Ooma(US:OOMA)2022-05-25 01:04Financial Data and Key Metrics Changes - Q1 revenue was $50.3 million, exceeding guidance of $49.5 million to $50.2 million, with a year-over-year growth of 10% [28][29] - Non-GAAP net income for Q1 was $3 million, surpassing guidance of $2.2 million to $2.8 million [29][38] - Cash increased to $31.8 million from $29 million year-over-year [39] Business Line Data and Key Metrics Changes - Ooma Business subscription and services revenue grew 18% year-over-year in Q1, accounting for over 50% of total subscription and services revenue for the first time [29][30] - Residential subscription and services revenue grew 4% year-over-year [30] - The take rate for Office Pro among new customers increased to 49% in Q1, up from 44% in Q4 [33] Market Data and Key Metrics Changes - The company ended Q1 with 1,111,000 core users, an increase from 1,100,000 in Q4, driven by business user growth [31] - Business users reached 320,000, representing 29% of total core users, with an increase of 12,000 from Q4 [31] - The blended average monthly subscription and services revenue per core user (ARPU) increased 8% year-over-year to $13.71 [32] Company Strategy and Development Direction - The company aims to extend leadership in serving small business customers, develop new verticals, expand internationally, capture the POTS copper line replacement opportunity with AirDial, and leverage the trend toward 5G and fixed wireless Internet [45] - The introduction of Ooma AirDial is expected to address the significant market opportunity as many customers transition from costly copper lines [20][21] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving business subscriber growth despite not meeting the 20% target in Q1, citing a strong pipeline and user growth rebound [69] - There are no signs of weakness in small business health, with churn rates down compared to Q4 [82] - The company anticipates continued growth in both business and residential segments, with opportunities to grow residential faster if marketing efforts are increased [85] Other Important Information - The company reported a total operating expense of $29.3 million, up 14% year-over-year, primarily due to increased sales and marketing expenses [36] - The gross margin for subscription and services improved to 72%, up from 71% in the prior year [34] Q&A Session Summary Question: Details on the strategic partnership with T-Mobile and Ooma Telo - Management confirmed ongoing marketing initiatives with T-Mobile and emphasized the close relationship, with plans for future marketing efforts [50][52] Question: Supply chain challenges for AirDial - Management indicated that they can currently build a couple of thousand units and expect to ramp up production to 7,000 or 8,000 units in the near term [55][56] Question: Interest in Ooma Office Pro Plus plan - Early feedback has been positive, with features like Salesforce integration being particularly valuable for larger customers [58][60] Question: Hiring impact in the current market - The company plans to increase the sales and marketing team by about 100 people by the end of the year, despite challenges in the hiring market [66] Question: Confidence in achieving business subscriber growth - Management expressed confidence in achieving growth targets, citing a strong pipeline and user ramping efforts [69][70] Question: Health of economic trends for small businesses - Management reported no signs of stress in small business health and noted that their offerings can save customers money, which supports growth [82][83]