OOMA - Earnings call transcript Q4 2022

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Operator

Good afternoon. My name is Emma and I will be your conference operator today. At this time, I would like to welcome everyone to the Ooma Fourth Quarter and Fiscal 2022 Financial Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a Q&A session.

ask during to [Operator time, like Instructions]. you'd a this question simply If

to again your you. you'd withdraw If like question, you begin Mr. may [Operator your conference. Robison, Thank Instructions].

Matt Robison

the day, Development. and XXXX Good Call Inc.. I Matt OOMA, name of and IR am Emma. Thanks Director Earnings welcome to of Fiscal Fourth everyone Year is Robison, My Quarter and Corporate

fourth section Shig the replay today, Events today a available evening, call A available OOMA's ooma.com. information in CEO, of release today's PM active its will week press this CFO, with OOMA This from webcast of and being closed market telephonic is me be This Eastern are call and this included of This Time. XXXX and Hamamatsu. the least on year the a for is be link replay On Presentations Stang, After website. page one release. Relations for website, fiscal earnings for release. accessible starting Investor quarter issued our at on call also Eric link year. for X:XX will of live is the press about [Indiscernible] the company's also is

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

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

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

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

over hand call Stang. CEO, will Eric to OOMA I the Now,

Eric Stang

with with joining fiscal was And off a pleased our year. QX increasing we while us growth our representing us revenues million have year many one and Matt. expectations fiscal outlook of Welcome in year XXXX XXXX, you, fiscal representing our growth to $XX.X everyone. we up for underway $XX.X initiatives kept for year-over-year. an We Total million, you for I'm million on to fiscal and QX revenue the EBITDA talk $XX report million, you of. OOMA's increasing our QX fiscal our million. our for today. and generating Hi, accomplished growth to also cash XXXX fiscal proud earnings about excited of We XX% was upcoming full XX% I'm and $XX.X to we're FYXXXX Thank to Thank year. this XXXX $XXX.X XXXX a drive exceeded over hand growth ARPU, call. strong from year-over-year.

at of made also FYXXXX, we our in proud future. back the Looking we're investments

beyond. my I I As this today, in put during go place of which through highlight we hold a number that and growth remarks tremendous will potential for in opportunities year FYXXXX,

execute though we enhancements marketing core strategy growing to at enterprise feature and first and through progress our SMB revenues in QX, sales subscription our continue Looking our expansion. and of

added SMB individual caller of caller ID, control desking, which work which as calendar and ID, Office Microsoft XXX. hot G shared features with and customers, allows our we For Suite integration facilitates such dynamic Google spaces,

growth plus to of will larger I'm upcoming for Pro range development which businesses of ARPU year. of continued Office Office. plus and launch We our track in report to facilitate extend QX further to remain Pro this Ooma features pleased Ooma even our also we serve tier, on

with our UCaaS integration For management Jazzware launched control cloud OOMA's our for customers, to link features Jazzware's enterprise solutions. and service property we of

to together OOMA for industry. for is the plan features Our Jazzware hospitality enable advanced and

with effort the Enterprise apps believe Enterprise. of I'm to report interact our of the of pleased users admin modernize each We this we that half also portal. new In ongoing of Ooma year and our our an complete first we regard, in with update this release ways the mobile to will updated continued Ooma

seasonality. did of face headwinds XXX some One Office in by exciting although fast group OOMA On users. progress, QX with particularly franchise for food intensity the new we customer QX the and and front, marketing good with a large typical we sales driven made over Omicron

franchises representing and firm, bringing locations firm. ware XXX six recent launch new of total XXX users to we services with than more are build now over new In nearly this in properties with seeing our large added [Indiscernible] QX hospitality, also the users since us in of landed a integration. franchise X,XXX We our of backlog opportunities

effort new made channel in We bars with All-in, sales are part good QX. XX QX, our in through and also over continued partners expand business our and of we signed resellers. expanding as progress to agents

at to largest scale lot users. a accomplished our QX more enable also We in to to customer rollout

this time through we QX coming, that the expect long rollout been the will begin While has of fully a in balance we year. know and accelerate

have quarters, of for In addition, over efforts of us our customer. this opportunity expanded last scope longer-term the the through with couple we

