Ooma (NYSE:OOMA) reported a stronger-than-expected start to fiscal 2027, with management citing growth in its business communications segment, accelerating adoption of its AirDial POTS replacement product and contributions from recent acquisitions.
CEO Eric Stang said the company exceeded expectations in the first quarter, highlighting year-over-year growth in revenue, non-GAAP net income and adjusted EBITDA. CFO Shig Hamamatsu later said first-quarter revenue was $81.8 million, up 25% from a year earlier, driven by Ooma Business, AirDial and the additions of FluentStream and Phone.com.
Hamamatsu said FluentStream and Phone.com contributed about $11.5 million of revenue during the quarter, their first full quarter under Ooma ownership. Excluding the acquisitions, total revenue grew 7% year-over-year.
Business Services and AirDial Drive Growth
Ooma’s business subscription and services revenue grew 38% year-over-year in the quarter. Excluding the impact of FluentStream and Phone.com, business subscription and services revenue grew 9%, which Stang said represented a step-up in organic growth.
AirDial, Ooma’s product for replacing traditional copper POTS lines, was a key contributor. Stang said AirDial services revenue rose 80% from a year earlier, while new lines installed more than doubled. Hamamatsu added that AirDial bookings increased more than 75% year-over-year.
Stang said market demand for POTS replacement is accelerating as companies face higher charges or line shutdowns from AT&T and other providers. During the quarter, Ooma added features to AirDial including equipment disconnect detection and off-hook alerts, which Stang said were developed in response to a healthcare customer that needed to ensure connections remained available.
Stang said AirDial saw particular success in healthcare, real estate investment trusts, and state and local government customers, including schools. Ooma also added two AirDial resellers in the quarter, including one that Stang said is switching away from a competitor’s product to sell AirDial exclusively. The company now has more than 40 AirDial resellers.
During the question-and-answer session, Stang said implementations are “going great,” and said Ooma is seeing more companies focus on replacing lines that may be shut down. He declined to provide detailed AirDial pipeline figures, but said the company expects AirDial to remain a strong contributor over the next several years.
AI Features Added to Ooma Office
Ooma also introduced Ooma AI, a suite of artificial intelligence capabilities for its Ooma Office platform. Stang said the announced features include AI Transcriptions, AI Answering Service, AI Receptionist, AI Insights and an OpenAI integration.
According to Stang, AI Transcriptions, AI Answering Service and the OpenAI integration have already been released to customers, while two additional features are in beta and expected to be released soon. The AI Answering Service and AI Receptionist will carry separate monthly charges, while other features are included in Ooma’s Pro Plus tier.
Stang said Ooma believes AI can help small businesses automate routine tasks, capture and summarize call information, improve call handling and generate real-time insights. He cited a statistic that more than 50% of calls to small businesses go unanswered by a live person, while nearly 25% go unanswered entirely.
In response to an analyst question, Stang said it is too early to quantify the financial impact of Ooma AI, but said the company hopes the new features will increase adoption of higher-tier service plans and generate incremental revenue.
Residential Business Stabilizes
Ooma’s residential business also showed signs of stabilization. Stang said the company grew its base of residential users for the first time in many quarters, supported by continued strength in Ooma Telo sales.
Management discussed MyPhone, a newly launched modern landline product designed for families with children. Stang said the product is aimed at parents who want to give children calling capabilities without the screen time and risks associated with smartphones.
MyPhone includes features such as Trusted Circle Calling, which allows calls only with approved contacts, Quiet Hours, which blocks calls during designated times, and online call logs for parental monitoring. Stang said the product is available at walmart.com, is expected to roll out to other online retailers and is expected to become available on Walmart store shelves this fall.
Hamamatsu said residential subscription and services revenue was flat year-over-year in the quarter, following stabilization that began in the second half of the prior fiscal year. He said MyPhone users would be premium subscription users and therefore accretive to average residential ARPU.
Profitability, Cash Flow and Balance Sheet
Ooma reported non-GAAP net income of $9.7 million, up 73% year-over-year, or $0.35 per diluted share. Adjusted EBITDA was a record $11.8 million, or 15% of total revenue, up 78% from the prior-year quarter.
Hamamatsu said FluentStream and Phone.com contributed about $2.7 million of non-GAAP net income in the quarter. Excluding the acquisitions, non-GAAP net income grew 24% year-over-year, which he attributed to operating leverage in research and development and optimization of sales and marketing spending.
Total subscription and services revenue was $74.6 million, representing 92% of total revenue. Product and other revenue was $6.6 million, up 37% year-over-year, driven by AirDial installations.
Ooma ended the quarter with 1.42 million core users, up from 1.404 million at the end of the previous quarter. Business users totaled 699,000, or 49% of total core users. The company’s blended average monthly subscription and services revenue per core user rose 9% year-over-year to $16.77. Net dollar subscription retention was 99%.
The company generated $6.4 million in operating cash flow and $4.9 million in free cash flow during the quarter. Over the trailing 12 months, Ooma generated $30.3 million in operating cash flow and $24.5 million in free cash flow. Ooma also repurchased stock through open-market purchases and RSU net share settlement, spending $4.6 million in the first quarter and $17.7 million over the past four quarters.
Hamamatsu said Ooma paid down $5 million of its term loan during the quarter, reducing outstanding debt to $53.5 million. Stang said the company intends to continue paying down debt to strengthen its ability to pursue additional acquisitions.
Guidance Raised for Fiscal 2027
For the second quarter of fiscal 2027, Ooma expects revenue of $81.6 million to $82.3 million, including $6.3 million to $6.7 million of product and other revenue. The company expects non-GAAP net income of $9.4 million to $9.8 million and non-GAAP diluted earnings per share of $0.33 to $0.34.
For the full fiscal year, Ooma expects revenue of $326 million to $328.5 million. The outlook assumes business subscription and services revenue growth of about 31% over fiscal 2026, while residential subscription revenue is expected to be flat to down 1%. Ooma expects non-GAAP net income of $37.5 million to $39 million, adjusted EBITDA of $45 million to $46.5 million and non-GAAP diluted EPS of $1.29 to $1.34.
Hamamatsu said the improved outlook reflects the strong first-quarter baseline but noted that Ooma remains conservative in forecasting AirDial installation timing and MyPhone adoption. Stang said the company is focused on capturing AirDial demand, driving growth through Ooma AI and MyPhone, further improving contributions from FluentStream and Phone.com, and pursuing future acquisitions in North America.
About Ooma (NYSE:OOMA)
Ooma, Inc, headquartered in Sunnyvale, California, is a leading provider of communication services for residential and business customers. Since its founding in 2004, Ooma has built a cloud-based platform that leverages Voice over Internet Protocol (VoIP) technology to deliver voice, video and data services over broadband networks. The company went public on the New York Stock Exchange in 2015 under the ticker OOMA and has continued to expand its service portfolio to meet evolving customer demands.
For residential users, Ooma offers an all-in-one home phone service that includes its flagship Telo device, mobile and web applications, and optional smart home security features.
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