Sangoma Technologies (NASDAQ:SANG) held its second-quarter earnings conference call on Wednesday. Below is the complete transcript from the call.
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The full earnings call is available at https://sangoma.com/company/investor-relations/
Summary
Sangoma Technologies reported Q2 fiscal 2026 revenue of $51.5 million, a 1.2% sequential increase, with service revenue growing by 1% and adjusted EBITDA at $8.3 million.
The company saw significant improvement in MRR bookings, up 67% sequentially and 60% year over year, driven by larger strategic deals and an enhanced partner program.
Sangoma is focusing on scaling its go-to-market strategy with a $2 million investment in SG&A, aiming to strengthen its mid-market presence and maintain strong financial discipline.
Operational highlights include a large strategic deal with a retail customer, and ongoing strength in their hardware and carrier voice solutions, with bookings translating into a strong backlog for Q3.
Future guidance indicates expected revenue of $205 million to $208 million for fiscal '26, with adjusted EBITDA margins between 17% to 18%, highlighting a return to organic growth post divestiture adjustments.
Full Transcript
OPERATOR
Thank you for standing by. This is the conference operator. Welcome to Sangoma's second quarter fiscal 2026 conference call. As a reminder, all participants are in listen-only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. To join the question queue, you may press star then one on your telephone keypad. If you need assistance during the conference call, you may reach an operator by pressing star then zero.
I would now like to turn the conference over to Samantha Reburn, Chief Legal Officer. Please go ahead, Ms. Reburn.
Samantha Reburn, Chief Legal Officer
Thank you, operator. Hello everyone and welcome to Sangoma's second quarter of fiscal year 2026 investor call. We are recording the call and we will make it available on our website for anyone who is unable to join us live. I'm here today with Charles Salameh, Sangoma's Chief Executive Officer, Jeremy Wubs, Chief Operating Officer, and Larry Stock, Chief Financial Officer. Charles will provide a high-level overview of the quarter. Jeremy and Larry will then take you through the operating results for the second quarter of fiscal year 2026, which ended on December 31, 2025.
Following their presentation, we will open the floor for Q&A with analysts. We will discuss the press release that was distributed earlier today together with the company's financial statements and MD&A, which are available on SEDAR+, EDGAR, and our website. As a reminder, Sangoma reports under International Financial Reporting Standards, and during the call we may refer to terms such as adjusted EBITDA and free cash flow, which are non-IFRS measures that are defined in our MD&A. Before we start, I'd like to remind you that the statements made during the course of this call that are not purely historical are forward-looking statements regarding the company or management's intentions, estimates, plans, expectations, and strategies for the future. Because such statements deal with future events, they are subject to various risks and uncertainties, and actual results may differ materially from those projected in the forward-looking statements.
Important factors that could cause actual results to differ materially from those in the forward-looking statements are discussed in the accompanying MD&A, unaudited condensed consolidated interim financial statements, our annual information form, and the company's annual audited financial statements posted on SEDAR+, EDGAR, and our website. With that, I'll hand the call over to Charles.
Charles Salameh, Chief Executive Officer
Good afternoon everyone and thanks for joining us. I'm pleased to report that fiscal Q2 tracked right to plan, including one of our strongest booking quarters in recent history. This is a clear indication that our go-to-market strategy is gaining traction and that the investments we've made in positioning Sangoma for growth are starting to show tangible results. As we outlined last quarter, Q2 would show sequential revenue growth and we delivered on that expectation.
Revenue for the quarter was $51.5 million, up 1.2% sequentially, and importantly, service revenue grew 1%. This is an important signal as it reflects the early impact of improving bookings momentum beginning to translate into recurring revenue growth. We delivered $8.3 million in adjusted EBITDA with 16% margins, and conversion of adjusted EBITDA to operating cash flow was very strong at more than 120%. This continues to reinforce the quality, consistency, and discipline of our earnings model, and as a result free cash flow improved sequentially to $8 million, or $0.24 per fully diluted share.
