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Ooma Reports Third Quarter Fiscal Year 2018 Financial Results

November 28, 2017

SUNNYVALE, Calif., Nov. 28, 2017 (GLOBE NEWSWIRE) -- Ooma, Inc. (NYSE:OOMA), a smart communications platform for small business and residential users, today released financial results for the third quarter ended October 31, 2017.    

Third Quarter Fiscal 2018 Financial Highlights:

  • Revenue: Total revenue was $28.5 million, up 6% year-over-year. Driven by 59% growth of Ooma Office, subscription and services revenue increased 10% year-over-year to $25.5 million. Product and other revenue decreased 22% year-over-year to $3.0 million.
  • Net Loss: GAAP net loss was $3.2 million, or $0.17 per basic and diluted share, compared to GAAP net loss of $2.8 million, or $0.16 per basic and diluted share, in the third quarter of fiscal 2017. Non-GAAP net loss was $0.4 million, or $0.02 per basic and diluted share, compared to non-GAAP net loss of $0.3 million, or $0.02 per basic and diluted share, in the third quarter of fiscal 2017.
  • Adjusted EBITDA: Adjusted EBITDA loss was $0.0 million for the third quarter of fiscal 2018 compared to a gain of $0.1 million in the prior year period.

For more information about non-GAAP net loss and Adjusted EBITDA, see the section below titled "Non-GAAP Financial Measures" and the reconciliation provided in this release.

“We are pleased to deliver a solid third quarter driven by 20% growth in our core Office and residential subscription and services revenue,” said Eric Stang chief executive officer of Ooma.  “We continue to pursue growth initiatives focused on expanding Ooma Office and delivering new services for Ooma Telo.  With our unique platform designed to address small business and residential needs, and the scale of the markets we serve, we believe we’re well positioned for continued growth.”

Business Outlook:

For the fourth quarter fiscal 2018, Ooma expects to report:

  • Total revenue between $29.3 million to $29.8 million.
  • GAAP net loss in the range of $2.8 million to $3.5 million, and non-GAAP net loss in the range of $0.5 million to $1.0 million.
  • GAAP net loss per share in the range of $0.15 to $0.18, and non-GAAP net loss per share in the range of $0.03 to $0.05 based on approximately 19.0 million basic and diluted weighted average common shares outstanding.

For the full fiscal year 2018, Ooma expects to report:

  • Total revenue in the range of $113.5 million to $114.0 million.
  • GAAP net loss in the range of $13.0 million to $13.7 million, and non-GAAP net loss in the range of $1.6 million to $2.1 million.
  • GAAP net loss per share in the range of $0.70 to $0.74, and non-GAAP net loss per share in the range of $0.09 to $0.11 based on approximately 18.6 million basic and diluted weighted average common shares outstanding.

The following is a reconciliation of GAAP net loss to non-GAAP net loss and GAAP basic and diluted loss per share to non-GAAP basic and diluted loss per share guidance for the fourth fiscal quarter and the fiscal year ending January 31, 2018 (in millions, except per share data):

   
  Projected range
  Three Months Ending Fiscal Year Ending
  January 31, 2018 January 31, 2018
     
  (unaudited)
GAAP Net Loss  ($2.8)-($3.5)   ($13.0)-($13.7) 
Stock-based compensation and related taxes  2.2-2.4   11.1-11.3 
Amortization of intangibles   0.1   0.3
Non-GAAP Net Loss  ($0.5)-($1.0)   ($1.6)-($2.1) 
     
Basic and Diluted Net Loss per Share on a GAAP basis  ($0.15)-($0.18)   ($0.70)-($0.74) 
Stock-based compensation and related taxes  0.12-0.13   0.60-0.61 
Amortization of intangibles   —  0.01-0.02 
Basic and Diluted Net Loss per Share on a Non-GAAP basis  ($0.03)-($0.05)   ($0.09)-($0.11) 
Weighted-average number of shares used in per share amounts:    
Basic and diluted   19.0   18.6
     

Conference Call Information:

Ooma will host a conference call and live webcast for analysts and investors at 5:00 p.m. Eastern time today, November 28, 2017. The news release with the financial results will be accessible from the company's website prior to the conference call. Parties in the United States and Canada can access the call by dialing +1 (833) 233-4456, using conference ID 1876019. International parties can access the call by dialing +1 (647) 689-4135, using conference ID 1876019.

The webcast will be accessible on Ooma's investor relations website at http://investors.ooma.com for a period of one year. A telephonic replay of the conference call will be available through Sunday, December 3, 2017. To access the replay, parties in the United States and Canada should call +1 (800) 585-8367 and use conference ID 1876019. International parties should call +1 (416) 621-4642 and enter conference ID 1876019.

