OOMA - Earnings call transcript Q4 2018

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Operator

Good afternoon. My name is Chantelle, and I will be your conference operator today. At this time, I would like to welcome everyone to the Ooma Fourth Quarter and Fiscal Year 2018 Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. you. Thank Instructions] [Operator begin may your you conference. Presenters,

Matthew Robison

Corporate webcast everyone, fiscal XXXX day, is CEO, Robison, IR Eric and are CFO, here Inc. the welcome release the live The release call available and quarter on Company's today, Matt page market at Ooma Newswire. is and of the of Director Narula. fourth Ooma Stang a the Ooma's With is website, earnings Ooma's name be me on Globe today of being issued to Investor Relations' My and through NASDAQ Good Development. one-year. Ravi call After a and available Ooma, This website of closed press period ooma.com. the also for will

our the statements presentation, Laws. make During Federal Securities of executives meaning the the within today's forward-looking of will course

to performance. operating Forward-looking events statements generally relate financial or future or future

that periods to the measures on in financial guidance give the a These key measures in the that the Please The On as expectations stated those call Section X-K that in to and addition to GAAP. otherwise are update presentations in statements press to press risks any an law. statements, regarding non-GAAP Investors non-GAAP full-year revenue in presentation press of includes events forward-looking accordance forward-looking actual in financial we reconciliation ooma.com basis. well Our mostly beliefs included our in to set be call, is businesses. metrics filings, by website. or of comparable expenses of this information any today, financial that measures as issued the described than on included us our on core not on note why this earnings to risks and as release to call and this obligation with our on be uncertainties as prepared The as or our this fiscal the Commission. are results Exchange the cause our matters non-GAAP page discussion non-GAAP intended considered may and discussed and be A more basis. a present and and in available our Securities Also, to those those based will earlier in are XXXX disclaim financial measures forth are projected. for to link date subject hereof, substitute release other materially available except there disclosed as with a required for materialize from website fully measures could non-GAAP not non-GAAP first results directly filings and actual financial include of these not we and a we'll differ financial of is quarter values subscription isolation in a cost and release and in GAAP our the results we

provides that of metrics. excluded to Additionally, non-GAAP Presentation include that GAAP our resolution from slides GAAP reconciliation expenses are also non-GAAP Investor

is several of California. Orange March in next during participation our first conferences few announced release press X, months; in County, next XXth February The the which Conference ROTH Our the Annual XX, Monday,

Eric. Okay,

Eric Stang

CES. announced pleased we FYXXXX entered performance and Hello FYXXXX look strong exciting earnings continued to fiscal enhancements at today We Matt. year. QX with call. with as from momentum many increased product new am welcome you, and the we Thank forward and you our to Ooma's I talk feature about our the to plans

approach, solution full cloud in leading space. which unique solution We made businesses using also acquisitions. a two strategic the very strategic and sized enter security having a featured serve which Voxter Communications positions to gives larger FYXXXX camera Butterfleye us UCaaS us with

progress. I is subscription straight services our these Once subscription from cases, don't QX, our In achieving for services proud was revenue year-over-year. year-over-year of QX solid and though, levels and priorities cash recap am by revenue a know $XX.X subscription our positive I by strategic our and Ooma exceeded QX a residential our of in outperformed row. the believe growth. on our growth extremely XX% expanding again revenues FYXXXX and our year-over-year. first approximately industry of services business revenue both who XX% Before generated another in accomplishments. revenues our million competitor approximately we guidance Overall, XX% was to I operations growing Total I growing seventh flow like quarter by

is strategy feel exciting ahead. an our outlook have More importantly, working and we I

Our communications in markets fact, cloud through scale, both markets; business summarized marketplace. we strategy both residential awareness, the to cuts gives competitive be and can serving advantage solutions enhanced competitive strength. and us as It believe brand bringing channel across uniquely

Even home encompasses its our also service though other such security strategy home related simply Our essence communication add which security new platform. writing on such services strategically as another and core to bring meaningful afford revenues the retention. strategy marketing sales to and subscription services to and is increase solutions customer differentiated marketplace. our the services of unique to ability customer and core The synergies

With today this Ooma Communications, serve and will only I describe detail, more Ooma own is customer our acquisition Office with we the unique And businesses. in set now which solution believe in to later course to the we farther apart marketplace. meeting of Telo, specifically special ourselves the again custom home cameras, needs Voxter of Butterfleye also small focused pursue the needs with in charting and see can value of provide the with larger combined are our even on strategy which security unique we’ll businesses. market You

this plan Our our I’d detail, on into course to more but provide executing background is before that like strategy, recent focused on I two acquisitions. of FYXXXX go

and customizable. feature we Voxter UCaaS businesses. highly provides announced and which This platform mid-market First, Voxter is enterprise Communications, just custom solutions rich for yesterday,

