CXDO

New in FY2025

• We are subject to risks related to public health crises, such as the COVID-19 pandemic, or other pandemics which may occur presently or in the future.
• For example, public and private sector policies and initiatives to reduce the transmission of contagious diseases and initiatives the Company took in response to the health crisis to promote the health and safety of our employees and provide critical infrastructure and connectivity to our customers, along with the related global slowdown in economic activity, resulted in slower revenue growth, increased costs and lower earnings per share and a sustained decrease in our stock price, which resulted in an impairment of goodwill of $32.1 million in 2022.
• Adverse Macroeconomic Conditions Could Materially Adversely Affect Our Business Adverse macroeconomic conditions, including inflation, interest rate volatility, tariffs, recessionary pressures, and uncertainty in capital markets, could materially adversely affect our business, financial condition, and results of operations.
• Our contracts typically fix pricing for multi‑year periods, which may limit our ability to pass through cost increases.
• Rising interest rates could reduce customer spending, increase financing costs, and negatively impact valuations.
• Recessionary conditions could increase customer churn, delay enterprise purchasing decisions, and reduce demand for our services.
• While non-US revenue has not been material to our business, that segment of our business has been expanding and may become material in 2026.
• The United States has imposed trade restrictions and tariffs on equipment we use, particularly from China and Canada.
• Risks Related to Sanctions and Export Controls.
• We may be subject to U.S. and foreign sanctions, export controls, and trade restrictions.
• Any inadvertent violation or failure by our customers or resellers to comply could expose us to fines, investigations, and reputational damage.
• Risks Related to Lawful Intercept and CALEA Compliance .
• We are subject to lawful intercept obligations under U.S. federal and state laws, including CALEA.
• Any failure to properly implement or maintain lawful intercept capabilities could expose us to enforcement actions, fines, litigation, or operational restrictions.
• We stopped paying a quarterly dividend in April 2023, the Company may consider a dividend in the future if there do not appear to be accretive acquisitions in 2026.
• The Board may consider a dividend if it appears unlikely the Company will make accretive acquisitions in 2026.
• As of December 31, 2025, we had net operating loss (“NOL”) carry-forwards of approximately $27,770.
• Service Level Agreement, Crexendo VIP 100% Uptime Guarantee and Customer Credit Exposure.
• Many of our enterprise and mid-market customer contracts include service level agreements (“SLAs”) that provide for customer credits, refunds, or termination rights if we fail to meet specified uptime, latency, or performance metrics.
• In addition, Crexendo VIP maintains a 100% uptime guarantee which also provides for credits and potential termination.
• Any prolonged outage, service degradation, or failure to meet contractual service levels could require us to issue significant credit, result in early terminations, and impair our ability to retain or attract customers.
• Our ability to meet SLAs is increasingly dependent on third-party cloud providers, carrier networks, and data center operators outside of our direct control.
• Any failure by those providers could expose us to contractual liabilities even when the underlying cause is external.
• Revenue Concentration and Enterprise Contract Renegotiation Risk.
• A portion of our revenues is derived from a limited number of large customers and service provider partners.
• The loss, downsizing, or repricing of one or more of these relationships could materially adversely affect our revenues, margins, and results of operations.
• Large customers often seek pricing concessions, customized features, and enhanced support, and may have greater leverage in contract renegotiations.
• Any inability to retain or renew large customer contracts on commercially acceptable terms could materially harm our business.
• Large customers close their business or otherwise migrating to a competator could have a negative affect on results and stock price.
• Dependence on APIs, Integrations, and Third-Party Applications.
• One of our competitive advantages relating to our software solutions division is our open application programming interfaces (“APIs”), allowing licenses to use applications that either they or third parties develop.
• Retail customers also use third party applications.
• Our products rely on application programming interfaces (“APIs”), integrations, and third-party applications to deliver functionality, enable workflows, and support customer use cases.
• Any failure, degradation, incompatibility, or discontinuation of third-party APIs or integrations could disrupt our services, impair customer experience, and reduce the attractiveness of our platform.
• Developers and integration partners may cease supporting our platform, migrate to competing platforms, or fail to build or maintain applications that meet evolving customer requirements.
• Feature Parity and Innovation Velocity Risk.
• Our ability to compete depends on maintaining feature parity with competing UCaaS and cloud communications platforms and rapidly deploying new functionality in response to customer expectations and technological change.
• If competitors introduce features or integrations that we do not match or cannot deploy in a timely or cost-effective manner, our products may become less attractive, and we may lose customers or pricing power.
• A portion of our software revenue is derived from licensees that self-host the NetSapiens platform.
• Our ability to generate recurring revenue and maintain platform quality is dependent on licensee deployment practices, security standards, and operational competence.

and 47 more.

