Crexendo's CEO Discusses Q4 2011 Results - Earnings Call Transcript

Crexendo, Inc. ( EXE)

Q4 2011 Earnings Call

February 28, 2012 4:30 p.m. ET

Executives

Steven G. Mihaylo – Chairman, President and Chief Executive Officer

Jonathan R. Erickson – Chief Financial Officer

David Krietzberg – Chief Administrative Officer

Doug Gaylor - Vice President of Sales

Jeffrey Korn – Chief Legal Officer

Analysts

Austin Hopper - AWH Capital

Jeff Bash - Private Investor

Craig Samuels - Samuels Capital Management

Ernie Segundo - Pandion Capital

Presentation

Operator

Good day and welcome to the Crexendo year end conference call. Today’s conference is being recorded. At this time I would like to turn the conference over to Mr. Steve Mihaylo, Chief Executive Officer. Please go ahead, sir.

Steven G. Mihaylo

Thank you, Melanie. Good afternoon, everyone, and welcome to the Crexendo year end financial conference call. I’m joined today on the call by John Erickson, our Chief Financial Officer, Dave Krietzberg, Our Chief Administrative Officer, Doug Gaylor, our Vice President of Sales, Clark Rines, Vice President of Engineers, and Jeff Korn, our Chief Legal Officer.

I’m going to provide some comments about our business and the continued changes we have implemented in our progress. I will then turn the call over to John who will add some granularity on the numbers. Doug Gaylor will give a brief sales update and Dave Krietzberg will provide an operation update.

We will then open the call up to questions. I’d first like to ask Jeff Korn to read our Safe Harbor information.

Jeffrey Korn

Thank you, Steve. I want to take this opportunity to remind listeners that this call will contain forward-looking statements within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934. The Private Securities Litigation Reform Act of 1995 provided a Safe Harbor for forward-looking statements. All statements made in this conference call other than statements of historical facts are forward-looking statements.

Forward-looking statements include, but are not limited to words like “belief,” “expect,” “anticipate,” “estimate,” “will,” and other similar statements of expectations identifying forward-looking statements. Investors should be aware that any forward-looking statements are based on assumptions, and are subject to risks and uncertainties that could cause actual results to differ materially from those discussed here today.

These risk factors are explained in detail in the Company’s filings with the securities and exchange commission, including the Form 10-K for the fiscal year ended December 31, 2011 which will be filed and the previous 10-K quarterly reports which are currently filed. Crexendo does not undertake any obligation to publicly update or revise any forward-looking statement, whether it’s a result of new information, future events or otherwise.

I’d now like to turn the call back to Steve. Steve?

Steven G. Mihaylo

Thank you, Jeff. Our Crexendo business continues to transition and I continue to be excited by what I see and the progress we’ve made. While I’m disappointed with the sales due to regulatory approval, I am pleased with the changes we have made to our sales process and the hiring process, including our training program. And I’m excited about our future prospects.

As we discussed before, we’ve registered our telecom services as a local exchange carrier in most jurisdictions. We did this to show and demonstrate our belief in our products and services and to make sure we could provide interstate calls in locations that require registration.

We are now registered in 46 states and two more pending. This fulfills my expectation that we will have a nationwide ready-to-go offering in place by the beginning of 2012. We’ve been very pleased with our rollout of the services and products and, as I discussed before, we have numerous beta tests of our products; one tester with 100 phones in multiple locations. All testers have been qualified in services that we provide.

I’m more pleased that most of the customers we use for now have agreed to pay for the service that we were giving them for free. They have used our services, compared our prices and offerings and made the decision that Crexendo was right for them.

We have a tiger team working on a strong Web offering for the small businesses in SoHo market. We will have an automated process in place to handle those customers at reduced costs. I expect that this will be in place by the end of next quarter and I have high hopes of the long-term sales from this market. We have a robust enterprise program and I am excited about the prospects of showing any size business our products and services work. And we are very competitive in our pricing.

Our Web Services division continues to provide excellent service to customer. We have ranked among the top SEO firm in many markets that we serve. We continue to increase our sales process for these services, working hand-in-hand with our telecom sales. I expect that this will be synergy between these segments of our business. I believe that we can provide multiple products to multiple customers and make our customers and partners go-to solutions for the Web telecom services and we’ll continue to provide.

In that regard, we are now diligently working on access to providing our customers with Internet access. We have in process some entering into resale agreements with numerous Internet providers so that we can provide network access to our customers and give them the benefit of getting multiple services from us on one unified bill. This will be of great benefit to our customers and provide us with more touch points so that we will have the sticky customers that recurring revenue model will be built upon.

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