OOMA Ooma Inc

Ooma, Inc. (NYSE:OOMA), a smart communications platform for small business and residential users, today released financial results for the third quarter ended October 31, 2017.    

Third Quarter Fiscal 2018 Financial Highlights:

• Revenue: Total revenue was $28.5 million, up 6% year-over-year. Driven by 59% growth of Ooma Office, subscription and services revenue increased 10% year-over-year to $25.5 million. Product and other revenue decreased 22% year-over-year to $3.0 million.
• Net Loss: GAAP net loss was $3.2 million, or $0.17 per basic and diluted share, compared to GAAP net loss of $2.8 million, or $0.16 per basic and diluted share, in the third quarter of fiscal 2017. Non-GAAP net loss was $0.4 million, or $0.02 per basic and diluted share, compared to non-GAAP net loss of $0.3 million, or $0.02 per basic and diluted share, in the third quarter of fiscal 2017.
• Adjusted EBITDA: Adjusted EBITDA loss was $0.0 million for the third quarter of fiscal 2018 compared to a gain of $0.1 million in the prior year period.

For more information about non-GAAP net loss and Adjusted EBITDA, see the section below titled "Non-GAAP Financial Measures" and the reconciliation provided in this release.

“We are pleased to deliver a solid third quarter driven by 20% growth in our core Office and residential subscription and services revenue,” said Eric Stang chief executive officer of Ooma.  “We continue to pursue growth initiatives focused on expanding Ooma Office and delivering new services for Ooma Telo.  With our unique platform designed to address small business and residential needs, and the scale of the markets we serve, we believe we’re well positioned for continued growth.”

Business Outlook:

For the fourth quarter fiscal 2018, Ooma expects to report:

• Total revenue between $29.3 million to $29.8 million.
• GAAP net loss in the range of $2.8 million to $3.5 million, and non-GAAP net loss in the range of $0.5 million to $1.0 million.
• GAAP net loss per share in the range of $0.15 to $0.18, and non-GAAP net loss per share in the range of $0.03 to $0.05 based on approximately 19.0 million basic and diluted weighted average common shares outstanding.

For the full fiscal year 2018, Ooma expects to report:

• Total revenue in the range of $113.5 million to $114.0 million.
• GAAP net loss in the range of $13.0 million to $13.7 million, and non-GAAP net loss in the range of $1.6 million to $2.1 million.
• GAAP net loss per share in the range of $0.70 to $0.74, and non-GAAP net loss per share in the range of $0.09 to $0.11 based on approximately 18.6 million basic and diluted weighted average common shares outstanding.

The following is a reconciliation of GAAP net loss to non-GAAP net loss and GAAP basic and diluted loss per share to non-GAAP basic and diluted loss per share guidance for the fourth fiscal quarter and the fiscal year ending January 31, 2018 (in millions, except per share data):

		Projected range
		Three Months Ending		Fiscal Year Ending
		January 31, 2018		January 31, 2018
		(unaudited)
GAAP Net Loss		($2.8)-($3.5)		($13.0)-($13.7)
Stock-based compensation and related taxes		2.2-2.4		11.1-11.3
Amortization of intangibles		0.1		0.3
Non-GAAP Net Loss		($0.5)-($1.0)		($1.6)-($2.1)
Basic and Diluted Net Loss per Share on a GAAP basis		($0.15)-($0.18)		($0.70)-($0.74)
Stock-based compensation and related taxes		0.12-0.13		0.60-0.61
Amortization of intangibles		—		0.01-0.02
Basic and Diluted Net Loss per Share on a Non-GAAP basis		($0.03)-($0.05)		($0.09)-($0.11)
Weighted-average number of shares used in per share amounts:
Basic and diluted		19.0		18.6

Conference Call Information:

Ooma will host a conference call and live webcast for analysts and investors at 5:00 p.m. Eastern time today, November 28, 2017. The news release with the financial results will be accessible from the company's website prior to the conference call. Parties in the United States and Canada can access the call by dialing +1 (833) 233-4456, using conference ID 1876019. International parties can access the call by dialing +1 (647) 689-4135, using conference ID 1876019.

