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Ooma (OOMA)
NYSE:OOMA
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Ooma
(NYSE:OOMA)
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Rating:72Outperform
Price Target:
$16.00
▲(11.11% Upside)
Action:ReiteratedDate:03/06/26
The score is driven primarily by improving financial performance (notably strong free cash flow and better profitability) and a positive earnings outlook with expanding EBITDA expectations. These strengths are tempered by a high valuation (P/E ~46.6) and overbought technical conditions that increase near-term volatility risk.
Positive Factors
Free cash flow growth
Material multi-year free-cash-flow improvement shows durable cash-generation capability. Sustained FCF enhances the firm's ability to fund organic growth, pay down debt, pursue accretive M&A, and return capital via buybacks without relying on external financing.
Conservative leverage and stronger equity base
Low debt-to-equity and a modest absolute debt load strengthen financial flexibility over the medium term. This balance-sheet resilience reduces bankruptcy and refinancing risk, enabling management to invest in product rollout and complete integrations with limited stress from interest burdens.
Business subscription momentum and ARPU gains
Rapid business subscription growth and rising ARPU demonstrate structural mix shift to higher-margin, recurring revenues. A larger business base increases revenue predictability and upsell opportunities, supporting durable margin expansion and recurring revenue scale over several quarters.
Negative Factors
Uneven operating profitability
Persistent volatility in operating profits and a recent slightly negative EBITDA indicate operating leverage is not fully realized. If management can't sustain margin improvements, earnings and cash conversion may fluctuate materially despite revenue growth, limiting long-term profitability visibility.
Negative product gross margin
A deeply negative product margin reflects structural cost issues or unfavorable product mix (AirDial installs). Unless product unit economics improve, hardware-driven losses could erode consolidated margins and force either higher prices or margin-dilutive investment to sustain growth.
Acquisition integration and related profitability risk
Recent M&A adds scale but brings near-term integration work and assets with low current profitability. Realizing synergies is uncertain and timing-lumpy; combined with remaining acquisition-related obligations, execution missteps could delay margin recovery and constrain free-cash-flow conversion.
Ooma (OOMA) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$400.20M
Dividend YieldN/A
Average Volume (3M)180.05K
Price to Earnings (P/E)50.1
Beta (1Y)0.77
Revenue Growth4.22%
EPS GrowthN/A
CountryUS
Employees1,186
SectorTechnology
Sector Strength88
IndustryTelecommunications Services
Share Statistics
EPS (TTM)0.34
Shares Outstanding27,600,000
10 Day Avg. Volume251,851
30 Day Avg. Volume180,050
Financial Highlights & Ratios
PEG Ratio-0.27
Price to Book (P/B)3.48
Price to Sales (P/S)1.18
P/FCF Ratio14.65
Enterprise Value/Market Cap0.99
Enterprise Value/Revenue1.44
Enterprise Value/Gross Profit2.36
Enterprise Value/Ebitda21.24
Forecast
1Y Price Target
$18.38Price Target Upside27.64% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering5
EPS Forecast (FY)1.21
Revenue Forecast (FY)$316.18M
Ooma Business Overview & Revenue Model
Company DescriptionOoma, Inc. provides communications services and related technologies for businesses and consumers in the United States and Canada. The company's products and services include Ooma Office, a cloud-based multi-user communications system for small and medium-sized businesses; Ooma Office Pro that offers services, including HD video meetings, call recording, enhanced call blocking, and voicemail transcription; Ooma Connect, which delivers fixed wireless internet connectivity; Ooma Managed Wi-Fi, a plug-and-play enterprise-grade Wi-Fi solution; and Ooma Enterprise, a unified-communications-as-a-service solution. It also provides Ooma AirDial, a plain old telephone service; Ooma Telo basic that provides unlimited personal calling within the Unites States; Ooma Premier, a suite of advanced calling features on a monthly or annual subscription basis; PureVoice HD, a residential phone services; Ooma Telo, a home communications solution designed to serve as the primary phone line in the home; and Ooma Telo 4G, which combines the Ooma Telo base station with the Ooma 4G Cellular Adapter and battery back-up. In addition, the company offers Ooma Mobile HD app that allows users to make and receive phone calls and access Ooma features and settings; Ooma Telo Air, a wireless Ooma Telo with built-in Wi-Fi and Bluetooth; Ooma Smart Security, a security and monitoring platform; and Talkatone mobile app. It offers its products through direct sales, distributors, retailers, and resellers, as well as online. Ooma, Inc. was incorporated in 2003 and is headquartered in Sunnyvale, California.
