10-Q 1 ooma-20241031.htm 10-Q 10-Q
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended October 31, 2024

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-37493

 

 

Ooma, Inc.

(Exact Name of Registrant as Specified in its Charter)

 

Delaware

06-1713274

(State or other jurisdiction

of incorporation or organization)

(I.R.S. Employer

Identification No.)

525 Almanor Avenue, Suite 200, Sunnyvale, California 94085

(Address of principal executive offices)

(650) 566-6600

(Registrant’s telephone number, including area code)

 

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol

Name of each exchange on which registered

Common Stock, par value $0.0001

OOMA

The New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large Accelerated Filer

Accelerated Filer

 

 

 

 

Non-Accelerated Filer

Smaller reporting company

 

 

 

 

 

 

 

Emerging growth company

 

 

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. Yes No

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No

As of November 29, 2024, there were 27.0 million shares of the registrant’s common stock outstanding.

 

 


 

TABLE OF CONTENTS

 

Page

PART I. FINANCIAL INFORMATION

 

Item 1.

Financial Statements (unaudited):

3

Condensed Consolidated Balance Sheets

3

Condensed Consolidated Statements of Operations

4

Condensed Consolidated Statements of Cash Flows

5

 

Condensed Consolidated Statements of Stockholders’ Equity

6

Notes to Condensed Consolidated Financial Statements

7

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

18

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

27

Item 4.

Controls and Procedures

27

PART II. OTHER INFORMATION

 

Item 1.

Legal Proceedings

28

Item 1A.

Risk Factors

28

Item 2.

Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities

60

Item 5.

Other Information

60

Item 6.

Exhibits

60

Signatures

 

62

 

Ooma | FY2025 Form 10-Q | 2


 

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

OOMA, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited, amounts in thousands)

 

 

October 31,
2024

 

January 31,
2024

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

17,131

 

$

17,536

Accounts receivable, net

 

 

8,225

 

 

9,864

Inventories

 

 

13,177

 

 

19,782

Other current assets

 

 

16,556

 

 

16,497

Total current assets

 

 

55,089

 

 

63,679

Property and equipment, net

 

 

11,586

 

 

9,897

Operating lease right-of-use assets

 

 

15,329

 

 

17,041

Intangible assets, net

 

 

23,591

 

 

27,952

Goodwill

 

 

23,069

 

 

23,069

Other assets

 

 

20,940

 

 

17,615

Total assets

 

$

149,604

 

$

159,253

 

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

6,764

 

$

7,848

Accrued expenses and other current liabilities

 

 

27,147

 

 

26,586

Deferred revenue

 

 

16,952

 

 

17,041

Total current liabilities

 

 

50,863

 

 

51,475

Long-term operating lease liabilities

 

 

12,211

 

 

13,676

Debt, net of current portion

 

 

3,000

 

 

16,000

Deferred revenue, non-current

 

 

24

 

 

15

Total liabilities

 

 

66,098

 

 

81,166

Commitments and contingencies (Note 11)

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

Common stock

 

 

5

 

 

5

Additional paid-in capital

 

 

223,419

 

 

211,361

Accumulated other comprehensive loss

 

 

 

 

(1)

Accumulated deficit

 

 

(139,918)

 

 

(133,278)

Total stockholders’ equity

 

 

83,506

 

 

78,087

Total liabilities and stockholders’ equity

 

$

149,604

 

$

159,253

 

See notes to condensed consolidated financial statements

 

Ooma | FY2025 Form 10-Q | 3


 

OOMA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited, amounts in thousands, except share and per share data)

 

 

Three Months Ended

 

Nine Months Ended

 

 

 

October 31,
2024

 

October 31,
2023

 

October 31,
2024

 

October 31,
2023

Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

Subscription and services

 

$

60,135

 

$

55,886

 

$

178,090

 

$

163,661

Product and other

 

 

4,992

 

 

3,970

 

 

13,665

 

 

11,400

Total revenue

 

 

65,127

 

 

59,856

 

 

191,755

 

 

175,061

 

 

 

 

 

 

 

 

 

 

 

 

Cost of revenue:

 

 

 

 

 

 

 

 

 

 

 

 

Subscription and services

 

 

18,006

 

 

15,993

 

 

53,120

 

 

46,174

Product and other

 

 

7,851

 

 

6,924

 

 

22,550

 

 

19,408

Total cost of revenue

 

 

25,857

 

 

22,917

 

 

75,670

 

 

65,582

Gross profit

 

 

39,270

 

 

36,939

 

 

116,085

 

 

109,479

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Sales and marketing

 

