Ooma (OOMA) 5 Dec 232024 Q3 Earnings call transcript

Hello, and welcome to Ooma's Third Quarter Fiscal Year 2024 Financial Results. [Operator Instructions] I would now like to hand the conference over to Matt Robison. Sir, you may begin.

Thank you, [ Towanda ]. Good day, everyone, and welcome to the fiscal third quarter 2024 earnings call of Ooma, Inc. Robison, IR I'm and Matt ] [ is of Director Corporate name and ] [ as My Development.

and Relations closed section Hamamatsu. Presentations of On accessible are Securities Investor the earnings is within from Federal on year.During Laws. the the press page Shig the also will release executives quarter This call the link statements Ooma's and link today issued live this our market After available meaning CEO, Eric make will release. being fiscal X call replay our Stang; is and a of XXXX with of third today, Ooma me company's is ooma.com. be on its Events This for today's for This presentation, of the forward-looking CFO, webcast website. the active website, call

or relate or events Forward-looking statements performance. future future generally financial to operating

materialize, page based statements as prepared today with to that this be cause Our to to available may included non-GAAP the risks financial reconciliation matters considered GAAP well call in earnings in press Overview financial the A us and Results be financial financial we a note be or on disclosed as to press expectations as Supplemental results as page year costs & directly are earlier a non-GAAP revenue page section Investors links otherwise in and not our the forward-looking than projected. measures those this set to not that on basis. fiscal include forward-looking any will this measures subscription a we call, could present update Commission. and obligation we is and issued except isolation our about actual of in beliefs results to our information GAAP. intended risks uncertainties guidance in the These to we date Information for X-K discussion and Disclosure statements, information included quarter website those substitute required non-GAAP measures non-GAAP to hereof, and on will is on subject regarding includes non-GAAP Events Securities call are These those of accordance Financial which release, on and forth in and in the actual titled The this fully of Presentations materially Disclosure the any non-GAAP in The section of filing, businesses. the stated, the Quarterly measures law.Please other from measures for our the and our or basis. disclaim and addition press expenses our Financial and our as our are by fourth differ results of Supplemental these filings why more are values release with release website presentation available and X comparable core a not website.On most discussed metrics Exchange Financial described to Also, key in of of X. risks and full XXXX the as in financial give

will Stang. Additionally, provides to also expenses from that GAAP to that include our slides over of metrics.Now non-GAAP CEO, Eric are non-GAAP investor Ooma's presentation resolution GAAP I excluded the reconciliation hand call

with a Fiscal QX you. major by Thanks that Year XXXXHz us. We for Hi, XXXX our I and performed advance made well acquiring Matt. report was Earnings for to to joining can Call. the Ooma's quarter. reviewing everyone. Ooma. look another during financially quarter strong We you, Thank forward Welcome Quarter Third progress

subscription our of $X net we ago, to by non-GAAP which impact revenue nearly excluding grew our XXXXHz, Organically, in million XX% is say, year spending for revenue, our We million OpEx million flat business QX and and QX, of held to of EBITDA Our year-over-year. services year. $X versus $XX.X results X last XX% and we the include increased income EBITDA. QX

exit We premium solution these strong progress small continued our company QX, customers. good performance demonstrate revenue, have businesses strategies million. integrations. added Ooma's medium-sized now the we to throughout new we for this feel Ooma annual features from XXXXHz, outlined pursue the for $XXX is results to recurring Our for quarter.During expand and including the year business and Office, to revenues award-winning

