Ooma(OOMA) - 2023 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION This section presents the company's unaudited condensed consolidated financial statements and management's discussion and analysis for the quarterly period Item 1. Financial Statements The unaudited condensed consolidated financial statements for the quarterly period ended April 30, 2022, show total revenue of $50.3 million, an increase of 10% year-over-year, and a net loss of $0.8 million, with total assets increasing to $111.2 million and net cash provided by operating activities at $0.8 million for the quarter Condensed Consolidated Balance Sheets Presents the company's financial position, showing assets, liabilities, and equity as of April 30, 2022, and January 31, 2022 Balance Sheet Summary (in thousands) | Balance Sheet Items | April 30, 2022 | January 31, 2022 | | :--- | :--- | :--- | | Total Assets | $111,221 | $109,253 | | Total Current Assets | $67,835 | $66,029 | | Total Liabilities | $56,427 | $58,197 | | Total Current Liabilities | $45,536 | $46,930 | | Total Stockholders' Equity | $54,794 | $51,056 | Condensed Consolidated Statements of Operations Details the company's revenues, expenses, and net loss for the three months ended April 30, 2022, and 2021 Statement of Operations Summary (in thousands, except per share data) | Metric | Three Months Ended April 30, 2022 | Three Months Ended April 30, 2021 | | :--- | :--- | :--- | | Total Revenue | $50,337 | $45,572 | | Subscription and services | $46,723 | $41,965 | | Product and other | $3,614 | $3,607 | | Gross Profit | $31,952 | $28,082 | | Loss from operations | $(759) | $(966) | | Net Loss | $(766) | $(887) | | Net Loss Per Share (Basic and Diluted) | $(0.03) | $(0.04) | Condensed Consolidated Statements of Cash Flows Outlines the cash inflows and outflows from operating, investing, and financing activities for the three months ended April 30, 2022, and 2021 Cash Flow Summary (in thousands) | Cash Flow Activity | Three Months Ended April 30, 2022 | Three Months Ended April 30, 2021 | | :--- | :--- | :--- | | Net cash provided by operating activities | $819 | $424 | | Net cash (used in) provided by investing activities | $(39) | $192 | | Net cash provided by financing activities | $1,206 | $984 | | Net increase in cash and cash equivalents | $1,986 | $1,600 | | Cash and cash equivalents at end of period | $21,653 | $18,898 | Condensed Consolidated Statements of Stockholders' Equity Presents changes in stockholders' equity, including net loss, stock-based compensation, and common stock issuance, for the period - Total stockholders' equity increased from $51.1 million at the beginning of the period (Feb 1, 2022) to $54.8 million at the end of the period (April 30, 2022), primarily driven by stock-based compensation and proceeds from common stock issuance, partially offset by a net loss of $0.8 million[15] Notes to Condensed Consolidated Financial Statements Provides detailed explanations and additional information supporting the condensed consolidated financial statements - For the three months ended April 30, 2022, Ooma Business revenue constituted approximately 50% of total revenue, while Ooma Residential was about 47%, a shift from the prior year when Ooma Residential was 51% and Ooma Business was 47%[25] - As of April 30, 2022, the company had a $25.0 million secured revolving credit facility with zero outstanding borrowings and was in compliance with all covenants[53][56] - The company has non-cancelable inventory purchase commitments of $17.9 million as of April 30, 2022, and is involved in ongoing litigation, including a tax dispute with the State of Oregon and a class action complaint in Canada[57][63][65] Management's Discussion and Analysis of Financial Condition and Results of Operations Management reported a 10% year-over-year increase in total revenue to $50.3 million for Q1 FY2023, driven by 18% growth in Ooma Business subscription and services revenue, with gross margin improving to 63% and net loss narrowing to $0.8 million Q1 FY2023 Financial Highlights | Metric | Q1 FY2023 | YoY Change | | :--- | :--- | :--- | | Total Revenue | $50.3 million | +10% | | Ooma Business Subscription Revenue | N/A | +18% | | Total Gross Margin | 63% | +1 ppt | | Net Loss | $0.8 million | Improved from $0.9M loss | | Adjusted EBITDA | $3.9 million | Up from $3.5M | Key Business Metrics | Metric | As of April 30, 2022 | As of April 30, 2021 | | :--- | :--- | :--- | | Core users (thousands) | 1,111 | 1,083 | | Annualized exit recurring revenue (AERR) | $182,657 | $164,681 | | Net dollar subscription retention rate | 96% | 98% | - The increase in operating expenses was driven by a $2.1 million (15%) rise in Sales and Marketing due to higher advertising costs, and a $1.2 million (13%) increase in R&D from higher headcount to support new product development like Ooma AirDial[107][108] - Net cash provided by operating activities was $0.8 million, an increase from $0.4 million in the prior year, primarily reflecting working capital timing and a lower net loss[113][114] Quantitative and Qualitative Disclosures About Market Risk The company states that there have been no material changes to its market risk during the first three months of fiscal 2023, referring to disclosures in its Annual Report on Form 10-K - There were no material changes to the Company's market risk during the first quarter of fiscal 2023[122] Controls and Procedures Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures as of April 30, 2022, concluding they were effective at a reasonable assurance level, with no material changes in internal control over financial reporting during the quarter - As of April 30, 2022, the CEO and CFO concluded that the company's disclosure controls and procedures were effective[123] - No changes occurred during the quarter that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[124] PART II. OTHER INFORMATION Covers legal proceedings, risk factors, equity sales, and exhibits, providing additional context beyond the financial statements Legal Proceedings This section refers to Note 11 of the condensed consolidated financial statements for a detailed discussion of the company's legal proceedings - For information regarding legal proceedings, the report directs readers to Note 11 in the financial statements[128] Risk Factors The company outlines numerous risks to its business, categorized into business/industry, security/IP, regulatory/tax, and public company/stock ownership risks, including supply chain disruptions, geopolitical events, and evolving regulations - Business & Industry Risks: The company faces challenges in cost-effective customer acquisition, potential for high customer churn, and significant dependence on a small number of manufacturers and sole-source component suppliers, which could be disrupted by global events[135][137][140] - Geopolitical & Third-Party Risks: Ooma relies on third-party contractors for software development, including teams located in Russia, where the ongoing invasion of Ukraine and related international sanctions could disrupt development, increase costs, or force a shift in resources[143] - Security & IT Risks: The company is vulnerable to ransomware attacks, DDOS attacks, and other security breaches that could interrupt service, compromise data, and result in significant liability and reputational harm[145] - Regulatory & Tax Risks: The business is subject to extensive regulation by the FCC, including rules for E-911 services, call completion, and STIR/SHAKEN implementation, with evolving data privacy laws (e.g., CCPA, GDPR) and potential changes to Universal Service Fund (USF) contributions increasing costs and legal exposure[230][233][234][241] Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities during the period covered by this report - There were no unregistered sales of equity securities during the quarter[282] Exhibits This section lists the exhibits filed as part of the quarterly report, including CEO and CFO certifications and Inline XBRL documents - The report includes a list of filed exhibits, such as officer certifications (Sections 302 and 906 of Sarbanes-Oxley) and interactive data files (XBRL)[282][285]