Ooma(OOMA) - 2025 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Q2 revenue was $64.1 million, up 10% year-over-year, and non-GAAP net income was$ 4.1 million, exceeding guidance [6][14] - Cash flow from operations was $7.1 million, nearly double that of Q1 and Q2 of the previous year [7] - Total subscription and services revenue was$ 59.6 million, or 93% of total revenue, compared to $54.7 million, or 94% in the prior year [15] Business Line Data and Key Metrics Changes - Business subscription and services revenue grew 15% year-over-year in Q2, driven by user growth and the addition of 2600Hz [15] - Ooma Office saw increased user engagement with 58% of new office users opting for higher-tier services, up from 55% in the prior quarter [16] - Ooma AirDial closed more new customers than any previous quarter, with significant sales momentum [9] Market Data and Key Metrics Changes - The residential market opportunity is expanding as POTS lines increase in cost and begin to sunset, with Ooma Telo positioned as a replacement solution [12] - The 2600Hz platform is experiencing expanded customer interest both domestically and internationally, driven by market dynamics [10] Company Strategy and Development Direction - The company is reaching a turning point to capitalize on previous investments and market opportunities, aiming for increased bottom-line results [13] - Ooma is focused on diversifying its offerings across business solutions, wholesale, and POTS replacement, with a strategic emphasis on growth in all areas [32] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the upcoming quarters, highlighting new customer relationships and the potential for significant growth [21] - The company anticipates a strong pipeline of opportunities, particularly with large customer wins expected to contribute to growth [34] Other Important Information - The company reduced its debt by$ 3 million in Q2, bringing the total outstanding debt to $8.5 million [19] - Annual exit recurring revenue grew to$ 233 million, up 8% year-over-year, with a gross margin of 72% [16][51] Q&A Session Summary Question: Updates on the sales cycle or install pace for AirDial customers - Management noted that larger customers often start with proof of concepts before full rollout, while smaller customers can be installed quickly [22] Question: Impact of the Top 10 service provider selling AirDial and Telo - Management indicated that both offerings are significant opportunities, but specific guidance on future impacts was not provided [23][24] Question: Guidance on adjusted net income for upcoming quarters - Management explained that anticipated churn and one-time revenue impacts were factored into the guidance [25][26] Question: Pipeline focus between wholesale and CPaaS customers - The pipeline is currently more skewed towards wholesale opportunities, with ongoing developments in the CPaaS model [30] Question: Update on the large 2600Hz customer rollout - The customer is expected to launch in beta in September, with a full rollout anticipated by year-end [44] Question: Size of the residential and enterprise opportunity with the local carrier - Management refrained from providing specific numbers but indicated that the opportunity is substantial given the carrier's size [45] Question: Update on UScellular and T-Mobile partnerships - Both partnerships are progressing well, with T-Mobile fully embracing AirDial and UScellular beginning to sell Ooma Office [50]