The webcast will be accessible on Ooma's investor relations website at http://investors.ooma.com for a period of one year. A telephonic replay of the conference call will be available through Sunday, December 3, 2017. To access the replay, parties in the United States and Canada should call +1 (800) 585-8367 and use conference ID 1876019. International parties should call +1 (416) 621-4642 and enter conference ID 1876019.

Non-GAAP Financial Measures

In addition to disclosing financial measures prepared in accordance with U.S. generally accepted accounting principles (GAAP), this press release and the accompanying tables contain certain non-GAAP financial measures, including: non-GAAP net loss, non-GAAP net loss per share, non-GAAP gross profit and gross margin, non-GAAP operating loss, and Adjusted EBITDA. Adjusted EBITDA represents the net loss before interest and other expense or income, depreciation and amortization and other non-GAAP expenses.

These non-GAAP financial measures exclude non-cash stock-based compensation expense and related taxes and amortization of intangibles.

These non-GAAP financial measures are presented to provide investors with additional information regarding our financial results and core business operations.  Ooma considers these non-GAAP financial measures to be useful measures of the operating performance of the company, because they contain adjustments for unusual events or factors that do not directly affect what management considers to be Ooma's core operating performance, and are used by the company's management for that purpose.  Management also believes that these non-GAAP financial measures allow for a better evaluation of the company's performance by facilitating a meaningful comparison of the company's core operating results in a given period to those in prior and future periods. In addition, investors often use similar measures to evaluate the operating performance of a company.

Non-GAAP financial measures are presented for supplemental informational purposes only to aid an understanding of the company's operating results. The non-GAAP financial measures should not be considered a substitute for financial information presented in accordance with GAAP, and may be different from non-GAAP financial measures presented by other companies.  A limitation of the non-GAAP financial measures presented is that the adjustments relate to items that the company generally expects to continue to recognize. The adjustment of these items should not be construed as an inference that the adjusted gains or expenses are unusual, infrequent or non-recurring. Therefore, both GAAP financial measures of Ooma's financial performance and the respective non-GAAP measures should be considered together.  Please see the reconciliation of non-GAAP financial measures to the most directly comparable GAAP measure in the tables below.

Disclosure Information

Ooma uses the investor relations section on its website as a means of complying with its disclosure obligations under Regulation FD. Accordingly, investors should monitor Ooma's investor relations website in addition to following Ooma's press releases, SEC filings, and public conference calls and webcasts.

Legal Notice Regarding Forward-Looking Statements

This press release contains forward-looking statements under the Private Securities Litigation Reform Act of 1995. In particular, statements regarding future economic performance, finances, and expectations and objectives of management constitute forward-looking statements. Forward-looking statements can be identified by the fact that they do not relate strictly to historical facts and generally contain words such as "believes," "expects," "may," "will," "should," "seeks," "approximately," "intends," "plans," "estimates," "anticipates," and other expressions that are predictions of or indicate future events and trends and that do not relate to historical matters.  Although the forward-looking statements contained in this press release are based upon information available at the time the statements are made and reflect management's good faith beliefs, forward-looking statements inherently involve known and unknown risks, uncertainties and other factors, which may cause the actual results, performance or achievements to differ materially from anticipated future results. Important factors that could cause actual results to differ materially from expectations include, among others:  our inability to attract new customers on a cost-effective basis; our inability to retain customers; intense competition; our reliance on retailers and reseller partnerships to sell our products; our reliance on vendors to manufacture the on-premise appliances and end-point devices we sell; our reliance on third parties for our network connectivity and co-location facilities; our reliance on third parties for some of our software development, quality assurance and operations; our reliance on third parties to provide the majority of our customer service and support representatives; our limited operating history; and interruptions to our service.  You should not place undue reliance on these forward-looking statements, which speak only as of the date hereof. We do not undertake to update or revise any forward-looking statements after they are made, whether as a result of new information, future events, or otherwise, except as required by applicable law.

The forward-looking statements contained in this press release are also subject to other risks and uncertainties, including those more fully described in our filings with the Securities and Exchange Commission, including the risk factors contained in our Quarterly Report on Form 10-Q for the quarter ended July 31, 2017, filed with the SEC on September 7, 2017. The forward-looking statements in this press release are based on information available to Ooma as of the date hereof, and Ooma disclaims any obligation to update any forward-looking statements, except as required by law.

