Ooma(OOMA) - 2026 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements (unaudited) Ooma, Inc.'s unaudited condensed consolidated financial statements, including balance sheets, operations, cash flows, and equity, are presented Condensed Consolidated Balance Sheets The condensed consolidated balance sheets provide a snapshot of the company's financial position, detailing assets, liabilities, and equity | Metric | July 31, 2025 (in thousands) | January 31, 2025 (in thousands) | | :-------------------------- | :----------------------------- | :------------------------------ | | Total Assets | $150,095 | $149,195 | | Total Liabilities | $61,974 | $63,917 | | Total Stockholders' Equity | $88,121 | $85,278 | | Cash and Cash Equivalents | $19,558 | $17,871 | Condensed Consolidated Statements of Operations This statement outlines the company's revenues, costs, and net income (loss) for periods ended July 31, 2025 and 2024 | Metric | Three Months Ended July 31, 2025 (in thousands) | Three Months Ended July 31, 2024 (in thousands) | Six Months Ended July 31, 2025 (in thousands) | Six Months Ended July 31, 2024 (in thousands) | | :--------------------------------- | :---------------------------------------------- | :---------------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Total Revenue | $66,364 | $64,129 | $131,393 | $126,628 | | Net Income (Loss) | $1,255 | $(2,137) | $1,114 | $(4,276) | | Basic Net Income (Loss) Per Share | $0.05 | $(0.08) | $0.04 | $(0.16) | | Diluted Net Income (Loss) Per Share | $0.04 | $(0.08) | $0.04 | $(0.16) | Condensed Consolidated Statements of Cash Flows The cash flow statement details sources and uses of cash from operating, investing, and financing activities | Metric | Six Months Ended July 31, 2025 (in thousands) | Six Months Ended July 31, 2024 (in thousands) | | :------------------------------------ | :-------------------------------------------- | :-------------------------------------------- | | Net Cash Provided by Operating Activities | $10,064 | $10,672 | | Net Cash Used in Investing Activities | $(2,535) | $(3,192) | | Net Cash Used in Financing Activities | $(5,842) | $(8,431) | | Net Increase (Decrease) in Cash | $1,687 | $(951) | Condensed Consolidated Statements of Stockholders' Equity This statement tracks changes in stockholders' equity, including common stock, additional paid-in capital, and accumulated deficit | Metric | July 31, 2025 (in thousands) | July 31, 2024 (in thousands) | | :-------------------------- | :--------------------------- | :--------------------------- | | Total Stockholders' Equity | $88,121 | $81,839 | | Net Income (Loss) (Q2) | $1,255 | $(2,137) | Notes to Condensed Consolidated Financial Statements These notes provide comprehensive disclosures supporting the condensed consolidated financial statements, detailing business and key financial areas Note 1: Overview and Basis of Presentation Ooma, Inc. provides communications services for businesses and consumers, operating as a single segment primarily in the US - Ooma, Inc. provides leading communications services and related technologies for businesses and consumers, delivered from its smart SaaS and unified communications platforms[15] - The company operates in a single reportable segment, with revenue principally derived from customers in the United States[21][22] - The company is currently evaluating the impact of adopting ASU 2023-09 (Income Taxes) and ASU 2024-03 (Expense Disaggregation Disclosures) on its consolidated financial statements[27][28] Note 2: Revenue and Deferred Revenue Revenue is primarily from recurring subscription and services fees, with Ooma Business contributing the majority - Subscription and Services Revenue is derived from recurring subscription fees related to service plans (Ooma Business, Ooma Residential) and recognized ratably[31] - Product and Other Revenue is generated primarily from the sale of on-premise and end-point devices, recognized at the point-in-time control is transferred[32] | Revenue Source | Three Months Ended July 31, 2025 (in thousands) | Six Months Ended July 31, 2025 (in thousands) | | :---------------------- | :---------------------------------------------- | :-------------------------------------------- | | Subscription and services | $61,139 | $121,398 | | Product and other | $5,225 | $9,995 | | Total Revenue | $66,364 | $131,393 | - Ooma Business contributed approximately 63% of total revenue for both the three and six months ended July 31, 2025[32] | Metric | July 31, 2025 (in thousands) | January 31, 2025 (in thousands) | | :---------------------- | :--------------------------- | :------------------------------ | | Total Deferred Revenue | $17,355 | $16,609 | - Remaining performance obligations for contracts greater than one year were approximately $41.0 million as of July 31, 2025, with 45% expected to be recognized over the next 12 months[35] Note 3: Fair Value Measurements Fair value measurements are categorized into a three-level hierarchy, with non-marketable equity investments classified as Level 3 - Cash and cash equivalents totaled $19.6 million as of July 31, 2025[38] - Non-marketable equity investments of $3.3 million in privately held Global Telecom Corporation (GTC) are classified as Level 3 within the fair value hierarchy[38][39] - A gain on note conversion of $1.0 million was recorded in the three months ended April 30, 2024, following the conversion of a convertible promissory note in GTC to preferred stock[44] Note 4: Balance Sheet Components This note provides detailed breakdowns of inventories, other current and non-current assets, and accrued expenses | Inventory Component | July 31, 2025 (in thousands) | January 31, 2025 (in thousands) | | :------------------ | :--------------------------- | :------------------------------ | | Finished goods | $12,324 | $9,156 | | Raw materials | $2,452 | $3,912 | | Total inventory | $14,776 | $13,068 | | Other Current Assets | July 31, 2025 (in thousands) | January 31, 2025 (in thousands) | | :--------------------- | :--------------------------- | :------------------------------ | | Deferred sales commissions, current | $9,336 | $9,301 | | Prepaid expenses and other | $4,822 | $5,613 | | Other current assets | $2,646 | $2,284 | | Total other current assets | $16,804 | $17,198 | | Accrued Expenses and Other Current Liabilities | July 31, 2025 (in thousands) | January 31, 2025 (in thousands) | | :--------------------------------------------- | :--------------------------- | :------------------------------ | | Payroll and related expenses | $11,086 | $15,415 | | Regulatory fees and taxes | $5,443 | $5,371 | | Short-term operating lease liabilities | $4,074 | $3,713 | | Customer-related liabilities | $1,346 | $1,401 | | Other | $3,875 | $3,167 | | Total accrued expenses and other current liabilities | $25,824 | $29,067 | - Amortization of deferred sales commissions was $2.6 million for the three months ended July 31, 2025, and $5.2 million for the six months ended July 31, 2025[42] Note 5: Acquired Intangible Assets This note details the gross value, accumulated amortization, and carrying values of acquired intangible assets | Intangible Asset | Carrying Value (July 31, 2025, in thousands) | Carrying Value (January 31, 2025, in thousands) | | :----------------- | :------------------------------------------- | :---------------------------------------------- | | Developed technology | $13,712 | $15,027 | | Customer relationships | $5,016 | $6,414 | | Trade names | $644 | $743 | | Total intangible assets | $19,372 | $22,184 | - Amortization expense was $1.4 million for the three months ended July 31, 2025, and $2.8 million for the six months ended July 31, 2025[47] | Fiscal Years Ending January 31, | Estimated Future Amortization Expense (in thousands) | | :------------------------------ | :--------------------------------------------------- | | 2026 remainder | $2,812 | | 2027 | $5,068 | | 2028 | $3,950 | | 2029 | $3,030 | | 2030 | $2,629 | | Thereafter | $1,883 | | Total | $19,372 | Note 6: Operating Leases This note details the company's operating lease agreements for facilities, including balance sheet information and lease costs | Lease Metric | July 31, 2025 (in thousands) | January 31, 2025 (in thousands) | | :-------------------------------- | :--------------------------- | :------------------------------ | | Operating lease right-of-use assets | $14,788 | $15,311 | | Total lease liabilities | $15,662 | $15,947 | | Weighted-average remaining lease term | 4.8 years | 5.2 years | | Weighted-average discount rate | 6.4% | 6.3% | - Total lease costs incurred were $1.8 million for the three months ended July 31, 2025, and $3.5 million for the six months ended July 31, 2025[50] - Cash payments for operating leases were $1.9 million for the six months ended July 31, 2025[50] | Fiscal Years Ending January 31, | Future Minimum Lease Payments (July 31, 2025, in thousands) | | :------------------------------ | :---------------------------------------------------------- | | 2026 remainder | $1,988 | | 2027 | $4,405 | | 2028 | $4,222 | | 2029 | $3,025 | | 2030 | $1,522 | | Thereafter | $3,390 | | Total future minimum lease payments | $18,552 | | Less: imputed interest | $(2,890) | | Present value of lease liabilities | $15,662 | Note 7: Stockholders' Equity This note details the company's equity incentive plans, stock option and RSU activity, and the stock