their significant international serving countries its U.S., most Australia, customers the Europe. and can customers companies We're in love today, at Hyperwallet also of It Perhaps market, Canada, it XX positioning needs has special size, to outstanding. several capable developed been excited In for way is customization Voxter’s such custom their Of customers segment fact, is solution has has been well. business over the customers of about of strategy individual established its platform UCaaS the all, revenues and in that a big along first and the the Grafana. important Voxter’s reach in it Optimizely, Company’s easy company of Voxter and the Japan meet we believe the strategic team for years foremost many an it and to enhancement. serve and serves needs fit and in extremely namely Whistler marquee Slack, underserved as not Blackcomb, and want

help believe us size the international enhance maximize platform acquisition this in also functionality scale of well. investments and serve and sales Ooma’s We as development growth. businesses the With channel office now we and any large expand marketing will Voxter, believe can reach, on we and

storage feature. when book It's shots, to power for Our time user to arm/disarm Internet has sensors which station most no business. a and Other in leaves temperature words and capture, requirement really automatic missed sensors of to or and through a other alarms. No thanks for in delay video battery limit onboard outages, added use user and continued and addition a instant audio backup. base operation cool motion second Butterfleye the Butterfleye, tell an returns, a that developed false leading camera acquisition many facial features include, leading team platform AI-powered includes advanced solution is home can which video is who seen. of notable the and recognition, security very the and is The for camera features,

solution As the technology in you the leading market and cameras a today. can see rich in Butterfleye feature

in a as growing excited what things revenue that and Beyond can large and additional access to We and monthly we fast for storage over based market subscription inherent we Butterfleye’s in we know features. serve others, marketplace. damages Butterfleye services are video the we can Butterfleye with increased advanced with such believe we on drive see

We’re do in important subscription also Ooma combination to feature total number us we requested the our video and fact home encouraged these two camera to to Ooma’s have capitalize security Butterfleye by one a solution. cameras tell We In work acquisitions. services Security solution. both on sell with is their FYXXXX, intend standalone and Home customers that

need the organization to side and accelerate we of Voxter, add channel reseller partners growth. go-to-market For more expand the to

plan focus year. Remote can our For other is to in features. half special momentum XXX a Butterfleye, chain also as acquired and them home to need had security tasks so integrated in FYXXXX we before scalable of the inventory we build these accomplish supply second the the to of we of we Butterfleye acquisitions solution, from it's these half year, Butterfleye gain our with integrate our run need overall out our fiscal of so more first the and into solution One

Ooma focus small Another is growth to customer business our Office the our FYXXXX of fast and continue base. plan of

will FYXXXX, in grow here remains goal Our we to marketing continue In faster to the to invest sales this than growth. drive and industry.

also Ooma launch handful market, location. more the with main the one of support order additional platform for features intend which the than We of addressable Office for businesses a to to expand in one is

the on on As first our of to year. of half year plan half complete begin in most we these feature of the momentum discussed second conference the the enhancements last call, we

I'm Finally, Office we in Spain. as Ooma announce pleased Office, for WeWork Ooma recently launched to that regards

final to launch to announced camera we geofencing, possible provide In unable the sensors through earlier, Telo sell Security of solution, element strategy as we service Butterfleye major and the for us includes where addition to our or and integrating our for finally, we is to phone with the distribution features CES, gives all increasing into The the already more the five security This new retail siren, to especially users in FYXXXX detector, countries on platform the and channels. other to without fruition. smoke more to Ooma security making FYXXXX. home the home countries baseline it this bring ways at mentioned launching Home in and service, plan plan

these invest year. of accomplish or to the is so for next so, in to the positioned Home and in back well marketing tasks awareness are plan sales the Our greater six we Security Ooma over months half

We in us growing fast our potential market, will take are time home but capture large security mindful the are it excited full the we opportunity. to about

parts resources things. One revenue. ad declining with like of We positive other is our I'd two and options, for from EBITDA this our we generate after our it strategy believe to will to adjusting Finally, approach, reviewing business. pricing even shifting continue that are to Talkatone by away Talkatone with mention

Office, article that one competition. also of readers The beating number states just the all report out Ooma I'm business seen learned to other the at that is has Magazine voted author have services the highest one today, received scores, the The net VoIP Ooma PC thrilled again once we for that choice of promoter XX%.

over to then comment, results and call the detail. return will the more turn with in Ravi to I me will questions. we discuss take let your Now our outlook final and

Ravi Narula

review I Thank you, Eric, the to of afternoon, and quarter and XXXX and fiscal Today, fourth am good for then results and our outlook the financial fiscal provide quarter everyone. XXXX. year first going

stock-based Relations and as our website. The page impact today reconciliation as accounting on would such press acquisitions related are also Investor a income recent release details non-GAAP found our it to in be compensation except expenses, can All items, to our provide of has financial I business. charges. Additionally, our issued and revenue, new non-GAAP standards acquisition GAAP the earlier the of data of revenue the statement of exclude basis on

