OOMA INC

Note 1: Overview and Basis of Presentation

Ooma, Inc. and its wholly-owned subsidiaries (collectively, “Ooma” or the “Company”) provides leading communications services and related technologies for businesses and consumers, delivered from its smart SaaS and unified communications platforms. The Company is headquartered in Sunnyvale, California.

Principles of Presentation and Consolidation. The accompanying consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and include the accounts of the Company and its wholly-owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. In the opinion of the Company’s management, the consolidated financial statements reflect all adjustments, which are normal and recurring in nature, necessary for fair financial statement presentation.

Fiscal Year. The Company’s fiscal year ends on January 31. References to fiscal 2026, fiscal 2025, and fiscal 2024 refer to the fiscal years ended January 31, 2026, January 31, 2025, and January 31, 2024, respectively.

Use of Estimates. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the Company’s consolidated financial statements and accompanying notes. Significant estimates include, but are not limited to, those related to revenue recognition, inventory valuation, deferred sales commissions, valuation of goodwill and intangible assets, operating lease assets and liabilities, regulatory fees and indirect tax accruals, loss contingencies, stock-based compensation and income taxes (including valuation allowances). The Company bases its estimates and assumptions on historical experience, where applicable, and other factors that it believes to be reasonable under the circumstances. These estimates are based on information available as of the date of the consolidated financial statements, and assumptions are inherently subjective in nature. Therefore, actual results could differ from management’s estimates.

Comprehensive Income (Loss). For all periods presented, comprehensive income (loss) approximated net income (loss) in the consolidated statements of operations and differences were not material. Therefore, the Consolidated Statements of Comprehensive Income (Loss) have been omitted.

Segment Reporting. The chief operating decision maker (the "CODM") for the Company is the chief executive officer, who reviews the Company’s financial information presented on a consolidated basis for purposes of allocating resources and evaluating financial performance. Accordingly, management has determined that the Company operates in asingle reportable segment.

Revenue was principally derived from customers located in the United States for all periods presented, with a small portion attributable to customers located in Canada and other countries. Long-lived assets located outside of the United States were not significant.

Foreign currency. The U.S. dollar is the functional currency of the Company's foreign subsidiaries. Remeasurement and transaction gains and losses are included in interest and other income, net and were not material for any periods presented.

Note 2: Significant Accounting Policies

Revenue Recognition

The Company derives its revenue fromtwo sources: (1) subscription and services revenue, which is derived primarily from the sale of subscription plans for communications services and other connected services; and (2) product and other revenue. Subscriptions and services are sold directly to end-customers. Products are sold to end-customers through several channels, including but not limited to distributors, retailers and resellers (collectively “channel partners”), and Ooma sales representatives.

The Company determines revenue recognition through the following steps:

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identification of the contract(s) with a customer;

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identification of the performance obligations in the contract;

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determination of the transaction price;

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allocation of the transaction price to the performance obligations in the contract; and

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recognition of revenue when, or as, the Company satisfies a performance obligation.

Subscription and Services Revenue. Most of the Company’s revenue is derived from recurring subscription fees related to service plans such as Ooma Business, Ooma Residential and other communications services. Service plans are generally sold as monthly subscriptions; however, certain plans are also offered as annual or multi-year subscriptions. Subscription revenue is generally recognized ratably over the contractual service term. A small portion of revenue is recognized on a point-in-time basis from services such as prepaid international calls, directory assistance, and advertisements displayed through the Talkatone mobile application.

Product and Other Revenue. Product and other revenue is generated primarily from the sale of on-premise devices and end-point devices, including Ooma AirDial, professional services revenue, and to a lesser extent from porting fees that enable customers to transfer their existing phone numbers. The Company recognizes product and other revenue from sales to direct end-customers and channel partners at the point-in-time that control is transferred. The Company’s distribution agreements with channel partners typically contain clauses for price protection and right of return. Credits and/or rebates issued for expected product returns and customer sales incentives are deemed to be variable consideration, which the Company estimates and records as a reduction to revenue at the point of sale. Product returns and sales incentives are estimated based on the Company’s historical experience, current trends and expectations regarding future experience. As of January 31, 2026 and 2025, total reserves for product returns and sales incentives were approximately $1.3 million and $1.1 million, respectively.

Revenue is recorded net of any sales and telecommunications taxes collected from customers to be remitted to government authorities. Amounts billed to customers related to shipping and handling are classified as product and other revenue. Shipping and handling costs are expensed as incurred and classified as cost of product and other revenue.

Multiple performance obligations. The Company’s contracts with customers typically contain multiple performance obligations that consist of communications services and related product(s). For these contracts, individual performance obligations are accounted for separately if they are distinct. The contract transaction price is then allocated to the separate performance obligations on a relative stand-alone selling price basis. The Company determines the stand-alone selling price (“SSP”) for its communications services based on observable historical stand-alone sales to customers, for which a substantial majority of selling prices must fall within a reasonably narrow pricing range. The Company determines the SSP for its on-premise devices and end-point devices based upon management’s best estimates and judgments, considering company-specific factors such as pricing strategies, discounting practices, and estimated product and other costs.

Cash Equivalents and Short-term Investments. All highly liquid investments with an original maturity of three months or less at the date of purchase are classified as cash equivalents. Cash and cash equivalents are stated at fair value.

Fair Value of Financial Instruments. The Company records its financial assets and liabilities at fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the reporting date. The Company estimates and categorizes the fair value of its financial assets by applying the following hierarchy:

Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets.

