Ooma(OOMA) - 2025 Q3 - Quarterly Report

Financial Performance - Total revenue for Q3 Fiscal 2025 was $65.1 million, representing a 9% year-over-year increase, primarily driven by growth in Ooma Business[60] - Total revenue for the three months ended October 31, 2024, was$ 65,127,000, representing a 9% increase from $59,856,000 in the same period last year[69] - For the nine months ended October 31, 2024, total revenue was$ 191,755,000, a 10% increase from $175,061,000 in the prior year[71] - Subscription and services revenue from Ooma Business grew 7% year-over-year, attributed to user growth[60] - Subscription and services revenue increased by$ 4.2 million or 8% year-over-year, driven by an increase in core users and AirDial lines[70] - Subscription and services revenue for the nine months increased by $14.4 million or 9%, attributed to organic growth and contributions from the acquisition of 2600Hz[71] - Product and other revenue rose by$ 1.0 million or 26% year-over-year, primarily due to increased AirDial units shipped and sales of accessories[70] Profitability and Margins - Total gross margin was 60%, compared to 62% in the prior year quarter[60] - Adjusted EBITDA increased to $5.7 million from$ 5.0 million in the prior year quarter[60] - Gross profit for the three months ended October 31, 2024, was $39,270,000, up from$ 36,939,000, reflecting a 6% increase[72] - The gross margin for subscription and services decreased to 70% from 71% year-over-year, while product and other revenue gross margin improved to negative 57% from negative 74%[73] Expenses - Operating expenses for the three months ended October 31, 2024, totaled $41,556,000, compared to$ 37,957,000 in the prior year, marking a 9% increase[72] - Sales and marketing expenses increased by $3.2 million or 6% year-over-year, primarily due to a$ 4.4 million increase in personnel-related costs[76] - Research and development expenses rose by $5.4 million or 15% year-over-year, mainly driven by a$ 4.2 million increase in personnel-related costs[76] - General and administrative expenses increased by $3.0 million or 15% year-over-year, largely due to a$ 1.9 million rise in personnel-related costs[76] - Total operating expenses for the nine months ended October 31, 2024, were $122.7 million, up from$ 111.1 million, reflecting a year-over-year increase of $11.6 million or 10%[76] Cash Flow and Liquidity - As of October 31, 2024, total cash and cash equivalents were$ 17.1 million, down from $17.5 million as of January 31, 2024[60] - Net cash provided by operating activities for the nine months ended October 31, 2024, was$ 18.8 million, an increase of $12.0 million year-over-year[79] - Cash used in investing activities was$ 4.8 million, a decrease of $26.3 million year-over-year, primarily due to the absence of cash outflow for the 2600Hz acquisition[81] - Cash used in financing activities was$ 14.4 million, reflecting an increase of $33.4 million year-over-year, mainly due to repayments of borrowings under the Credit Agreement[82] - As of October 31, 2024, the company had$ 17.1 million in cash and cash equivalents, sufficient to meet cash needs for at least the next 12 months[78] Debt and Credit Facilities - Total debt decreased to $3.0 million from$ 16.0 million as of January 31, 2024[60] - The company entered into a secured revolving credit facility allowing borrowing up to $30.0 million, with$ 3.0 million outstanding as of October 31, 2024[83] User Metrics - Core users remained stable at 1,242 as of October 31, 2024, with Ooma Business users increasing to approximately 41% of total core users[62] - Annualized exit recurring revenue (AERR) grew to $234.0 million from$ 224.9 million year-over-year, driven by an increase in average revenue per core user[62] - Net dollar subscription retention rate remained strong at 99%, indicating effective user retention and growth[62] Net Loss - GAAP net loss was $2.4 million, a decline from net income of$ 2.3 million in the prior year quarter due to continued investments and a non-recurring tax benefit[60]