Ooma, Inc. Q4 FY2026 Earnings Call - Record Adjusted EBITDA and AirDial momentum prime the company for acquisitive growth and AI monetization

Michelle, Conference Call Operator: Good day, and thank you for standing by. Welcome to the Ooma, Inc. fourth quarter and fiscal year 2026 financial results conference call. At this time, all participants are in a listen-only mode. After the speaker’s presentation, there will be a question-and-answer session. To ask a question at that time, please press star one one on your telephone, and you will hear an automated message advising you your hand is raised. To withdraw your question, please press star one one again. Please be advised that today’s conference is being recorded. I would now like to hand the conference over to your speaker today, Matthew Robison. Please go ahead, sir.

Matt Robinson, Director of Investor Relations and Corporate Development, Ooma, Inc.: Thank you, Michelle. Good day, everyone, welcome to the fourth quarter and fiscal year 2026 earnings call of Ooma Inc. My name is Matt Robinson, Ooma’s Director of IR and Corporate Development. On the call with me today are Ooma’s CEO, Eric Stang, and CFO, Shig Hamamatsu. After the market closed today, Ooma issued its fourth quarter and fiscal 2026 earnings press release. This release is also available on the company’s website, Ooma. This call is being webcast live and is accessible from a link on the Events and Presentations page of the Investor Relations section of our website. This link will be active for replay of this call for one year. During today’s presentation, our executives will make forward-looking statements within the meaning of the federal securities laws. Forward-looking statements generally relate to future events or future financial or operating performance.

Our expectations and beliefs regarding these matters may not materialize, and actual results are subject to risks and uncertainties that could cause actual results to differ materially from those projected. These risks include those set forth in the press release we issued earlier today and those risks more fully described in our filings with the Securities and Exchange Commission. The forward-looking statements in this presentation are based on information available to us as of the date hereof, and we disclaim any obligation to update any forward-looking statements except as required by law. Please note that other than revenue or as otherwise stated, the financial measures to be disclosed on this call will be on a non-GAAP basis. The non-GAAP financial measures are not intended to be considered in isolation or as a substitute for results prepared in accordance with GAAP.

A discussion of why we present non-GAAP financial measures and a reconciliation of the non-GAAP financial measures discussed in this call to the most directly comparable GAAP financial measures is included in our earnings press release, which is available on our website. On this call, we will give guidance for 1st quarter and full year fiscal 2027 on a non-GAAP basis. Also, in addition to our press release and 8-K filing, the Overview page and Events and Presentations page in the Investor section of our website, as well as the Quarterly Results page of the Financial Information section of our website include links to information about costs and expenses not included in our non-GAAP values and key metrics of our core subscription businesses. These are titled Supplemental Financial Disclosure 1 and Supplemental Financial Disclosure 2.

Additionally, our investor presentation slides include GAAP and non-GAAP reconciliation and also provides resolution of GAAP expenses that are excluded from non-GAAP metrics. Before I turn this over to Eric, I’d like you to know that we will participate in the 38th annual Roth Conference at Dana Point on March 23rd and 24th. I will hand the call over to Ooma CEO, Eric Stang.

Eric Stang, Chief Executive Officer, Ooma, Inc.: Thank you, Matt. Hi, everyone. Welcome to Ooma’s fourth quarter and fiscal 2026 year-end earnings call. Thanks for joining us. We’re pleased to report strong Q4 financial results to update you on our progress integrating our two Q4 acquisitions, FluentStream and Phone.com, and to discuss our strategy and the positive momentum we see for fiscal 2027. Financially, we’re pleased with our Q4 results, which included solid revenue growth and new records for net income, for Adjusted EBITDA, and for cash flow from operations. Our Adjusted EBITDA in Q4 reached $11.5 million, which equates to 15% of revenue. This result compares favorably to Adjusted EBITDA of 11% of revenue just a year ago. Total Adjusted EBITDA for fiscal 2026 was $33.9 million, up from $23.2 million the prior year and $19.8 million the year before that.

Looking forward, we expect our fiscal 2027 Adjusted EBITDA to be comfortably above $40 million. And as we continue to grow and expand our business, we expect our Adjusted EBITDA to go even higher, which is strategic to our outlook, as higher Adjusted EBITDA affords us greater opportunity to make acquisitions, repurchase stock, and invest in business growth. On the business front, we achieved solid growth in Q4, particularly due to our two acquisitions and a record quarter for AirDial. The additions of FluentStream and Phone.com provide us new avenues for growth, as well as the potential to capture significant synergies. To date, we have only just started the process of integrating these acquisitions and making the most of the opportunity they present. Also in Q4, I’m pleased to report that AirDial added more lines than ever before.

