OOMA - Earnings call transcript Q2 2019

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Operator

Good afternoon. My name is Sheryl, and I will be your conference operator today. At this time, I would like to welcome everyone to the Ooma Inc. Fiscal Second Quarter 2019 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. there a remarks, Instructions]. session speakers' the will question-and-answer be [Operator After you. Thank your Matthew, you conference. may begin

Matt Robison

Good site day, available a site. My market also Relations call After welcome on Corporate CEO, least events is ooma.com. earnings release a for Robison, year. everyone. Web and Eric And issued from Director closed Development. This our This call fiscal being quarter Company's Ooma's release accessible CFO, today page press The active of today, XXXX at be link one With replay live webcast of Web Stang me Ooma GlobeNewswire. will section Ooma are IR and of the Inc. of Investor name here is Matt this to is the of via for the and link the Ooma's of is the on second Narula. call Ravi

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

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

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

that Additionally provides are also GAAP our of from and include resolution investor relations that metrics. presentation reconciliation non-GAAP non-GAAP to slides excluded expenses GAAP

participation press during described conferences release coming our several Xth in August Our days.

Gateway August Thursday providing Conference the by webcast be and on Idea's Xth. Liolios, Chicago presented the will Conference XXth in from audio We September Midwest Thursday,

Eric. Okay,

Eric Stang

while this of to XX% Ooma report year-over-year. making initiatives. to forward look each second revenues important on solid million Thank I'm several I'd half for results, achieved that in on you, everyone, to progress Matt. QX, service like call. year. and QX Hi FYXX in subscription significant welcome fiscal revenues of key elaborate to these earnings QX Ooma's then our we achieved and core and today plans grew Financially our $XX.X we the for pleased

increased was on our many dollar XXX%. results strong, subscription our remains executed and our we’re well rate for we retention ARPU All-in, net fronts with pleased QX. margins Our financial and

We significant on As monitoring integrate small I start on We users. to year, the would capitalize serve to at in to each. the expand to the acquisition of in the here discussed our security fiscal substantial we for Voxter is Ooma of our extend services in are future. video initiatives respects elaborate year year larger progress which this like to a out solution these set and businesses; and businesses; for home we to and this many FYXX and made building residential for breadth making platform include on QX, investments

more locations; we IVR, extension, site customers. as a serve dynamic to multiple with our and First, DECT two-line flexible IP and namely phone These ability sequential solution use for feature office; the seven added we wireless regarding phone to and new desk new attractive expect include our business, solution phone. a multilevel curated, easy important others; and to will ballpark cordless small make DPX our which Ooma businesses range options, such new core features,

feature believe to improvements serving we complete, resources major now app, When all our these to towards further of that expect yearend. on before are recording our are launch able and we will We a focused mobile call to three more we initiatives. we multiline enhancements; a and encounter, just other solution we have every phone, office about which engineering of turn be remaining business will receptionist of small capable

On our is in during expectations, well Office, faster grew sales and and we productivity resources. once community front add and sales we QX, Ooma our than to the again our marketing when obtain marketing expanded with Consistent time others into executed a our for ramp-up full team industry. sales and there

beyond. so and And anticipate in growth the QX made we investments further in we drive QX would

allows Ooma and I'm to that we in Office. our with serve all Voxter have Ooma businesses optimize Voxter and customizable repositioned to our acquisition pleased us to leads UCaaS full-featured report larger a our between Ooma go-to-market we with Turning and of integration This Enterprise, to response sized now have and marketing strategy generate as a under next that solution, integrated customer the Ooma our each enterprise brand. continuum activities present the customer capabilities, sales to and to uniquely

