Revenue of $234.0 million beat the $233.1 million estimate by 0.4%; non-GAAP diluted EPS of $0.50 beat the $0.47 estimate by 6.1%.
Full-year 2026 guidance is $905-$910 million of revenue, $124-$125 million of adjusted EBITDA and $1.73-$1.79 of non-GAAP EPS; against nine-month revenue of $662.7 million and non-GAAP EPS of $1.22, that leaves $242-$247 million and $0.51-$0.57 for the fourth quarter.
Operating leverage turned: adjusted EBITDA of $34.8 million grew 43% on 22% revenue growth, and GAAP operating income was positive at $1.8 million against a $2.0 million loss a year ago.
Cash came through: operating cash flow of $37.7 million and free cash flow of $33.0 million, against $22.2 million and $13.1 million a year ago.
The one thing that matters: the 22% revenue headline overstates the growth that carries margin - cloud communications revenue, which strips out pass-through messaging surcharges, rose 11% to $158 million from $142 million, which is why GAAP gross margin fell to 36% from 38% while non-GAAP gross margin rose to 61% from 58%.
Key metrics
Metric
Reported
Prior year
Change
Revenue
$234 million
$192 million
up 22% year-over-year
Adjusted EBITDA
$35 million
$24 million
up 43% year-over-year
Non-GAAP Gross Margin
61%
58%
—
Non-GAAP net income
$20 million
$11 million
—
Free cash flow
$33 million
$13 million
—
Cloud communications revenue
$158 million
$142 million
—
Guidance changes
Item
New guidance
Prior guidance
Full year 2026 revenue
$905 - $910
—
Full year 2026 Adjusted EBITDA
$124 - $125
—
Full year 2026 Non-GAAP earnings per share
$1.73 - $1.79
—
Full year 2026 weighted average diluted share count
approximately 38.7 million
—
2027 Cloud Communications revenue outlook
double-digit Cloud Communications revenue from voice usage demand growth
—
Quality of earnings
The gap between GAAP and adjusted is ordinary, and cash backs the result. Non-GAAP net income of $19.9 million against $5.2 million of GAAP net income is $14.6 million of stock compensation and related payroll taxes plus $7.5 million of amortization, net of tax effects; operating cash flow of $37.7 million ran more than seven times GAAP net income.
Per-share growth lags the business because the share count jumped. Non-GAAP net income rose 73% to $19.9 million from $11.5 million, but non-GAAP diluted EPS rose only 39% to $0.50 from $0.36, with diluted shares at 40.1 million against 32.3 million on convertible conversion.
GAAP net income runs above pre-tax income. Net income of $5.2 million on $3.3 million of pre-tax income reflects a $1.9 million income tax benefit, and other income includes a $0.8 million gain on debt extinguishment.
Gotchas & watch items
The growth is thinner than 22% looks: pass-through messaging surcharge revenue went to roughly $76 million from $50 million, since total revenue of $234.0 million less cloud communications revenue of $158 million compares with $191.9 million less $142 million a year ago.
The 22% adjusted EBITDA margin is measured on the smaller base: $34.8 million against cloud communications revenue of $158 million, not against the $234.0 million of total revenue, where it is 14.9%.
Cost discipline is better than the gross line suggests: total operating expenses grew 9.5% to $83.0 million against 22% revenue growth, and non-GAAP gross margin rose three points to 61%.
The full-year guide needs a step up, not a repeat: $905-$910 million implies $242-$247 million in the fourth quarter against the $234.0 million just reported.