Level 2: Observable prices based on inputs not quoted in active markets but are corroborated by market data.

Level 3: Unobservable inputs that are supported by little or no market activity.

The carrying value of the Company’s financial instruments, including cash equivalents, accounts receivable, inventory, accounts payable and other current assets and current liabilities approximates fair value due to their short maturities. The carrying value of debt approximates its fair value.

Concentrations. Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents and accounts receivable (Note 5). The Company’s cash and cash equivalents are held by financial institutions that management believes are of high-credit quality although the balances, at times, may exceed federally insured limits. The Company performs credit evaluations of its customers’ financial condition and generally does not require collateral for sales made on credit.

Customers who represented 10% or more of net accounts receivable were as follows:

Accounts Receivable. Accounts receivable are recorded net of an allowance for doubtful accounts for expected credit losses. Allowances are recorded based upon assessment of several factors, including historical experience, aging of receivable balances and economic conditions. As of January 31, 2026 and 2025, the allowance for doubtful accounts was $0.5 million and $0.3 million, respectively. Bad debt expense recorded in the consolidated statement of operations was not material for the periods presented.

Inventories. Inventories, which consist of raw materials and finished goods, include the cost to purchase manufactured products, allocated labor and overhead. Inventories are stated at the lower of actual cost and net realizable value on a first-in, first-out basis. The Company writes down the carrying value of inventory to net realizable value for estimated excess and obsolete inventory based upon assumptions about forecast demand and market conditions. Inventory carrying value adjustments are recognized as a component of cost of product and other revenue in the consolidated statement of operations.

Customer Acquisition Costs. Sales commissions and other costs paid to internal sales personnel, third-party sales entities and value-added resellers are considered incremental and recoverable costs of obtaining customer contracts. The resellers are selling agents for the Company and earn sales commissions that are directly tied to the value of the contracts that the Company enters with the end-user customers. These costs are capitalized and amortized on a systematic basis over the expected period of benefit offive years, or customer contractual term for multi-year contracts. The Company has determined the period of benefit taking into consideration both qualitative and quantitative factors, such as expected subscription term and expected renewal periods of its customer contracts, product life cycles and customer attrition. Amortization expense is recorded in sales and marketing expenses in the consolidated statement of operations.

The Company pays sales commissions on initial contracts, contracts for increased purchases with existing customers (expansion contracts) and certain contract renewals. The Company periodically evaluates whether there have been any changes in its business, the market conditions in which it operates or other events which would indicate that its amortization period should be changed or if there are potential indicators of impairment. To date, there have beenno material impairment losses related to the costs capitalized.

Property and Equipment, net. Property and equipment, net is stated at cost, less accumulated depreciation and amortization. Depreciation and amortization is computed on a straight-line basis over the estimated useful lives of those assets, generally threeto five years. Capitalized costs related to development of the Company's customer-facing websites are amortized on a straight-line basis over an estimated useful life ofthree tofive years. Leasehold improvements are amortized over the shorter of the lease term or estimated useful lives of the respective assets. Repairs and maintenance costs that do not extend the life or improve the asset are expensed as incurred.

Operating Leases. Right-of-use lease assets and lease liabilities are recognized at the lease commencement date based upon the present value of the remaining lease payments over the lease term. The Company uses its incremental borrowing rate in determining the present value of lease payments, as the discount rates implicit in the Company’s leases cannot be readily determined. Our incremental borrowing rate is estimated to approximate the interest rate on a collateralized basis with similar terms and payments. Lease agreements that contain both lease and non-lease components are combined and accounted for as a single component.

Business Combinations. The Company accounts for its business combinations using the acquisition method of accounting. The purchase consideration is allocated to the tangible assets acquired, liabilities assumed and intangible assets acquired based on their estimated fair values. The excess of the fair value of purchase consideration over the fair value of these assets acquired and liabilities assumed is recorded as goodwill. Management is required to make significant estimates and assumptions in determining fair values, especially with respect to acquired intangible assets, which include but are not limited to: the selection of valuation methodologies, expected future revenue and cash flows, expected customer attrition rates from acquired customers, future changes in technology, and discount rates. These estimates are inherently uncertain and, therefore, actual results may differ from the estimates made. As a result, during the measurement period of up to one year from the acquisition date, the Company may record adjustments to the assets acquired and liabilities assumed with the corresponding offset to goodwill as information on the facts and circumstances that existed as of the acquisition date becomes available. Upon the conclusion of the measurement period, any subsequent adjustments are recorded in the consolidated statements of operations. Acquisition-related expenses are recognized separately from business combinations and are expensed as incurred.

Intangible Assets. Acquired intangible assets, which primarily consist of customer relationships, are amortized over their estimated useful lives. Each period, the Company evaluates the estimated remaining useful life of its intangible assets and whether events or changes in circumstances warrant a revision to the remaining period of amortization.

Impairment Assessment. Long-lived assets, such as property and equipment, capitalized website development costs, intangible assets, goodwill, operating lease right-of-use assets, and non-marketable equity investments, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the asset.

The Company evaluates goodwill for impairment annually during its fourth quarter of each fiscal year, or more frequently if and when circumstances indicate that goodwill may not be recoverable. The Company has a single reporting unit and consequently evaluates goodwill for impairment based on an evaluation of the fair value of the Company as a whole.

The Company didnot record any material impairment charges for leases for fiscal 2026, fiscal 2025 or fiscal 2024.

Advertising. Advertising costs are expensed as incurred, except for production costs associated with television and radio advertising, which are expensed on the first date of airing. Advertising costs are included in sales and marketing expense and were $16.9 million, $15.9 million and $16.5 million in fiscal 2026, 2025 and 2024, respectively.