Building on the KPIs we introduced last quarter, we're starting to see sustained progress in our mid-market strategy. Pipeline conversions remain solid, our bookings profile continues to improve, and we're seeing growing traction across our verticals and our wholesale motions. Collectively, these trends highlight the increasing effectiveness of our platform approach and our ability to execute at larger scales. With regard to pipeline, our pipeline remains steady in Q2, reflecting a healthy balance between new opportunity creation and deal conversion.
Importantly, we continue to see improvements in our close rates, which reinforces both the quality of the pipeline and the effectiveness of our go-to-market execution. On bookings, MRR bookings grew significantly, up 67% sequentially and 60% year over year. As we increasingly engage with these larger, more complex mid-market opportunities, we expect some quarterly volatility but with a higher long-term value and stronger recurring revenue. This is exactly the type of shift we want to see as we scale this business.
On churn, also very proud of this, we saw sequential improvement in the churn rate. Retention remains excellent, with blended churn holding just under 1%. This reflects the stability of our recurring revenue base and the progress we've made in our customer experience, service delivery, and platform stability. Now, as we continue to execute on our FY26 priorities, we are seeing momentum across all the business. Our essential communications platform, combined with more focused solution bundles, deeper vertical alignment, and a strengthening partner ecosystem, is enabling us to compete more effectively for larger, multi-site, and more strategic mid-market opportunities. More broadly, this reflects a shift in how customers are buying, and we're seeing that dynamic increasingly show up in the structure and the quality of opportunities we're pursuing. The progress we are seeing is not isolated to individual wins but is visible in the overall size of the opportunities, the quality of those bookings, and the breadth of the customer segments engaging with us on our platform. With our leadership team, our operating systems, and our partner programs now firmly in place, we are investing to scale our go-to-market engine.
As outlined last quarter, we committed approximately $2 million in incremental SG&A to accelerate pipeline development, customer acquisitions, and execute on partner enablement. In Q2, we began deploying these investments in a measured way, focused on building momentum while maintaining strong financial discipline. Our approach to capital allocation remains balanced and pragmatic. We continue to reduce debt and return value to our shareholders through our normal course issuer bid.
At the same time, we maintain the flexibility to pursue strategic and selective, accretive M&A aligned with our strategy should the right opportunity show up. Before I hand it over to Jeremy, I want to take a moment to step back and frame how we see the next phase of our business. What we are seeing in the market today, particularly in the mid-market, continues to reinforce the direction we've been intentionally pursuing over the past several years.
Customer expectations are evolving towards fewer vendors, more integrated solutions, and partners that can deliver dependable service in industry-specific contexts. In this environment, scale becomes a strategic priority—not as an objective on its own, but because it supports stronger economics, consistent execution, and deeper long-term customer relationships. The key point here is that our ability to pursue scale is now an enabler for Sangoma rather than a constraint.
The foundational work we completed has positioned Sangoma extremely well. We have the balance sheet, the operating discipline, platform breadth, and the partner ecosystem required to grow organically while also being able to pursue opportunities that expand our scale and momentum as industry dynamics continue to evolve. As a result, we have real flexibility in how we move forward. That includes continuing to execute organically, selectively expanding the platform where it makes sense, and maintaining the ability to evaluate broader opportunities as the market continues to mature.
Any path we pursue will be grounded in discipline and a clear focus on long-term value creation, as we have been doing for the past two years. And importantly, you've already seen the impact of the foundation show up in the fundamentals—stronger bookings, a growing recurring revenue base, improving churn, and consistent cash generation. I want to thank the entire Sangoma team for their continued focus and execution, as well as the key stakeholders who have been with us through this entire transformation.
The progress we're seeing is the direct result of the work being done across the whole company, and it's what positions us well for the next phase of our growth. Jeremy is now going to walk you through how the momentum is translating into our go-to-market execution and our booking performance. Over to you, Jeremy. Thanks.
Jeremy Wubs, Chief Operating Officer
I am pleased to provide an update on our go-to-market progress. Building on the bookings momentum Charles highlighted, what I want to emphasize today is how those wins are being driven and why we're confident in the trajectory of our go-to-market engine. As mentioned, our pipeline remains healthy and we continue to convert a balanced mix of volumetric business and larger strategic mid-market opportunities. During the second quarter we closed 7.5 of the 14.8 million in new large strategic deal TCV identified last quarter, bringing our total large strategic TCV bookings to 10.8 million for the first half of fiscal 2026.