The number of Q4 AirDial lines installed was more than double the number that we installed in the same quarter a year ago. I’m pleased to say, too, that other parts of Ooma also performed well in Q4, particularly our residential solution, Ooma Telo. As was also the case for Q3, Ooma Telo in Q4 added more users than anticipated, such that our total residential user base remained essentially flat in number. All in Q4 was a strong quarter that positions us well for fiscal year 2027. Looking ahead now to fiscal 2027, I’d like to highlight a handful of our most exciting initiatives. The first is the introduction of AI solutions on our Ooma Office platform. This quarter, we intend to introduce several new AI solutions for our customers.

These include transcription and summarization of calls, the ability to drive insights from call data using third-party AI platforms such as ChatGPT or others, an AI-powered answering service, and a full AI receptionist solution. The first two of these will be part of our top pro-plus tier of service, helping us to trade up customers to higher ARPU. The second two will be priced independently in addition to the cost of our current service offerings. Communications is a fertile ground for the use of AI, and we believe AI can bring new business opportunity for Ooma. The second initiative I would like to highlight is our plans for AirDial. We are seeing increased market interest as POTS prices continue to rise and the pace of POTS line shutdowns accelerates.

AT&T announced POTS line price increases last fall and has signaled there will be further price increases this spring. We’re also seeing an increasing number of shutdown announcements, with many forecasts for late this year. We believe these are quite positive trends that will expand the opportunity for AirDial. In part, due to these trends, we added four more AirDial reseller partners in Q4, bringing the total number of partners we have to 41. Some of these partners are switching to Ooma from competitive solutions, which we believe also validates the competitive strength of Ooma AirDial. In select cases, our resellers are being driven to act as the cost they pay for the POTS lines they have purchased and resold can even sometimes exceed the revenue they’re receiving from their end customers.

We are working more closely with our reseller partners than ever before and are seeing them increase their sales and marketing efforts and expand their sales pipelines. It remains our goal to add at least 2 new reseller partners each quarter, and in total, our goal remains to grow our number of AirDial reseller partners to over 50. As far as we have already come with AirDial, we still believe it is early days. Most of the POTS line shutdowns we have seen announced so far have come from AT&T. We don’t see Verizon active yet. We also believe AT&T has years of shutdowns to go. AirDial remains a key investment area for Ooma in fiscal 2027, and we expect to continue our fast expansion.

The third initiative I’d like to mention is our plans for our recent acquisitions, FluentStream and Phone.com, and along with this, our desire to make further acquisitions in the future. In a nutshell, our plans haven’t changed from the announcements we made last fall. FluentStream is a solid business generating high EBITDA that brings us increased channel strength and another outlet to sell AirDial. Phone.com has low EBITDA today, but we expect it can be dramatically improved through scale economies, and Phone.com also affords us a second small business brand in the market with a name and URL that can be highly leveraged. While it’s difficult to forecast the timing and impact, we’ll be working through fiscal 2027 to bring Ooma’s marketing and sales expertise, lean operations, and product strengths to Phone.com.

As a reminder, we were able to acquire both FluentStream and Phone.com at prices that made their acquisitions accretive just 1 quarter forward. We believe acquisitions such as these provide highly cost-effective business expansion. It is a goal of ours for fiscal 2027 to move quickly to pay down the debt we assumed for our recent acquisitions and to make further acquisitions. At this time in our industry, we believe Ooma is well-positioned to do so, and there are many targets to consider. For fiscal 2027, I would like also to comment on our residential business. As I mentioned above, Telo sales the last 2 quarters have been remarkably robust. We believe there are 3 main drivers for this. One is POTS lines are also going away in the residential space. A second is wireless 5G home internet, which allows more consumers to unbundle internet from telephony.

A third is the desire of parents to give their younger kids a phone but avoid screen time. There’s a movement happening among parents to wait until eighth grade before letting a child receive a smartphone. Ooma Family Bundle, consisting of the Ooma Telo and a family-friendly phone, is one way families use our solutions. In fiscal 2027, we intend to launch a new product called MyPhone, which we hope parents will find particularly attractive for use by younger people in the home. We’ll have more to say on this as our strategy unfolds. We believe fiscal 2027 is shaping up nicely for us, with upside opportunities in each of the four areas I’ve just mentioned and more. We also believe we are going into fiscal 2027 in our strongest position ever.