Stock-Based Compensation. The majority of the Company's stock-based compensation is derived from RSUs granted to employees and non-employee directors. Stock-based compensation is generally measured based on the closing market price of the Company’s common stock on the date of grant and recognized on a straight-line basis over the vesting period. Forfeitures are recorded in the period in which they occur.

Income Taxes. Income taxes are recorded using the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income (loss) in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. A tax position is recognized when it is more-likely-than-not that the tax position will be sustained upon examination, including resolution of any related appeals or litigation processes. A tax position that meets the more likely than not recognition threshold is measured at the largest amount of benefit that is greater than 50% likely of being realized upon ultimate settlement with a taxing authority.

Interest and penalties associated with unrecognized tax benefits are classified as income tax expense. The Company hadno interest or penalty accruals associated with uncertain tax benefits in its consolidated balance sheets and statements of operations for any periods presented.

Recent Accounting Pronouncements Not Yet Adopted. In November 2024, the FASB issued ASU 2024-03: Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which requires disaggregation of certain costs in a separate note to the financial statements, such as the amounts of employee compensation, depreciation and intangible asset amortization, included in each relevant expense caption in annual and interim consolidated financial statements. The ASU also requires disclosure of the total amount of selling expenses and our definition of selling expenses. The standard is effective for annual periods beginning after December 15, 2026 and for interim periods beginning after December 15, 2027 on a retrospective or prospective basis, with early adoption permitted. The Company is evaluating the new standard.

In July 2025, the FASB issued ASU 2025-05, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets, providing a practical expedient to calculating current expected credit losses for current accounts receivable and contract assets by assuming that the current conditions as of the balance sheet date will not change for the remaining life of the asset. This update is effective for annual reporting periods beginning after December 15, 2025 and for interim periods within those annual periods, and is applied prospectively. The Company is currently evaluating the impact of adopting this ASU on its consolidated financial statements and disclosures.

In September 2025, the FASB issued ASU 2025-06, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software, which simplifies the capitalization guidance by removing all references to software development project stages so that the guidance is neutral to different software development methods. The amendments in this ASU are effective for annual reporting periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods, with early adoption permitted. The amendments in this update permit an entity to apply the new guidance using a prospective, retrospective or modified transition approach. The Company is currently evaluating the impact of adopting this ASU on its consolidated financial statements and disclosures.

Recently Adopted Accounting Pronouncements. In December 2023, the FASB issued ASU 2023-09, which focuses on income tax disclosures by requiring public business entities, on an annual basis, to disclose specific categories in the rate reconciliation, provide information for reconciling items that meet a quantitative threshold, and certain information about income taxes paid. The standard is effective for annual periods beginning after December 15, 2024, with early adoption permitted. The amendments may be applied on a prospective or retrospective basis. The Company adopted ASU 2023-09, on a prospective basis, effective February 1, 2025. While the adoption of this guidance did not have a material impact on the Company’s consolidated financial statements, it did result in additional disclosures. For more details, refer to Note 10 - Income Taxes of this Annual Report on Form 10-K.

Note 3: Revenue and Deferred Revenue

Disaggregated revenue

Revenue disaggregated by revenue source consisted of the following (in thousands):

The Company derived approximately 64%,61% and 58% of its total revenue from Ooma Business and approximately 34%,36% and 40% of its total revenue from Ooma Residential in fiscal 2026, 2025, and 2024, respectively.

No individual country outside of the United States represented 10% or more of total revenue for the periods presented. No single customer accounted for 10% or more of total revenue for the periods presented.

Deferred revenue primarily consists of billings or payments received in advance of meeting revenue recognition criteria. Deferred services revenue is recognized on a ratable basis over the term of the contract as the services are provided.

During fiscal 2026, the Company recognized revenue of approximately $16.6 million pertaining to amounts deferred as of January 31, 2025. As of January 31, 2026, the majority of the Company’s deferred revenue balance was composed of subscription contracts that were invoiced during the fourth quarter of fiscal 2026.

Remaining performance obligations. As of January 31, 2026, contract revenue that had not yet been recognized for open contracts with an original expected length of greater than one year was approximately $59.5 million. The Company expects to recognize revenue on approximately 47% of this amount over the next 12 months, with the balance to be recognized thereafter.

Note 4: Fair Value Measurements

As of January 31, 2026 and 2025, the Company had$20.1 million and$17.9 million in cash, respectively.

Non-Marketable Equity Investments. As of January 31, 2026 and January 31, 2025, the total amount of non-marketable equity investments in privately held companies included in other assets in the Company's consolidated balance sheets was $3.3 million. This balance represents investments in preferred shares of Global Telecom Corporation (“GTC”), a privately-held technology company.

The Company’s non-marketable equity investments do not have readily determinable fair values. Under the measurement alternative election, the Company accounts for these non-marketable equity securities at cost and remeasures to fair value upon observable price changes in orderly transactions for the identical or similar investment of the same issuer or upon impairment. These investments are not eligible for the net-asset-value practical expedient from fair value measurement. The measurement alternative election is reassessed each reporting period to determine whether the non-marketable equity investments continue to be eligible for this election. The Company classifies these non-marketable equity investments as Level 3 within the fair value hierarchy.

Note 5: Balance Sheet Components

The following sections and tables provide details of selected balance sheet items (in thousands):

Inventories

Property and equipment, net

Depreciation and amortization of property and equipment totaled$4.4 million, $4.3 million and $4.3 million in fiscal 2026, 2025 and 2024, respectively.