 

19,223

 

 

17,912

 

 

57,960

 

 

54,744

Research and development

 

 

14,234

 

 

12,540

 

 

41,667

 

 

36,261

General and administrative

 

 

8,099

 

 

7,505

 

 

23,077

 

 

20,094

Total operating expenses

 

 

41,556

 

 

37,957

 

 

122,704

 

 

111,099

Loss from operations

 

 

(2,286)

 

 

(1,018)

 

 

(6,619)

 

 

(1,620)

Interest and other income, net

 

 

14

 

 

267

 

 

834

 

 

1,214

Loss before income taxes

 

 

(2,272)

 

 

(751)

 

 

(5,785)

 

 

(406)

Income tax (provision) benefit

 

 

(92)

 

 

3,036

 

 

(855)

 

 

2,636

Net (loss) income

 

$

(2,364)

 

$

2,285

 

$

(6,640)

 

$

2,230

 

 

 

 

 

 

 

 

 

 

 

 

Net (loss) income per share of common stock:

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted

 

$

(0.09)

 

$

0.09

 

$

(0.25)

 

$

0.09

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average shares of common stock outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

26,837,594

 

 

25,469,997

 

 

26,547,389

 

 

25,458,063

Diluted

 

 

26,837,594

 

 

25,990,264

 

 

26,547,389

 

 

26,052,180

 

See notes to condensed consolidated financial statements

Ooma | FY2025 Form 10-Q | 4


 

OOMA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited, amounts in thousands)

 

 

 

Nine Months Ended

 

 

 

October 31,
2024

 

 

October 31,
2023

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net (loss) income

 

$

 

(6,640

)

 

$

 

2,230

 

Adjustments to reconcile net (loss) income to net cash provided by operating activities:

 

 

 

 

 

 

 

 

Stock-based compensation expense

 

 

 

13,475

 

 

 

 

10,838

 

Depreciation and amortization of capital expenditures

 

 

 

3,143

 

 

 

 

3,230

 

Amortization of intangible assets

 

 

 

4,361

 

 

 

 

2,226

 

Amortization of operating lease right-of-use assets

 

 

 

2,291

 

 

 

 

2,217

 

Gain on note conversion

 

 

 

(980

)

 

 

 

 

Deferred income tax benefit

 

 

 

 

 

 

 

(3,234

)

Facilities consolidation gain

 

 

 

 

 

 

 

(956

)

Other

 

 

 

147

 

 

 

 

(5

)

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable, net

 

 

 

1,639

 

 

 

 

(1,903

)

Inventories and deferred inventory costs

 

 

 

6,614

 

 

 

 

4,671

 

Prepaid expenses and other assets

 

 

 

(2,530

)

 

 

 

(2,231

)

Accounts payable, accrued expenses and other liabilities

 

 

 

(2,676

)

 

 

 

(10,057

)

Deferred revenue

 

 

 

(80

)

 

 

 

(261

)

Net cash provided by operating activities

 

 

 

18,764

 

 

 

 

6,765

 

 

 

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Capital expenditures

 

 

 

(4,752

)

 

 

 

(4,884

)

Proceeds from maturities of short-term investments

 

 

 

 

 

 

 

2,750

 

Business acquisition, working capital adjustments

 

 

 

 

 

 

 

(28,910

)

Net cash used in investing activities

 

 

 

(4,752

)

 

 

 

(31,044

)

 

 

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Proceeds from issuance of common stock

 

 

 

3,451

 

 

 

 

2,725

 

Shares repurchased for tax withholdings on vesting of restricted stock units ("RSU")

 

 

 

(2,816

)

 

 

 

(1,410

)

Payments for repurchases of common stock

 

 

 

(2,052

)

 

 

 

 

Repayments of long-term debt

 

 

 

(13,000

)

 

 

 

 

Proceeds from issuance of long-term debt

 

 

 

 

 

 

 

18,000

 

Credit facility issuance costs

 

 

 

 

 

 

 

(301

)

Net cash (used in) provided by financing activities

 

 

 

(14,417

)

 

 

 

19,014

 

Net decrease in cash and cash equivalents

 

 

 

(405

)

 

 

 

(5,265

)

Cash and cash equivalents at beginning of period

 

 

 

17,536

 

 

 

 

24,137

 

Cash and cash equivalents at end of period

 

$

 

17,131

 

 

$

 

18,872

 

See notes to condensed consolidated financial statements

Ooma | FY2025 Form 10-Q | 5


 

OOMA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited, amounts in thousands)

 

 

Common stock

 

 

 

 

 

 

