Earnings call transcript: Ooma Inc’s Q2 2025 earnings beat expectations, stock rises

Ooma Inc (OOMA) reported its Q2 2025 earnings, surpassing analysts’ expectations with an EPS of $0.23 against a forecasted $0.20, marking a 15% surprise. Revenue reached $66.4 million, slightly above the anticipated $65.72 million. Following the announcement, Ooma’s stock rose by 2.17% in aftermarket trading, reflecting investor optimism. According to InvestingPro data, 7 analysts have revised their earnings upward for the upcoming period, with price targets ranging from $16 to $20.

Key Takeaways

• Ooma reported a 3.5% year-over-year increase in revenue for Q2 2025.
• The company achieved a record non-GAAP net income of $6.5 million, up 59% year-over-year.
• Ooma’s stock price increased by 2.17% following the earnings release.
• Business subscription revenue grew by 6% year-over-year, while residential subscription revenue declined by 2%.

Company Performance

Ooma Inc demonstrated robust performance in Q2 2025, driven by growth in its business subscription and services segment. The company reported a significant increase in non-GAAP net income and adjusted EBITDA, highlighting effective cost management and operational efficiency. The introduction of innovative products, such as the Connect 5000, and new AI-driven features have positioned Ooma well within the competitive landscape.

Financial Highlights

• Revenue: $66.4 million, up 3.5% year-over-year
• Earnings per share: $0.23, exceeding the forecast of $0.20
• Non-GAAP net income: $6.5 million, up 59% year-over-year
• Adjusted EBITDA: $7.2 million, representing 11% of revenue
• Operating cash flow: $6.4 million for Q2, $26 million over the trailing twelve months

Earnings vs. Forecast

Ooma’s actual EPS of $0.23 exceeded the forecasted $0.20 by 15%, marking a positive surprise for investors. The revenue of $66.4 million also surpassed expectations, albeit by a modest margin of 1.03%.

Market Reaction

In response to the earnings announcement, Ooma’s stock price rose by 2.17% in aftermarket trading, reaching $12.22. This increase reflects investor confidence in the company’s performance and future prospects, as indicated by the positive earnings surprise and robust financial metrics.

Outlook & Guidance

Ooma provided optimistic guidance for the upcoming quarter, projecting revenue between $67.2 million and $67.9 million. For the full fiscal year 2026, the company anticipates revenue between $267 million and $270 million, with non-GAAP net income expected to range from $24.5 million to $25 million. Ooma also aims to increase its adjusted EBITDA to between $28.5 million and $29 million, driven by anticipated growth in business subscription revenue.

Executive Commentary

CEO Eric Stang highlighted the company’s achievements, stating, "We have more than tripled our revenue, dramatically improved our bottom line." He also emphasized Ooma’s strategic focus on mergers and acquisitions, saying, "We are always looking for M&A opportunities that fit our criteria." Stang expressed confidence in future profitability, noting, "We intend to drive EBITDA higher next year."

Risks and Challenges

• Decline in residential subscription revenue could impact overall growth.
• Competitive pressures in the telecommunications sector may affect market share.
• Potential challenges in scaling new product offerings like the Connect 5000.
• Economic uncertainties could influence consumer spending and subscription rates.
• Dependence on partnerships for market expansion introduces external risks.

Q&A

During the earnings call, analysts inquired about Ooma’s recent win with a large national retailer for its AirDial solution, expected to cover 3,000 locations. The company also addressed its focus on mergers and acquisitions and plans for international expansion. Questions regarding R&D efficiency and sales and marketing discipline were also prominent, reflecting investor interest in Ooma’s strategic priorities.

Full transcript - Ooma Inc (OOMA) Q2 2026:

Conference Operator: Hello, and welcome to Ooma, Inc. Second Quarter Fiscal Year twenty twenty six Financial Results Conference Call. At this time, all participants are in a listen only mode. After the speakers’ presentation, there will be a question and answer session. I would now like to turn the conference over to Matt.

You may begin.

