OOMA INC
For the period ended Apr 30, 2025. Filed Jun 9, 2025.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Apr 30, 2025 · Filed Jun 9, 2025
OOMA$18.00+2.5%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-10-31; filed 2024-12-10.
0000950170-24-134668
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-04-30; filed 2025-06-09.
0000950170-25-083284
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 89 previous paragraphs and 80 current paragraphs.
44 unchanged; 33 reworded; 3 added; 11 removed; 1 previous and 0 current paragraphs rearranged.
Tables are not compared: 9 previous and 9 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (3)
Current report
GAAP net loss was $0.1 million, compared to net loss of $2.1 million in the prior year quarter reflecting continued improvement in our operations.
Current report
As of April 30, 2025, we maintained zero outstanding debt balance consistent with January 31, 2025.
Current report
Product and other revenue increased $0.7 million or 16% year-over-year, primarily attributable to an increase in AirDial shipments.
Removed paragraphs (11)
Previous report
GAAP net loss was $2.4 million, compared to net income of $2.3 million in the prior year quarter reflecting continued investments in our operations and the income tax benefit realized in the prior year quarter due to the acquired intangible assets related to 2600Hz, which did not recur in the current quarter.
Previous report
As of October 31, 2024, we had total debt of $3.0 million, compared to $16.0 million as of January 31, 2024.
Previous report
Subscription and services revenue increased $4.2 million or 8% year-over-year, primarily attributable to an increase in our core users, an increase in AirDial lines, and an increase in the average revenue per core user. Revenue increase year-over-year is also partially attributable to revenue contributed from 2600Hz, which we acquired at the end of third quarter of fiscal 2024.
Previous report
Product and other revenue increased $1.0 million or 26% year-over-year, primarily attributable to an increase of AirDial units shipped, sale of accessories to Ooma Enterprise customers, and other revenue contributed from 2600Hz.
Previous report
We derived approximately 61% and 57% of our total revenue from Ooma Business and approximately 36% and 41% from Ooma Residential for the nine months ended October 31, 2024 and 2023, respectively.
Previous report
Product and other revenue increased $2.3 million or 20% year-over-year, primarily attributable to the increase of AirDial units shipped and sale of accessories to Ooma Enterprise customers.
Previous report
Subscription and services gross margin of 70% decreased year-over-year from 72%. Cost of subscription and services revenue increased $6.9 million year-over-year, primarily due to a $2.7 million increase in infrastructure costs, a $1.9 million increase in depreciation and amortization expense, a $1.4 million increase in regulatory fees, and a $1.3 million increase in personnel-related costs, partially offset by a $0.4 million decrease in supplies and equipment costs.
Previous report
Sales and marketing expenses increased $1.3 million or 7% year-over-year, primarily due to a $1.3 million increase in personnel-related costs to scale with the overall growth of our business.
Previous report
General and administrative expenses increased $0.6 million or 8% year-over-year, primarily due to a $1.0 million increase in personnel-related costs to scale with the overall growth of our business, partially offset by a $0.4 million decrease in acquisition-related costs.
Previous report
General and administrative expenses increased $3.0 million or 15% year-over-year, primarily due to a $1.9 million increase in personnel-related costs, driven by higher headcount, an absence of a $1.0 million facility consolidation gain which did not recur in the current fiscal year, a $0.3 million increase in restructuring costs, partially offset by a $0.4 million decrease in acquisition-related costs.
Previous report
A significant portion of the year-over-year increase in personnel-related costs and amortization of intangible assets for operating expenses was due to the 2600Hz acquisition near the end of the third quarter of fiscal 2024.
Reworded paragraphs (33)
Previous wording
We generate revenues primarily from the sale of subscriptions and other services for our business and residential communications solutions. We generate our product and other revenue from the sale of our on-premise devices and end-point devices. We primarily offer our solutions in the United States and Canada, with limited offerings in certain other countries.
Current wording
We generate revenues primarily from the sale of subscriptions and other services for our business and residential communications solutions. We generate our product and other revenue from the sale of our on-premise devices and end-point devices, including Ooma AirDial. We primarily offer our solutions in the United States and Canada, with limited offerings in certain other countries.
Previous wording
Third Quarter Fiscal 2025 Financial Performance
Current wording
First Quarter Fiscal 2026 Financial Performance
Previous wording
Total revenue was $65.1 million, up 9% year-over-year, primarily driven by the growth of Ooma Business.