Gone since FY2024

• We are subject to risks related to public health crises, such as the COVID-19 pandemic, or other pandemics which may occur.
• The COVID-19 pandemic had an adverse effect on our operating results in 2022.
• For example, public and private sector policies and initiatives to reduce the transmission of COVID-19 and initiatives the Company took in response to the health crisis to promote the health and safety of our employees and provide critical infrastructure and connectivity to our customers, along with the related global slowdown in economic activity, resulted in slower revenue growth, increased costs and lower earnings per share and a sustained decrease in our stock price, which resulted in an impairment of goodwill of $32.1 million in 2022.
• Adverse conditions in the U.S. and international economies could impact our results of operations and financial condition.
• Unfavorable economic conditions, such as a recession or economic slowdown in the U.S. or elsewhere, or inflation in the markets in which we operate, could negatively affect the affordability of and demand for some of our products and services and our cost of doing business.
• In difficult economic conditions, business customers that we serve may delay purchasing decisions, delay full implementation of service offerings or reduce their use of services.
• In addition, adverse economic conditions may lead to an increased number of business customers that are unable to pay for services.
• Unfavorable economic conditions could also amplify other risk factors discussed herein, including, but not limited to, our competitive position and margins.
• Over the last three years, as a result of the inflationary environment in the U.S., we experienced increases in our direct costs, including electricity and other energy-related costs for our network operations, and transportation and labor costs.
• We expect the inflationary environment and related pressures to continue into 2025.
• In that case and if other unfavorable economic conditions continue or worsen, they could have a material adverse effect on our results of operations and financial condition.
• The US economy has been strong, however there is a possibility of a recession or increase in inflation.
• If Inflation rises the Federal Reserve may not continue to reduce rates any further or may raise them and these factors may negatively affect our business.
• The economy has been strong; however, interest rates are still high and rate reductions are uncertain and there is a risk of a recession which may cause substantial disruption in our sales and results.
• Of particular concern is (1) impact of market downturn on sales; (2) impact of uncertain capital markets; (3) rising interest rates; and (4) the impact of inflation.
• Those issues, together with other uncertainties based on the economy may cause customers to cease operations, reduce spending by our customers, have customers defer purchase decisions and or reduce spending.
• All of those factors may have a material adverse effect on our business, results of operations, or financial condition.
• We sustained operating losses in 2023 and may experience losses in the future.
• While non-US revenue has not been material to our business, that segment of our business has been expanding and may become material in 2025.
• The United States may very likely impose trade restrictions and tariffs on equipment we use, particularly from China and Canada.
• We stopped paying a quarterly dividend in April 2023, the Company may consider a dividend in the future if there do not appear to be accretive acquisitions in 2025.
• The Board may consider a dividend if it appears unlikely the Company will make accretive acquisitions in 2025.
• As of December 31, 2024, we had net operating loss (“NOL”) carry-forwards of approximately $17,372.
• We are now selling more subscriptions based licenses on a monthly recurring revenue model, how the sale is structured may affect results on a quarter-to-quarter basis.
• Increasing Complexity in Managed Service Offerings Crexendo's Managed Service Provider (MSP) division may face challenges in scaling services, managing cybersecurity risks, and meeting the increasing expectations of customers.
• Migration to Oracle Cloud Infrastructure We are in the process of migrating from our own physical data centers to the Oracle Cloud Infrastructure (OCI).
• Operational Risks During Migration The migration process itself involves significant technical and operational risks.
• Challenges include data migration errors, potential service outages, and ensuring compatibility between our existing systems and Oracle's infrastructure.
• Any disruptions during migration could negatively impact on our customers, damage our reputation, and lead to potential revenue loss or customer attrition.
• Long-Term Dependence on Oracle's Business Strategy Oracle’s future decisions regarding pricing, technology offerings, or strategic priorities may directly impact our operations and profitability.
• Mihaylo, who was previously our Chief Executive Officer and former Chairman of the Board of Crexendo, Inc., owns approximately 43% of the outstanding shares of our common stock based on the number of shares outstanding as of December 31, 2024.
• At December 31, 2024, approximately 2,627,321 remain available for conversion.
• The right to exercise the options expires between March 11, 2026 through January 4, 2031.