And immediate we taking Our in expansion made Ooma users, us users goal, total. XX,XXX are we we plus AirDial. XX,XXX announcement as stated is that that achieved, to to Last further we approximately previously, the anticipate is exciting introducing once add quarter, follow. will

rather on development, to to quarter, timing. year are late together beta customers. we from opportunity. already and market over T-Mobile certainty recall, that production use We continued QX. you'll replace backup, home and are sale at with ability see will internally challenge this solution upside and the offer significant that combine announcement signed OOMA and who also Telo excited the our quantities will growth internet home AirDial in offered. serving business home our and analog-to-digital potential demand, At more by this lines supply but execute until to battery for working be is been on AirDial to phone. units anticipate opportunity have outlook being of conservatively demand be through internet our strong customers Telo only not our Nonetheless, FYXXXX T-Mobile we and made Currently As Internet have controlled and applications. pursue LTE units. the provides and building has Last AirDial for critical copper underway customers market conversion, T-Mobile's time, XG Ooma AirDial T-Mobile will we to forecasting units available this multiple starting resellers. we see a market to are AirDial we we build significant reception The build want management, and biggest we have this to in for network remote exciting actively by We're plans working wireless and

with As T-Mobile, early of marketing but is potential included option day joint too T-Mobile's implement experiencing of Telo to and website, now, partnership. as on still underway work the an every this sales We're full forecast to initiatives. add-on other is

and applications, forward serving customers. our look We see leader in have we SME growth. foundation a believe for of built we we a today segments, target as select ourselves customers, solid enterprise each FYXXXX, As to residential

serving We Online at strategic a is we ours, to have approximately users build X.X competencies platform are are sales. marketing and today. million sales and reseller robust end-to-end scale, investing built that operating and channel of flexible our very direct large

America now extends extend North other scope beyond to that the of Europe world. we'll regions beyond and Our to soon

not also charting include Overall, connect, only and but integrated as AirDial. growth, generating own broaden to We Ooma services we're Ooma operations. driving are our solutions Fi, increasingly from cash we as direction flow positive such Ooma our - Wi

businesses superior Strategically, communications value to create foundation ease-of-use, services worldwide. that growth. and today leading strong remains a related accomplishments vision uncommon features, provide advanced future Our to for our deliver and

FYXXXX in find to As for this and growth. we focused priorities are we implement seek vision,

First, a Number customers. to stronger Pro, launch marketing business to and develop tier execute has grow In our sales X, brand particular, expand new continue Ooma recognition. and intend higher to Office sales. verticals service build and which to to our channel sales we to activities

copper number Number As this bars We'll with we with expand in our customer. X, intend and rolling that for sun-setting. new large and by in to number part work to of support largest out part grow a of expansion on channel AirDial plans strengthen users are our to achieve capitalize FYXXXX the this, Europe. resellers. agents to of we service achieving lines replace X, our as Number of

create serving extensive be steps X, transition first to added Connect, have both place leverage and value solution, to With Internet this. the growth. number Our the and the this And opportunity. in T-Mobile XG Telo to with we leader solution most offered and the XG Ooma finally, best drive and intention is by achieve to the

more more have in year, also a than discuss then now our outlook you lot in to As closing ever results I us see, have can this return CFO, over of some and we before. to front call remarks. and turn opportunity the accomplish our detail to Shig, we will while with

Shig Hamamatsu

related achieving exceeding accounted subscription customers in than business I'll of On the our total Non-GAAP quarter to services was quarter another guidance $XX.X the from growth $XXX.X more total our million in and million Eric. afternoon, and full provide fiscal a $X.X services $XX.X and XX% prior year-over-year million a results, with full was to services you, the in grew of million compared our our million towards growth including delivered of We in as and full good quarter full-year revenue basis, subscription exceeded $XX.X fourth million. a to OOMA XX% revenue, future. prior $XX.X fiscal the of year income the which growth the basis, for by range results XX% everyone. million. subscription and total progress revenue net revenue the million $XX.X fiscal million compared And gross XXXX for year business review first $XXX.X revenue and was for with revenue, and and of begin in in then year driven the And year, financial year, business net which our near the fourth On for in Thank million, guidance driven quarter, make fourth continue strong revenue. to strength range representing 'XX $X.X margin. of subscription outlook quarter of services financial achieving revenue we income XX% expansion to coming total subscription services OOMA XX% $X.X by year-over-year, in XXXX.

