We came across a bullish thesis on Crexendo, Inc. (CXDO) on Substack by Sam McColgan. In this article, we will summarize the bulls’ thesis on CXDO. Crexendo, Inc. (CXDO)’s share was trading at $4.45 as of April 17th. CXDO’s trailing P/E was 74.17 according to Yahoo Finance.
A telecommunications tower in a rural setting, showing the reach of cloud telecom services.
Crexendo (CXDO) presents a resilient and compelling investment case despite macroeconomic headwinds like tariffs, which are currently focused on physical goods rather than services—the core of Crexendo’s business. While the company does generate a small portion of its revenue (about $5 million out of $60 million) from hardware, this segment is low-margin and largely non-strategic. Its hardware offerings exist primarily to complement its broader UCaaS platform, and any tariff-driven impact would be both minor and likely passed on to customers without materially affecting margins. Even if hardware sales were to completely collapse—a highly unlikely scenario—the effect on Crexendo’s value proposition would be negligible. The real driver for CXDO is its fast-growing, high-margin software business, which is what fundamentally attracts investor interest. Hardware cost increases, while not ideal, are unlikely to shift buyer behavior significantly; communication devices are essential and relatively inexpensive, especially when amortized through installment plans. Furthermore, competitors in the UCaaS space share the same global supply chains, so there’s little risk of Crexendo falling behind due to tariff-related cost pressures. The essential nature of its offerings ensures demand persistence even in a downturn, with Crexendo’s position as the low-cost provider potentially becoming even more attractive to budget-conscious businesses. This dynamic not only supports stable customer retention but could also accelerate new client onboarding. Importantly, any near-term suppression in the company’s valuation due to market noise could serve as a strategic opportunity. With a strong balance sheet, Crexendo could deploy its cash reserves to pursue opportunistic acquisitions, further strengthening its market position. Overall, the potential impact from tariffs appears minimal and does little to detract from Crexendo’s underlying growth trajectory and operational resilience, making it a fundamentally attractive name in the UCaaS space with built-in downside protection and upside optionality.
Crexendo, Inc. (CXDO) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 10 hedge fund portfolios held CXDO at the end of the fourth quarter which was 7 in the previous quarter. While we acknowledge the risk and potential of CXDO 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 CXDO but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article was originally published at Insider Monkey.