We have partnership to center best-in-class place Ooma core sales Talkdesk's Ooma marketing Enterprise strategic announced platform also Enterprise bring a and customers. just put contact Talkdesk in recently to the organization with and

as for namely their companies response bespoke we needs providing well. fit extremely UCaaS Now while their un-served that days positive Ooma it's individual Enterprise, our still solutions an strategy to market, are want to of at seeing what see a early already we custom targeted

include we QX, users. home extending and services in the for residential platform security Ooma toward progress Finally to video monitoring made significant

specifically their standalone and add-on home now later Ooma need Our calling most unique allows the option This the approach service. feature to our security in for without at includes up service. remote to home security to home purchase is the phone for notable market development sell the customers. ability XXX kit us way Customers phone which sign security, then and starter home first Ooma to can market

and Alexa, siren Ooma for triggered. home with In and is and of important arm added from system Amazon their the a geofencing disarm when to security platform for goes premises QX many we voice when the including customer automatic in addition, the system features comes integration a

solution facial began platform just camera with the our customer selling home screens We This allows unique that integrated such the security as recently in camera's XXX recognition. present also Butterfleye into and integrated an app. includes features the QX to development main remote video mobile and us also

we a well lot While of back now great work awareness, start and are have customer placed of year. solution for home build retailers the to ahead to security major place and we half the off at believe I a our

Now, QX. looking ahead to

earlier. Our initiatives primary the continue to strategic is outlined on execute main to focus I

number For and Ooma they remaining a features, we our marketing on launch and plan Office, extent up resources greater small a to come speed. as capitalize to intend added to to sales we of

Talkdesk of product adding on For call growing partnership, features and plans Ooma number marketing additional sales certain and further our growing Enterprise, the capitalizing our for our resellers, new team. for expanding

and our continued brand as efforts Finally security will awareness well as concentrate placement, and for development. Butterfleye, retail home future on building

to have us, fully exploit I'm are front about our excited progress, While ahead. solid I our making much go to of believe initiatives the outlook hold and opportunities in we further we taking are

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

Ravi Narula

and Eric, afternoon good you, everyone. Thank

can 'XX. review key except which then available release a our charges. provide I'm for related acquisition data such and fiscal full-year intangibles the revenues be found GAAP XXXX and of the the press quarter and in non-GAAP statement results on of financial non-GAAP is and All year other basis quarter second the reconciliation amortization exclude expenses to section metrics as financial today, income and going earlier our to site. compensation, stock-based third our Relations Web The of Investor of outlook items business are on issued fiscal First,

guidance fiscal from of range $XXX,XXX on the was quarter basis achieving to execution, revenue within $XXX,XXX for issued for year-over-year million. are $XX.X 'XX our growth Now to prior Ooma $XX.X particularly loss or by a subscription and million previously $X.X basis with previously on the revenue of strong are Net total total our exceeded XX% 'XX as a a million performance, of business XX% of This revenue XX% Ooma compared revenue driven range an business. year-over-year QX business results. guidance and had in year $XX.X now We the second of million quarter. pleased issued of to $X.X and quarter million. increase was we our continued grew XX% service second contributions Ooma

residential combined grew revenue services residential subscription businesses, year-over-year. Ooma basis. and year-over-year Our business The from XX% services namely grew core the subscription on revenue XX% Ooma and and a

Ooma portal Product a increase system was product we automated Ooma take million, of well generation Voxter quarter some was on we and flat was and robust XX% XX% small progress XX% for second Ooma 'XX. revenue Enterprise phone subscription Talkatone for of At to regulatory recently more total cameras, now are to us a Butterfleye marketing revenue As second have large decline solution, fiscal our second and X% integrated telecommunications a driven add our business. and business quarter year new of fiscal service Voxter the for 'XX future well is first; period. stack increase the relatively as infrastructure services quarter reminder, made. of provider. and believe refer to All of and sales acquisitions UCaaS the end I'll customizable opportunity quarter Butterfleye making this product revenue this add to for but as security revenue year-over-year progress our Voxter, to bundles, good Ooma million, with solution revenue as other activities was the and of a 'XX, of with solid with features Office, as progress, This confidence year-over-year. by the $X.X makes we fiscal that first billing expectations, Voxter users in and compliance; us together continue $X.X such some lead the growth. our prior and a gives compared and product which color sales Starting Consistent we Office. was revenue is positioned building compared and

details Butterfleye. on some Now

to issues second Butterfleye and mentioned production Eric some during new cameras are Butterfleye retail create the resolved channels shipping earlier, for cameras. started quarter, As initial working we now having

add product features about the the details customer side, competitive market to With to metrics make Butterfleye in we our new now. more some that On continue development place.