services Ooma XXXX. year for revenues fiscal revenue details driven year-over-year and as QX fiscal X% as both XX% by on year growth. revenue Residential grew our some services and in ARPU and well XXXX. of QX, fiscal grew full and subscription fourth and XXXX, Now user business growth, quarter subscription for end XX%

total subscription revenue services compared of quarter. was the in million year XX% total revenue the fourth XX% quarter, prior to or $XX.X For and

customer and which year, products product earnings fixed compared quarter, During million, to strategic of wireless same saw as million increase to the third fourth expected, our $X.X $X.X a we sale our to the we for driven same the of quarter the other period discussed revenue by units additional call. as last in

metrics. core with ended at users fiscal details up XXXX customer end year X,XXX,XXX prior the driven X,XXX,XXX Now the We core fiscal users, of from by growth key some on business the excited report I'm from the represented users. fiscal prior our now that XX% we business of to users, core of in users, year. at the total have which XX% up XXX,XXX end our

subscription the by in monthly $XX.XX average driven users, prior core revenue increased users. or Pro Office in X% blended and ARPU Our business ARPU, increase per to higher $XX.XX an including up mix from quarter, user of year services

for now During new fiscal XX% up Office the Pro fiscal service, Office which Overall, fourth quarter, year office our for service Pro XX% to XX% Office XXXX, tier. have year. for was full of in of of XX% users and subscribed our prior opted the users our users from new Pro opted

QX XX% $XXX.X in to revenue recurring grew was a as year-over-year. and annual up million Our

subscription compared to remains XX%, prior quarter. rate net dollar quarter the stable year Our which for the retention was

For retention quarterly the our fiscal improvement XX% net averaged XX%, XXXX. was XXXX, rate of entirety fiscal an in dollar from which

Now some our margin. details on gross

for million prior for and I The on subscription and XX%, now by or the driven was by the activities year. to were Ooma to was for of service for AirDial. and or improvement the was earlier. channel period $XX.X And our Product and million the in in expenses On such quarter. products $X.X same million margin margin was year-over-year, same revenue to total $X.X quarter expenses margin as higher total revenue, Ooma in XX% from from improvement quarter mix compared greater details $X product X% million, strategic XX% gross the some of customer XX% service prior was overall were business revenue fourth XX% as business. the year year higher year. gross negative by million fourth higher scale Office the both driven million Our well were Total products revenue increase were $XX.X quarter of last for for QX gross of Research operating an This wireless last prior during margin quarter driven mix ARPU XX% up which was sale and a quarter, a development of other year the fourth marketing expenses negative up expenses period new quarter quarter XX% from improvement total customers. up of marketing year-over-year basis a XX% and $X.X X% subscription on expenses. operating for or for in the Enterprise, same mostly million OOMA features Gross Ooma for as basis, mentioned the an we the XX% or fourth total G&A new investments due year. and Sheldon fixed XX% development for fourth had the to $X.X compared quarter. to for the as compared prior over the as

year. $X.XX the quarter. resulted $X.XX $X.X earnings per and the of earnings Our total investments in share adjusted diluted ended especially services quarter were in gross year. Adjusted the diluted compared year non-GAAP of as EBITDA million the a prior quarter of fourth to for million income EBITDA prior to share margin. per $X to fourth quarter The net related compared in and operations X% quarter in year. economies for a in fiscal and the for Cash non-GAAP of at the with or the year $XX.X in $X.X of year $X.X compared increases million net compared last for $XX EBITDA from revenue same period million generated was cash income growth subscriptions, $XX.X $X.X million to as QX was for compared quarter. the million was total and as scale, in million revenue, 'XX Adjusted million the full million with fiscal prior of the end by driven We to $XX.X prior

XXXX, the record was to as full $X.X operations a prior in from For $X.X compared million fiscal year year. generated million cash

and headcount we with quarter ended the employees front, XXX contractors. a On

and as guidance and basis provide stock-based adjusted intangibles. of amortization for on the first for Again, has and been non-GAAP is compensation I'll fiscal year a such our guidance XXXX. Now, quarter full expenses

we be For revenue of XXXX, total quarter million. fiscal the to the XX.X to of range expect first $XX.X in million

customer to guidance product additional revenue products to fixed wireless guidance earlier. driven of quarter assumes ad-based season. holiday also shipment the not range XXXX revenue strategic in half discussed quarter in the first the by The we of will same other and peaks the The in quarter first revenue do revenue saw reflects normalize our revenue level anticipate fourth over we [Indiscernible] of the [Indiscernible] decline seasonal typically the as its first range fiscal normal as

of to income EPS the million range to expect million. diluted First to be Non-GAAP We $X.XX. $X.X $X.XX Quarter to be in the net expected $X.X is between

diluted We the have where for outstanding assumed first-quarter. the XX.X million shares average

