Ooma (OOMA) FY Conference Summary Company Overview - Ooma is a provider of communication services, specifically cloud telephone service and Unified Communications as a Service (UCaaS) [3][4] - The company operates in four segments: residential phone service, small business phone service, enterprise solutions, and wholesale platforms [17][26] Financial Performance - Ooma reported total revenue of $259 million for the last four quarters, with a year-over-year growth of 7% [5] - Adjusted EBITDA for the same period was $25 million, reflecting a 24% increase [5] - Annual exit recurring revenue (ARR) stands at $234 million, with a retention rate of 72% [6] - The company has a high gross margin of 72% on subscription revenue and a total gross margin of 63% [35] User Metrics - Ooma has over 1.2 million core users, with a monthly average revenue per user (ARPU) of approximately $15 [6][13] - Business ARPU is reported at over $23, while residential ARPU is around $19 [34] Market Opportunities - There are an estimated 6 million businesses in North America with 1 to 20 employees, with about half yet to transition to cloud solutions, presenting a significant market opportunity [16] - The company is targeting the replacement of copper lines, with an estimated 10 million lines in the U.S. being phased out [17][18] Product Segments - **Residential Product Line**: Ranked number one by Consumer Reports, offering affordable phone services [9][15] - **Small Business Solutions**: Ooma Office allows small businesses to access powerful communication features at a low cost, catering to their unique needs [10][12] - **Enterprise Solutions**: Focused on verticals like hospitality, with over 500 hotels in North America using Ooma's services [11] - **AirDial**: A solution for replacing copper lines, designed to maintain existing equipment while providing advanced features [19][22] Strategic Partnerships - Ooma has signed over 30 resellers for AirDial, including major partners like T-Mobile and Comcast, enhancing market reach [22] - The company has a significant partnership with Marriott, certifying Ooma AirDial for all their properties, which includes over 5,000 locations in North America [51] Growth Strategy - Ooma aims to reach 300,000 lines for AirDial, which could generate an additional $100 million in recurring revenue annually [23] - The company is focused on acquiring small business user bases through strategic acquisitions, typically targeting businesses with $10 million to $25 million in revenue [38] Financial Outlook - Ooma expects to improve adjusted EBITDA margins to 11% by Q4 of the current year, with a long-term goal of reaching 20% to 25% in the next four to five years [43] - The company plans to continue using free cash flow for stock buybacks, having spent $12 million in the last twelve months [39][40] Conclusion - Ooma is positioned in a growing market with a strong financial foundation, focusing on differentiated solutions in the cloud communications space, particularly through its unique offerings like AirDial and the 2,600 Hertz platform [59]

Core Viewpoint - Ooma (OOMA) has shown an 8.8% increase in stock price over the past four weeks, with a mean price target of $18.30 indicating a potential upside of 34.1% from the current price of $13.65 [1] Price Targets and Analyst Estimates - The mean estimate consists of five short-term price targets with a standard deviation of $1.10, where the lowest estimate is $17 (24.5% increase) and the highest is $20 (46.5% increase) [2] - A low standard deviation suggests a high degree of agreement among analysts regarding the stock's price movement [9] Earnings Estimates and Market Sentiment - Analysts have shown increasing optimism about Ooma's earnings prospects, with a positive trend in earnings estimate revisions correlating with potential stock price increases [4][11] - The Zacks Consensus Estimate for the current year has risen by 6.2% over the past month, with three estimates increasing and no negative revisions [12] Zacks Rank and Investment Potential - Ooma holds a Zacks Rank 2 (Buy), placing it in the top 20% of over 4,000 ranked stocks based on earnings estimates [13] - While consensus price targets may not be reliable for predicting exact gains, they can indicate the direction of price movement [13]

Company Performance - Ooma reported quarterly earnings of $0.20 per share, exceeding the Zacks Consensus Estimate of $0.18 per share, and up from $0.14 per share a year ago, representing an earnings surprise of 11.11% [1] - The company posted revenues of $65.03 million for the quarter ended April 2025, surpassing the Zacks Consensus Estimate by 0.32%, and an increase from $62.5 million year-over-year [2] - Ooma has consistently surpassed consensus EPS estimates over the last four quarters [2] Future Outlook - The sustainability of Ooma's stock price movement will depend on management's commentary during the earnings call and future earnings expectations [3][4] - Current consensus EPS estimate for the upcoming quarter is $0.18 on revenues of $66.09 million, and for the current fiscal year, it is $0.78 on revenues of $267.67 million [7] - The estimate revisions trend for Ooma is mixed, resulting in a Zacks Rank 3 (Hold), indicating expected performance in line with the market [6] Industry Context - The Communication - Components industry, to which Ooma belongs, is currently ranked in the bottom 35% of over 250 Zacks industries, which may impact stock performance [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, suggesting that industry outlook can significantly affect stock performance [5][8]