Ooma now serves over 1.4 million core users, is growing solidly, has over $290 million in annual exit recurring revenue, is achieving approximately 99% net dollar retention, and is driving meaningful double-digit Adjusted EBITDA as a % of revenues. With our growth and significantly improved Adjusted EBITDA, we have built a more valuable company.

We’re dismayed that our advances have not yet translated into a meaningfully higher market capitalization, but we’re also confident that that will come in time. Our strong position in each of our four business areas, the market momentum we see in our favor, especially for AirDial, the great strategic partners we have secured who are helping propel our growth, our potential for further accretive acquisitions to layer on additional inorganic growth, and our estimation that Ooma can continue to increase adjusted EBITDA and become more profitable in the future all have us excited about the road ahead. I’ll now turn the call over to Shig, our CFO, to discuss our results and outlook in more detail and then return with some closing remarks.

Shig Hamamatsu, Chief Financial Officer, Ooma, Inc.: Thank you, Eric, and good afternoon, everyone. Before I dive into our fourth quarter financial results, I’d like to quickly recap the financial terms of the two acquisitions we completed during the fourth quarter. We completed the acquisition of FluentStream on December first, 2025, for approximately $45 million in cash. We also completed the acquisition of Phone.com on December twenty-sixth, 2025, for approximately $23.2 million in cash. The financial results of these acquired businesses are included in Ooma’s financial results starting from their respective acquisition completion date in Q4. There are no other contingency payments for either of these acquisitions, and the aggregate cash acquisition price was mostly funded by a $65 million term loan with an interest rate of 6.4%.

I’m going to review our fourth quarter financial results and then provide our outlook for the first quarter and full year fiscal 2027. We had a solid finish to fiscal 2026, with the fourth quarter revenue of $74.6 million, up 15% year-over-year, driven by the growth of Ooma Business, including AirDial, and the additions of FluentStream and Phone.com. On a combined basis, FluentStream and Phone.com added approximately $6.1 million of revenue in Q4, of which $6 million was in business subscription revenue. Excluding the impact of these acquisitions, total revenue in Q4 grew 5% year-over-year. In Q4, business subscription and services revenue accounted for 67% of total subscription and services revenue as compared to 61% in the prior year quarter.

Q4 product and other revenue came in at $5.9 million and was up 30% year-over-year, driven by the growth of AirDial installations. Despite Q4 being a holiday quarter, we had a record number of AirDial line installations, which more than doubled over the prior year quarter. New bookings for AirDial was also robust and grew approximately 80% year-over-year in Q4. On the full year basis, total revenue was $273.6 million for fiscal 2026 as compared to $256.9 million in the prior year, representing 7% growth year-over-year, including 10% growth in business subscription and services revenue. Excluding the impact of the acquisitions, total revenue and the business subscription revenue for fiscal 2026 grew 4% and 6% year-over-year, respectively.

On the profitability front, Q4 non-GAAP net income was $9.4 million and grew 62% year-over-year as we continue to focus on operating leverage in R&D and optimizing our sales and marketing spend. On a full year basis, non-GAAP net income was $29.2 million compared to $18 million in the prior year and also grew 62% year-over-year. Some details on our Q4 revenue. Business subscription and services revenue grew 23% year-over-year in Q4, driven by user growth and ARPU growth for Ooma business and the additions of FluentStream and Phone.com. Excluding the impact of the acquisitions, business subscription and services revenue in Q4 grew 7% year-over-year. On the residential side, subscription and services revenue was down 1% year-over-year.

For the fourth quarter, total subscription and services revenue was $68.7 million or 92% of total revenue as compared to $60.6 million or 93% of total revenue in the prior year quarter. Some details on our key customer metrics. Please note that Q4 ARPU as well as net dollar retention rate excludes the impact of the Q4 acquisitions as these businesses only had a partial quarter starting from their respective acquisition date. We plan to incorporate them into these metrics starting in the first quarter of fiscal 2027 when they have a full quarter with us, which is consistent with our past practice. As for the number of core users and annual exit recurring revenue at the end of Q4, they do incorporate the impact of the acquisitions.