Matt Robinson, Director of IR and Corporate Development, Ooma, Inc.: Thank you, Towanda. Good day, everyone, and welcome to the fiscal second quarter twenty twenty six earnings call of Ooma, Inc. My name is Matt Robinson, Ooma’s Director of IR and Corporate Development. On the call with me today are Ooma’s CEO, Eric Stang and CFO, Sheik Hamamatsu. After the market closed today, Ooma issued its fiscal second quarter twenty twenty six earnings press release.

This release is also available on the company’s website, ooma.com. This call is being webcast live and is accessible from a link on the Events and Presentations page of the Investor Relations section of our website. This link will be active for replay of this call for one year. During today’s presentation, our executives will make forward looking statements within the meaning of the federal securities laws. Forward looking statements generally relate to future events or future financial or operating performance.

Our expectations and beliefs regarding these matters may not materialize and actual results are subject to risks and uncertainties that could cause actual results to differ materially from those projected. These risks include those set forth in the press release we issued earlier today and those risks more fully described in our filings with the Securities and Exchange Commission. The forward looking statements in this presentation are based on information available to us as of the date hereof, and we disclaim any obligation to update any forward looking statements except as required by law. Please note that other than revenue or as otherwise stated, the financial measures to be disclosed on this call will be on a non GAAP basis. The non GAAP financial measures are not intended to be considered in isolation or as a substitute for results prepared in accordance with GAAP.

The discussion of why we present non GAAP financial measures and a reconciliation of the non GAAP financial measures discussed in this call to the most directly comparable GAAP financial measures is included in our earnings press release, which is available on our website. On this call, we will give guidance for third quarter and full year fiscal twenty twenty six on a non GAAP basis. Also in addition to our press release and eight ks filing, the overview page and events and presentations page in the investor section of our website as well as the quarterly results page of the financial information section of our website include links to information about cost and expenses not included in our non GAAP values and key metrics of our core subscription businesses. These are titled supplemental financial disclosure one and supplemental financial disclosure two. Additionally, our investor presentation slides include GAAP to non GAAP reconciliation that also provides resolution of GAAP expenses that are excluded from non GAAP metrics.

Now I will hand the call over to Ooma’s CEO, Eric Stang.

Eric Stang, CEO, Ooma, Inc.: Thank you, Matt. Hi, everyone. Welcome to Ooma’s second quarter fiscal twenty twenty six earnings call. Thank you for joining us. We’re pleased to report strong Q2 financial results and to discuss momentum we have going into the second half of our fiscal year.

Financially, we grew our revenue in Q2 to 66,400,000.0 while also setting some bottom line records. In Q2, we achieved record non GAAP net income of $6,500,000 and record adjusted EBITDA of 7,200,000.0 GAAP net income was $1,300,000 and cash flow from operations was $6,400,000 Currently, we are at 11% adjusted EBITDA as a percent of revenue, our highest to date and now already at the low end of our mid term target range model of 11% to 14%. I believe these results show the power of our business to grow top line revenue, while also driving improved bottom line profitability. Regarding our revenue from business users, our metrics strengthened in Q2. User growth net of churn, average revenue per user, annual exit recurring revenue and the take rate of our Pro and Pro Plus higher tier offerings were all up both sequentially and year over year.

We believe we executed well to achieve these results. Regarding our communications solutions for smaller sized businesses, we will be strengthening our ability to provide a double play offering by introducing the Connect 5,000 later this quarter. Connect 5,000 is a five gs internet solution that incorporates WiFi and prioritizes voice traffic over the connection. Sold with Ooma Office, it will allow us to offer more complete solution for our customers. It also affords us the opportunity to increase our revenue and have a deeper relationship with our customers.

In q three, we will also continue our efforts to develop new AI driven features. For smaller sized businesses, we believe AI features need to be not only powerful, but also very easy to use and extremely low cost. We have already developed AI applications that we use internally and are learning from them as we craft new features for our customers. New AI features along with more advanced contact center functionality and integrations with other vertical solutions will allow us to serve slightly larger sized businesses, and we are already beginning to see some traction in that regard. I’m pleased to report that Airdial ramped well in q two.