XXXX guidance for to Ooma for of the fiscal QX on of strong previously particularly an guidance $XXX,XXX for performance Now and core for revenue loss exceeded XXXX Office. driven was loss in compared loss on to a million, a fiscal quarter compares to year million fourth fiscal basis, fiscal $X $XXX,XXX was or subscription compared our and our issued XXXX for XXXX. and revenue, year loss Total was the million million $X.X year-over-year basis. an the $XX.X $XX.X year-over-year revenue increase increase This last of full-year XX% issued results. Total a Net fiscal for increase XXXX $XX.X million, the million of range fiscal was fourth $X.X year. loss to of $XXX,XXX was to $XX quarter of previously $XXX.X XXXX by million Net million. services quarter range revenue $X.X million, same XXXX of

change with subscription subscription Consistent Product Ooma XX% XXXX, Office XX% fourth revenue services and year-over-year quarter overall a services for expectations, residential sequential $X.X the now Office was fourth XXXX. basis. for was and sequential Talkatone about primarily some This by on in the of by was XXXX grew year-over-year. Ooma grew revenue For $X.X decline of price customer quarter million, our I driven in XX%. our XX% Residential growth Combined of our Ooma XX% to residential basis. quarter grew fiscal made and user was growth to a declined growth, extent revenue lesser and details ARPU, and million fiscal the third fiscal up on XX% a year-over-year metrics. year-over-year up provide will X% and a

base user fiscal the approximately end XXXX users users at X% fiscal XXXX. end XXX,XXX at core to core of Our XXX,XXX increased from the of

Our fourth Ooma compared prior year the in end Office to to compared users Ooma approximately users of Office end quarter. XX% fiscal the at core grew of total XXXX. revenue of total fiscal XX% XX% XXXX in the contributed XX% to to core at quarter the

growth in amount as our significant large back which residential office the user to of enables cash, business Our and us pursue continues invest initiatives. we to generate base

subscription Residential users the compared customer and Annualized to ARPU Ooma $XXX $XX the XXXX. $X.XX XXXX. was the period. prior services recurring of XX% year-over-year Office fiscal mix of quarter structure. a average million year by for quarter exit monthly the for ARPU million or Ooma for pricing was revenue fourth Ooma made major from of Our users fourth Office driven quarter increase higher well to $X.XX revenue as This our and changes fiscal fiscal was fourth and from a XXXX milestone of as surpassed of for growth was This million $XXX residential

to fourth XX% net retention fourth the quarter compared XXX% rate Our for of the for quarter dollar was XXXX. fiscal subscription

XX in basis scale. revenue fourth was Ooma of as the growth from primarily and Now onto point gross XXX XXXX, same services gross margin increased period XXXX fourth the up the fiscal overall by quarter benefits a same the of increase for was of Office year. from point margins; the driven gross XX% basis well moving Subscription as period quarter of to of in fiscal XX%, XXXX. margins continued last XX% increase This fiscal

of to $X.X increase period million increase to were million $XX.X small expenses compared offerings flat the XX% subscription development our to in Fourth quarter negative from margins Research product and other to prior continued developing year-over-year functionalities, an our adding as of and by marketing growth basis at and XX% million, million, an solution. XX% launching XX% year-over-year Spain, channels. total prior fourth or for WeWork million, XX% $X.X to $X.X service quarter. home expenses year-ago products Office. was the the our a support expenses features the Office from revenue and G&A million expenses services revenue million year new our and an $X.X of the gross security Additionally, of year our period. increase driven X% as new Product was XX% operating primarily sales increase were were a to in of on $X business enhancements made drive in the of This increase were on basis. well support operating the year-over-year our $X.X growth investments growing and in increased solutions. or approximately Sales by to quarter expenses

quarter Our of loss loss net fourth $XXX,XXX a loss in the XXXX or in fiscal per fiscal $XXX,XXX share compared XXXX. per loss fourth $X.XX the was $X.XX of of or quarter share to

versus G&A particularly invest and to EBITDA the and XXXX of in for pleased gross same in continuous of fourth from be margins $XXX,XXX $XXX,XXX Adjusted last gain getting business, sales loss quarter allows the are marketing. us which a was the to in year. We and leverage improvements period fiscal R&D

sheet. to turning balance Now the

quarter. investments no end the $XX.X of of have at fourth debt million the cash and with We

of quarter. operations to we quarter For cash XXXX, compared prior the from $XXX,XXX generated $XXX,XXX fourth in approximately approximately the in fiscal year

prior operations For from driven growth in We full-year fiscal quarter This XXX year and by was the compared $X.X XXX from with operations and fiscal cash up fourth XXXX, to we sales employees generated full from $XXX,XXX quarter. in million cash ended R&D. XXXX. contractors in of the headcount in time

initiatives, provide two about the outlook, provide our insights fiscal including recent some I acquisitions. let details of Before about XXXX our me

our XXXX. of comprehensive part security in As developing solution, acquired December we Butterfleye home