For $XXX.X full expect $XXX.X in the million. total revenue XXXX, million be to of range to fiscal we

Let XXXX. guidance. me revenue recur context not to you fiscal $X million XXXX important additional remember currently give of fiscal do XXXX revenue a that customer approximately we fiscal in strategic included that is our for will revenue anticipate product It to

assumes reflects X% the meaningful Excluding XX% of will fiscal in point of the business subscription revenue expectation revenue services AirDial second and impact fiscal of for revenue residential. of more XXXX, current half growth also guidance fiscal from represents year. and between our for contribution this XXXX guidance the revenue our growth for to The OOMA fiscal approximately X% be XXXX that rate net revenue year XX.X% year-over-year, the in product which of

the $XX.X significant enables as products cost million to AirDial channel in be to increasing cost range XXXX our to fiscal launched and the services for expand after incorporating locations. expansion income labor, such of net strategy, in international new million of non-GAAP of expect We $X.X

range non-GAAP expect diluted in $X.XX We $X.XX. fiscal for EPS be to XXXX of the to

average fiscal approximately progress pass back $XX.X pleased Eric shares fiscal with XXXX. towards closing We the XXXX, which Eric? objectives. for outstanding In have we while will where for our demonstrates remarks. our to it assumed diluted our made we're strength execution, in very I performance now solid some million summary, in long-term

Eric Stang

mentioned in I investments made investments most and tiers, Those higher Thanks they FYXXXX. Shig. expansion T-Mobile of the partnering my more, positioned verticals outset FYXXXX, new that significant remarks lines, we at in level future. than our international new in complete and the service better Telo and for all ever us copper creating in of in developments channels replacing with solution the for

our drive visibility to we will While what have achieve we on improve year, significant FYXXXX clearly in through growth. will potential the the

As OOMA long-term you. building XXX% focused is always, team OOMA's the on Thank success.

take now will your We questions.

Operator

would time, this question, ask like to a I Instructions]. [Operator order everyone At in to remind

Your the from first Matt Stotler Blair. of question William comes line today with

Your line now is open.

Matt Stotler

Shig, Hey, for Eric the thanks and questions. taking

gave a business at looking saw a on customer you some this the off, of adds large towards QX. and in net of First were the the little retention little bit helpful of revenue end year, took It's the we and the a growth. a guidance some step-down, KPIs, year, of the deceleration and and for been down environment And takes, tough it's both a of color early the a there's lot of people. of bit sequentially, in little puts seasonality a

and that going you I some how those And maybe impacted just about saw face face on how you saw, that those -- about KPIs, or potentially. some whether thoughts the So seasonality of forward. factors those if think then of to Omicron you channels what it's those talk

Eric Stang

Matt. Hi, Sure.

of issues question. some in hit the right there your You

phones a middle last brought for what the But affect would up kind was the well the was at pains but can year, users comment. say levels lead we we net on us, at a we Omicron in QX, I backed users add had our adding a run are we'd first of and than last as we is but where we at business that previous We you would bit good that secondary January. January month year of also December I'm December was us. had particularly but bounced us February them do December right. This how tough it? was strong, a quarter we about say the churn with quarter you teething for tougher less quarter. feeling well. launch line the I as and expect, new significant for back QX, did in are running with in seasonality, IP look challenging. at of that If some and was -- of little figures, in it previous a I rates that Five little -- those pretty of the our to business, the $XX,XXX today, back is over and us period, phones

Matt Stotler

it. one Got opportunities. specific helpful. the That's maybe on vertical And then

announcements You potential little in do and the bit still you and hospitality, talked specific How opportunities obviously the after for about about early. additional a that around some -- you hotels think made Jazzware the partnership. it's

the potential some thoughts plays And there? maybe then on on maybe vertical-specific opportunities going that and you're forward, focused So additional out? for what how

Eric Stang

Yeah.

that we want new additional of these powering rooms, features features Through partners, something again, verticals. that the vein, analog You've year, and with that differentiate. us. PMS together way a we're have and bring digital also new to connected with can conjunction, frankly, our verticals to solution special us up for bit level business. And develop we hospitality, causes helping is be with with become resource relationships really develop partners work strategy integrated pretty channel In to question. kind where of we the resellers a to industry unique adjust open finding the work unique in bring up us we've have in channel great to and reseller where because In particularly It's to enterprise more because focus that capabilities UCaaS captured AirDial It's this for channel intending systems. trying our than new is at got applications also, our combined, can are fairly Rather to a individual them. basic we us. everybody, to to something to everything a simply convinced

with We but can some building that that's to strategy strongest extra part feature bring around our have real set this enterprise for I and here, couple talk are time about you year. really come we'll together and when the they dimensionality of but well, we could take they a more target as some

Matt Stotler

Very helpful. again. Thanks

Operator

question next line Josh from Your comes Riley. the B. of with Nichols

Your line is now open.