Spain This #X as long-term service to revenue platform experience. for from Africa.In our users integrations with used that Clio which We new as already expand communications we half Enterprise, announce per Ooma Workplace a in to next new America, the further. of that user.I'm in of in rolled signed premium of were started given also users are sequentially QX our expanded the and and business that which North we another which of In also known Clio with increasing is year.Outside I'm airport increased the of them in including U.S.A. in release. serve select hospitality QX announcement we by spread in out which our Regus. focus Ooma's our we the ARPU average in the here our premium AirDial XX XX% QX, South a across join targeted U.S. course, and we first total followed name new of in These regions, IWG, was IWG of with We our communications report of landed region out to being we over Group, number premium is the Asia. office hotel. T-Mobile their slower general, now personnel throughout One IWG with office once are is services we announced and resellers, raising users tier or contributes and QX international conjunction make up in the with also for and X for to pursue exciting we X our Cellular. a the working our pleased giving industry. launch different of and began again us addition, a AirDial strategy anticipate continued verticals in now pleased again customers new pickup one hospitality the QX, AirDial, aggressively. locations, finally IWG once total we with now calling believe in Africa to of name Enterprise countries the total, to recently, countries is second additional base.It touchtone largest In serving report rooms our to our we our XX% with customer roll in of customer with QX, our of of in of XXX and can Office market.In new by and Netherlands, made integrate expansion customer, available our the largest International holidays, property of hired part being Users partnered and more a strategy In U.K. others strategy vertical, we legal serving software most to on Plus press across we integration resellers XX Ooma exciting Clio, advantages sales our their new Pro In to customers. in Australia, locations particular, the our the

phones communications and who increasingly entry alarm announced of campus elevator in extensive a expensive products, more marketplace and including phones manufacturer distributors elevators, PBX best and is the testing XXX equipment soon their AirDial.As that We security emergency phones, to to also performing copper to AirDial systems, Electronics, older lines fire believe panels, recommending safety than and solution mentioned, of for own its Viking and the are we that we've replacing customers more. after decommissioned AirDial be offers connected began

industry, World we voice in selected in we by not transportation of Ooma POTS are the magazine, AirDial the the solution category XXXX have thrilled of vertical either Best for validation the up Supplier, the still are replacement.We are Ellies have signed standing AirDial. by Awards AirDial.We that resellers to are System improvement the in the leading continued media Ooma our QX announced also honoring seeing Communication in for We for thrilled many Elevator

RDM, also we the RDM AirDial solution and AirDial's out customers Manager, their recently, public other occurs QX multipath not Remote stands we ability to cloud before AirDial can AirDial where continuous for AirDial connections and X AirDial connection issues Just differentiator AirDial Ooma announced, in made provides data separate provision, enable our equipment.While multipath network providing by X by how transmitting who customer incorporates call occur to failover announced expect technology. encompassing dual today. we related as another we be on AirDial.I'm RDM internet additional the Multipath it. become full Device provides are technology quality or calls and all the as end-to-end to for We telephone to report Ooma's premise through key delays Multipath approaches their there example patented between both where improvements the one view manage of device. monitor, landed customers that what other from data X links.Unlike to devices QX, one AirDial pleased backup will to now simultaneously links, Ooma's that of control switch failover, we where can in individual and our transport customers largest portal. packets gives creates seamless more a dropped of

rolling out large retailer brands. another AirDial individual by replacement one stores brand with One solution. started of owned these POTS a to we customers customer, already many this We've is are displacing where of

with we is sales is large business to opportunities QX, in are rollout very industry backlog just October. is expect new turn We our and this back pursuing.I'd to Phase elevator large we of customer opportunities. opportunities now again in the other XXXXHz, acquired to a to customer.The grew I'm like potential which provider many with pleased a access in of report we that number the this X have

launching company KAZOO in of part XXXXHz Ooma source, now services. have strengthen areas between runs reasons or on weeks marketplace capitalize marketplace reminder, telecom functionality provides large its Europe blended America, the strategy this relying users. partners.It's thousands in teams in to and spending XXXXHz to and have non-open providers to named locations XXXXHz to opportunity since use contractors XXXXHz. many is that strategic and acquire unlock pre-built other KAZOO that Central and position of contracting approximately in million As XXXXHz paying acquisition The call maintains carriers scale XXX cloud on has X to significant see to today and operational by to our of established to the $X a expanded about cloud, who applications. benefits for providers. new made of position serve strategy. the we our KAZOO customer Telecom leveraging serve became suite Ooma's ago, workforce of solely our drove open applications and of provides time, initially ability decision In about today choice main X solutions we needs by has and own end the hosted complete low-cost together, employees and Oceania, combined source with Ooma. wholesale approximately revenues of annually.X XXXXHz North certain application X and of spread is in rationalized and more by Ooma's across source our centers UCaaS, been themselves new center provide to X also enhance the core and We data XXXXHz Since decade and open private fundamental hosted building technology, over a launching and a CPaaS customers hundreds XXX solution.XXXXHz calling

