Sangoma Announces Transformative Acquisition of Digium

MARKHAM, ON, Aug. 24, 2018 – Sangoma Technologies Corporation (TSX VENTURE: STC), a trusted leader in delivering Unified Communications solutions for SMBs, Enterprises, OEMs, and Service Providers, both on-premises and in the cloud, has entered into a definitive agreement on August 23, 2018 to acquire all of the outstanding shares of Digium, Inc. The deal is expected to close on or about August 31, 2018, subject to customary closing conditions.

Digium is the creator of Asterisk, the most widely used open source communication software in the world, along with Sangoma’s FreePBX. The company offers a comprehensive product portfolio including Digium’s cloud-based UCaaS (Unified Communication as a Service) platform, the Switchvox premise-based phone system, a complete range of IP phones, and a full suite of Asterisk software and connectivity products. Founded in 1999, Digium is a true pioneer in the communications market, launching the open source segment of telecom, and is one of the industry’s best known, most respected brands. It is headquartered in Huntsville, Alabama, is privately held and venture-backed, with over 40% of sales in recurring services revenue to a huge customer base around the world.

Reaching a New Milestone in Scale

“Sangoma and Digium have a long history of working together, while also competing in the marketplace, and have gotten to know each other very well over the years. Our relationship and mutual respect allows us both to know that the strategic fit between the two businesses really is excellent”, said Bill Wignall, President and CEO of Sangoma. Wignall continued, “This transaction will add very meaningful sales, create market leadership in our segment, increase recurring revenue materially, and allow us to nicely leverage our complementary businesses. During a time of industry consolidation, this transformative merger is another bold step for us in implementing our strategy to scale up and increase shareholder value, by augmenting our organic growth with complementary M&A opportunities. To the new staff that will be joining us, I’d like to welcome you to the growing Sangoma family. To our Digium customers and partners around the globe, I’d like to assure you that everyone here at Sangoma remains committed to you, to the Digium products you rely upon, and to further contributing to your success. And of course, to the Asterisk community, I would like to reassure you that Sangoma recognizes the value of Asterisk and is committed to keeping it open source. We will continue to invest in its development and to seek input from the broad base of developers that has led to its outstanding success.”

The acquisition, Sangoma’s seventh in seven years, provides the combined company with several strategic advantages, including: increased scale via significantly higher sales, expanded recurring revenue percentage, stronger gross margins, market leadership in our category, a more complete product portfolio, a larger team of excellent employees during a time when competition for talent is high, a much wider network of complementary channel partners around the world, and a larger base of enterprise and SMB customers. After closing, the merged company will have a combined workforce of over 300 employees.

“I created Asterisk and Digium to be disruptive in the communications industry”, said Mark Spencer, Founder and Chairman of Digium. Spencer continued, “I am really proud that it has grown under its current ownership and management to a very successful point, and it is now time to take it to the next stage as part of a larger, public company. Given the involvement of both companies in the history of Asterisk dating back to its creation in 1999, Sangoma is the natural home for the Asterisk project. For many years both companies have had teams working to improve Asterisk and make it more accessible. I believe Sangoma’s commitments should reassure the Asterisk community that Sangoma is dedicated to the project. I look forward to seeing the results of tighter collaboration between those teams, and the benefits to the community, now that they will be part of a single company.”

Transaction Details

Under the terms of the agreement, Sangoma expects to pay a total purchase price of US$28 million on a debt-free and cash-free basis, subject to customary working capital adjustments. The purchase price consists of US$24.3 million in cash and 3,943,025 Sangoma common shares (representing US$3.7 million based on a ten (10) day volume weighted average price of $1.2214 per common share). Digium generated approximately US$30 million in revenue in its fiscal year ended December 31, 2017, with consolidated assets (net of cash) of approximately US$11 million, no debt and a net loss of approximately US$4 million. Further, for the most recently completed quarter ending June 30, 2018, Digium is operating at about EBITDA breakeven.

