Ooma, Inc. (OOMA) Q2 2026 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
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.
Key Financial Performance
Revenue $66.4 million, up 3% year-over-year, driven by the growth of Ooma Business, including AirDial.
Non-GAAP Net Income $6.5 million, up 59% year-over-year, primarily driven by improving operating leverage and a small tax benefit due to recent changes in U.S. tax law.
Adjusted EBITDA $7.2 million, up 27% year-over-year, reflecting improved profitability and operating leverage.
GAAP Net Income $1.3 million, no specific year-over-year change mentioned.
Cash Flow from Operations $6.4 million, no specific year-over-year change mentioned.
Adjusted EBITDA as a Percent of Revenue 11%, the highest to date and at the low end of the midterm target range of 11% to 14%.
Business Subscription and Services Revenue 62% of total subscription services revenue, up from 60% in the prior year quarter, driven by user growth and ARPU growth.
Product and Other Revenue $5.2 million, up 15% year-over-year, due to growth in AirDial installations.
Residential Subscription and Services Revenue Down 2% year-over-year, but up slightly sequentially.
Core Users 1,230,000, up from 1,225,000 in the previous quarter.
Business Users 508,000, an increase of 9,000 from Q1, representing 41% of total core users.
ARPU (Average Revenue Per User) $15.68, up 4% year-over-year, driven by an increase in the mix of business users, including higher ARPU Office Pro and Pro Plus users.
Office Pro and Pro Plus Take Rate 61% of new Office users opted for these higher-tier services, up from 58% in the prior year quarter.
Annual Exit Recurring Revenue $240 million, up 3% year-over-year.
Net Dollar Subscription Retention Rate 100%, up from 99% in the first quarter.
Subscription and Services Gross Margin 71.3%, down slightly from 72% in the prior year.
Product and Other Gross Margin Negative 47%, improved from negative 69% in the prior year, due to consuming higher-cost components procured during the pandemic.
Total Gross Margin 62%, flat compared to the prior year, reflecting a heavier mix of product revenue due to AirDial installations.
Operating Expenses $35.1 million, down $0.1 million year-over-year.
Sales and Marketing Expenses $18 million, up 2% year-over-year, driven by higher marketing and channel development activity for AirDial and 2600Hz.
Research and Development Expenses $11.5 million, down 6% year-over-year, due to headcount management and focus on R&D efficiency.
G&A Expenses $5.6 million, up from $5.4 million in the prior year quarter, due to an increase in personnel-related costs.
Free Cash Flow $5 million for the quarter, $20 million on a trailing 12-month basis.
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Operating Highlights
Connect 5000: A 5G Internet solution incorporating WiFi and prioritizing voice traffic. It will be sold with Ooma Office to provide a more complete solution for smaller-sized businesses, increasing revenue and deepening customer relationships.
AI-driven features: Developing new AI features for smaller-sized businesses that are powerful, easy to use, and low cost. These features aim to serve slightly larger-sized businesses with advanced contact center functionality and integrations.
AirDial: Achieved significant growth with more than doubled bookings year-over-year and secured a large national retailer as a customer, serving over 3,000 locations. Expanded reseller partnerships to 35 and targeting active segments like real estate, healthcare, and hospitality.
2600Hz platform: Launched new mobile and desktop applications, video meetings, and team chat. Signed one new customer and expanded with existing ones, focusing on extending Ooma's IP to the platform.
AirDial market expansion: Targeting active segments such as real estate, healthcare, senior living, government, and hospitality. Expanded reseller partnerships to 35, including experienced partners for competitive solutions.
ISP-driven growth: Signed 7 new ISPs in Q2, bringing the total to 85 ISPs selling or referring Telo. ISP-driven users represent a small but growing opportunity for residential market expansion.
Revenue growth: Q2 revenue grew to $66.4 million, a 3% year-over-year increase, driven by business subscription and services growth.
Profitability: Achieved record non-GAAP net income of $6.5 million and adjusted EBITDA of $7.2 million, with an 11% adjusted EBITDA margin.