Accumulated

 

 

Stockholders'

 

Fiscal 2025

 

and APIC (1)

 

 

AOCL (2)

 

 

Deficit

 

 

Equity

 

BALANCE - February 1, 2024

 

$

 

211,366

 

 

$

 

(1

)

 

$

 

(133,278

)

 

$

 

78,087

 

Issuance of common stock under equity-based plans

 

 

 

1,417

 

 

 

 

 

 

 

 

 

 

1,417

 

Shares repurchased for tax withholdings on RSU vesting

 

 

 

(740

)

 

 

 

 

 

 

 

 

 

(740

)

Stock-based compensation

 

 

 

4,363

 

 

 

 

 

 

 

 

 

 

4,363

 

Net loss

 

 

 

 

 

 

 

 

 

(2,139

)

 

 

 

(2,139

)

BALANCE - April 30, 2024

 

$

 

216,406

 

 

$

 

(1

)

 

$

 

(135,417

)

 

$

 

80,988

 

Issuance of common stock under equity-based plans

 

 

 

167

 

 

 

 

 

 

 

 

 

 

167

 

Shares repurchased for tax withholdings on RSU vesting

 

 

 

(884

)

 

 

 

 

 

 

 

 

 

(884

)

Repurchases of common stock

 

 

 

(891

)

 

 

 

 

 

 

 

 

 

(891

)

Stock-based compensation

 

 

 

4,595

 

 

 

 

 

 

 

 

 

 

4,595

 

Changes in other comprehensive loss

 

 

 

 

 

 

1

 

 

 

 

 

 

 

1

 

Net loss

 

 

 

 

 

 

 

 

 

(2,137

)

 

 

 

(2,137

)

BALANCE - July 31, 2024

 

$

 

219,393

 

 

$

 

 

$

 

(137,554

)

 

$

 

81,839

 

Issuance of common stock under equity-based plans

 

 

 

1,867

 

 

 

 

 

 

 

 

 

 

1,867

 

Shares repurchased for tax withholdings on RSU vesting

 

 

 

(1,192

)

 

 

 

 

 

 

 

 

 

(1,192

)

Repurchases of common stock

 

 

 

(1,161

)

 

 

 

 

 

 

 

 

 

(1,161

)

Stock-based compensation

 

 

 

4,517

 

 

 

 

 

 

 

 

 

 

4,517

 

Net loss

 

 

 

 

 

 

 

 

 

(2,364

)

 

 

 

(2,364

)

BALANCE - October 31, 2024

 

$

 

223,424

 

 

$

 

 

$

 

(139,918

)

 

$

 

83,506

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock

 

 

 

 

 

 

Accumulated

 

 

Stockholders'

 

Fiscal 2024

 

and APIC

 

 

AOCL

 

 

Deficit

 

 

Equity

 

BALANCE - February 1, 2023

 

$

 

195,610

 

 

$

 

(23

)

 

$

 

(132,443

)

 

$

 

63,144

 

Issuance of common stock under equity-based plans

 

 

 

1,724

 

 

 

 

 

 

 

 

 

 

1,724

 

Shares repurchased for tax withholdings on RSU vesting

 

 

 

(431

)

 

 

 

 

 

 

 

 

 

(431

)

Stock-based compensation

 

 

 

3,500

 

 

 

 

 

 

 

 

 

 

3,500

 

Changes in other comprehensive loss

 

 

 

 

 

 

12

 

 

 

 

 

 

 

12

 

Net loss

 

 

 

 

 

 

 

 

 

(326

)

 

 

 

(326

)

BALANCE - April 30, 2023

 

$

 

200,403

 

 

$

 

(11

)

 

$

 

(132,769

)

 

$

 

67,623

 

Issuance of common stock under equity-based plans

 

 

 

164

 

 

 

 

 

 

 

 

 

 

164

 

Shares repurchased for tax withholdings on RSU vesting

 

 

 

(483

)

 

 

 

 

 

 

 

 

 

(483

)

Stock-based compensation

 

 

 

3,624

 

 

 

 

 

 

 

 

 

 

3,624

 

Changes in other comprehensive loss

 

 

 

 

 

 

6

 

 

 

 

 

 

 

6

 

Net income

 

 

 

 

 

 

 

 

 

271

 

 

 

 

271

 

BALANCE - July 31, 2023

 

$

 

203,708

 

 

$

 

(5

)

 

$

 

(132,498

)

 

$

 

71,205

 

Issuance of common stock under equity-based plans

 

 

 

837

 

 

 

 

 

 

 

 

 

 

837

 