Our blended average monthly subscription and services revenue per core user or ARPU increased 5% year-over-year to $15.99, driven by an increasing mix of business users, including AirDial, as well as higher ARPU Office Pro and Pro Plus users. During the fourth quarter, we continued to see a healthy Office Pro and Pro Plus take rate with 57% of new Ooma Office users opting for these higher-tier services. Overall, 39% of Ooma Office users have now subscribed to these higher-tier services. Our net dollar subscription retention rate for the quarter was 99% as compared to 99% in the third quarter.

We ended the fourth quarter with 1,404,000 core users, including 164,000 business core users from the acquisitions, up from 1,233,000 core users at the end of the third quarter. At the end of the fourth quarter, we had 684,000 business users or 49% of our total core users, an increase of 171,000 from Q3. Our annual exit recurring revenue was $291 million, up 24% year-over-year. Excluding the impact of the acquisitions in Q4, our annual exit recurring revenue grew 5% year-over-year. Some details on our gross margin. Our subscription and services gross margin for the fourth quarter was 72% as compared to 72% in the prior year.

Product and other gross margin for the fourth quarter was -42% as compared to -55% for the same period last year. The year-over-year improvement in product and other gross margin was primarily due to fully consuming higher cost components we had procured a few years ago. On an overall basis, the total gross margin for Q4 was 63% as compared to 63% in the prior year quarter. The flat overall gross margin in Q4 this year reflects the heavier mix of product revenue versus prior year due to an increase in AirDial installations, which offset the improvement in product gross margin. Now some details on operating expenses. Total operating expenses for the fourth quarter were $37 million, an increase of $1.9 million year-over-year due to the additions of FluentStream and Phone.com.

Excluding the impact of the acquisitions, total operating expenses decreased $0.7 million from the same period last year. Sales and marketing expenses for the fourth quarter were $18.4 million or 25% of total revenue, up 4% year-over-year due to the addition of FluentStream and Phone.com expenses. R&D expenses were $12.2 million or 16% of total revenue, up 9% on a year-over-year basis due to the addition of FluentStream and Phone.com team members. G&A expenses were $6.4 million or 9% of total revenue for the fourth quarter, compared to $6.2 million for the prior year quarter. non-GAAP net income for the fourth quarter was $9.4 million or diluted earnings per share of $0.34 as compared to $0.21 in the prior year quarter.

Adjusted EBITDA for the quarter was a record $11.5 million or 15% of total revenue and grew 67% over the prior year quarter. On a full year basis, Adjusted EBITDA was $33.9 million or 12.4% of total revenue, compared to $23.3 million or 9% of total revenue in the prior year. We are pleased with the meaningful step up in Adjusted EBITDA margin realized in fiscal 26 as we continue to focus on growing profitability towards our long-term financial goals. We ended the quarter with total cash investments of $20.1 million. In Q4, we generated $10.7 million of operating cash flow and $9.1 million of free cash flow.

On a trailing twelve months basis, we generated $27.7 million of operating cash flow and $22 million of free cash flow. We spent a total of $16.8 million over the last four quarters, including $4.6 million in Q4, to buy back stock through a combination of open market repurchase and our issue net share settlement. In addition, we already paid down the term loan by $6.5 million in Q4 and reduced the outstanding debt balance from $65 million to $58.5 million at the end of Q4. With strong free cash flow generation, we believe we can continue to maintain a reasonable level of stock repurchase while paying down our debt at a healthy pace. On the headcount front, we ended the quarter with 1,420 employees and contractors.

Now I will provide a guidance for the first quarter and full fiscal year 2027. Our guidance is on a non-GAAP basis and has been adjusted for expenses such as stock-based compensation, amortization of intangibles, and acquisition-related and other expenses. We expect total revenue for the first quarter of fiscal 2027 to be in the range of $79.6 million-$80.4 million, which includes $5.7 million-$6.1 million of product and other revenue. We expect the first quarter non-GAAP net income to be in the range of $8.8 million-$9.2 million. Non-GAAP diluted EPS is expected to be between $0.31 and $0.33.

We estimate 28 million weighted average diluted shares outstanding for the first quarter. For full year fiscal 2027, we expect total revenue to be in the range of $321 million-$325 million. The full year fiscal 2027 revenue guidance assumes business subscription and services revenue growth rate of approximately 30% over fiscal 2026, while residential subscription revenue to decline 1%-2%. In terms of revenue mix for the year, we expect 92%-93% of total revenue to come from subscription and services revenue and the remainder from products and other revenue. We expect non-GAAP net income for fiscal 2027 to be in the range of $35.5 million-$37 million. Based on this guidance range, we estimate our Adjusted EBITDA for fiscal 2027 to be $43 million-$44.5 million.