to and direction organization. possible have possible bring field acquisition. telecom well, White will Ooma time of leverage a are accretive Best know promised, see and to potential. XXXXHz the X to customers, We're the today about scale conversations you evaluate active us, a I XXXXHz from are their and we solution has acquisition base in KAZOO XXXX. Label of track customer now working positive but to was the we named the of customers. KAZOO to recently delivered key analysts thrilled as and as internally believe as model. resources strategic for property mention also adjusted optimistic new communications the prestigious going we KAZOO larger a our Partner our some Similarly, Awards services mature publication make conversations Overall, finalists. more at XX by communications provide leading from intellectual about Solution with a customers on X XXXXHz cloud the get take are responded user a we on chosen benefit These XXXXHz already to actively number excited is our within feedback of as business months.Finally, the integration applications and EBITDA underway I'm with that are working industry UC CPaaS of in the Ooma's customers.XXXXHz's panel with We They

architecture to course, with in that, Shig, Of outlook detail and not modern discuss KAZOO's our know apart call turn I over will sets we're now then industry.With surprised it our remarks. CFO, API-based in more since to return the the and results some closing we

Thank you, everyone. Eric, good and afternoon,

be Before to of I revenue we approximately subsequent into approximately are regard completed third to XX, our the XXXXHz acquisition. review expected recurring of The EBITDA as of is I'm provide end a services there X within of months sheet our included quarter in million recap from approximately to adjusted annual and quickly the make the of acquisition synergies dive and like We EBITDA year results, a of million we no operational add financial subscription last the our XXXX.We acquisition $XX of to the this revolving before remaining then million $XX the on quarter. revenue cash to third Ooma. line contribution full for adjusted acquired $XX balance cash, price, financial to used in periods.Now are and I'd new million days million, delivered and quarter quarter for from aspects revenue accretive XXXXHz in XXXX, and credit Bank.XXXXHz and million increasing cash to purchase quarter. for results financial October the from for of the which outlook $X overall going from our solid third payments million fourth realized is our XXXXHz quarter $X.XX Citizens $XX.X contingency other XXXXHz $XX to another with XX came expected funding total our of right With fiscal

QX to million On million contribution, a services million. which the to revenue $XX our recur XXXXHz revenue included accessory prior basis, year. high Excluding this $X.X as revenue profitability business, X% year the at was of revenue end revenue QX XX% XX% $X driven quarter, came that grew in at and growth in of the prior in as quarter.QX sales third accounted third and million prior in at other The $XX.X front, year.On product by of revenue [ the ] of the $XX.X million not Ooma year the product compared quarter $X came compared income did total guidance range for year-over-year certain in to the non-GAAP net total subscription million.

quarter million prior Excluding net our our $X.X from million net exceeding on million, details guidance $X.X income $X.X increase non-GAAP XX% XXXXHz, of represented the $X.X QX quarter.Now, of to some third million loss and $X.X the in revenue. range was million over year

driven year-over-year by revenue QX, in impact the Business growth. XXXXHz, XX% user subscription Excluding services and of Ooma grew

and On flat were year-over-year. the revenue Residential services side, subscription

our on revenue some prior total was $XX.X of discuss I'm first users. users, to during of million with do the related lost churn or this XXXXHz where metrics Please year reminder, an third had note a quarter, include year quarter.Now metrics total subscription impact as event key comparison metrics. we to continue the onetime As in in application key details million quarter XX% with of the which customer total QX.For the a a $XX.X revenue to not fiscal that and particular revenue our services X,XXX compared approximately XX% unusual tele year-over-year any or about to we customer

