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10-Q 1 ooma-20230731.htm 10-Q 10-Q

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 July 31, 2023


☐	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.

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 August 31, 2023, there were 25.6 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	17
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	26
Item 4.	Controls and Procedures	26
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	27
Item 1A.	Risk Factors	27
Item 2.	Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities	57
Item 5.	Other Information	57
Item 6.	Exhibits	57
Signatures		59

Ooma | FY2024 Form 10-Q | 2

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

OOMA, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited, amounts in thousands)


	July 31, 2023		January 31, 2023
Assets
Current assets:
Cash and cash equivalents	$	28,979	$	24,137
Short-term investments		495		2,723
Accounts receivable, net		8,612		7,131
Inventories		22,806		26,246
Other current assets		14,508		14,368
Total current assets		75,400		74,605
Property and equipment, net		9,253		7,996
Operating lease right-of-use assets		16,129		12,702
Intangible assets, net		9,030		10,463
Goodwill		8,655		8,655
Other assets		17,722		16,584
Total assets	$	136,189	$	131,005

Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	12,505	$	13,462
Accrued expenses and other current liabilities		22,379		26,726
Deferred revenue		17,391		17,216
Total current liabilities		52,275		57,404
Long-term operating lease liabilities		12,692		10,426
Other long-term liabilities		17		31
Total liabilities		64,984		67,861
Commitments and contingencies (Note 11)
Stockholders’ equity:
Common stock		5		5
Additional paid-in capital		203,703		195,605
Accumulated other comprehensive loss		(5)		(23)
Accumulated deficit		(132,498)		(132,443)
Total stockholders’ equity		71,205		63,144
Total liabilities and stockholders’ equity	$	136,189	$	131,005

See notes to condensed consolidated financial statements

Ooma | FY2024 Form 10-Q | 3

OOMA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

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


	Three Months Ended				Six Months Ended
		July 31, 2023	July 31, 2022		July 31, 2023		July 31, 2022
Revenue:
Subscription and services	$	54,726	$	47,995	$	107,775	$	94,718
Product and other		3,627		4,658		7,430		8,272
Total revenue		58,353		52,653		115,205		102,990

Cost of revenue:
Subscription and services		15,456		12,675		30,181		25,884
Product and other		6,309		6,161		12,484		11,337
Total cost of revenue		21,765		18,836		42,665		37,221
Gross profit		36,588		33,817		72,540		65,769

Operating expenses:
Sales and marketing		18,842		17,432		36,832		33,583
Research and development		11,768		11,119		23,721		21,617
General and administrative		5,972		6,912		12,589		12,974
Total operating expenses		36,582		35,463		73,142		68,174
Income (loss) from operations		6		(1,646)		(602)		(2,405)
Interest and other income, net		532		17		947		50
Income (loss) before income taxes		538		(1,629)		345		(2,355)
Income tax (provision) benefit		(267)		1,967		(400)		1,927
Net income (loss)	$	271	$	338	$	(55)	$	(428)

Net income (loss) per share of common stock:
Basic and diluted	$	0.01	$	0.01	$	(0.00)	$	(0.02)

Weighted-average shares of common stock outstanding:
Basic		25,330,545		24,388,275		25,327,255		24,254,465
Diluted		25,935,018		24,873,764		25,327,255		24,254,465

See notes to condensed consolidated financial statements

Ooma | FY2024 Form 10-Q | 4

OOMA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited, amounts in thousands)


	Six Months Ended
	July 31, 2023			July 31, 2022
Cash flows from operating activities:
Net loss	$	(55)	$	(428)
Adjustments to reconcile net loss to net cash provided by operating activities:
Stock-based compensation expense		7,124		6,842
Depreciation and amortization of capital expenditures		2,188		1,739
Amortization of intangible assets		1,433		698
Amortization of operating lease right-of-use assets		1,460		1,449
Deferred income tax benefit		—		(2,043)
Facilities consolidation gain		(956)		—
Other		(4)		26
Changes in operating assets and liabilities:
Accounts receivable, net		(1,481)		973
Inventories and deferred inventory costs		3,347		(7,158)
Prepaid expenses and other assets		(1,485)		(2,326)
Accounts payable, accrued expenses and other liabilities		(6,896)		2,690
Deferred revenue		161		520
Net cash provided by operating activities		4,836		2,982

Cash flows from investing activities:
Proceeds from maturities and sales of short-term investments		2,250		9,125
Purchases of short-term investments		—		(3,869)
Capital expenditures		(3,518)		(2,812)
Business acquisition and related working capital adjustments		300		(9,771)
Net cash used in investing activities		(968)		(7,327)

Cash flows from financing activities:
Proceeds from issuance of common stock		1,888		1,554
Shares repurchased for tax withholdings on vesting of restricted stock units ("RSU")		(914)		(684)
Net cash provided by financing activities		974		870
Net increase (decrease) in cash and cash equivalents		4,842		(3,475)
Cash and cash equivalents at beginning of period		24,137		19,667
Cash and cash equivalents at end of period	$	28,979	$	16,192

See notes to condensed consolidated financial statements

Ooma | FY2024 Form 10-Q | 5

OOMA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited, amounts in thousands)


	Common stock				Accumulated		Stockholders'
Fiscal 2024	and APIC (1)		AOCL (2)		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

