Financial Trends -- 5.4/10
| Metric | CQ1 24 (FQ1 25) | CQ2 24 (FQ2 25) | CQ3 24 (FQ3 25) | CQ4 24 (FQ4 25) | CQ1 25 (FQ1 26) | CQ2 25 (FQ2 26) | CQ3 25 (FQ3 26) | CQ4 25 (FQ4 26) |
|---|---|---|---|---|---|---|---|---|
| Revenue | $1,141M | $1,163M | $1,178M | $1,184M | $1,175M | $1,217M | $1,230M | $1,247M |
| YoY Growth | ~2.6% | ~2.1% | ~3.9% | ~3.4% | 2.9% | 4.7% | 4.4% | 5.3% |
| Enterprise Rev | $665.7M | $682.8M | $698.9M | $706.8M | $704.7M | $730.7M | $741.4M | $757.3M |
| Online Rev | $475.5M | $479.7M | $478.7M | $477.3M | $470.0M | $486.6M | $488.4M | $489.7M |
- Revenue is accelerating: FY26 full-year revenue grew 4.4% vs 3.0% in FY25 -- 130bps of acceleration. Q4 FY26 was the fastest quarter at 5.3% YoY
- Enterprise is the growth engine: Enterprise revenue (61% of total) grew 7.1% YoY in Q4 FY26. Enterprise has been accelerating each quarter
- Online has stabilized: Online revenue (~$490M/Q) is essentially flat but no longer declining. 2.9% average monthly churn in Q4 shows the prosumer base remains under pressure
- FY27 guided at $5.065-5.075B: Representing 4.1% growth -- roughly in line with FY26. Management sees upside from AI and Contact Center
| Metric | CQ1 24 (FQ1 25) | CQ2 24 (FQ2 25) | CQ3 24 (FQ3 25) | CQ4 24 (FQ4 25) | CQ1 25 (FQ1 26) | CQ2 25 (FQ2 26) | CQ3 25 (FQ3 26) | CQ4 25 (FQ4 26) |
|---|---|---|---|---|---|---|---|---|
| Non-GAAP Gross Margin | 79.3% | 78.6% | 78.9% | 78.8% | 79.2% | 79.8% | 80.0% | 79.8% |
| Non-GAAP Op Margin | 40.0% | 39.2% | 38.9% | 39.5% | 39.8% | 41.3% | 41.2% | 39.3% |
| GAAP Op Margin | 17.8% | 17.4% | 15.5% | 19.0% | 20.6% | 26.4% | 25.2% | 20.0% |
| Non-GAAP EPS | $1.35 | $1.39 | $1.38 | $1.41 | $1.43 | $1.53 | $1.52 | $1.44 |
| FCF ($M) | $570M | $365M | $458M | $416M | $463M | $508M | $614M | $338M |
| FCF Margin | 49.9% | 31.4% | 38.9% | 35.2% | 39.4% | 41.7% | 50.0% | 27.1% |
- Gross margin stable at 79-80%: Non-GAAP gross margin is rock-steady, ticking up slightly from 78.6% to 80.0% range. No margin compression
- Non-GAAP op margin ~40%: Consistently at or above 39%, reaching 41.3% in Q2 FY26. Excellent cost discipline for a UCaaS company
- GAAP op margin expanding: From 17-19% range to 20-26%, reflecting SBC reduction (-18% YoY) and operational leverage
- FCF lumpy but strong: $1.92B annual FCF (7.0% yield). Q3 FY26 was exceptional at $614M (50% margin). FY27 guided lower at $1.7-1.74B due to data center refresh
- Non-GAAP EPS consistent: $1.35-$1.53 range. FY26 total of $5.92. Management beats EPS guidance consistently
Score of 5.4/10 reflects a business with excellent profitability metrics (40% op margin, 39% FCF margin, 80% gross margin) and an accelerating revenue trajectory, offset by persistent structural weaknesses.
Positives: Revenue acceleration from 3.0% to 4.4% (+15). FCF margin ~39%, $1.92B annual (+20). Non-GAAP op margin ~40% (+15). Gross margin stable 79-80% (+10).
Negatives: NDE sub-100% for 7 quarters -- existing customers net-contracting (-10). Revenue growth still only mid-single-digit (-8). Enterprise customer count declining post-reclassification (-5). Mandatory penalties: revenue growth below 10% (-5 points), NDE below 100% for 7+ quarters (-3 points).
The raw score of 62/100 was reduced to 54/100 (5.4/10) after penalties. This is not a high-growth business -- it is a stable, profitable, mid-single-digit grower with excellent cash generation but a concerning inability to expand within its existing customer base.