Equally important, we backfilled the pipeline as we move into the second half. These bookings further validate our strategy as an essential communications provider and our ability to move upmarket. Several of these large wins also include upfront product or NRR components and will contribute to a slightly higher product mix in Q3. In prior quarters I referenced a number of our go-to-market strategies targeting service providers, MSPs, vertical solution providers and wholesale opportunities.
Regarding the wholesale opportunities, last quarter I talked about a FELAC win of over 20k MRR and a comparable deal in our pipeline for a large healthcare organization of 12k MRR. I'm very pleased to confirm that this opportunity, which supports two large hospitals and nine urgent care facilities, is now a close win. We also closed a large multi-location retail customer worth 18k MRR that previously had three separate vendors for voice, access and managed services.
This client was looking for a single provider and valued the bundled solution from Sangoma to standardize the technology stack across all locations and ensure scalability, repeatability and simplified support. Our most substantial service win this quarter was a greater than 150k MRR deal with a large distributed retail customer with 350 plus locations and a fragmented and disparate business communications environment. This customer was also looking for a single provider to once again ensure scalability, repeatability and simplified support.
Beyond these large and strategic MRR wins, our hardware products such as our Prem UC products, phones and gateways continue to contribute to our product revenue as they move through distribution. I'm very pleased that this channel continues to show strength. With revenue up 4% over the same quarter last year, we are also seeing strong momentum with our carrier voice and trunking solutions. During the quarter we announced a contract with Kameo who selected our wholesale SIP trunking solution to support their nationwide cloud, voice and messaging footprint.
They are one of many new customers that are leveraging our trunking infrastructure, which is up over 10% from the same quarter last year. I'm encouraged by the progress of our go-to-market. We have a disciplined and focused team driving a growing pipeline in the volumetric business alongside larger strategic opportunities. These larger deals are being closed and we will see the revenue impact in later quarters, providing solid visibility towards our growth.
I want to extend my thanks and appreciation to the entire Sangoma team. It's truly a team effort for the continued execution and focus on driving sustainable, profitable growth. I'll end here and pass things over to Larry. Thank you.
Larry Stock, Chief Financial Officer
Thank you Jeremy, and welcome everyone. We appreciate you joining us for today's call. Fiscal Q2 landed exactly where we expected, reflecting continued execution across the business. As a result of the bookings momentum in Q2, our starting backlog for Q3 is up approximately 125% compared to the start of Q2. This provides strong visibility into the second half of the year and reinforces the improving consistency of our operating performance. In the second quarter we generated $10.1 million in net cash from operating activities, representing a 122% conversion rate from adjusted EBITDA.
This reflects positive working capital movements as trade receivables returned to historical levels following the timing impact we discussed last quarter related to our ERP implementation. Year-to-date, our conversion of adjusted EBITDA to net cash from operations was 91%, which is right in line with our expectations for the fiscal year. Free cash flow for the second quarter was $8 million, or $0.24 per diluted share. Given our strong free cash flow yield relative to the share price, we continue to take advantage of our normal course issuer bid.
During the second quarter, we repurchased approximately 196,000 shares. Since launching the program last April, we have retired more than 700,000 shares, or 2.1% of shares outstanding. This reflects both our capital discipline and our confidence in the long-term value of the business. We also continued to reduce debt, retiring an additional $5.2 million in debt during the second quarter. We ended Q2 at $37.6 million of total debt compared to $60.4 million in Q2 of last year.
This ongoing deleveraging remains an important part of our capital allocation strategy and as our credit profile improves, it further enhances our flexibility. As we think about the next phase of the business, quarter-end cash was $17.1 million, up 27% from June 30. Looking ahead to the remainder of fiscal '26 and into fiscal '27, our capital priorities remain unchanged: leveraging strong cash generation to support organic growth and profitability, continue reducing debt to provide greater strategic flexibility, return capital to shareholders where appropriate, including through the NCIB, and evaluate disciplined, strategically aligned M&A opportunity.