business revenue $XX.XX, core related quarter, to and our of from year-over-year we XXXXHz blend users, total not users to the Plus core third user X,XXX,XXX increase ARPU nature increase increased continue services monthly end users end At ARPU, will X,XXX higher or at We including Given users. of Office core to quarter. into Business user, users an intend the had per Pro average quarter X,XXX,XXX key business driven metrics, which the Ooma traditional from XXX,XXX we core subscription XXXXHz's the in users, QX.Our ended Pro third of blended of X% metrics represent the users, XX% to do of mix up the metrics second user of or wholesale business, with only. by an the core and and Residential

year up for the During Pro continued quarter, was XX% users dollar was these services, compared the Plus for take to which Office and Pro quarter. in from quarter. quarter rate new rate in XX% we third XX% to users a tier retention our or to have net second see now opting of Pro Overall, the healthy Office XX% the prior XX% Plus with tier.Our Pro subscribed subscription of Ooma as higher Office

Ooma was margin. Our $XXX annual users consists some which users, to recurring and up grew gross now details XXXXHz year-over-year.Now revenue from exit of recurring revenue, and our on core million XX%

into Our subscription resources the customer to and for investments [indiscernible].Products our services this period well the the margin expansion margin was compared XX% quarter gross XX% ongoing and for the compared XX% XX% and subscription year prior as as third as Africa last year. our we QX services by for as third in negative made quarter Asia in and quarter as year. was gross other we for certain largest customer the third same was to the started AirDial support gross margin negative for further in impacted investments

] supply X product from saw year. this margin components fiscal and to impact on gross product second, following last calls, accessory recur sell-through of the of that year gross last did due cost margin the certain this not versus the mentioned and the we prior sales higher in a anticipated previous to decline certain primarily the QX chain in first, As factors: pandemic-driven stay that QX was issues; benefited we year procured year [ have ahead year

fiscal for to be We expect be the an negatively product product expenses costs last overall the year. impacted through quarter.And third by some to in margin total neighborhood quarter gross $XX.X was XX% margin other on for gross up as Total onetime P&L XX% the for and the same expenses. gross component details the prior quarter were of million operating margin basis, million, running to XX%. or estimate in fourth X% continue the year to currently of and remainder XXXX QX from On and other excess the period for compared negative operating $X.X now

Excluding XXXXHz, of the the total increased same million year-over-year. flat or expenses revenue from or the impact flat of last operating the $X.X third $XX.X quarter million period and expenses effectively total marketing XX% of year.Sales were and for

Excluding XX% or the million, million $XX.X the million $XX $XX.X well for same a $X.X for were third of as expenses sales control or AirDial. Ooma in last on decrease of marketing up expenses as and period total by spend driven revenue, our Office as a increased Enterprise development year-over-year the and impact from profitability.Research investments and million XXXXHz, basis features X% into new of from quarter were year we

third for was net income revenue The share an costs.Non-GAAP quarter of or million quarter. the of impact personnel the diluted were prior expenses increase last R&D $X primarily expenses in total earnings same year XXXXHz, year. year-over-year or period to $XX the the compared quarter in X% increase G&A Excluding expenses of quarter to million, for $X.X was $X.X $X.XX. for due for million per the to million third the compared flat third were G&A

per for the impact of the diluted or share year quarter million $X.XX quarter $X.X third to compared income in $X the total EBITDA XXXXHz, was was the X% million of revenue. as or quarter.Adjusted non-GAAP $X.XX earnings prior Excluding for of net

our with EBITDA in XXXXHz, the of $XX.X revenue additional Excluding increase $X.X million [ of operations a at a cash represented of million draw combination period borrowing million the cash The rate our basis sheet Form or X% in investments balance impact later total $XX of million on all-in same to in and term as funded same new of on compared a of and from The to based XXXXHz million XX-Q are under interest new last was $X.X $XX adjusted quarter generated points filed or cash this quarter credit year. earlier, a period the week. credit million line XX, facility the we the of cash in from over an and We with time revolving the approximately credit. drawdown $X.X available million. on our rate it purchase XX% the X-K October We XXX for for ended SOFR total $X.X last from mentioned ] bear as XXXX, year.As price the of borrowing will October. facility the as X-year filed be plus has X.X% Form details of a well