We camera along inventory. features camera the new with for AI-enabled and exciting the are developing Butterfleye building

shipping We Voxter. Butterfleye year. in It developing meaningful important these the marketing excited to is start also investment technology latest will middle note this cameras expect to and sales generating and the in acquisition the of sometime in before require that revenues. It the about channels very

customizable the we sizes. a engine and a Ooma earlier, number organizations of solution, with mentioned combining businesses highly positive believe will allowing Eric to marquee and As Voxter’s with technology marketing us complete has results. sales all Voxter meet provides needs customers Voxter of of yield the UCaaS and of

expect to I million We $X during acquisitions for integration of both sales to same In these million to period. $X revenues six combined and the of $X sales, be operations summary, approximately marketing the in months. fiscal be marketing million XXXX investment R&D expect next these and from and completed acquisitions between two

Moving approximately on XXXX. business revenue the XXXX, a $X we of Talkatone from to million fiscal expect XXXX is in revenues. This Talkatone million fiscal for from reduction $X fiscal

these revenue We rules. items modified but generate spend steps major I are and the accounting new rules quarter retrospective the reduced these EBITDA. the details will this of in adoption XXXX expect implementing the about XXX. to Talkatone provide highlight for two some you not now to the There rules recently with approach. have under ASC to We're Last, fiscal positive least, business using under of first taken

will made product existing from revenue accounting. be our channel sell-in recognized a basis of the methodology versus on to partners sales First, sell-through

reflecting fiscal our the these approximately guidance. deferred to Due the rules, partners $X.X sold had and million become through the product in yet fiscal XXXX. customers. held we of product XXXX this As is Under lose old of the and product we of will revenue, channel not end end which have by XXXX, generally inventory fiscal revenue adoption to new would in revenue revenue, majority rules, a QX of reflected of deferred

to expense and expensing the we stock-based were over is for about expected sales these this guidance. change is charges. following accounting to fiscal and With acquisition now approximately adjustments guidance as related The required marketing lower provide commission me result outlook. these excludes background, in accounting charges This expected Previously, our in two amortize the we capitalize commission details them of Secondly, million and life. customer sales charges XXXX. $X sales of Again, impact reflected let compensation expense our incurred.

expected quarter fiscal be first assumes of of of $XX.X the million Our approximately $X This Talkatone million. revenue quarter XXXX loss in for range Voxter. expected to million Butterfleye $X.XX total revenue. net be of Non-GAAP is first to Non-GAAP of guidance by the of XXXX to to driven additional the range per expenses fiscal net $XX of million in be loss is the $X.XX. $X.X to expected and share is to range in $XXX,XXX

We approximately for million have $XX.X outstanding assumed QX. weighted-average shares

full-year in range For total the be XXXX, $XXX million $XXX to million. of revenue expected to fiscal is

to Non-GAAP million. of to million $X.X net net $X.XX. loss $X.XX of be to non-GAAP $X.X expect in is We be range to range in the loss per expected the share

by pass We have shares progress confidence gives of home to in made we million, Eric? XXXX. our about of well and products us summary, as good expansion fiscal Eric some Ooma assumed With fiscal of WeWork that, Office, momentum six long-term XXXX growth weighted-average remarks. it outstanding In prospects solution. approximately at our security $XX.X towards countries, as This growth our executing in back for I'll features closing initiatives. of the launching

Eric Stang

FYXXXX entering we’re that strong moment. excited with I’m Ravi. Thanks

to We Voxter customers know the with us friends drive of everyone. And asset business. refer believe to Butterfleye, great us solutions. we long-term unique with even to you, addition test positioned our large a products and their growth. building differentiated is I serving and now the are markets better We our which are love Thank

questions your take will We now. Operator?

Operator

first [Operator Your from Nemeroff Credit Suisse. with Michael comes question Instructions]

Your line is open.

Alexander Hu

for on questions. our is Alex Michael. Hu This for taking guys. Thanks Hey,

represent business? recent I with actually you've XX% while ramping is acquisition the partnership one the Office see acceleration subscription we And shouldn't it sort larger really we FY the So some is Office of of question XX% piece continues reason me there And any of guess revenue in more that along exiting revenue growth? from my services of to and to as year-over-year. to continue out growing that been to VARs Office was Is see XXXX And with? assume and Voxter the given stood working quarter a growth the your strong beyond? reasonable an core be should of specifically WeWork subscription why in overall

Eric Stang

go-to-market foremost take businesses expanding Eric. a ahead The office there aggressively is up at market quite now both we're This businesses organization yes, hard build the and on small place market company business could and are technology Voxter developing with to small Well right, for go on quite Alex. grow to about is long and first this But solutions. we you're we year. time which fantastic powering larger the is are focused But and Voxter, team perspective. larger business for lot Voxter. Hi, now a to excited office from and to intending midsize to to a

