Sangoma Technologies Q3 F25 Update - $STC.to

Steady as she goes. Waiting for growth.

*Disclosure: I own shares in STC. I am not a professional. Please do your own due diligence.

Price: $8.29 CAD / $5.82 USD

MC: 193 million USD

EV: 229 million USD

1 year performance: +46.7%

STC reported yesterday after the close and held a call. Results were in line with of my expectations (which means they were roughly in line with their guidance).

*all numbers in USD unless stated otherwise

Quarter Recap

• 58.1 million revenue vs 61 last year

• 9.8 million EBITDA vs 11.2 last year

  • 16.8% margin

  • Would have been 10.2 million without the ERP

• Quarterly churn less than 1%

• Purchased 155k shares

• Guide narrowed for full year

  • From 235-240 million revenue to 235-238 million revenue

    • This would mean flat to around a 5% drop in top line for Q4 if I did my math right

  • Keeping EBITDA guidance of 40-42 million

    • Looks like they are at 10.3-12.3 million in Q4

• ERP cost drag and efficiencies that it provides will become evident in 2026

Call Notes

• Project diamond is now complete

  • This was meant to streamline STC and set them up for future growth

• So far tariff have not impacted their business in a big way

• They are looking to divest the 3rd party product resell part of the business

  • This is VOIP Supply

• Lots of discussion on the call of the Mitel bankruptcy and the opportunity it presents

  • STC has a chance to win some on prem or hybrid business and help those customers with their cloud migration when they are ready

• The balance sheet is much cleaner and now they are ready to pursue growth opportunities

  • organic, geographical expansion or M&A

  • the CEO mentioned several times that he doesn’t want to dilute shareholders to grow

• They want to see how the NCIB goes before doing an SIB

• They mentioned that gross margin and EBITDA margin should grown from here as they hit some operating leverage

Valuation

I have STC at 5.6x EV/mid point F25 EBITDA. I have them at under 8x EV/FCF which is pretty darn cheap.

Closing Thoughts

The deleveraging and streamlining is done for STC. They are entering the next phase for the business. They have deployed capital in an efficient manner and set themselves up for success in the future. If they can get some organic growth layered with an acquisition, I could see the multiple going up from here. I don’t know how much growth we get in 2026, but I would hope it’s something.

The NCIB should provide some support in the share price here. I like how it’s an automatic purchase plan.

I continue to hold my shares.

Thanks for reading.

Dean

* long STC