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Investing.com - Needham has initiated coverage on Crexendo Inc. (NASDAQ:CXDO) with a Buy rating and a price target of $8.00, citing the company’s strong position for market share gains in the wholesale UCaaS (Unified Communications as a Service) market. The stock, currently trading at $6.07, has demonstrated impressive momentum with a 95% return over the past year. According to InvestingPro data, analyst targets range from $7.50 to $10.00, suggesting potential upside.
The research firm believes Crexendo has significant growth potential beyond its current base of 238 licensees, with an opportunity to expand across 5,000-6,000 service providers in the U.S. alone. Needham points to 2,000 licensees currently embedded in the Broadsoft/Metaswitch ecosystems as evidence of substantial runway with Tier 3 service providers at these legacy vendors. The company’s growth trajectory is already evident, with revenue increasing by 13.85% in the last twelve months and maintaining healthy gross margins of 63%.
Needham also highlights accretive acquisition opportunities for Crexendo to purchase companies from its licensee base, similar to its Allegiant Networks acquisition in 2022. The firm views this as a strategic path for growth beyond organic expansion.
The research firm cites Crexendo’s disruptive pricing model, open platform architecture, and broad set of integrations as key competitive advantages in the UCaaS market. These factors are expected to help the company outpace the overall market growth for UCaaS telephony lines.
Crexendo operates in the cloud communications sector, providing UCaaS, call center, collaboration, and other cloud business services to businesses and service providers across North America and internationally. The company maintains strong financial health with a current ratio of 2.71 and more cash than debt on its balance sheet. InvestingPro subscribers can access 12+ additional investment tips and a comprehensive Pro Research Report, offering deeper insights into Crexendo’s valuation and growth prospects.
In other recent news, Crexendo reported a 12% increase in total revenue for Q1 2025, reaching $16.1 million. Despite the revenue growth, the company fell short of its earnings per share (EPS) forecast, posting an EPS of $0.04 compared to the expected $0.06. Crexendo’s software solutions segment was a key driver, with a 33% revenue increase to $6.9 million, although product revenue saw a decline of 22% to $1.1 million. The company also announced plans to migrate to Oracle (NYSE:ORCL) Cloud Infrastructure by the end of 2025, aiming for further operational improvements. In another development, Crexendo is set to join the Russell 2000 and 3000 indexes, a move anticipated to enhance its visibility among investors. This inclusion is pending final review and expected to be effective after the U.S. markets open on June 27, 2025. Analyst discussions highlighted Crexendo’s ongoing focus on expanding its software solutions and AI capabilities, with potential strategic acquisitions under consideration.
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CXDO: A Bull or Bear Market Play?
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