip in Q3, but it also led to a sequential improvement in gross margins as we reduced our reliance on lower margin NRR resale offerings. At this time, we've been actively pursuing acquisitions that can expand our footprint in both North America and internationally. And importantly, With our debt lower than planned, we were able to launch and begin executing a normal course issuer bid, reinforcing our strong belief in Sangoma's intrinsic value. This deliberate shift is already delivering benefits, bringing up resources for strategic investments that are creating momentum for our core MRR business, where the measurable benefits are clear. Client satisfaction NPS scores have improved significantly year over year. with NPS scores up nearly 300% and client satisfaction scores up 23%. Customer churn remains industry-leading at below 1%, 0.9% to be exact. I'm most proud of this, that we were able to maintain churn levels at this low level during a very significant transformation. Our large deal pipeline is up considerably compared to last quarter. We are seeing accelerated signs of growth across our entire pipeline, new partner engagements, and in deal closings. Free cash flow per share is $0.25 in Q3 and $0.84 in the first three quarters, a double-digit increase over the past two years. These results are the direct outcome of the strategy we outlined in the previous quarters. We committed to enhancing customer success, focusing our investments on core communication platforms, and driving disciplined operational execution. We are seeing progress on all those funds. This gives me great confidence as Sangoma is poised for the opportunities that lie ahead. I just want to step back for a moment to speak on the industry trends. First, on tariffs and geopolitical risk, I get asked that question all the time. We have not seen a material impact to our business today. For areas in our supply chain that were of concern, we got ahead of it and de-risked the company. Because we own the IP and our own hardware, we have flexibility now to adjust our processes and supply chains to mitigate any impact. And like all of you, we're just simply hoping for peace and common sense to prevail on the global stage. Closer to home, we're witnessing a major shift in our industry landscape, one that played directly into Sangoma's strength. Mitel's recent Chapter 11 filing highlights the struggles of legacy on-premises providers. NEC and Avaya are pulling back from the premise-based business, reinforcing the industry's shift to cloud and hybrid models. And single solution vendors continue to face commoditization pressures and margin erosion. Against this backdrop, Sangoma is now positioned to win. With our integrated platforms, integrating both security and AI components, spanning premises, hybrid, and cloud solutions, modernized systems in both back and front offices, and an energized channel ecosystem coupled with financial flexibility, we are uniquely positioned to fill the void left by legacy players. And we are already seeing the pipeline and market demand growing in this particular sector. We offer voice, data, video, security, and proprietary hardware, the essential communication elements, and we're now bundling them into industry-tailored solutions, delivering exactly what mid-size enterprises need as they modernize their communication infrastructure. We are now a full one-stop shop for our customers, and a single product competitor cannot match that. The last six quarters have been challenging and exhilarating. The men and women of Sangoma have risen to the occasion, embracing change, strengthening our culture, and pushing the company to new heights. We are a very different company than we were one year ago. That transformation is now complete. Sangoma now has the financial, operational, and cultural readiness to execute our three-pronged growth strategy. Organic expansion, strategic acquisitions, geographic growth. The changes we're seeing in the market validate the strategy we pursued, offering integrated essential communication services to a single trusted partner is working. We anticipated this shift, and now we are ahead of the curve. We are confident that Sangoma will continue to deliver increased value to customers and shareholders alike. Finally, I want to sincerely thank the entire Sangoma team for achieving this remarkable transformation. And I want to thank our investors and the trust you placed in us throughout this journey. I am more energized than ever to see what can be achieved with the transformation that we've created. I'll now hand it over to Jeremy and Larry to walk you through the detailed financial and operational results.