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Ooma (OOMA)
NYSE:OOMA
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Ooma
(NYSE:OOMA)
Rating:65Neutral
Price Target:
$14.00
▲( 7.94% Upside)
Positive Factors
Financial Performance
Ooma reported better-than-expected F4Q25 results, with non-GAAP EPS and adj. EBITDA surpassing consensus expectations, which left the stock up 4% in the aftermarket.
Market Opportunities
The extent of the market opportunity for AirDial is conveyed by more than 20 million North American POTS lines requiring urgent actions to avoid cost escalations, limit potential safety liabilities, and reduce business disruptions.
Product Development
An especially significant win was Marriott Hotels and Resorts extending brand certification to AirDial as its only approved POTS replacement solution.
Negative Factors
Competitive Position
Full year F2026 top line is guided to $267-$270M, actually somewhat below Benchmark’s prior $275M estimate especially as immediate AirDial gains have been muted by an interregnum off Verizon’s pending acquisition of Frontier.
Growth Challenges
Guidance was mixed, with muted growth expected and challenges associated with predicting the timing of AirDial revenue ramp.
Guidance and Outlook
Fiscal 2026 guidance fell short of consensus growth expectations with revenue guidance impacted by downsell at Ooma's largest customer.
Ooma (OOMA) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$357.46M
Dividend YieldN/A
Average Volume (3M)112.62K
Price to Earnings (P/E)―
Beta (1Y)0.81
Revenue Growth8.50%
EPS Growth-743.51%
CountryUS
Employees1,186
SectorCommunication Services
Sector Strength86
IndustryTelecommunications Services
Share Statistics
EPS (TTM)0.21
Shares Outstanding27,560,724
10 Day Avg. Volume94,869
30 Day Avg. Volume112,616
Financial Highlights & Ratios
PEG Ratio-0.56
Price to Book (P/B)4.11
Price to Sales (P/S)0.00
P/FCF Ratio17.68
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$18.25Price Target Upside40.71% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering6
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 its subscription-based model, offering communication services to both residential and business customers. For residential users, Ooma provides VoIP phone services which typically include the sale of hardware devices like the Ooma Telo, followed by ongoing service subscriptions. For business customers, Ooma offers a suite of business phone services, including Ooma Office, which charges a monthly fee per user for access to its cloud-based phone system. Additionally, Ooma earns from smart security products and managed service offerings. The company may also enter into partnerships with retailers and service providers to expand its market reach and enhance its distribution channels, contributing to its revenue streams.
Ooma Financial Statement Overview
Summary
Ooma's financial performance shows strong revenue growth and improved cash flow management. However, persistent profitability issues and operational inefficiencies remain challenges. The balance sheet has strengthened, with increasing equity and a healthier debt profile. Overall, while the company is on a positive trajectory, addressing operational losses is essential for long-term sustainability.Income Statement
Ooma has demonstrated consistent revenue growth with an increase from $151.6M in 2020 to $256.9M in 2025, indicating strong top-line growth. The gross profit margin has remained healthy, hovering around 60% recently. However, the company has been struggling with profitability, as evidenced by negative net income and EBIT margins over the years. The negative EBIT and EBITDA margins reflect operational challenges.68
Positive
Balance Sheet
The balance sheet appears relatively stable with stockholders' equity increasing from $28.4M in 2020 to $85.3M in 2025. The debt-to-equity ratio has improved as the company reduced its total debt relative to equity. The equity ratio has increased, indicating a stronger financial footing and reduced leverage risk. Despite these improvements, the company still needs to address its net debt position.73
Positive
Cash Flow
Cash flow has significantly improved with operating cash flow increasing from negative figures in 2020 to $26.6M in 2025. The company has managed to generate positive free cash flow, showing effective cash management. The operating cash flow to net income ratio is strong, suggesting good cash generation relative to accounting profits. However, free cash flow growth can be volatile, and further stability is needed.75
Positive
| Breakdown | ||||
| Mar 2025 | Mar 2024 | Mar 2023 | Mar 2022 | Mar 2021 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 256.85M | 236.74M | 216.16M | 192.29M | 168.95M | Gross Profit |
| 156.02M | 147.23M | 137.65M | 118.44M | 104.80M | EBIT |
| -6.94M | -3.29M | -5.76M | -1.93M | -2.77M | EBITDA |
| 6.99M | 8.18M | 3.28M | 5.43M | 4.60M | Net Income Common Stockholders |
| -6.90M | -835.00K | -3.65M | -1.57M | -2.44M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 17.87M | 17.54M | 26.86M | 31.28M | 28.31M | Total Assets |
| 149.19M | 159.25M | 131.00M | 109.25M | 89.10M | Total Debt |
| 15.95M | 29.68M | 14.04M | 14.45M | 2.81M | Net Debt |
| -1.92M | 12.14M | -10.09M | -5.21M | -14.48M | Total Liabilities |
| 63.92M | 81.17M | 67.86M | 58.20M | 49.55M | Stockholders Equity |
| 85.28M | 78.09M | 63.14M | 51.06M | 39.55M |
| Cash Flow | Free Cash Flow | |||
| 20.16M | 6.11M | 3.56M | 2.45M | 1.21M | Operating Cash Flow |
| 26.61M | 12.27M | 8.77M | 6.66M | 4.37M | Investing Cash Flow |
| -6.45M | -35.33M | -6.15M | -4.89M | 229.00K | Financing Cash Flow |
| -19.82M | 16.45M | 1.84M | 601.00K | 1.02M |
Ooma Technical Analysis
Negative
12.97
Price Trends
12.85
Positive
13.58
Negative
12.83
Positive
Market Momentum
0.23
Negative
48.21
Neutral
31.47
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For OOMA, the sentiment is Negative. The current price of 12.97 is below the 20-day moving average (MA) of 13.03, above the 50-day MA of 12.85, and above the 200-day MA of 12.83, indicating a neutral trend. The MACD of 0.23 indicates Negative momentum. The RSI at 48.21 is Neutral, neither overbought nor oversold. The STOCH value of 31.47 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative 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 1 New Risks
1.
