Company Quick10K Filing
Ooma
Price10.96 EPS-1
Shares21 P/E-14
MCap235 P/FCF-35
Net Debt-12 EBIT-17
TEV223 TEV/EBIT-13
TTM 2019-10-31, in MM, except price, ratios
10-K 2020-01-31 Filed 2020-04-14
10-Q 2019-10-31 Filed 2019-12-06
10-Q 2019-07-31 Filed 2019-09-09
10-Q 2019-04-30 Filed 2019-06-07
10-K 2019-01-31 Filed 2019-04-03
10-Q 2018-10-31 Filed 2018-12-07
10-Q 2018-07-31 Filed 2018-09-06
10-Q 2018-04-30 Filed 2018-06-08
10-K 2018-01-31 Filed 2018-04-02
10-Q 2017-10-31 Filed 2017-12-08
10-Q 2017-07-31 Filed 2017-09-07
10-Q 2017-04-30 Filed 2017-06-06
10-K 2017-01-31 Filed 2017-04-11
10-Q 2016-10-31 Filed 2016-12-09
10-Q 2016-07-31 Filed 2016-09-09
10-Q 2016-04-30 Filed 2016-06-10
10-K 2016-01-31 Filed 2016-04-13
10-Q 2015-10-31 Filed 2015-12-10
10-Q 2015-07-31 Filed 2015-09-11
8-K 2020-03-05 Earnings, Exhibits
8-K 2019-11-21 Earnings, Exhibits
8-K 2019-08-27 Earnings, Exhibits
8-K 2019-06-10 Shareholder Vote
8-K 2019-05-21 Earnings, Exhibits
8-K 2019-05-15 Other Events, Exhibits
8-K 2019-03-05 Earnings, Exhibits
8-K 2018-11-27 Earnings, Exhibits
8-K 2018-08-28 Earnings, Exhibits
8-K 2018-06-06 Shareholder Vote
8-K 2018-05-22 Earnings, Exhibits
8-K 2018-03-06 Earnings, Exhibits

OOMA 10Q Quarterly Report

Part I - Financial Information
Item 1. Financial Statements
Note 1: Overview and Basis of Presentation
Note 2: Revenue and Deferred Revenue
Note 3: Fair Value Measurements
Note 4: Balance Sheet Components
Note 5: Acquired Intangible Assets and Goodwill
Note 6: Operating Leases
Note 7: Stockholders' Equity
Note 8: Stock-Based Compensation
Note 9: Income Taxes
Note 10: Basic and Diluted Net Loss per Share
Note 11: Commitments and Contingencies
Note 12: Business Acquisition
Note 13: Restructuring Charges
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A")
Item 3: Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II - Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Item 5.Other Information.
Item 6. Exhibits.
EX-10.1 ooma-ex101_150.htm
EX-31.1 ooma-ex311_8.htm
EX-31.2 ooma-ex312_7.htm
EX-32.1 ooma-ex321_9.htm
EX-32.2 ooma-ex322_6.htm

Ooma Earnings 2019-10-31

Balance SheetIncome StatementCash Flow
856851341702013201520172020
Assets, Equity
403020100-102013201520172020
Rev, G Profit, Net Income
10.02.0-6.0-14.0-22.0-30.02013201520172020
Ops, Inv, Fin

10-Q 1 ooma-10q_20191031.htm 10-Q ooma-10q_20191031.htm

 

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, 2019

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 30, 2019, there were 21.4 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

  

23

Item 3.

  

Quantitative and Qualitative Disclosures About Market Risk

  

33

Item 4.

  

Controls and Procedures

  

33

 

PART II. OTHER INFORMATION

Item 1.

  

Legal Proceedings

  

34

Item 1A.

  

Risk Factors

  

34

Item 2.

  

Unregistered Sales of Equity Securities and Use of Proceeds

  

60

Item 5.

 

Other Information

 

60

Item 6.

