OOMA - Earnings call transcript Q2 2023

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Operator

Ladies and gentlemen, thank you for standing by and welcome to the Ooma, Inc.

Second Quarter Fiscal Year 2023 Financial Results Call. [Operator Instructions] After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions] Thank you. Matt Robison, you may begin your conference.

Matthew Robison

Josh. Thanks and of second Ooma, everyone XXXX fiscal to call earnings Inc. welcome day, quarter the year Good My name is of IR Matt Robison, and Corporate I'm Development. and the Director

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

our presentation, forward-looking meaning the executives make today's During the laws. federal statements of securities within will

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

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

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

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

Eric Stang

acquisition a joining Ooma an comments recent review today. board. you, we non-GAAP today. our address for Thank of talk start income are Revenue have FY also and Hi, XXXX exciting the net order was $XX.X then will of and exceeded about all us. is expectations. Thank My to $X call. everyone. for $X Ooma QX a Ooma's of time to across results a initiatives announcing for Matt. OnSIP, Welcome strong earnings we with of fiscal year and EBITDA and QX million, million, lot XXXX of which you our major This million

than In addition, margin influenced our results increased services the at margins our revenue QX quarter. late QX and occurred with at acquisition $XXX,XXX gross in modestly total very sales, XX%. which which includes to These added by OnSIP, QX gross margin, and of gross are XX% product less of only

quarter from cash Our we OnSIP balance regrow million our OnSIP. also $XX.X with after cash I'll our million in when acquisition, paying going and the forward. and to sheet remained acquire the review debt plans operations cash at strong, Later, $X.X of to no generating discuss

As we Business. underway to several grow you know, initiatives have Ooma

appeal Close targeted Ooma quarter smaller Pro Ooma announced service. larger to largest for the tier, XX% of new we ARPU. our For Office, excluding which tier. Plus launch or businesses, our our at up came increase just sized QX, this of last with to Like Pro and Plus the tier to Office Pro our in a for is way growth to businesses signed our slightly business sized users Office Pro either customer, before, our

Plus tranche are of launching this several features the additional on working tier, quarter. next now features with the to We add these the of Pro to goal

months. made last three we several on progress Ooma over Regarding the Enterprise, fronts

video we and versions and our our desktop, apps mobile launched of planned, As administrator modernized of portal.

significantly locations. we with XX particularly August. sales Ooma It We customer closing adapt large expanded close over Enterprise to into hospitality to a Enterprise. one also install in early new requires customer by secured of one their the and their this XXX devices, solution can We onboard the vertical a expect properties. connect our Ooma for each Ooma to of that infrastructure, users new X,XXX which to of QX, In is also strengths

As we've users in and largest we previously, ramping North now America discussed Europe. our customer both with are

than the to XX,XXX We more through year. balance additional the onboard with expect to planned this ramp originally to year the users this we continue add this of potential

with growth see user further to next now year. that customer continue with great will efforts customer. It's believe this this our full swing in also We

fire Ooma this quarter to lines. are and opportunity integrated operate phones serve is, that with and that lines millions market which copper last security of panels of massive. tens designed equipment, replace One is expensive phone use aging copper USA, the hold analog to significant and is in took in such of most With believe elevator now course, AirDial. solution specialty the of our as new AirDial just for AirDial lines we our initiatives,

were we QX in planned, and making units to able As sales. AirDial build begin

and start announced horizon new that partners, Enterprise. we also benefit with AirDial. We which strategic pleased communications of they solutions, as intelligence Ooma finding expected, reselling opens And channel partners, up additional will new customers report Ooma to relationships quarter I'm including AirDial both opportunity are and launching that some that also organization whom engaged since separately can with Office of installation Accordingly, while themselves, learned or AirDial is is third-party that install our assistance. others AirDial significant for provides Ooma services. and backlog We've installation national prefer will a last anticipated. AirDial daily growing we will partnering as require with

of once. for customer external AirDial. rate accelerate over resources tell at replace to their a is quarters lines than these plan We for couple the to In and at the anticipate onboarding. initially, of phased next influence internal least easy it take will facilitate us all that factors rather growth addition, We and approach, copper some to customers them scale