Josh Nichols

for my conservative you're T-Mobile elaborate curious you any your opportunity. like to traction on on stage. I'm you're an mention little please? did relatively seems you that longer-term realize the T-Mobile, given for in seeing. commentary revenue like for I taking touch how interesting guidance of Thanks question. can a Could I'd what it's early but type early on it's stage, like being this bit, year And make that you side

Eric Stang

what feel millions out and that play together. to they've have that customers happy T-Mobile's the double their exciting, It base at users starts the try about look we solution, Yes, intentions some Internet They user market building comments the call I and as I'm but to That's to. can back forward alongside re-quote talked to you next to Internet. their we has service few own to spoken what I very around space. phone committed that. won't sure effort with think They with want have and said, a they look of home are years.

want the where have in from addition, switching already solutions us. in to between to may two to some they may fit natural cable-based continue a both away customers services switch. order And both get be of and there's So they

will of we capture meetings the as next to partnership on them great opportunity. this to We marketing together and work to try a do it's a So develop planning this. that with steps cadence have happen

be, So click section that far, numbers as on said sales every I day can today. is service. their could the you big to Internet, get But would happened you website. there's not buy phone this section been on home a We're seeing that, only thing also what early it's compared but I When stage. say to that's it's from put up

to we We you want our outlook. unfolds. wait forecasted take for have because is I to for think it bigger that the -- how we planning should forecast in about low asked if that forecast it fairly it a than year, much units in it how today. We much we this how our just forecasted they we be number what gave many us we see

It's just more let times at and thought by developing January now, visibility that. but but well now. give bit it easiest time, a So little we this, I the we'd -- to have December me than this right pursue leave were it's can you

Josh Nichols

to clarity really provides sales of good to some that and allocated Historically, has on That more. Thanks. just revenue and then touch been company's one XX% the marketing.

the interesting have One perspective of is you in really that least the of T-Mobile my things with idea at wouldn't a lot those expenses.

be T-Mobile? may How that some partner You may fair is you that do joint with or we think about going to the -- should marketing have assume there is Is that some. to flow-through? to

Eric Stang

enabling doing efforts. No. What we're and with T-Mobile, their we're sales marketing

that, special their enabler to offer for customers. put have from a want the do. We them doing to we're together they really aside an things But

just we're us joint the far website, on plans discussed between to so is more Internet both of that. but than And their do

Josh Nichols

queue. question last me, then for in then jump I'll And back the

going Is the be more to front-half, should dollars guidance? EPS allocated going be are to? Just I about there, what we but of those a some revenue sense back to makes the year, guidance Where going built in think year-over-year. it side investment I said additional down to on How the be to elaborate given the of in for half-weighted? you've bit, everything little and looking is the services side, think operating at know that's guidance the this

Shig Hamamatsu

growth. of growth as whole than want the With question. the be to channel for going on invest bit And before, thanks in piece of and Josh, as Yes, to into I continue little is And that's drive the we've drive to to lower to be in -- said we business respect probably of marketing. the the spent I a investments, before, like side areas think the the we user biggest to side. to said 'XX, development XX%. Eric That's about we

the channel out largest model And 'XX, trade we so travel pandemic across expansion. general, that pick the see a to other end revenue unique we the about, and general which intend projecting also [Indiscernible] OPEC, customer that's that but spend probably the towards to so of [Indiscernible] next second is come of a And be front, up percent the about that ramp XX.X% customer, us By increase spend then of a of in the And we insures in of behind think cost And That development, the piece to shows we originally I labor, that to between the the in FYXXXX. talked that to half like past. of activities here, of on not because that the year. see in low we those largest said mid-term talked my as market. I of probably are still a also that some can to into which one hiring more normalize, as something say as timing that just were that with a and in of investments FYXXXX moving remarks, invest. in just with but we But in want there's we'll start areas it's that things in in XX%. range marketing year, we level that and way, in