repurchase plan - Stockholders approved amendments to the 2015 Equity Incentive Plan (EIP) and 2015 Employee Stock Purchase Plan (ESPP) on June 5, 2025, extending terms and increasing authorized shares[53] | Stock Option Activity | July 31, 2025 (in thousands) | | :-------------------- | :--------------------------- | | Balance | 523 | | Weighted-Average Exercise Price Per Share | $13.55 | | Vested and exercisable | 506 | | RSU Activity | July 31, 2025 (in thousands) | | :------------- | :--------------------------- | | Balance | 2,305 | | Weighted-Average Grant Date Fair Value Per Share | $12.35 | - The company repurchased 411,794 shares of common stock for $5.4 million during the six months ended July 31, 2025, under its stock repurchase plan[57] - As of July 31, 2025, approximately $4.2 million remained authorized and available under the company's share repurchase plan[57] Note 8: Stock-Based Compensation This note details stock-based compensation expense recognized across functional areas and remaining unrecognized expense | Expense Category | Three Months Ended July 31, 2025 (in thousands) | Six Months Ended July 31, 2025 (in thousands) | | :----------------------- | :---------------------------------------------- | :-------------------------------------------- | | Cost of revenue | $222 | $453 | | Sales and marketing | $452 | $1,155 | | Research and development | $978 | $2,098 | | General and administrative | $1,983 | $3,865 | | Total stock-based compensation expense | $3,635 | $7,571 | - As of July 31, 2025, there was $27.1 million of unrecognized compensation expense related to unvested RSUs, stock options, and ESPP rights, expected to be recognized over approximately 2.7 years[60] Note 9: Income Taxes This note reports income tax benefit or provision, highlighting tax law changes and valuation allowance against deferred tax assets | Metric | Three Months Ended July 31, 2025 (in thousands) | Six Months Ended July 31, 2025 (in thousands) | | :------------------------ | :---------------------------------------------- | :-------------------------------------------- | | Income Tax Benefit (Provision) | $118 | $(129) | - The company maintains a full valuation allowance against its remaining deferred tax assets[61] - Unrecognized tax benefits were approximately $12.8 million as of July 31, 2025, which would not affect the effective tax rate if recognized due to the valuation allowance[62] - The company is evaluating the potential effects of the recently passed One Big Beautiful Bill Act (OBBBA) on its financial position, results of operations, and cash flows[63] Note 10: Basic and Diluted Net Income (Loss) Per Share This note provides the computation of basic and diluted net income (loss) per share, including weighted-average common shares and dilutive securities | Metric | Three Months Ended July 31, 2025 | Six Months Ended July 31, 2025 | | :--------------------------------- | :------------------------------- | :----------------------------- | | Basic Net Income (Loss) Per Share | $0.05 | $0.04 | | Diluted Net Income (Loss) Per Share | $0.04 | $0.04 | | Basic Weighted Average Common Shares | 27,595,209 | 27,521,797 | | Diluted Weighted Average Common Shares | 28,125,304 | 28,224,710 | - Approximately 0.3 million potentially dilutive securities were excluded from diluted net loss per share computation for periods with net loss as their inclusion would have been anti-dilutive[66] Note 11: Commitments and Contingencies This note details non-cancelable purchase commitments, ongoing legal proceedings, and indemnification agreements - Non-cancelable inventory purchase commitments totaled approximately $9.3 million as of July 31, 2025[67] - A non-cancelable service agreement with a telecommunications provider has $9.2 million outstanding as of July 31, 2025, through February 2029[67] - In Canadian litigation, class action certification was denied, compelling individual arbitration, but an appeal and related California complaint are pending[72] - The Bachhuber Litigation is a putative class action alleging violations of the Telephone Consumer Protection Act (TCPA), seeking damages of $500-$1,500 per violation[73] - No accrued liabilities were recorded for loss contingencies as of July 31, 2025[69] Note 12: Financing Arrangements This note describes the company's secured revolving credit facility, including borrowing capacity, interest rate terms, and covenant compliance - The company has a three-year secured revolving credit facility of up to $30.0 million, which includes a $10.0 million sub-facility for letters of credit and can be increased to $50.0 million[76] - Loans under the Credit Agreement bear interest at either the Alternate Base Rate