Alexander Hu

recently, your has sort and do think Okay. their acquisition Great. your this of peers the relates significant larger home remarks, I differences on some larger it what one of and as you in security the in strategy with might do made compete how side? think of guess you security the prepared And a space guess peers I then to you products

Eric Stang

Yes.

any and even they're features one you're acquisition case, Remote a referring work of it actually We're where with home. ourselves Amazon's what doing. delivery retailers core other at focused if now could our instant a get to couple can Amazon's as way of else as you is is differencing on home a much obviously such with Ring. versus probably XXX think bit your ways, not to of we a because all security they're retailers in help from I I on you're actually anything a that package We perspective. And think in be focused home think in benefit

with you the self unlike services do useful It alarm much what monitoring think user. which Ooma action? path clear you to so and do to makes a And have take then I other more

We also to approach lot of in app very elegant solution have developing the work service. a very cost and effective a a put

as the bring that component can And And there I offer to more truly the for features make we retail and having out less into platform, very so our and I finally what final amazing to strong the build well. position, is message doing of think security acquisition our think get things we with home to of build. and going without some This will effectively who an need others solution The just to than that as bridge only added build we're we telephony. over are well others security into there the security, and monitoring it camera put is out positioned world momentum also can we're an Butterfleye. effort home you to guy be camera think about

bit I So awareness certainly marketing from the a and in going users are until we're to but to then have year, going drive to Ooma, we are in of cautious. to think get invest they realize quite half opportunity this back the

Alexander Hu

leverage from guess on for FYXXXX on if impact namely? those So sense two increase Great. the How of my from then is acquisitions financial And last your driven much expense the core you recent namely Ravi. a guide with helpful. or Ooma? quantify Can side? in acquisitions could comment of the implied we That's very question the the investments actually the

Ravi Narula

Yes. is Alex, this Ravi.

we and be million and Butterfleye. and XXXX. on cameras start I and in $X a two, is we revenues so So year R&D and had I roughly fiscal for year million of of other said million into this the between the and both it. and $X have In the to $X as will happening, and marketing engines remarks, Voxter in revenue we And technology plus of mentioned investment prepared and in invest coming sales integration investments do we the it the get things of the the sales side Butterfleye as to expect marketing what inventory bring

fiscal we as start these in So fiscal And invest in one two we we million we are the what $X that cost from as means take to of – into these investments. probably of grow, two cost seeing will these XXXX the leverage businesses, onwards. million, will we product, out and to $X to because start two lose going XXXX of investments expect businesses service really

do I to months to XX become XX these So within believe accretive. businesses

Alexander Hu

Thanks Congrats. Great. for taking questions. our

Eric Stang

Thank you.

Ravi Narula

you. Thank

Operator

next the of JMP Your Walravens from question with Pat line comes Securities.

Your line is open.

Matthew Spencer

Thank UCaaS market Voxter Spencer is for to you who for vision you is the given and in This Matthew for What our taking compete question. with? acquisition long-term Ooma the on specifically Pat. do expect

Eric Stang

Yes.

their meeting vision to what carve is to where needs fit a solutions out to position long-term Our want with businesses really business. unique they UCaaS individual a into they're trying do as

UCaaS size all. fits the one of vision not market Our is

companies they variety accomplish needs as different the have today in seeing to a think I of special try we're ways. that

capabilities meet with be able do then is these I store for with unique is development monitor very really platform being vertical with more you example As market a needs opportunity of one and customer think needs. businesses work we give I a expand that can their into other we effectively, very for job of. nice a Voxter stores. independent have a done have who lots built has And that that solution solution customers they've provided very good has analytics I that to already situation. and Voxter central strong in full independent excited things to business who featured in because this our sense. might have something can They of way in think it very that fronts. vertical is We're as lot some That manage others and well a organization, similar the as upon that other built a help market of and now general similar

the in bespoke think succeed So to will to being than bit we a business the would we niche market. our with competitors little be look forward and our be that more

Matthew Spencer

guys obviously recently Thank pretty continue it have And two calendar activity should of we the M&A been you expect you. active in terms then in to Thank the with and XXXX? What's you. driven acquisitions.

Eric Stang

camera subscription video for on can is is it we driven, like into to do and video particularly what's charge we because It bring technology cameras. separately security a platform it what opportunity. Well, services fit the we home natural these

a revenue So clear also opportunity. it's distinct

are So that. the to after Similar do and for that in and to with and so now we not market the businesses position we're with get features have serve, customers Ooma designed excited strength is the solutions. very some ability larger go we leverage building set we all Office unique channels, the Ooma Voxter, to time asked with channel really to Voxter, by midsize

if extensions things we And for M&A the with these come said along, at as succeed very as us. we strategy. So them. will been such do do our have not these other in we’ve to logical to are past, But jump

And with today, plan we've stand execute so we talked about as with what here. to you we

Matthew Spencer

That's congratulations. Thanks and again very helpful.

Eric Stang

Thank you.