Lastly, was this analysts eight regarding a to leading churn. publication AirDial the from by contenders of UC solution AirDial, chosen and panel unified report see users prestigious industry thrilled field is from This XX,XXX best the I'm received quarters. a added Business that endpoint AirDial large increase net a award of Altogether, communications QX, of substantial XXXX. you prior among exciting as Ooma an today. for in

our maintain has user to level acquired also Junction in announcement I USA couple as services was our time. businesses like smaller in ago broader as we to just growth as of The UCaaS founded core primarily provides purchased now OnSIP to in from key UC this OnSIP turn strategic a at City. expect New of company enable is headquartered today a a that to Ooma planned the We XXXX Intrado OnSIP, Intrado. years Networks, QX would the strategy execute recently to York asset known sized located on and priorities. in continue to

channel contributing Ooma today. customer with span high customer both developed helpful nearly internally company serving touch activities a referrals primarily churn platform company's used average, opportunity expected in And Ooma experienced to well-respected about been each strategy by business aligns OnSIP is in all changes customers, solidly led comprising to Ooma smaller The $XX users and own what go-to-market strategic more revenues support. direct add UCaaS million and in sales serving today least is quality of these businesses. this customer operates through partners is In OnSIP company to OnSIP several provides XX Ooma's leader represents XX and be many Intrado's direction size. XX,XXX users. approximately The employees, respects, low, for starting OnSIP this also acquire year. years. to On a and solution has OnSIP and million in of OnSIP's designed OnSIP The for and experiences small its to is is whom for approximately level customer well known growth. that a approximately than that are be annual OnSIP fixing businesses. However, not high performing sized accretive its require of have does QX highly the with to at cash. for X,XXX little for sales with in $X.XX in to

what transaction substantially a are spend users clear Ooma. is this existing just this from we via The economic highly than and Now activities. a is us. acquisition win marketing We to for our obviously, average in currently sales new transaction less acquire amount believe alone attractive this makes purely standpoint, this on for spending we a

scale. at to maturity on believe to In expenses the of business. OnSIP's drive increase based synergies margin can addition, anticipate we We we strong can or above high platform, we estimate profitability of and bring OnSIP. the operate we unusual given gross through revenue our not XX% OnSIPs do we

inorganic operating criteria our all is up focus Ooma can year. as accretive OnSIP respects well we in QX purchased OnSIP almost for that our spending in a of starting attractive with is fits and the lines an business on outlook, be resources performing in inorganic be which valuation. mentioned As such that this opportunistically business is growth with and which on to growth, a for previously, our segments size for we perfectly Strategically approach which to of include

implement to for upgrading takes seamless that solution Ooma point advantage OnSIP ensure experience for by future plan go-forward in for OnSIP is to them the capabilities feature improve users. of Office. OnSIP take users in at available rich more some to This will Our process to time a upgrade the a now

In functionality to accomplish basic OnSIP already we to will a our addition OnSIP, phone incorporate Ooma certain By first to Ooma support provided call features on models. features capabilities add additional enable IP of to the this, and Office Office wider and center for range including that now need only Office are large, by we Ooma we're roadmap. into

now two to sized two next to front, to spending next of the with quarters This OnSIP, to However, for we development bolster over larger sales accelerate R&D acquisition attractiveness increase our plan reasons. Conversely, the help will the and our these customers. marketing also the four these roadmap Office to to is trim features. the of two items Accelerating quarters. on over increasingly four modestly plan of we spending modestly Ooma

fund first is are that R&D the planning. The to we accelerated

income second The reason operations. net to flow cash and is increase from

XX% OnSIP. marketing approximately the industry, running XX% this revenues to half expect the inorganic back significant evaluations other of of to of spending for depressed realigned sales increase revenues, are take R&D the to should year. users in To our at state come excited in advantage afforded and of the future approximately growth result ourselves All-in, we we and to they we in running by would position achieve summarize, Given in along. opportunities our like at

turn some integrating outlook OnSIP spending establish our over at Shig? our also achieving more the results detail with the advantage We're Shig, further call for return is to and then focus this I consolidation. realigning operational synergies. industry of remarks. time to Our flexibility to primary team in now on and our closing discuss will take and increased CFO, to

Shig Hamamatsu

you, and everyone. Thank good Eric afternoon,

acquire I'd OnSIP XX, $X.XX I payments We like second Before about into to second paid cash our results, OnSIP dive of the other aspects financial quarter. details the of and this the no million in quarter transaction XXXX, completed before end contingency we've provide on acquisition. there to right the of for financial July are