We expect non-GAAP diluted EPS for fiscal 2027 to be in the range of $1.26-$1.31. We have assumed approximately 28.2 million weighted average diluted shares outstanding for fiscal 2027. In summary, we are pleased with a solid finish to our fiscal 2026 with a record Adjusted EBITDA of $33.9 million for the year, which grew 46% year-over-year, along with a record free cash flow of $22 million. As we start our new fiscal year, we are excited about both organic and inorganic growth opportunities in front of us and remain focused on achieving another meaningful progress towards our long-term financial targets. I’ll now pass it back to Eric for some closing remarks. Eric?

Eric Stang, Chief Executive Officer, Ooma, Inc.: Thank you, Shig. On nearly every metric, Ooma is a stronger company today than ever before. As we now enter fiscal 2027, we’re encouraged by our past execution, the positive market tailwinds we see, particularly for AirDial, our expanding number of strategic partners, and the addition of our 2 acquisitions last quarter. Our team is committed to making fiscal 2027 a great year for Ooma. Thank you for joining our call today. We’ll now take your questions.

Michelle, Conference Call Operator: Thank you. As a reminder to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. One moment while we compile our Q&A roster. Our first question is gonna come from the line of Josh Nichols with B. Riley Securities. Your line is open. Please go ahead.

Josh Nichols, Analyst, B. Riley Securities: Yeah, thanks for taking my question. Always good to see record EBITDA margins and free cash flow profitability for the company. I just was curious, you mentioned it on the call that, you know, FluentStream is already, you know, doing quite well from a EBITDA margin perspective, but you mentioned that you think that there’s room for pretty significant increases for Phone.com. Does the fiscal year 2027 guidance you lay out include very much in the way of potential cost synergies on that front? Would that potentially be some upside to the 2020-2027 outlook that you laid out?

Shig Hamamatsu, Chief Financial Officer, Ooma, Inc.: Yeah, thanks for that question, Josh. You know, profitability guidance, we don’t assume the synergy yet. You know, we wanna start the year conservatively on that note. As we said before, we have a pretty good, you know, track record going back to prior acquisitions to achieve the cost synergies ultimately, on SIP as an example again. You know, as we start the year, we wanted to take that as an upside as we realize then probably second half of the year that’s what we’re targeting to see more meaningful cost synergy. Long story short, the guidance does not assume the synergy benefit yet.

Josh Nichols, Analyst, B. Riley Securities: Great. Well, that’s good to hear. Just in terms of the AirDial catch up, I know you said you thought there was like some customers because of weather and seasonality was gonna be a little bit slower, but the numbers for 4Q that you kind of mentioned for AirDial seem quite strong. When you look at some of those like larger reseller partners, do you expect like the pace of deployments to increase pretty significantly this year relative to last year? Or what’s the expectation there?

Eric Stang, Chief Executive Officer, Ooma, Inc.: Hi, Josh. Yeah, in short, we do. It’s difficult to forecast and, you know, we don’t wanna get out in front of committed agreements that aren’t in place yet. If you look at, you know, funnels and backlogs of opportunity and the, you know, customer response we’re seeing out in the market and just the momentum which AT&T is moving at to increasingly raise prices and retire more POTS lines, we think we have the potential for a very good year ahead. You know, we put some of that into our guidance, but we think there’s definitely upside there as things unfold.

Josh Nichols, Analyst, B. Riley Securities: Great. I guess last question for me, I mean, you really have a pretty well-rounded capital allocation strategy here. You’re buying back stock. You’re generating cash flow. You’re improving the margins, and you’re also looking at M&A. Is the expectation right now with what’s been going on in the market that you’d probably close at least like one additional acquisition this year based on the pipeline, or what’s the expectation there?

Eric Stang, Chief Executive Officer, Ooma, Inc.: Well, as I said in my remarks, we think acquisitions like FluentStream and Phone.com are another great avenue for growth for the company and it’s part of our strategy today. You can never handicap when something’s gonna happen. There are targets out there. Yeah, I, you know, I’m hopeful that every year we’ll be doing some acquisition or acquisitions to augment what we’re doing ourselves just ’cause of the opportunity we see.

Josh Nichols, Analyst, B. Riley Securities: Thanks, Art. Hop back in the queue.

Eric Stang, Chief Executive Officer, Ooma, Inc.: Thank you, Charles.