Operator

comes next of line Your from question Northland Mike Capital with Latimore the Markets.

open. is line Your

Michael Latimore

there. Great Thanks. Great. quarter

On Slack Slack the own Voxter customer. a was Does that acquisition, does I to collaboration? that for sell use a guess of you places? Or internally its Slack own mentioned as part its customers

Eric Stang

system Slack. is good a the phone That's question. within Yes. corporate This

UCaaS services, Slack to how so that's uses employees it. Slack’s For receive

develop features potential Slack of trying they working interfacing extra a also developed and of to not example something added to with on other some it's Slack do. the capabilities customers the its and capabilities have Now to with surprisingly to with Company gives what bring company unique the a those customized has and they're good users to UCaaS now solution

larger Company's is is of no – the customers it today. but So Slack one –

Michael Latimore

And then something proprietary its not right? Is like – BroadSoft that? for is that like reselling like It's has this own technology. Voxter

Eric Stang

range our That’s BroadSoft. and Yes, solutions UCaaS It they've XX nice press the of for over base. correct. been is not as for put years we in developing reselling release,

Michael Latimore

them gross then last on The company in that margins on sort line longer-term with gross just margin? Voxter. of And Okay.

Ravi Narula

the in generally And within on target expect do Mike, our longer-term, long-term margins XX% which the Yes, Ravi. is this we model, services. XX% be to speaking to subscription is

we margin range. similar So expect that

Michael Latimore

Okay. you. Thank

Eric Stang

Thank you.

Operator

Your Suri Blair. Bhavan next from William question comes with

open. Your line is

Bhavan Suri

there my product for Congrats some Voxter here. box sort is Voxter, you I’ve sort or the and deploy just you the of time sort products nice the trying these sort understand, as side Hey, product customer side. guys. as two had on a of sort Eric, there, of you in more especially over SMB if at question. point do for think a today to to of Thanks about these think you offline business on converge integration on question, days XX/XX the mix segments of of – strategic around a you RD of the sort on taking the lines start pieces. that Linux growth follow-up small a separate for sort sort it within little the

blend of large sort So of from a to this natural sort small enterprise? middle

Eric Stang

a it's little yes, nuanced. Hi, more Bhavan,

me a I give here. stay two very segments moment the different. core, the So believe At

experience the for curated businesses. have small We

as So and Voxter ability that would that to of really user lots simply, system the they put of expert the help IT can more can the flexibility, tried solutions with an Similarly takes complexity a we bit and into to powerful it. And get set it lots harm more the But maybe small serve with little well office a that's so. what they it's need, doesn't get interface we it of business that very portals, okay, of operate to a work into dimensionality all need that solution how UCaaS UCaaS so the install they businesses if solution, it because we our in business the a lot up administrator to very easily, themselves, doing small it of or solution, the clear add business. have department. the

capabilities add different the and how and see do trying not an the that to of platform for for types It's we've cloud away is do we a the if system that office a not similarly It's long operates, And to core you with network marketplace experience, achieve blending the to solutions. but want longer-term, the us a not help think that customer at it's from may well and not but because that those we a the list different in something after two said, more core lot to the of couple the do level. Voxter there on So us we platform. are there's things. But things to into hard office background are of office in does I on bringing closer them to solutions This some come – we're been couple the go over the the is to markets there together over the with opportunities with stronger longer-term see at our will, going fast, are essential strategy. that. we going but going that as make platforms the power at platform, the

Bhavan Suri

it. Got

target think in bit, approaching I sort like mid sort an handful tend large – of seems on how to sort of guys, we sales, today that sort sort people? of expanded investments? quarter opportunity, quick What approach of follow-up be has I obviously the little because the people, would to here, growth of make the heavy of sales How account that large the you’re expense, of bit. not types guys but of to many thinking drive be model about that Ooma? sales of of How terms that in a do about How that. sort know sort you In approach appraisal sort and how are a and helpful? terms thinking but that’s we of have investments of you for there little sort understanding going of – caring Voxter business a strategy Enterprise sales sales something

Eric Stang

Yes.

effectively actually factors of they channel very role it a phones that want display larger process. partners today. two partners of solutions period look, label are the complicated other our and ways good make channel. They the to very and and to very go partners. to way Many basically the a just have direct sells for channel not time to competitors partners number channel in destroy in sales just apps partners. right enabled Voxter it. IP billing, over through They've able mobile You're to sale information, white web mid-sized channel way sell channel channel the to selling effective the way a a through sell look. portals those but They're the with or distinction, the They a be is when more businesses very into sell longer a turn trying take that active involved

side has unique very channel well. the positioning some on Voxter as think I

more out a we way now and not Now right big to of you that amount hire will pace. but jump we're of be senior personnel people a the we to describe at gate, measured them going we're the we're at that sales team build with going up are will and that have hiring to – hiring

you. answer give can best the that's So I

fast I and the we people. things find best on how think depends can little develop bit it right how a