Q3, 2024
Ooma Peers Comparison
Overall Rating
UnderperformOutperform
Sector (60)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
76 Outperform | $204.53M | 24.17 | 9.35% | ― | 18.23% | 81.31% | |
65 Neutral | $357.46M | ― | -8.45% | ― | 8.50% | -743.51% | |
65 Neutral | $368.33M | ― | 0.20% | ― | 9.62% | ― | |
60 Neutral | $14.12B | 6.43 | -3.57% | 3.69% | 2.49% | -35.43% | |
58 Neutral | $619.67M | ― | -12.42% | ― | 1.91% | 15.71% | |
52 Neutral | $213.64M | ― | -5.79% | 6.84% | -5.46% | -76.33% | |
48 Neutral | $361.56M | ― | -26.19% | ― | -8.37% | 78.45% |
* Communication Services Sector Average
Performance Comparison
OOMA
Ooma
12.97
5.07
64.18%
ATNI
ATN International
14.04
-8.56
-37.88%
RDCM
Radcom
12.76
3.41
36.47%
SIFY
Sify Technologies
5.10
-4.98
-49.40%
RBBN
Ribbon Communications
3.51
0.35
11.08%
WOW
Wideopenwest
4.23
-0.56
-11.69%
Ooma Earnings Call Summary
Earnings Call Date:Mar 04, 2025
(Q4-2025)
| % Change Since: -5.67%|
Next Earnings Date:May 28, 2025
Earnings Call Sentiment Positive
Ooma's earnings call shows a positive outlook with strong financial growth in FY'25 and promising guidance for FY'26. The company has made significant progress in its POTS replacement segment and business subscriptions. However, challenges such as user churn and uncertainty in AirDial's revenue ramp present risks.Q4-2025 Updates
Positive Updates
Solid Revenue and Non-GAAP Net Income Growth
For FY'25, Ooma achieved $256.9 million in revenue, representing an 8% year-over-year increase, and a 17% growth in non-GAAP net income year-over-year, reaching $18 million.
POTS Replacement Segment Success
Ooma AirDial received brand certification from Marriott Hotels and Resorts, positioning it as the preferred POTS replacement solution for Marriott's properties.
Business Subscription Growth
Business subscription and services revenue grew 13% year-over-year, with an average monthly subscription revenue per core user increasing by 4% year-over-year.
Strong Free Cash Flow
Ooma generated over $20 million in free cash flow in FY'25, a 230% increase over the previous year.
Positive Outlook for FY'26
Guidance for FY'26 includes expected total revenue of $267 million to $270 million, with 5% to 6% growth in business subscription and services revenue.
Negative Updates
Churn and User Decline
Ooma experienced a sequential decline in total core users, primarily due to seat reductions with IWG, leading to a net dollar subscription retention rate decrease to 98%.
Challenges with AirDial Revenue Ramp
The pace of AirDial revenue ramp with new partners and customers remains uncertain, impacting revenue predictability.
Residential Subscription Revenue Decline
Residential subscription and services revenue declined by 1% year-over-year.
Company Guidance
During the call, Ooma Inc. provided guidance for the first quarter and full fiscal year 2026, projecting total revenue between $267 million to $270 million, with the business subscription and services revenue expected to grow by 5% to 6%. They anticipate the residential subscription revenue to decline by 1% to 2%. For Q1 2026, revenue is forecasted between $64.7 million to $65.1 million. The company 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, reflecting an adjusted EBITDA margin close to 11%. Ooma expects non-GAAP diluted EPS for the full fiscal year to range from $0.77 to $0.82, assuming approximately 28.6 million weighted average diluted shares outstanding. Their guidance reflects anticipated churn from IWG in Q1 and cautious expectations for the ramp-up of AirDial revenue with new partners.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
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.