The cash portion of the consideration will be funded through a combination of cash on hand and, in order to minimize dilution, a new credit facility of approximately $21 million from Sangoma’s existing Canadian Tier 1 bank, bringing Sangoma’s total credit facilities to about $28 million, of which approximately $25 million will be outstanding at Closing. The new credit facility will be drawn in US dollars, be repaid over 7 years and is expected to have an interest rate of 6.0% to 6.5% per annum at closing.

Transaction Advisors

INFOR Financial Inc. acted as the exclusive financial advisor to Sangoma in connection with the transaction.

Conference Call Information

Management will discuss this planned acquisition more fully on a conference call at 8:30am EDT today, Friday August 24, 2018. The dial-in number for the call is 1-800-319-4610 (International 1-604-638-5340) and investors are requested to dial in 5 to 10 minutes before the scheduled start time and ask to join the Sangoma call.

About Sangoma Technologies Corporation

Sangoma Technologies is a trusted leader in delivering Unified Communications solutions for SMBs, Enterprises, OEMs, Carriers and service providers. Sangoma’s globally, scalable offerings include both on-premises and cloud-based phone systems, telephony services and industry leading Voice-Over-IP solutions, which together provide seamless connectivity between traditional infrastructure and new technologies.

Sangoma’s products and services are used in leading PBX, IVR, contact center, carrier networks and data-communication applications worldwide. Businesses can achieve enhanced levels of collaboration, productivity and ROI with Sangoma. Everything Connects, Connect with Sangoma!

Founded in 1984, Sangoma Technologies Corporation is publicly traded on the TSX Venture Exchange (TSX VENTURE: STC). Additional information on Sangoma can be found by visiting

About Digium

Digium®, Inc. provides Asterisk® software, telephony hardware, and on-premises and hosted Switchvox business phone systems that deliver enterprise-class Unified Communications (UC) and UC as a Service (UCaaS) solutions at an affordable price. Digium is the creator, primary developer and sponsor of the Asterisk project; the world’s most widely used open source communications software. Asterisk turns an ordinary computer into a feature-rich communications server. A community of more than 80,000 developers and users worldwide uses Asterisk to create VoIP communication solutions in more than 170 countries. Since 1999, Digium has empowered developers to create innovative communications solutions based on open standards and open source software, providing an alternative to proprietary phone systems. Digium Switchvox Cloud and other cloud-based products and services are offered through Digium Cloud Services, LLC, a wholly owned subsidiary of Digium, Inc. Digium’s business communications products are sold through a worldwide network of reseller partners. More information is available at and

Cautionary Statement Regarding Forward Looking Statements

This press release contains forward-looking statements, including statements regarding the future success of our business, development strategies and future opportunities.

Forward-looking statements include, but are not limited to, statements concerning estimates of future revenue, expected expenditures, expected future production and cash flows, and other statements which are not historical facts. When used in this document, the words such as “could”, “plan”, “estimate”, “expect”, “intend”, “may”, “potential”, “should” and similar expressions indicate forward-looking statements.

Readers are cautioned not to place undue reliance on forward-looking statements, as there can be no assurance that the plans, intentions or expectations upon which they are based will occur. By their nature, forward-looking statements are based on the opinions and estimates of management on the date that the statements are made and involve numerous assumptions, known and unknown risks and uncertainties, both general and specific, that contribute to the possibility that the predictions, forecasts, projections and other events contemplated by the forward-looking statements will not occur or will differ materially from those expected. Although Sangoma believes that the expectations represented by such forward-looking statements are reasonable based on the current business environment, there can be no assurance that such expectations will prove to be correct as these expectations are inherently subject to business, economic and competitive uncertainties and contingencies. Some of the risks and other factors which could cause results to differ materially from those expressed in the forward-looking statements contained in the management’s discussion and analysis include, but are not limited to changes in exchange rate between the Canadian Dollar and other currencies, the variability of sales between one reporting period and the next, changes in technology, changes in the business climate in one or more of the countries that Sangoma operates in, changes in the regulatory environment, the rate of adoption of the company’s products in new markets, the decline in the importance of the PSTN and new competitive pressures. The forward-looking statements contained in this press release are expressly qualified by this cautionary statement and Sangoma undertakes no obligation to update forward-looking statements if circumstances or management’s estimates or opinions should change except as required by law.

