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OI

OOMA INC (OOMA)·Q3 2025 Earnings Summary

Executive Summary

  • Ooma will report Q3 FY26 (quarter ended Oct 31, 2025) after market close on Dec 8, 2025; pre-release positioning is favorable following Q2 beats vs guidance and raised full-year profitability outlook .
  • Q2 FY26 revenue was $66.4M, with non-GAAP EPS $0.23 and record adjusted EBITDA $7.2M; both non-GAAP net income and adjusted EBITDA were above guidance, demonstrating operating leverage and cash generation strength .
  • Q3 FY26 guidance: revenue $67.2–$67.9M, non-GAAP EPS $0.22–$0.23; full-year FY26 non-GAAP EPS raised to $0.87–$0.89 and non-GAAP net income to $24.5–$25.0M, while revenue remains $267–$270M; adjusted EBITDA target lifted to ~$28.5–$29.0M .
  • Strategic catalyst: definitive agreement to acquire FluentStream (~80k business users), expected to add $24–$25M revenue and $9.5–$10.5M adjusted EBITDA annually at ~4.5x EBITDA, accretive to non-GAAP EPS and adjusted EBITDA on closing (expected Q4 FY26) .

What Went Well and What Went Wrong

What Went Well

  • Strong Q2 execution with record adjusted EBITDA of $7.2M and non-GAAP net income $6.5M; CEO: “these results show the power of our business to grow top line revenue, while also driving improved bottom line profitability” .
  • AirDial momentum: bookings more than doubled YoY; largest national retail win with anticipated rollout across ~3,000 locations; expanding reseller base (~35 partners), including Comcast and T-Mobile; CFO indicated AirDial contributing meaningfully to ARR and business user adds .
  • Operating leverage: R&D down 6% YoY and held at ~17% of revenue; CFO raised FY26 non-GAAP net income and EPS guidance, citing R&D efficiency and disciplined S&M ROI .

What Went Wrong

  • Residential subscription and services revenue declined 2% YoY in Q2, highlighting ongoing pressure in consumer segment despite slightly reduced churn vs Q1 .
  • Product and other gross margin remained negative (-47% in Q2), reflecting heavier mix from AirDial installations, although improved vs prior year due to consuming higher-cost components .
  • Visibility on Q3 revenue includes variability from customer installation timing in AirDial, driving a relatively wide Q3 guidance range; management flagged timing risk rather than churn .

Financial Results

MetricQ1 FY26 (Apr 30, 2025)Q2 FY26 (Jul 31, 2025)Q3 FY26 Guidance
Revenue ($USD Millions)$65.0 $66.4 $67.2–$67.9
GAAP Net Income ($USD Millions)$(0.1) $1.3 $0.9–$1.3
Non-GAAP Net Income ($USD Millions)$5.6 $6.5 $6.0–$6.4
Adjusted EBITDA ($USD Millions)$6.7 $7.2 N/A (not guided)
GAAP Diluted EPS ($USD)$(0.01) $0.04 $0.04–$0.05
Non-GAAP Diluted EPS ($USD)$0.20 $0.23 $0.22–$0.23
Gross Margin % (GAAP)63% 62% N/A

Segment/Revenue Mix

MetricQ1 FY26Q2 FY26Q3 FY26 Guidance
Subscription & Services Revenue ($USD Millions)$60.3 $61.1 N/A
Product & Other Revenue ($USD Millions)$4.8 $5.2 $5.7–$6.2
Subscription & Services % of Total93% 92% 91–92% FY mix

KPIs

KPIQ1 FY26Q2 FY26
Core Users (000s)1,225 1,230
Business Users (000s)499 508
Office Pro/Pro Plus Take Rate (New Office users, %)61% 61%
Blended ARPU ($/month)$15.37 $15.68
Annual Exit Recurring Revenue ($USD Millions)$234 $240
Net Dollar Subscription Retention (%)99% 100%
Subscription & Services Gross Margin (%)72% 71.3%
Product & Other Gross Margin (%)-41% -47%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Total Revenue ($USD Millions)FY26$267–$270 $267–$270 Maintained
GAAP Net Income ($USD Millions)FY26$0.6–$1.6 $3.5–$4.0 Raised
Non-GAAP Net Income ($USD Millions)FY26$22.5–$23.5 $24.5–$25.0 Raised
Non-GAAP Diluted EPS ($USD)FY26$0.79–$0.83 $0.87–$0.89 Raised
Adjusted EBITDA ($USD Millions)FY26$28–$29 $28.5–$29.0 Raised
Tariffs Impact ($USD Millions)FY26~$0.5 included ~$0.5 included Maintained
Total Revenue ($USD Millions)Q3 FY26N/A$67.2–$67.9 New
Product & Other Revenue ($USD Millions)Q3 FY26N/A$5.7–$6.2 New
Non-GAAP Net Income ($USD Millions)Q3 FY26N/A$6.0–$6.4 New
Non-GAAP Diluted EPS ($USD)Q3 FY26N/A$0.22–$0.23 New
GAAP Net Income/EPSQ3 FY26N/A$0.9–$1.3; $0.04–$0.05 New