Financial Data and Key Metrics Changes - For Q1 FY 2026, the company achieved revenue of $65 million, a 4% year-over-year growth, and non-GAAP net income of $5.6 million, which is a 56% increase compared to the prior year [9][17][22] - Adjusted EBITDA for the quarter was $6.7 million, representing a 33% growth over the prior year [22] - The annual exit recurring revenue was $234 million, up 33% year over year [19] Business Line Data and Key Metrics Changes - Business subscription and services revenue grew 6% year over year, accounting for 62% of total subscription and services revenue [16][17] - Residential subscription and services revenue declined by 2% year over year [17] - Ooma Office expanded its new account wins and users, with 61% of new Office users opting for a premium service tier, the highest ever [10][19] Market Data and Key Metrics Changes - The company serves over 500 hotels across North America, indicating strong traction in the hospitality sector [11][60] - The number of Airdial reseller partners increased to over 30, with significant new customer wins in Q1 [13][52] Company Strategy and Development Direction - The company focuses on four market segments: cloud communications for small businesses, POTS replacement, wholesale platform services, and residential telephony [9][10] - The company is optimistic about the growth of Airdial, especially with the partnership with Comcast, which launched Airdial on schedule [12][38] - The company aims to enhance its product offerings and expand its market reach, particularly in the hospitality and larger business segments [11][46] Management's Comments on Operating Environment and Future Outlook - Management noted a steady demand environment for UCaaS solutions, while demand for Airdial is accelerating [32][33] - The company expects to maintain a net dollar subscription retention rate of around 99% going forward [29] - Management expressed confidence in achieving higher profitability and adjusted EBITDA margins in the future [93] Other Important Information - The company generated $3.7 million of operating cash flow and $2.5 million of free cash flow in Q1 [22][23] - Total operating expenses for Q1 were $35.4 million, up 1% year over year, with a focus on sales and marketing for Airdial [21][22] Q&A Session Summary Question: What contributed to the 1% increase in NRR this quarter? - The retention rate improvement was largely due to the improvement in non-Regis subscription revenue, offsetting the anticipated decline from Regis [28][29] Question: What are you seeing in the demand environment? - The demand environment for UCaaS solutions has remained steady, while Airdial demand is accelerating [32][33] Question: Is there any change to visibility on Airdial adoption? - Early opportunities with larger accounts are promising, but it takes time to move through the sales cycle [38] Question: What impact have tariffs had on your subscriber base? - There has been no significant impact from tariffs on the customer base or sales opportunities [40] Question: What areas will you be investing in moving forward? - The company is reallocating sales and marketing spend towards Airdial and 2600 Hertz, while maintaining significant R&D investment [44][46] Question: How productive are your Airdial partners? - The company is pleased with the traction of its largest partners and is seeing good success across its reseller network [51][52] Question: What is the outlook for the hospitality sector? - The company targets winning 50 to 100 hotels per quarter and sees significant opportunity in this segment [60] Question: Are there any significant changes in the competitive environment? - The company continues to focus on its four segments to maintain a competitive advantage, with no specific changes noted [68] Question: Are you talking with other cable companies? - The company is actively engaging with new reseller partners and aims to add partners consistently [74] Question: What is the timeline for integrating Ooma apps into 2600 Hertz? - The integration is expected to be completed by the end of the year [80] Question: Have you seen any change in sales cycles for 2600 Hertz? - There is good momentum in customer wins, but it is unclear if this is due to the market or the company's efforts [82]