Current wording
Total revenue was $65.0 million, up 4% year-over-year, primarily driven by the growth of Ooma Business.
Previous wording
Subscription and services revenue from Ooma Business grew 7% year-over-year, driven by user growth.
Current wording
Subscription and services revenue from Ooma Business grew 6% year-over-year, primarily driven by user growth.
Previous wording
Total gross margin was 60%, comparable to 62% in the prior year quarter.
Current wording
Total gross margin was 62%, up from 61% in the prior year quarter.
Previous wording
Adjusted EBITDA was $5.7 million, compared to $5.0 million in the prior year quarter.
Current wording
Adjusted EBITDA was $6.7 million, compared to $5.0 million in the prior year quarter.
Previous wording
As of October 31, 2024, we had total cash and cash equivalents of $17.1 million, compared to $17.5 million as of January 31, 2024.
Current wording
As of April 30, 2025, we had total cash and cash equivalents of $19.0 million, compared to $17.9 million as of January 31, 2025.
Previous wording
Core Users increased year-over-year, which was primarily driven by growth in business users. As of October 31, 2024, Ooma Business users comprised approximately 41% of our total core users, up from 38% as of October 31, 2023. We believe that the number of our core users is an indicator of our market penetration, the growth of our business and our anticipated future subscription and services revenue. We define our core users as the number of active residential user accounts and business user extensions (excluding Talkatone and 2600Hz users). We believe that the relationship that we establish with our core users positions us to sell additional premium communications services and other new connected services to them.
Current wording
Core Users decreased year-over-year, which was primarily driven by a decline in Ooma Residential users, partially offset by an increase in Ooma Business users. As of April 30, 2025, Ooma Business users comprised approximately 41% of our total core users, up from 39% as of April 30, 2024. We define our core users as the number of active residential user accounts and business user extensions (excluding Talkatone and 2600Hz users). We believe that the relationship that we establish with our core users positions us to sell additional premium communications services and other new connected services to them.
Previous wording
Annualized Exit Recurring Revenue ("AERR") grew year-over-year due to an increase in the average revenue per core user, which was largely driven by an increasing mix of business users. We believe that AERR is an indicator of recurring subscription and services revenue for near-term future periods. We estimate our AERR by dividing our recurring quarterly subscription revenue from our Core Users by the average number of core users each quarter and annualize by multiplying by four. We then multiply that result by the number of core users at the end of the period to calculate AERR. Beginning in the third quarter of fiscal 2024, the AERR includes the annual recurring revenue from 2600Hz.
Current wording
Annualized Exit Recurring Revenue ("AERR") grew year-over-year due to an increase in the average revenue per core user, which was largely driven by an increasing mix of Business users. We believe that AERR is an indicator of recurring subscription and services revenue for near-term future periods. We estimate our AERR by dividing our recurring quarterly subscription revenue from our Core Users by the average number of core users each quarter and annualize by multiplying by four. We then multiply that result by the number of core users at the end of the period to calculate AERR. AERR includes the annual recurring revenue from 2600Hz.
Previous wording
Net Dollar Subscription Retention Rate (“NDRR”) increased due to reduction in user churn and increase in Average Monthly Recurring Subscription Revenue. We believe that our net dollar subscription retention rate provides insight into our ability to retain and grow our subscription and services revenue and is an indicator of the long-term value of our customer relationships and the stability of our revenue base.
Current wording
Net Dollar Subscription Retention Rate (“NDRR”) stayed consistent year-over-year. We believe that our net dollar subscription retention rate provides insight into our ability to retain and grow our subscription and services revenue and is an indicator of the long-term value of our customer relationships and the stability of our revenue base.
Previous wording
In addition, we use Adjusted EBITDA (Earnings Before Interest Tax and Depreciation and Amortization) to manage our business, evaluate our performance and make planning decisions. We consider this metric to be a useful measure of our operating performance, because it contains adjustments for unusual events or factors that do not directly affect what management considers being the core operating performance, and are used by our management for that purpose. We also believe this measure enables us to better evaluate our performance by facilitating a meaningful comparison of our core operating results in a given period to those in prior and future periods. Investors often use similar measures to evaluate the operating performance with competitors. Adjusted EBITDA represents net income before interest and other income, income taxes, depreciation and amortization of capital expenditures, amortization of intangible assets and acquisition related costs, stock-based compensation and related taxes, litigation costs, restructuring costs, gain on note conversion, and facilities consolidation gain.
