Ooma, Inc. Q2 FY2027 earnings call

• Airdial Expansion: The fastest-growing segment, with Q2 revenue up 75% YoY. Added two new resale partners (including a Verizon Platinum partner) to reach over 40 total partners. Won a large hospital system deal (~200 lines, >1,000 UCaaS seats).
• AI Integration: Launched AI transcription, insights, answering service, and receptionist. ProPlus tier adoption is strong (58% take rate). Q3 will see the release of the 'UMA AI Productivity Pack' with ~10 features.
• Residential Products: Launched 'MyPhone' (targeting parents/children), adding >3,000 users and reversing historical decline. Announced 'StarDial' for Starlink users, leveraging adaptive redundancy technology; expected to launch in-store at one major retailer late fall.
• Acquisitions & Synergies: Integrating Fluent Stream and Phone.com. Actions taken in Q2 to capture synergies are expected to positively impact bottom-line results starting Q3.
• Operational Efficiency: Adjusted EBITDA margin improved to 15% (from 10% six quarters ago). Non-GAAP net income grew 58% YoY to $10.2 million.

Total revenue was $83.2 million, up 25% year-over-year. Subscription and services revenue accounted for 91% of total revenue ($75.6 million), with business subscription and services comprising 70% of this segment (up from 62% in the prior year). Product and other revenue was $7.6 million (9% of total revenue), up 46% year-over-year, driven by Airdial installations and initial MyPhone shipments.

• Q3 FY2027 Revenue: Expected between $83.7 million and $84.5 million.
• Q3 FY2027 Net Income: Expected between $9.8 million and $10.2 million (Non-GAAP diluted EPS: $0.34–$0.35).
• Full Year FY2027 Revenue: Expected between $332 million and $333.5 million.
• Full Year FY2027 Net Income: Expected between $39.5 million and $40.3 million (Non-GAAP diluted EPS: $1.35–$1.38).
• Full Year Adjusted EBITDA: Estimated between $47.5 million and $48.3 million.
• Revenue Mix: Subscription/services expected to be 91–92% of total revenue.
• Growth Assumptions: Business subscription revenue growth approx. 32% YoY; Residential subscription revenue flat to +1% YoY.

• Hardware Margins: Product gross margin remains negative (-25% in Q2, approx. -30% excluding tariff recovery benefits) due to hardware mix and rising memory costs.
• Adoption Uncertainty: New AI standalone services and residential products (MyPhone, StarDial) are early-stage; customer adoption rates and long-term retention data are not yet fully established.
• Competition: Intense competition in POTS replacement and UCaaS markets, requiring continuous differentiation and channel partnership management.

Q: Analyst asked about MyPhone adoption trends and long-term opportunity. / A: CEO stated MyPhone drove a swing to +3,000 residential users after years of decline, targeting 20M US households with young children. Retail store presence expected late fall; strong cultural tailwinds regarding limiting kids' cell phone use support demand.

Q: Analyst asked how AI drives ARPU and ProPlus attach rates. / A: CEO described AI as an inflection point, offering tier upgrades (+$5-$10/user) and standalone services ($15-$50+/mo). Expects double-digit % of new customers to adopt AI features this quarter, with a broader 'Productivity Pack' launching in Q3.

Q: Analyst asked if POTS sunset sales cycles are narrowing for Airdial. / A: CEO noted increased interest and pipeline activity, though POCs remain standard. Sales cycles vary based on self-install vs. UMA-managed rollout. Targeting replacement of competitor solutions and expanding reseller base to address ~8M remaining POTS lines.

Q: Analyst asked what drove the upward guidance revision. / A: CFO cited two main factors: stronger-than-expected Airdial growth (75% YoY in Q2) and residential subscriptions turning flat/+1% instead of the originally forecasted 1-2% decline. These shifts significantly impacted the full-year outlook.

Q: Analyst asked about AI cost structure and competitive positioning vs. Zoom. / A: CEO explained UMA runs AI internally on custom hardware to minimize costs, avoiding expensive external LLM APIs. They use usage-based pricing and smaller models for specific tasks to maintain margins, seeing no current cost blowout risk.