	Common stock				Accumulated		Stockholders'
Fiscal 2023	and APIC		AOCL		Deficit		Equity
BALANCE - February 1, 2022	$	179,864	$	(20)	$	(128,788)	$	51,056
Issuance of common stock under equity-based plans		1,554		—		—		1,554
Shares repurchased for tax withholdings on RSU vesting		(348)		—		—		(348)
Stock-based compensation		3,337		—		—		3,337
Changes in other comprehensive loss		—		(39)		—		(39)
Net loss		—		—		(766)		(766)
BALANCE - April 30, 2022	$	184,407	$	(59)	$	(129,554)	$	54,794
Shares repurchased for tax withholdings on RSU vesting		(336)		—		—		(336)
Stock-based compensation		3,505		—		—		3,505
Changes in other comprehensive loss		—		(1)		—		(1)
Net loss		—		—		338		338
BALANCE - July 31, 2022	$	187,576	$	(60)	$	(129,216)	$	58,300

(1) Additional paid-in capital

(2) Accumulated other comprehensive loss

See notes to condensed consolidated financial statements

Ooma | FY2024 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 2024 and fiscal 2023 refer to the fiscal years ended January 31, 2024 and January 31, 2023, 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, 2023 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, 2023 filed with the SEC on April 7, 2023 (“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 six months ended July 31, 2023 are not necessarily indicative of the results to be expected for any subsequent quarter or for the fiscal year ending January 31, 2024.

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.

Ooma | FY2024 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				Six Months Ended
	July 31, 2023			July 31, 2022	July 31, 2023		July 31, 2022
Subscription and services revenue	$	54,726	$	47,995	$	107,775	$	94,718
Product and other revenue		3,627		4,658		7,430		8,272
Total revenue	$	58,353	$	52,653	$	115,205	$	102,990

The Company derived approximately 57% and 50% of its total revenue from Ooma Business and approximately 41% and 47% from Ooma Residential for the three months ended July 31, 2023 and 2022, respectively. The Company derived approximately 56% and 50% of its total revenue from Ooma Business and approximately 41% and 47% from Ooma Residential for the six months ended July 31, 2023 and 2022, 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
	July 31, 2023	January 31, 2023
Customer A	21%	18%

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
	July 31, 2023		January 31, 2023
Subscription and services	$	17,404	$	17,239
Product and other		4		8
Total deferred revenue	$	17,408		17,247
Less: current deferred revenue		17,391		17,216
Non-current deferred revenue included in other long-term liabilities	$	17	$	31

During the three and six months ended July 31, 2023, the Company recognized revenue of approximately $3.1 million and $13.8 million, respectively pertaining to amounts deferred as of January 31, 2023. As of July 31, 2023, deferred revenue was primarily composed of subscription contracts invoiced during the first half of fiscal 2024, as well as amounts recorded during fiscal 2023 for annual contracts.

Remaining Performance Obligations. As of July 31, 2023, contract revenue that had not yet been recognized for open contracts with an original expected length of greater than one year was approximately $20.8 million. The Company expects to recognize revenue on approximately 43% of this amount over the next 12 months, with the balance to be recognized thereafter.

Ooma | FY2024 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.

Financial assets measured at fair value on a recurring basis by level were as follows (in thousands):


	Balance as of July 31, 2023
	Level 1		Level 2		Total
Cash and cash equivalents:
Money market funds	$	14,936	$	—	$	14,936
Total cash equivalents	$	14,936	$	—		14,936
Cash						14,043
Total cash and cash equivalents					$	28,979

Short-term investments:
U.S. treasury securities	$	495	$	—	$	495
Total short-term investments	$	495	$	—	$	495

	Balance as of January 31, 2023
	Level 1			Level 2		Total
Cash and cash equivalents:
Money market funds	$	11,380	$	—	$	11,380
Total cash equivalents	$	11,380	$	—		11,380
Cash						12,757
Total cash and cash equivalents					$	24,137

Short-term investments:
U.S. treasury securities	$	1,232	$	—	$	1,232
Commercial paper		—		1,491		1,491
Total short-term investments	$	1,232	$	1,491	$	2,723

The Company classifies its cash equivalents and short-term investments within Level 1 or Level 2 because it uses quoted market prices or alternative pricing sources and models utilizing market observable inputs to determine their fair value. The Company has no Level 3 assets or liabilities. For the periods presented, the amortized cost of cash equivalents and marketable securities approximated their fair value and there were no material realized or unrealized gains or losses, either individually or in the aggregate.

Short-term investments due in less than a year were $0.5 million and $2.7 million as of July 31, 2023 and January 31, 2023, respectively.

Ooma | FY2024 Form 10-Q | 9

Ooma, Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

OOMA INC [OOMA] Filings
10-Q	[2023-09-08]
10-Q	[2023-06-08]
10-K	[2023-04-07]
10-Q	[2022-12-09]
10-Q	[2022-09-08]
10-Q	[2022-06-08]
10-K	[2022-04-08]
10-Q	[2021-12-08]
10-Q	[2021-09-08]
10-Q	[2021-06-09]
10-K	[2021-04-07]
10-Q	[2020-12-04]
10-Q	[2020-09-04]
10-Q	[2020-06-09]
10-K	[2020-04-14]
10-Q	[2019-12-06]
10-Q	[2019-09-09]
10-Q	[2019-06-07]
10-K	[2019-04-03]
10-Q	[2018-12-07]
10-Q	[2018-09-06]
10-Q	[2018-06-08]
10-K	[2018-04-02]
10-Q	[2017-12-08]
10-Q	[2017-09-07]
10-Q	[2017-06-06]
10-K	[2017-04-11]
10-Q	[2016-12-09]
10-Q	[2016-09-09]
10-Q	[2016-06-10]
10-K	[2016-04-13]
10-Q	[2015-12-10]
10-Q	[2015-09-11]
S-1	[2015-06-15]