So hopefully color you gives little that there. a

Josh Nichols

Thanks. perfect. That's

Operator

Your of Kiruba with Sharon next the Capital Northland from line Markets. question comes

now is line open. Your

Sharon Kiruba

it? you're you Sharon what please about on of behalf for currently this the are Hi, the Latimore. talk AirDial pipeline is for Can marketing and strategies Mike using

Eric Stang

Sure. Hi.

can which they or will that year. three the that It's four see ways to We that do spoke their we more who, produce this We through don't is go market. to than So as into in product encouraging. the One resellers I bring we go now the can of pipeline much even add think up AirDial marketing. know to. earlier, needs channel enterprises we we need pretty is

to replace are copper solution. real column some And be We be the with to are solution. or able that type of have finding a offer distributors to some lines able said want aggregators the need we who Cvax to also seeing

us signed mentioned, So parties with already I AirDial. to for market those multiple going to activities work on we've

I a it. in interest think lot of there's

flowing get I to think quantity. us products in and going everyone's it get waiting with for

Sharon Kiruba

Okay. this will moving And they Thank internationally? you materially in year regard think that largest forward you. your do be customer, with

Eric Stang

Yes.

Sharon Kiruba

Okay. Thank you.

Eric Stang

Sure.

Operator

comes Your line Matthew the Benchmark. question next Harrigan with of from

now open. line Your is

Matthew Harrigan

Thank you. to, and Reverting you back got to the alluded growth feels target initiatives that's number a I priority. model of the know like it you've

on Is even bit growth, transition versus the Shig's going love If for from objectives probably a been on? ROI this you is the and timing you to that that margins color-wise. flux get level at sales have of in know the off tap can devised even timing bit there to maybe the opt immediately, some all tweaked predecessor, the of to long-term if long-term this -- the little that sense by the out long-term I out but activity variation a new mid-term model? there's any Thanks. any little off initiatives pushed I'd you margin that to trying going some see getting but the do know of and you're by of or reasonable

Shig Hamamatsu

for thanks there. Matt, question that

I the I'm the and in about, total when in Then think subscription gross margin aim looking long-term talking margin We to feel model, past. the the subscription mid-term, model good I at this about now, to we be XX. margin. about to XX I'm mid-term XX do we talked look at XX in

further right business we're it, user with that's of when scale in ads a XX%, think we business AirDial I the and and ramps user. middle the as and side,

a have we improve are. from to we think continue where we path incrementally to So

feel we data number the one that's about So subscription, point. good

product I past a margin a this customer having of quarter, total reported function to quarters. two a more we but strategic -- think XX% that's gross heavier know total mix last I that

more it I So next our But and subscription, last past towards beginning as excuse expect anticipating do second a only XX% did mix, year, to those. improve year, product, which mix X% I this tilted half AirDial, to mid-term means changed a and us year, going said, in not half is bit. next that the has X% data half little at was described revenue of now, more so pretty last keep past product on just a gross product. shift going pick well to the between long-term model that that we're of into component right the we're into XX% probably in about that margin that QX, that that it's think we point in -- be and go happening should feel half question, revenue me, of bit. expect one towards I little fiscal or because see to your first That's so a overall, more good go product on year subscribed this subscription mix mix progressing answer back mix the that overall revenue that year But margin. towards we if mind of up subscription and we meaningful and I'm a to because seeing what which the the revenue product still off I so first ramp share our threw like in

Matthew Harrigan

on some happy AirDial, de do would have circumstance the point? at I'm competition you're you obviously, facto where markets something got getting some more only the the or then And anticipate how kind alternative that's that you have only think alternative. business you or circumstance or the competition and in you're as real curious, your you the of We've of some CY plan the transpoint just going on innovator long functionally getting of to in And and said.

Eric Stang

it The future when that more be way competition, but market competition we and will approaching the is look big we the have. solution the in enough at there's today isn't that already there

-- design out an complete makers through that and we with company solution. have require. a existing now includes product where supply in to solution last this cloud product doing spot to the and to on competitors worked about as and scaling for part in tend wireless the be it we're anyone year we've up unique chain is scaling looking this good service internet we've to and devices maintain ahead small and a but production able there, be tend of while. be product, There things a our get they this just that have in These today for puts don't provide on to these that year to and to as are we environment an we they that a and the we be these we'll been at may up for are and We production very of very integrated trying and to work who What can else put that are with get difficult difficult. is the We're over together be network components can that the controlled us create days we've our today hardware conjunction partnership well, T-Mobile a well. got because

Matthew Harrigan

getting [Indiscernible] Thanks, like thanks, any to going it's Shig. Eric, easier be immediately. and

Shig Hamamatsu

Sure. Thank you.