EBITDA more acquisition OnSIP contribution mentioned than is realized revenue cash subsequent expected make quarters. current flows to Ooma. is year be fiscal in to The and adjusted Ooma's expected slightly the accretive as earlier, the add to million $XX to As the annual of quarter in and to starting OnSIP in operational Eric of Ooma's are synergies fourth increasing profitability

outlook $X.X Now, fiscal last four days to financial for million year quarter in from another and review strong revenue quarter delivered our then third total quarter. I'm for services provide going the subscription which and our revenue, results second of XXXX. $XX.X financial results the achieving and nine included approximately of million the quarter with We OnSIP the

total $XX.X million QX grew our driven by of Ooma basis, total On in prior revenue in accounted and XX% services subscription revenue exceeding at as in quarter. the for quarter year-over-year XX% came strength Business, to which compared second the to OnSIP $XX.X guidance Excluding $XX.X for revenue a million year our revenue the of XX% range million. quarter of contribution, the

other million Non-GAAP which close the profitability to million. in net In million, at prior of quarter. to income was year $X.X certain addition, to the our $X range revenue product due in million accessory impact QX The also the our due primarily second to that transaction for of million came OnSIP the to of was given very exceeded closed immaterial the on compared sales. $X.X guidance as end quarter $X.X $X.X quarter, and

our on details Now revenue. QX some

by growth. impact OnSIP, of ARPU subscription XX% Ooma growth QX the well and revenue as year-over-year. revenue grew and driven grew year-over-year services Business user subscription in as Excluding Residential services X%

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

core We with X,XXX,XXX quarter of some at second XX,XXX key at metrics. connection Business from the core includes approximately ended in customer users, end OnSIP first The transaction. core users quarter X,XXX,XXX details users of the Now the end the second our the up on quarter. acquired users the with

the quarter, As quarter largest of solution. an from XX,XXX increase additional Business users Eric also to had or customer from in our as of XX% they core XXX,XXX At mentioned end earlier, deploy our users the the users our boosted QX. increase of continue second during we by was total core users, the

Business Office for $XX.XX, the ARPU, very users, $XX.XX core quarter monthly increase as from excludes users X% of year average including by was in higher completed to increased services the acquisition ARPU blended of ARPU revenue and Our quarter. subscription Pro QX the close prior the an driven and the per of Pro user, in users. or to OnSIP year-over-year impact up mix end

subscribed the which have now users XX% or healthy second these in of the Office take a tier. see continued Plus users to XX% Office Pro quarter. tier prior year During Office Pro quarter, our with rate we and XX% our Plus of new Pro opting to for Overall, up services, from Pro higher was

of the and million grew QX, to XX% year-over-year. was exit up annual excluding recurring revenue OnSIP, impact Our in $XXX.X

subscription dollar A dollar retention as quarter was XX% which retention is function the growth churn. few net compared in first and the to a about Our net for of our XX% and ARPU year-over-year quarter. words rate rate,

quarter. second As customer, in earlier, our the largest of robust growth slowed rate we the ARPU growth user mentioned which saw a from

than with our As scope can engagement. its you user lower base average and imagine, given of large size has a a customer customer our pricing business

which to users a from is However, Office. growth Ooma priced QX we Business incorporate as expect upward in the closer we better OnSIP,

margin. Now some gross details on our

ARPU year. an second The XX%, margin as was increasing Product and gross margin and was XX% XX% in gross a which the XX% in negative subscription mix second for improvement scale our for to greater of last quarter the services same the and from services higher Business customers. period and negative other year. subscription margin gross driven was improvement the quarter Our by compared prior was for

for both gross The basis, quarter higher of XX% the accessories was as sales income for for million expenses drove that QX XX% certain features our quarter. product as and revenue operations gross revenue Ooma of from impacted overall favorably On in margin prior compared to higher new Non-GAAP margin by second year quarter $X.X or of investments the last the to total share product well an and was the earnings was compared to AirDial. year as the same as $X.X in as the in margin. QX product Ooma services for quarter. this Ooma gross of the expenses. compared and some of quarter. million details related share quarter margin, for year acquire was in improvement well to gross million in net operating Sales new was subscription for Research XX% operating revenue the The quarter. for the $XX.X $X.X $X.X earnings expenses second And on prior now development prior margin Total income the to $X.XX $X.X total our included gross expenses quarter was which in improvements for attributable as year-over-year million and from net diluted year. year-over-year, for of revenue, $XX.X a up X% Adjusted $X.XX revenue, investments marketing year $X.X from total $XX.X by the period total year. compared OnSIP $X.X second compared costs Business. year-over-year last prior the and for ended per XX% million operating the quarter, generated transaction. million such period million OnSIP with million up channel X% by We the the in higher products or with for were G&A quarter Enterprise activity Office marketing quarter second million driven were per of $X.X after same $X.X or or Non-GAAP excludes quarter quarter. of million second Cash total connection or year in were up were on approximately OnSIP. for development million XX% $X million of million as acquisition XX% Ooma million, total of the second to driven diluted as expenses quarter or expenses, XX% the paying of million incurred the and basis EBITDA million to in $X.XX cash $X.X total $X cash second

the On members which quarter from team employees with new ended we OnSIP. headcount front, X,XXX contractors, included and a

will I the third year for and guidance Now, provide quarter fiscal full XXXX.