I the new a On guidance and for which front, and year members employees X,XXX fiscal full ended we provide contractors, XXXX. team with quarter included will quarter XXXXHz.Now headcount from fourth the

on certain basis has amortization guidance is and stock-based and a non-GAAP such as intangibles been for items. Our of adjusted non-recurring compensation, expenses

Additionally, partial starting guidance XXXXHz quarter the and impact quarter. interest balance for new activities as benefit restructuring a full facility as the earlier took credit expense in reflects of fourth of the outstanding the fourth the the under related place well in quarter

the million quarter be $XX.X quarter to the the $X.X range income of for range in million, to fourth net We of to $X.X million revenue $X.X to million $X.X fourth which the revenue.We be of expect fiscal XXXX $XX.X total in expect million. product includes million of to

approximately As the expense includes quarter to be mentioned million. impact facility, new interest income a earlier, credit to is $X.X QX which guidance of net full related estimated

and balance from XXXXHz.Non-GAAP between be assumes of that a $X.XX was guidance expense expected million price million, of cash will Additionally, approximately be the purchase diluted $X.XX. EPS lower sequentially given towards $X.X is spent sheet $XX by cash interest to

the average We for diluted have weighted million quarter. shares outstanding assumed XX.X fourth

to total other and total subscription services $XXX.X from products year, the XX.X% fiscal revenue full expect remaining X.X% revenue million.In revenue of mix be to we we and $XXX.X from of the come terms revenue year and revenue. in XXXX, For expect to million for the of range

We in million expect million to million.Fiscal interest guidance be well as income also an the 'XX guidance estimate approximately or non-GAAP net non-GAAP $X.X of for this as reflects credit range our we XXXX increase income X% $XX.X to EBITDA facility reduction of net the $XX.X the $XX.X stated new range, a income $XX.X adjusted net to expense for of million in $X.X of fiscal reasons on approximately interest for approximately income related to to be million million earlier.Based XXXX in revenue. fiscal

We expect non-GAAP diluted $X.XX. EPS for fiscal range 'XX to $X.XX of be in to the

organically, while net non-GAAP adjusted EBITDA to and remarks. XX%, respectively.I'll flat organic resulted effectively back some in environment, We XX% have the our income great assumed growing which of shares economic in fiscal approximately growth summary, Eric? diluted now and average pleased The for subscription are performance done today's team outstanding keeping job XX.X quarter. pass business million in weighted it operating XXXX.In we revenue solid expenses with for year-over-year year-over-year of XX% Eric has third closing a

grow Thanks, Shig. base our to busy QX user quarter business a and was We us. for worked internationally. expand to

of XXXXHz base. integrate AirDial our along significantly optimize steps and those, is we We AirDial top our feel along pipeline increase invested to cost also these, opportunities, and acquisition sales on with well going on the our of XXXXHz XXXXHz for plans our into with and acquisition structure. smoothly. and Ooma took I resellers that, and also we're number closed our team, of On installed to user

with QX questions. from and in generation now Our entail expense operations.Thank strategies our continued on cash continued focus combination for management plans take sensible growth, you. for multiple We'll

[Operator from Instructions] question line of Capital with Mike Our comes Northland the first Markets. Latimore

think do fiscal to they now? by And largest your customer, have -- I year. new launch year? said opportunity is that Regus, what's of think many expect incremental guess you ] the which now kind On year-end you [ next I will then next users the how countries you

Yes.

