Crexendo (CXDO) Q2 2026 earnings summary

Executive summary

• Total revenue for Q2 2026 increased 49% year-over-year to $24.6 million, driven by the ESI acquisition, organic growth in service and product revenues, and the addition of eleven new platform customers in the first half.

• GAAP net income for Q2 2026 was $1.1 million, with non-GAAP net income at $4.1 million; higher operating expenses from the ESI acquisition impacted margins.

• Adjusted EBITDA for Q2 2026 was $4.1 million, up 46% year-over-year, and operating cash flow for the first half increased 89% to $4.8 million.

• The ESI acquisition, completed March 1, 2026, exceeded expectations, contributing $6.96 million in Q2 revenue and expanding the customer base.

• AI initiatives, including the CAIRO product, are gaining traction, with meaningful revenue contribution expected in 2027.

Financial highlights

• Q2 2026 service revenue increased 78% year-over-year to $14.9 million; software solutions revenue rose 5% to $7.3 million; product revenue more than doubled to $2.5 million.

• Gross margin for Q2 2026 was 61.6%–66%, with service, product, and software margins all improving.

• Operating expenses for Q2 2026 rose 53% year-over-year, mainly due to the ESI acquisition.

• Adjusted EBITDA margin for Q2 2026 reached 16.7%–17%.

• Cash and equivalents at June 30, 2026 were $18.3 million, down from $31.4 million at year-end 2025.

Outlook and guidance

• Organic revenue growth year-to-date is 11%, in line with double-digit guidance, and management expects to achieve 100% of annual revenue and adjusted EBITDA targets for 2026.

• Targeting a $100 million revenue run rate by year-end 2026.

• Remaining performance obligations at June 30, 2026 reached $138.97 million, up 97% year-over-year, with ESI contributing $49.8 million.

• Expecting continued gross margin improvements and strong add-on orders as the licensee base expands.

• Anticipates meaningful AI-related revenue in 2027 as adoption of CAIRO and EVP program accelerates.