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2 and Q-1)Current Period (Q3 pre-release)Trend
AI/technology initiativesQ2: Connect 5000 5G internet solution planned; new AI features for SMB, easy/low-cost; integrations expanding; Q1: bringing Ooma IP/apps onto 2600Hz; contact center and API focus .Continued AI feature development for SMB; desktop/mobile apps and team chat launched; platform strengthening .Positive momentum
Supply chain / costsConsumption of high-cost components improved product margins YoY; overall margins flat due to heavier product mix .Mix shift (AirDial installations) still weighs on product margins; subscription margins stable ~71–72% .Improving but mix-sensitive
Tariffs / macroFY26 includes ~$0.5M tariff impact; demand steady for UCaaS; accelerating AirDial demand; minimal tariff effect on sales cycles observed .Maintained ~$0.5M tariff estimate in updated FY26 guidance .Neutral
Product performanceAirDial bookings doubled YoY; largest retail win (~3,000 sites); reseller expansion (Comcast, T-Mobile, ~35 partners) .Q3 product revenue guided $5.7–$6.2M, reflecting installation ramp .Accelerating
Regional trendsFocus North America for AirDial; services in 32 countries via IWG; cautious on international AirDial until lead carrier emerges .No change; priority remains NA .Stable
R&D executionR&D down 6% YoY; leverage targeted lower over time; significant IP integration to 2600Hz in progress (mobile/desktop apps launched); end-of-year target .Continued R&D efficiency; FY26 non-GAAP profitability raised .Positive leverage

Management Commentary

  • CEO (Q2): “We achieved record non-GAAP net income of $6.5 million and record adjusted EBITDA of 7.2 million… results show the power of our business to grow top line revenue, while also driving improved bottom line profitability.” .
  • CEO (Q2): “Connect 5000 is a 5G internet solution… sold with Ooma Office… allows us to offer a more complete solution… opportunity to increase our revenue and have a deeper relationship with our customers.” .
  • CFO (Q2): “Q2 non-GAAP net income was $6.5 million, above our guidance… driven by improving operating leverage… product revenue up 15% YoY due to growth in AirDial installations.” .
  • CEO (Q1): “Comcast launched AirDial on schedule… we are engaged on very large deals… we now exceed 30 reseller partners for AirDial.” .

Q&A Highlights

  • AirDial contribution: CFO indicated AirDial is starting to contribute meaningfully to ARR and business user growth; business adds up 9k QoQ with a “good chunk” from AirDial .
  • Reseller ramp: Nearly 35 resellers; Comcast orders beginning, back-half acceleration possible; T-Mobile “never been stronger” on AirDial .
  • Guidance variability: Q3 range reflects installation timing at customers, not expected churn; conservatism driven by AirDial install schedules .
  • Profitability focus: Share repurchases (~$4.5M in Q2 TTM ~$14.5M) do not preclude tuck-in M&A; disciplined approach to accretive acquisitions .
  • Churn clarity: IWG/Regus seat churn (~12–13k last two quarters; ~19–20k last FY) largely behind the company by Q1; NRR at 99% in Q1 and 100% in Q2 .

Estimates Context

  • Wall Street consensus via S&P Global for Q3 FY26 was unavailable at time of writing due to API request limits; Q3 results are scheduled for Dec 8, 2025. We will update comparisons to consensus post-release .
  • Company guidance implies Q3 revenue $67.2–$67.9M and non-GAAP EPS $0.22–$0.23; product revenue $5.7–$6.2M, suggesting continued AirDial-driven mix in Q3 .

Key Takeaways for Investors

  • Pre-release setup is constructive: Q2 delivered beats vs guidance and raised FY26 profitability metrics; Q3 guidance suggests sequential top-line growth, with AirDial installations driving product revenue mix .
  • Watch AirDial execution in Q3/Q4: Installation timing and large national retail rollout (~3,000 locations) are near-term revenue/cash flow catalysts; reseller momentum (Comcast, T-Mobile) underpins pipeline .
  • Full-year non-GAAP EPS raised to $0.87–$0.89 and non-GAAP net income to $24.5–$25.0M—evidence of improved operating leverage and R&D efficiency even with heavier product mix .
  • FluentStream acquisition (expected Q4 close) is accretive and expands SMB footprint (~80k users), adding $24–$25M revenue and $9.5–$10.5M adj. EBITDA annually at ~4.5x multiple—track closing and integration plan .
  • Margin watch: Subscription margins stable (~71–72%); product margins remain negative but improving YoY; overall gross margin mix-sensitive to AirDial installations .
  • Capital allocation: Strong FCF ($20M TTM) supports buybacks and tuck-in M&A; management remains disciplined on CAC and operating efficiency .
  • Event catalyst: Q3 results and call on Dec 8; monitor any updates to FY26 revenue or margin outlook and explicit commentary on AirDial install cadence and FluentStream closing timeline .

Additional Relevant Press Releases (Q3 FY26 period)

  • Zapier integration added to Ooma Office Pro Plus (no extra cost), enabling low-code automation across 8,000+ apps—supports SMB productivity narrative .
  • Ooma’s definitive agreement to acquire FluentStream—strategic and financial accretion; funding via cash and bank debt .

Notes:

  • Q3 FY26 earnings materials (8-K 2.02 and call transcript) are not yet published; Ooma has scheduled the release for Dec 8, 2025 .
  • All quantitative figures above are sourced from Ooma’s Q1/Q2 FY26 press releases and earnings calls; consensus estimates from S&P Global were unavailable at time of writing due to request limits.