We more than doubled new bookings year over year and secured our largest customer win to date with a large national retailer. We’ve started the rollout with this retailer and anticipate serving over 3,000 locations. We also closed several other significantly sized customers who placed initial orders. As is our goal every quarter, we expanded the number of partners who will resell Airdial and signed three new partner resellers in the quarter. We believe two of these new partners have experience selling competitive solutions and will be able to ramp relatively quickly with Airdial.

In total, we are now approaching 35 Airdial partner resellers. Currently, real estate and REITs, colleges and universities, health care and senior living, state and local government, and hospitality are very active segments for Airdial. And in general, we believe the POS replacement market is expanding as more businesses come to realize the need to act. We believe Airdial is the leading solution in the market today and we intend to make it even stronger in the future by introducing further enhancements to our Airdial remote device management portal and by driving down the cost of Airdial hardware. For 2,600 Hertz, our wholesale UCaaS, CPaaS, and contact center platform, we announced in Q2 the launch of new mobile and desktop applications.

More recently, we also introduced video meetings and team chat. We signed one new customer in q two and expanded with several existing customers. Looking forward, we see continued sales momentum and remain focused on extending Ooma’s IP to the 2,600 Hertz platform. On the residential front, we had a stronger quarter for new customer acquisition and experienced slightly reduced churn compared to Q1. Subscription and services revenue, though down year over year was up slightly sequentially.

Retail and direct are our main sales channels, but we also sell to Internet service providers and receive customer referrals from T Mobile. Currently, we have approximately 85 ISPs selling or referring Telo, and we signed seven new ISPs in Q2. While ISP driven users make up just a small percentage of our teller user base today, we believe sales to ISPs represent additional opportunity for growth. As we go into the second half of our fiscal year, our focus is on capitalizing fully on AirDial, continuing to enhance Ooma Office to drive higher ARPU and to expand to larger customers, and positioning twenty six Hertz as the best wholesale platform. We hope to expand our list of AirDial partners and see our existing partners ramp sales significantly.

Most of all, we are focused on executing well. We believe we have built outstanding solutions and have set goals to drive both growth and improved profitability going forward. Now before I turn it over to Shig, I would also like to mention that this past July marked ten years since Ooma became a public company. We’re proud of this milestone. Since we went public, we have more than tripled our revenue, dramatically improved our bottom line, shifted to serving primarily business customers, and reinvented ourselves to serve new markets.

I’m proud of our accomplishments and excited as I look forward since I believe Ooma has never been stronger than it is today. I’ll now turn over the call to Shig, our CFO, to discuss our results and outlook in more detail and then return with some closing remarks.

Sheik Hamamatsu, CFO, Ooma, Inc.: Thank you, Eric, and good afternoon, everyone. I’m going to review our second quarter financial results and then provide our outlook for the third quarter and full fiscal year 2026. Our second quarter revenue was $66,400,000 above our guidance range and was up 3.5% year over year, driven by the growth of Ooma Business, including AirDot. In Q2, business subscription and services revenue accounted for 62% of total subscription services revenue as compared to 60% in the prior quarter. Q2 product and other revenue came in at $5,200,000 and was up 15% year over year due to growth in air dial installations.

On the profitability front, Q2 non GAAP net income was $6,500,000 above our guidance range of $5,600,000 to $5,900,000 and grew 59% year over year, primarily driven by our improving operating leverage. Q2 non GAAP net income this year also included a small amount of tax benefit due to the recent changes in The U. S. Tax law. Now some details on our Q2 revenue.

Business subscription and services revenue grew 6% year over year in Q2, driven by user growth and ARPU growth. On the residential side, subscription and services revenue was down 2% year over year. For the second quarter, total subscription and services revenue was $61,100,000 or 92% of total revenue as compared to $59,600,000 or 93% of total revenue in the prior Now some details on our key customer metrics. We ended the second quarter with 1,230,000 core users, up from 1,225,000 core users at the end of the first quarter.

