Ooma Inc. ((OOMA)) has held its Q4 earnings call. Read on for the main highlights of the call.
Ooma Inc. recently held its earnings call, revealing a positive sentiment with strong financial growth in FY’25 and promising guidance for FY’26. The company has made notable strides in its POTS replacement segment and business subscriptions, although challenges such as user churn and uncertainty in AirDial’s revenue ramp present potential risks.
Solid Revenue and Non-GAAP Net Income Growth
Ooma reported impressive financial results for FY’25, achieving $256.9 million in revenue, marking an 8% increase year-over-year. Additionally, the company saw a 17% growth in non-GAAP net income, reaching $18 million. These figures underscore Ooma’s robust financial performance and its ability to generate significant income growth.
POTS Replacement Segment Success
The company’s POTS replacement segment, particularly Ooma AirDial, has gained traction, receiving brand certification from Marriott Hotels and Resorts. This certification positions AirDial as the preferred POTS replacement solution for Marriott’s properties, highlighting Ooma’s success in this segment.
Business Subscription Growth
Ooma’s business subscription and services revenue grew by 13% year-over-year, with an average monthly subscription revenue per core user increasing by 4%. This growth indicates a strong demand for Ooma’s business services and a successful expansion of its subscription base.
Strong Free Cash Flow
In FY’25, Ooma generated over $20 million in free cash flow, representing a remarkable 230% increase over the previous year. This substantial growth in cash flow demonstrates the company’s effective financial management and operational efficiency.
Churn and User Decline
Despite the positive financial results, Ooma faced challenges with a sequential decline in total core users, primarily due to seat reductions with IWG. This led to a decrease in the net dollar subscription retention rate to 98%, highlighting the challenges in maintaining user growth.
Challenges with AirDial Revenue Ramp
The pace of AirDial’s revenue ramp with new partners and customers remains uncertain, impacting revenue predictability. This uncertainty poses a risk to Ooma’s future revenue streams, requiring careful management and strategic planning.
Residential Subscription Revenue Decline
Ooma experienced a 1% year-over-year decline in residential subscription and services revenue. This decline suggests challenges in the residential market, which may require strategic adjustments to reverse the trend.
Positive Outlook for FY’26
Looking ahead, Ooma provided guidance for FY’26, projecting total revenue between $267 million to $270 million, with business subscription and services revenue expected to grow by 5% to 6%. However, they anticipate a decline in residential subscription revenue by 1% to 2%. For Q1 2026, revenue is forecasted between $64.7 million to $65.1 million. The company also projects non-GAAP net income for fiscal 2026 in the range of $22 million to $23.5 million, with adjusted EBITDA estimated between $27.5 million to $29 million.
In summary, Ooma’s earnings call reflected a positive sentiment with strong financial growth and promising guidance for the future. The company has achieved significant success in its POTS replacement and business subscription segments, although challenges such as user churn and uncertainty in AirDial’s revenue ramp remain. Investors and stakeholders will be keenly watching how Ooma navigates these challenges while capitalizing on growth opportunities in FY’26.