  

Exhibits

  

60

Signatures

  

62

 

 

 

 

 

Ooma | FY2020 Form 10-Q | 2

 


 

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

OOMA, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

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

 

 

 

October 31,

2019

 

 

January 31,

2019

 

Assets

 

 

 

 

 

 

 

 

Current assets:

 

Cash and cash equivalents

 

$

11,688

 

 

$

15,370

 

Short-term investments

 

 

15,786

 

 

 

27,253

 

Accounts receivable, net

 

 

5,015

 

 

 

3,723

 

Inventories

 

 

9,484

 

 

 

10,117

 

Other current assets

 

 

8,482

 

 

 

5,450

 

Total current assets

 

 

50,455

 

 

 

61,913

 

Property and equipment, net

 

 

4,977

 

 

 

4,563

 

Operating lease right-of-use assets

 

 

4,341

 

 

 

 

Intangible assets, net

 

 

7,149

 

 

 

2,635

 

Goodwill

 

 

4,264

 

 

 

3,898

 

Other assets

 

 

7,539

 

 

 

5,379

 

Total assets

 

$

78,725

 

 

$

78,388

 

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

10,415

 

 

$

10,231

 

Accrued expenses and other current liabilities

 

 

21,716

 

 

 

19,048

 

Deferred revenue

 

 

16,005

 

 

 

15,443

 

Total current liabilities

 

 

48,136

 

 

 

44,722

 

Long-term operating lease liabilities

 

 

2,892

 

 

 

 

Other liabilities

 

 

269

 

 

 

619

 

Total liabilities

 

 

51,297

 

 

 

45,341

 

Commitments and contingencies (Note 11)

 

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

 

 

Preferred stock $0.0001 par value: 10 million shares authorized; none issued and outstanding

 

 

 

 

 

 

Common stock $0.0001 par value: 100 million shares authorized; 21.4 million and 20.3 million shares issued and outstanding, respectively

 

 

4

 

 

 

4

 

Additional paid-in capital

 

 

149,712

 

 

 

138,848

 

Accumulated other comprehensive income (loss)

 

 

14

 

 

 

(10

)

Accumulated deficit

 

 

(122,302

)

 

 

(105,795

)

Total stockholders’ equity

 

 

27,428

 

 

 

33,047

 

Total liabilities and stockholders’ equity

 

$

78,725

 

 

$

78,388

 

 

See notes to condensed consolidated financial statements

 

 

 

 

 

 

 

 

 

 

 

 

Ooma | FY2020 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,

2019

 

 

October 31,

2018

 

 

October 31,

2019

 

 

October 31,

2018

 

Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Subscription and services

 

$

36,489

 

 

$

29,794

 

 

$

102,070

 

 

$

85,532

 

Product and other

 

 

3,106

 

 

 

2,814

 

 

 

8,875

 

 

 

8,979

 

Total revenue

 

 

39,595

 

 

 

32,608

 

 

 

110,945

 

 

 

94,511

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Subscription and services

 

 

11,093

 

 

 

8,796

 

 

 

32,117

 

 

 

26,388

 

Product and other

 

 

6,462

 

 

 

3,739

 

 

 

14,035

 

 

 

11,339

 

Total cost of revenue

 

 

17,555

 

 

 

12,535

 

 

 

46,152

 

 

 

37,727

 

Gross profit

 

 

22,040

 

 

 

20,073

 

 

 

64,793

 

 

 

56,784

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales and marketing

 

 

13,205

 

 

 

10,755

 

 

 

37,498

 

 

 

30,149

 

Research and development

 

 

10,639

 

 

 

8,593

 

 

 

29,118

 

 

 

25,558

 

General and administrative

 

 

5,136

 

 

 

4,589

 

 

 

15,416

 

 

 

13,036

 

Total operating expenses

 

 

28,980

 

 

 

23,937

 

 

 

82,032

 

 

 

68,743

 

Loss from operations

 

 

(6,940

)

 

 

(3,864

)

 

 

(17,239

)

 

 

(11,959

)

Interest and other income, net

 

 

128

 

 

 

224

 

 

 

666

 

 

 

599

 

Loss before income taxes

 

 

(6,812

)

 

 

(3,640

)

 

 

(16,573

)

 

 

(11,360

)

Income tax benefit

 

 

28

 

 

 

146

 

 

 

66

 

 

 

277

 