break. this XX,XXX And might teams be too So have And -- we're as because and a to year. QX XXX,XXX in of we the fiscal have will growth a of we're a But in up with we QX and talked the get I've past little at of to need or it's more work users over taking that's these now. that And both so, a working it's a be countries did we'll the going. little could bring an to each the the we XX,XXX some slower end sides bit now up towards do where than of half of on at outset. year. are lot little get -- countries next work add every them just extra we much the country and are the for as and effort new first bit over But smaller ones with maybe not the

fast I'm how next So users. we're adding we get sure. there, busy half of anticipating first But [ the ] still with not exactly is year

small business collections, land? U.S. change the activity sort just is in UCaaS in much business Any cycles, sales how then market? of small And noticeable versus quarter last just general terms of

busy similar. in Actually, No small we off January then, than cautious for holidays And have. ones kicked as the their all, or we are because, the little and remember we We're issues years. with normal cycles robust. year during obviously, last solution think like modern Sales market a it a up everyone with collections was were finishing other up no. QX we markets a -- Ooma yet market be communication figuring out COVID new that's provides. a the the And to opportunity. but big solutions, was stronger to there's brought But when good most it's time importantly, still businesses

see So opportunity after. of to we go lots

the come out the here, gross some last just Once product to? product what mix should that of normalize margin. margin of gross one on And anomalies

say, the the Yes. components, It's We -- kind a QX would about ]. talking get we before we're of cost Mike. range, normalized consumption I there higher probably range But we to through were had XX% I component. this of traditionally next year once [ think XX%

I what would that's So say.

Suppiger question JMP line Our comes next Securities. with Erik of from the

It off, there outlook seem just basis. on an more any you're First flat does on reason for on Is conservative as for looking QX. relatively though there? organic growth you're revenue the subscription sequential the

$XXX,XXX about of non-recurring revenue we on in in of an have to revenue one basis, not total QX. QX So we're the that overall had reason is going product

seems the basis the why about is -- a that now that's sequential nothing itself. the there it's nature, in total quarter-over-quarter. So And on making revenue fundamentally that flat adjustment subscription side [ and business then we're ] different just trend really onetime in one that

you X which revenue I at quarter-over-quarter. items, dollars thousand take fundamentally, more say, growing still out we ] subscription hundred these a the would level, if several [ see normalized So is,

that's some So see, with but what bit it's see. little obviously, of these pointers, a hard to we

How you you And then you think anticipate that I users. will XXX,XXX end that, many said be? reach, said countries Regus could would

they're vast tail. so. to We're now be of to or we for believe we'll But in. but we're of I sure. in and for I rollout already countries XXX XX more than that able happen. how it them wait a I total They're conversions in as now need in think we'll a with -- because countries serve majority see countries, little Over to be about in the are the runs out a conservative XX

quite Some countries of are small. the

around follow-on countries? do can anticipate you how the generating business Is little -- about that with a talk you that? those then of timing And kind bit

Well...

that customers [ with on business additional Follow is. ]

Sure.

of months obviously, just organization. a next to They is phase growing we've here. discussed So the are X rollout -- X as

get do serving growth that their other have as it we for theirs a premium road operating their I opportunities our we that's are roll the much that us for get in with growth the also, that them our we evolving have that with -- we but after more don't this users of of into that potential serving are think They kinds as we're us. belt. see could things we'll ones to have that So potential other where the rollout And buildings. solutions too for under them, -- are next, want well. down users more out we're

Our next the question Josh with comes Nichols of Riley. from B. line

you that opportunity XX market any I the a on you little these more largest type the that elaborate customers little think the units longer probably customers think become over those a I to could we of X was X know you are customers quarter a -- if clarity to alone bit provide ramp ultimately think you to do into of little wondering X originally could AirDial I if you landed what represent? represent bit taken than type has XX that But anticipated. And bit customers. in months? AirDial next you visibility the could going mentioned installed about have

Sure. are of my me one Yes, of date. could to they funnel that not customers to our that our over but XX,XXX, customers each put mentioned largest and are potential. thousands we let X the it clarify larger. sales we pursuing have in way, other even mentioned But We users, -- users -- words, do thousands X we is be

for positions the to we several number fill AirDial, also The We go process understanding is through did of our opportunities other particularly this.We late-stage sales potential strongly. first helps thing with us we've our seen go of more has quarter, sales that all able the us year in each -- get make of number the allow after to this users where in in big of year, and sales will X were market quarters this better the a a step grown which QX. funnel, can

these continues We have and the with a we and be us. And XX if do as what -- look even to very get move different just would verticals positive we obviously, at we that. to to have can pursuing represent, customers faster, it we're to like opportunity -- AirDial. we're we're investing said, for you opportunities couple that of you and doing But need

X small did just revenue fourth million you $X.X the and then you for things. between Shig, quarter? said million be product X think I $X.X And would or mention,

that's Yes, correct. Yes, correct.