users of quarter second user at core the core $XXX,XXX to end 'XX users second total X% quarter fiscal approximately of of 'XX. base the end core of Our from increased at fiscal $XXX,XXX

end quarter Our XX% XX% end of second 'XX. or total fiscal from up of of the of users business 'XX, users at fiscal quarter second grew at core the to the of

revenue compared second of was the monthly prior quarter average the Annualized for quarter and ARPU at to period. revenue services the fiscal fiscal year-over-year of in $X.XX increase. 'XX, approximately to end of 'XX $XXX exit Our XX% second the million blended year $X.XX increased subscription a recurring or monthly

quarter to period. compared are second achieved for the XXX% XX% net year We pleased dollar the prior retention have subscription to rate for

of second Now and some fiscal for gross XX% margins. color margins gross 'XX were 'XX. quarters on the fiscal Overall,

for the at Our same Product was gross compared services strong quarter to and of period. subscription for margins were margins [Technical the XX% quarter gross Difficulty]. prior year other and negative XX% second the

charges. second incremental the of started During production freight as we we and Butterfleye quarter, a the camera and incurred material result, some

increase from an up operating were $XX.X operating to second on expenses, ended expenses contractors, the XXX $X.X [Technical million to marketing million approximately to basis. of spend employees on drive million, and quarter quarter sales [Technical of [XX%] as Difficulty] year-over-year and Now prior a business. the by quarter or We growth quarter. Overall, increased prior year in compared $X.X the year Difficulty] Ooma

creating the quarter, branding started activities and also for market we Security. During awareness terms of Ooma marketing Home in

from including year the business as of a Butterfleye. well acquisitions. future. as support year-over-year was benefits new expenses [Technical Ooma to these efforts we well to positioned of the in to G&A recent share an increase and development Research a support and enhancements Home $X.X million, longer market we Difficulty], period are development believe features made expected Security growth the the to two on million of Ooma $X.X While the from the business, over branding XX% expenses are marketing timeframe, X% increase a or basis prior gain for the including

second loss same versus of to 'XX the net period or of was per or per was fiscal loss $X.XX in quarter fiscal share 'XX for Adjusted a second in $XX,XXX the loss quarter share of of last the a $X.XX the $XXX,XXX EBITDA $XXX,XXX of fiscal in loss year. loss second 'XX. Our $XXX,XXX compared quarter

of details 'XX. second the the zero at cash of some of quarter cash, on fiscal investments Now we had million $XX.X with end debt

stock-based of $X.X the approximately 'XX quarter. prior in to was fiscal of Ooma The cash used second This quarter generation to in will third support cash the $XXX,XXX of cash and used operations our year quarter now building and as was intangibles excludes expense, The 'XX fiscal growth compared million approximately acquisition Butterfleye provide I well outlook. full guidance year camera amortization inventories. charges. compensation as related of following business,

million; loss total of for to quarter in average $XXX,XXX XX million 'XX, loss is be net $X.XX; third revenue of range to QX. is to in expect per $X.XX of the expected the non-GAAP we $XX.X outstanding weighted assumed net the we have the expected range non-GAAP million; $X.X For $XX range of in be to share shares fiscal to million of

$XXX.X year For Revenue range fiscal guidance we for fiscal increasing be is now the trends, expected of our million in full 'XX, revenue total 'XX. to to million. based are revenue on $XXX.X

to loss in be activities of marketing expected ongoing addition million. $X.X we in [Technical $X.XX. share homes Non-GAAP Ooma is our increase security, the to Given on expect business, to commitment net in Ooma to $X.XX per non-GAAP range net to Difficulty] the

financial us weighted average shares for We for back momentum summary, outstanding and have pleased remarks. it pass million some to our Eric? our 'XX. with assumed positions growth In With to approximately I'll are fiscal XX.X execute we results the that, well long-term towards second business closing Eric quarter strategy.