Non-GAAP Financial Measures

In addition to disclosing financial measures prepared in accordance with U.S. generally accepted accounting principles (GAAP), this press release and the accompanying tables contain certain non-GAAP financial measures, including: non-GAAP net loss, non-GAAP net loss per share, non-GAAP gross profit and gross margin, non-GAAP operating loss, and Adjusted EBITDA. Adjusted EBITDA represents the net loss before interest and other expense or income, depreciation and amortization and other non-GAAP expenses.

These non-GAAP financial measures exclude non-cash stock-based compensation expense and related taxes and amortization of intangibles.

These non-GAAP financial measures are presented to provide investors with additional information regarding our financial results and core business operations.  Ooma considers these non-GAAP financial measures to be useful measures of the operating performance of the company, because they contain adjustments for unusual events or factors that do not directly affect what management considers to be Ooma's core operating performance, and are used by the company's management for that purpose.  Management also believes that these non-GAAP financial measures allow for a better evaluation of the company's performance by facilitating a meaningful comparison of the company's core operating results in a given period to those in prior and future periods. In addition, investors often use similar measures to evaluate the operating performance of a company.

Non-GAAP financial measures are presented for supplemental informational purposes only to aid an understanding of the company's operating results. The non-GAAP financial measures should not be considered a substitute for financial information presented in accordance with GAAP, and may be different from non-GAAP financial measures presented by other companies.  A limitation of the non-GAAP financial measures presented is that the adjustments relate to items that the company generally expects to continue to recognize. The adjustment of these items should not be construed as an inference that the adjusted gains or expenses are unusual, infrequent or non-recurring. Therefore, both GAAP financial measures of Ooma's financial performance and the respective non-GAAP measures should be considered together.  Please see the reconciliation of non-GAAP financial measures to the most directly comparable GAAP measure in the tables below.

Disclosure Information

Ooma uses the investor relations section on its website as a means of complying with its disclosure obligations under Regulation FD. Accordingly, investors should monitor Ooma's investor relations website in addition to following Ooma's press releases, SEC filings, and public conference calls and webcasts.

Legal Notice Regarding Forward-Looking Statements

This press release contains forward-looking statements under the Private Securities Litigation Reform Act of 1995. In particular, statements regarding future economic performance, finances, and expectations and objectives of management constitute forward-looking statements. Forward-looking statements can be identified by the fact that they do not relate strictly to historical facts and generally contain words such as "believes," "expects," "may," "will," "should," "seeks," "approximately," "intends," "plans," "estimates," "anticipates," and other expressions that are predictions of or indicate future events and trends and that do not relate to historical matters.  Although the forward-looking statements contained in this press release are based upon information available at the time the statements are made and reflect management's good faith beliefs, forward-looking statements inherently involve known and unknown risks, uncertainties and other factors, which may cause the actual results, performance or achievements to differ materially from anticipated future results. Important factors that could cause actual results to differ materially from expectations include, among others:  our inability to attract new customers on a cost-effective basis; our inability to retain customers; intense competition; our reliance on retailers and reseller partnerships to sell our products; our reliance on vendors to manufacture the on-premise appliances and end-point devices we sell; our reliance on third parties for our network connectivity and co-location facilities; our reliance on third parties for some of our software development, quality assurance and operations; our reliance on third parties to provide the majority of our customer service and support representatives; our limited operating history; and interruptions to our service.  You should not place undue reliance on these forward-looking statements, which speak only as of the date hereof. We do not undertake to update or revise any forward-looking statements after they are made, whether as a result of new information, future events, or otherwise, except as required by applicable law.

The forward-looking statements contained in this press release are also subject to other risks and uncertainties, including those more fully described in our filings with the Securities and Exchange Commission, including the risk factors contained in our Quarterly Report on Form 10-Q for the quarter ended July 31, 2017, filed with the SEC on September 7, 2017. The forward-looking statements in this press release are based on information available to Ooma as of the date hereof, and Ooma disclaims any obligation to update any forward-looking statements, except as required by law.

About Ooma

Founded in 2004, Ooma creates new communications experiences for small businesses and consumers. Its smart platform serves as a communications hub, which offers cloud-based telephony, internet security, home security and other connected services. Ooma combines PureVoice HD call quality and innovative features with mobile applications for reliable anytime, anywhere calling. The company has been ranked the No. 1 home phone service for overall satisfaction and value for five consecutive years by the leading consumer research publication. Ooma is also partnering with connected device makers to create smarter offices and homes. Ooma is available in stores and online from leading retailers. For more information about Ooma, please visit www.ooma.com or follow us on TwitterLinkedIn or Facebook.

