Crexendo: The Software Slowdown Is Raising Questions, But The Thesis Isn't Broken

Fernanda Galvez Jalil 1.26K Followers Follow Summary Crexendo is rated Strong Buy, with ESI integration driving margin improvement despite a sharp slowdown in software growth. CXDO's Q2 revenue rose 49% YoY to $24.6M, but organic growth was only 7% and software revenue grew just 5%, raising concerns. Profitability improved, with gross margin at 65.9% and EBITDA margin at 12.6%. Free cash flow margin reached 10.2%. AI assistant CAIRO is showing early monetization, and $139M in RPO and new customer wins provide future revenue visibility. Luis Alvarez/DigitalVision via Getty Images Investment Thesis Crexendo's ( CXDO ) latest quarter showed a clear split in the story. ESI is integrating well and margins are improving. The problem is that software growth has slowed sharply, which is concerning in a market This article was written by Fernanda Galvez Jalil 1.26K Followers Follow My name is María Fernanda and I'm currently studying an MBA. My inspiration investors are Warren Buffett, Peter Lynch and Terry Smith, so I look for quality companies at a reasonable valuation. I believe that, in the long term, fundamentals are what drive the share price, so I look to predict what a business's earnings per share will do. Analyst’s Disclosure: I/we have a beneficial long position in the shares of CXDO either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.