Shares of Altigen Communications, Inc. ATGN have gained 1.7% since the company reported its earnings for the quarter ended Dec. 31, 2025. This compares to the S&P 500 index’s 1.1% decline over the same time frame. Over the past month, the stock has declined 5.4% compared with the S&P 500’s 0.9% decrease.
Altigen reported fiscal first-quarter 2026 breakeven earnings per share. An earnings of 1 cent per share was reported in the prior-year quarter.
Total revenue of $3.2 million represented a 6% decrease from $3.4 million in the year-ago quarter. The company’s gross margin slipped slightly to 62% compared to 63% in the same period last year.
Despite the revenue decline, Altigen achieved its seventh consecutive quarter of profitability, with GAAP net income rising 16% year over year to $0.1 million.
AltiGen Communications, Inc. Price, Consensus and EPS Surprise
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Other Key Business Metrics
Altigen saw a decline in both Cloud Services and Services & Other revenue lines, with Cloud Services revenue falling approximately 17% to $1.4 million from $1.7 million a year ago. This drop was attributed largely to elevated customer churn related to the company’s transition away from legacy platforms, an impact that management believes is now largely behind them.
The Services & Other segment brought in $1.5 million, up from $1.4 million in the prior year. The prior quarter had been buoyed by a one-time customer request that accelerated delivery of services, inflating comparisons. Operating expenses fell 9% to $1.9 million, helping offset the revenue headwinds and supporting profitability.
Adjusted EBITDA for the quarter came in at $0.26 million, a marginal decrease from $0.29 million in the year-ago period, reflecting both the revenue contraction and reduced non-GAAP adjustments.
Management Commentary
CEO Jerry Fleming emphasized that the company is transitioning from a legacy PBX service provider into a modern, AI-powered, Microsoft Cloud-focused communications platform provider. The infrastructure buildout and product transformation, according to management, are now substantially complete, positioning Altigen for scalable, high-margin growth in the back half of fiscal 2026.
Fleming noted that churn from legacy platforms was expected and has largely normalized. He also highlighted the company’s revised go-to-market strategy, now aimed at mid-market and enterprise segments through a white-label and platform bundling approach.
CFO Gary Stone reiterated Altigen’s focus on disciplined execution, cost control and operational efficiency, which has helped sustain profitability despite the decline in revenues.
Factors Influencing Results
The year-over-year revenue decline was driven mainly by churn associated with the company’s platform transition. Many customers departed as Altigen migrated away from legacy systems, although management believes this headwind has now largely played out.
Gross margins remained strong above 60%, a testament to the company’s high-value software and service mix. Operating efficiency also improved, as demonstrated by the 9% reduction in operating expenses, reflecting cost containment amid the transition.
Altigen’s investment in internally developed AI platforms is expected to boost revenue going forward. Specifically, the company is nearing the release of two AI-powered solutions: a 24/7 customer self-service engine and a customer engagement analytics platform, both designed to enhance retention and average deal size.
Guidance and Outlook
Management expressed confidence in accelerating revenue growth during the second half of fiscal 2026. The optimism stems from the expected launch of new AI products, a growing installed customer base, and a sales shift toward managed service providers (MSPs) who serve small to mid-sized business clients.
Joe Hamblin, president & COO, noted that the company is now offering tailored support to MSPs and has initiated a new partner program to encourage expansion into global markets.
Other Developments
The company pursued capital investments in software development, with $0.3 million capitalized during the quarter, up from $0.2 million a year earlier. This reflects Altigen’s strategy of building out its proprietary technology stack to support its AI-driven solutions.
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