About Ooma

Founded in 2004, Ooma creates new communications experiences for small businesses and consumers. Its smart platform serves as a communications hub, which offers cloud-based telephony, internet security, home security and other connected services. Ooma combines PureVoice HD call quality and innovative features with mobile applications for reliable anytime, anywhere calling. The company has been ranked the No. 1 home phone service for overall satisfaction and value for five consecutive years by the leading consumer research publication. Ooma is also partnering with connected device makers to create smarter offices and homes. Ooma is available in stores and online from leading retailers. For more information about Ooma, please visit www.ooma.com or follow us on Twitter, LinkedIn or Facebook.

Ooma, PureVoice and the Ooma logo are trademarks of Ooma, Inc. All other company and product names may be trademarks of the respective companies with which they are associated.

Investor Relations:Matthew S. RobisonDirector of IR and Corporate DevelopmentOoma, Inc.ir@ooma.com(650) 300-1480

 

	OOMA, INC
	CONDENSED CONSOLIDATED BALANCE SHEETS
	(Amounts in thousands)
	(unaudited)
		October 31,				January 31,
			2017				2017
	Assets
	Current assets:
	Cash and cash equivalents	$	4,947			$	3,990
	Short-term investments		48,574				49,211
	Accounts receivable, net		3,542				4,714
	Inventories		6,216				5,830
	Deferred inventory costs		1,132				1,620
	Prepaid expenses and other current assets		3,118				1,891
	Total current assets		67,529				67,256
	Property and equipment, net		4,527				4,176
	Intangible assets, net		293				537
	Goodwill		1,117				1,117
	Other assets		284				252
	Total assets	$	73,750			$	73,338
	Liabilities and stockholders' equity
	Current liabilities:
	Accounts payable	$	6,206			$	5,857
	Accrued expenses		12,967				11,579
	Deferred revenue		15,812				15,521
	Total current liabilities		34,985				32,957
	Other liabilities		507				561
	Total liabilities	$	35,492				33,518
	Stockholders' equity:
	Common stock		2				2
	Additional paid-in capital		126,296				117,639
	Accumulated comprehensive loss		(36	)			(11	)
	Accumulated deficit		(88,004	)			(77,810	)
	Total stockholders' equity		38,258				39,820
	Total liabilities and stockholders' equity	$	73,750			$	73,338

 

	OOMA, INC.
	CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
	(Amounts in thousands, except share and per share data)
	(unaudited)
			Three Months Ended								Nine Months Ended
			October 31,				October 31,				October 31,				October 31,
				2017				2016				2017				2016
	Revenue:
	Subscription and services		$	25,524			$	23,179			$	74,830			$	67,086
	Product and other			2,981				3,828				9,440				9,874
	Total revenue			28,505				27,007				84,270				76,960
	Cost of revenue:
	Subscription and services			7,613				7,388				23,176				22,103
	Product and other			3,726				4,276				11,314				11,316
	Total cost of revenue			11,339				11,664				34,490				33,419
	Gross profit			17,166				15,343				49,780				43,541
	Operating expenses:
	Sales and marketing			9,127				8,302				27,526				24,975
	Research and development			7,476				6,244				21,360				17,824
	General and administrative			3,890				3,705				11,511				11,105
	Total operating expenses			20,493				18,251				60,397				53,904
	Loss from operations			(3,327	)			(2,908	)			(10,617	)			(10,363	)
	Other income (expense):
	Interest income, net			160				95				418				259
	Other (expense) income, net			(12	)			(8	)			5				(13	)
	Net loss		$	(3,179	)		$	(2,821	)		$	(10,194	)		$	(10,117	)
	Net loss per share of common stock:
	Basic and diluted		$	(0.17	)		$	(0.16	)		$	(0.55	)		$	(0.58	)
	Weighted-average number of shares used in per share amounts:
	Basic and diluted			18,725,286				17,648,251				18,407,817				17,337,682

 