Ooma, PureVoice and the Ooma logo are trademarks of Ooma, Inc. All other company and product names may be trademarks of the respective companies with which they are associated.

Investor Relations:
Matthew S. Robison
Director of IR and Corporate Development
Ooma, Inc.
ir@ooma.com
(650) 300-1480

 

   
 OOMA, INC 
 CONDENSED CONSOLIDATED BALANCE SHEETS 
 (Amounts in thousands) 
 (unaudited) 
      
  October 31, January 31, 
   2017   2017  
 Assets    
 Current assets:    
 Cash and cash equivalents$  4,947  $  3,990  
 Short-term investments   48,574     49,211  
 Accounts receivable, net   3,542     4,714  
 Inventories   6,216     5,830  
 Deferred inventory costs   1,132     1,620  
 Prepaid expenses and other current assets   3,118     1,891  
 Total current assets   67,529     67,256  
 Property and equipment, net   4,527     4,176  
 Intangible assets, net    293     537  
 Goodwill   1,117     1,117  
 Other assets   284     252  
 Total assets$  73,750  $  73,338  
      
 Liabilities and stockholders' equity     
 Current liabilities:    
 Accounts payable$  6,206  $  5,857  
 Accrued expenses   12,967     11,579  
 Deferred revenue   15,812     15,521  
 Total current liabilities   34,985     32,957  
 Other liabilities   507     561  
 Total liabilities$  35,492     33,518  
 Stockholders' equity:    
 Common stock   2     2  
 Additional paid-in capital   126,296     117,639  
 Accumulated comprehensive loss   (36)    (11) 
 Accumulated deficit   (88,004)    (77,810) 
 Total stockholders' equity    38,258     39,820  
 Total liabilities and stockholders' equity $  73,750  $  73,338  
      

 

   
 OOMA, INC. 
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS 
 (Amounts in thousands, except share and per share data) 
 (unaudited) 
           
   Three Months Ended Nine Months Ended 
    October 31,   October 31,   October 31,   October 31,  
    2017   2016   2017   2016  
 Revenue:         
 Subscription and services $  25,524  $  23,179  $  74,830  $  67,086  
 Product and other    2,981     3,828     9,440     9,874  
 Total revenue    28,505     27,007     84,270     76,960  
           
 Cost of revenue:         
 Subscription and services    7,613     7,388     23,176     22,103  
 Product and other    3,726     4,276     11,314     11,316  
 Total cost of revenue     11,339     11,664     34,490     33,419  
 Gross profit    17,166     15,343     49,780     43,541  
           
 Operating expenses:         
 Sales and marketing     9,127     8,302     27,526     24,975  
 Research and development     7,476     6,244     21,360     17,824 
 General and administrative     3,890     3,705     11,511     11,105 
 Total operating expenses    20,493     18,251     60,397     53,904  
 Loss from operations    (3,327)    (2,908)    (10,617)    (10,363) 
 Other income (expense):         
 Interest income, net    160     95     418     259  
 Other (expense) income, net    (12)    (8)    5     (13) 
 Net loss $  (3,179) $  (2,821) $  (10,194) $  (10,117) 
           
 Net loss per share of common stock:         
 Basic and diluted $  (0.17) $  (0.16) $  (0.55) $  (0.58) 
 Weighted-average number of shares used in per share amounts:         
 Basic and diluted    18,725,286     17,648,251     18,407,817   17,337,682  
           

 

  
OOMA, INC 
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS 
(Unaudited, amounts in thousands) 
          
  Three Months Ended Nine Months Ended 
  October 31, October 31, October 31, October 31, 
   2017   2016   2017   2016  
Cash flows from operating activities:         
Net loss  $  (3,179) $  (2,821) $  (10,194) $  (10,117) 
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:         
Stock-based compensation expense    2,635     2,370     8,726     7,243  
Depreciation and amortization    509     498     1,604     1,320  
Amortization of intangibles    80     83     244     265  
Other non-cash income, net    —     —     —     (3) 
Changes in operating assets and liabilities:         
Accounts receivable, net    716     (388)    1,172     743  
Inventories    615     (28)    (386)    419  
Deferred inventory costs    64     594     488     570  
Prepaid expenses and other assets    (1,368)    (316)    (1,233)    (99) 
Accounts payable and other liabilities    661     296     1,707     (813) 
Deferred revenue    214     120     251     296  
    Net cash provided by (used in) operating activities    947     408     2,379     (176) 
Cash flows from investing activities:         
Purchases of short-term investments    (18,354)    (11,063)    (38,898)    (44,178) 
Proceeds from maturity of short-term investments    12,644     9,700     37,977     20,650  
Proceeds from sale of short-term investments    450     1,350     1,350     4,366  
Purchases of property and equipment    (684)    (116)    (1,747)    (1,146) 
    Net cash used in investing activities    (5,944)    (129)    (1,318)    (20,308) 
Cash flows from financing activities:         
Shares repurchased for tax withholdings on vesting of restricted stock units     (1,470)    (1,340)    (1,973)    (1,340) 
Proceeds from issuance of common stock related to employee stock benefit plans    981     657     1,869     1,447  
Repayment of debt related to capital leases    —     —     —     (628) 
Payment of acquisition related earn-out    —     —     —     (100) 
    Net cash used in financing activities    (489)    (683)    (104)    (621) 
    Net (decrease) increase in cash and cash equivalents    (5,486)    (404)    957     (21,105) 
Cash and cash equivalents at beginning of period    10,433     6,712     3,990     27,413  
Cash and cash equivalents at end of period $  4,947  $  6,308  $  4,947  $  6,308  
          