Financial Data and Key Metrics Changes - For Q1 FY 2026, the company achieved revenue of $65 million, a 4% year-over-year growth, and non-GAAP net income of $5.6 million, which is a 56% increase compared to the prior year [8][16][22] - Adjusted EBITDA for the quarter was $6.7 million, representing a 33% growth year-over-year [22] - The annual exit recurring revenue was $234 million, up 33% year-over-year [19] Business Line Data and Key Metrics Changes - Business subscription and services revenue grew 6% year-over-year, accounting for 62% of total subscription and services revenue [16][17] - Residential subscription and services revenue declined by 2% year-over-year [17] - Ooma Office saw an increase in new account wins, with 61% of new Office users opting for a premium service tier, the highest ever [11][19] Market Data and Key Metrics Changes - The company serves over 500 hotels across North America, indicating strong traction in the hospitality sector [10][60] - The number of Airdial reseller partners increased to over 30, with significant new customer wins in Q1 [13][52] Company Strategy and Development Direction - The company focuses on four market segments: cloud communications for small businesses, POTS replacement, wholesale platform services, and residential telephony [8][9] - The company is optimistic about Airdial growth and has made significant investments in developing solutions for its target segments [26] - The company aims to maintain a strong gross margin of 72% for subscription and services while investing in infrastructure to support growth [20][49] Management's Comments on Operating Environment and Future Outlook - Management noted a steady demand environment for UCaaS solutions, while demand for Airdial is accelerating [32][33] - The company expects to see continued growth in adjusted EBITDA and free cash flow, reaffirming its revenue guidance for FY 2026 [24][25] Other Important Information - The company ended Q1 with total cash and investments of $19 million and generated $3.7 million of operating cash flow [22][23] - The company is raising the low end of its non-GAAP net income guidance for FY 2026 to a range of $22.5 million to $23.5 million [25] Q&A Session Summary Question: What contributed to the 1% increase in NRR this quarter? - The retention rate improvement was largely due to the improvement in non-Regis subscription revenue, offsetting the anticipated decline from Regis [28][29] Question: What are you seeing in the demand environment? - The demand environment for UCaaS solutions has remained steady, while Airdial demand is accelerating [32][33] Question: Is there any change to visibility on when adoption will begin to ramp? - The company is optimistic about early opportunities with Comcast and expects continued growth through the year [37][38] Question: What impact have tariffs had on your subscriber base? - There has been no significant impact from tariffs on the customer base or sales opportunities [39] Question: What areas will you be investing in moving forward? - The company is reallocating sales and marketing spend towards Airdial and 2600 Hertz, while maintaining significant R&D investment [44][46] Question: Can you quantify the number of lines that churned at Regis? - Approximately $12,000 to $13,000 in churn occurred over the last two quarters at Regis [90][92] Question: What is a reasonable goal for adjusted EBITDA margin in the future? - The company believes there is potential for significantly higher adjusted EBITDA margins in the future [96]

Financial Performance - Ooma's revenue reached $259 million, with a 7% year-over-year growth[7] - Adjusted EBITDA was $25 million, showing a 24% year-over-year increase[7] - Annual Exit Recurring Revenue (AERR) amounted to $234 million[7] - Recurring Gross Profit Margin stood at 72%[7] Customer Base and Retention - The company has over 12 million core users[7] - Net dollar subscription retention rate (NDR) is 99%[7] Market and Growth Opportunities - The North American Business Market is experiencing a -4% CAGR[27] - The Worldwide hosted voice/UC public cloud (UCaaS) market is experiencing a 17% CAGR[27] - All other VoIP is experiencing a 36% CAGR[27] - Ooma is targeting the POTS (copper line) replacement market, estimated at >10 million lines in the U S [31]