Operator

Your the line Colliers next with question from Andrew King comes of Securities.

Your line is now open.

Andrew King

how the quarter efficiently sales also, these you specialized they focused? what to taking many for go XX Thanks an force area, idea, really of get partnership Jazzware hospitality my that ramp added to this more to the see in ours sell then and hospitality forward. guys. do off solution just of going that get want Hey, hurdle were to question. with Eric, just of I good services into a

Eric Stang

focus majority know work on selling about an it say the all, to There they the particular, resellers we more that they with or easily those what success do when that can type there excited it's they sale. of and say half Office would say we we'll build. something hospitality be on added and some don't bars Of are because I an I we I that that be started what I about the capable focused more And vertical, would get into one with they be generally and resellers the work all would be find will -- half think perspective, they, company XX-plus in focused it but Ooma enterprise-type on about and a just a So we enterprise follow bars, from we were focused added they're And do up not that on we'd but significant with of in agents larger industry, when type just are find they that focused is on space. I that. recently selling can't have space. would out resellers we're what

are can more success hope is in hotels, where come modern question some with And have in made. motels get you But no, And got comments you in that solutions and case, which as to stuck. way as to the they But developed, So the different run really -- way the takes known And are vertical there I we traditionally grow. sell answered with and that need they've to expensive I we're solution it. I've us you've as your well. etc., looking -- result. it. traditional we though, these for too the the a the just that's at helps it a that more And the we space all it's our modernize of it's way that this antiquated got, kind that

Andrew King

That's any we hospitality also seasonality there's differences the hospitality you sales verticals, that versus process can in any color vertical, in give and the other should just any Then Yeah. us the if great. there's material at in the looking if business. expect vertical

Eric Stang

serve do other our in and underlying, in really this API walk can their can is, to Like the any something but vertical, talk to with solution flexible. and solutions customers, can something doing what's they're With you the needs. about verticals Through customize is for enterprise it's to helps rooms, hospitality to here they it do what we vertical. if also underlying A their one analog the otherwise. space a doesn't large change in front a do desk in you -- this of and well-placed to vertical together to want capabilities both that, based, problems design together mind, is one phones the we're capabilities and needs you hospitality is the use the what modern problems with In industry very we're in we very to or case, put that's but to going modern digital it solution. focus, have. It's integrate issues keep of Also, know we're unique establish need where talking what -- can about how that. key like very of you and these lot at lot we

is resellers any I to In have regard. of market. fast taking it we seasonality, time can our just see don't the little agents something bring them and the this we're and and on how and with the will to growth solution going particular build bit over get It's pace seasonality what a terms in comfortable to

Andrew King

Great. questions. I appreciate taking you my

Eric Stang

you. Thank Sure.

Operator

Alliance comes Partners. question line Kinstlinger Brian Global next of from with Your the

Your line now is open.

Brian Kinstlinger

you. Thank Great.

T-Mobile website, T-Mobile's In like Ooma website Air I on terms to program, exceptionally you and said, and looked to Telo hard find. honest, and of be the the ISP it's

have down, scroll to looking you got almost to it. You be for

deliver times this other you talk and Internet much the ways, do about make to inventory at aware have users lead playing suppliers? can what How and the home when program? first T-Mobile's of to So you the for are

Eric Stang

Yes.

you have first plans this get that really on they of they're us they're are last plans kinds of since do been put like from do. for think, they'd needed website to can I the significantly if they to to it's they've on side, in what to we've the So the quantities see because told partner for don't -- those plan going we place. talk Yes, us I planning their I it. product year. than terms you we've what components planning and that that don't ahead, today. fall comment the in shouldn't do But really availability And unavailable, can't you'll have I on question, into I want get until really more a about -- tell what

cost would we that to probably in them need quantities but scale work through to get Some to more big components would short-term we us up that.

things, that that today to they satisfy more be come customers and us feel to I more well able as it. do placed So we're enough relationship, we'll through

Brian Kinstlinger

margin, margin? then to that impact And Great. that of AirDial. on overall same When And crushes ramps, in piece is to on hardware that piece? widen of the recurring starts the be a the going it's going have the then to once there program results gross terms the what's question ramp,

Shig Hamamatsu

Thanks for Sure. Brian. Yes, question.

