Ricardo Pillai
2 min read
We came across a bullish thesis on Sangoma Technologies Corporation (SANG) on Substack by The LongView. In this article, we will summarize the bulls’ thesis on SANG. Sangoma Technologies Corporation (SANG)'s share was trading at $5.67 as of May 12th.
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Sangoma Technologies reported a solid quarter, with results largely in line with expectations, reinforcing the company’s improving fundamentals and strategic direction. Revenue came in at $58.1 million, down slightly from the previous quarter, but gross margins improved to 69%, and adjusted EBITDA reached $9.8 million—17% of revenue. Free cash flow remained strong at $8.4 million, or $0.25 per diluted share, and net debt fell from $43.3 million to $35.8 million. Over the past six months, Sangoma has generated over 12% of its market cap in operating cash flow, reflecting a resilient and cash-generative business. The most compelling signals point to a meaningful return of organic growth, a theme that is increasingly central to the investment case. The company's forward 90-day pipeline rose 24%, the large deal pipeline surged 90%, and the premium UCaaS pipeline doubled, helped in part by market share gains from bankrupt competitors. Importantly, customer satisfaction metrics soared—NPS is up 4x year-over-year, and overall satisfaction has improved 23%, which bodes well for retention and future growth. Management continues to focus on high-margin recurring revenue products while phasing out non-core, non-recurring offerings. Despite a slight expected revenue drop from this transition, it positions Sangoma for long-term margin expansion, with gross margins targeted at 75–80% by H2 2026. Churn also improved, now just 0.9%. The company is hinting at divestitures, likely of lower-margin hardware assets, and recently completed ERP investments will save $5 million over three years. With strong buybacks, no dilution risk, and competitors weakening, Sangoma appears primed for a multiple rerate.
Sangoma Technologies Corporation (SANG) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 2 hedge fund portfolios held SANG at the end of the fourth quarter which was 0 in the previous quarter. While we acknowledge the risk and potential of SANG as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than SANG but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