Other current and non-current assets

Customer Acquisition Costs. Amortization of deferred sales commissions was$10.5 million, $9.8 million and $9.0 million in fiscal 2026, 2025 and 2024, respectively.

Global Telecom Corporation. In December 2018, the Company invested $1.3 million in cash in GTC, a privately-held technology company, in exchange for a convertible promissory note that would convert to shares of GTC stock upon the occurrence of certain future events. As amended, the promissory note and accrued interest was due and payable upon the Company’s demand at any time after June 30, 2023. GTC was a variable interest entity for accounting purposes and the Company did not consolidate GTC into its financial statements because the Company was not the primary beneficiary.

The Company made total payments to GTC for inventory purchases and related shipping costs of approximately $0.2 millionand $1.0 million in fiscal 2026 and 2025, respectively. As of January 31, 2026 and 2025, the Company hadno prepaid inventory deposit and no non-cancelable inventory purchase commitments to GTC.

On March 8, 2024 ("Financing Date"), GTC completed an equity financing which qualified as a conversion event under the convertible promissory note. As of the Financing Date, the carrying value of the convertible promissory note of $2.3 million, including accrued interest, was converted to 8.2 million shares of preferred stock of GTC. Upon the conversion event, GTC is no longer a variable interest entity for accounting purposes. The Company recorded a gain on note conversion of $1.0 million to other incomein the condensed consolidated statements of operations for the three months ended April 30, 2024. The Company recorded the fair value of GTC preferred stock of $3.3 million as of January 31, 2026, to other assets in the consolidated balance sheets.

Accrued expenses and other current liabilities

Note 6: Goodwill and Acquired Intangible Assets

During fiscal 2026, the Company recognized intangibles of $46.9 million and goodwill of $26.8 million in connection with business acquisitions completed in December 2025. See Note 13: Business Acquisition.

The goodwill balance was as follows (in thousands):

The gross value, accumulated amortization and carrying values of intangible assets were as follows (in thousands):

Amortization expense was$6.6 million,$5.8 million and$3.7 million in fiscal 2026, 2025 and 2024, respectively.

At January 31, 2026, the estimated future amortization expense for intangible assets was as follows (in thousands):

Note 7: Operating Leases

The Company leases its headquarters located in Sunnyvale, California, as well as office space and data center facilities in several locations under non-cancelable operating lease agreements, with expiration dates through fiscal 2033. The lease agreements often include escalating rent payments, renewal provisions and other provisions which require the Company to pay common area maintenance costs, property taxes and insurance. The lease agreements do not contain any material residual value guarantees or material restrictive covenants.

Operating lease right-of-use assets and long-term operating lease liabilities are included on the face of the consolidated balance sheet. Short-term operating lease liabilities are presented within accrued expenses and other current liabilities.

Supplemental balance sheet information related to leases was as follows (in thousands):

The components of lease expense were as follows (in thousands):

(1) Recognized on a straight-line basis over the lease term. Includes rent for leases with initial terms of twelve months or less, which were not material.

(2) Primarily included common area maintenance, utilities and property taxes and insurance, which were expensed as incurred.

Supplemental cash flow information related to leases was as follows (in thousands):

As of January 31, 2026, maturities of operating lease liabilities were as follows (in thousands):

Note 8: Stockholders’ Equity

Common Stock Reserved for Future Issuance

The Company has a stock-based compensation plan, the 2015 Equity Incentive Plan (the “EIP”), pursuant to which it has granted incentive and nonstatutory stock options and restricted stock units. Additionally, the Company's 2015 Employee Stock Purchase Plan (the “ESPP”) allows eligible employees to purchase shares of common stock at a discounted price through payroll deductions.

On June 5, 2025, our stockholders approved the amended and restated EIP. The EIP was amended to extend the term for 10 years, remove the evergreen provision, and increase the number of shares authorized for issuance by 330,000, among other items. Additionally, on June 5, 2025, our stockholders approved the amended and restated ESPP. The ESPP was amended to eliminate the term thereof so that the ESPP will not expire, remove the evergreen provision, and increase the number of shares authorized for issuance by 795,144, among other items.

The Company had shares of common stock reserved for issuance as follows (in thousands):

Stock Options. Under the EIP, options to purchase shares of common stock may be granted to employees, non-employee directors and consultants. These options vest from the date of grant to up tofour years and expireten years from the date of grant. Options may be exercised anytime during their term in accordance with the vesting/exercise schedule specified in the recipient’s stock option agreement and in accordance with the EIP provisions.

Stock option activity for fiscal 2026 was as follows:

The aggregate intrinsic value of vested options exercised during fiscal 2026, 2025 and 2024 was $0.4 million, $2.9 million and $0.5 million, respectively. The weighted-average grant date fair value of options granted during fiscal 2026 was $5.98. No options were granted in fiscal 2025 and 2024.

Restricted Stock Units. Under the EIP, RSUs may be granted to employees, non-employee directors and consultants. These RSUs vest ratably over a period ranging fromone tofour years, and are subject to the participant’s continuing service to the Company over that period. Until vested, RSUs do not have the voting and dividend participation rights of common stock and the shares underlying the awards are not considered issued and outstanding.

RSU activity for fiscal 2026 was as follows:

Vested RSUs included shares of common stock that the Company withheld on behalf of certain employees to satisfy the minimum statutory tax withholding requirements, as defined by the Company. The Company withheld an aggregate amount of $5.1 million, $4.4 million and $1.7 million in fiscal 2026, 2025 and 2024, respectively, which were classified as financing cash outflows in the consolidated statements of cash flows. The Company canceled and returned these shares to the EIP, which became available under the plan terms for future issuance.