Cost management: Improved operating leverage with reduced R&D expenses by 6% year-over-year and managed headcount effectively.
Focus on AirDial: Prioritizing AirDial growth by enhancing its features, reducing hardware costs, and expanding reseller partnerships.
Shift to business customers: Increased focus on business customers, with business subscription revenue now accounting for 62% of total subscription revenue.
Long-term strategy: Aiming for profitable growth by capitalizing on AirDial, enhancing Ooma Office, and positioning 2600Hz as a leading wholesale platform.
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Risk or Challenges
Market Competition: Ooma faces competitive pressures in the POTS replacement market and the broader communications solutions industry. The company must continue to differentiate its offerings, such as AirDial, to maintain its market position.
Supply Chain Costs: The company experienced improved product gross margins due to consuming higher-cost components procured during the pandemic. However, this indicates potential risks if supply chain costs rise again in the future.
Residential Revenue Decline: Residential subscription and services revenue declined 2% year-over-year, signaling a potential challenge in maintaining or growing this segment.
Tariff Impact: The company anticipates approximately $500,000 in tariffs for fiscal 2026, which could impact profitability.
Customer Churn: Although churn was slightly reduced in the residential segment, maintaining low churn rates remains a challenge, especially in competitive markets.
Economic Uncertainty: Ooma's performance could be impacted by broader economic uncertainties, which may affect customer spending on communication solutions.
Scaling AI Features: The company is developing AI-driven features for smaller businesses, but ensuring these features are easy to use and cost-effective poses a challenge.
Partner Ramp-Up: Ooma is expanding its AirDial partner network but faces challenges in ensuring new partners ramp up sales effectively and quickly.
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Guidance & Outlook
Revenue Guidance for Q3 FY 2026: Expected total revenue to be in the range of $67.2 million to $67.9 million, including $5.7 million to $6.2 million of product revenue.
Non-GAAP Net Income for Q3 FY 2026: Expected to be in the range of $6 million to $6.4 million.
Non-GAAP Diluted EPS for Q3 FY 2026: Expected to be between $0.22 to $0.23.
Full Fiscal Year 2026 Revenue Guidance: Expected total revenue to be in the range of $267 million to $270 million. Business subscription and services revenue growth rate projected at 5% to 6% over fiscal 2025, while Residential subscription revenue is expected to decline by 1% to 2%.
Revenue Mix for FY 2026: 91% to 92% of total revenue expected to come from subscription and services revenue, with the remainder from products and other revenue.
Full Fiscal Year 2026 Non-GAAP Net Income: Raised guidance to be in the range of $24.5 million to $25 million, including approximately $500,000 of tariffs.
Adjusted EBITDA for FY 2026: Expected to be in the range of $28.5 million to $29 million.
Non-GAAP Diluted EPS for FY 2026: Expected to be in the range of $0.87 to $0.89.
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Shareholder Return Plan
share repurchase: With strong free cash flow generation, we spent a total of $14.5 million over the last 4 quarters, including $4.5 million in Q2 to buy back stock through a combination of open market repurchase and RSU net share settlement.
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Key Q&A
Q:Is AirDial contributing any meaningful percentage to ARR at this point?
A:Yes, AirDial is contributing to the growth of ARR and is starting to contribute meaningfully. User adds on the Business side increased by 9,000 quarter-over-quarter, with a good chunk coming from AirDial. Double the bookings year-over-year also help accelerate growth into the second half.
Q:Can you provide updates on the AirDial ramp and new partners?
A:There are nearly 35 partners reselling AirDial, including Comcast, T-Mobile, and a CLEC announced last year. Comcast has started placing orders but is ramping slowly. T-Mobile is performing strongly, and the CLEC is ramping meaningfully. The company aims to add a couple of new partners each quarter.
Q:Where is the incremental cash flow being directed, and are there any M&A opportunities?
A:The company is using some cash flow for share buybacks, which they find sensible at the current share price. They are also looking for M&A opportunities that fit specific criteria, such as acquiring users rather than technology and ensuring acquisitions are small enough to integrate without disrupting major plans.