Net loss

 

$

(6,784

)

 

$

(3,494

)

 

$

(16,507

)

 

$

(11,083

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss per share of common stock:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted

 

$

(0.32

)

 

$

(0.18

)

 

$

(0.79

)

 

$

(0.56

)

Weighted-average shares of common stock outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted

 

 

21,274,285

 

 

 

19,962,735

 

 

 

20,872,253

 

 

 

19,655,727

 

 

See notes to condensed consolidated financial statements

 

 

 

 

Ooma | FY2020 Form 10-Q | 4

 


 

OOMA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited, amounts in thousands)

 

 

 

Nine Months Ended

 

 

 

October 31,

2019

 

 

October 31,

2018

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net loss

 

$

(16,507

)

 

$

(11,083

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

 

 

Stock-based compensation expense

 

 

9,647

 

 

 

7,734

 

Depreciation and amortization of capital expenditures

 

 

1,976

 

 

 

1,717

 

Amortization of acquired intangible assets

 

 

900

 

 

 

540

 

Non-cash restructuring charges

 

 

1,603

 

 

 

 

Non-cash operating lease expense

 

 

1,365

 

 

 

 

Other

 

 

(79

)

 

 

(613

)

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable, net

 

 

(289

)

 

 

(207

)

Inventories and deferred inventory costs

 

 

(644

)

 

 

(1,693

)

Prepaid expenses and other assets

 

 

(3,645

)

 

 

(2,822

)

Accounts payable and other liabilities

 

 

(1,438

)

 

 

4,164

 

Deferred revenue

 

 

329

 

 

 

458

 

Net cash used in operating activities

 

 

(6,782

)

 

 

(1,805

)

 

 

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Purchases of short-term investments

 

 

(31,236

)

 

 

(26,709

)

Proceeds from maturities and sales of short-term investments

 

 

42,996

 

 

 

40,762

 

Capital expenditures

 

 

(2,384

)

 

 

(1,438

)

Business acquisition, net of cash assumed

 

 

(7,073

)

 

 

(2,402

)

Net cash provided by investing activities

 

 

2,303

 

 

 

10,213

 

 

 

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Proceeds from issuance of common stock

 

 

2,740

 

 

 

2,763

 

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

 

 

(1,523

)

 

 

(2,298

)

Payment of acquisition-related holdback

 

 

(420

)

 

 

 

Net cash provided by financing activities

 

 

797

 

 

 

465

 

Net (decrease) increase in cash and cash equivalents

 

 

(3,682

)

 

 

8,873

 

Cash and cash equivalents at beginning of period

 

 

15,370

 

 

 

4,483

 

Cash and cash equivalents at end of period

 

$

11,688

 

 

$

13,356

 

 

 

See notes to condensed consolidated financial statements

 

 

 

Ooma | FY2020 Form 10-Q | 5

 


 

OOMA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited, amounts in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock

 

 

 

 

 

 

Accumulated

 

 

Stockholders'

 

 

 

and APIC (1)

 

 

AOCI (2)

 

 

Deficit

 

 

Equity

 

BALANCE - February 1, 2019

 

$

138,852

 

 

$

(10

)

 

$

(105,795

)

 

$

33,047

 

Issuance of common stock under equity-based plans

 

 

1,454

 

 

 

 

 

 

 

 

 

1,454

 

Shares repurchased for tax withholdings on RSU vesting

 

 

(730

)

 

 

 

 

 

 

 

 

(730

)

Stock-based compensation

 

 

2,982

 

 

 

 

 

 

 

 

 

2,982

 

Changes in comprehensive income

 

 

 

 

 

11

 

 

 

 

 

 

11

 

Net loss

 

 

 

 

 

 

 

 

(4,740

)

 

 

(4,740

)

BALANCE - April 30, 2019

 

$

142,558

 

 

$

1

 

 

$

(110,535

)

 

$

32,024

 

Issuance of common stock under equity-based plans

 

 

354

 

 

 

 

 

 

 

 

 

354

 

Stock-based compensation

 

 

3,411

 

 

 

 

 

 

 

 

 

3,411

 