Bhavan Suri

I Telo Telo, Got for if implied plays related a acquisition the X% And split just business. But office organic, on think quick over how you played one I Europe. in one of little correctly it. up sort the Ravi. right, if Ravi, the here growth range the the think from is back numbers, out that's in color between

You’ve those always out? for just given of questions. Thanks segments taking sort obviously but Talkatone put between my plays growth, guys. Thanks two

Ravi Narula

Bhavan. Absolutely

of So and growth. in the terms to overall drive growth expect Office Telo, the split do between we Office

number of it the faster numbers, fiscal high faster it still lower, Telo expect services. And be In slightly so should XX%, growth. in to So continue subscription do and pace. in a we grown a residential the XXXX but than lot large has much much grow there's at to XX%

we job it XX% had a growth year-over-year in and be in do do expect done XXXX. past growth and do previously to with as expect previously that the of mentioned goal that we given decent I to mid our had fiscal XXXX fast guidance continue growth XX%, to in high fiscal to – we always have We possible, is of single-digit Eric as residential think but

Bhavan Suri

Thank you. it. Got guys. Thanks

Eric Stang

Thank you.

Operator

Nichols question Riley. [Operator next comes Your with Josh B. Instructions] from

line open. Your is

Josh Nichols

the a run Telo Thanks before platform home talk some the little market, looking additional out to maybe fiscal margin should Couple in to you and back of of also add year? that side for bit larger you side? the percentage Yes. the think then that you profile base? we question. about Is security And both services Are outside taking the becomes could about and my things. features half hardware to the sales on how this subscription a

Eric Stang

garage beta made through. partnership detector, take with of smoke four will to in first The and a the those certifications The that geofencing this pole part of of Door is half the longest be go are VTech and several I of a smoke We CES Sure. out opener, including do already the Geofencing year. siren, because that that customers capability. get door a detector marketplace Sensor, in that's Garage to some with needs available. to coming. that. now in first want things the in We did rest the of out will and we announcement

is phone with The security to year to someone wants sell really half first but want home bundle and doesn't necessarily of who the the home security, sensors possible thing make such in we want second do it service. in for a

buy And our solution, service security our so order today in to buy first. home to you have phone

security. the And will this, a benefits That So are in on well. on then is two the together. in places of the to we allows And Butterfleye on Remote as from great when doing we're the sell full home then on integrating that can try different Butterfleye us app our capability stores cameras we in customer, side bring educate Butterfleye the into focus sell also once the into we're the making product. obviously capability kind them get to standalone, elements third phone alerts people people with standalone and a working home solution thing camera use the we the and who security for we're integrating XXX to use the app we

off, cetera. that will the goes sensor et camera So motion on or turn a

through. it take can You

of the at and this for actually. we will security all believe place to and solution have a that we'll I in want we strategy strong market the year in stuff get in our baseline half that home So quite point done first have

through home security think extend and other several of think this farther the key things to I at work for of this those balance some but really I have than will We this and don't on things others, year baseline we time. want strategy they're to the year, next

back now rolling due I'm too and really see and to the we we're year not we it WeWork, being a excited we last pushed little want far to So that focus strategy bit on home be. on out can where out the security

Ravi Narula

margins, hardware services subscription and gross XX%. product QX XX% of terms in margin gross had in on negative Josh, we side, was margins side,

product go stay it XX% do we margins could XX% margin, relatively expect negative things or consistent change don't to to QX, expect make we XX%. too that, it like services much and in where expect what and But seen subscription will Going it’s adding some we do to XXXX. around negative in to forward, from And Voxter with between continue some we Spain, fiscal Butterfleye investments in there. we WeWork have

to you past have the last are forward, year ahead this going than investments So of you more of opportunities us. in of we in have seen seen because think XX some growth new growth, these putting margins months XX what what the I the of

reasonable So margin I for expectation is expecting think at around gross time. subscription services this XX%

Josh Nichols

and make to as know does And last some there's question, – year on then year, I leverage Company as historically know $XXX a surpassed R&D? I when about leverage million, a gaining sales like I talked well obviously the Thanks. lot a with that the has last revenue operating WeWork. model, know more couple gone recurring revenue little seeing as a start on Now investments how But percentage the spend extra bit this up? going and but are has of to some marketing, we

Eric Stang

growth. to This that little cash at and achieve last a year, I’d increased we from spend certain goals rather generated Eric. target over time. our cash We this million. then monitor in We invest Yes. operations is growth look drive at for $X

that until start more we otherwise about them Ravi going where I say that that's to get But that’s to And probably is than investment. expanding which to this sales two model. acquisitions, talked take about investing going year and going Maybe our for to on marketing. get. because leverage particularly So us. think multiple we're excited fronts R&D we take to has R&D are into fiscal we're and as with and wanted are We're the to bring some this? had incorporate to expense ramp We in have to here on we growth going with more we've

Ravi Narula

the side. is and G&A just think And to for Eric Voxter margin office, the are make along gross services and And invest Butterfleye, R&D I is on is as also this as with to so the the this overall we on into side, getting leverage getting fiscal going add said that year the us we investment investment believe bigger XXXX security that's a R&D between then investments obviously. more right it’s to Eric’s point, on where is investment in to the home marketing here. subscription

Josh Nichols

good. questions. Sounds my Yes, Thanks for taking sorry.

