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Ooma Reports Second Quarter Fiscal Year 2019 Financial Results

August 28, 2018

SUNNYVALE, Calif., Aug. 28, 2018 (GLOBE NEWSWIRE) -- Ooma, Inc. (NYSE: OOMA), a smart communications platform for businesses and consumers, today released financial results for the second quarter fiscal 2019 ended July 31, 2018.

Second Quarter Fiscal 2019 Financial Highlights

  • Revenue: Total revenue was $31.7 million, up 12% year-over-year. Subscription and services revenue increased to $28.4 million and was 90% of total revenue, driven by 19% year-over-year growth in our business and residential subscription and services revenue.
  • Net Loss: GAAP net loss was $3.9 million, or $0.20 per basic and diluted share, compared to GAAP net loss of $3.6 million, or $0.20 per basic and diluted share, in the second quarter fiscal 2018. Non-GAAP net loss was $0.9 million, or $0.05 per basic and diluted share, compared to non-GAAP net loss of $0.4 million, or $0.02 per basic and diluted share, in the prior year period.
  • Adjusted EBITDA: Adjusted EBITDA was ($0.6) million compared to ($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 achieved solid financial results while investing for growth,” said Eric Stang, chief executive officer of Ooma.    “Our focus remains on our three key FY19 strategic initiatives, which are to continue the fast growth of Ooma Office for small businesses, capitalize on our Voxter acquisition to serve larger businesses with custom UCaaS solutions, and extend the Ooma platform to include home security and video monitoring services for residential users.  We believe we are executing well on these initiatives and will drive long term shareholder value.”

Business Outlook

For the third quarter fiscal 2019, Ooma expects to report:

  • Total revenue in the range of $31.5 million to $32.0 million.
  • GAAP net loss in the range of $4.0 million to $4.6 million and GAAP net loss per share in the range of $0.20 to $0.23.
  • Non-GAAP net loss in the range of $0.8 million to $1.3 million and non-GAAP net loss per share in the range of $0.04 to $0.07.

For the full fiscal year 2019, Ooma expects to report:

  • Total revenue in the range of $125.5 million to $127.5 million.
  • GAAP net loss in the range of $15.4 million to $16.9 million, and GAAP net loss per share in the range of $0.77 to $0.85.
  • Non-GAAP net loss in the range of $3.5 million to $4.5 million, and non-GAAP net loss per share in the range of $0.18 to $0.23.

The following is a reconciliation of GAAP net loss to non-GAAP net loss and GAAP basic and diluted net loss per share to non-GAAP basic and diluted net loss per share guidance for the third fiscal quarter and the fiscal year ending January 31, 2019 (in millions, except per share data):

     
    Projected range
    Three Months Ending   Fiscal Year Ending
    October 31, 2018   January 31, 2019
         
    (unaudited)
GAAP net loss   ($4.0)-($4.6)   ($15.4)-($16.9)
Stock-based compensation and related taxes 2.8-2.9   10.8-11.2
Acquisition-related costs, amortization of intangible assets and income tax benefit 0.2   1.1-1.2
Change in fair value of acquisition-related contingent consideration 0.2  
Non-GAAP net loss   ($0.8)-($1.3)   ($3.5)-($4.5)
         
GAAP basic and diluted net loss per share ($0.20)-($0.23)   ($0.77)-($0.85)
Stock-based compensation and related taxes 0.14   0.54-0.56
Acquisition-related costs, amortization of intangible assets and income tax benefit 0.01   0.05-0.06
Change in fair value of acquisition-related contingent consideration 0.01  
Non-GAAP basic and diluted net loss per share ($0.04)-($0.07)   ($0.18)-($0.23)
         
Weighted-average number of shares used in per share amounts:    
Basic and diluted   20.0   19.9
         

Conference Call Information:

Ooma will host a conference call and live webcast for analysts and investors at 5:00 p.m. Eastern time today, August 28, 2018. 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 “Ooma Second Quarter.” International parties can access the call by dialing +1 (647) 689-4135, using conference ID “Ooma Second Quarter.”

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 Tuesday, September 4, 2018. To access the replay, parties in the United States and Canada should call +1 (800) 585-8367 and use conference ID 9357627. International parties should call +1 (416) 621-4642 and enter conference ID 9357627.

Conference Schedule

We are pleased to participate in the following conferences in coming days.  Please check with conference hosts for further details.

Three Part Advisors IDEAS Conference August 30, Chicago, Illinois

ROTH Internet of Things Corporate Access Day September 5, San Francisco, California

2018 Gateway Conference Presented by Liolios September 6, San Francisco, California

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, income tax benefit, depreciation and amortization and other non-GAAP expenses.