Q:Is the 5%-6% growth rate for the Business side for the year conservative?
A:The variability in guidance is due to the timing of AirDial installations, which depend on customer readiness rather than the company's readiness. There is some conservatism in the guidance, but it is not related to incremental churn.
Q:Can you provide details about the new largest retail customer win?
A:The customer is a large national retailer won in partnership with T-Mobile. Installations have started and are expected to continue through the back half of the year. The deal validates the solution and is expected to lead to more opportunities. AirDial ARPU is around $25 per line per month.
Q:What is the status and growth potential of 2600Hz?
A:2600Hz is a wholesale platform with low ARPU per user but high flexibility and API-based design. The company is integrating Ooma IP to make it a stronger turnkey solution. Growth is expected more next year as the solution is rounded out this year. The platform has potential to replace older platforms like BroadSoft and Metaswitch.
Q:Is there any pull demand for AirDial from Europe?
A:AirDial is currently sold in North America. Expansion to other regions would depend on securing a large carrier or lead customer in those markets. The company already has services in 32 countries, which could facilitate future expansion.
Q:What drove the 1-point uptick in NRR, and what is the expected NRR going forward?
A:The uptick was due to improved churn compared to the previous quarter. NRR is expected to remain steady between 99% and 100%.
Q:What efficiencies are being implemented to achieve the raised net income guidance?
A:Efficiencies include R&D leverage, disciplined sales and marketing expenses, and a tax benefit from a recent tax law change. Sales and marketing expenses are around 27% of revenue, and R&D expenses are expected to remain flat or slightly decrease.
Q:What are the trends with the largest UCaaS customer, and is meaningful growth expected?
A:The rollout to IWG/Regus has been completed in planned countries, and the company expects stability in this area moving forward.
Q:Review of Unclear Management Responses
A:Management avoided providing specific revenue expectations for the new largest retail customer, stating they could not disclose customer-specific details. They also did not provide a clear timeline or specifics for potential AirDial expansion into Europe, emphasizing their primary focus on North America.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
AI application
AI contact
AI cost
AI feature
ARPU Hz
AirDial Office
AirDial Remote
AirDial booking
AirDial hardware
AirDial installation
AirDial partner
Alinda Li
Benchmark LLC
Blair LLC
CEO Chairman
CFO Alinda
CPaaS contact
Chairman Director
Conference Instructions
Development Shigeyuki
Device portal
Events Presentations
ISPs
Internet
LLC Research
Presentations page
Research Division
contact center
flow month
partner resellers
record
retailer
sic
solution business
tax
user ARPU
OOMA Transcript
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The earnings call reveals strong financial performance with significant growth in recurring revenue and operating cash flow. The introduction of AI solutions and the expansion of AirDial partnerships are promising developments. The Q&A session highlights optimism about growth opportunities, particularly with major partnerships and AI services. Despite conservative guidance, the overall tone is positive, with management expressing confidence in future prospects. The lack of specific guidance on Verizon's actions is a minor concern, but it doesn't overshadow the positive sentiment from other areas.
Ooma, Inc. (OOMA) Q4 2026 Earnings Call Transcript
Positive3-4
The earnings call reveals strong financial performance with a 7% revenue increase and substantial growth in business subscriptions. The company's strategic initiatives, such as AI solutions and AirDial expansion, show promising future prospects. Despite some cautious guidance, particularly around acquisitions and residential growth, the overall sentiment is positive. The Q&A session highlighted management's optimism about AirDial's growth and acquisition strategy, boosting confidence in future performance. The positive momentum in business subscriptions and strategic partnerships suggests a likely positive stock price movement in the short term.
Ooma, Inc. (OOMA) Q3 2026 Earnings Call Transcript
Unknown12-8
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.
Ooma, Inc. (OOMA) Q2 2026 Earnings Call Transcript
Positive8-26
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.
OOMA Slides
OOMA Report
Frequently Asked Questions
Where does this earnings call transcript come from?
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They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.