plus 1.25% or Term SOFR plus 2.00%[77] - As of July 31, 2025, the company had zero outstanding borrowings and $30.0 million of available borrowing capacity, and was in compliance with all covenants[81] - An amendment in August 2025 permits unlimited open market repurchases of equity interests up to the board-authorized amount, subject to certain conditions[80] Note 13: Segment Information This note confirms the company operates as a single reportable segment, with the CEO reviewing consolidated financial information - The company operates in a single reportable segment, with the chief executive officer serving as the chief operating decision maker[82] | Metric | Three Months Ended July 31, 2025 (in thousands) | Six Months Ended July 31, 2025 (in thousands) | | :-------------------------- | :---------------------------------------------- | :-------------------------------------------- | | Revenue from external customers | $66,364 | $131,393 | | Consolidated net income (loss) | $1,255 | $1,114 | | Other Segment Expenses | Three Months Ended July 31, 2025 (in thousands) | Six Months Ended July 31, 2025 (in thousands) | | :----------------------------- | :---------------------------------------------- | :-------------------------------------------- | | Amortization of intangible assets | $1,406 | $2,812 | | Stock-based compensation and related taxes | $3,708 | $7,776 | | Litigation costs | $83 | $390 | | Total other segment expenses | $5,197 | $10,978 | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management's discussion and analysis covers Ooma's financial performance, including business overview, key metrics, and consolidated results Executive Overview Ooma provides communications services, primarily generating subscription revenue, reporting 3% revenue growth and $1.3 million GAAP net income - Ooma provides leading communications services and related technologies for businesses and residential customers through smart SaaS and unified communications platforms[84] - Revenue is primarily generated from the sale of subscriptions and other services for business and residential communications solutions[85] | Metric | Q2 Fiscal 2026 (in millions) | YoY Change | | :-------------------------- | :--------------------------- | :--------- | | Total Revenue | $66.4 | +3% | | Ooma Business Subscription & Services Revenue | +6% | | | GAAP Net Income | $1.3 | N/A | | Adjusted EBITDA | $7.2 | N/A | | Cash and Cash Equivalents (July 31, 2025) | $19.6 | N/A | | Outstanding Debt (July 31, 2025) | $0 | N/A | Key Business Metrics The company evaluates its business using core users, AERR, and NDRR, with core users decreasing, AERR growing, and NDRR remaining flat at 100% | Metric | As of July 31, 2025 (in thousands, except %) | As of July 31, 2024 (in thousands, except %) | | :-------------------------- | :------------------------------------------- | :------------------------------------------- | | Core Users | 1,230 | 1,244 | | Annualized Exit Recurring Revenue (AERR) | $239,679 | $233,081 | | Net Dollar Subscription Retention Rate (NDRR) | 100% | 100% | - Core users decreased year-over-year, primarily driven by a decline in Ooma Residential users, partially offset by an increase in Ooma Business users[89] - Ooma Business users comprised approximately 41% of total core users as of July 31, 2025, up from 40% as of July 31, 2024[89] - AERR grew year-over-year due to an increase in the average revenue per core user, largely driven by an increasing mix of Business users[90] Adjusted EBITDA Adjusted EBITDA, a non-GAAP metric, increased significantly for both the three and six months ended July 31, 2025 | Metric | Three Months Ended July 31, 2025 (in thousands) | Three Months Ended July 31, 2024 (in thousands) | Six Months Ended July 31, 2025 (in thousands) | Six Months Ended July 31, 2024 (in thousands) | | :------------------------------------ | :---------------------------------------------- | :---------------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | GAAP Net Income (Loss) | $1,255 | $(2,137) | $1,114 | $(4,276) | | Adjusted EBITDA | $7,161 | $5,635 | $13,829 | $10,635 | - Adjusted EBITDA excludes non-cash items and unusual events such as interest and other income/expense, income taxes, depreciation and amortization of capital expenditures, amortization of intangible assets, stock-based compensation and related taxes, litigation costs, restructuring costs, and gain on note conversion[94][95] Components of Results of Operations This section details Ooma's revenue, cost of revenue, and operating expenses, with subscription revenue expected to grow and product gross margin remaining negative - Subscription and services revenue is expected to grow as the