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Ooma Reports Third Quarter Fiscal 2020 Financial Results

November 21, 2019
Business Services Revenue up 67%, Driven by Organic Growth and Broadsmart

SUNNYVALE, Calif., Nov. 21, 2019 (GLOBE NEWSWIRE) -- Ooma, Inc. (NYSE: OOMA), a smart communications platform for businesses and consumers, today released financial results for the third quarter fiscal 2020 ended October 31, 2019.

Third Quarter Fiscal 2020 Financial Highlights

  • Revenue: Total revenue was $39.6 million, up 21% year-over-year. Subscription and services revenue increased to $36.5 million and was 92% of total revenue, driven by 24% year-over-year growth in combined Ooma Business and Ooma Residential services.
  • Net Income/Loss: GAAP net loss was $6.8 million, or $0.32 per basic and diluted share, compared to GAAP net loss of $3.5 million, or $0.18 per basic and diluted share, in the third quarter fiscal 2019. GAAP net loss includes a $3.1 million charge relating to certain restructuring activities taken at the end of the quarter. Non-GAAP net income was $0.1 million, or $0.01 per basic and diluted share, compared to a loss of $0.5 million, or $0.03 per basic and diluted share in the prior year period.
  • Adjusted EBITDA: Adjusted EBITDA was $0.6 million, compared to ($0.2) million loss in third quarter fiscal 2019.

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

“Ooma delivered strong results for the third quarter of our 2020 fiscal year”, said Eric Stang, chief executive officer.  “We achieved 21% year-over-year revenue growth, driven primarily by 67% growth in subscription services revenues from business customers, and an important milestone with non-GAAP profitability.  We also took actions in Q3 to strengthen our focus on serving and growing business customers going forward”.

Business Outlook:

For the fourth quarter of fiscal 2020, Ooma expects to report:

  • Total revenue in the range of $39.6 million to $40.3 million.
  • GAAP net loss in the range of $3.2 million to $3.6 million and GAAP net loss per share in the range of $0.15 to $0.17.
  • Non-GAAP net income in the range of $0.0 million to $0.4 million and non-GAAP net income per share in the range of $0.00 to $0.02.

For the full fiscal year 2020, Ooma expects to report:

  • Total revenue in the range of $150.5 million to $151.2 million.
  • GAAP net loss in the range of $19.8 million to $20.2 million, and GAAP net loss per share in the range of $0.94 to $0.96.
  • Non-GAAP net loss in the range of $1.4 million to $1.8 million, and non-GAAP net loss per share in the range of $0.06 to $0.08.

The following is a reconciliation of GAAP net loss to non-GAAP net income (loss) and GAAP basic and diluted net loss per share to non-GAAP basic and diluted net income (loss) per share guidance for the fourth fiscal quarter ending January 31, 2020 and the fiscal year ending January 31, 2020 (in millions, except per share data):

    Projected range
  Three Months Ending   Fiscal Year Ending
    January 31, 2020   January 31, 2020
    (unaudited)
GAAP net loss   ($3.2)-($3.6)   ($19.8)-($20.2)
Stock-based compensation and related taxes   3.2   13.2
Amortization of intangible assets and acquisition-related costs   0.4   1.5
Restructuring charges     3.1
Litigation costs     0.6
Non-GAAP net income (loss)   $0.0-$0.4   ($1.4)-($1.8)
         
GAAP net loss per share   ($0.15)-($0.17)   ($0.94)-($0.96)
Stock-based compensation and related taxes   0.15   0.63
Amortization of intangible assets and acquisition-related costs   0.02   0.07
Restructuring charges     0.15
Litigation costs     0.03
Non-GAAP net income (loss) per share   $0.00-$0.02   ($0.06)-($0.08)
         
Weighted-average number of shares used in per share amounts:        
  Basic   21.6   21.1
  Diluted   22.5   21.1
         

 

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 21, 2019. 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 Third Quarter”. International parties can access the call by dialing +1 (647) 689-4135, using conference ID “Ooma Third 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 Thursday, November 28, 2019. To access the replay, parties in the United States and Canada should call +1 (800) 585-8367 and use conference ID 9784758. International parties should call +1 (416) 621-4642 and enter conference ID 9784758.

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 income (loss), non-GAAP net income (loss) per share, non-GAAP gross profit and gross margin, non-GAAP operating loss, and Adjusted EBITDA. Adjusted EBITDA represents the net income (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, acquisition-related costs, amortization of acquired intangibles, restructuring charges and certain litigation costs outside the ordinary course of our business.  For the third quarter of fiscal 2020, restructuring charges primarily included write-downs for Smart Cam inventory  and certain assets including the related intangibles and severance expenses for the affected employees.