Eric Stang

Ravi. Thanks

gain market, committed well our on of of a our now FYXX we to new are we We're believe start and and we of and to now us looking and working. ahead ahead to the year. discussed, strategy We're we've and year. have As remain made you. QX opportunity we're solid tremendous the Thank balance QX acquisitions our Overall, to us we market key from see behind bring the open added initiatives. the questions. solutions executing momentum opportunity take feel We the at is this focused expand

Operator

[Operator William Instructions] line Blair. Suri question from Please open. Our your is of ahead line go first of the comes Bhavan

Bhavan Suri

the go-to-markets love should I and and I opportunity it here. Ooma different guess, Ooma just the obviously doing Office between or had Voxter, I understand you're of questions because products. I'd to mid-market couple a how say

move-up you or expectation would but how it, you when placed? couple understand delineation you cadence at market, just seats seeing pleased about to love deal quarters that look then is delineate you a do I with and talked how that just many size? ago? are versus And of Voxter that So how just

Eric Stang

[Technical of seats IVR [Technical hold We set-up to competitor of more big made isn’t don’t business environment. these extension are. easy Difficulty] small it simple administrate business to we still be Difficulty]. but We other nature big segment has specifically like what need a some [Technical of Ooma like really ideal delineate [Technical so for or needs really to any Office and the type served curate, doesn’t well by number an is Difficulty] [Technical system, by Difficulty] use customers' the simple the wouldn’t sophisticated business for and business Difficulty] it features than ideal and a anything appear [Technical and Difficulty], that

design, customer something more UCaaS go for when more, a own. So a some and have need own platform we type a provide lot we flows, functionality the small call we operate customized, If with when Office capabilities, can And from something mail their happy our contact our them. of set they unique solution dial it slacks solution a our business maybe sophisticated that does location for special is of Enterprise their Difficulty] try don’t test build that. do to it on Ooma that. with up their customers even by they product [Technical like But capability, in is beyond to Difficulty] and into a their [Technical centralized advanced with operate customer and our center onsite equipment and way type service needs more solutions, operate Ooma things on to want obviously, and and that and just and and level

step to on Difficulty] So have complete [Technical do apply better for find And going more when customer other. but we up frankly solution, a to segments, activities when what expensive a needs each what marketing those is we Enterprise. we we that's the Ooma more, separate when more but is do efforts

has So share work more our we about together. making really and sure been integration these

XX this parent with organization. all one that store on working fronts about going is up fact, a In just week we've some to been opportunity

Office of would found Enterprise Ooma offers go perfect with the analytics for and it As example [Technical features for Ooma parent going store that front, to organization those ideal custom some Office. be each customer. an want some through but we extra and Ooma try Difficulty] that

a that hopefully, bit you So of we're little a that. of gives how approaching flavor

Bhavan Suri

vis-à-vis this maybe else When I into next just resellers guess I go-to-market. touching into follow the who the And resellers, looking demanding resellers, and and who two to they resale not have just is the up the look would how customers else of reseller guess they and selling the little color of the I case, then capabilities how resellers, be some especially the between too. in else or Voxter's who customization is the at delineate you the -- on competitor Voxter's products a thinking so offerings? someone bit competition the

Eric Stang

Sure, segment businesses has services layer [Technical Office. telecom quite haven’t to added some operator Ooma them Enterprise, for small we'll customer to doing be for you an now not IT and I Perhaps on ideal generally that generate sold follow resellers find once Generally, tend those opportunities other small Ooma needing working customer. and business. the able for or again, they maybe past, and hundreds think a even value but those might Difficulty] to a each Office at owner to where level that's of in be but bring even Ooma resellers, do as they their it are be They up.

resellers established, they Voxter it's had of when not side, became Flip the Ooma, On already team real big. a part of

could to white flexible resellers cloud is sized substantially One to somebody resellers. this any probably And into the where out And grow that way label year a our UCaaS. case, and of brand goals about the We're through forced those that willing than of next decision from choose just it but partners' is much are the for into team companies. of resale else's much we're that to generally, pretty more our year they telecommunications there they've they're vendors stuff balance with this been name. more and under having just and in

hour In built it's and fact, in can mobile it's customize you the app way. that about so labeled, that Enterprise Ooma everything White an platform completely

and they they we're their talk can and can that bespoke what what to maybe as really others. more; so customer; we well; that get for system, on somebody that reseller special solutions; to needs do between can a want between and from with the and dimension provide do the work that's them And own adding we're those out do a for find with; else's willing they kit think their they'll resellers but they to we don't

Bhavan Suri

here squeeze be but go-to-market I'll more in may one quickly are all quick. If questions and my I unfortunately

you to to you go-to-market? On go think also think type or the Is more here think is this customers guys for How a home is to my them hey, do security with Thank as that about this very monitoring we that I'm much, of about. piece, dealers DIY still do offer tell themselves. going you. solution solution, security like market that all there companies, or should a to

Eric Stang

about Sure, starter not our to us, now. the Home yes, within Ooma this kit and so channels we new I'll try talk weeks focus for just of is today one. this But long launched into the

use it pipes didn’t Difficulty] may whatever. underneath winter what leak they're to month, we [Technical We more view $XX, a to willing month or can way self sensors the if we're So didn’t to but they do maybe they building or DIY it's it either expensive augment the it the have, just have, cameras, include to It we doesn't to surpass already $XX, focused you by already as it go type monitor. viewing and instead the a as in what, and to to or include or garage a lot might up have solution much protect two it one know solution, today. it of ways of we're they either added expensive we've augment this. customer for $XX $XX video a their a system an a today frankly or dimensions AVT today, system look bring at got to But

up our remote we it even they can is talk. now home one as So they go their largely get DIY. if yes forward button authority show an capability here XXX and But they alert, focus with if our built-in calls don’t XXX with push the and

Operator

comes line Please question Walravens Securities. from of ahead. Pat of next go JMP Your

open. is line Your

Pat Walravens

So picture. two I question Eric one just just have question bigger

Why to to this I whatever and they back revenue and think million they might is company in on, How step Butterfleye isn’t they the you're you it story, the enough. residential have have and do you Voxter, the going and if many new are camera is and would office there roughly have say, have so to XXX gosh, explain going they things business. Office them?

Eric Stang

Yes, have But year lot we’re in critical together particularly we there these this make of going we way. let do a this on, a as lot investments them are areas. doing, tie what some and common me threats to

There First commonalities of the that you all our are platform works side three described. technical is areas all the significant itself. how amongst for cloud of

and for the In about capability processing a into Ooma other security security. platform alerts home endpoint to memory, provide be in addition, that of bit, to VoIP or our We that little apps up phone do services, home a The to think a put in devices doing we monitor towards always labor with all phone ability a we telecommunications service. not more. And to with system. connect a built as to has DECT, through in just then able lot power, etcetera sensors vision mobile

as of an it might much as adding so on you And think. is not

In fits fact, we well. think it

very brand good have we bit that, fair position recognition. and built retail Beyond a a recognition, of brand strong and

home consumer service we leaders retail America high promoter heard features the can the this with its home position score. up week from XX% some number Tello build XXX We ranked have we gives a Phone of some by than we because security. a again security. reports. think We base That one out others, us we security promote think score. net phone better got in real And very as bring On brand marry and can position as also net service do just phone we like to promoter we

the these and So us looking at as position might platform just nearly have, of brand are seem someone market dramatically from as sales -- because and extensions they the type sales and to outside. we of

buy just degree side last all We doing, and tie I businesses business the said like we're frankly TV I what our run the when small that customers what they think, consumers. some did. for even Now to into find we nature and act TV of as our small heard of as just think much advertising starts our saw residential our residential, reliable, it that ads the tell super us things is about our And us owners Ooma bring to residential company to Frankly, a the do where what super and to high device -- differently easy that super put use, board space, small the had the the is that to business because same in a customer we quality device. to allows Tello onsite we goes base board put that in Tello DNA. same the we inside inside we business business

can leverage brought activities sales of leverage. sense benefits. believe us some we our We you commonality ability that Enterprise gives and marketing it and we the So to And on when then Ooma Office. several look at

Ooma and trading business. said to to build has Enterprise. continue we now brand And much that platform that As gave company. location leads cost team think great us Ooma Certainly, I and rest up up wise does a of beachhead we're most to why positive marry a all, the we're we well with momentum we’ve and a doing earlier, the is which got lower our a built. one of Vancouver, it in what also It I called what

you feels it like to different realized see together from But three it natural. I all and So tie things. can't outside in, looking us it

Pat Walravens

been competitively I'm Talkdesk. I I about guess wondering all so and the hearing you piece Twilio Flex, one terms programmable just can is partnership tell And if center you see have with and saw more, the is which ask contact I'll other in space we evolving, that of us what And a center. how that lot is contact the

wondering I'm contact So do center that see you just area whole evolving. how

Eric Stang

bit a let to two it a They're doing from longer it's with they're now And we say, me on important some different But for bit a And at very contact a be pretty very we're is Ooma think approach. to on makes some of but system. be customers it's bring us. to built forefront Enterprise here have you know, can things. excited discussion about to as a agents And build for than mainly because way of hungry of step up in little That voice. you solution in the rather contact might well, in sense. point. if partnered But around we to Talkdesk. partnership, everything innovative that Talkdesk growing customer sophisticated the it have be which to fits center is built little try And faster ourselves, We lot very still that today want hundreds sophisticated do who center partnership we need. have a level, going

So to us. found be and good them I going for to a where with real strength work we think

of folks and you the contact that would start I market things types see of generally evolving, mean I offer to center others we've certain note. like and terms seen how it's In solutions. Amazon even

a the grateful I want standalone bit we I makes can with featured do, think sophisticated really you And the business don’t them see to have sense solutions the something think but overall they still And now, you as that's to need. a see be up do marry as quite with competitor more as Talkdesk integrated I that what really think customers platform center invest has. they Talkdesk to think where us it and as for contact communications full we what competitor.

if to little So you I it. want a it and offline bit adds hope take happy that

Operator

Northland of your Please ahead Your Latimore the open. is question line of line go Capital. next from comes Mike

Mike Latimore

sales. What customer early, of little on the taking the but the well? a percent is Butterfleye initial unit Maybe subscription the as camera

Ravi Narula

we to it still is double-digit happy double-digit initial upon but don’t for three is it's Obviously, want are take or always This also are have whether packs. depends pretty been is we the -- room a initial improvement and a with buying there -- in pack rate. But give one the numbers, customers number. reasonable I

is the market about features and And ways the rate and pack, somebody the take high we three facial once number features packs upgrade If use as we seeing about other them very say one as stuff let's a double-digit So very, this them. do are three that’s always business, customers, buys how we more upgrade. there. it's them not to have email that provide still can but they can it for those through then the with to tell other we high pack, a it's goal recognition good or

So in we what early are have of couple into but customers. with [Technical of we it's stage, achieved we Difficulty] happy are -- our first the months

Mike Latimore

you for guidance the some as revenues it to is guidance or change same that before? gave here. And Any combined Voxter/Butterfleye then

Ravi Narula

this a just can QX shipping. we plus the had started -- was the foundations, guidance the on last billing million I the benefit quarter $X mean it foundational portal, for now whether I infrastructures, If year, I more given is mention Butterfleye it's building exclude whether tax

expectations our performing terms be Voxter the that the in in given. can had big previously a revenue the full-year. of guidance includes we're what per for doing factor factors I are might numbers not as for think it's at think I minimum together I terms both and guidance one the of Butterfleye in small very of But revenue say I

Mike Latimore

And think said or large strengths order you you that to a related some said. that from I you had products telco of the an residential segment? Is of hardware business then that