Current wording
In addition, we use Adjusted EBITDA (Earnings Before Interest Tax and Depreciation and Amortization) to manage our business, evaluate our performance and make planning decisions. We consider this metric to be a useful measure of our operating performance, because it contains adjustments for unusual events or factors that do not directly affect what management considers the core operating performance, and are used by our management for that purpose. We also believe this measure enables us to better evaluate our performance by facilitating a meaningful comparison of our core operating results in a given period to those in prior and future periods. Investors often use similar measures to evaluate the operating performance with competitors. Adjusted EBITDA represents net income before interest and other income, income taxes, depreciation and amortization of capital expenditures, amortization of intangible assets, stock-based compensation and related taxes, litigation costs, restructuring costs and gain on note conversion.
Previous wording
Adjusted EBITDA does not consider the impact of interest and other income/expense, income taxes, stock-based compensation and related taxes, amortization of intangible assets, acquisition-related costs, litigation costs, restructuring costs and non-recurring gains; and
Current wording
Adjusted EBITDA does not consider the impact of interest and other income/expense, income taxes, stock-based compensation and related taxes, amortization of intangible assets, litigation costs and restructuring costs; and
Previous wording
Product and other gross margin may fluctuate from period-to-period based on a number of factors, including total units shipped as compared to the direct costs of production and relatively fixed personnel costs incurred. We sell our on-premise devices at aggressive price points to facilitate the adoption of our platforms and services. Additionally, some product costs have become subject to significantly higher pricing that we experienced due to supply chain constraints in the global macroeconomic environment and, increasing tariffs, as well as certain components becoming subject to end-of-life and we may not be able to fully offset such higher costs through price increases. Another factor is the high AirDial installation costs due to ramp up efforts. Accordingly, we expect our product and other gross margin will continue to be negatively impacted by these higher component costs and AirDial installation costs. We expect our product and other gross margin to continue to be negative for the foreseeable future.
Current wording
Product and other gross margin may fluctuate from period-to-period based on a number of factors, including total units shipped as compared to the direct costs of production and relatively fixed personnel costs incurred. We sell our on-premise devices at aggressive price points to facilitate the adoption of our platforms and services. Additionally, some product costs have become subject to significantly higher pricing reflecting supply chain constraints in the global macroeconomic environment and the impacts of increasing tariffs or trade restrictions and related uncertainty, as well as certain components becoming subject to end-of-life and we may not be able to fully offset such higher costs through price increases. Accordingly, we expect our product and other gross margin will continue to be negative for the foreseeable future as they are negatively impacted by these higher component costs and AirDial installation costs.
Previous wording
General and administrative expenses consist of personnel costs for our finance, legal, human resources and other administrative employees and contractors, as well as professional service fees, certain acquisition-related costs, and allocated overhead costs. We expect our general and administrative expenses to increase in absolute dollars as we continue to grow our business.
Current wording
General and administrative expenses consist of personnel costs for our finance, legal, human resources and other administrative employees and contractors, as well as professional service fees, and allocated overhead costs. We expect our general and administrative expenses to increase in absolute dollars as we continue to grow our business.
Previous wording
Comparison of the three and nine months ended October 31, 2024 and 2023(dollars in tables are in thousands):
Current wording
Comparison of the three months ended April 30, 2025 and 2024(dollars in tables are in thousands):
Previous wording
We derived approximately 62% and 58% of our total revenue from Ooma Business and approximately 36% and 39% from Ooma Residential for the three months ended October 31, 2024 and 2023, respectively.
Current wording
We derived approximately 62% and 61% of our total revenue from Ooma Business and approximately 35% and 37% from Ooma Residential for the three months ended April 30, 2025 and 2024, respectively.
Previous wording
Subscription and services revenue increased $14.4 million or 9% year-over-year, primarily attributable to an increase in our core users, an increase in AirDial lines, and an increase in the average revenue per core user, driven by organic growth, which was in part due to higher sales to our Office and Enterprise customers, and revenue contributed from 2600Hz.
Current wording
Subscription and services revenue increased $1.9 million or 3% year-over-year, primarily attributable to an increase in AirDial lines, and an increase in the average revenue per core user.