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, Securities and Exchange Commission (“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 and financial positions, 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. This press release includes forward–looking statements regarding the company’s business outlook, its execution of initiatives to continue the growth of Ooma Office and Ooma Enterprise, and its execution of other initiatives to drive 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 achieve the intended results from our acquisition of Broadsmart; 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 SEC, including the risk factors contained in our quarterly filing on Form 10-Q for the quarter ended July 31, 2019, filed with the SEC on September 9, 2019. 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 innovative smart security solution delivers a full range of wireless security sensors that make it easy for anyone to protect their home or business. Learn more at www.ooma.com.

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.
press@ooma.com 
(650) 566-6693





  OOMA, INC
  CONDENSED CONSOLIDATED BALANCE SHEETS
  (Unaudited, amounts in thousands)
         
         
    October 31,   January 31,
      2019       2019  
  Assets      
  Current assets:      
  Cash and cash equivalents $ 11,688     $ 15,370  
  Short-term investments   15,786       27,253  
  Accounts receivable, net   5,015       3,723  
  Inventories   9,484       10,117  
  Other current assets   8,482       5,450  
  Total current assets   50,455       61,913  
  Property and equipment, net   4,977       4,563  
  Operating lease right-of-use assets   4,341        
  Intangible assets, net   7,149       2,635  
  Goodwill   4,264       3,898  
  Other assets   7,539       5,379  
  Total assets $ 78,725     $ 78,388  
         
  Liabilities and stockholders' equity      
  Current liabilities:      
  Accounts payable $ 10,415     $ 10,231  
  Accrued expenses and other current liabilities   21,716       19,048  
  Deferred revenue   16,005       15,443  
  Total current liabilities   48,136       44,722  
  Long-term operating lease liabilities   2,892        
  Other liabilities   269       619  
  Total liabilities   51,297       45,341  
         
  Stockholders' equity:      
  Common stock   4       4  
  Additional paid-in capital   149,712       138,848  
  Accumulated other comprehensive gain (loss)   14       (10 )
  Accumulated deficit   (122,302 )     (105,795 )
  Total stockholders' equity   27,428       33,047  
  Total liabilities and stockholders' equity $ 78,725     $ 78,388  
         

 





  OOMA, INC.
  CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
  (Unaudited, amounts in thousands, except share and per share data)
                   
      Three Months Ended   Nine Months Ended
      October 31,   October 31,   October 31,   October 31,
        2019       2018       2019       2018  
  Revenue:                
  Subscription and services   $ 36,489     $ 29,794     $ 102,070     $ 85,532  
  Product and other     3,106       2,814       8,875       8,979  
  Total revenue     39,595       32,608       110,945       94,511  
                   
  Cost of revenue:                
  Subscription and services     11,093       8,796       32,117       26,388  
  Product and other     6,462       3,739       14,035       11,339  
  Total cost of revenue     17,555       12,535       46,152       37,727  
  Gross profit     22,040       20,073       64,793       56,784  
                   
  Operating expenses:                
  Sales and marketing     13,205       10,755       37,498       30,149  
  Research and development     10,639       8,593       29,118       25,558  
  General and administrative     5,136       4,589       15,416       13,036  
  Total operating expenses     28,980       23,937       82,032       68,743  
  Loss from operations     (6,940 )     (3,864 )     (17,239 )     (11,959 )
  Interest and other income, net     128       224       666       599  
  Loss before income taxes     (6,812 )     (3,640 )     (16,573 )     (11,360 )
  Income tax benefit     28       146       66       277  
  Net loss   $ (6,784 )   $ (3,494 )   $ (16,507 )   $ (11,083 )
                   
  Net loss per share of common stock:                
  Basic and diluted   $ (0.32 )   $ (0.18 )   $ (0.79 )   $ (0.56 )
  Weighted-average shares of common stock outstanding:                
  Basic and diluted     21,274,285       19,962,735       20,872,253       19,655,727  
                   

 






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,
      2019       2018       2019       2018  
Cash flows from operating activities:                
Net loss   $ (6,784 )   $ (3,494 )   $ (16,507 )   $ (11,083 )
Adjustments to reconcile net loss to net cash used in operating activities:                
Stock-based compensation expense     3,254       2,658       9,647       7,734  
Depreciation and amortization of capital expenditures     629       655       1,976       1,717  
Amortization of acquired intangible assets     384       197       900       540  
Non-cash restructuring charges     1,603             1,603        
Non-cash operating lease expense     466             1,365        
Other     145       (236 )     (79 )     (613 )
Changes in operating assets and liabilities:                
Accounts receivable, net     (332 )     223       (289 )     (207 )
Inventories     745       (217 )     (644 )     (1,693 )
Other assets     (1,342 )     (1,189 )     (3,645 )     (2,822 )
Accounts payable and other liabilities     701       149       (1,438 )     4,164  
Deferred revenue     (96 )     (51 )     329       458  
Net cash used in operating activities     (627 )     (1,305 )     (6,782 )     (1,805 )
                 
