Sangoma Technologies (STC) Q2 2026 earnings summary

Executive summary

• Fiscal Q2 2026 delivered strong bookings momentum, with one of the highest booking quarters in recent history, reflecting traction in the go-to-market strategy and investments in growth initiatives.

• Revenue reached $51.5 million, up 1.2% sequentially, with service revenue growing 1%, signaling early impact of improved bookings on recurring revenue.

• Adjusted EBITDA was $8.3 million (16% margin), with strong conversion to operating cash flow (>120%) and free cash flow of $8 million ($0.24 per diluted share).

• MRR bookings surged 67% sequentially and 60% year-over-year, driven by large strategic mid-market deals and improved close rates.

• Strategic exit from low-margin, non-recurring resale activity via sale of VoIP Supply, LLC, impacting year-over-year revenue comparison.

Financial highlights

• Total revenue for Q2 was $51.5 million, up 1.2% from Q1; excluding divested VoIP Supply, revenue was 2% lower year-over-year on a like-for-like basis.

• Gross profit was $38.2 million, with gross margin improving to 74% (from 72% in Q1 and 68% in prior year), driven by favorable revenue mix and recurring services.

• Adjusted EBITDA margin held at 16%, consistent with Q1 and historical seasonal patterns.

• Net cash from operating activities was $10.1 million (122% conversion from adjusted EBITDA); free cash flow was $8 million ($0.24 per diluted share).

• Quarter-end cash was $17.1 million, up 27% from June 30; total debt reduced to $37.6 million from $60.4 million a year ago.

Outlook and guidance

• Fiscal 2026 revenue guidance tightened to $205–$208 million, with adjusted EBITDA margin expected at 17–18%.

• Sequential revenue growth expected in Q3, with a return to year-over-year organic growth after adjusting for the VoIP Supply divestiture.

• Margins expected to remain stable despite a higher product mix in Q3.

• Guidance assumes continued sequential growth, stable macroeconomic conditions, and successful execution of go-to-market initiatives.

• Assumptions include stable supply chain, customer demand, and access to capital.