How the Company Makes MoneyOoma generates revenue primarily through subscription services and equipment sales. The company offers different tiers of subscription plans, including Ooma Telo service and Ooma Office plans, which provide users with various features and functionalities for a monthly fee. Additionally, Ooma earns money from the sale of hardware, such as the Ooma Telo device and other communication equipment. The company also benefits from partnerships with internet service providers and technology firms, which enhance its market reach and service offerings. Furthermore, Ooma generates revenue from additional services such as international calling and business applications, contributing to its overall earnings.
Ooma Earnings Call Summary
Earnings Call Date:Mar 04, 2026
(Q4-2026)
| % Change Since: |
Next Earnings Date:Jun 02, 2026
Earnings Call Sentiment Positive
The call conveyed strong operational and financial momentum: record adjusted EBITDA, sizable YoY improvements in non-GAAP net income, robust cash generation, ARPU and recurring revenue growth, and clear AirDial and acquisition-driven growth initiatives. Management provided conservative FY27 guidance that already assumes meaningful Business subscription growth (~30% YoY) and higher adjusted EBITDA while leaving potential acquisition synergies as upside. Key challenges include a still-negative product gross margin (though improving), a slight Residential revenue decline, Phone.com requiring integration to reach profitability, some lumpy and competitive dynamics in AirDial, and remaining acquisition-related debt. Overall, positive operational progress and a constructive outlook outweigh the near-term execution and margin risks.Q4-2026 Updates
Positive Updates
Q4 and Full-Year Revenue Growth
Q4 revenue was $74.6M, up 15% year-over-year; fiscal 2026 revenue was $273.6M, up 7% year-over-year. Excluding Q4 acquisitions, Q4 revenue grew 5% YoY and full-year revenue grew 4% YoY.
Record Adjusted EBITDA and Margin Expansion
Q4 adjusted EBITDA was a record $11.5M (15% of revenue), up 67% YoY. Full-year adjusted EBITDA was $33.9M (12.4% of revenue), up from $23.3M (9% prior year), a 46% YoY increase.
Strong Profitability and Cash Generation
Q4 non-GAAP net income was $9.4M, up 62% YoY; full-year non-GAAP net income was $29.2M, up 62% YoY. Q4 operating cash flow was $10.7M and free cash flow was $9.1M; trailing 12-month FCF was $22M (operating cash flow $27.7M).
Business Segment Momentum and ARPU Improvement
Business subscription and services revenue grew 23% YoY in Q4 (7% YoY excluding acquisitions). Blended ARPU rose 5% YoY to $15.99, driven by a higher mix of Business users and greater take rate for Office Pro/Pro Plus tiers (57% of new Office users choose higher tiers).
User Base and Recurring Revenue Scale
Core users increased to 1,404,000 at quarter end (from 1,233,000 in Q3), including 164,000 Business users from acquisitions. Business users totaled 684,000 (49% of core users). Annual exit recurring revenue rose to $291M, up 24% YoY (5% YoY excluding acquisitions).
AirDial Acceleration
AirDial installations in Q4 more than doubled year-over-year; AirDial new bookings grew approximately 80% YoY in Q4. Added 4 AirDial reseller partners in Q4 (total 41 partners) and achieved record quarterly hospitality wins (over 80 hotels added in Q4).
Accretive Acquisitions Completed
Completed acquisition of FluentStream ($45M) and Phone.com ($23.2M) in Q4. Combined Q4 contribution from these acquisitions was ~$6.1M of revenue (~$6M in Business subscription revenue). Management stated the acquisitions were accretive one quarter forward.