core user base expands, primarily driven by Ooma Business[97] - Product and other revenue consists primarily of sales of on-premise and end-point devices, including Ooma AirDial[98] - Product and other gross margin is expected to remain negative for the foreseeable future due to higher component costs and AirDial installation costs[103] - Sales and marketing, research and development, and general and administrative expenses are expected to increase in absolute dollars as the business continues to grow[105][106][107] Consolidated Results of Operations This section compares Ooma's consolidated revenue, cost of revenue, gross profit, and operating expenses, showing 3-4% revenue growth and improved product gross margin | Metric | Three Months Ended July 31, 2025 (in thousands) | Three Months Ended July 31, 2024 (in thousands) | Change (in thousands) | Change (%) | | :-------------------------- | :---------------------------------------------- | :---------------------------------------------- | :-------------------- | :--------- | | Total Revenue | $66,364 | $64,129 | $2,235 | 3% | | Subscription and services | $61,139 | $59,566 | $1,573 | 3% | | Product and other | $5,225 | $4,563 | $662 | 15% | | Metric | Six Months Ended July 31, 2025 (in thousands) | Six Months Ended July 31, 2024 (in thousands) | Change (in thousands) | Change (%) | | :-------------------------- | :-------------------------------------------- | :-------------------------------------------- | :-------------------- | :--------- | | Total Revenue | $131,393 | $126,628 | $4,765 | 4% | | Subscription and services | $121,398 | $117,955 | $3,443 | 3% | | Product and other | $9,995 | $8,673 | $1,322 | 15% | - Subscription and services revenue increased primarily due to an increase in AirDial lines and an increase in the average revenue per core user, driven by organic growth in Ooma Office and Ooma Enterprise services[111][114] - Product and other revenue increased primarily due to an increase in AirDial and Telo shipments[112][114] | Gross Margin | Three Months Ended July 31, 2025 | Three Months Ended July 31, 2024 | Six Months Ended July 31, 2025 | Six Months Ended July 31, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Subscription and services | 70% | 70% | 70% | 70% | | Product and other | (47)% | (70)% | (45)% | (69)% | | Total | 61% | 60% | 61% | 61% | - Product and other revenue gross margin improved significantly due to the depletion of certain higher cost components procured in prior fiscal years[117][119] - Total operating expenses decreased by $0.98 million (2%) for the three months ended July 31, 2025, primarily due to lower personnel-related costs in sales and marketing and research and development[120][121][122] Liquidity and Capital Resources As of July 31, 2025, Ooma had $19.6 million in cash, with net cash from operating activities decreasing slightly, and a $30.0 million revolving credit facility - As of July 31, 2025, the company had $19.6 million of total cash and cash equivalents, believed to be sufficient for at least the next 12 months[128] | Cash Flow Activity | Six Months Ended July 31, 2025 (in thousands) | Six Months Ended July 31, 2024 (in thousands) | | :------------------------------------ | :-------------------------------------------- | :-------------------------------------------- | | Net Cash Provided by Operating Activities | $10,064 | $10,672 | | Net Cash Used in Investing Activities | $(2,535) | $(3,192) | | Net Cash Used in Financing Activities | $(5,842) | $(8,431) | | Net Increase (Decrease) in Cash | $1,687 | $(951) | - Net cash provided by operating activities decreased $0.6 million year-over-year, primarily due to working capital impacts from payment timing[130] - Net cash used in investing activities decreased $0.7 million year-over-year due to a decrease in fixed asset additions[132] - Net cash used in financing activities decreased $2.6 million year-over-year, primarily due to no repayments of borrowings under the Credit Agreement in the first half of fiscal 2026[133] - The company had zero outstanding borrowings and $30.0 million of available borrowing capacity under its revolving credit facility as of July 31, 2025[134] Critical Accounting Policies and Estimates This section refers to the Annual Report on Form 10-K for critical accounting policies and estimates, noting no material changes in fiscal 2026 - There have been no material changes to the company's significant accounting policies and estimates as outlined in its fiscal 2025 Annual Report in the first half of fiscal 2026[136] Item 3. Quantitative and Qualitative Disclosures About Market Risk No material changes to market risk occurred during the first half of fiscal 2026, with