Shares repurchased for tax withholdings on RSU vesting

 

 

 

(496

)

 

 

 

 

 

 

 

 

 

(496

)

Stock-based compensation

 

 

 

3,714

 

 

 

 

 

 

 

 

 

 

3,714

 

Changes in other comprehensive loss

 

 

 

 

 

 

4

 

 

 

 

 

 

 

4

 

Net income

 

 

 

 

 

 

 

 

 

2,285

 

 

 

 

2,285

 

BALANCE - October 31, 2023

 

$

 

207,763

 

 

$

 

(1

)

 

$

 

(130,213

)

 

$

 

77,549

 

(1) Additional paid-in capital

(2) Accumulated other comprehensive loss

See notes to condensed consolidated financial statements

Ooma | FY2025 Form 10-Q | 6


Ooma, Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

 

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.

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

Basis of Presentation. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. The condensed consolidated balance sheet as of January 31, 2024 included herein was derived from the audited financial statements as of that date, but does not include all the disclosures required by GAAP. Therefore, the information included in this Quarterly Report on Form 10-Q should be read in conjunction with the audited consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended January 31, 2024 filed with the SEC on April 2, 2024 (“Annual Report”).

The accompanying condensed consolidated financial statements reflect all normal recurring adjustments that management believes are necessary for a fair presentation of the interim periods presented. The results for the three and nine months ended October 31, 2024 are not necessarily indicative of the results to be expected for any subsequent quarter or for the fiscal year ending January 31, 2025.

Principles of Consolidation. The condensed consolidated financial statements include the accounts of Ooma, Inc. and its wholly-owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation.

Comprehensive Loss. For all periods presented, comprehensive loss approximated net loss in the condensed consolidated statements of operations and differences were not material. Therefore, the condensed consolidated statements of comprehensive loss have been omitted.

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.

Significant Accounting Policies. There have been no material changes to the Company’s significant accounting policies from those disclosed in the Annual Report.

Recent Accounting Pronouncements Not Yet Adopted. In November 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2023-07, which is intended to improve reportable segment disclosure requirements, primarily through additional disclosures about significant segment expenses. The standard is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The amendments should be applied retrospectively to all prior periods presented in the financial statements. The Company is evaluating the new standard.

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 should be applied on a prospective basis. Retrospective application is permitted. The Company is evaluating the new standard.

 

Ooma | FY2025 Form 10-Q | 7


Ooma, Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

 

Note 2: Revenue and Deferred Revenue

The Company derives its revenue from two sources:

Subscription and Services 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, and advertisements displayed through the Talkatone mobile application.

Product and Other Revenue is generated primarily from the sale of on-premise devices and end-point devices, including Ooma AirDial, 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.

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

 

 

Three Months Ended

 

Nine Months Ended

 

 

October 31,
2024

 

 

October 31,
2023

 

October 31,
2024

 

October 31,
2023

Subscription and services revenue

 

$

60,135

 

$

55,886

 

$

178,090

 

$

163,661

Product and other revenue

 

 

4,992

 

 

3,970

 

 

13,665

 

 

11,400

Total revenue

 

$

65,127

 

$

59,856

 

$

191,755

 

$

175,061

The Company derived approximately 62% and 58% of its total revenue from Ooma Business, and approximately 36% and 39% from Ooma Residential, for the three months ended October 31, 2024 and 2023, respectively. The Company derived approximately 61% and 57% of its total revenue from Ooma Business, and approximately 36% and 41% from Ooma Residential, for the nine months ended October 31, 2024 and 2023, respectively. No individual country outside of the United States, and no single customer, represented 10% or more of total revenue for the periods presented.

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

 

 

 

 

 

As of

 

 

 

 

 

October 31,
2024

 

 

January 31,
2024

Customer A

 

 

 

 

23%

 

 

33%

 

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.

 

 

 

 

As of

 

 

 

 

October 31,
2024

 

January 31,
2024

Subscription and services

 

 

 

$

16,894

 

$

17,034

Product and other

 

 

 

 

82

 

 

22

Total deferred revenue

 

 

 

$

16,976

 

 

17,056

Less: current deferred revenue

 

 

 

 

16,952

 

 

17,041

Deferred revenue, non-current

 

 

 

$

24

 

$

15

During the three and nine months ended October 31, 2024, the Company recognized revenue of approximately $2.0 million and $15.9 million, respectively pertaining to amounts deferred as of January 31, 2024. As of October 31, 2024, deferred revenue was primarily composed of subscription contracts invoiced during the first three quarters of fiscal 2025, as well as amounts recorded during fiscal 2024 for annual contracts.