Financial Performance - Ooma reported total revenue of $65.0 million for Q1 fiscal 2026, representing a 4% year-over-year increase[5]. - Non-GAAP net income for the quarter was $5.6 million, or $0.20 per diluted share, compared to $3.6 million, or $0.14 per diluted share in the prior year[5]. - Adjusted EBITDA increased to $6.7 million, up from $5.0 million in Q1 fiscal 2025, reflecting a 33% year-over-year growth[5]. - Subscription and services revenue accounted for 93% of total revenue, increasing to $60.3 million from $58.4 million in the same quarter last year[5]. - Revenue for the three months ended April 30, 2025, was $65,029,000, an increase of 4.9% compared to $62,499,000 for the same period in 2024[27]. - GAAP gross profit for the same period was $40,209,000, up from $38,115,000, resulting in a GAAP gross margin of 62%[27]. - Non-GAAP gross profit increased to $41,161,000 from $39,175,000, maintaining a Non-GAAP gross margin of 63%[27]. - The company reported a GAAP net loss of $141,000 for the three months ended April 30, 2025, significantly improved from a net loss of $2,139,000 in the same period of 2024[27]. - Non-GAAP net income for the period was $5,640,000, compared to $3,583,000 for the same period in 2024[27]. - Adjusted EBITDA for the three months ended April 30, 2025, was $6,668,000, an increase from $5,000,000 in the prior year[27]. Future Projections - Ooma expects total revenue for Q2 fiscal 2026 to be in the range of $65.5 million to $66.1 million[6]. - For the full fiscal year 2026, Ooma anticipates total revenue between $267 million and $270 million[6]. Asset Management - Total current assets as of April 30, 2025, were $57.3 million, compared to $56.2 million as of January 31, 2025[22]. - Ooma's total assets decreased slightly to $148.8 million from $149.2 million at the end of the previous quarter[22]. - Cash and cash equivalents at the end of the period were $18,988,000, up from $15,848,000 at the end of the same period in 2024[26]. - Net cash provided by operating activities was $3,703,000, compared to $3,585,000 for the same period in 2024[26]. Stock and Compensation - The company issued common stock, generating proceeds of $2,288,000, compared to $1,417,000 in the prior year[26]. - The company incurred stock-based compensation expense of $3,936,000, slightly down from $4,363,000 in the same period of 2024[26]. Customer Acquisition - The company added over 30 AirDial resellers and secured four new customers for its 2600Hz solution during the quarter[4]. Loss Improvement - GAAP net loss for Q1 fiscal 2026 was $0.1 million, or $0.01 per share, an improvement from a loss of $2.1 million, or $0.08 per share, in Q1 fiscal 2025[5].

Industry Overview - The Zacks Communication - Components industry is facing challenges due to raw material price volatility, high capital expenditure for 5G infrastructure, and supply chain issues, which have negatively impacted profitability [1][4][6] - The industry primarily includes companies providing telecom products and services for scalable network architecture, video solutions, and broadband access equipment [3] Current Challenges - High operating costs are driven by a shortage of chips, elevated raw material prices due to geopolitical tensions, and technological obsolescence [4][6] - Demand erosion is occurring as customers shift to lower-priced alternatives in response to increased fees for network upgrades, compounded by trade restrictions affecting credibility [7] Future Prospects - Companies like Harmonic Inc., Ooma, Inc., and AudioCodes Ltd. are expected to benefit from rising demand for scalable infrastructure driven by IoT, fiber densification, and accelerated 5G rollout [2] - The industry is positioned for growth through a software-driven, data-centric approach that enhances cloud architecture and user experience [5] Performance Metrics - The Zacks Communication - Components industry has outperformed the S&P 500 and the broader Zacks Computer and Technology sector, with a 34.1% increase over the past year compared to 9.2% and 7.2% for the S&P 500 and sector, respectively [11] - The industry currently trades at a trailing 12-month price-to-book (P/B) ratio of 3.11X, below the S&P 500's 7.81X and the sector's 8.63X [14] Key Companies - **Harmonic Inc.**: Specializes in video delivery solutions and has a strong earnings outlook with a 67.9% earnings surprise on average over the last four quarters [17][18] - **Ooma, Inc.**: Offers cloud-based communication solutions and has shown an 18% earnings surprise on average, focusing on small business customers [21][23] - **AudioCodes Ltd.**: Provides advanced communication solutions and aims to leverage partnerships to strengthen its market position, with a 0.4% earnings surprise on average [26][27]

Core Insights - Ooma (OOMA) is expected to report quarterly earnings of $0.18 per share, reflecting a 28.6% increase year-over-year [1] - Analysts forecast revenues of $64.82 million, indicating a 3.7% year-over-year growth [1] - The consensus EPS estimate has remained unchanged over the last 30 days, suggesting stability in analyst projections [1] Revenue Projections - Analysts estimate 'Revenue- Product and other' to reach $4.56 million, representing an 11.1% increase from the previous year [4] - 'Revenue- Subscription and services' is projected to be $60.92 million, showing a year-over-year change of 4.3% [4] Gross Margin Insights - The consensus for 'Gross Margin- Subscription and services' is expected to be 70.7%, an improvement from the year-ago figure of 70% [4] Stock Performance - Ooma shares have increased by 8.7% in the past month, outperforming the Zacks S&P 500 composite's 8.2% increase [5] - Ooma holds a Zacks Rank 3 (Hold), indicating it is expected to closely follow overall market performance in the near term [5]

