Ooma Inc Q2 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Brian Kinstlinger - Alliance Global Partners - Analyst : Great, thanks so much for taking my questions, just a couple. The first one is, are there any updates on the sales cycle or install pace for AirDial customers, the enterprise ones?

Question: Brian Kinstlinger - Alliance Global Partners - Analyst : Great, thank you. And then you talked about the top 10 service provider in the US selling AirDial to its residential customers. Is the sales, the execution of the sale on them, and will we see -- let me change it, do you expect to see the residential customers and users begin to increase in the second half of the year or early next year. How do you think this might impact your results on the residential side? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 27, 2024 / 9:00PM, OOMA.N - Q2 2025 Ooma Inc Earnings Call

Question: Brian Kinstlinger - Alliance Global Partners - Analyst : I want to follow up on that. You mentioned they can move as fast as they want, so the consumer, the user, on the residential side won't have to opt in?

Question: Brian Kinstlinger - Alliance Global Partners - Analyst : Great, that's helpful. Last question for Shig. I think I asked this last quarter too, but with revenue in the third quarter and fourth quarter looking similar to what was just reported with a similar mix and the gross margin of hardware coming down by 15 points or more, I guess I'm wondering why the adjusted net income guidance looks similar in the third quarter and fourth quarter compared to what was reported in the second quarter. Hope that makes sense.

Question: Brian Kinstlinger - Alliance Global Partners - Analyst : Okay, thanks.

Question: Brian Kinstlinger - Alliance Global Partners - Analyst : Okay, that makes a little more sense because it sounds like you're going to save $1 million on hardware gross margin with the exact same split of revenue. So, to me, that million dollars may be explained by G&A, but other than that, it would be a little bit --

Question: Brian Kinstlinger - Alliance Global Partners - Analyst : Okay, thank you.

Question: Mike Latimore - Northland Securities - Analyst : Great results and some interesting updates here. First on 2600Hz, obviously you have a nice big customer you're launching. As you look at the pipeline, is the pipeline more skewed towards a wholesale model or a CPaaS customer?

Question: Mike Latimore - Northland Securities - Analyst : Okay, great. And the ILEC announcement is very interesting. I guess, did you say that you are the exclusive vendor into the business channel there, or is it the preferred vendor.

Question: Mike Latimore - Northland Securities - Analyst : And do they have a sort of drop-dead date where their POTS lines go away and would be a catalyst for both these segments, sir?

Question: Mike Latimore - Northland Securities - Analyst : Okay. All right. Makes sense. Great. Thanks very much.

Question: Josh Nichols - B. Riley Securities - Analyst : Yeah, thanks for taking my question. Good to see some upside on the top line, not just for the quarter, but for the year. Sounds like you got a few irons in the fire, but I'm kind of curious if you were to think about the back half and the upside revenue guidance. How would you attribute that if you were to kind of bifurcate it between the core business offering that you guys have, AirDial and 2600Hz, how is that being driven?

Question: Josh Nichols - B. Riley Securities - Analyst : Thanks, [Sullivan]. I know the 2600Hz margin profile is a little bit lower, but the company's actually seen Subscription and services gross margins start to increase again sequentially at least for the last couple quarters. I'm just curious when you look at that piece of the business, Shig, do you think that there's room for that margin to continue to expand from current levels in the back half now that the integration is largely complete or what are the margin thoughts for the subscription piece in the back half?

Question: Josh Nichols - B. Riley Securities - Analyst : Thanks. So then I guess like last question for me in terms of timing, it looks like you have a lot of stuff that's starting to come online in the second half of this year. Some new AirDial opportunities as well that we've talked about recently, as well as 2600Hz, it seems to be benefiting from the Metaswitch news. Fair to assume whenever you look at like how you guys have laid out the guidance for this year, that while you're not providing any formal guidance for next year, that you would expect at least a decent acceleration and growth rate based on kind of the irons that you guys have in the fire today, at least on the subscription boost.

Question: Josh Nichols - B. Riley Securities - Analyst : Thank you.

Question: Eric Martinuzzi - Lake Street Capital Markets - Analyst : I wanted to follow up on the ILEC win. Was there any other competitor on either the business side or the residential side that kind of gave you a run for your money or caused the awarding of it to maybe get slowed down versus what you thought? Or is it pretty much you're writing the RFP and winning the RFP?

Question: Eric Martinuzzi - Lake Street Capital Markets - Analyst : So that's a pipeline that could potentially convert here in FY25?

Question: Eric Martinuzzi - Lake Street Capital Markets - Analyst : Okay. And then for the business growth rate, your guidance is based on 13% for business and residential at a minus 1%. Just looking quarter by quarter, the trend is actually going the other way, Q2 versus Q1 on the business side at 9% versus the 12% we had in Q1. Is that just a question of the lumpiness of the quarter by quarter and that we've got either a backlog or a pipeline that substantiates that full year at 13%? What's behind the guide?

Question: Eric Martinuzzi - Lake Street Capital Markets - Analyst : Thank you for taking my questions.

Question: Brian Kinstlinger - Alliance Global Partners - Analyst : Thanks so much. I have two follow-ups. The first one is, can you provide an update on that large 2600Hz customer? You had mentioned it has the potential to add 100,000 seats, I believe, last quarter. How do you see that rollout playing out over the next four to six quarters? I guess, is there a committed number of lines that they've communicated over the first 12 months?

Question: Brian Kinstlinger - Alliance Global Partners - Analyst : That's helpful. And then my other question is related to that local carrier you discussed on this call. Can you -- maybe you did already, I missed it -- can you size both the residential and enterprise opportunity in terms of lines?

Question: Brian Kinstlinger - Alliance Global Partners - Analyst : Okay. Thank you so much. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 27, 2024 / 9:00PM, OOMA.N - Q2 2025 Ooma Inc Earnings Call

Question: Matthew Harrigan - The Benchmark Company LLC - Analyst : Thank you. It's nice to see that the curator is also taking fellow as a compliment to AirDial because it hasn't gotten nearly as much attention. Can you talk a little bit more about sizing the cam on Telo and what it would be internationally, I guess especially in Europe, given the regulatory differences? I had two more questions after that.

Question: Matthew Harrigan - The Benchmark Company LLC - Analyst : [Ben], you did say in relation to that ILEC that this is a company that has one of the top 10 number of consumer relationships, so we can infer that we're probably at the high end of the league table on that one, if you interface the Venn diagrams, I would think. Is that fair?

Question: Matthew Harrigan - The Benchmark Company LLC - Analyst : Didn't you also say that they were one of the top 10 companies in terms of US consumer relationships, or did I misunderstand?

Question: Matthew Harrigan - The Benchmark Company LLC - Analyst : Okay, I misheard then. Great, that's results in quite a while. Congratulations.

Question: Oliver Crookenden - JMP Securiries - Analyst : Hey, great. This is Oliver on for Pat. Could you provide an update on the US Cellular and T-Mobile reseller partnerships, how they contributed this quarter, and how you expect those to ramp throughout the back half of the year?