AltiGen Communications (OTCMKTS:ATGN) reported fiscal third-quarter 2026 revenue of $3 million and GAAP net income of $15,000, extending its streak of profitable quarters to nine as the company continues shifting from legacy communications products toward cloud-based, AI-powered customer engagement services.
Revenue declined from $3.5 million in the prior-year quarter, while GAAP net income decreased from $110,000. Non-GAAP net income was $190,000, or $0.01 per share, compared with $350,000, or $0.01 per share, a year earlier. Adjusted EBITDA, excluding legal, severance and other one-time costs, was $423,000, down from $645,000 in the prior-year period.
“This is a critical inflection point for Altigen,” Fleming said. “During the company’s transformation initiatives, churn from our legacy business outpaced revenue gains from our new cloud solutions. That equation is now beginning to change.”
Fleming said management believes most legacy churn is behind the company, positioning it to pursue sustainable revenue growth. He added that average revenue per customer is increasing and the company’s revenue mix is moving toward larger strategic opportunities.
Cloud and services revenue decline
Cloud services revenue was approximately $1.4 million, down 18% from $1.7 million in the year-earlier quarter. Services and other revenue totaled approximately $1.5 million, down 8% from $1.7 million a year ago.
Gross margin was 58%, compared with 63% in the prior-year period. Chief Financial Officer Gary Stone said the decline reflected lower revenue and higher professional-services costs related to new project work that required additional upfront resources.
GAAP operating expenses fell 18% to $1.7 million from $2.1 million a year earlier. Stone said the lower expense base was the primary reason the company remained profitable despite the revenue decline.
At the end of the quarter, AltiGen had $3.4 million in cash and cash equivalents, up from $2.75 million at Sept. 30, 2025. Working capital increased to $3.2 million from $2.9 million at the end of the prior fiscal year.
AI customer-engagement platform
The company is building an integrated suite of cloud-native, AI-powered customer engagement products aimed at mid-market and enterprise customers. Fleming described the platform as consisting of Core Interact, Core Engage and Core Insights.
- Core Interact is an AI-first virtual-agent platform designed to handle customer interactions across voice and digital channels and resolve issues without requiring a live agent where possible.
- Core Engage is a Microsoft Teams-based contact-center product that can receive escalated customer interactions along with their conversation context.
- Core Insights analyzes customer interaction and transaction data to provide customer views, identify trends and issues, and recommend actions.
Fleming said the new platform is intended to help the company win customers with larger contract values, longer expected retention periods and greater expansion potential than its historical small-business customer base.
AltiGen Consulting Services, or ACS, is also seeking to benefit from enterprise demand for AI projects. The consulting unit helps customers identify AI projects with potential return on investment and then designs, deploys and manages those solutions, according to management.
Operational investments and larger opportunities
President and Chief Operating Officer Joe Hamblin said the company completed its annual consulting planning process with the Connecticut Department of Transportation, establishing the scope of work for the coming year. He also said AltiGen completed its first major development project for a newer regulated-industry customer, delivering the work on time and on budget before transitioning the engagement into an ongoing support relationship.
During the quarter, the company launched CoreManage, a next-generation customer-management portal replacing its legacy portal, with customer migrations underway. AltiGen is also continuing its SOC 2 certification audit-monitoring process, which Hamblin said could remove a barrier in regulated sectors such as financial services and healthcare once completed.
The company is developing Core Interact AI Studio, which is intended to integrate solutions from multiple AI providers through a common architecture. Hamblin said this approach is designed to avoid dependence on a single AI technology provider.
AltiGen is also deploying a geo-redundant session border controller environment that would enable use of multiple Tier 1 and Tier 2 carriers. Once fully implemented, management expects the initiative to reduce operating costs by approximately $10,000 per month.
Hamblin said Core Engage continued to gain momentum and that the company signed its largest cloud customer to date during the quarter. He characterized the deal as evidence that AltiGen can compete for and win larger enterprise opportunities involving complex requirements, Microsoft Teams environments, communications and AI capabilities.
Fiserv approvals and fourth-quarter priorities
Management also highlighted progress in its relationship with Fiserv. During the quarter, Fiserv approved AltiGen’s AI IVR enhancements for general availability and approved the company to begin quality-assurance testing for its Core Insights analytics platform.
Hamblin said both offerings could create incremental revenue opportunities across existing Fiserv customer relationships. The companies also began holding regular sales-engagement sessions, and AltiGen planned to participate in a Fiserv Customer Forum expected to reach approximately 4,000 banking executives.
Looking ahead, Fleming said AltiGen’s focus is on deploying contracted business, expanding within its enterprise customer base, converting its pipeline into recurring revenue and building on the company’s cloud and AI offerings.
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.