Changes in comprehensive income

 

 

 

 

 

5

 

 

 

 

 

 

5

 

Net loss

 

 

 

 

 

 

 

 

(4,983

)

 

 

(4,983

)

BALANCE - July 31, 2019

 

$

146,323

 

 

$

6

 

 

$

(115,518

)

 

$

30,811

 

Issuance of common stock under equity-based plans

 

 

932

 

 

 

 

 

 

 

 

 

932

 

Shares repurchased for tax withholdings on RSU vesting

 

 

(793

)

 

 

 

 

 

 

 

 

(793

)

Stock-based compensation

 

 

3,254

 

 

 

 

 

 

 

 

 

3,254

 

Changes in comprehensive income

 

 

 

 

 

8

 

 

 

 

 

 

8

 

Net loss

 

 

 

 

 

 

 

 

(6,784

)

 

 

(6,784

)

BALANCE - October 31, 2019

 

$

149,716

 

 

$

14

 

 

$

(122,302

)

 

$

27,428

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BALANCE - February 1, 2018

 

$

128,083

 

 

$

(84

)

 

$

(90,931

)

 

$

37,068

 

Issuance of common stock under equity-based plans

 

 

1,205

 

 

 

 

 

 

 

 

 

1,205

 

Shares repurchased for tax withholdings on RSU vesting

 

 

(759

)

 

 

 

 

 

 

 

 

(759

)

Issuance of common stock for business acquisition

 

 

390

 

 

 

 

 

 

 

 

 

390

 

Stock-based compensation

 

 

2,314

 

 

 

 

 

 

 

 

 

2,314

 

Changes in comprehensive loss

 

 

 

 

 

(1

)

 

 

 

 

 

(1

)

Cumulative adjustment upon adoption of Topic 606

 

 

 

 

 

 

 

 

(292

)

 

 

(292

)

Net loss

 

 

 

 

 

 

 

 

(3,685

)

 

 

(3,685

)

BALANCE - April 30, 2018

 

$

131,233

 

 

$

(85

)

 

$

(94,908

)

 

$

36,240

 

Issuance of common stock under equity-based plans

 

 

488

 

 

 

 

 

 

 

 

 

488

 

Shares repurchased for tax withholdings on RSU vesting

 

 

(441

)

 

 

 

 

 

 

 

 

(441

)

Stock-based compensation

 

 

2,762

 

 

 

 

 

 

 

 

 

2,762

 

Changes in comprehensive loss

 

 

 

 

 

36

 

 

 

 

 

 

36

 

Net loss

 

 

 

 

 

 

 

 

(3,904

)

 

 

(3,904

)

BALANCE - July 31, 2018

 

$

134,042

 

 

$

(49

)

 

$

(98,812

)

 

$

35,181

 

Issuance of common stock under equity-based plans

 

 

1,118

 

 

 

 

 

 

 

 

 

1,118

 

Shares repurchased for tax withholdings on RSU vesting

 

 

(1,097

)

 

 

 

 

 

 

 

 

(1,097

)

Stock-based compensation

 

 

2,658

 

 

 

 

 

 

 

 

 

2,658

 

Changes in comprehensive loss

 

 

 

 

 

15

 

 

 

 

 

 

15

 

Net loss

 

 

 

 

 

 

 

 

(3,494

)

 

 

(3,494

)

BALANCE - October 31, 2018

 

$

136,721

 

 

$

(34

)

 

$

(102,306

)

 

$

34,381

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Additional paid-in capital

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2) Accumulated other comprehensive income (loss)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See notes to condensed consolidated financial statements

 


 

 

 

Ooma | FY2020 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”) create new communications experiences for businesses and consumers, delivered from its smart cloud-based SaaS platform. The Company was founded in 2003 and is headquartered in Sunnyvale, California.

The Company’s fiscal year ends on January 31. References to fiscal 2020 and fiscal 2019 refer to the fiscal year ending January 31, 2020 and the fiscal year ended January 31, 2019, respectively.

The Company refers to its Ooma Office, Ooma Enterprise and Broadsmart offerings collectively as Ooma Business. The Company refers to its Ooma Telo basic and premier services and Smart Security solutions as Ooma Residential.