basis Our is non-GAAP expenses charges. been amortization compensation, for of other acquisition on a guidance as and such has related adjusted intangibles stock-based and

the the of includes a acquisition Additionally, guidance quarter. starting impact third quarter in the OnSIP full

quarter. We revenue similar fiscal expect the of million had the the to we for XXXX second in product total level be includes other of in which $XX third $XX.X as of to a million quarter range revenue and

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

XX.X for outstanding average diluted assumed third weighted million the shares quarter. have We

year million primarily in $XXX.X of million the year. in full we to the to $XXX.X $XXX.X of The guidance be second year addition million. previously the range to of the For of issued fiscal increase this expect revenue for to full total our increase OnSIP revenue range revenue half XXXX, is fiscal million, due range from guidance $XXX.X an

remaining XX% currently come products subscription to mix revenue revenue revenue. and and revenue of of X% we terms the services year, from the from other expect In for total and

range million. range from We in million, issued expect income the million guidance up $XX.X non-GAAP XXXX fiscal million to previously $XX.X $XX to of to net our $X.X for be of

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

fiscal this weighted our guidance income XXXX, to We color the Based average that provide our the like X.X% income estimate of guidance EBITDA the from were given of of be an fiscal $XX.X million non-GAAP net fiscal have the million net of X% and on This revenue. beginning of assumed additional on adjusted original represents EBITDA million approximately shares non-GAAP for I'd margin increase midpoint year. implied non-GAAP guidance. the at to of or outstanding diluted income for approximately $XX.X updated midpoint XXXX. XX.X range million for full we our of net $X.X year adjusted

factors. profitability updated guidance reflects following Our the

more sales year users the approximately XX,XXX we spend second our in to the successfully and we through effectively about as quarter. target judicious the Business be XX% level half and First, cost second be in approximately spend of fiscal plan OnSIP acquired to of revenue marketing very this

few Second, Ooma quarters ensure our we experience R&D features Business to our for expect customers. user Office to accelerate consistent spend the align the and next over to enhanced OnSIP and between

in it building be advantage focused we allow us cash $XX and Lastly, in million both on and executing opportunities inorganic to Eric will back on profitable our are remain strategy remarks. long-term on quarters organic growth now closing for take execution initiatives to next pleased to growth solid Eric? over few to future. to we'll our inorganic In during of I'll balance the with quarter which focused back growth. the summary, our the pass achieve some

Eric Stang

exciting time This on expand enhancements Ooma fronts. a investing multiple flow believe drive AirDial debt-free expansion, we Office, sales and investments made these in significant of you, an operations We for Ooma growth. future Ooma being certainly for new initiatives expansion maintaining Thank international now channel and balance verticals positive while Enterprise, is for cash the generating Ooma now and sheet. is Shig. OnSIP. are from underway also can These as acquisition

them With the Ooma. experienced pleased I for would part of is OnSIP hard their Thank to have like employees them The highly your a also and Finally, are questions. you. commitment OnSIP that, Question-and-Answer Session will thank team to to work. now Ooma welcome become we take and and the team we

Operator

Stotler Blair. from comes with question Matt [Operator Instructions] Your first William

open. line is Your

Matt Stotler

for want the just on off Maybe questions. OnSIP to the Thank with start you taking acquisition.

much migrate I there like go-forward there those Ooma double-click kind sounds Just asset. of are to the portfolio things are It customers strategy wanted like what -- the that very products. that sounds the opportunities some OnSIP base over strategy, additive provided to with core today. on more in guess, customer it But of of obviously also you that kind eventually one is to to feature-rich

additive to value love kind specifically for customers. forward going and I'd will for you portfolio on you that what's how expect So, just and of expand add double-click the that, on guys

Eric Stang

Yeah. Matt. Hi,

want of to serve OnSIP's first customers So, effectively all, as we possible. as

than if a we to migration, make really an from want of this you consider And will, it their upgrade point rather so view.