 

  
OOMA, INC. 
Reconciliation of Non-GAAP Financial Measures 
Impact of Non-GAAP Adjustments on Reported Net Loss 
(Amounts in thousands, except percentages and per share data) 
(unaudited) 
          
Reconciliation of non-GAAP financial measures are set forth below: Three Months Ended Nine Months Ended 
  October 31, October 31, October 31, October 31, 
   2017   2016   2017   2016  
Revenue $  28,505  $  27,007  $  84,270  $  76,960  
          
GAAP gross profit $  17,166  $  15,343  $  49,780  $  43,541  
Stock-based compensation and related taxes    262     264     932     752  
Amortization of intangibles    40     40     123     122  
Non-GAAP gross profit $  17,468  $  15,647  $  50,835  $  44,415  
          
Gross margin on a GAAP basis  60%  57%  59%  57% 
Gross margin on a Non-GAAP basis  61%  58%  60%  58% 
          
GAAP operating loss $  (3,327) $  (2,908) $  (10,617) $  (10,363) 
Stock-based compensation and related taxes    2,722     2,447     8,886     7,320  
Amortization of intangibles    80     83     244     265  
Non-GAAP operating loss $  (525) $  (378) $  (1,487) $  (2,778) 
          
GAAP net loss $  (3,179) $  (2,821) $  (10,194) $  (10,117) 
Stock-based compensation and related taxes    2,722     2,447     8,886     7,320  
Amortization of intangibles    80     83     244     265  
Non-GAAP net loss $  (377) $  (291) $  (1,064) $  (2,532) 
          
GAAP basic and diluted loss per share $  (0.17) $  (0.16) $  (0.55) $  (0.58) 
Stock-based compensation and related taxes    0.15     0.14     0.48     0.42  
Amortization of intangibles    —     —     0.01     0.02  
Non-GAAP basic and diluted loss per share $  (0.02) $  (0.02) $  (0.06) $  (0.14) 
          
GAAP net loss $  (3,179) $  (2,821) $  (10,194) $  (10,117) 
Reconciling items:         
Interest and other expense, net    (148)    (87)    (423)    (246) 
Depreciation and amortization    484     459     1,446     1,193  
Amortization of intangibles    80     83     244     265  
Stock-based compensation and related taxes    2,722     2,447     8,886     7,320  
Adjusted EBITDA $  (41) $  81  $  (41) $  (1,585) 
          
          
Depreciation and amortization applied to Adjusted EBITDA reconciliation excludes amortization related to financing/other income.   
          

 

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Source: Ooma, Inc.

1Purchase of Ooma Telo required, beginning at suggested retail price of $129.99. Ooma's free home phone service does not include high-speed Internet or broadband service. Free home calling offered in the United States only. Federal universal service charges, FCC regulatory fee, state and local taxes, fees & surcharges and regulatory and compliance fees are billed monthly and are subject to change. To determine the specific charges in your area, go to http://www.ooma.com/rates. Transfer of your existing phone number, where available, requires a one-time processing fee. Ooma Premier. and other enhanced features carry a monthly service fee and may require additional peripheral devices sold separately.

Unlimited U.S. calls are subject to normal residential usage limitations. See http://www.ooma.com/termsandconditions for current usage limitations. International calls are billed per minute and must be prepaid. Directory assistance (411) calls are billed per call. See http://www.ooma.com/rates. Ooma E911 service operates differently from non-Internet 911 service. See http://www.ooma.com/911 for details. Some alarms, faxes and other devices may not be compatible. Additional terms apply, see http://www.ooma.com/termsandconditions.

Any questions? Call us (free, of course). Call 866.452.6662. Monday-Friday 5am-5pm PST, Saturday-Sunday 8am-5pm PST.

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