Remaining Performance Obligations. As of October 31, 2024, contract revenue that had not yet been recognized for open contracts with an original expected length of greater than one year was approximately $30.3 million. The Company expects to recognize revenue on approximately 45% of this amount over the next 12 months, with the balance to be recognized thereafter.

Ooma | FY2025 Form 10-Q | 8


Ooma, Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

 

Note 3: Fair Value Measurements

The Company estimates and categorizes fair value 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 Company had $17.1 million and $17.5 million in cash and cash equivalents as of October 31, 2024 and January 31, 2024, respectively.

Non-Marketable Equity Investments. As of October 31, 2024, the total amount of non-marketable equity investments in privately held companies included in other assets in the Company's condensed 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.

 

 

Ooma | FY2025 Form 10-Q | 9


Ooma, Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

 

Note 4: Balance Sheet Components

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

Inventories

 

 

 

 

 

As of

 

 

 

 

October 31,
2024

 

January 31,
2024

Finished goods

 

 

 

$

8,898

 

$

12,024

Raw materials

 

 

 

 

4,279

 

 

7,758

Total inventory

 

 

 

$

13,177

 

$

19,782

Other current and non-current assets

 

 

 

 

As of

 

 

 

 

October 31,
2024

 

January 31,
2024

Deferred sales commissions, current

 

 

 

$

9,231

 

$

8,579

Prepaid expenses and other

 

 

 

 

4,952

 

 

4,177

Convertible note receivable (see "GTC" below)

 

 

 

 

 

 

2,257

Other current assets

 

 

 

 

2,373

 

 

1,484

Total other current assets

 

 

 

$

16,556

 

$

16,497

 

 

 

 

 

 

 

 

 

Deferred sales commissions, non-current

 

 

 

$

14,978

 

$

15,257

Other assets

 

 

 

 

5,962

 

 

2,358

Total other non-current assets

 

 

 

$

20,940

 

$

17,615

 

Customer Acquisition Costs. Amortization of deferred sales commissions was $2.5 million and $2.3 million for the three months ended October 31, 2024 and 2023, respectively, and $7.3 million and $6.7 million for the nine months ended October 31, 2024 and 2023, respectively.

Global Telecom Corporation. In December 2018, the Company invested $1.3 million in cash in GTC in exchange for a convertible promissory note that will 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. As of October 31, 2024, the Company had $0.4 million of prepaid inventory deposit and $0.8 million in 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. Per the terms of the note, in the event of an equity financing all of the outstanding principal and accrued but unpaid interest would be converted to a number of shares of standard preferred stock equal to the Conversion Amount divided by the Conversion Price. "Conversion Amount" is defined as outstanding principal plus unpaid accrued interest. "Conversion Price" is 70% of the per share price for the preferred stock. 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 income in the condensed consolidated statements of operations. The Company recorded the fair value of GTC preferred stock of $3.3 million as of October 31, 2024 to other assets in the condensed consolidated balance sheets.

Ooma | FY2025 Form 10-Q | 10


Ooma, Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

 

Accrued expenses and other current liabilities

 

 

 

 

As of

 

 

 

 

October 31,
2024

 

January 31,
2024

Payroll and related expenses

 

 

 

$

13,629

 

$

12,301

Regulatory fees and taxes

 

 

 

 

5,234

 

 

4,598

Short-term operating lease liabilities

 

 

 

 

3,694

 

 

3,742

Customer-related liabilities

 

 

 

 

1,400

 

 

1,118

Other

 

 

 

 

3,190

 

 

4,827

Total accrued expenses and other current liabilities

 

 

 

$

27,147

 

$

26,586

 

Note 5: Acquired Intangible Assets

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

 

 

 

 

 

As of October 31, 2024

 

As of January 31, 2024

 

 

Estimated life
(in years)

 

Gross
Value

 

Accumulated Amortization

 

Carrying
Value

 

Gross
Value

 

Accumulated Amortization

 

Carrying
Value

Developed technology

 

 

2-7

 

$

20,618

 

$

(4,933)

 

$

15,685

 

$

20,618

 

$

(2,865)

 

$

17,753

Customer relationships

 

 

5-7

 

 

16,545

 

 

(9,433)

 

 

7,112

 

 

16,545

 

 

(7,336)

 

 

9,209

Trade names

 

 

2-5

 

 

1,685

 

 

(891)

 

 

794

 

 

1,685

 

 

(695)

 

 

990

Total intangible assets

 

 

 

 

$

38,848

 

$

(15,257)

 

$

23,591

 

$

38,848

 

$

(10,896)

 

$