detailed disclosures in the Annual Report - There have been no material changes to the Company's market risk during the first half of fiscal 2026[138] Item 4. Controls and Procedures Management concluded disclosure controls and procedures were effective as of July 31, 2025, with no material changes in internal control over financial reporting - Management, with the participation of the CEO and CFO, evaluated the effectiveness of disclosure controls and procedures as of July 31, 2025, and concluded they were effective at the reasonable assurance level[139] - No changes in internal control over financial reporting materially affected, or are reasonably likely to materially affect, internal control over financial reporting during the quarter ended July 31, 2025[140] PART II. OTHER INFORMATION Item 1. Legal Proceedings This section refers to Note 11: Commitments and Contingencies for a discussion of the company's legal proceedings - For a discussion of legal proceedings, refer to Note 11: Commitments and Contingencies of the notes to the condensed consolidated financial statements[144] Item 1A. Risk Factors This section details various risks and uncertainties that could materially and adversely affect Ooma's business, financial condition, and operations Risk Factor Summary This summary provides a high-level overview of key risks, including user acquisition and retention, service interruptions, SMB vulnerability, product development, supply chain, and cybersecurity - Key risks include inability to attract new users cost-effectively, high customer turnover, service interruptions, reliance on small and medium-sized businesses, and challenges in product development[147] - Other significant risks involve dependence on retailers, reseller partnerships, and sole suppliers, potential impacts from tariffs, and effective inventory management[147] - Security breaches, intense market competition, risks from international operations, and reliance on third parties for network and customer service are also critical concerns[150] - Regulatory compliance, including telecommunications laws, 911 requirements, and data privacy, along with the ability to achieve and sustain profitability, pose further risks[150] Risks Related to Our Business and Industry This section details business and industry risks, including user acquisition and retention, service interruptions, SMB vulnerability, product innovation, supply chain reliance, and tariffs - Inability to attract new users cost-effectively, due to increasing advertising costs or customer resistance to new technologies, could materially and adversely affect the business[151][152] - Customers can terminate monthly subscriptions without penalty, and increased churn, particularly from Ooma Business customers, could significantly impact financial performance and increase retention costs[153][154] - Interruptions in software or services due to errors, defects, or data center failures could harm reputation, result in revenue reduction, and incur significant costs[157][159] - A significant portion of revenue from small and medium-sized businesses makes the company vulnerable to economic downturns, rising inflation, and financial institution defaults[160][161] - Failure to develop, acquire, or enhance products and services on a timely and cost-effective basis, or achieve market acceptance for new offerings like Ooma AirDial, could materially and adversely affect results of operations[162][163][166] - Significant reliance on retailers, reseller partnerships, and app stores for product sales means failure to effectively manage these channels could materially and adversely affect revenue and business[167][168] - Dependence on several sole suppliers and a small number of manufacturers (primarily in China, Vietnam) for devices and components creates risks of delays, interruptions, and increased costs[169][170][172] - Additional tariffs or trade restrictions on imported goods could increase costs, reduce supply, and materially harm revenue, gross margin, and results of operations[173] - Ineffective management of inventory levels and purchase commitments could lead to excess or obsolete inventory, shortages, and negatively affect gross margins and customer relations[176][177][178] - Expansion through acquisitions may divert management attention, dilute stockholders, increase expenses, disrupt operations, and may not yield expected benefits or successful integration[179][180][181][182] Risks Related to Security, IT Systems and Intellectual Property This section addresses risks related to cybersecurity threats, internet infrastructure failures, fraudulent activity, intellectual property infringement, and proprietary rights - A