Principles of Presentation and Consolidation

These 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 (the “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. Therefore, the information included in this Quarterly Report on Form 10-Q should be read in conjunction with the audited consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K for the year ended January 31, 2019 (“Annual Report”).

These financial statements have been prepared on the same basis as the Company’s annual financial statements and, in the opinion of management, reflect all normal recurring adjustments necessary to present fairly the Company’s financial position, its results of operations, and cash flows for the interim periods presented, but are not necessarily indicative of the results of operations to be anticipated for the full fiscal year ending January 31, 2020. The condensed consolidated balance sheet as of January 31, 2019 included herein was derived from the audited financial statements as of that date.

The condensed consolidated financial statements include accounts of the Company and its wholly-owned subsidiaries. All intercompany transactions and balances have been eliminated upon consolidation.

Use of Estimates.  The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the Company’s condensed consolidated financial statements and notes thereto. Significant estimates include, but are not limited to, those related to revenue recognition, inventory valuation, valuation of goodwill and intangible assets, deferred sales commissions, operating lease assets and liabilities, regulatory fees and indirect tax accruals, loss contingencies, stock-based compensation, income taxes (including valuation allowances) and fair value measurements. Estimates are based on historical experience, where applicable, and other assumptions believed to be reasonable by management. These estimates are based on information available as of the date of the condensed consolidated financial statements, and assumptions are inherently subjective in nature. Therefore, actual results could differ from management’s estimates.

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.

Recently Adopted Accounting Standards

Leases.  On February 1, 2019, the Company adopted Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842) which superseded the guidance in Topic 840 and required the Company to recognize operating leased assets and corresponding liabilities on the balance sheet and to provide enhanced disclosures. The Company adopted Topic 842 using the modified retrospective transition method by applying the new standard to all leases existing at the date of initial adoption and not restating comparative periods. The Company elected the package of practical expedients, which among other things, allowed it to carry forward its historical lease classification and its assessment of whether any existing leases as of the date of adoption are or contain leases.

Adoption on February 1, 2019 resulted in the recognition of $4.1 million of operating right-of-use “ROU” assets and $4.3 million of operating lease liabilities on the condensed consolidated balance sheet, with no adjustment to accumulated deficit. The difference of $0.2 million represented deferred rent for leases that existed as of the date of adoption, which was an offset to the opening balance of ROU assets.

Adoption of the new standard did not materially impact the Company’s consolidated statements of operations, consolidated statements of stockholders’ equity and consolidated statements of cash flows. The Company has

Ooma | FY2020 Form 10-Q | 7

 


Ooma, Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

 

implemented policies, processes and controls to support the standard's measurement and disclosure requirements. See Significant Accounting Policies – Leases below and Note 6: Operating Leases.

Stock-based compensation. The Company adopted ASU 2018-07, Compensation – Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting in the first quarter of fiscal 2020, which expanded the scope of Topic 718 to include and simplify financial reporting for non-employee stock-based payments. Under the amended standard, most of the guidance on stock compensation for non-employees became aligned with the requirements for employees. The adoption of this ASU did not have a material impact on the Company’s consolidated financial statements.

Significant Accounting Policies – Leases

Under Topic 842, the Company determines if an arrangement is a lease at inception. The Company’s leases primarily consist of real property and are classified as operating leases. The Company does not have any finance leases nor material arrangements as a lessor. ROU assets and lease liabilities are recognized at the lease commencement date based upon the present value of the remaining lease payments over the lease term. The Company uses its incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. Lease expense for lease payments is recognized on a straight-line basis over the term of the lease. Lease terms may include options to renew or extend when it is reasonably certain that the option will be exercised. Lease agreements that contain both lease and non-lease components are accounted for as a single component. Short-term leases with an initial term of twelve months or less are not recorded on the balance sheet.

 


Ooma | FY2020 Form 10-Q | 8

 


Ooma, Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

 

 

Note 2: Revenue and Deferred Revenue

The Company’s revenue for the three and nine months ended October 31, 2019 and 2018 are presented in accordance with the provisions under Topic 606. The Company derives its revenue from two sources:

Subscription and Services Revenue is derived primarily from recurring subscription fees related to service plans such as Ooma Business, Ooma Residential and other communications services. Subscription revenue is generally recognized ratably over the contractual service term.