At the end of the second quarter, we had 508,000 business users or 41% of our total core users, an increase of 9,000 from Q1. Our blended average monthly subscription and services revenue per core user, or ARPU, increased 4% year over year to $15.68 driven by an increase in mix of business users, including higher ARPU Office Pro and Pro Plus users. During the second quarter, we continued to see a healthy Office Pro and Pro Plus take rate with 61% of new office users opting for these higher tier services, which was up from 58% in the prior year quarter. Overall, 37% of Ooma Office users have now subscribed to these higher tier services. Our annual exit recurring revenue was $240,000,000 up 3% year over year.

Our net data subscription retention rate for the quarter was 100% as compared to 99% in the first quarter. Now some details on our gross margin. Our subscription and services gross margin for the second quarter was 71.3% as compared to 72% in the prior year. Product and other gross margin for the second quarter was negative 47% as compared to negative 69% for the same period last year. The year over year improvement in product and other gross margin was primarily due to a fully consuming higher cost components we had procured during the pandemic in the first half of the last fiscal year.

On an overall basis, the total gross margin for Q2 was 62% as compared to 62% in the prior year quarter. The flat overall gross margin in Q2 this year reflects the heavier mix of product revenue versus prior due to an increase in AIDAL installations, which offset the improvement in product gross margin. And now some details on operating expenses. Total operating expenses for the second quarter were $35,100,000 and down $100,000 year over year. Sales and marketing expenses for the second quarter were $18,000,000 or 27% of total revenue, up 2% year over year, primarily driven by higher marketing and channel development activity for Airdial and two thousand six hundred Hertz.

Research and development expenses were $11,500,000 or 17% of total revenue, down 6% on a year over year basis, primarily driven by headcount management as we continue to focus on R and D efficiency and operating leverage. G and A expenses were $5,600,000 or 8% of total revenue for the second quarter compared to $5,400,000 for the prior year quarter. The year over year increase in G and A expense was primarily due to an increase in personnel related costs. Non GAAP net income for the second quarter was $6,500,000 or diluted earnings per share of $0.23 as compared to zero one five dollars in the prior year quarter. Adjusted EBITDA for the quarter was a record $7,200,000 or 11% of total revenue and grew 27% over the prior year quarter.

We ended the quarter with total cash and investments of $19,600,000 In Q2, we generated $6,400,000 of operating cash flow and $5,000,000 of free cash flow. On a trailing twelve months basis, we generated $26,000,000 of operating cash flow and $20,000,000 of free cash flow. With strong free cash flow generation, we spent a total of $14,500,000 over the last four quarters, including $4,500,000 in Q2 to buy back stock through a combination of open market repurchase and RSU net share settlement. On the headcount front, we ended our quarter with eleven ninety five employees and contractors. Now I will provide guidance for the third quarter and full fiscal year 2026.

Our guidance is on a non GAAP basis and has been adjusted for expenses such as stock based compensation and amortization of intangibles. We expect total revenue for the 2026 to be in the range of $67,200,000 to $67,900,000 which includes $5,700,000 to $6,200,000 of product revenue. We expect the third quarter non GAAP net income to be in the range of $6,000,000 to $6,400,000 Non GAAP diluted EPS is expected to be between $0.22 to $0.23 We have assumed 27,900,000.0 weighted average diluted shares outstanding for the third quarter. For full fiscal year 2026, we expect total revenue to be in the range of $267,000,000 to $270,000,000 which is unchanged from our prior guidance. The full year fiscal twenty twenty six revenue guidance assumes business subscription and services revenue growth rate of 5% to 6% over fiscal twenty twenty five, while residential subscription revenue to decline 1% to 2%.