This balanced approach positions us to drive durable long-term value creation. Now turning to the P&L, total revenue for the second quarter was $51.5 million, representing sequential growth of 1.2% from Q1. As we had indicated last quarter, excluding $6.4 million of revenue from VoIP Supply which was strategically sold to exit low-margin non-recurring resale activity, revenue was 2% lower year over year on a like-for-like basis. As Charles noted, services, which represent 92% of total revenue, grew 1% sequentially driven by higher cloud services revenue.
Gross profit was $38.2 million in the second quarter and gross margin improved to 74% compared to 72% in the first quarter and 68% in the prior-year period, reflecting a more favorable revenue mix and continued strength in recurring services. Adjusted EBITDA for the second quarter was $8.3 million, or 16% of revenue, consistent with Q1. We also had higher commissions tied to several large contracts booked in Q2, a healthy sign of commercial productivity.
We expect adjusted EBITDA margins to improve in the second half of fiscal '26 as revenue builds and we benefit from operating leverage. With the first two quarters coming in largely as expected and a solid backlog, we are tightening our guidance for fiscal '26. We now expect revenue of $205 million to $208 million and adjusted EBITDA margin in the range of 17% to 18%. Achieving this outlook assumes another sequential revenue increase in Q3, and we anticipate returning to year-over-year organic growth once we adjust for the divestiture of VoIP Supply.
We look forward to building on these foundations as we move through the back half of the year and into fiscal '27. Before we open the line for questions, I want to thank the broader Sangoma team. Your focus, commitment and execution continue to drive the progress we're seeing across the entire business. We're now ready to open the call for questions. Operator?
OPERATOR
Certainly. We'll now begin the question and answer session. For analysts to join the question queue, you may press star then 1 on your telephone keypad. You'll hear a tone acknowledging your request. If you're using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press star then 2. Our first question is from Robert Young with Canaccord Genuity. Go ahead.
Robert Young, Analyst at Canaccord Genuity
Great. The 67% quarter-over-quarter growth in MRR bookings, I'd like to dig into that a bit. What are the key drivers there? I mean, you mentioned a lot in the prepared remarks. Timing of larger deals, higher close rate, I guess the go-to-market biting where you want it to. If you can just dig into that a little more because it's a big number. What are the key drivers?
Jeremy Wubs, Chief Operating Officer
Yeah, I mean the key drivers are really tied to some of those larger strategic deals. We've got a really healthy new partner program in place and we're seeing some of those bigger strategic partners working closely with us to find larger logos. So some of those logos that I mentioned just a few minutes ago, some of those larger deals are what grew both our pipeline and our bookings quarter over quarter.
Charles Salameh, Chief Executive Officer
Those are deals. Rob, how's it going by the way? Those were deals that we started developing early in Q3 of last year and Q4, and now they're coming to fruition. As I was talking about, the pipeline was building these larger transactions, these multi-site locations, and they started landing in Q1 and Q2. We'll see that continued trend going forward and hopefully growing.
Robert Young, Analyst at Canaccord Genuity
That's my second question. Just the trend. I mean, that 67% growth quarter-over-quarter to 60% year over year, is that the sort of growth in bookings that you anticipate, or the seasonality? Is the pipeline still shifting towards large bundled deals that can continue to support that type of bookings growth, or is this just a special quarter for that?
Charles Salameh, Chief Executive Officer
Well, certainly, as I said before, we've kind of gone from the transformational phase which was sort of ending in June into this sort of growth phase, and the booking pipeline will continue to grow as the deals continue to grow. We built the company, as I've been saying for two years, to integrate multiple components of essential communications to serve the rising, more sophisticated mid-market. And the premise behind that was that this mid-market industry vertical was going to be looking for single vendors, lower TCO, top quality service to handle their essential communications.
That's what we built. That's where now these last two quarters are beginning to show. We never had these size deals before. This is now a new area of business as we take the company. So this quarter, and particularly in this first half, the bookings growth numbers are going to be big because we really didn't have it before. We had smaller deals, component selling, in the past. So I think you're beginning to see the points of the strategy of integration and the idea of our ability to put larger deals together of components of voice, data, video, security, hardware prove itself out now because we closed five fairly significant deals and we see more of them in the pipeline going forward in the company. That is where this company is focused, that is our growth strategy. And now we have real proof points that validate the thesis that customers are going to be buying this way.
