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01/11 04:06
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call highlights strong financial performance, with revenue and net income exceeding guidance and significant growth in adjusted EBITDA. The Q&A section indicates steady demand and optimism for future growth, particularly in AirDial. Despite some vague responses, the overall sentiment remains positive, supported by high retention rates and plans for continued expansion. The increased guidance and lack of negative surprises contribute to a positive outlook for the stock price over the next two weeks.
Revenue $65 million, up 4% year-over-year, driven by growth in Ooma business, including AirDial.
Non-GAAP Net Income $5.6 million, grew 56% year-over-year, exceeding guidance range.
Adjusted EBITDA $6.7 million, grew 33% year-over-year, representing 10.3% of total revenue.
Product Revenue $4.8 million, up from $4.1 million in the prior year quarter, driven by growth in AirDial installations.
Business Subscription and Services Revenue 62% of total subscription and services revenue, up from 60% in the prior year quarter.
Residential Subscription and Services Revenue Down 2% year-over-year.
Average Revenue Per User (ARPU) $15.37, increased 4% year-over-year, driven by a higher mix of business users.
Annual Exit Recurring Revenue $234 million, up 33% year-over-year.
Net Dollar Subscription Retention Rate 99%, up from 98% in the fourth quarter.
Total Operating Expenses $35.4 million, up 1% year-over-year.
Sales and Marketing Expenses $18.3 million, up 3% year-over-year, driven by higher marketing and channel development activity.
Research and Development Expenses $11.3 million, down 6% year-over-year, due to headcount management.
G&A Expenses $5.8 million, up from $5.5 million in the prior year quarter, due to increased personnel-related costs.
Operating Cash Flow $3.7 million generated in Q1.
Free Cash Flow $2.5 million generated in Q1.
Total Cash and Investments $19 million at the end of the quarter.
Employee Count 1,132 employees and contractors at the end of the quarter.
AirDial Growth: Ooma made significant progress on AirDial, with a major cable company, Comcast, reselling AirDial, which launched on schedule. The company signed several new AirDial reseller partners, exceeding 30 in total.
Ooma Office Expansion: Ooma Office expanded the number of new account wins and users, particularly in verticals such as dental, medical, insurance, and legal. 61% of new office users opted for a premium service tier.
2600Hz Platform Growth: Ooma's wholesale platform services, sold as 2600Hz, closed four new customers, marking the most ever in one quarter.
Market Segments: Ooma focuses on four market segments: cloud communications for small businesses, parts replacement for business and residential customers, wholesale platform services, and residential telephony.
Customer Base: Ooma serves over 500 hotels across North America in the hospitality vertical.
Revenue Growth: Q1 revenue was $65 million, a 4% year-over-year increase, driven by business subscription and services revenue.
Profitability: Non-GAAP net income for Q1 was $5.6 million, exceeding guidance and growing 56% year-over-year.
Partnerships: Ooma is engaged with Comcast on large deals and has a growing sales pipeline with Marriott, with over 100 properties in the pipeline.
Customer Rightsizing: The company's largest customer, Regus, underwent rightsizing, which dampened overall results for the quarter. Although this was anticipated, it poses a risk to revenue stability.
Tariffs Impact: The company has included an estimated impact of approximately $500,000 from tariffs in their financial guidance, indicating potential regulatory and economic risks.
User Decline: A sequential decline in total core users was noted, primarily due to seat reductions with IWG, which could affect future revenue growth.
Product Revenue Challenges: The product and other gross margin was negative 41%, although improved from the previous year, indicating ongoing challenges in product profitability.
Market Competition: The company faces competitive pressures in the cloud communications market, particularly as they expand their offerings and partnerships.
Economic Factors: The overall economic environment and potential fluctuations in customer demand could impact revenue growth, particularly in the residential subscription segment, which is expected to decline.
AirDial Growth: Ooma made significant progress on AirDial, with a major cable company, Comcast, reselling AirDial and launching on schedule. The company is engaged in large deals with Comcast and has signed several new AirDial reseller partners, exceeding 30 partners in total.
Customer Expansion: Ooma Office expanded the number of new account wins and users, particularly in verticals such as dental, medical, insurance, and legal. The company now serves over 500 hotels across North America through Ooma Enterprise.
Wholesale Platform Services: Ooma's wholesale platform services, sold as 2600Hz, accelerated in Q1 with four new customer wins, validating the platform's capabilities.
Q2 Revenue Guidance: Ooma expects total revenue for Q2 FY26 to be in the range of $65.5 million to $66.1 million, including $4.8 million to $5.2 million of product revenue.
Full-Year Revenue Guidance: For FY26, Ooma reaffirms total revenue guidance of $267 million to $270 million, with business subscription and services revenue growth of 5% to 6%.
Net Income Guidance: Ooma raises the low end of its non-GAAP net income guidance for FY26 to a range of $22.5 million to $23.5 million.
Adjusted EBITDA Guidance: Estimated adjusted EBITDA for FY26 is projected to be between $28 million to $29 million.
EPS Guidance: Non-GAAP diluted EPS for FY26 is expected to be in the range of $0.79 to $0.83.
Stock Buyback Program: In Q1, Ooma spent a total of $11.8 million over the last four quarters, including $3.7 million in Q1, to buy back stock through a combination of open market repurchase and RSU net share settlement.
The earnings call presents a mixed picture. While there are positive aspects such as improved product margins, reduced operating expenses, and potential synergies from acquisitions, there are also concerns like flat total gross margin, delayed AirDial deployments, and lack of detailed guidance on acquisitions. The Q&A section highlights management's cautious approach, which could temper investor enthusiasm. Without market cap data, the stock's reaction is uncertain but likely neutral given the balance of positive and negative factors.
The earnings call summary presents a positive outlook with strong financial performance, optimistic guidance, and strategic growth initiatives. The Q&A section highlights meaningful contributions from AirDial, strategic partnerships, and conservative yet promising growth guidance. Despite some uncertainties in international expansion and specific revenue details, the overall sentiment is positive due to raised guidance, efficient expense management, and strategic partnerships. The lack of specific market cap information prevents a more precise prediction, but given the positive indicators, a stock price increase is likely.
The earnings call shows solid financial performance with revenue and net income growth, positive cash flow, and a stable gross margin. The stock buyback program and optimistic guidance further bolster confidence. Despite some vague responses in the Q&A, the overall sentiment is positive. The emphasis on strategic growth in business segments and strong financial metrics outweigh minor concerns, suggesting a likely positive stock price movement.
The earnings call highlights strong financial performance, with revenue and net income exceeding guidance and significant growth in adjusted EBITDA. The Q&A section indicates steady demand and optimism for future growth, particularly in AirDial. Despite some vague responses, the overall sentiment remains positive, supported by high retention rates and plans for continued expansion. The increased guidance and lack of negative surprises contribute to a positive outlook for the stock price over the next two weeks.
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