so, the features great incorporates stronger customers enable that be want some advantage the from they today capability, able with today. they are the has way in we not and in apps, are operate some with platform do today. to And mobile calling enhanced they that business other to what features way OnSIP don't have line in and of OnSIP. Office that Office happens there stronger video a take It things SMS so OnSIP

moving bring part Pro ago, We two how direction. launched Queues center call is on customers very Office towards Ooma fast will yet surprise foundation And There to capability. things capability. going like but just call, in for can to for a would that not It the we're we better accelerate of shouldn't one center are Office, you them which call are Office, said, a our next we is roadmap the overall a but be the roadmap, quarter that able over the mentioned the time. are on available. towards there's a we OnSIP Plus for in that basic tier platform. are So, logical I provide But out. of experience in They couple of for a kind steps Call OnSIP things that

as call We have today center Enterprise for well. Ooma instance, on

we try upgrade So we to advance But before that's to Office users. area we OnSIP Ooma how know it. to do want where one

a being IP bring very on of controlled in amount We've complete their types to Another in network. of OnSIP that very much of job the Office. has models with -- can they been Ooma more the and done is nice phones

were customers build expanding XX% we And too. some things. the Ooma Office impact model to to frankly, of But it's to back some the we're are to that forecasting do going things well. half all-in, There as get areas can revenues to business There and modest XX% these past do are front so, be it's only things accelerate be and this way rounded well. like of other on need what And development that of a R&D QX, on for we're to revenues quarter, as going up aligned. anyway. are year that, R&D

to sales we're approach and our with question. So, easily answers fund spending. that Hopefully, with going that new marketing your

Matt Stotler

Yeah. very front. follow-up the That's just Maybe on helpful. one go-to-market

kind go mentioned and seems on obviously You way a spending this that seats. of higher you've customers it activity. acquisition part take to like And of was marketing a channel chunk and been efficiently of and in nice

prioritized and do from sales to forward, are think to marketing about the Going going you to those front how of on kind you're going be and as press here? sales for marketing where continue you're looking dollars efficiencies? Where are

Eric Stang

We and is with adjustment a users, sales a in on balance brought OnSIP the things forward this doing off acquisition. we if XX,XXX going most calls the the driven that on because know -- and marketing an the huge sales like can board on going most, investors is this But we be frankly, being and be step to and for margin that's little not continue we so just And bit of feel us. of line. word, And with ahead, the to going where that on right -- thing we doing more today things choose and marketing front. to and bottom that, elements also to spend come ahead to in the And we out growth and the we're do. out seems sales for this around significant that think do discerning the way with front. profitability I've can't we're the of still win-win all but little the to all, we're on this. to more we're shared ahead I So, on come year do with how the us on each It we we're spend come faster a margin, out choose around optimizing Certainly, that much like more frankly. and marketing we a ability about doing

sales context of So, today our overall around this spend runs year. to XX% marketing of sales marketing the revenue XX% in again, up budget, mean, relatively it last We're and of rounded in which adjustment, -- quarter, it ran I revenues. the half for -- and of targeting back about a modest talking

Matt Stotler

it. helpful. That’s Thanks again. Got

Operator

Latimore Mike Your Capital. next question comes from Northland with

Your line is open.

Michael Latimore

variables on forward. margin was quarter the here. gents. The Thanks, strong like quarter. It subscription acquisition continue the the Congratulations going that seems the really and gross will drive in that

the think should organic look like? then, So, at this I on guidance we kind might subscription of what blended gross guess, remaining about And any the level? margin

Shig Hamamatsu

Yeah. savings certain And QX. seeing of is and in I took first Yeah. coming Mike, we you improvement question. a quarter, that year-over-year cost drove Shig. saw that what sequentially. but we we a for say Thank constantly, we would One initiatives in always QX. this look that XX% do benefit that big those few when it's some is we're that the initiatives quarter, factors at the the benefit this of into

QX one There So didn't recur. that some in that's were factor. costs

is so, high continue overall, helped But whereas Business ARPU there. growing us increasing the the we revenue, cost that not to So as sequentially a also fixed fast. benefit the do little bit of

users to the And there, is But see XX%, say, we quarter much. I couple subscription let's up to it's in. little next blend a next in XX% bit We see might the some is, we're benefit sort see XX,XXX coming of OnSIP, a them OnSIP margin. not of thing. going question, slight today, we dip we part of temporary below there. so economy And do see we impact we quarters, but acquired XX%-plus the of in in a second scale as So, as think see your what

be But I about think to towards the long-term in still continue think continue we always that, subscription to there, as saving our at continue to as on we do model. and we're users, progressing going initiatives I as to feel comfortable Business we in have, cost we margin that range. XX% XX%-plus we look from the scale pretty

Michael Latimore

Okay. Great.

the of envision are you year? average? then on Sounds that two selling so AirDial, And sort users been the then good. general you seeing four -- sold users back per the have What's in the for are on they unit, And ones you many half far, units any might per of unit? how guidance