Michelle, Conference Call Operator: Thank you, and one moment for our next question. Our next question comes from the line of Patrick Walravens with Citizens. Your line is open. Please go ahead.

Kincaid, Analyst, Citizens: Oh, great. This is Kincaid on for Patrick Walravens. Thanks for taking the question. Eric, just wanted to follow up on 2 comments that you’ve made last quarter. Number 1, you said that there was some of the AirDial installations had been pushed out. You mentioned January, so I’d love to get a follow-up on that. I understand that you may not wanna give this every quarter, but you mentioned 50 hotels per quarter was your goal. Love to hear how that’s going.

Eric Stang, Chief Executive Officer, Ooma, Inc.: You bet. Yeah, some of what was pushed out last fall did come in in Q4 or, you know, particularly January. We had a very strong January for AirDial. You know, that momentum’s actually carried into February as well. I think we’re off to a great start for the year on AirDial. You know, on the hotel hospitality front, you know, our goal was to add 50 new hospitality customers every quarter. I think we did a little over 80 in Q4, which is a nice step for us. That might be a record in the terms of the number in any particular quarter. I will say our Marriott relationship is also finally starting to pay off some in contributing to that number. You know, continued good momentum there too.

Kincaid, Analyst, Citizens: Spectacular. Just one last one from me. On the Family Phone Bundle, do you have a sense of what the TAM on that would look like?

Eric Stang, Chief Executive Officer, Ooma, Inc.: That’s a good question. The Ooma Family Bundle is one of three or four bundles we have in the market today, more focused around giving something easy for families to use and have 911 capability for, you know, real landline 911 and things like that. MyPhone, when we announce it, will be specifically targeted towards, you know, that market opportunity we see where parents want to have something in their home for the kids to use that, you know, isn’t putting a, you know, internet and screen time in front of them. We think it’s a very real segment there, and I think that’s partly what’s been buoying our last two quarters success on the residential front.

I think MyPhone is gonna take us the next step, we should have it out in the market in the first half of this year. We have previewed it with a couple of our retail partners, and they love it. We’re, you know, we really believe every family with kids at home, you know, eighth grade or less, is a potential customer for that, so in U.S. and Canada. It’s a real opportunity.

Kincaid, Analyst, Citizens: That’s great. I love it from a values perspective as well. Spectacular. Thanks for the time.

Eric Stang, Chief Executive Officer, Ooma, Inc.: Thank you.

Michelle, Conference Call Operator: Thank you. One moment for our next question. Our next question will come from the line of Matthew Harrigan with The Benchmark Company. Your line is open. Please go ahead.

Matthew Harrigan, Analyst, The Benchmark Company: Oh, thank you. Given the awareness of the copper line replacement quandary is increasing, what are the? It really feels like you’re making accelerations in the approval process and all that, and you’ve kind of reached an inflection point. But the guys who aren’t running with you yet, what are the kind of the ad hoc solutions that they’re adapting? I know, adopting. I know that I’ve asked you this question before, but are you seeing anything in terms of competition from other, you know, providers where there’s any innovation? It feels like, as we’ve also talked about before, this has been going on for a long time. You’ve made a, I think, a fairly conscious decision not to push the sales and marketing, you know, that heavily right now.

I know R&D is coming down a lot, you know, hence the improvement in margins. Are you just generating a tremendous amount of pull demand and you feel vindicated by not pushing sales and marketing, you know, harder? Do you think you could still grow even faster if you push the sales and marketing? Thank you.

Eric Stang, Chief Executive Officer, Ooma, Inc.: Hi. We are growing sales and marketing in our outlook this year, but we have something buoying our efforts, which is all our partners, 41 now, who have signed up to resell AirDial. They’re driving a lot of our success too. Yes, our pricing’s lower with them ’cause they’re reselling, but they’re taking the sales and marketing lift on their shoulders. It’s part of our business model to leverage ourselves with the strength of others to go faster than we could go just ourselves. I will say that I think we ended Q4 with sales and marketing at about 25% of revenue. I certainly wouldn’t wanna see that go lower, and we may see it go higher a little bit as we go through this year.

We’re definitely getting out ahead right now of additional growth opportunities that we think are coming our way on AirDial, and we are hiring in key areas.

Matthew Harrigan, Analyst, The Benchmark Company: Are you seeing anything in the way of other people presenting alternative solutions?