Robert Young, Analyst at Canaccord Genuity
Okay, and last question for me would just be on the wholesale activity. I think you had two this quarter, the Kameo you talked about before. And so that's a relatively new channel as I understand it. Maybe we could just go into the opportunity in wholesale and white label a little more deeply and whether that's something that can significantly expand the TAM, be a supporter of accelerated growth maybe. And then I'll pass the line.
Charles Salameh, Chief Executive Officer
I'm going to start with a real quick update on that. So the wholesale channel really is about these large ecosystem partners, whether it's a carrier, a CLEC, or even private healthcare, where you have multiple big hospitals that combine together with an ecosystem of specialty care centers scattered all over the United States. These infrastructures, these ecosystems are now being realized through our wholesale channel to be monetized. Where the hospital themselves, for example, might say, hey, we want to have a standard offering for all the specialty care facilities that are attached to our ecosystem.
We want a wholesale price from you for a bundle for a specialty care center, 1, 2, or 3, depending on their size, and we want to make money off of that. Carrier is the same way: they're buying our packages. They're wholesaling it to their ecosystem of residential customers, small businesses that are attached to. So this idea of leveraging our ability to integrate and sell to the retail channel is now being used for the wholesale channel, who can then use the lower wholesale pricing to monetize their ecosystem.
Want to add to that, Jim?
Jim
Yeah, I'd just add: well, there are two big players in the industry selling softswitches as well — I mean Microsoft and Metaswitch and kind of where all that went — and then Cisco BroadSoft. And so there's customers that have been on those platforms. They're getting pushed to kind of new business models that don't have the same type of margin that they used to. And we've got a really great platform with our Ultra offering. So we're inserting ourselves into that transformation opportunity.
And the two examples I gave are examples of that — customers that have helped, which is they're looking for something competitive that still held the kind of market profile they had in the past. And so they're moving with us as part of that transformation plan.
Charles Salameh, Chief Executive Officer
Okay, bud, thank you.
OPERATOR
The next question is from Gavin Fairweather with ATB Cormark. Please go ahead.
Gavin Fairweather, Analyst at ATB Cormark
Oh, hey, good afternoon.
Charles Salameh, Chief Executive Officer
Hi, Gavin.
Jeremy Wubs, Chief Operating Officer
Hey, Gavin.
Gavin Fairweather, Analyst at ATB Cormark
Maybe just to start out on the bundling and hear some more examples of bundled wins. Curious. How many of your newer prospects are you seeing that are interested in a bundled solution? How are you thinking about that opportunity in the base? Presumably a lot of the base would still be kind of component selling. Is there a way for you to move in there and really kind of drive greater upsell momentum?
Jeremy Wubs, Chief Operating Officer
Yes, that's a great question. I'd say there's three things, Gavin, to think about. One, you highlighted a few of these larger strategic deals that were kind of that full stack opportunity — we're seeing momentum and success for those. We're very bullish on more of that showing up, especially in our pipeline over the coming quarters. Second is kind of new customers, and we've reorganized our go-to-market to really focus on that integrated proposition, full bundle sale, so that our partners are able to go out and kind of sell that full stack solution versus point solution.
So those two are kind of well in motion, part of our plan. And then the third component, kind of what you're highlighting, is we do have a lot of customers that are single-threaded with one single offer. We have a team very specifically that's actually using some new AI tools to examine analytically that base, use data models to look at where within those existing customers and partners there are opportunities to cross-sell and upsell. So that's a motion that the team is running now.
We do a bit of upsell, I would say today, not as much as I would like, but on a go-forward basis, we expect to see a pretty significant increase in the cross-sell/upsell for two reasons. One, we've really put a focused team around it and, second of all, we're using some data models and AI tools to help us target this client.
Charles Salameh, Chief Executive Officer
It's also made it easier — I'll just close now. As part of the transformation, we've made it easier through our quoting tools to give our partners the opportunity to pick and choose from a menu of different items that they really couldn't do before. And we can present them now on a more concise bill. These two components that you've been hearing me talk a lot about were prerequisites to be able to do this. A lot, you'll hear it as more and more partners begin to understand that this tool is now there.