ransomware attack or other security breach could delay or interrupt service, compromise data integrity, result in loss of intellectual property, harm reputation, or subject the company to significant liability[183][185] - Failures in internet infrastructure or interference with broadband access could cause customers to perceive services as unreliable, leading to customer churn[234][238] - Excessive fraudulent activity or inability to meet evolving credit card association merchant standards could result in substantial costs, fines, and loss of the right to accept credit cards for payment[239][240][241] - Accusations of intellectual property infringement could lead to costly litigation, diversion of management attention, and potential liability or requirements to redesign products[242][243][244] - Failure to obtain or enforce intellectual property rights, including patents, trademarks, and trade secrets, particularly internationally, could materially and adversely affect the business[245][246][247][249] - Potential problems with internal or third-party information systems could interfere with business operations, customer orders, billing, and financial reporting[250][251] - The use of open-source technology could impose limitations on the ability to commercialize services if license conditions are unanticipated or violated[252] Risks Related to Regulatory and Tax Matters This section outlines regulatory and tax risks, including compliance with telecommunications and data privacy laws, increased costs from 911, and tax liabilities - Ooma's services are subject to extensive federal (FCC), state, and international regulations, including those related to privacy, disability access, law enforcement access, 911, and robocall mitigation; non-compliance could lead to fines, restrictions, and reputational harm[254][255][256] - Additional FCC 911 requirements could increase costs, make services more expensive, decrease profit margins, or expose the company to significant liability for service failures[257] - Failure to comply with FCC rules imposing call signaling requirements (e.g., STIR/SHAKEN) could result in fines, cease and desist orders, or other penalties[258] - Non-compliance with communications and telemarketing laws (TCPA, CAN-SPAM, FCC rules on robocalling/texting) carries significant financial penalties and class action litigation risk[261] - Reform of federal and state Universal Service Fund (USF) programs could increase service costs to customers, diminishing or eliminating Ooma's pricing advantage[263][264] - Compliance with evolving industry standards (e.g., SIP, SRTP, NFPA 72, UL 864) and regulations is critical; failure or delays could disrupt production, incur fines, or harm service adoption[265] - Processing, storing, and using personal information subjects the company to evolving U.S. and international data privacy laws (CCPA, CPRA, GDPR), increasing costs, potentially decreasing product adoption, and exposing to liability[266][267][269][271] - The increasing growth of internet voice communications heightens the risk of new or increased regulatory requirements, taxes, or fees, potentially assessed retroactively[275] - Non-compliance with anti-corruption (FCPA) and anti-money laundering laws can subject the company to criminal/civil liability and harm its business[277][278] - The company is subject to governmental sanctions and export/import controls; non-compliance could impair international expansion and result in substantial penalties[279][280] - Potential liabilities for past services for taxes, surcharges, and fees, along with changes in effective tax rates, could adversely affect results of operations and financial condition[282][283] - The company may be unable to use some or all of its net operating loss carryforwards due to future income levels or ownership changes, which could materially and adversely affect reported financial condition and results of operations[284] Risks Related to Being a Public Company This section highlights risks of being a public company, including maintaining effective internal control over financial reporting and potential deviation from operating guidance - Failure to maintain an effective system of internal control over financial reporting could lead to inaccurate financial reporting, adversely affecting investor confidence and the value of common stock[286][287] - Actual operating results may differ significantly from guidance, which is inherently speculative, potentially causing stock price decline and costly lawsuits[288][289][290] Risks Related to Ownership of Our Common Stock This section discusses risks of owning Ooma's common stock, including price volatility, impact of share sales, analyst