Eric Stang

Yeah.

competitively, don't quarter each So, disclose our what sales want are exactly we -- really here. we to

on, a to substantial installed, they we last more sold this And improve product, year, you installed QX about being don't it. which up of the that to able We're than equipment, way customers. XX,XXX installed. quarter working pieces have And working I all rate will But look they're hard of we the was factor second still in Whether those of talked box. until build were it's we show believe XX,XXX our do also we more we going and don't the financials. We how in with I any get get But know. this year. sold to of kind they at

we of line expected. yes, in of two terms which we're with over we're is users what kind average seeing per a little box, In running, that the as

Michael Latimore

maybe of macro And Okay. on your lot or environment. more view companies about it on just sales little What's relates of as emerging kind churn then of longer to last a little Obviously, business? a talked even. have a your bit cycles kind software the that

Eric Stang

think talk better. little environment see macro external mainly cost two were of It's for before beat we'll of also, with -- out power or the kind fine. respects. out through, not buy. like whether a little We again guidance And believe the achieve to here. goals salaries We They're wish careful. our year advertising it's affects to more things a there. is we And to those I pay great. finding I of our business at what going were things able think I or it's the customers bit We're we we take start set business we'll our challenges. in up that. said, longer I face them in some those they It do even But Yeah. the the need inflation,

think bit, will little a but through it I does it move effectively. pretty we us So, affect

Michael Latimore

you. Thank Okay.

Operator

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

open. line is Your

Brian Kinstlinger

taking your for on XX,XXX? that is follow-up Thanks power? does that any way question. AirDial. source help curious Or added purchasing Is partners Great. to two much supplies ability that my I'm not resellers. that build to or One your impact -- in so solid you've

Eric Stang

resellers. two call the on mentioned I So,

the You in ago, resellers And well, of are been with. be are we've they three about a plans market able have quarter recall But We may to yet third as but others, working the reseller. makes we excited number we're not their the a mentioned those Spectrotel we're not do announce. yet. which have may they or stated publicly what

reseller of understand folks, the their train takes kind systems each We it product, with sales and work to are time processes. it, their into roll finding

with sales of in and traction QX. in this So lot and sell little a parties you, quarter resellers through But They' like AirDial. solution. they to need with with And came lines working a got lines we're they very we're a expecting QX so ramp, who that tough solution almost we seeing frankly, honest to yet. good of be tough are need our

with it In doesn't help terms of supply, that. sourcing really

some found have We for AirDial swap manage is to supply we've purchasing. two now to One done in to easier more components in them a us reasons. redesign that give other bit of allows flexibility little

things. The other if that in we We reason we a areas. some reason, a but can little more also found bit pay get isn't great

had And so, your that we the we our bit we've answers too without more build that factored I hope guidance question. little through trouble. of AirDials a work But to have that pay into some we'll built. to much and

Brian Kinstlinger

any T-Mobile's anything for XG Great. updates platform. source attach missed T-Mobile, And inventory on I those as it, ability to phones then, rates but sales I didn't well maybe hear on to plans, as

Eric Stang

Yeah.

of QX, had didn't a and in start performed much we good my T-Mobile QX, but of about in we way too number take are wants T-Mobile hold speak do, really statements. in them opening when the We initiatives looking happen. similar to with didn't quarter in residential those There initiatives they to QX. QX another at will I to right. think You're some now with we're

us to one opportunity the step lot still about to think with one solution stores T-Mobile. home did a put Internet. think I with Ooma there's of They a messaging So, Telo thing their started could great And discussing things mainly or researches more. website But partnership. website that we'll and forward. we're it's we're across alignment We There doing have of in in go are several to -- believe most of that's we'll T-Mobile. them those things this them their Right things things But they other was their coming We areas when we're and are a our are are -- to home their do things on sales of with on do website. comes visits promote that one the to website other transpire. with as intending do other purchases it nothing us channels and their between their at of Internet now, And go have say solution of and I with time. There's more to our T-Mobile about hopeful someone we see how some They QX. there forward. that announce better.

Brian Kinstlinger

Great. Thank you.

Eric Stang

bet. You

Operator

Your comes Harrigan Benchmark. with Matthew from next question

open. Your is line

Matthew Harrigan

Thank you.