Employee Stock Purchase Plan

The ESPP allows eligible employees to purchase shares of common stock at a discount through payroll deductions of up to 15% of their eligible compensation, subject to plan limitations. The ESPP provides for a 6-month offering period comprised of one purchase periods ofsix months. Employees are able to purchase shares at 85% of the lower of the fair market value of the Company’s common stock as of the first date or the ending date of the offering period. The offering periods are scheduled to start on the first trading day on or after March 15 and September 15 of each year. During each of the fiscal years 2026, 2025 and 2024, employees purchased 0.3 million,0.3 million and 0.2 million shares at a weighted-average purchase price of $7.53, $7.35 and $10.60 per share, respectively.

Stock Repurchase Plan. In fiscal 2025, our board of directors authorized a common stock repurchase program of up to $14.0 million. In December 2025, our board of directors approved an increase to our share repurchase program of an additional $10.0 million. Repurchases of our common stock may be effected, from time to time, in open market, negotiated or block transactions, or other means, in accordance with applicable securities laws. The timing and the amount of any repurchased common stock will be determined by our management based on its evaluation of market conditions and other factors. The repurchase plan will be funded using our cash. Any repurchased shares of common stock will be retired. The plan does not obligate us to repurchase any specific dollar amount or to acquire any specific number of shares of our common stock. The Company repurchased in the open market 923,684 shares and 366,825 shares of common stock for an aggregate amount of $11.6 million and $4.4 million in fiscal year 2026 and fiscal year 2025, respectively. As of January 31, 2026, approximately $7.9 million remained authorized and available under the Company’s share repurchase plan for future share repurchases.

The purchase price for shares of common stock repurchased is reflected as a reduction to common stock and additional paid-in capital.

Note 9: Stock-Based Compensation

Total stock-based compensation recognized in the consolidated statements of operations was as follows (in thousands):

The income tax benefit related to stock-based compensation expense waszero for all periods presented due to a full valuation allowance on the Company's deferred tax assets (see Note 10: Income Taxes below). As of January 31, 2026, there was $20.9 million of unrecognized compensation expense related to unvested RSUs, stock options and stock purchase rights under the ESPP, which is expected to be recognized over a weighted-average vesting period of 2.5 years.

The fair value of employee stock options and ESPP was estimated using the Black–Scholes model with the following assumptions:

The expected term of options granted to employees was based on the simplified method, and the expected term of the ESPP is based on the contractual term. For fiscal years presented, expected volatility was derived from the average historical volatility of the Company’s own common stock. The risk-free interest rate was based on the yields of U.S. Treasury securities with maturities similar to the expected term.

Note 10: Income Taxes

The domestic and foreign components of income (loss) before income taxes were as follows (in thousands):

Income tax (benefit) provision consisted of the following (in thousands):

The income tax benefit of $2.1 million for fiscal 2026 was primarily attributable to the release of a $2.5 million valuation allowance on certain preexisting deferred tax assets realized as a result of deferred tax liabilities assumed in the Company's acquisition of Phone.com. The income tax benefit of $2.0 million for fiscal 2024 was primarily attributable to the release of a $3.1 million valuation allowance on certain preexisting deferred tax assets realized as a result of deferred tax liabilities assumed in the Company's acquisition of 2600Hz.

Rate Reconciliation

The Company adopted ASU 2023-09 Income Taxes (Topic 740): Improvements To Income Tax Disclosures' on a prospective basis beginning with the year ended January 31, 2026. The following table presents required disclosure pursuant to ASU 2023-09 and reconciles the Company's U.S. federal statutory tax amount and rate to its actual effective amount and rate for the year ended January 31, 2026 (dollars in thousands):

(1)State taxes in Florida, Maryland, Michigan, Pennsylvania, Texas, Virginia, Minnesota, New York, New Hampshire, Kentucky, and Idaho made up the majority (greater than 50 percent) of the tax effect in this category.

The following table presents the required disclosures prior to the Company's adoption of ASU 2023-09 and reconciles the U.S. federal statutory income tax rate to the actual global effective income tax rate for the years ended January 31, 2025 and January 31, 2024 (in thousands):

The tax effects of temporary differences that give rise to significant portions of the Company’s deferred tax assets and liabilities are as follows (in thousands):

Management believes that, based upon the available evidence, both positive and negative, it is more likely than not that the deferred tax assets will not be utilized, such that a full valuation allowance has been recorded. The net change in the total valuation allowance was an increase of $4.6 million and an increase of $2.7 million for fiscal 2026 and 2025, respectively.

As of January 31, 2026, the Company had net operating loss carryforwards for federal and state income tax purposes of approximately $81.4 million and $96.9 million, respectively, which will begin to expire in fiscal 2033 and fiscal 2029, with $79.4 million of federal net operating loss carryforward lasting indefinitely. In addition, as of January 31, 2026, the Company had federal and state research credit carryforwards of approximately $14.5 million and $13.1 million, respectively, available to offset future taxes. If not utilized, the available federal credits will begin to expire in fiscal 2030 and the state credits can be carried forward indefinitely.