[indiscernible] in [ line. kind of So ]

Yes.

like last guidance the the for how there's expecting given and surprising know cash GAAP I to flow kind to think for delta super that what the trying big that's not between costs? the of non-GAAP then a manage curious Just were or XQ. was know onetime I And you I XQ? question. about acquisition. just for model

Yes.

quarter, have going costs. few So onetime the we're fourth to a

we're release -- restructuring press -- There's happy activities it's you with cost have a we But too, the million in detail can we undertook. cost acquisition-related little associated release, more costs. press restructuring our QX. we also it's And there. some $X.X in and get in a to incurring actually it, with is item get one that additional there So Josh,

line the comes with from Brian Global question Our of Alliance next Kinstlinger Partners.

you there Congrats question in on about, last challenges with is installations. pace My talked one were the quarter the AirDial. of successes

it Some of any, installs if progress help might What happen. of within piece installation some made, where company improve were were [indiscernible] to people, rates? places especially of various -- it the has the its control, control the

that we've hand, feel I actually. well got in Yes.

wanted -- all customer significant when do who to did locations of is access quickly what a ready and if it we We customer X out Not are quite so are right and customer that we knows roll needs a the with to can And a have it. are where and number all the like week, and to that. in move has move planned them. customers needs our and all their their now out, and

couple just months concept want and who deadline have up can you stand get of then and a they But a sometimes proof for customers to of test Some take several to a something even months move. more. customers

So of pace more can is customers like -- to ready than from We're the accomplish than I go. what rollout team. what driven being our feel

and meaningful second I they become installations and start revenue for would the ramping my us versus of just a and and Shig question subscription piece to remind the more when puts revenue, margin takes product be, guess services?

Yes.

along a to So and in itself. as we're related the product, the product activity cost So itself [indiscernible] installation the -- installation reporting revenue with

not that to the the intent on customer money so product see is And but on installation. installation to to as pass that. start meaning activities, going on ramp we're I achieve lose increase we our about earlier, a revenue that think to cost it And to talked we we

is, as we're going the we it's on happen have and front my installation well ramp well. revenue as the because on think on product in subscription AirDial service so And to revenue, AirDial-related the seeing margins take improve side side, installation as the on subscription precede margin still our that pretty related needs Obviously, the subscription trend And ARPU should more product a AirDial on to good it. ramp will today that of we to as be time. over we to accretive

Harrigan Instructions] next Our of [Operator the with Benchmark. line from Matthew comes question

modeling not evident pretty mean, you're since in going it's including your that Firstly, longer I XXXXHz be to term. KPIs, we're

before, on surface upgrade. to consider I I looks Plus ] presumably, brotherly opportunities the be same affording but marketing time? there rate exceed But you with you You ] customized I there, subscription while then or growth now. certainly growth a asked of the at is know to you better you've good your to whether existing a how some more ramping your do XX% secondly, incremental in the [ it mean, the and your that more utility talked [ our presumably rate, for business? terms core right of at you could even upgrade and taking got about don't ambition get the installed some What's this are do the of building apps it growth -- of which that ] And you said monetization of I've more -- incrementally base? it's than it KAZOO. people user Pro low shove [ Pro Why like business, pretty know on product long-term to -- much cost. customers

around a our outreach Pro to and Yes. do bit Well, Plus. we customer Pro existing of base

self-selected board when with You they to got keep as users, time at our in they on came mind the solution. that