OOMA, INC
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, amounts in thousands)
		Three Months Ended								Nine Months Ended
		October 31,				October 31,				October 31,				October 31,
			2017				2016				2017				2016
Cash flows from operating activities:
Net loss		$	(3,179	)		$	(2,821	)		$	(10,194	)		$	(10,117	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Stock-based compensation expense			2,635				2,370				8,726				7,243
Depreciation and amortization			509				498				1,604				1,320
Amortization of intangibles			80				83				244				265
Other non-cash income, net			—				—				—				(3	)
Changes in operating assets and liabilities:
Accounts receivable, net			716				(388	)			1,172				743
Inventories			615				(28	)			(386	)			419
Deferred inventory costs			64				594				488				570
Prepaid expenses and other assets			(1,368	)			(316	)			(1,233	)			(99	)
Accounts payable and other liabilities			661				296				1,707				(813	)
Deferred revenue			214				120				251				296
Net cash provided by (used in) operating activities			947				408				2,379				(176	)
Cash flows from investing activities:
Purchases of short-term investments			(18,354	)			(11,063	)			(38,898	)			(44,178	)
Proceeds from maturity of short-term investments			12,644				9,700				37,977				20,650
Proceeds from sale of short-term investments			450				1,350				1,350				4,366
Purchases of property and equipment			(684	)			(116	)			(1,747	)			(1,146	)
Net cash used in investing activities			(5,944	)			(129	)			(1,318	)			(20,308	)
Cash flows from financing activities:
Shares repurchased for tax withholdings on vesting of restricted stock units			(1,470	)			(1,340	)			(1,973	)			(1,340	)
Proceeds from issuance of common stock related to employee stock benefit plans			981				657				1,869				1,447
Repayment of debt related to capital leases			—				—				—				(628	)
Payment of acquisition related earn-out			—				—				—				(100	)
Net cash used in financing activities			(489	)			(683	)			(104	)			(621	)
Net (decrease) increase in cash and cash equivalents			(5,486	)			(404	)			957				(21,105	)
Cash and cash equivalents at beginning of period			10,433				6,712				3,990				27,413
Cash and cash equivalents at end of period		$	4,947			$	6,308			$	4,947			$	6,308

 

OOMA, INC.
Reconciliation of Non-GAAP Financial Measures
Impact of Non-GAAP Adjustments on Reported Net Loss
(Amounts in thousands, except percentages and per share data)
(unaudited)
Reconciliation of non-GAAP financial measures are set forth below:		Three Months Ended								Nine Months Ended
		October 31,				October 31,				October 31,				October 31,
			2017				2016				2017				2016
Revenue		$	28,505			$	27,007			$	84,270			$	76,960
GAAP gross profit		$	17,166			$	15,343			$	49,780			$	43,541
Stock-based compensation and related taxes			262				264				932				752
Amortization of intangibles			40				40				123				122
Non-GAAP gross profit		$	17,468			$	15,647			$	50,835			$	44,415
Gross margin on a GAAP basis			60	%			57	%			59	%			57	%
Gross margin on a Non-GAAP basis			61	%			58	%			60	%			58	%
GAAP operating loss		$	(3,327	)		$	(2,908	)		$	(10,617	)		$	(10,363	)
Stock-based compensation and related taxes			2,722				2,447				8,886				7,320
Amortization of intangibles			80				83				244				265
Non-GAAP operating loss		$	(525	)		$	(378	)		$	(1,487	)		$	(2,778	)
GAAP net loss		$	(3,179	)		$	(2,821	)		$	(10,194	)		$	(10,117	)
Stock-based compensation and related taxes			2,722				2,447				8,886				7,320
Amortization of intangibles			80				83				244				265
Non-GAAP net loss		$	(377	)		$	(291	)		$	(1,064	)		$	(2,532	)
GAAP basic and diluted loss per share		$	(0.17	)		$	(0.16	)		$	(0.55	)		$	(0.58	)
Stock-based compensation and related taxes			0.15				0.14				0.48				0.42
Amortization of intangibles			—				—				0.01				0.02
Non-GAAP basic and diluted loss per share		$	(0.02	)		$	(0.02	)		$	(0.06	)		$	(0.14	)
GAAP net loss		$	(3,179	)		$	(2,821	)		$	(10,194	)		$	(10,117	)
Reconciling items:
Interest and other expense, net			(148	)			(87	)			(423	)			(246	)
Depreciation and amortization			484				459				1,446				1,193
Amortization of intangibles			80				83				244				265
Stock-based compensation and related taxes			2,722				2,447				8,886				7,320
Adjusted EBITDA		$	(41	)		$	81			$	(41	)		$	(1,585	)
Depreciation and amortization applied to Adjusted EBITDA reconciliation excludes amortization related to financing/other income.