The Company’s ability to utilize the domestic net operating losses (NOLs) and tax credit carryforwards may be limited due to ownership change limitations that may have occurred or that could occur in the future, as required by Internal Revenue Code Section 382, as well as similar state provisions. An “ownership change,” as defined by the code, results from a transaction or series of transactions over a three-year period resulting in an ownership change of more than 50 percentage points of the outstanding stock of a company by certain stockholders or public groups. Any limitation may result in expiration of all or a portion of the NOL or tax credit carryforwards before utilization.

Uncertain Tax Positions

The Company has unrecognized tax benefits of approximately $11.5 million as of January 31, 2026. Deferred tax assets associated with these unrecognized tax benefits are fully offset by a valuation allowance. If recognized, these benefits would not affect the effective tax rate before consideration of the valuation allowance.

The following table summarizes the activity related to unrecognized tax benefits (in thousands):

The Company hadno interest or penalty accruals associated with uncertain tax benefits in its balance sheets and statements of operations. Because the Company has net operating loss and credit carryforwards, there are open statutes of limitations in which federal, state and foreign taxing authorities may examine the Company’s tax returns for all tax years from the fiscal year ended January 31, 2010 through the current period.

The Company files income tax returns in the U.S. federal, various state, and foreign jurisdictions with varying statutes of limitations. The Company is generally no longer subject to tax examinations for years prior to 2023 for federal purposes and 2022 for state purposes, except in certain limited circumstances.

The Company adopted ASU 2023-09 on a prospective basis for the year ended January 31, 2026 and has included the following table as a result of its adoption, which presents income taxes paid (net of refunds received) for the year ended January 31, 2026 (in thousands):

The amount of cash income taxes paid by the Company during the years ended January 31, 2025 and January 31, 2024 was $0.6 million and $0.8 million, respectively.

On July 4, 2025, the U.S. government enacted The One Big Beautiful Bill Act of 2025 ("OBBBA") which includes, among other provisions, changes to the U.S. corporate income tax system including the allowance of immediate expensing of qualifying research and development expenses and permanent extensions of certain provisions within the Tax Cuts and Jobs Act. Certain provisions are effective for the Company beginning in fiscal year 2026. The Company determined that the OBBBA did not have a material impact on the financial statements for the year ended January 31, 2026.

Note 11: Commitments and Contingencies

Purchase Commitments

As of January 31, 2026 and 2025, non-cancelable inventory purchase commitments to contract manufacturers and other parties were approximately $15.1 million and $6.2 million, respectively. Additionally, the Company has a non-cancelable service agreement with a telecommunications provider pursuant to which the Company is obligated to total minimum purchase commitments of $10.2 million between March 2025 and February 2029, of which $8.1 million was outstanding as of January 31, 2026.

In addition to the litigation matters described below, from time to time, the Company may be involved in a variety of other claims, lawsuits, investigations, and proceedings relating to contractual disputes, intellectual property rights, employment matters, regulatory compliance matters, and other litigation matters relating to various claims that arise in the normal course of business. Defending such proceedings is costly and can impose a significant burden on management and employees. The Company may receive unfavorable preliminary or interim rulings in the course of litigation, and there can be no assurances that favorable final outcomes will be obtained.

The Company determines whether an estimated loss from a contingency should be accrued by assessing whether a loss is deemed probable and can be reasonably estimated. The Company assesses its potential liability by analyzing specific litigation and regulatory matters using reasonably available information. The Company develops its views on estimated losses in consultation with inside and outside counsel, which involves a subjective analysis of potential results and outcomes, assuming various combinations of appropriate litigation and settlement strategies. Legal fees are expensed in the period in which they are incurred. As of January 31, 2026, the Company had immaterial liabilities recorded for loss contingencies in its consolidated financial statements. As of January 31, 2025, the Company hadno accrued liabilities recorded for loss contingencies in its consolidated financial statements.

Canadian Litigation

On February 3, 2021, plaintiff Fiona Chiu filed a class action complaint against the Company and Ooma Canada Inc. in the Federal Court of Canada, alleging violations of Canada’s Trademarks Act and Competition Act. The complaint seeks monetary and other damages and/or injunctive relief enjoining the Company from describing and marketing its Basic Home Phone using the word “free” or otherwise representing that it is free. On November 9, 2021, the Federal Court of Canada removed Ms. Chiu and substituted John Zanin as the new plaintiff in the proceeding. In connection with the substitution of Mr. Zanin as the new plaintiff, the Federal Court of Canada deemed the proceeding as having commenced on November 8, 2021 instead of February 3, 2021. In January 2022, the Federal Court of Canada heard arguments from counsel representing each of the Company and Mr. Zanin regarding jurisdiction and class action certification issues. In January 2025, the Federal Court of Canada ruled in favor of the Company by denying class action certification and compelling individual arbitration in California; however, plaintiff’s counsel has since filed an appeal of certain portions of the judgment in Canada and filed a related complaint in California seeking a declaratory judgment that the arbitration agreement in the Company’s terms of services is invalid and unenforceable. On June 5, 2025, the proceedings related to the complaint filed in California were stayed pending the resolution of the Canadian appeal. The Company intends to continue to defend itself vigorously against these complaints. Based on the Company’s current knowledge, the Company has determined that the amount of any reasonably possible loss resulting from these matters is not estimable.

Bachhuber Litigation

On September 3, 2025, plaintiff Kevin Bachhuber filed a putative class action complaint against the Company in the U.S. District Court for the Northern District of California, alleging violations of the Telephone Consumer Protection Act of 1991 or TCPA (the "Bachhuber Litigation"). On February 6, 2026, the Company and plaintiff settled the complaint for an immaterial amount, and the complaint was voluntarily dismissed with prejudice on February 12, 2026.