Conservative Guidance with Upside
Fiscal 2027 guidance: revenue $321M–$325M, Business subscription/services growth ~30% YoY, non-GAAP net income $35.5M–$37M and adjusted EBITDA $43M–$44.5M. Management does not yet assume acquisition synergies in guidance, leaving potential upside.
Gross Margin Stability and Product Margin Improvement
Subscription & services gross margin remained stable at 72% YoY. Product & other gross margin improved from -55% to -42% YoY due to consumption of previously procured higher-cost components; overall gross margin remained 63%.
Capital Allocation and Balance Sheet Actions
Generated strong free cash flow, repurchased $4.6M of stock over last 4 quarters, paid down term loan by $6.5M in Q4 (debt reduced from $65M to $58.5M). Ended quarter with $20.1M in cash & investments and 1,420 employees/contractors.
Negative Updates
Product Gross Margin Still Negative
Product & other gross margin remains negative at -42% in Q4 despite improvement (from -55% prior year), reflecting higher-cost product mix from AirDial installations; overall gross margin held flat at 63% due to product mix effects.
Residential Revenue Slight Decline
Residential subscription and services revenue declined 1% YoY in Q4 and management expects Residential subscription revenue to decline 1%–2% for fiscal 2027 (though new product 'My Phone' may offset this over time).
Phone.com Low Current Profitability and Integration Work
Phone.com has low EBITDA today and requires scale and integration to improve margins; management did not include expected synergies in FY27 guidance, meaning near-term benefit is limited and realization timing is uncertain.
Deal Lumpyness and Competitive Pressures in AirDial
AirDial growth can be lumpy due to large single-customer deals (thousands of lines) and competition exists; management remains conservative in forecasting despite strong funnels and partner momentum.
Incremental Operating Expenses from Acquisitions
Total operating expenses rose $1.9M YoY in Q4 due to the additions of FluentStream and Phone.com (excluding acquisitions, operating expenses decreased $0.7M YoY). R&D and sales & marketing increased (R&D +9% YoY) to onboard acquisition teams.
Outstanding Debt and Interest Cost
Acquisition funding included a $65M term loan at 6.4% interest; although $6.5M was repaid in Q4, debt remained $58.5M at quarter end, representing leverage to be paid down while pursuing further M&A and buybacks.
Market Valuation Lag
Management expressed disappointment that improved operational metrics (growth, margin expansion, cash flow) have not yet translated into a meaningfully higher market capitalization, signaling potential investor recognition risk in near term.
Company Guidance
Ooma provided non‑GAAP guidance for Q1 and full‑year fiscal 2027: Q1 revenue $79.6–80.4M (including $5.7–6.1M of product & other), Q1 non‑GAAP net income $8.8–9.2M and non‑GAAP diluted EPS $0.31–0.33 on ~28.0M diluted shares; full‑year revenue $321–325M (assuming Business subscription & services growth of ~30% YoY and Residential subscription revenue down 1–2%), with subscription & services expected to comprise 92–93% of revenue, full‑year non‑GAAP net income $35.5–37.0M, non‑GAAP diluted EPS $1.26–1.31 on ~28.2M shares, and adjusted EBITDA of roughly $43–44.5M (management noted it should be comfortably above $40M); guidance excludes stock‑based compensation, amortization of intangibles, acquisition‑related and other specified items.Ooma Financial Statement Overview
Summary
Improving fundamentals with a return to profitability and strong multi-year free cash flow expansion (FCF up to ~$22.1M in 2026). Balance sheet leverage appears conservative, but operating profitability remains uneven (including slightly negative EBITDA in the latest year per the financial statement notes), which caps the score.Income Statement
