We came across a bullish thesis on Crexendo, Inc. (CXDO) on Twitter by Kyle Adams. In this article, we will summarize the bulls’ thesis on CXDO. Crexendo, Inc.'s share was trading at $5.19 as of Oct 11^th. CXDO’s trailing P/E was 51.90 according to Yahoo Finance.

A technician in a telecommunication tower adjusting the receiver of a voice over internet protocol call.

Crexendo (CXDO) is a $100M market cap company that operates in the Unified Communications as a Service (UCaaS) space. Competing against larger names, Crexendo stands out for its high customer satisfaction, ranking #1 in 19 categories on G2.

Crexendo generates revenue primarily from two segments: software and telecom. The software segment, which makes up 35% of the revenue and is growing at 25% year-over-year, boasts high margins of 73%. The telecom side, accounting for 65% of revenue, has lower margins at 60% and slower growth. As the software side continues expanding, it is set to become the majority of revenue, significantly improving the company’s bottom line.

Investing in CXDO presents multiple reasons for optimism. The company is migrating to Oracle Cloud Infrastructure (OCI), which will save an estimated $1M annually, boosting profitability. The growing UCaaS market, expanding at a 20% CAGR, offers significant opportunities, particularly as Crexendo was recently named the fastest-growing UCaaS provider in the U.S. by Frost & Sullivan. Additionally, Microsoft's decision to sunset its MaX UC system opens up a $500M market opportunity for Crexendo. CXDO’s recent acquisition of Allegiant Networks has already proven successful, driving 21% revenue growth in 2023. Future acquisitions of licensees are expected to further accelerate growth. With insider ownership at 59% and significant recent insider buying, management is clearly aligned with shareholder interests. Given the company’s double-digit growth, and expanding software margins, Crexendo offers a compelling investment case.

Crexendo, Inc. is not on our list of the 31 Most Popular Stocks Among Hedge Funds. As per our database, 7 hedge fund portfolios held CXDO at the end of the second quarter which was 8 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.