Indemnification

The Company enters into standard indemnification arrangements in the ordinary course of business. Pursuant to these arrangements, the Company indemnifies, holds harmless and agrees to reimburse the indemnified parties for certain losses suffered or incurred by the indemnified party. In some cases, the term of these indemnification agreements is perpetual. The maximum potential amount of future payments the Company could be required to make under these agreements is not determinable because it involves claims that may be made against the Company in the future but have not yet been made.

The Company has entered into indemnification agreements with its directors and officers that may require the Company to indemnify its directors and officers against liabilities that may arise by reason of their status or service as directors or officers, other than liabilities arising from willful misconduct of the individual. The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is unlimited; however, the Company has director and officer insurance coverage that reduces the Company’s exposure and enables the Company to recover a portion of any future amounts paid. To date the Company has not incurred costs to defend lawsuits or settle claims related to these indemnification agreements. No liability associated with such indemnifications has been recorded to date.

Note 12: Financing Arrangements

Revolving Credit Facility

On October 20, 2023, the Company, as borrower, entered into a three-year secured credit agreement (“2023 Credit Agreement”) with Citizens Bank N.A., as Administrative Agent (“Agent”) and lender. The Credit Agreement provided for a secured revolving credit facility under which the Company could borrow up to an aggregate amount of $30.0 million, which included a $10.0 million sub-facility for letters of credit and could be increased up to an aggregate amount of $50.0 million, subject to certain conditions.

On December 1, 2025, the Company entered into an amendment to the 2023 Credit Agreement (as so amended, the “Credit Agreement") with Citizens Bank, N.A., the terms of which replace and supersede the terms of the 2023 Credit Agreement. The Credit Agreement has a five-year term and provides for a term loan facility of up to $65.0 million and a revolving credit facility of up to $10.0 million.

Borrowings under the Credit Agreement would bear interest, at the Company’s option for revolving loans, at either (i) the Alternate Base Rate plus the Applicable Margin (as defined in the amendment to the 2023 Credit Agreement), or (ii) Term Secured Overnight Financing Rate ("SOFR") plus the Applicable Margin (as defined in the amendment to the 2023 Credit Agreement. The applicable margin under the Credit Agreement is 1.25% for Alternate Base Rate loans and 2.00% for SOFR loans under the Revolving Facility, and 2.50% for Term Loans. The Alternate Base Rate is the highest of (a) the Agent’s prime rate, (b) the federal funds effective rate plus 0.50% per annum, and (c) the Daily SOFR rate plus 1.00% per annum, with a minimum floor of zero. “Term SOFR” is a forward-looking rate published by CME Group Benchmark Administration Limited plus a 0.10% adjustment, subject to a floor of zero. Upon the occurrence of an event of default, the interest rate on outstanding borrowings increases by 5.00% per annum. The Company is required to pay a commitment fee on the unused portion of the secured revolving credit facility of 0.35% per annum.

The Credit Agreement includes customary covenants, including financial covenants requiring the Company to maintain specified leverage and fixed-charge coverage ratios, as well as minimum liquidity levels. The Credit Agreement also contains customary events of default.

In December 2025, the Company borrowed $65.0 million as a term loan maturing on December 1, 2030. The Company used the proceeds of the term loan to finance the acquisitions of FluentStream Corp. and its wholly-owned subsidiaries (“FluentStream”) and Phone.Com, Inc. ("Phone.com") (see Note 13: Business Acquisition). In January 2026, the Company made an early principal repayment of $6.5 million of the drawn term loan facility, reducing the outstanding term loan balance to $58.5 million as of January 31, 2026.

In fiscal 2026, the Company incurred debt issuance costs and lender fees associated with the Credit Agreement of $0.6 million which was recorded as a debt discount. The debt discount is amortized in interest expense using the straight-line method over the amended term of the Credit Agreement.

As of January 31, 2026, the carrying value of the Term Loan, net of unamortized debt discount and issuance costs, was $57.9 million, at the effective interest rate of 6.3%. Accordingly, $10.0 million of borrowing capacity is available for the purposes permitted by the Credit Agreement. As of January 31, 2026, the Company was in compliance with the covenants contained in the Credit Agreement.

The contractual future principal payments for all borrowings as of January 31, 2026 were as follows (in thousands):

Note 13: Business Acquisition

FluentStream Corp.

On December 1, 2025, the Company acquired all outstanding stock of FluentStream, a provider of cloud communications/UCaaS solutions for small and medium-sized organizations. The Company acquired FluentStream for total gross cash consideration of approximately $50.5 million, subject to cash acquired and customary working capital adjustments. This payment is not subject to any contingency requirements. The Company has included the financial results of FluentStream in the condensed consolidated financial statements from the date of acquisition, which for the twelve months ended January 31, 2026 were not material.

The following table summarizes the preliminary purchase price allocation, as adjusted (in thousands):

The goodwill recognized was primarily attributable to the assembled workforce and is not expected to be deductible for income tax purposes. The fair values assigned to tangible assets acquired and liabilities assumed were based on management’s estimates and assumptions and may be subject to change as additional information is received and certain working capital adjustments to the purchase consideration are finalized. The primary areas that remain preliminary relate to the fair values of intangible assets acquired, certain liabilities assumed, legal and other contingencies as of the acquisition date, income taxes and residual goodwill. The Company expects to finalize the valuation as soon as practicable, but not later than one year from the acquisition date.

The following table sets forth the components of identifiable intangible assets acquired and their estimated useful lives as of the date of acquisition (in thousands):

Customer relationships represent the preliminary estimated fair values of the underlying relationships with FluentStream’s customer base.