Financial Performance - Total revenue for fiscal 2025 was $256.9 million, representing an increase from $236.7 million in fiscal 2024 and $216.2 million in fiscal 2023, indicating strong revenue growth[17]. - For fiscal 2025, approximately 61% of revenue was derived from Ooma Business and 36% from Ooma Residential, indicating a strong reliance on these segments for future growth[92]. - The company incurred a net loss of approximately $6.9 million in fiscal 2025, despite generating cash from operations of $26.6 million[139]. - The company has significant fixed operating expenses, which may lead to increased net losses if revenue falls short of expectations[141]. - The company has experienced fluctuations in demand and pricing for its products, which may impact revenue and profitability[142]. User Base and Customer Service - As of January 31, 2025, Ooma had a total of 1,234,000 core users across Ooma Business and Ooma Residential[17]. - Ooma maintains two customer contact centers to support business and residential customers, utilizing various communication media for customer service[47]. - The company’s customer service is primarily provided by third parties, and any failure in service quality could harm the company's reputation and lead to significant liability[132]. - The company relies on third-party carriers for number portability, which is critical for customer acquisition and retention[138]. Product and Service Offerings - Ooma Office offers three service plans sold as monthly subscriptions, providing essential business phone features and advanced functionalities[21]. - Ooma Enterprise provides a highly customizable UCaaS solution, enabling organizations to utilize mobile and softphone telephony, multiparty conferencing, and call center capabilities[26]. - Ooma AirDial serves as a replacement for legacy analog phone services, supporting up to four safety devices per base station[29]. - Ooma's residential phone service includes PureVoice HD voice quality and advanced functionalities, enhancing user experience and integration with mobile devices[32]. - The introduction of new products, such as Ooma Office Pro Plus and AirDial, is essential for maintaining competitive advantage and driving revenue growth[93]. Market and Competitive Landscape - The competitive landscape includes established providers like Comcast and Verizon, as well as emerging CPaaS and CCaaS companies such as Twilio and RingCentral, indicating a highly fragmented market[53][56]. - The company faces significant competition in the CPaaS and CCaaS markets, with competitors having greater resources and established customer relationships, which may lead to price reductions to remain competitive[118]. - Increased competition in the cloud-based communications industry may lead to pricing pressures and reduced profit margins, impacting the company's ability to grow sales[115]. Risks and Challenges - The company faces risks related to customer turnover, reliance on small and medium-sized businesses, and potential tariffs on imported goods[76]. - The company faces significant risks related to customer churn, as customers can terminate subscriptions without penalty, potentially impacting revenue stability[82]. - The company may face penalties if it fails to comply with number porting timeframes set by regulatory bodies[138]. - The company is exposed to potential tariffs and trade restrictions that could materially harm revenue and gross margins, particularly due to sourcing from China[104]. - The company may incur substantial costs due to fraudulent activities, which could negatively impact its revenue and customer base[176]. Regulatory and Compliance Issues - Regulatory obligations include contributions to the Federal Universal Service Fund and compliance with E-911 service requirements, impacting operational costs[69]. - The company is currently in compliance with PCI standards, but non-compliance by subsidiaries could result in fines or restrictions on credit card acceptance[175]. - The FCC is considering increased regulation of interconnected VoIP services, which may negatively impact the company's business[198]. - The company is subject to various data privacy laws, which may increase operational costs and affect product adoption rates[201]. Strategic Partnerships and Marketing - The company has strategic partnerships with third parties, such as T-Mobile, to expand its service offerings to a broader customer base[44]. - The company employs a multi-channel marketing approach, utilizing online marketing, traditional advertising, and word-of-mouth strategies to grow its customer base[39]. - The company relies significantly on retailers and reseller partnerships for product sales, with a notable portion of Ooma Residential and Ooma Business sales made through major retailers like Amazon and Walmart[98]. Research and Development - The company has invested significantly in its engineering and R&D team, enhancing capabilities in various areas including digital hardware design and mobile app development[50]. - The company holds 51 issued patents and has one patent application pending in the United States, with patents expiring between 2031 and 2040[66]. Operational Infrastructure - The company operates three data center facilities in Northern California, Texas, and Virginia, with additional leased space in Europe, South Africa, and Asia Pacific[51]. - Manufacturing of on-premise and end-point devices is primarily contracted out to manufacturers in Vietnam and other Asian countries, with logistics managed from Newark, California[52]. Growth and Future Outlook - Future growth may involve acquisitions, which could divert management attention and increase operational risks[76]. - Future success depends on the ability to develop and enhance products in a rapidly changing technological landscape, with potential delays affecting market competitiveness[92]. - The company anticipates ongoing costs related to security measures against breaches, which could impact profitability[12].