Behind The Numbers – Ooma (OOMA) Focusing on Strategic Initiatives
Ooma, through its communications solutions and connect services, has created a hybrid SaaS connectivity platform for residential and small business users in the United States and Canada. After the close yesterday, the company reported its Q2 Earnings:
-EPS of -$0.05 vs -$0.06 estimate – Beat
-Revenue of $31.7M vs $30.88M estimate – Beat
-Total Revenue increased 12%
-Subscription Services Revenue increased 19%
-Subscription Retention Rate of 100%
CEO Eric Stang would comment, “Our focus remains on our three key FY19 strategic initiatives, which are to continue the fast growth of Ooma Office for small businesses, capitalize on our Voxter acquisition to serve larger businesses with custom UCaaS solutions, and extend the Ooma platform to include home security and video monitoring services for residential users.”
Per the company’s conference call, here is a bit more dialogue on each of these strategic initiatives:
Ooma Office – The company added 7 important new features, which they expect will make their solution attractive to more customers, such as the ability to serve businesses with multiple site locations, feature extensions such as a multi-level IVR, dynamic sequential ring, call park and others, and offer new phone options, namely their DP1 DECT wireless, 2-line desk phone and a new cordless IP phone. CEO Eric Stang said they are now focused on 3 remaining major feature enhancements: A multi-line receptionist phone, call recording and further improvements to their Office Mobile app, all of which they expect to launch before year-end.
Voxter – Back in March, Ooma acquired this Canadian-based company for an undisclosed amount in a move that would help them reach larger businesses. Fast forward to the conference call, Ooma discussed that it has repositioned Voxter in their go-to-market strategy as Ooma Enterprise and have now integrated their sales and marketing activities between Ooma Enterprise and Ooma Office. This integration allows them to optimize their response to the customer leads that they generate and to present each customer with a continuum of capabilities all under the Ooma brand.
Home Security – Ooma highlighted that they added many important features in Q2 to their Home Security platform, including voice integration with Amazon Alexa, geofencing for automatic arm and disarm of the system when a customer comes and goes from their premises and a siren for when the system is triggered. They also began selling the Butterfleye camera in Q2 and just recently integrated the camera’s video streams into their main Home Security mobile app. This development allows us them to present the customer with an integrated platform solution that also includes unique features such as Remote 911 and facial recognition.
Analyst Commentary
Credit Suisse, this morning, raised its Price Target to $17 from $13 saying that key metrics all trended higher including a 19% Y/Y revenue growth in business + residential subscription services, a key focus of OOMA’s growth strategy. ARPU was solid at $9.56 [+11%]. Additionally, Ooma is now marketing + selling home security products without phone service, which should drive higher penetration of home security products.
BAML would also raise their price target to $18 from $16.50, but remained Neutral-rated saying that the company’s Telo business possibly faces impact from Amazon Echo and Google voice, which now have developed basic and limited calling and home security functionalities.
Upcoming Events
Finally, before the company’s Q3 earnings in late-November, investors should be aware that Ooma will be presenting at the following conference over the next week:
August 30th – Three Part Advisors IDEAS Conference
September 5th – Roth Capital Internet of Things Corporate Access Day
September 6th – 7th Annual Liolios Gateway Conference