Ravi Narula

on side, the more yes. residential It's product

Operator

Nichols is line ahead B. of question Josh open. Your line the comes Please next your from Riley. go of

Josh Nichols

ask. a to Voxter Real next fiscal help leverage the that I is it did little year? quick much and you Butterfleye? staff And like bit works operating as Company how translate investing ramp how and want into better might to integrate frame sales up Could some the

Eric Stang

Well, this. think versus generally measure a XX% by industry revenues or any on I'll to more in spent I And I were sure, But we will on about and competitors the have XX%. Ravi significant on think just engineering for of that's investing start R&D -- but I am development. QX, say amount

overtime give us flexibility So to want into don't to know investments add, Ravi? going if will that we're spend to direct you elsewhere. and I grow that

Ravi Narula

this terms have year still fiscal to that I XXXX of we previous in of still building as these mentioned invest goal infrastructure, done. in the think and I right, are ground the so calls, are track into You're what expectations -- are on towards similar mentioned be our tracking become acquisitions we it had. that we and or accretive, Voxter when in earnings even work both -- should we had do And we expect Butterfleye getting

these we should benefit In financial have benefits; two once built it scale. of the some come from terms the leverage, secondly, we will seeing I infrastructures sides; and start think of

passing percentage Ooma high you're margins leverage revenue to But even we we need the the grow mentioned, we financial from seeing R&D goes will the is versa. is down whether of a the Those As should scale things as R&D should in it or and sales and would the question given Eric line. right, these start pretty grow -- are start earlier or faster vice Office then as benefits, to bottom be And up. goal you go leverage Voxter up revenue, the help to more. get marketing money and will coming us our spend

Josh Nichols

that margin coming we want a then enterprise -- And enterprise subscription you tends gross well, and think particularly security profile the mentioned of those subscription along solution. offering. Could as to little see you services should talk to about ask, offering home to good the was I the bit with I layer as things on? revenue the that revenue also know pretty higher cost how

Ravi Narula

are In until are Obviously, have we into more. as generally now in at security relatively enterprise, we is should for subscription margins point add time. accretive XX% Right more speaking pricing subscription today do this we state the Enterprise now, services higher are help. so be but million investing the margin, margin continue should higher believe the Voxter to the they'll and price services building this but Ooma -- to we a be I add security, home to obviously home customers

services. margins I target So subscription in long the expect aligned our term long with model for should be do term the

Just a they Ooma as security long-term is of XX%. services as Ooma believe reminder, well home well XX% target. model And I Enterprise Josh, our that term subscription target as with both fit long to

Josh Nichols

guidance to last be good I expecting cadence materially And the a the case seasonal? some that of see me, and the holiday still for regarding question then that of QX the seasonality. do Are you business a season, you revenue or subscribers during a year. here are and is less And stronger for just ask typically want to have you base how bit steady expect selling given eddy more less little growing to

Eric Stang

does ways. a bit cut both It little

make the we surprisingly side, quarter, on As things do we businesses do the there the aren't kinds through busy like themselves side, very the the things Black holiday. specials to also or changes that. or but off holiday do periods I where business They then not lower think holiday these the see quarter with taking looking much. of some are on added momentum or And might Friday be as some residential for over time

balances out but a difference. bit on a seasonality dramatic bit all it QX, not little think I a of in maybe little So itself counting and we're

Ravi Narula

to the as these what the now John, at to to much throughout just needs three, XX% side. with XX%, even lower we is before and days residential be but be not more years more was four residential year prime going the throughout, revenue happens used the special around day, seasonality on happen business be than of they with

Operator

I this are Instructions] back like further [Operator over questions turn closing call remarks. Stang time. There to no for Eric to at the would audio

Eric Stang

say you support Thank really We for time call your you. thank to appreciate thank everyone quickly Ooma your to I you today. and just want for on this today.

Operator

conference call. This concludes today's

You may disconnect. now

Ooma (OOMA) 28 Aug 182019 Q2 Earnings call transcript