It's kind of an easy button to put pieces together. The bundling proposition becomes way more attractive because it's larger commission for that.
Gavin Fairweather, Analyst at ATB Cormark
Great. And then just on partner maturity, I know you narrowed down your network of partners — it's a bit over 1,000. I'm wondering is the read-through from the bookings that we're seeing that the partner network has really kind of hit maturity and is quite effective, or do you think that there's further kind of partner enablement that you can do to help get to a new level?
Charles Salameh, Chief Executive Officer
I think there's two things. One, the continued growth within the existing partner ecosystem because we're far more strategic with them and we've given them tools to allow them to see the breadth of the entire portfolio — Sangoma. Secondly, there are much more focused effort on new partners because we've narrowed not only our partners but we're also narrowing our focus, at least for the foreseeable fiscal year, which is: let's go win and dominate in four verticals where we're very strong — healthcare, education, retail, hospitality.
In those environments, we're actually acquiring new partners who specialize in these fields. And we're also partnering up with, from not only a technical point of view but also from an ecosystem point of view, software vendors who are very much entrenched in these verticals — whether it's Jazzware in hospitality or quick List in education that we've had press releases on. The partner ecosystem will continue to expand, but now with much more precision than we had in the past where we were just a holistic set of partners who can advocate for us and just sell any one of our solutions, but much more precise.
So you'll see deeper entrenchment with our existing narrowed-down partner view, and you'll see expansion of the partner ecosystem along the vertical line that I described.
Gavin Fairweather, Analyst at ATB Cormark
Maybe just lastly on churn. I did notice the change in language from 1% to just under 1%. I think last quarter you talked about some non-ideal customers churning out that have been on three-year contracts. I'm curious if a lot of that is now flushed through the system or do you think that churn could maybe move lower here in the coming quarters?
Jeremy Wubs, Chief Operating Officer
I think we have a little bit of room, Gavin, to improve for a couple of reasons. One is some of the more challenging accounts — that's going to move through the system. The second is similar to what I mentioned before. Our kind of data models across sell and upsell — we have some new AI tools, again, data models, to help us kind of target some customers that might have a higher churn propensity. And we're getting more proactive with those customers to kind of offer more for the same to competitively, obviously, protect that base and use it as an opportunity to cross-sell and upsell.
Charles Salameh, Chief Executive Officer
I don't have a problem just telling you we're putting money into churn reduction. Something we can't control, like macroeconomic issues — things, businesses shutting down or what have you — we're not seeing that as a major part of our business. But there's also ways we can get proactive with customers, early renewals, things of that nature. And I set a pretty bull target. I want 85. We're at 96. We're going to be focusing on trying to push churn down as much as we possibly can.
And we've got a lofty goal to try and go after. So it's a very important part of our revenue plan and the way we handle LTV in this company because we're going after larger deals. Churn is an important metric and it's a very important priority for me and I think where we're putting our money to invest in this company.
Gavin Fairweather, Analyst at ATB Cormark
Thanks so much and congrats on the progress.
Charles Salameh, Chief Executive Officer
Thank you.
OPERATOR
The next question is from David Kwan with TD Securities. Please go ahead.
Charles Salameh, Chief Executive Officer
Hey, David.
David Kwan, Analyst at TD Securities
Hey guys. Just want to clarify one quick thing. Just on the revenue guidance, it sounds like you still think — or are expecting — to grow year over year, excluding bloat supply, starting in Q3 and then continuing to Q4. Is it growing sequentially?
Larry Stock, Chief Financial Officer
That's correct.
David Kwan, Analyst at TD Securities
Okay, perfect. Thanks, Larry. And as it relates to the product revenue, I think it was talking about expecting some higher hardware product sales in Q3. So can you assume that the gross margins probably are coming down a bit sequentially because of that student revenue mix?
Larry Stock, Chief Financial Officer
No, I don't think so. We're expecting our margins to be stable as we get into Q3 and into Q4. Even if we did have some changes in the mix, I'd expect those to stay stable. A bit of the product mix is just coming from some of those larger strategic deals and there's a bit of NRR upfront associated with them. So I just expect a little bit of a shift. But again, it's really tied to the NRR associated with the MRR business.
