Ooma(OOMA) - 2026 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Revenue for Q2 reached $66.4 million, a 3.5% increase year over year, exceeding guidance [17][19] - Non-GAAP net income was $6.5 million, up 59% year over year, surpassing guidance [19][24] - Adjusted EBITDA reached a record $7.2 million, representing 11% of total revenue, a 27% increase year over year [24][28] - Cash flow from operations was $6.4 million, with free cash flow of $5 million [25] Business Line Data and Key Metrics Changes - Business subscription and services revenue grew 6% year over year, accounting for 62% of total subscription services revenue [18][20] - Residential subscription and services revenue decreased by 2% year over year [20] - The average revenue per user (ARPU) increased by 4% year over year to $15.68, driven by a higher mix of business users [21] Market Data and Key Metrics Changes - The company ended Q2 with 1.23 million core users, including 508,000 business users, an increase of 9,000 from Q1 [20] - The annual exit recurring revenue was $240 million, up 3% year over year [21] - The net data subscription retention rate improved to 100% from 99% in the previous quarter [20][71] Company Strategy and Development Direction - The company plans to enhance its offerings with the introduction of the Connect 5,000, a 5G internet solution for small businesses [9] - Continued development of AI-driven features is a priority, aimed at serving slightly larger businesses [10] - The focus remains on capitalizing on AirDial, enhancing Ooma Office, and positioning 2600 Hertz as a leading wholesale platform [14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's growth trajectory, particularly with AirDial and the overall market opportunity [29][84] - The company anticipates continued sales momentum and is focused on executing its long-term strategy for profitable growth [28][84] Other Important Information - The company celebrated its ten-year anniversary since going public, highlighting significant revenue growth and improved profitability [15] - The guidance for Q3 revenue is projected between $67.2 million and $67.9 million, with full-year revenue guidance unchanged at $267 million to $270 million [26][27] Q&A Session Summary Question: Contribution of AirDial to ARR - Management confirmed that AirDial is contributing meaningfully to ARR growth, with a significant portion of new business user growth attributed to AirDial [32][33] Question: Updates on AirDial partnerships - Management reported nearly 35 partners reselling AirDial, with notable progress from partners like Comcast and T-Mobile [36][37] Question: Use of incremental cash flow - Management clarified that share buybacks are sensible at current prices, while still exploring M&A opportunities that fit their strategic criteria [43][44] Question: Business subscription growth outlook - Management indicated that the guidance reflects conservatism due to installation timing rather than expected churn [46] Question: Details on the new largest retail customer - Management shared that the new customer is a large national retailer, with installations expected to ramp up in the second half of the year [51][52] Question: Organic growth rate of 2600 Hertz - Management noted that 2600 Hertz is a wholesale platform with low ARPU, but they are working to enhance its capabilities and expect growth opportunities in the future [59][62]