Cash flows from investing activities:                
Purchases of short-term investments     (12,040 )     (12,721 )     (31,236 )     (26,709 )
Proceeds from maturities and sales of short-term investments     10,950       11,000       42,996       40,762  
Capital expenditures     (752 )     (583 )     (2,384 )     (1,438 )
Business acquisitions, net of cash assumed                 (7,073 )     (2,402 )
Net cash (used in) provided by investing activities     (1,842 )     (2,304 )     2,303       10,213  
                 
Cash flows from financing activities:                
Proceeds from issuance of common stock     932       1,119       2,740       2,763  
Shares repurchased for tax withholdings on vesting of restricted stock units     (793 )     (1,098 )     (1,523 )     (2,298 )
Payment of acquisition-related holdback                 (420 )      
Net cash provided by financing activities     139       21       797       465  
Net (decrease) increase in cash and cash equivalents     (2,330 )     (3,588 )     (3,682 )     8,873  
Cash and cash equivalents at beginning of period     14,018       16,944       15,370       4,483  
Cash and cash equivalents at end of period   $ 11,688     $ 13,356     $ 11,688     $ 13,356  
                 

 







OOMA, INC.
Reconciliation of Non-GAAP Financial Measures
(Unaudited, amounts in thousands, except percentages, shares and per share data)
                 
    Three Months Ended   Nine Months Ended
  October 31,   October 31,   October 31,   October 31,
      2019       2018       2019       2018  
Revenue   $ 39,595     $ 32,608     $ 110,945     $ 94,511  
                 
GAAP gross profit   $ 22,040     $ 20,073     $ 64,793     $ 56,784  
Stock-based compensation and related taxes     348       257       1,006       708  
Restructuring charges     2,289             2,289        
Amortization of intangible assets     128       146       407       400  
Non-GAAP gross profit   $ 24,805     $ 20,476     $ 68,495     $ 57,892  
                 
Gross margin on a GAAP basis     56 %     62 %     58 %     60 %
Gross margin on a Non-GAAP basis     63 %     63 %     62 %     61 %
                 
GAAP operating loss   $ (6,940 )   $ (3,864 )   $ (17,239 )   $ (11,959 )
Stock-based compensation and related taxes     3,383       2,775       10,004       8,003  
Restructuring charges     3,085             3,085        
Amortization of intangible assets and acquisition-related costs     433       197       1,162       835  
Litigation costs                 606        
Non-GAAP operating loss   $ (39 )   $ (892 )   $ (2,382 )   $ (3,121 )
                 
GAAP net loss   $ (6,784 )   $ (3,494 )   $ (16,507 )   $ (11,083 )
Stock-based compensation and related taxes     3,383       2,775       10,004       8,003  
Restructuring charges     3,085             3,085        
Amortization of intangible assets and acquisition-related costs     433       197       1,162       766  
Litigation costs                 606        
Non-GAAP net income (loss)   $ 117     $ (522 )   $ (1,650 )   $ (2,314 )
                 
GAAP basic and diluted net loss per share   $ (0.32 )   $ (0.18 )   $ (0.79 )   $ (0.56 )
Stock-based compensation and related taxes     0.16       0.14       0.48       0.41  
Restructuring charges     0.15             0.15        
Amortization of intangible assets and acquisition-related costs     0.02       0.01       0.06       0.04  
Litigation costs                 0.02        
Non-GAAP net income (loss) per share   $ 0.01     $ (0.03 )   $ (0.08 )   $ (0.11 )
Non-GAAP weighted-average shares     22,148,123       19,962,735       20,872,253       19,655,727  
                 
GAAP net loss   $ (6,784 )   $ (3,494 )   $ (16,507 )   $ (11,083 )
Reconciling items:                
Interest and other income, net     (128 )     (224 )     (666 )     (599 )
Income tax benefit     (28 )     (146 )     (66 )     (208 )
Depreciation and amortization of capital expenditures     628       655       1,975       1,717  
Stock-based compensation and related taxes     3,383       2,775       10,004       8,003  
Restructuring charges     3,085             3,085        
Amortization of intangible assets and acquisition-related costs     433       197       1,162       766  
Litigation costs                 606        
Adjusted EBITDA   $ 589     $ (237 )   $ (407 )   $ (1,404 )
                 

 




 

 



 


 




 

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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.

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