Revenues of FluentStream included in the Company’s consolidated statements of operations from the acquisition date of December 1, 2025 to January 31, 2026 was approximately $4.0 million. The Company believes it is not practicable to separately identify earnings of FluentStream on a stand-alone basis due to the integrated nature of the Company's operations. On a pro forma basis, had the FluentStream acquisition been included in the Company's consolidated results of operations beginning February 1, 2024, the Company’s total revenue would have approximated $294.0 million and $281.7 million for fiscal 2026 and 2025. These pro forma revenue amounts do not necessarily represent what would have occurred if the business combination had taken place on February 1, 2024, nor do these amounts represent the results that may occur in the future. Pro forma net income (losses) have not been presented because the impact was not material to the consolidated statements of operations.

Acquisition-related costs related to the FluentStream acquisition charged to general and administrative expense during fiscal 2026 were approximately $0.9 million.

Phone.Com, Inc.

On December 29, 2025, the Company acquired all outstanding stock of Phone.com, a provider of UCaaS solutions for small and medium-sized organizations. The Company acquired Phone.com for total gross cash consideration of approximately $22.6 million, subject to cash acquired and customary working capital adjustments. This payment is not subject to any contingency requirements. The Company is required to withhold $1.0 million of holdback adjustments for the purposes of providing security for any indemnification obligations and any purchase price adjustment in accordance with the acquisition agreement. The funds related to the holdback adjustments are not held in escrow, and $0.6 million are recorded as accrued expenses and other current liabilities and $0.4 million are recorded as other liabilitiesin the condensed consolidated balance sheets.

The Company has included the financial results of Phone.com in the condensed consolidated financial statements from the date of acquisition, which for the twelve months ended January 31, 2026 were not material.

The following table summarizes the preliminary purchase price allocation, as adjusted (in thousands):

The goodwill recognized was primarily attributable to the assembled workforce and is not expected to be deductible for income tax purposes. The fair values assigned to tangible assets acquired and liabilities assumed were based on management’s estimates and assumptions and may be subject to change as additional information is received and certain working capital adjustments to the purchase consideration are finalized. The primary areas that remain preliminary relate to the fair values of intangible assets acquired, certain liabilities assumed, legal and other contingencies as of the acquisition date, income taxes and residual goodwill. The Company expects to finalize the valuation as soon as practicable, but not later than one year from the acquisition date.

The following table sets forth the components of identifiable intangible assets acquired and their estimated useful lives as of the date of acquisition (in thousands):

Customer relationships represent the preliminary estimated fair values of the underlying relationships with Phone.com’s customer base.

Revenues of Phone.com included in the Company’s consolidated statements of operations from the acquisition date of December 29, 2025 to January 31, 2026 was approximately $2.1 million. The Company believes it is not practicable to separately identify earnings of Phone.com on a stand-alone basis due to the integrated nature of the Company's operations. On a pro forma basis, had the Phone.com acquisition been included in the Company's consolidated results of operations beginning February 1, 2024, the Company’s total revenue would have approximated $294.4 million and $279.6 million for fiscal 2026 and 2025. These pro forma revenue amounts do not necessarily represent what would have occurred if the business combination had taken place on February 1, 2024, nor do these amounts represent the results that may occur in the future. Pro forma net income (losses) have not been presented because the impact was not material to the consolidated statements of operations.

Acquisition-related costs related to the Phone.com acquisition charged to general and administrative expense during fiscal 2026 were approximately $0.7 million.

Note 14: Net Income (Loss) Per Share

Basic and diluted net income (loss) per share of common stock is calculated by dividing the net income (loss) allocable to common stockholders by the weighted-average number of common shares outstanding during the period. Diluted net loss per share of common stock is the same as basic net loss per share because the effects of potentially dilutive securities are antidilutive because the Company reported net losses for all periods presented.

The following table sets forth the computation of basic and diluted net income (loss) per share of common stock (in thousands, except share and per share data):

Potentially dilutive securities of approximately 0.8 million and 0.6 million in fiscal 2025 and 2024, respectively, were excluded from the computation of diluted net loss per share as their inclusion would have been anti-dilutive. These shares included the Company’s unvested RSUs, outstanding stock options and shares to be purchased under the ESPP.

Note 15: Retirement Plan

The Company offers a qualified 401(k) defined contribution plan to eligible full-time employees that provides for discretionary employer matching and profit-sharing contributions. The Company matches the lower of 50% of employee contributions or 50% of the first 6% of each employee’s eligible compensation that is contributed to the 401(k) plan. Contributions made by the Company vest 100% upon contribution and are expensed as incurred as compensation costs. The Company’s matching contributions to the plan were $1.4 million, $1.2 million and $1.1 million for fiscal 2026, 2025 and 2024, respectively.

Note 16: Segment Information

The Company has asingle reportable segment. The CODM uses consolidated net income (loss) for purposes of allocating resources and evaluating financial performance, including monitoring actual results versus historical periods. Adjusted cost of revenue, adjusted sales and marketing, adjusted research and development and adjusted general and administrative expenses are considered significant segment expenses that are regularly provided to the CODM and included within consolidated net loss. The measure of segment assets is the total assets on the Company’s consolidated balance sheets. Capital expenditures are reported on a consolidated basis on the Company’s consolidated statements of cash flows. The following tables include the Company's segment revenue, significant segment expenses, and other segment items to reconcile to net income (loss) (in thousands):

(1) Amounts exclude other segment expenses as follows: