AltiGen Communications (OTCMKTS:ATGN) reported fiscal first-quarter 2026 revenue of $3.2 million and GAAP net income of $101,000, marking its seventh consecutive profitable quarter, executives said on the company’s earnings call covering the period ended Dec. 31, 2025.
Management attributed the sequential revenue decline from fiscal Q4 to typical seasonality tied to customer holiday schedules, while also noting elevated churn related to customers migrating off legacy platforms. CEO Jerry Fleming said that churn was anticipated as part of the company’s transition to newer technology platforms and that management believes “the majority of that churn is now behind us,” with only a modest residual tail remaining.
Financial results and margins
Stone broke out revenue components, noting that total cloud services revenue was approximately $1.4 million, down 17% from $1.7 million in the prior-year period. Services and other revenue increased 7% to $1.5 million from $1.4 million.
Gross margin was 62%, compared with 63% in the same period last year. GAAP operating expenses totaled $1.9 million, a 9% decrease from $2.1 million a year ago, which management tied to the operating changes made during its broader transformation.
The company ended the quarter with $2.55 million in cash and cash equivalents, down from $2.75 million at Sept. 30, 2025. Stone said cash flow “continued to fluctuate due to the timing of payments from some of our larger customers and the timing of our accounts payable,” adding that accounts payable was down $400,000 compared with fiscal Q1 2025. Working capital was $2.9 million, unchanged from the end of September.
Adjusted EBITDA—excluding legal, severance, and other one-time costs—was $257,000, compared with $291,000 in the prior-year quarter.
Transformation strategy: cloud and AI focus
Fleming said AltiGen has “completely transformed” over the past two years, repositioning from a PBX provider serving SMBs to “a cloud-based customer experience solutions and services company targeting mid-market and larger enterprise customers.” He said the first phase focused on building scalable infrastructure and modernizing internal systems across ordering, provisioning, billing, accounting, and service management, alongside a realignment around a cloud-first business model.
He emphasized a “build versus buy” product strategy. For what he called commoditized markets such as UCaaS and CCaaS, AltiGen is white-labeling platforms to improve time-to-market and operating efficiency. For differentiated opportunities—particularly those driven by AI—the company plans to build internally. Fleming said this approach supports the company’s targeted model of maintaining gross margins above 60%, consistent profitability, and a debt-free balance sheet.
On the “buy” side, Fleming said the company selected a white-label CCaaS platform powering CoreEngage, its native Microsoft Teams contact center solution, about 18 months ago. He added that more than a year ago, AltiGen selected Crexendo’s NetSapiens platform as the white-label foundation for its UCaaS offering marketed as MaxCloud UC.
On the “build” side, Fleming said the company is nearing completion of two internally developed platforms:
- An AI-powered 24/7 customer self-service solution
- Core Insights, an AI-driven customer engagement analytics platform
He said preview versions are expected within 90 days, with revenue contribution expected to begin later in fiscal 2026.
Operational update across four business lines
President and COO Joe Hamblin said the company is increasing disclosure granularity starting this quarter, providing more detail on performance across four lines of business: AltiGen Consulting Services (ACS), Max Platforms, IVR, and the Teams-based UCaaS platform, CoreEngage.
AltiGen Consulting Services (ACS): Hamblin said ACS reached $1.55 million in revenue in fiscal Q4 2025 due to customer-driven acceleration of several one-time projects. In fiscal Q1 2026, ACS revenue “normalized” to about $1.47 million, which he attributed to reduced holiday billings. He said ACS signed a new customer in the commercial power industry for a custom-developed ticketing solution; the first project is estimated at $150,000, and the customer has identified additional potential opportunities. Hamblin added that the company has several other new engagements in discovery and estimation, many driven by AI-related requirements.