Eric Stang, Chief Executive Officer, Ooma, Inc.: we do have a handful of competitors out there, and who the customer is and all, they might be stronger or weaker in, you know, in terms of relationship with that customer or opportunity. I will say that I still believe I believe strongly that the features and capabilities in our solution are ahead of others in the market. that allows us to really bring it all together for a customer. that’s I think that’s why we’re winning so many of these you know, partner resellers, because they recognize the strength of our solution. I think last fall, we took some additional steps to make our remote device management even more robust for our partners to use.

We have other improvements planned on AirDial this year, or really, I’d say feature additions. I think we’re gonna stay ahead. It’s, you know, I think that, you know, the AirDial market today or the POTS replacement market, somebody’s gonna break through as the winning solution in the market.

Kincaid, Analyst, Citizens: Right.

Eric Stang, Chief Executive Officer, Ooma, Inc.: I think it’s ours to go get, and we’re executing to try to do that.

Kincaid, Analyst, Citizens: Great. Thanks, Eric.

Eric Stang, Chief Executive Officer, Ooma, Inc.: Thank you.

Michelle, Conference Call Operator: Thank you. One moment for our next question. Our next question will come from the line of Arjun Bhatia with William Blair. Your line is open. Please go ahead.

Arjun Bhatia, Analyst, William Blair: Eric, thank you. Can you guys just touch a little bit on the AirDial strength and, you know, I know in the past you’ve talked about implementation hurdles. Just help us understand where we are on that. Is this like a permanent sort of, or more durable tailwind going into 2026, or could there still be some kind of bumps just as we’re thinking about the outlook?

Eric Stang, Chief Executive Officer, Ooma, Inc.: Yeah. Our AirDial grows in a couple of ways. There is a steady stream of business we know or can reasonably forecast we’re gonna drive every quarter through our channel agents, through our own direct sales, through what we know some of our partners have been doing and will keep doing. There’s also big deals out there, larger size deals, and they’re lumpy and you don’t know when a customer’s gonna pull the trigger. I think that there’s been a lot of budgeting to address this segment by larger customers this year that wasn’t in place last year. I know that some of our key reseller partners are putting more emphasis today than they were one year or two ago on this segment.

I’m hopeful we’ll keep winning multiple partners every quarter to bring on board. It’s not all perfect, you know, there is some, there’s certainly an increased momentum. Because it’s lumpy and because one customer can be 5 or 10 thousand lines, ultimately, if it’s a very large customer, you just don’t know when you’re gonna win those and who’s gonna win those. So we’re a little more conservative on how we forecast AirDial today. But the business is certainly out there, and we feel like things are going well for us for all these opportunities.

Arjun Bhatia, Analyst, William Blair: Okay. Perfect. Got it. Thank you. Then, just, you know, when we’re thinking of the sort of residential business, you know, you had a better Q4. You’re kind of talking about MyPhone, might come in, this year. Can that be a growth? Can that grow in 2026, or how are you thinking about the sort of range of outcomes?

Eric Stang, Chief Executive Officer, Ooma, Inc.: I do think it can grow, but I can tell you in our guidance, we have not modeled it that way. But, you know, we don’t expect it to decline either. You know, residential is close to $100 million of revenue for us and a very nice segment for us to be in. You know, we’ve had a little bit of decline over last year and all. Not a lot, but a little, like 1% year-over-year. But I think with MyPhone and some of the trends we’re seeing, I mean, we essentially end users did not decline in Q3 and did not decline in Q4. When MyPhone comes in, maybe we’ll see the users grow a little bit.

I think that’s all I wanna predict at this time. Once we get MyPhone in the market, depending on what retail placement it has, you know, we’ll be updating you. Certainly it’s great to see that the residential phone is not dead. There’s some very good, powerful reasons to have one in the home. 911 being one, something for the kids to use, having a home office with better voice quality, having a parent or mother or father-in-law in the home. There’s all kinds of reasons why it’s a nice convenience. It may be not be a nice convenience at, you know, $30, $40 a month, but with Ooma, it can be as little as just, you know, a few dollars of taxes and fees a month. That’s powerful.

Yeah, we see real market opportunity there, and we’re not, you know. We’re investing in it today.

Arjun Bhatia, Analyst, William Blair: Great. Appreciate the call. Thank you.

Eric Stang, Chief Executive Officer, Ooma, Inc.: You bet.

Michelle, Conference Call Operator: Thank you. As a reminder, if you would like to ask a question, please press star one one on your telephone. Our next question will come from the line of Maxwell Michaelis with Lake Street Capital Markets. Your line is open. Please go ahead.