Previous wording
Subscription and services gross margin of 70% decreased year-over-year from 71%. Cost of subscription and services revenue increased $2.0 million or 13% year-over-year, primarily due to a $0.6 million increase in infrastructure costs, a $0.5 million increase in depreciation and amortization expense, a $0.4 million increase in personnel-related costs, and a $0.5 million increase in regulatory fees. Overall, the increase in the cost of subscription and services in part reflects growth of Ooma Business and an increase in infrastructure costs and amortization of acquired intangible assets related to 2600Hz.
Current wording
Subscription and services gross margin of 70% remained consistent year-over-year. Cost of subscription and services revenue increased $0.6 million or 3% year-over-year, primarily due to a $0.7 million increase in infrastructure costs and a $0.2 million increase in personnel-related costs, partially offset by a $0.1 million decrease in credit card processing fees, and $0.2 million decrease in depreciation and amortization expense. Overall, the increase in the cost of subscription and services in part reflects the growth of Ooma Business.
Previous wording
Product and other revenue gross margin increased to negative 57% from negative 74% in the prior year period. The negative product margin was primarily due to the depletion of certain higher cost components that we procured in prior fiscal years to stay ahead of pandemic driven supply chain issues.
Current wording
Product and other revenue gross margin improved to negative 42% from negative 68% in the prior year period. The negative product margin was primarily due to the depletion of certain higher cost components that we procured in prior fiscal years to stay ahead of pandemic driven supply chain issues.
Previous wording
Sales and marketing expenses increased $3.2 million or 6% year-over-year, primarily due to a $4.4 million increase in personnel-related costs and a $0.2 million increase in amortization of intangible assets, partially offset by a $1.4 million decrease in advertising and marketing costs.
Current wording
Sales and marketing expenses increased $0.3 million or 1% year-over-year, primarily due to a $0.4 million increase in commissions expense, partially offset by a $0.1 million decrease in advertising and marketing expense.
Previous wording
Research and development expenses increased $1.7 million or 14% year-over-year, primarily due to a $1.2 million increase in personnel and contractor related costs, driven by higher headcount, and a $0.7 million increase in restructuring costs, partially offset by a $0.2 million decrease in supplies and equipment costs.
Current wording
Research and development expenses decreased $1.4 million or 10% year-over-year, primarily due to a $0.9 million decrease in personnel and contractor related costs, driven in part due to a reduction in acquisition related stock-based compensation expense, a $0.4 million decrease in restructuring costs, and a $0.1 million decrease in supplies and equipment costs.
Previous wording
Research and development expenses increased $5.4 million or 15% year-over-year, primarily due to a $4.2 million increase in personnel-related costs, driven by higher headcount, a $1.2 million increase in restructuring costs, and a $0.3 million increase in allocated overhead costs, partially offset by a $0.3 million decrease in hosting costs.
Current wording
General and administrative expenses increased $0.5 million or 6% year-over-year, primarily due to a $0.4 million increase in personnel-related costs, a $0.3 million increase in litigation costs, and a $0.1 million increase in supplies and equipment costs, partially offset by a $0.3 million decrease in restructuring costs.
Previous wording
As of October 31, 2024, we had $17.1 million of total cash and cash equivalents, which we believe will be sufficient to meet our cash needs for at least the next 12 months. Our future capital requirements will depend on many factors, including our growth rate, the introduction of new and enhanced offerings, the timing and extent of our sales and marketing activities and research and development expenditures and other factors. We may in the future make investments in or acquisitions of businesses or technologies, which may require the use of cash.
Current wording
As of April 30, 2025, we had $19.0 million of total cash and cash equivalents, which we believe will be sufficient to meet our cash needs for at least the next 12 months. Our future capital requirements will depend on many factors, including our growth rate, the introduction of new and enhanced offerings, the timing and extent of our sales and marketing activities and research and development expenditures and other factors. We may in the future make investments in or acquisitions of businesses or technologies, which may require the use of cash.
Previous wording
For the nine months ended October 31, 2024, our net loss of $6.6 million included non-cash items of $22.4 million primarily related to stock-based compensation, operating lease expense, depreciation and amortization expense and gain on note conversion. Operating asset and liability changes for the nine months ended October 31, 2024 included:
Current wording
For the three months ended April 30, 2025, our net loss of $0.1 million included non-cash items of $7.1 million primarily related to stock-based compensation, operating lease expense, and depreciation and amortization expense. Operating asset and liability changes for the three months ended April 30, 2025 included:
Previous wording
a decrease of $1.6 million in accounts receivable due to the timing of customer cash collections;
Current wording
an increase of $0.1 million in accounts receivable due to the timing of customer cash collections;
Previous wording
a decrease of $6.6 million in inventories and deferred inventory costs;
Current wording
an increase of $1.0 million in inventories and deferred inventory costs;
Previous wording
an increase of $2.5 million in prepaid expenses and other current and non-current assets;
Current wording
a decrease of $1.3 million in prepaid expenses and other current and non-current assets;
Previous wording
a decrease of $0.1 million in deferred revenue.