These non-GAAP financial measures exclude non-cash stock-based compensation expense and related taxes, change in fair value of acquisition-related contingent consideration, acquisition related transaction costs, amortization of acquired intangibles and non-cash acquisition-related income tax benefit.

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.  This press release also includes forward–looking statements regarding the company’s execution of its initiative to continue the fast growth of Ooma Office, and its execution of this and other initiatives driving long-term shareholder value.  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 annual filing on Form 10Q for the period ended April 30, 2018, filed with the SEC on June 8, 2018. 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

Ooma (NYSE: OOMA) creates powerful connected experiences for businesses and consumers, delivered from its smart cloud-based SaaS platform. For businesses of all sizes, Ooma provides advanced voice and collaboration features that are flexible and scalable. For consumers, Ooma provides PureVoice HD voice quality, advanced functionality and integration with their mobile devices. Ooma’s groundbreaking home security solution delivers a full range of wireless security sensors and a smart video camera that put consumers in charge of protecting their homes. Learn more at www.ooma.com.

Ooma, PureVoice HD 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. The detailed terms and conditions of Ooma's products, services, and support are fully set forth in the Terms and Conditions, available online under the "legal" tab on the bottom navigation bar of the Ooma Web site.

CONTACT:

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

Media
Mike Langberg
Director of Corporate Communications
Ooma, Inc.
mike.langberg@ooma.com
(650) 566-6693

OOMA, INC
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited, amounts in thousands)
               
               
   July 31,     January 31, 
   2018     2018 
Assets              
Current assets:              
Cash and cash equivalents $ 16,944     $ 4,483  
Short-term investments   31,687       47,307  
Accounts receivable, net   3,103       2,858  
Inventories   7,601       6,079  
Other current assets   3,593       4,397  
Total current assets   62,928       65,124  
Property and equipment, net   4,858       4,732  
Intangible assets, net    3,033       1,292  
Goodwill   3,803       1,947  
Other assets   2,028       336  
Total assets $ 76,650     $ 73,431  
               
Liabilities and stockholders' equity               
Current liabilities:              
Accounts payable $ 10,189     $ 5,453  
Accrued expenses   15,216       14,777  
Deferred revenue   15,117       15,556  
Total current liabilities   40,522       35,786  
Other liabilities   947       577  
Total liabilities   41,469       36,363  
               
Stockholders' equity:              
Common stock   2       2  
Additional paid-in capital   134,040       128,081  
Accumulated other comprehensive loss   (49 )     (84 )
Accumulated deficit   (98,812 )     (90,931 )
Total stockholders' equity   35,181       37,068  
Total liabilities and stockholders' equity  $ 76,650     $ 73,431  
               


OOMA, INC.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited, amounts in thousands, except share and per share data)
 
                                   
    Three Months Ended   Six Months Ended  
       July 31,         July 31,         July 31,         July 31,     
      2018       2017       2018       2017    
Revenue:                                  
Subscription and services    $ 28,426     $ 25,206     $ 55,738     $ 49,306    
Product and other       3,255         2,981         6,165         6,459    
Total revenue       31,681         28,187         61,903         55,765    
                                   
Cost of revenue:                                  
Subscription and services       8,818         7,814         17,592     $ 15,563    
Product and other       4,090         3,792         7,600         7,588    
Total cost of revenue        12,908         11,606         25,192         23,151    
Gross profit       18,773         16,581         36,711         32,614    
                                   
Operating expenses:                                  
Sales and marketing        10,499         9,245         19,394         18,399    
Research and development        8,443         7,263         16,965         13,884    
General and administrative        3,995         3,865         8,447         7,621    
Total operating expenses       22,937         20,373         44,806         39,904    
Loss from operations      (4,164       (3,792       (8,095       (7,290  
Interest and other income, net       198         169         375         275    
Loss before income taxes       (3,966     (3,623       (7,720       (7,015  
Income tax benefit       62         —         131         —    
Net loss   $ (3,904   $ (3,623   $ (7,589   $ (7,015  
                                   
Net loss per share of common stock:                                  
Basic and diluted   $ (0.20    $ (0.20   $ (0.39   $ (0.38  
Weighted-average number of shares used in per share amounts:                                  
Basic and diluted     19,673,658       18,360,560       19,499,677       18,246,457    
                                   


OOMA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, amounts in thousands)
                           