David Kwan, Analyst at TD Securities
Right, perfect. Thanks. Thanks for the color. And then as it relates to the growth investments — I know, Larry, you talked — or not, Larry. Charles, I think you said in your commentary just about the 2 million I think that you guys were talking about last quarter as it relates to the investments going to go to market. And I think it was talking about over the next few quarters. We saw a notable pickup in sales and marketing, which I would have expected, but also on the G&A side.
So I was wondering if you could talk about A) what some of that spend went into, and B) did you maybe expedite that spend level given the uptick we saw this quarter in the OPEX side, and is Q2 kind of the new baseline that we should be basing our forecast off of?
Larry Stock, Chief Financial Officer
Yeah, so it's a combination of things actually, David. So we did have some increased commissions in the quarter for some of the new bookings that we had — timing. We also had, also in timing, some tax-related items that hit G&A this quarter. Nothing unusual, and that'll fluctuate a little bit as we move forward, but not by much. I would expect that we're in line with where we've been and that trend will continue for both G&A and sales and marketing in light of the investments that we've made.
I think we'll be right in line with that.
David Kwan, Analyst at TD Securities
Okay, great. And just one last question. Curious what you're seeing in the M&A market. Obviously we've seen some pretty significant downdrafts here on the software market in particular. So I'm curious to see what you're seeing from an M&A perspective as you look at maybe adding some, maybe tuck-in acquisitions.
Charles Salameh, Chief Executive Officer
Well, when we started this journey two years ago, you heard me say this, David, a number of times, that the whole idea was to set the company up for optionality on what we perceive to be a market that will be under pressure because of some of the extraneous factors — some of them technically related around AI, some of them commoditization — because there are a lot of players in the industry. I think it's an opportune time. We're seeing a lot of opportunities in the marketplace, both small scale and larger scale.
We're seeing valuations come down. We're seeing our valuations begin to be a little bit more level-set with, I think, where the market was two years ago, which gives us even greater opportunity given our balance sheet position. And we're seeing it across the spectrum. Companies of all sizes and scales and of all dimensions that really add value to our platform, whether it's vertically oriented software companies, MSPs — which have really kind of come down in valuation — hardware companies — but we're not really interested in those — but security players and even distribution-scale companies of our ilk in the communication space, in the call center space. These are all areas that would be valuable to the platform, given the platform that I integrated, and have come down in valuation, that we can take advantage of, as I said in my comments, leveraging scale as a strategic option for the company because the balance sheet is now at a point where it enables us to do so. So I think it's an opportune time the market is providing. I've said this before — even said to my board today — I've seen this movie three or four times in my career where the industry offers opportunities, and those who have strong balance sheets and good financial discipline can take advantage of the discontinuities that are occurring in the industry, and the M&A world is providing that opportunity as we speak. So we're seeing it across the spectrum. And as I said, I think the last couple of days of what you've seen in the market I think will continue to put pressure on the software industry, and we can take advantage of that.
David Kwan, Analyst at TD Securities
That's great. Thanks for the color. That's it for me.
Charles Salameh, Chief Executive Officer
Thank you, David.
OPERATOR
The next question is from Susan Sukumar with Stifel Canada. Please go ahead.
Susan Sukumar, Analyst at Stifel Canada
Good evening, Jeff. And congrats on the quarter. For my first question, I wanted to talk about the partner ecosystem. It sounds like, post all the changes and investments you guys made, the partner channel sounds like it's coming quite nicely here. Can you talk a little bit about the level of partner engagement and contribution to bookings growth versus your direct sales organization this quarter, and what are some of the metrics you look at to measure performance here on an ongoing basis?
Jeremy Wubs, Chief Operating Officer
Yeah, thanks. I mean, a couple things. I mean, the bulk of our revenue — outside some of the sort of carrier trunking and other things we do — are partner-driven. Right. So when you hear me talk about the bookings increase, the large GCB deals that we sign, those have all come through partners really — the combination of new, more strategic partners. Some of them are oriented around the verticals that Charles mentioned earlier, and then other just new partners that are enticed by the bundles that we have and kind of getting out in front of their customers with that integrated value proposition.