Current wording
a decrease of $0.6 million in deferred revenue.
Previous wording
Cash provided by operating activities for the nine months ended October 31, 2024 increased $12.0 million year-over-year, which primarily reflected working capital impacts resulting from the timing of payments. Although we have generated cash from operations in recent periods, our operating cash flow may not remain positive in the future as we continue to invest in efforts to scale our business.
Current wording
Cash provided by operating activities for the three months ended April 30, 2025 increased $0.1 million year-over-year, which primarily reflected working capital impacts resulting from the timing of payments. Although we have generated cash from operations in recent periods, our operating cash flow may not remain positive in the future as we continue to invest in efforts to scale our business.
Previous wording
For the nine months ended October 31, 2024, cash used in investing activities was $4.8 million, which consisted of capital expenditures of $4.8 million. Cash used in investing activities decreased $26.3 million year-over-year primarily due to the absence of cash outflow for the 2600Hz acquisition in the current periods, partially offset by receipt of proceeds from investment maturities in the first three quarters of fiscal 2024, which did not recur in the first three quarters of fiscal 2025.
Current wording
For the three months ended April 30, 2025, cash used in investing activities was $1.2 million, which consisted of capital expenditures of $1.2 million. Cash used in investing activities decreased $0.2 million year-over-year primarily due to decrease in fixed assets additions in the first quarter of fiscal 2026.
Previous wording
For the nine months ended October 31, 2024, cash used in financing activities was $14.4 million, which consisted of $13.0 million debt repayments, payments of $2.8 million related to shares repurchased for tax withholdings on vesting of RSUs, and payments of $2.1 million under our stock repurchase plan, offset by proceeds of $3.5 million from the issuance of common stock from our ESPP and stock option exercises. Cash used in financing activities increased $33.4 million year-over-year, which primarily reflected a borrowing of $18.0 million under our Credit Agreement for the 2600Hz acquisition in fiscal 2024, which did not recur in the first three quarters of fiscal 2025, and repayments of borrowings outstanding under our Credit Agreement in fiscal 2025.
Current wording
For the three months ended April 30, 2025, cash used in financing activities was $1.4 million, which consisted of payments of $1.5 million related to shares repurchased for tax withholdings on vesting of RSUs, and payments of $2.2 million under our stock repurchase plan, offset by proceeds of $2.3 million from the issuance of common stock from our ESPP and stock option exercises. Cash used in financing activities decreased $2.4 million year-over-year, which primarily reflected repayments of borrowings under our Credit Agreement during the first quarter of fiscal 2025, which did not recur in the first quarter of fiscal 2026.
Previous wording
In October 2023, we entered into a credit and security agreement with certain banks that provides for a secured revolving credit facility under which we may borrow up to an aggregate of $30.0 million and, subject to certain conditions, may be increased to up to $50.0 million. As of October 31, 2024, we had $3.0 million of outstanding borrowings and were in compliance with all loan covenants.
Current wording
In October 2023, we entered into a credit and security agreement with certain banks that provides for a secured revolving credit facility under which we may borrow up to an aggregate of $30.0 million and, subject to certain conditions, may be increased to up to $50.0 million. As of April 30, 2025, we had zero outstanding borrowings and were in compliance with all loan covenants.
Previous wording
Refer to Part II, Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the fiscal year ended January 31, 2024 for a discussion of our critical accounting policies and estimates. There have been no changes to the Company’s significant accounting policies and estimates as outlined in our fiscal 2024 Annual Report in the first three quarters of fiscal 2025.
Current wording
Refer to Part II, Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the fiscal year ended January 31, 2025 for a discussion of our critical accounting policies and estimates. There have been no changes to the Company’s significant accounting policies and estimates as outlined in our fiscal 2025 Annual Report in the first quarter of fiscal 2026.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
Product and other revenue gross margin increase to negative 65% from negative 70% in the prior year period, primarily due to the depletion of certain higher cost components that we procured in prior fiscal years to stay ahead of pandemic driven supply chain issues.