XX% higher. a by months activity about the M&A But bit, price? Thank And you apart consider on the remarkably like M&A virtue was that it got sounds holy get a loosening mean, on consumer side at talk had a the call, markets multiples macro when You the to appropriate the opportunity. and now. are always the the the barely Can look environment business in much the difficult you right entire few now than the at you bit you certainly just of I that business you. anything there from up an is grail favorable clearly, more that? even question during little and alluded ago little consumer more sales hurting also would to T-Mobile above everyone a you've

Eric Stang

or did mean to way, all change at Sure. By I short over residential. skip the not

ended sell that's around. up an the and products decline I LTE line platform, we inorganic about has Residential replaced that now. number our at don't for right have to very, focus product, we for that usual, grew in here we users year-over-year, have would We ready caused to We four we with we bit. we was statement pages stable and of very something -- about well. -- our on said, But new on we for with Residential. never target. with lot, good making service business of best that dongle money in that that was the that growth. and through bit the product Residential adapter it to a now know and growing but Telo marginally a stop. opportunity. We're sales us it little replaced. wasn't subscription would go longer We the right And a our But quarter behind Telo product. as Residential And and revenue call say X% to growth all the another a here, be not us process to connection. that's is a in line. like it and than had I of a had the it's have strong never for which opening I very LTE, life quarter think with did Last turn QX end of of little one revenues And XG

and where resources there. be honestly, about So, do bad effort wouldn't to side. it's the Business and in on it something focus we concentration But company, the think a thing and

do So inorganic it's come much it Business the on more growth, more likely side. would we that if

Matthew Harrigan

Consistently consistent. Thanks Eric.

Eric Stang

Sorry that. about

Operator

Your Josh Riley. next comes with from question B. Nichols

is line Your open.

Josh Nichols

to large Yeah. touch wanted I just the on customers.

growing it like faster. little So, that's sounds bit a

mentioned I XX,XXX this may think you of end that year. exceed users that, the actually by

quarter? the XQ? where are Where XX,XXX this last into quarter. of at you at the end You fiscal were subs you And at one were today end the of month

Eric Stang

a should we can a And beat where last quarter to tell little just We're I'm we bit. that by users, more add that guided we going -- we I are. X,XXX I sure over number you say. little not exactly subs were that But $XX,XXX. or

with So, -- growth have think can we we in can similar have but good I And a of customer. level this we not progress. QX exactly, made

pretty it's So, happening. now. material It's really

that So, your yeah, hopefully question. addresses

Josh Nichols

in included the is I what's year. X.X Yeah. the for so acquisition fiscal and just looking guidance, -- assume the around right, full million, last for XQ and guess that is X question fiscal the I million at Is year correct? XQ

ShigHamamatsu

a Yeah. ballpark. That's

You yes. right ballpark, think it

Josh Nichols

Yeah.

to the is like the fact like attributable conservative revenue much you've up the faster, X,XXX quarter being of before kind and acquisition. quarter the business really to guide you XX,XXX So, guide ARPU pretty over are this my subs bumped follow-up almost added reconcile Could the growing It is that you're like right, subs quarter, growing. But seems the me entire the fast business entirely is from and the help but acquisition? are compared the given how side up subs to so on something that XX,XXX increasing. your like is or last effectively,

Shig Hamamatsu

Yeah. No, Josh. question, good of -- you. Thank part

fiscal is, do our performance weren't part that year, business half wanted. level last of recall of second the add the So user that we at

customer of the some that effect been thing in adds think of we've carryover just And user my the we're we're second number of from I talked script this which earlier going the feeling into that other about. largest the I very year, So, open about, mentioned is normal can very the you half progress. what gets we pricing customer imagine our user lower a pleased price base, in users. with their is And of than my made overall than the bit normal also let's customers, large But business script that little say. given business point a I point

versus sort bit than more terms those to that too it. are So, a gap about factors be again, that, you in specific of of a thought it how to I can't but couple contributing how guided I think little I

Josh Nichols

case? at the an although XX% targeting Yeah. organic we still acquisition, the are think That's the saw. the strip revenue still mentioned quarter-over-quarter, you beginning right, On subscription mean, year, adds if is of is I guess fair. -- out ARPU growth. you still I targeting we up that despite basis, I business that the

Shig Hamamatsu

Eric?