Maxwell Michaelis, Analyst, Lake Street Capital Markets: Hey guys, thanks for taking my questions. First one, just kinda wanna focus on ARPU. You noted Fluent Stream and Phone.com weren’t included in this quarter’s numbers, but can you give us a sense of what that looks like in Q1? Just give us a sense on what their ARPU looks like compared to Ooma. If we look at sort of the AI offerings you guys mentioned earlier in the call, can you give us a sense of what ARPU looks like for a customer who’s using the highest tier of all the AI offerings?

Shig Hamamatsu, Chief Financial Officer, Ooma, Inc.: In terms of, you know, what we could expect once we incorporate those two acquisitions, you know, they’re relatively comparable to Ooma Office ARPU. I would say slightly lower than Ooma Office, but not too much. You might see a little bit of pull down on ARPU just because of that, but they’re not too far off from Ooma Office is. In a higher tier services, I think your second question was the higher tier services on Ooma Office.

Maxwell Michaelis, Analyst, Lake Street Capital Markets: Well, it was AI.

Shig Hamamatsu, Chief Financial Officer, Ooma, Inc.: AI. With AI, okay. Yeah.

Eric Stang, Chief Executive Officer, Ooma, Inc.: Well, okay. The first 2 services I talked about will be part of Pro Plus, which sells for $29.95 a month. A single digit % of our customers today take the Pro Plus tier. We think with AI included in it, we can move that up, and that will bring our ARPU up. Our Pro tier is $24.95. Our Essentials tier is $19.95. Most of our customers take our Pro tier. You know, the other 2 services I mentioned will be priced separately. We haven’t announced pricing on them, so I can’t give you a specific answer here today, I apologize.

They’ll most likely be a fixed price per month and a usage charge as well, basically if you go over a certain level of usage. I think you can look at these solutions in the market today and see they’re priced above. Generally, those solutions on their own are priced above where our current Ooma Office ARPU is at. I think they have the potential to bring things, bring our overall average up as well.

Maxwell Michaelis, Analyst, Lake Street Capital Markets: Last one for me, just around acquisitions. I think the combined revenue multiple you guys paid for both the companies were around 1.4x sales. I mean, is there a criteria you guys are following or a multiple you guys are willing to pay for higher growth that you guys can share with us?

Eric Stang, Chief Executive Officer, Ooma, Inc.: Yeah, you know, it’s interesting, if you look at the acquisitions we’ve done, we’ve bought two businesses for less than 1x revenue, one for about 1x revenue and FluentStream for more than 1x revenue, but with very strong EBITDA coming from the company. It’s a balance and a trade-off. A business that has low EBITDA, but we think, with our synergies, we can improve, you know, that’s work on our side, and we’re not gonna pay as up as much for that. When we see a business with higher EBITDA that we think is stable and that we can leverage for the future, we’re gonna pay a little more. You know, either way, I think our biggest metric is it accretive?

Do we think putting our dollars there is gonna have more impact than putting them into sales and marketing? I, you know, I think that, you know, we’re kind of a unique company in this whole UCaaS space as well because these businesses in the kind of the $10 million-$30 million revenue range, they’re meaningful for us, but they, you know, there aren’t a lot of other players out there who would want to buy something that size or, you know, have the financial position to do so. I think we’ve got good opportunities and it’s, you know. Always it’s a case-by-case discussion for us over what’s appropriate for that business and what it’s doing.

Maxwell Michaelis, Analyst, Lake Street Capital Markets: All right. Thanks, guys.

Michelle, Conference Call Operator: Thank you. I’m showing no further questions at this time, and I would like to hand the conference back over to management for any further remarks.

Eric Stang, Chief Executive Officer, Ooma, Inc.: Well, thank you, everyone. you know, we’re up to around I think we got it around $320 million-$325 million in revenue for this year. If we can do more acquisitions this year, we’ll be moving that up. I think that part of what we’re doing here is becoming a bigger company, with more reach and more breadth and I think also appealing to a larger investor base, which is also something we’re trying to do as we look forward. We’re excited about these initiatives we went over with you. Four clear initiatives, one around AI, one around AirDial, one around capitalizing the acquisitions we’ve done, and one around our better than expected performance on residential.

I think those are great trends for us as we go into fiscal 2027. Thank you for your time today and I’ll stop there. Thank you, everyone. Bye-bye.

Michelle, Conference Call Operator: This concludes today’s conference call. Thank you for participating, and you may now disconnect. Everyone, have a great day.