Readers are directed to Sangoma’s filings on SEDAR with respect to Management’s Discussion and Analysis of Financial Results for the basis of Sangoma’s reconciliation of EBITDA to net income as calculated under IFRS

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Sangoma Technologies Corporation
David Moore
Chief Financial Officer
(905) 474-1990 Ext. 4107
[email protected]


Congrats on this, looking forward to seeing what will come out of it!

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Good news!

FAQ from the header

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Congrats to the Sangoma team. Most IT acquisitions and promises of synergy are often met with eye-rolls and head-shakes by those of us who have been around a few years, but this one seems to make a lot of sense. We’re looking forward to seeing great things!

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Well isn’t that special!

Look, I get why Sangoma is doing this - for crying out loud Digium was making a profit of 30m a year and Sangoma is picking them up for 28m - that is a deal! In 2 years you pay back the purchase price and double your money! I DON’T understand why Digium is doing it - it’s one thing to sell out when you are going downhill with no way to stop it but when your profitable? Somebody clearly wanted to buy a boat and play with their grandchildren!!!

The one thing I will point out to Sangoma is that the Q&A and press releases are COMPLETELY IGNORING what is going to happen to the IP phones and commercial phone systems and this is BAD NEWS. Nobody who has been around the tech industry for any length of time is going to believe that you are going to maintain independent IP phones and premise-based phone system products for any long period time - the entire point of an acquisition like this is to halt competition. So as I see it - here’s your options:

  1. Kill both products and release a NEW phone system and NEW set of IP phones that combine all the best features of both systems

  2. Replace Digium’s phone system and IP phones with Sangoma’s phone system and IP phones

  3. Reposition/remarket Digium’s phone system and IP phones as the “large company, enterprise” brand and Sangoma’s as the “small business” brand (or vis-versa) - this is what Cisco did when they bought Linksys for example.

So, which is it? I think Sangoma needs to get on it and make that decision ASAP because you have installers out there who are going to be real reluctant to quote a system that might end up being taken off the market in a year or so.

I guess you missed the part in the announcement that Digium was losing money, 4 million last year.
This year seems better. I guess that wasn’t sustainable and Sangoma came in for the rescue.
Looks like the asterisk development team is now safeguarded, and hopefully the combined entity will remain profitable.


Please re-read things. You are dead wrong on the profitability. If they were making 30M a year in profit they would of sold for over 100M.

As far as product related things how could we announce something when we haven’t even closed on the sale yet and then need to evaluate everything and talk with customers and partners to come up with the best plan that suits everyone and that may include keeping all products. Time will tell.


Does that mean the end of FreePBX is near? Or will it remain open source like Asterisk will?

Both questions answered in the FAQ linked at the top.

Where would you get that idea from? I thought I was very clear when I said products not projects. Nothing to do with asterisk or FreePBX. Without those their is no Sangoma or Digium. Please don’t start assuming things. FreePBX and Asterisk are 100% not going away and will keep growing and being invested in like they have been.


Congrats to the Sangoma team!

Only good things can happen.

(I can see lotta feature requests on will get into working status. Shhhh… :shushing_face:)

Ah yes, I definitely missed that one - $30m in REVENUE not PROFIT. Big difference there! Although that leads to the question - how can you make $30m in revenue and still lose money?!? Unless this sale was in the works for the last couple years and they decided to crowd all their losses into FY2017 so that the buyer didn’t have to declare a loss after purchase. I guess if your #1 goal is purely “being disruptive” than making money isn’t your strong suite!

