Sangoma Technologies Corp. reported its Q2 Fiscal 2026 results, posting revenue of $51.5 million—$0.3 million above the $51.24 million consensus estimate—while earnings per share fell to $‑0.06, a $0.12 miss against the $0.06 consensus. Adjusted EBITDA margin was 17 % to 18 %, and the company generated $8.0 million in free cash flow, up from $3.2 million in the prior quarter.
Revenue grew 1.2 % sequentially, driven by a 2.5 % increase in recurring Core services and a 3.0 % rise in mid‑market sales. However, when adjusted for the $6.4 million of low‑margin revenue removed by the VoIP Supply divestiture, revenue was down 2 % on a like‑for‑like basis versus the same period a year earlier, reflecting a modest slowdown in legacy product demand.
Gross margin expanded to 74 % from 72 % in Q1, a result of a higher mix of high‑margin Core contracts and improved operational leverage. The company’s adjusted EBITDA margin guidance for fiscal 2026 was narrowed to 17 %–18 % from the previous 17 %–19 % range, signaling a more conservative outlook amid longer sales cycles for large MRR deals.
The EPS miss was largely attributable to higher operating expenses and a lower revenue base after the VoIP divestiture. Management noted that while cost controls were effective, the decline in recurring revenue and the impact of one‑time restructuring charges weighed on profitability.
Management reiterated its focus on expanding the mid‑market channel and strengthening recurring revenue streams. CFO Larry Stock highlighted that the conversion of adjusted EBITDA to operating cash flow exceeded 120 %, and CEO Charles Salameh emphasized that the company’s “right‑to‑plan” trajectory remains on track despite the EPS miss. The market reacted with a 1.43 % decline in the stock price, driven primarily by the earnings miss, even as the company beat revenue expectations and improved its free‑cash‑flow position.
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