0001866633-26-000011
SEC filingRevenue grew 2% YoY driven by Corporate segment growth, offset by SoHo decline; margins improved.
For the three months ended March 31, 2026, total revenue increased 2% to $88.5 million from $87.1 million in the prior year period. The growth was driven entirely by the Corporate segment, which saw an 8% increase to $58.7 million, while SoHo revenue declined 9% to $29.7 million. Gross profit rose to $71.6 million (81% margin) from $68.9 million (79% margin) in Q1 2025, as cost of revenues decreased 6% due to lower data transmission costs ($0.8 million) and depreciation/amortization ($0.6 million). Operating expenses increased 7% to $33.8 million, with sales and marketing up 8% (higher advertising spend), R&D up 12% (personnel costs), and G&A up 6% (personnel and depreciation). Net income improved to $24.8 million from $22.3 million, reflecting higher revenue, improved gross margin, and lower interest expense ($7.8 million vs. $9.0 million) due to debt repurchases. The effective tax rate decreased to 23.0% from 24.1%, benefiting from the One Big Beautiful Bill Act and geographic income mix.
The Corporate segment continued its growth trajectory, with revenue increasing 8% YoY to $58.7 million, supported by a rise in customer accounts (65 vs. 60) and stable ARPA ($305.59 vs. $304.50). Paid adds for Corporate were 7 in Q1 2026, up from 5 in Q1 2025. Monthly churn for Corporate increased to 3.00% from 2.32%, indicating some retention challenges despite account growth. The SoHo segment experienced a 9% revenue decline to $29.7 million, driven by a reduction in customer accounts (645 vs. 701) and higher monthly churn (3.92% vs. 3.52%). SoHo ARPA remained relatively flat at $15.46. The company noted it removed duplicate Corporate accounts and eliminated dormant SoHo accounts in prior periods, which affected comparability. The mix shift toward Corporate is a strategic priority, as the company focuses on larger commercial and public sector customers with higher ARPA and longer retention.
Management expects organic and inorganic growth through reinvestment and opportunistic acquisitions in the interoperability space. The company highlighted its ability to sustain growth amid uncertain economic conditions, inflationary pressures, and elevated interest rates. Key strategic priorities include maintaining and increasing the customer base and ARPA, expanding Cloud Fax internationally, and managing risks from currency fluctuations and regulatory changes. The company's liquidity position is strong, with $92.3 million in cash and cash equivalents as of March 31, 2026, and $11.0 million available under the Revolving Credit Facility. Management anticipates existing cash and operating cash flows will fund working capital, capital expenditures, and stock/debt repurchases for at least the next 12 months. The debt repurchase program (up to $300 million) and share buyback program (extended through February 2028) remain active, with $222.6 million in debt and $72.6 million in shares repurchased cumulatively as of March 31, 2026.