But we'd say our partner program from a metrics perspective, it's certainly about: Are we signing up the new partners? How quickly are those partners quoting? How quickly are those partners getting to win? So we sort of track the, call it, the life cycle of a partner — are they the right strategic fit, are they able to represent our value proposition well out to customers, and are they quoting and closing business for us. So we keep a pretty close and intimate eye on our partnerships and want to make sure we put all the right partner programs and support in place to help them grow, because it helps us grow.
Susan Sukumar, Analyst at Stifel Canada
That's great. My second question, I want to touch on the on-prem component of your current pipeline. How is that piece trending now, and how do you think about the conversion of that pipeline over the course of this year? I'm kind of curious how this opportunity is tracking to your initial expectations.
Jeremy Wubs, Chief Operating Officer
Yeah, we continue to see our prem UC business, PBX, up. It's been up every year over year, every quarter, the last number — four, five quarters. Basically, we've got great momentum there. We're typically seeing the share come from both Avaya and Mitel. Those are the places we've been hunting. Like, we're a little more oriented — which is probably not surprising — around small-medium business, and that's kind of where our product fits. It drives both our prem solution as well as some of our phones.
So it's continued to have strong momentum for us. There is absolute market for our prem solutions out there — certain customer profiles, sometimes in government, education, others — that want that solution, and we continue to see momentum there. So we're pretty bullish on continuing to take share and grow in that space.
Susan Sukumar, Analyst at Stifel Canada
Okay. Okay, great. This is just one last question for me. Just on the overall booking strength this quarter and kind of heading into Q3, how do you guys think about that conversion of bookings to revenues over the course of the year? To me it sounds like these are some significantly larger projects than you've dealt with in the past, so it feels like there's more moving pieces than you might be used to. But just kind of curious what you're seeing here.
Charles Salameh, Chief Executive Officer
I mean, these types of deals do take time to roll out. Like the one Jeremy mentioned that we won this quarter, it's 300-plus locations. There's a deployment of equipment at every location, there's an installing partner that's got to be on-site, and you work as fast as you can with the client in combination with them to coordinate dispatch and install and testing and so forth. And so we've got a pretty good machine running now. Joel Kappes, who runs our provisioning team, we've got a very disciplined, well-trained project management organization that understands how to thoughtfully and efficiently execute on these to roll out and convert.
Revenue drops in the quarters as fast as possible — not only for our sake, obviously, because we want the revenue as quickly as possible, but customers want to move that fast. Once they get their understanding of the value prop that this is going to standardize their network stack and lower their TCO, they want to move fast, too. So you've got motivated customers, you've got a motivated company, and Jeremy and the team have done an excellent job of building the infrastructure, the processes, the systems, the tooling, the competencies, the structure of the team to be able to execute — because both of us have had lots of experience doing this in our career, executing on these larger transactions. So it's not any more complicated unless you didn't do the hard work of what we did in the last two years, which was transform the company and get it set up to do just that part of the work. I'll just answer your question: We see revenue dropping pretty consistently from quarters of deals that are done in the previous quarters.
So there'll be a natural wave that keeps building, wave upon wave. As bookings go up, that revenue will continue to drop from deals we may have signed two quarters, three quarters ago will drop into the quarters. And so our goal is to try and be much more transparent so you can see those bookings coming through. You understand the translation to revenue, you understand the provisioning cycle. And then within eight months — usually to 10 months or so, depending on the size of the deal — you're going into full throttle for three to five years.
And when you combine that with a churn rate of below 1%, or 0.96 where we're at now, the LTV becomes very, very compelling. So you take the $11 million that Jeremy talked about. At those churn rates, you're going to assume they churn through. That's a $30 million TCV as long as you can keep customer service and all those things up. So that's how we see it.
Susan Sukumar, Analyst at Stifel Canada
Awesome. Thanks for the feedback, guys, and it's great to see the progress play out here. I'll pass the line.
Charles Salameh, Chief Executive Officer
Appreciate it.
OPERATOR
This concludes the question and answer session and today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.
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