influence, no cash dividends, and takeover prevention - The company's stock price has been and may continue to be volatile, fluctuating in response to operating results, market conditions, competition, and other factors, potentially leading to a substantial loss of investment[291][292][293] - Sales of a substantial number of common stock shares in the public market, or the perception of such sales, could cause the stock price to decline and impair the ability to raise capital[294] - If securities analysts cease publishing research or publish negative evaluations, the stock price could decline[295] - The company has never paid cash dividends and does not anticipate doing so, meaning stockholders' returns depend solely on stock price appreciation[296] - Charter documents and Delaware law contain provisions (e.g., classified board, blank check preferred stock, prohibition of cumulative voting) that could delay or prevent a change in control, potentially reducing the market price of the stock[297][299] - The amended and restated certificate of incorporation designates the Delaware Court of Chancery as the exclusive forum for substantially all disputes, potentially limiting stockholders' ability to obtain a favorable judicial forum[300] - The company has been subject to class action litigation in the past and may be in the future, incurring substantial costs and diverting management attention[301] General Risk Factors This section covers broader risks impacting Ooma's business, including personnel retention, global health crises, catastrophic events, and climate change impacts - Inability to hire, retain, and motivate qualified personnel, particularly in technical and sales roles, could adversely affect business operations and growth[302] - Any future global health crisis or pandemic could disrupt sales, marketing, customer acquisition, and the operations of customers, partners, and suppliers[304] - Catastrophic events (e.g., earthquakes, hurricanes, cyber-attacks, war) or political instability could seriously impair business operations, leading to system interruptions, data loss, and reputational harm, especially given facilities in vulnerable regions and reliance on international contractors[305] - Climate change and related events (drought, heat waves, wildfires) may disrupt business, suppliers, and customers, potentially leading to higher churn, losses, and increased operational costs[306][307] Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities This section details common stock repurchase activities during the quarter ended July 31, 2025, under the authorized plan, excluding shares withheld for tax purposes | Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (in thousands) | | :-------------------------- | :------------------------------- | :--------------------------- | :------------------------------------------------------------------------------- | :------------------------------------------------------------------------------------------------- | | May 1, 2025 to May 30, 2025 | 7,372 | $13.64 | 7,372 | $7,249 | | June 1, 2025 to June 30, 2025 | 241,643 | $12.79 | 241,643 | $4,159 | | July 1, 2025 to July 31, 2025 | — | — | — | $4,159 | | Total | 249,015 | $12.81 | 249,015 | | - As of July 31, 2025, approximately $4.2 million remained authorized and available under the company's $14.0 million stock repurchase plan[310] - Shares repurchased for tax withholdings on vesting of restricted stock units are not included in the table as they are not part of the public stock repurchase program[310] Item 5. Other Information No directors or officers adopted, modified, or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the fiscal quarter ended July 31, 2025 - None of the company's directors or officers informed of the adoption, modification, or termination of a "Rule 10b5-1 trading arrangement" or a "non-Rule 10b5-1 trading arrangement" during the fiscal quarter ended July 31, 2025[312] Item 6. Exhibits This section lists all exhibits filed or incorporated by reference as part of the Quarterly Report, including amended equity incentive plans, credit agreement amendment, and certifications - Key exhibits include the amended and restated 2015 Equity Incentive Plan, the 2015 Employee Stock Purchase Plan, the Third Amendment to Credit Agreement, and certifications from the Chief Executive Officer and Chief Financial Officer[316] Signatures This section contains the required signatures of Ooma, Inc.'s President and CEO, Eric B. Stang, and CFO, Shig Hamamatsu, certifying the report on September 5, 2025 - The report is signed by Eric B. Stang, President and Chief Executive Officer, and Shig Hamamatsu, Chief Financial Officer, on September 5, 2025[321]