Revenue has grown steadily over the last several annual periods (from ~$169M in 2021 to ~$274M in 2026), though growth has decelerated to ~3.6% in the latest year. Profitability has improved meaningfully: after multiple years of losses, the company returned to positive net income in 2026 (~2.5% net margin). Gross margin has remained consistently healthy (~61–64%), but operating profitability remains a key weak spot—EBITDA turned slightly negative in 2026 and prior-year operating results were volatile.68
Positive
Balance Sheet
Leverage looks conservative, with debt-to-equity around ~0.19 in 2025–2026 and total debt modest (~$17M) relative to the equity base (~$93M). Equity has also grown over time, supporting balance-sheet resilience. The main concern is returns: while 2026 return on equity turned positive (~7.5%), the company posted negative returns in most prior years, indicating profitability is still not firmly established.74
Positive
Cash Flow
Cash generation is a clear strength. Operating cash flow and free cash flow have expanded materially (free cash flow rising from ~$1.2M in 2021 to ~$22.1M in 2026), with strong latest-year free-cash-flow growth (~15.6%). Free cash flow is solid relative to earnings in 2026 (about ~0.8x net income), suggesting earnings quality is supported by cash. A weakness is that cash flow coverage metrics are not consistently strong year-to-year, pointing to some variability in cash conversion despite the positive multi-year trend.82
Very Positive
| Breakdown | Jan 2026 | Jan 2025 | Jan 2024 | Jan 2023 | Jan 2022 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 273.60M | 256.85M | 236.74M | 216.16M | 192.29M |
| Gross Profit | 167.24M | 156.02M | 147.23M | 137.65M | 118.44M |
| EBITDA | 18.58M | 6.20M | 8.18M | 3.28M | 5.43M |
| Net Income | 6.46M | -6.90M | -835.00K | -3.65M | -1.57M |
Balance Sheet | |||||
| Total Assets | 227.54M | 149.19M | 159.25M | 131.00M | 109.25M |
| Cash, Cash Equivalents and Short-Term Investments | 20.14M | 17.87M | 17.54M | 26.86M | 31.28M |
| Total Debt | 17.36M | 15.95M | 29.68M | 14.04M | 14.45M |
| Total Liabilities | 134.62M | 63.92M | 81.17M | 67.86M | 58.20M |
| Stockholders Equity | 92.92M | 85.28M | 78.09M | 63.14M | 51.06M |
Cash Flow | |||||
| Free Cash Flow | 22.10M | 20.16M | 6.11M | 3.56M | 2.45M |
| Operating Cash Flow | 27.69M | 26.61M | 12.27M | 8.77M | 6.66M |
| Investing Cash Flow | -69.68M | -6.45M | -35.33M | -6.15M | -4.89M |
| Financing Cash Flow | 44.27M | -19.82M | 16.45M | 1.84M | 601.00K |
Ooma Technical Analysis
Positive
14.40
Price Trends
11.90
Positive
11.64
Positive
12.01
Positive
Market Momentum
0.52
Negative
77.90
Negative
89.70
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For OOMA, the sentiment is Positive. The current price of 14.4 is above the 20-day moving average (MA) of 12.16, above the 50-day MA of 11.90, and above the 200-day MA of 12.01, indicating a bullish trend. The MACD of 0.52 indicates Negative momentum. The RSI at 77.90 is Negative, neither overbought nor oversold. The STOCH value of 89.70 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for OOMA.
Ooma Risk Analysis
Ooma disclosed 63 risk factors in its most recent earnings report. Ooma reported the most risks in the "Legal & Regulatory" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Ooma Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
76 Outperform | $180.49M | 18.42 | 11.43% | ― | 17.27% | 39.41% | |
72 Outperform | $400.20M | 50.13 | 7.25% | ― | 4.22% | ― | |
61 Neutral | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% | |
55 Neutral | $382.35M | -23.34 | -1.70% | 4.63% | -3.10% | 66.00% | |
55 Neutral | $157.16M | -0.95 | ― | ― | 0.06% | 55.55% | |
52 Neutral | $851.09M | -16.17 | -4.41% | 0.97% | 11.59% | -106.83% | |
51 Neutral | $396.87M | 12.80 | -11.40% | ― | 7.38% | 20.81% |
* Technology Sector Average
OOMA
Ooma
14.40
0.35
2.49%
ATNI
ATN International
24.18
5.19
27.34%
RDCM
Radcom
11.20
-0.49
-4.19%
SHEN
Shenandoah Telecommunications Co
15.28
3.60
30.78%
RBBN
Ribbon Communications
2.15
-2.02
-48.44%
KORE
KORE Group Holdings
8.98
6.47
257.77%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.