    Three Months Ended
  Six Months Ended
 
     July 31,       July 31,       July 31,      July 31,    
    2018     2017     2018     2017    
Cash flows from operating activities:                          
Net loss    $   (3,904 )   $   (3,623 )   $   (7,589 )   $   (7,015 )  
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:                          
Stock-based compensation expense     2,762       3,120       5,076       6,091    
Depreciation and amortization     558       494       1,062       962    
Amortization of acquired intangibles     198       81       343       164    
Change in fair value of acquisition-related contingent consideration     (128 )     —       (128 )     —    
Deferred income taxes     (62 )     —       (131 )     —    
Amortization and accretion of premiums from investments     (61 )     58       (118 )     133    
Changes in operating assets and liabilities:                          
Accounts receivable, net     444       184       (430 )     456    
Inventories     (2,113 )     153       (2,424 )     (1,001 )  
Other assets     (121 )     216       (685 )     559    
Accounts payable and other liabilities     1,176       477       4,015       1,046    
Deferred revenue     457       107       509       37    
Net cash (used in) provided by operating activities     (794 )     1,267       (500 )     1,432    
                           
Cash flows from investing activities:                          
Purchases of short-term investments     (8,579 )     (15,103 )     (13,988 )     (20,544 )  
Proceeds from maturities and sales of short-term investments     18,236       15,923       29,762       26,233    
Purchases of property and equipment     (450 )     (484 )     (855 )     (1,063 )  
Acquisition of business, net of cash acquired     —       —       (2,402 )     —    
Net cash provided by investing activities     9,207       336       12,517       4,626    
                           
Cash flows from financing activities:                          
Shares repurchased for tax withholdings on vesting of restricted stock units     (441 )     (203 )     (1,200 )     (503 )  
Proceeds from issuance of common stock      478       25       1,644       888    
Net cash provided by (used in) financing activities     37       (178 )     444       385    
Net increase in cash and cash equivalents     8,450       1,425       12,461       6,443    
Cash and cash equivalents at beginning of period     8,494       9,008       4,483       3,990    
Cash and cash equivalents at end of period   $   16,944     $   10,433     $   16,944     $   10,433    
                           


OOMA, INC.
Reconciliation of Non-GAAP Financial Measures
(Unaudited, amounts in thousands, except percentages and per share data)
                           
    Three Months Ended    Six Months Ended   
    July 31,     July 31,     July 31,     July 31,    
    2018     2017     2018     2017    
Revenue   $   31,681     $   28,187     $   61,903     $   55,765    
                           
GAAP gross profit   $   18,773     $   16,581     $   36,711     $   32,614    
Stock-based compensation and related taxes     249       348       451       670    
Amortization of intangible assets     139       40       254       80    
Non-GAAP gross profit   $   19,161     $   16,969     $   37,416     $   33,364    
                           
Gross margin on a GAAP basis   59 %   59 %   59 %   58 %  
Gross margin on a Non-GAAP basis   60 %   60 %   60 %   60 %  
                           
GAAP operating loss   $   (4,164 )   $   (3,792 )   $   (8,095 )   $   (7,290 )  
Stock-based compensation and related taxes     2,819       3,146       5,228       6,164    
Acquisition-related costs and amortization of intangible assets     270       81       766       164    
Change in fair value of acquisition-related contingent consideration     (128 )     —       (128 )     —    
Non-GAAP operating loss   $   (1,203 )   $   (565 )   $   (2,229 )   $   (962 )  
                           
GAAP net loss   $   (3,904 )   $   (3,623 )   $   (7,589 )   $   (7,015 )  
Stock-based compensation and related taxes     2,819       3,146       5,228       6,164    
Acquisition-related costs, amortization of intangible assets and income tax benefit     270       81       697       164    
Change in fair value of acquisition-related contingent consideration     (128 )     —       (128 )     —    
Non-GAAP net loss   $   (943 )   $   (396 )   $   (1,792 )   $   (687 )  
                           
GAAP basic and diluted net loss per share   $   (0.20 )   $   (0.20 )   $   (0.39 )   $   (0.38 )  
Stock-based compensation and related taxes     0.15       0.17       0.27       0.33    
Acquisition-related costs, amortization of intangible assets and income tax benefit     0.01       0.01       0.04       0.01    
Change in fair value of acquisition-related contingent consideration     (0.01 )     —       (0.01 )     —    
Non-GAAP basic and diluted net loss per share   $   (0.05 )   $   (0.02 )   $   (0.09 )   $   (0.04 )  
                           
GAAP net loss   $   (3,904 )   $   (3,623 )   $   (7,589 )   $   (7,015 )  
Reconciling items:                          
Interest and other income, net     (198 )     (169 )     (375 )     (275 )  
Change in fair value of acquisition-related contingent consideration     (128 )     —       (128 )     —    
Depreciation and amortization     558       494       1,062       962    
Acquisition-related costs, amortization of intangible assets and income tax benefit     208       81       635       164    
Stock-based compensation and related taxes     2,819       3,146       5,228       6,164    
Adjusted EBITDA   $   (645 )   $   (71 )   $   (1,167 )   $   —    

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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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