In terms of revenue mix for the year, we expect 91% to 92% of total revenue to come from subscription and services revenue and the remainder from products and other revenue. In terms of full year fiscal twenty twenty six non GAAP net income, we are raising the guidance and now expect it to be in the range of $24,500,000 to $25,000,000 Updated non GAAP net income guidance for fiscal twenty twenty six includes the impact of approximately $500,000 of tariffs, which is our current best estimate. Based on this guidance range, we estimate our adjusted EBITDA for fiscal twenty twenty six to be in the range of 28,500,000 to $29,000,000 We expect the non GAAP diluted EPS for fiscal twenty twenty six to be in the range of $0.87 to $0.89 We have assumed approximately 28,200,000.0 weighted average diluted shares outstanding for fiscal twenty six. In summary, we are pleased with our solid results for the second quarter with a record adjusted EBITDA of $7,200,000 which grew 27% year over year and improved our adjusted EBITDA margin to 11%. Our free cash flow remains robust with $20,000,000 generated for the past twelve months along with $14,500,000 of share repurchase for the same period.

We’re excited about growth opportunities in front of us and remain focused on executing to our long term strategy to achieve profitable growth. I’ll now pass it back to Eric for some closing remarks. Eric?

Eric Stang, CEO, Ooma, Inc.: Thanks, Shag. I’m pleased to say we now have a strong first half of our fiscal year behind us and the momentum that goes with that. We’re encouraged by our recent growth with Airdial and by the scope of market opportunity we see across our business. Our focus is on executing well, capturing the opportunities before us and then driving improved top and bottom line results. Thank you everyone.

We’ll now take questions.

Conference Operator: Thank you. Our first question comes from the line of Josh Nichols with B. Riley. Your line is open.

Josh Nichols, Analyst, B. Riley: Yes, thanks for taking my question. Good to see the improvement particularly in the bottom line and the company buying back some stock. I know you mentioned Airdial bookings more than doubled. And with the second half hardware ramp, I presume a lot of that’s related to Airdial as well. Is it AIRDAU contributing any meaningful percentage to ARR at this point?

Or at what point do you think you’d start giving a little bit more granularity on on the breakout as that continues to build?

Sheik Hamamatsu, CFO, Ooma, Inc.: Yeah. I think, yes, AIDAL is contributing to the growth of ARR and also the ARR as a whole, you know, starting to contribute meaningfully. And if we also look up on the perspective of user ads on the business side, which increased by 9,000 quarter over quarter. A good chunk of that came from Airdial. And so from, you know, these kind of data points, you know, we think that especially if you look at quarter over quarter basis, even on an annual basis, AERDAL is starting to contribute more to the ARR itself.

And, you know, also having double the booking year over year, as you heard it, Josh, that that certainly helps to accelerate that growth further into the second half.

Josh Nichols, Analyst, B. Riley: Thanks. And then just to update, I mean, you’ve continued to add new partners on the AirDial front as well too. When you look, I I think in one q, you launched with a a very large market cap telecom company. You have a aggregator, Ceilac, and previously announced, like, ILEC. Any updates, Eric, that you could give us on just, like, how that ramp is progressing since, like, the the last quarter call update?

Thanks.

Eric Stang, CEO, Ooma, Inc.: Yeah. Hi, You know, it’s pretty exciting to have nearly 35 partners who are reselling AirDial in the marketplace. I I think that a pretty strong vote of the strength of our solution as well. Two of the resellers we brought on or signed, I should say, this last quarter are moving from a competitor’s product to ours, which which is also quite exciting. These resellers do take time to ramp.

We announced a very important relationship with Comcast early this year. We have seen orders now from Comcast, but still it’s slowly moving forward as Comcast works deals and trains its sales teams. I think that the back half of this year, we could see acceleration there. T Mobile has never been stronger with us on Airdial. They are doing a fantastic job.

And we are also seeing the Select that we announced pretty much this time last year finally start to ramp with Airdial in a meaningful way. So and that’s just three of the of the close to 35 resellers we have. I I feel well placed with I feel we’re placed with the well placed with the range of companies we’re working with. And I think all of them have plans to to grow as we go forward. Our goal is to add a couple every quarter.

And I you know, my expectation this time is that we’ll have more that we’re adding in q three, and a couple of them could be particularly exciting as well. So more to come, but, that’s working well for us.

Josh Nichols, Analyst, B. Riley: Appreciate it. Thanks, Gus.

Sheik Hamamatsu, CFO, Ooma, Inc.: Thanks, Josh.