Eric Stang

This too our is not out skis here. We're far on to careful get ahead Eric.

from careful very sure want we're we We’re productivity the getting it. managing about you. our spend Thank to make

Operator

Your next Bank question of from Beliov with comes Lynch. America Nikolay Merrill

open. is line Your

Nikolay Beliov

talked is residential growth on a a lower impact one in pricing that contribution and point a like the bit growth it additional home business, like the from of something rate, about security from or two you or The you little it that? two from number please of really number accelerated XX%. us terms Can the little each help bit to XX%

Ravi Narula

incremental but in was in, incremental correctly, smaller increase, customers, to the That understood home this we structure to price this it That of Nikolay, question is the If our terms did Fiscal from pricing. growth Ravi. differently the customer see driving XXXX, XX% year are. I services. the subscription in changes but there was our XX%, your XX%, growth. same was price we security we growth the not of any we Telo did given of And driver. the adding two element change expect the a small in factors of also was

Telo. security solution were results it growth then there in into said, we the is coming should more and invest rates more line expect we of and terms going Eric in, more to and home almost As for base product to see

Nikolay Beliov

growth on talked bit us Got it. subscription color revenue into revenue ASC XXX. the the and growth you And total revenue the versus little revenue a in growth? you and guidance product product from guidance Can give more baked growth, between subscription hit terms about of

Ravi Narula

in Product basis will from small grow in is there's business so revenue there is additional to divested not revenue is subscription is which services. $X very to come coming one the more going will that thing, grow Product before expected growth sales. and revenue some on be all a happen camera which fiscal the business much, of also. Mind roughly to you are not we In million promoter going we XXXX, dollar out.

to fiscal $XX if included probably XXXX promoter revenue. revenue would Promoter look of product be business apples-to-apples total has So comparison million you million fiscal without plus which at $XXX.X Business revenue and of were zero XXXX

from of in product growing, but most subscription small. the So business and the very is is slightly coming services growth

Nikolay Beliov

they've you that Eric when with last since one it. been their you. hosted which Got try I were success. have the And I around than XX for DNA plus product better very years? when what have? And more why to and solution Voxter, their from architecture, and for type That’s their can a to do while On number seems guess you a drawn question architecture over Plug you confidence different on And 'n' I understand they That's that Play guys like website two, number helpful. limited you done one. gives go

Eric Stang

Yes.

actually I extremely been they've successful. think

they've look lists, their marquee you architected way pretty believe unique. is platform the their at that I If and also customer

strong They from datacenters for as have world. happens at to that network be it around that locations you the failover down, credentials sitting and company will sit the automatically phone there go IP can your You put amongst one an the to the other into also to in the around serve multiple the any setup has user to a location world there that's that world, extremely side be moment. within

about it level to together think architecture the platform easily. they’ve that Office Ooma relatively core things come a of So guts help are platform there think I will that I we on what and at very with do the some powerful it

efficiently, or vertical a me able versus I pretty it things other able being has we're to about players. do strategy a through efficiently, me the to for things. things able special as winning with head-to-head customize two being that to customize it company space about I've to is a said, So strategy about go in able the channel smaller UCaaS player. is a white partners, really approaching they're than being – gives larger to think three Voxter excited One platform. What special excites already trying way market being is label good I requirements, that One think the is

quite I come mouth our they've basically word been Secondly, that has on organization little effort and marketing engineering like and through sales marketing. very mostly with of an honesty. Mostly fact you the sales know

can and the And so I think and we're level. marketplace to be minor I site think location that's resources, that we're located them thirdly, I what as in to based They're to to is a competitive for then between more in it's but much think and a as in perfect Ooma this structure be it's and with part Vancouver cost marriage anyone noting. lower have take up do in position And a to a the with the and them as of can we now based. around marketplace to excited located next given the Canada Ooma’s and – where point, combination we us build that's Vancouver in opportunity worth

What can work customers continued our exciting we we've Ooma a for think And drove and as no customer and we've it sales spend channel across is our And for customer can that's needs obviously also in maximize us. reasons marketing for and So progress too. marketing we provide to say Office the a – it's sales Ooma Office, good I too. we pretty have come opportunity. as us that's this those much to whatever for built if we now and still

going the next with years. very it's So think our I to couple strategy fit over well

Nikolay Beliov

it. Got Thank you.

Eric Stang

Q&A of End you. Thank

Operator

today's call. concludes conference This

disconnect. now may You

Eric Stang

everybody. Thanks

Ooma (OOMA) 6 Mar 182018 Q4 Earnings call transcript