Crexendo has made a significant move to expand its presence in cloud communications by acquiring Estech Systems (ESI) for $35 million. This acquisition adds 75,000 seats to the NetSapiens ecosystem, enhancing Crexendo’s operational capabilities and positioning it closer to its goal of achieving a $100 million annual revenue run rate.
The acquisition involves a combination of $27.3 million in cash and $7.7 million in common stock. It is a strategic consolidation of the NetSapiens ecosystem, making one of its long-standing licensees a part of the Crexendo family. This move is expected to positively impact revenue and EBITDA, strengthening Crexendo’s financial standing as it continues to capture a greater share of the cloud communications market.
Chairman and CEO Jeff Korn expressed enthusiasm about the acquisition: “This acquisition is exactly the type of transaction we have been talking about for years. ESI is a best-in-class organization with exceptional people, strong engineering capabilities, and a long history of success serving customers on our NetSapiens platform. By incorporating ESI into Crexendo, we are combining our strong double-digit organic growth with an accretive acquisition from our deep ‘fishing pond’ of licensees.”
The financial terms value ESI at around 1.35 times its unaudited 2025 revenue, approximately $26 million. By acquiring ESI, Crexendo not only gains a healthy revenue stream but also integrates a well-established organization from Plano, Texas, adding further operational scale to its growth strategy.
A noteworthy aspect of this acquisition is the reinforcement of Crexendo’s innovative M&A model. In an industry where integrating diverse platforms can be challenging, acquiring a NetSapiens licensee brings inherent advantages. With compatible tech stacks, the acquisition reduces risks related to post-merger challenges and eliminates the capital-intensive migration from legacy systems to new environments.
A key element of Crexendo’s strategy involves moving workloads to Oracle Cloud Infrastructure (OCI). This shift indicates a focus on expanding margins by optimizing infrastructure and licensing costs, highlighting Crexendo’s commitment to refining its business model for profitability and growth. This distinction sets Crexendo apart in a market where acquiring growth at any cost is common.
For customers, especially those within the ESI user base, this acquisition offers stability not often seen in vendor consolidations. Operating on the same NetSapiens platform minimizes disruptions to daily operations and avoids platform sunsetting. As George Platt, President & CEO of ESI, stated, “Crexendo has been a trusted partner for many years, and this transaction allows us to deliver even greater value to our customers.”
Moving to Oracle Cloud Infrastructure promises a more resilient backend, addressing the growing importance of security and uptime among enterprise buyers. Additionally, customers will benefit from Crexendo’s enhanced R&D capabilities, ensuring continuous innovation in AI and collaboration features.
In conclusion, Crexendo’s acquisition of ESI not only strengthens its market position but also demonstrates a strategic approach to sustainable growth. With a focus on familiar partnerships, Crexendo prepares to meet future challenges in an ever-evolving telecommunications landscape.