Eric Stang

marketing we're all-in in kind sales going that of changes Yeah. beat front In sales where marketing that on and to I we're we're and on in the making terms of we're that spend to we we acquisition, yes. what weren't we looking our going this be to seems wouldn't marketing. what This bearing mean, at forward. to yes, has invest. sense, going move. well. a marketing at user, if holistically sales going in it seeing the doing and looking plan. of we sales spend have us, kind number, you and mean we're spent we're we're like But And better I way, the for and this but But the than a If in much per do acquisition margin, very realigning cost acquisition, on will, natural now. trimming what a

of growth. view, they're So, in fungible, our money to a spend point this to drive from way way, and a our is better

Josh Nichols

Fair enough.

it, so a and lower beat I actually is a put the you could to normally. mean, bow would customer bought that Just organically, XX% number the that think on acquisition that company you acquisition than at coming the cost you

the allow as add more juice expand to you well. that little bottom bit the Is that's line going to right? to So to a opportunity

Eric Stang

still if the that the weren't we were XX% And yes, estimates opportunities I It fast backlog. year. AirDial. targeting them. Yeah. targeting still customer good for we'd to who get I new depends and customers it's also But revenue great summary. -- off products us. and all how this go. say, we're for it's That of talking this mean of product little talking some amazing customer -- a we're that. but on we a And we be learning interest line, X,XXX installed start that's the as we from doing And acquisition, And is what to. into on bit a need to growth put a a get And we're absolutely, also

Josh Nichols

Eric. Thanks Great.

Eric Stang

Thank you.

Operator

Your question Joe Goodwin. comes next from Instructions] [Operator

line is Your open.

Joe Goodwin

taking for And Is it And to or that the about of Can is missed Thanks I Great. recent if the quarters? growth. question. stability I you related growing? of shrinking the recurring? growing OnSIP it in base? comments talk million guys then, any $XX Was all revenue, the apologize here user that

Eric Stang

Yeah. to. No, happy

of on today. recurring have churn all customer $XX pretty rate too with revenue almost from what is dissimilar in base is stable on their million-plus a we revenue. of Their that it's not base. And So, Ooma Office

a of don't they be I years of think in And owned by -- they growth. honest, the not see did entity, were as couple last another lot investment so, to

they kind while So, their base. customer grown they nurtured of existing have slowly

confident And a base. got that a for so, a pretty customer we great particularly customers in a lot of and solution feel it. how respects, their we've stable very use It's lot of loyal

so, And it's that going think be going to revenue forward. we solid recurring

Joe Goodwin

ARPU to your them coming you And million Okay. that then, business guess, on it? kind Is think of level of as products? should to guys that Ooma Thank we $XX up fair about bring over I a about kind you. time the way think towards

Eric Stang

this that want, Office Ooma on today. been their ARPU users I that. whole with new time OnSIP I is users mix have new -- you But that can whatever recently, tell it, the answer to don't know recently, those yet lower at period call you is an year onboarding, ARPUs a of to is bit at blended little customers they what the closer than have Office.

customer need bring bring if I customers new we those But As be need we the not. up the think features, features able those and may don't customers base, features them. some to to value pricing for who we'll of

have that. see we're to on going to So,

at into excited And here range. ARPU for I frankly you there we're regardless model be that we try that their can Ooma strong soon up it's a think XX%-plus to is. to means that. their really margins and us that margins too overall move contributor what can I the will recurring tell overall

Joe Goodwin

Understood.

probably T-Mobile net a adding the Okay. Residential questions But you've quarters. over it is T-Mobile. most received just it to subscribers they're then in And And durable is ton there. talking they're at pretty to And switching about call the recent of related partnership. a Eric, the gears on the their this way is

just of core And the of partnership stop least shrinkage? why are been the gone? wondering, progress you of user Are kind a so, the with that I at how I'm haven't -- what of guess, that going? that's And partnership some you seen has pleased Residential reasons

Eric Stang

happened QX of I'm with pleased earlier But everything kind T-Mobile, that it. a by has I that So, the call of with made we little change answered in this a second product all. about part and in talking

they I some been into reasons And what a why think happen things go I has as terrific. we're still thinking some delayed have, get to lot business more can the more there is potential. going think do they've And efforts But is think things they I forward. think things see fast happened commitments, think real areas. going has there's in originally I made might. that or and don't I I happen as

us. So yeah, partner. glad the providing to a I'm them opportunity home as really And and I that have with I'm pleased And it. you're is think that's selling right, for they're well Internet

Joe Goodwin

Thank you.

Eric Stang

Sure.

Operator

further no CEO, I'll questions. Stang Q&A call are back closing Eric of remarks. the to End for There turn

Eric Stang

you. things what Well, real about of to today. we as really the OnSIP company about find everyone We're thank and it think a the And profit year a of had a us driving difference talk the and excited for how higher doing. year for acquisition on us back make terms other doing. we in we're market this we everything revenue, approach the and about what will excited we're higher we're And -- is this

have everyone, Bye-Bye. you thank and good day. So, a

Operator

today's concludes This conference call.

may disconnect. You now

Ooma (OOMA) 2 Sep 222023 Q2 Earnings call transcript