Ooma Inc Q3 2024 Earnings Call Transcript

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

Question: Mike Latimore - Northland Capital Markets - Analyst : Yes, thanks so much. On the largest customer, which is our Aegis, how many users do you think they will have by fiscal year end now? And then I think you said you expect to launch new countries next year. I guess what's the kind of incremental opportunity next year? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 05, 2023 / 10:00PM, OOMA.N - Q3 2024 Ooma Inc Earnings Call

Question: Mike Latimore - Northland Capital Markets - Analyst : And then how much is the US small business market, any noticeable change versus last quarter in terms of just sales cycles, collections, just general activity and sort of small business you called on?

Question: Mike Latimore - Northland Capital Markets - Analyst : Great. And just last one on product gross margin. Once some of the anomalies come out of the mix here, what should that product gross margin normalize to?

Question: Mike Latimore - Northland Capital Markets - Analyst : Okay. Very good. Thanks a lot.

Question: Erik Suppiger - JMP Securitites - Analyst : We are going to take a question from first off just on the outlook for Q4 it does seem as though you're looking for relatively flat sequential growth on the subscription revenue on an organic basis, is there any reason you're more conservative there?

Question: Erik Suppiger - JMP Securitites - Analyst : Okay. And then you said done Regis could reach, I think said 120,000 end users. How many countries would you anticipate that will be?

Question: Erik Suppiger - JMP Securitites - Analyst : Okay. And then how do you anticipate generating follow-on business with those countries? Is that kind of -- can you talk a little bit about the timing around that? (multiple speakers) with additional customers, that is.

Question: Erik Suppiger - JMP Securitites - Analyst : Got it. Okay. Thank you.

Question: Josh Nichols - B. Riley Securities - Analyst : Thanks for taking my question. I was wondering if you could elaborate a little bit. I think you mentioned that in the quarter you landed two AirDial customers that you think ultimately are probably going to become the largest customers. I know AirDial is taking a little bit longer to ramp than originally as anticipated, but could you provide a little bit more clarity on the type of market opportunity that those two customers represent? And do you have any visibility into what type of install units these two customers alone could represent if we think about over the next 12 to 18 months?

Question: Josh Nichols - B. Riley Securities - Analyst : Thanks. And then just one or two small things. Shig, did you mention I think you said product revenue would be between $3.8 million for $4.1 million for first quarter?

Question: Josh Nichols - B. Riley Securities - Analyst : And then last question, I know there's like a big delta between the GAAP and non-GAAP guidance for 4Q. I know that that's not super surprising given the acquisition. I was just kind of curious what you were expecting for one-time costs. Just trying to think about how to manage or model the cash flow for 4Q?

Question: Josh Nichols - B. Riley Securities - Analyst : Sounds good. I appreciate it. Thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 05, 2023 / 10:00PM, OOMA.N - Q3 2024 Ooma Inc Earnings Call

Question: Brian Kinstlinger - Alliance Global Partners - Analyst : Great. Thanks so much for taking my question and congrats on the successes that were AirDial. My one question is last quarter you talked about there were challenges in the pace of installation, some of it were people, some of it were the various places where installers might happen and what progress has the company made, especially within its control, the future governance control, if any to help improve installation rates. Thank you.

Question: Brian Kinstlinger - Alliance Global Partners - Analyst : And just my second question for shared would be when the installations start ramping and they become a more meaningful piece of revenue. Just remind us the puts and takes to product revenue and margin. Our shares are subscription and services.

Question: Brian Kinstlinger - Alliance Global Partners - Analyst : Great. 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. DECEMBER 05, 2023 / 10:00PM, OOMA.N - Q3 2024 Ooma Inc Earnings Call

Question: Matthew Harrigan - The Benchmark Company LLC - Analyst : Well, thank you. Firstly, since you're not including 2600Hz in your KPIs, and it's pretty evident we're going to be modeling that longer-term, you talk about some of the growth opportunities there with some of the customized apps and certainly even the better monetization of consumer, what's your ambition in terms of the long-term growth rate there, which presumably exceed that your core business? And then secondly, on your existing subscription business, you said that 28% are taking Pro or Pro plus right now you've got a good product incrementally at pretty low incremental cost. Why is that? I know I've asked you this before, but how often do you consider devoting more to marketing to upgrade the installed base. I don't know whether it's much more of a further release of them looks like on the surface to get people to upgrade, but presumably you could be affording more utility for customers and ramping growth rate while you do it at the same time effects?

Question: Matthew Harrigan - The Benchmark Company LLC - Analyst : (microphone inaccessible) free trial for like a month or three months, just certain capabilities, I assume the expenses wouldn't be I wouldn't be that high to do it or is that just offered in terms of the upgrade?

Question: Matthew Harrigan - The Benchmark Company LLC - Analyst : I like that because you're pretty unfortunately modeling that separately since you're not including that in your cohort KPIs as you stipulated ?

Question: Matthew Harrigan - The Benchmark Company LLC - Analyst : Thank, Eric. Thanks, Shig.

Question: Arjun Bhatia - William Blair & Company, L.L.C. - Analyst : Perfect. Thank you, guys for taking the question. If I could just go back to the user growth. I know it sounded like it was your largest customer region that was driving some of the headwinds there. But if we look to other customers, are you seeing similar kind of muted growth there in Q3 and Q4? Is it largely related to regions where we're seeing slower growth from that customer base from these arrays rather?

Question: Arjun Bhatia - William Blair & Company, L.L.C. - Analyst : Okay, perfect. That's helpful. And then maybe going back to bridges, I know you're talking about expanding into other countries and the opportunity that it could pose longer term, how should we think about what what that process is like to go into other countries? How long does it typically take to open up a new geography, how many resources are required? What are the challenges? Maybe just help us understand that process some a little bit better?

Question: Arjun Bhatia - William Blair & Company, L.L.C. - Analyst : And sorry, one more if I can just follow up. On the is the subscription and services gross margin following this international build-out, meaning once this is once you have the additional region stood up by the middle of next year, should that be the trough in and subscription gross margins or are there other factors that maybe I'm not considering there?

Question: Arjun Bhatia - William Blair & Company, L.L.C. - Analyst : Okay. Very helpful. Thank you for taking my questions.