Conference Operator: Please stand by for our next question. Our next question comes from the line of Eric Montanuzzi with Lake Street Capital Markets. Your line is open.

Eric Montanuzzi, Analyst, Lake Street Capital Markets: Hi, congratulations as well on the improving profitability of the business. I wanted to talk about where you’re pointing that incremental cash flow. Obviously, in Q2 with the, what was it $4,500,000 or so on the share repurchase program, is that to say that we’re not actively pursuing any M and A opportunities? Or is it just to say that your own shares are the better bargain in the market with that cash flow?

Eric Stang, CEO, Ooma, Inc.: It really doesn’t say either one of those. We do feel some share buybacks at this current share price in the market are sensible for us. So we are have started doing that as of about nine or twelve months ago. But we are always looking for m and a opportunities that fit our criteria. And our criteria are fairly specific.

We we don’t wanna overpay. We’re looking for a strategic way to acquire users more than technology. And we’re looking for businesses that are small enough in size that they can fit into what we’re doing without, you know, upsetting our our major plans as a company. There are opportunities out there. From time to time, we have discussions and we would like to do more, almost call them tuck ins like that as we go forward.

Eric Montanuzzi, Analyst, Lake Street Capital Markets: Okay. And then the growth on the business side, you’ve got two quarters in a row here of 6% growth in the core subscription service growth rate on the business side. You’re talking about 5% to 6% for the year. Is that just conservatism? Or are we looking at maybe some incremental churn that we need to model for in the back half?

Sheik Hamamatsu, CFO, Ooma, Inc.: Hey, Eric. Yes. So it’s not so much about incremental churn, but I think you may notice that we’ve given a relatively wide range for Q3 on revenue and also still for the whole year. I think the variability there is just the timing of the AirDigm installation going to second half. Now we doubled more than doubled the booking, and we continue to ramp up the bookings going to second half.

Sometimes the installation timing because of customer timing on their end, not so much about our readiness install plays into it. So there’s a little bit of conservatism from that perspective, but it’s not about the churn that we’re expecting.

Eric Montanuzzi, Analyst, Lake Street Capital Markets: Got it. Thanks for taking my questions.

Sheik Hamamatsu, CFO, Ooma, Inc.: Thank you. No, thank you.

Conference Operator: Please stand by for our next question. Our next question comes from the line of Pat Walravens with Citizens. Your line is open.

Kincaid, Analyst, Citizens: Hey, team. This is Kincaid on for Pat. Thanks for taking the question. Super excited to hear about that new largest retail customer that you guys landed. I’d love to hear more about how that deal came about.

What was the differentiator? What let you win that? And are we gonna start seeing that in the back half of the year or what’s the timeline there?

Eric Stang, CEO, Ooma, Inc.: Yeah. It’s an exciting win for us. This is a very large national retailer. This is a company we’ve talked to for a long time. They they went through a number of trials with our solution.

We actually thought they might, know, sign up in q one that moved into q two. This is a customer we’ve also won with our partner T Mobile, which we’re very excited about as well. They played a key role in winning this deal too. We’ve done a limited amount of installations with them so far and we are anticipating installations through the back half of this year. I don’t know how fast it’ll move at this point.

But, yeah, a very big validating win and and frankly, we we hope the first of many more. I mean, there are large business opportunities in the market like this. And with the strength of the partners we have and the increased focus on possibly placement by larger businesses now, We have a whole range of sizes of opportunity in our pipeline and we’re obviously working all of that. But yeah, a really nice win. I wish I could say who it was, I can’t.

It it came it came together after a lot of validation on their part and a lot of testing of our solution.

Kincaid, Analyst, Citizens: Spectacular. If you can give me a little color on how much, like you said 3,000 locations, how much revenue are you expecting to drive per location with these installations?

Eric Stang, CEO, Ooma, Inc.: We don’t we can’t answer that for a customer, but but we’ve given guidance to you on what to model for air dial ARPU, and that’s around $25 a line per month. And that’s a blend of across our go to market channels and the different pricing we have in them. And I think that’s a reasonable number to use for AirDial going forward.

Josh Nichols, Analyst, B. Riley: Thank you so much.

Conference Operator: Thank you. Please stand by for our next question. Our next question comes from the line of Matthew Harrigan with The Benchmark Company. Your line is open.

Eric Montanuzzi, Analyst, Lake Street Capital Markets: Thank you. I know it’s probably a

Matthew Harrigan, Analyst, The Benchmark Company: bit of touch of an afterthought compared to Airdial. But can you talk a little bit about 2,600 hertz and what kind of the organic growth rate there is? I know you introduced a number of new open APIs. And I think when you did the deal, there’s some discussion of trying to get better monetization for Kazoo. And know it fits well within your business portfolio, but it doesn’t get as much bandwidth as as Eridial, perhaps understandably.

Thank you.

Eric Stang, CEO, Ooma, Inc.: Yeah. So 2,600 Hertz is a wholesale platform, and and and we sell it to companies that want to offer their own solutions in the market. And so our our ARPU per user, if you look at that way, is is pretty low. But obviously, we’re not doing any of the rest of the business to get those users. We we are working this year to bring Ooma IP onto the 2,600 hertz platform.

And I I made some important announcements about that actually in my opening script and comments. The reason for that is that the real strength of 2,600 hertz is its flexibility and its API based design, but it doesn’t have as strong a turnkey applications as we’d like it to have. And by bringing loop IP onto it, we are we are making it a very good turnkey solution as well. For smaller customers in the market, that’s important. For the larger customers in the market, they really care about the flexibility and and what they can do with it.

And and you know, our our largest win to date on that platform was service titan who uses, in particular, 2,600 hertz as contact center capability and was able to build a number of AI based applications working with our platform to, you know, really create something bespoke to their needs. That that’s powerful. And our vision for 2,600 Hertz is to win other large customers like that who will use the platform in that way. I would say this year, by the end of the year, we will have also filled out the boxes in terms of the turnkey solutions and that’ll put us in a stronger position net for next year for going after the smaller players who care more about that. I think we’ve added about a handful of of customers so far this year onto the platform, but it’s also a sale where once you win a customer, it can take many months to have them move their users over or or grow with the platform.

So we view it more as upside opportunity next year than this year. This year, we are really rounding out the solution. We’ll we’ll continue to give guidance every quarter on it. And we’re super excited for the long term because the traditional platforms in use out there today, BroadSoft, BroadWorks, Metaswitch, others, they were built a long time ago. They they don’t have all the modern features that that a platform like 2,600 Hertz can enable.

And so we feel there’s real opportunity over the next several years to be the platform in the future.

Matthew Harrigan, Analyst, The Benchmark Company: And we know that you have enough on your hands with Airdial in North America. But to the extent that you’re getting full demand from Europe, I mean, that’s really a testament to the efficacy of the product relative to limited alternatives. Are you seeing more of that? And again, I know that’s not a priority, but I was just curious.

Eric Stang, CEO, Ooma, Inc.: So today, AirDial is being sold in North America, US and Canada. We would move to other parts of the world if or when we have a large carrier or other entity that can be a lead customer in that market. And don’t have any announcements in that regard today. But that’s how we would evolve with it. Now we are able to achieve a customer like that.

We already have Ooma services operating in 32 countries around the world as part of our IWG Regis customer relationship. So we already have a pretty good head start towards enabling service like Airdial in other countries. But but honestly, I don’t want to make too much of this because our primary focus still is North America because we just see so much opportunity here.

Matthew Harrigan, Analyst, The Benchmark Company: Great. Thanks, Eric.

Sheik Hamamatsu, CFO, Ooma, Inc.: Thank you. Please

Conference Operator: stand by for our next question. Our next question comes from the line of Alinda Lee with William Blair. Your line is open.

Alinda Lee, Analyst, William Blair: Perfect. Thank you. Congrats on the solid quarter and also on the ten year anniversary. Quick question here, NRR was 100%. Can you give us more color in terms of what drove the one point uptick there?

And what should we expect NRR to be going forward?

Sheik Hamamatsu, CFO, Ooma, Inc.: Yeah. I I think the biggest contributor just overall was we had a better churn, quarter over last. And so, obviously, last quarter, we saw the impact of the, you know, what we think is less of the large IWG churn. We don’t have that this quarter. And just looking across the other service lines, I think we’re generally speaking, the improved churn quarter.

So I think that’s the biggest contributor to the better retention rate. Was the second part of question, Alinda? Sorry. I missed it.

Alinda Lee, Analyst, William Blair: Yeah. No worries. The second part was what should we expect in our NRR to be going forward?

Sheik Hamamatsu, CFO, Ooma, Inc.: Yeah. I I think, you know, we’ve been very steady between 99 to a 100%, sometimes rounds up, sometimes round down kind of a situation. So I think that’s a good, zone to be in, and I think we that that’s what we think it was gonna be.

Alinda Lee, Analyst, William Blair: Cool. And another question is top line guidance was reiterated, but net income guidance is raised again by around 7.6% at the midpoint. So what are the efficiencies that you are looking to implement to achieve the bottom line guidance? I know you mentioned also the tax benefit that is helping with the bottom lines. Any other efficiencies that we should be aware of?

Sheik Hamamatsu, CFO, Ooma, Inc.: Yeah. Just to kinda get the tax one out out there. So part of the raise for net income, I would say seven to a hundred thousand of the raise are related was related to tax law change that I talked about. It’s just that our estimate for tax payment is much lower due to the one big beautiful bill that we already heard about. And but a remainder, which is still a meaningful portion of the raise, is really seeing the r and d efficiency.

Efficiency. That’s a big part because we more or less see flat r and d or maybe slightly less r and d going to second half. So, you know, as we said going into this year, we want to see the r and d leverage that we talked about. So I think that’s the the biggest driver in addition to the tax benefit. But but also, you know, we’ve been very prudent about about the sales and marketing expense.

It’s hovering around 27% of revenue. And as we said before, we are very disciplined about customer acquisition cost and making sure that we’re putting into the right channel to realize best ROI we can achieve. So both the sales and marketing efficiency, the R and D leverage, and the tax, those are three pieces.

Alinda Lee, Analyst, William Blair: That’s really helpful. Thank you.

Sheik Hamamatsu, CFO, Ooma, Inc.: Thank you.

Conference Operator: Our next question comes from the line of Brian Kinstlinger This

Kincaid, Analyst, Citizens: is Kevin for Brian. Can you give us a sense on the new business line trends you’re seeing with your largest UCaaS customer? And should we expect meaningful growth over the next twelve to eighteen months?

Eric Stang, CEO, Ooma, Inc.: If you’re referring to IWG Regis, we have rolled out to the countries we’re planning to roll out to. And so I think we expect them to be essentially stable as we look forward in our outlook.

Josh Nichols, Analyst, B. Riley: Great. Thank you.

Conference Operator: Thank you. Ladies and gentlemen, I’m showing no further questions in the queue. I would now like to turn the call back over to Eric for closing remarks.

Eric Stang, CEO, Ooma, Inc.: Thank you. Thank you everyone for joining us today. It’s interesting to put our results in a little bit of longer term perspective. I think it was a couple of years ago we did mid teens, upper teens EBITDA. I think last year we did 23,000,000.

We’ve guided this year for around 29 SG if I’m correct. And we intend to drive EBITDA higher next year. I think we have built a business that has a potential to be highly profitable and our solutions are well developed and they’re leading in the market. And so as we grow, we can get leverage on a lot of our spending. So it is our plan to continue to drive both growth and bottom line performance.

And we feel that’s the combination of those two is what’s gonna build the most valuable company as we look forward. We appreciate your time today. We had a strong first half of the year. As I said in my opening comments, we’re glad to have that momentum as we go into the second half of the year. Thank you, everyone.

Conference Operator: Ladies and gentlemen, that concludes today’s conference call. Thank you for your participation. You may now disconnect.

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