a users way and Telo on I way, piece subscription that margin But right a materially is would And or product a costs expecting profile the [Indiscernible] the on first piece, a there's on the they right that Telo, reminder gross we're say total product different and that by not impact piece. sales all premium side. the a on and just product On are yes, subscription side now would have now. side piece

as if of revenue, this I QX and QX, look normalized So like said, margin profile level go it's product gross you to look forward year last at, minus we into a XX%. remarks, earlier I at revenue product into for on and FYXXXX, when minus about XX%

Telo the I range T-Mobile. that's a even good ramp of with So think through

I have subscription we -- and we that that do The reference positive ramp. one also impact product it the do does component for -- side has a think margin think on when our component. a product product that's revenue the you. on AirDial, do So both

And And well. it's there that's positive So it leave margin on way. I'll it by have too subscription as business our subscription a early. since just quantifying a without impact should much as that the also

some gives So that you hopefully color there.

Brian Kinstlinger

so much. Thanks Great.

Shig Hamamatsu

Thank you.

Operator

Your next question Joe Goodwin comes from Securities. the with of JMP line

Your line is now open.

Joe Goodwin

of order year? the Eric, stack taking importance Great. Thank questions. for growth on rank this for you priorities five-part in could my you for FYXXXX, those through

Eric Stang

X happen longer-term developing as will -- we very gross Sure. year, did year number very my believe with We're sales I our serving we significantly will our stated happen but and thereafter. those sales things started grow in four. feel year, off we sales wished, to this strategy channel OOMA with believe happen and more quarter. will our I've That we're with the were new continue and number this to in X this look Hi bring other out ours, this business is I stronger we're team coming going and that some will Joe. pretty to actually, to have sales hard multiyear our plus our in -- in to tremendous is this not We users -- activities. upside. customer us, that, next it's XG last and like executing and and is will We these is beyond we a that just customer. so under marketing for of now, Pro rank comfortable to transition moving to and the something to comfortable it on we're that users year. between not largest achieve and at go, Expanding largest which expand customer. After in things remarks, ready that marketing really challenges, doing hiring what want expand to try Office Europe, but I customers. Ooma to with focused we're -- with AirDial this get before forward before starting expanding belt in to XG focus the have T-Mobile, intending expand our to happen. Europe our transition are Europe they large that at doing verticals

in invested and all are units well, year. T-Mobile we what do I do depending the But market X, they to we sales but four after material, each second all think many I and we response. depend think of on will the them, think in if question four but last build, I in these your don't the first is know of very answered so how marketing number activities I've next and chooses the important and case how can

work So it's done. we're next go as these most actually I lot I think of to four to is say while this going on at do, year, a look the

And Hello so at T-Mobile. least with Europe AirDial and

we I can them like feel as year. So of this well all accomplish

Joe Goodwin

it. Got

then you like about Office do actually Ooma existing from of just Are any or customers to for And me. you're that your you that you you are the sort that. Thank or the existing providing another talk reaching strategy Office offers Okay. Ooma upsell base? upselling question employing your current to -- Can out, to you approach just anything Pro. how

Eric Stang

new feature interested, as we Pro, will in to bring out they existing we reach just as a it's base simple, For them the do what And relatively up let Office and they're take a it from we if show them base our way our Ooma can there. selling out and know. is to

that's the how company And special it. don't do in give the as promotions, an we we have about but do features we do make anything and so aggressive a We're people marketing program like exciting don't we trials, that. with as that, offered too come base tell We not essentially getting along. installed to point free they, they

go So to out when Pro new to our there. whole about plus also this what's us launches available and now that tell basis give base a them year, will customer go

Joe Goodwin

Great. Thank you.

Eric Stang

you. Thank

Operator

you just if We'll [Operator to ask any pause final moment Again like for would question, Instructions]. a to compile a questions.

Eric Stang

Think we're pausing.

Shig Hamamatsu

that, to names talk. thing. users their for named for don't XX top forward along It reader has It's of experience list it's with in our was and and customer of time us. the OOMA Everyone, drive one joining I'll we to named I based tech fun of a time look telling very much today that out something friends experience of helped We and final that that. is It one but brands having rewarding This Magazine though, next were close PC Thank I we the you some a good to with this the We're Bye-bye. quote and I Apple too out us were comment. don't on me best Tesla, a appreciate kind in on recognition was for lot want like of see as put your growth. everyone. on to to a Sony. you, was thank fun see could survey make -- XXXX. focused but January, OOMA. to our fun. team

Operator

This concludes attending. today's conference call. for you Thank

may You disconnect. now

Ooma (OOMA) 4 Mar 222022 Q4 Earnings call transcript