Product and Other Revenue is generated from the sale of on-premise appliances and end-point devices, including shipping and handling fees for customers, and to a lesser extent from porting fees that enable customers to transfer their existing phone numbers. Revenue is recognized at the point in time that control transfers which is typically when the product is delivered or when all customer contractual provisions have been met, if any.

Refer to the Company’s Annual Report for additional information regarding its revenue recognition policy.

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

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

October 31,

2019

 

 

October 31,

2018

 

 

October 31,

2019

 

 

October 31,

2018

 

Subscription and services revenue

 

$

36,489

 

 

$

29,794

 

 

$

102,070

 

 

$

85,532

 

Product and other revenue

 

 

3,106

 

 

 

2,814

 

 

 

8,875

 

 

 

8,979

 

Total revenue

 

$

39,595

 

 

$

32,608

 

 

$

110,945

 

 

$

94,511

 

The Company derived approximately 55% and 67% of its total revenue from Ooma Residential and approximately 42% and 30% from Ooma Business for the three months ended October 31, 2019 and 2018, respectively. The Company derived approximately 59% and 69% of its total revenue from Ooma Residential and approximately 38% and 27% from Ooma Business for the nine months ended October 31, 2019 and 2018, respectively.

No individual country outside of the United States represented 10% or more of total revenue for the periods presented. No single customer accounted for 10% or more of total revenue for the periods presented.  

Customers who represented 10% or more of the Company's net accounts receivable balance were as follows:

 

 

As of

 

 

 

October 31,

2019

 

 

January 31,

2019

 

Customer A

 

 

16

%

 

 

 

Customer B

 

 

 

 

 

15

%

Ooma | FY2020 Form 10-Q | 9

 


Ooma, Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

 

Deferred Revenue.  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. For all arrangements, any revenue that has been deferred and is expected to be recognized beyond one year is classified in long term liabilities on the condensed consolidated balance sheets.

Deferred revenue consisted of the following (in thousands):

 

 

As of

 

 

 

October 31,

2019

 

 

January 31,

2019

 

Subscription and services

 

$

16,112

 

 

$

15,682

 

Product and other

 

 

83

 

 

 

68

 

Total deferred revenue

 

 

16,195

 

 

 

15,750

 

Less: current deferred revenue

 

 

16,005

 

 

 

15,443

 

Non-current deferred revenue included in other long-term liabilities

 

$

190

 

 

$

307

 

During the three and nine months ended October 31, 2019, the Company recognized revenue of approximately $2.3 million and $14.1 million, respectively, that was included in the corresponding deferred revenue balance as of January 31, 2019.

Remaining Performance Obligations.  As of October 31, 2019, contract revenue that has not yet been recognized for open contracts with an original expected length of greater than one year was $0.2 million. This amount includes both long-term deferred revenue and any non-cancelable contract amounts that will be invoiced and recognized as revenue in future periods.

 

Ooma | FY2020 Form 10-Q | 10

 


Ooma, Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

 

Note 3:  Fair Value Measurements

The Company records its financial assets and liabilities at fair value. 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’s financial assets that are measured at fair value on a recurring basis by level within the fair value hierarchy were as follows (in thousands):

 

 

Balance as of October 31, 2019

 

 

Balance as of January 31, 2019

 

 

 

Level 1

 

 

Level 2

 

 

Total

 

 

Level 1

 

 

Level 2

 

 

Total

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Money market funds

 

$

5,832

 

 

$

 

 

$

5,832

 

 

$

5,951

 

 

$

 

 

$

5,951

 

Commercial paper

 

 

 

 

 

499

 

 

 

499

 

 

 

 

 

 

5,429

 

 

 

5,429

 

Total cash equivalents

 

$

5,832

 

 

$

499

 

 

$

6,331

 

 

$

5,951

 

 

$

5,429

 

 

$

11,380

 

Cash

 

 

 

 

 

 

 

 

 

 

5,357