But, my second point still stands. There’s been a big press release - but if I was a Digium customer I’d be worried. Tony - the press release stated “increased scale via significantly higher sales” well you cannot scale up to higher sales if your sales are all split up among a bunch of similar products. This is why for example General Motors created the “corporate car” and badged it Oldsmobile, Buick, Chevrolet and so on for whatever brand it was under. THAT was an example of scaling up. GM acquired Buick and Olds, killed their separate R&D and engine lines, built the identical car for both brands and labeled it Olds or Buick or Chevrolet. They greyhairs that desperately wanted to believe that the old Olds was still around got a bone, the accountants got a bone, and everyone was happy.

Your words about retaining all products are nice but not consistent with profitability which is the entire point you are making about the purchase. If I was a Digium customer I would assume that my system is at risk of being orphaned in the future. Your Sangoma customers don’t really care what Digium is doing with it’s products - all they care about is what’s going to happen to the Asterisk project and it’s obvious from a logical standpoint you wouldn’t be stupid enough to kill the goose what lays the golden eggs, the Asterisk project is the only thing in the acquisition that’s going to be left alone.

It is S.O.P. in tech for the acquirer to drop redundant products of the acquired. So far nothing in your comments or in the press release would lead anyone to assume Sangoma’s products were going away and I would think you would be daft to tamper with something that is making money. Instead the attention is going to be focused on Digium’s products and what is their future. The service contract fees will prevent an immediate slash-and-kill of their products but the desire to make them profitable and scale up is going to make it inevitable that something changes there. My advice is that the sooner Sangoma commits to some time figures the better.

Nothing would hurt you to make an announcement that as part of the sale Sangoma has committed to maintain the Digium products, unaltered, for the next 2 years while you contact the Digium customers and find out what they would like a future to look like. It would put a date on “when we are going to start screwing with your phone system” that would prevent those customers from being worried about your intentions and bolting or falling prey to being picked off by opportunists like Cisco.

But, suit yourself. I’m raising a flag from “outside the wall” that you simply don’t see from the inside and if you don’t care about it, it’s your choice. Maybe I’m wrong and you have already run around to the major Digium customers and made commitments and your not worried. But if I’m right - you need to do something about this quickly.

How can we comment on something and plans when we haven’t even closed on the deal yet. Please just relax. The Sangoma team is not dumb. We have done 6 of these in the last 3.5 years and the management team combined has done well over 50 deals with alot of them being much larger then this deal.

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As Tony keeps saying the sale has not closed yet. The soonest anything could happen is after the sale closes.

He also said all products COULD stay. Yes that is highly unlikely but these decisions have to be evaluated. Somethings Digium acceled at. Other things Sangoma did. Obviously a stronger product will be more attractive. This is by no means an arbitrary process. As the teams work through these decisions they will be analyzing multiple data points. I am personally not involved in any of this so I don’t obviously know what those points are but it seems above Tony said user, reseller, customer feedback will matter. My unsolicited advice is to not come in assuming things. Provide your constructive feedback and desires through the appropriate channels. If you have a particular product you want to be heard on contact your point of purchase or account manager. Assumption and panic don’t really progress the conversation.

I would assume in the next year or two we will see the fruit of all this. M&A events like this with longstanding products and teams is going to take time, but this is obviously exciting for both FreePBX and Switchvox users. There was a good episode of VUC thats online from Friday worth checking out.

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The problem isn’t going to be people like me who are raising the issue publicly. The problem are the customers out there who have already put money into Digium gear and no matter what you all say, are going to be looking for some actual commitment. And commitment isn’t going to come from their point of purchase or account manager who lacks authority to commit the company to any course of action.

Only the exec staff of Sangoma has authority to make promises on Digium gear future and nothing that anyone of you Sangoma fanboys says about it matters in this area. If anything you really need to but-out since you aren’t helping Tony at all.

So far the official line is “we can’t comment until the deal closes” which as I pointed out isn’t any comfort to someone who has spent coin on gear. I don’t know if the additional “trust us we know what we are doing” is going to be very reassuring to those folks but I suppose they do feel better knowing that at least their support is now being provided by a profitable business.

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So I need to but out. Interesting. Whys that?