Max Platforms and UCaaS migration: Hamblin said year-over-year revenue declined to $3.2 million from $3.4 million, driven by seasonal effects and churn. He said the “majority of the churn” came from partner transitions, where some long-term partners moved to an alternative platform before AltiGen adopted Crexendo’s NetSapiens platform for MaxCloud UC. He said the company is pursuing targeted win-back strategies and managing expected churn in the legacy Max business through customer migration programs, partner incentives, and direct engagement.
Hamblin also said AltiGen recently launched a new MSP program aimed at IT-managed service providers, offering white-labeled UC solutions for resell. As of the end of fiscal Q1, he said the company had more than 100 customers active and billing on MaxCloud UC, representing more than 4,000 seats, plus 40 contracted customers representing more than 1,700 seats configured and scheduled to go live within four months. He added that several thousand on-premise subscriber seats remain in the installed base and that moving those customers to the cloud remains a key initiative.
IVR (white-labeled by Fiserv): Hamblin said the IVR solutions have produced stable revenue for several years and that the company expects acceleration in the latter half of fiscal 2026 from new AI-enabled capabilities. He listed additions including conversational AI for self-service and analytics capabilities under the Core Insights umbrella.
CoreEngage (Teams-based): Hamblin said six customers representing more than 200 users are actively billing. He said additional contracted customers representing about 500 users are in deployment stages and are expected to begin billing by the end of fiscal Q3. He also cited an estimated 500 additional seats in advanced discussions.
Partnership updates and customer examples
Hamblin said that in December, Fiserv approved CoreEngage as its preferred Teams contact center. He added that AltiGen and Fiserv also agreed to a partnership in which Fiserv will recommend Microsoft Teams Phone to its customers, with AltiGen providing migration services from legacy PBX to Teams. Under that model, Hamblin said AltiGen expects to capture migration services revenue and ongoing recurring revenue from direct SIP trunk routing and premier support services. He said Fiserv is developing a marketing program that includes featuring AltiGen solutions on its website, joint marketing materials, invitations to two Fiserv user conferences, and sales training for about 200 Fiserv account managers.
Hamblin also referenced a recently announced licensing and collaboration agreement with Crexendo, saying it allows AltiGen to focus on delivery execution with a streamlined cloud communications offering.
Fleming highlighted ACS work with CTDOT as an example of applying “agentic AI” to automate high volumes of IT support tickets submitted through Jira, with the AI escalating issues outside its capabilities to human technicians and incorporating resolutions into its knowledge base.
Q&A: customer profiles and cloud benefits
During the Q&A, management described typical end users by solution category. Fleming said MaxCloud UC targets SMBs—roughly 10 to 100 employees—and that AltiGen is shifting its UCaaS go-to-market approach toward MSPs rather than selling directly to individual small customers. He said average revenue per customer on that platform is about $300 to $500 per month, while MSP relationships are typically $3,000 to $5,000 per month in spend.
For IVR, Fleming said the customer base consists of banks and credit unions, with about 1,500 customers today through the Fiserv channel. For CoreEngage, he said customers tend to be mid-market to enterprise, ranging from a few hundred users to several thousand, and he mentioned one deployment the company is working on that is “upwards of 50,000 employees.”
Fleming also discussed cloud adoption benefits, citing a shift from capital expenditure to operating expenditure and reduced need for customers to buy, maintain, and update hardware and on-premise software.
Looking ahead, Hamblin said churn levels are declining and subscriber additions are increasing, with management expecting those trends to “intersect and turn positive by fiscal Q3.” Fleming said the company expects to provide its next update on the next earnings call in April.
About AltiGen Communications (OTCMKTS:ATGN)
AltiGen Communications, Inc is a provider of voice-over-IP (VoIP) telephony and unified communications solutions designed primarily for small and medium-sized businesses. The company offers a range of IP-based PBX systems, contact center applications and unified messaging products that enable organizations to streamline inbound and outbound voice traffic, automate call routing and integrate voice mail, e-mail and conferencing functions into a single platform.
Founded in the mid-1990s and headquartered in California, AltiGen develops both hardware appliances and software modules that support analog, digital and SIP-based telephony endpoints.