It's our what customers to are than So to they more as always those And are some as flow going into -- -- a premium users. at you customers have new need to on to might But cases, many we half just might said, them -- with able get on a to bit marketing a that little base. starting installed capabilities. the bit our taking to can those e-mails customers. explain level But new coming too too, little do we work expand, some reach of got, see of because board to customers part on coming forward. more I tap it be the is it really In and tier.It of and be that do something don't conversations resources hard it to develop they're hard through. they've are pretty to we out new salespeople of our with happy them it's with

again...? question First

do X that Or the that terms it? upgrade? Would I month offer do of there is wouldn't for of assume push just free [ software or the capabilities? [indiscernible] ] sort months trial in show be like let's to the you it X -- them expenses be just high

go what that No. in little it's a different information good aren't that more a we But of send bad today And of on We nature. things, kinds keep e-mails trials do free do or sometimes a less to question. some features could people of with that Yes, just way tend of the get. is and either to bit mind.

right? growth to relation was I core assume something the like think, that Matt, XXXXHz, to sort respect of first what could or with rate something that, question of, your you business, line in on the

Yes.

you're pretty stipulated. it's you that because your are as core including Exactly, modeling since not -- people separately going be in that KPIs, to

much internally maybe the platform or now are it's they've more users weeks others whom opportunity and reluctant paying too There there, been source the [ be developing little an to off only another this see try do than with could ] them just would opportunities. into owned of perspective new it. that Yes. We're for something move are and to question X have platform, a to more some to converted they moving modern. that's platform are out over by KAZOO to that because real brought out there There X that meaningful offering detail something that we've on significant built today. customers going to answer be opportunities be want sunset what to from open we been users But of and

getting have we then what base and bring to move in I as specific next the us. on think and to structure installed company's then for platform effort have Ooma's hard see will scale very are in Predicting and of CPaaS to services from a for our that customer another we'll today the and there. But if to -- fiscal be offering close that a is close in telecom year first KAZOO. wait we place and CPaaS QX.And to services cost thirdly, the we off move

next the a of guidance in then sales at learn think our end the the give and I lot quarter. better able months to X in we'll that next efforts be

Our line next with Arjun the Bhatia comes of question from William Blair.

we If the to region the customer I the look headwinds some that QX go are is it largely the from of we're I to there. slower was Or base could know But other where from you seeing -- base rather? seeing related largest similar QX? was back growth user user if it sounded growth. driving muted and your to it just customer in like Regus of customers, there kind growth

holiday we're time. off time being the Yes. to quarter not is with Well, very the to investment growth customer. QX large we're sensible We're holidays strategies. best about and with an for small interesting customer in businesses thinking very we taking going time always with involved our for that, see, that the being busy because It's acquisition. said, now, for But both QX. Particularly as you QX our beyond want muted be and QX cautious

our We and happy sales our we're acquisition the costs, with marketing commensurately. spend. improving are customer We're EBITDA controlling and

Our other EBITDA than growing metrics. is our growth -- faster the of our

business into want year happy with to were sales compared the period see didn't to out.I Monday -- with And the one plan a So we Black I through drive this little Friday QX. Cyber and it some front, I X thus But you can guarded wait think ago. we're we're give point. we our how achieved more year being Thanksgiving Residential data and We're that far to know quarter. what Residential. we just but for pleased ask have on and a yes, when Residential good and turns about we

So have. that that's positive we one piece of already news

that long geography? other think a open resources talking opportunity know like How expanding you're us help And then about go countries and longer process new understand into What the to typically Regus. back better. into How little Maybe does How challenges? a what take are required? is other it could term. maybe pose are going many we process about the up that countries? should to just I to that bit

of the services, we're the I quality. may starts with it in and Because distances communications so with to calls, region. Sure. delays be putting -- things previous said into you of dealing that capabilities the mindful going But apologize. I'm some our can internet to have I have repeat affect

laws today, regions although and standalone those more certain to language region have place, I fully said, the in platform, the to be particular we we we to may want we're you have now the pretty we regulations there.As X the in be those in stand down each conform patterns. middle to There serve to and adaptations to, and to instances and of of then next X do So much countries other it what have we year. can regions have we in country. that where X countries Once certainly regions, regions you serve need to have what aren't coverage. And now have yet. between up calling we then all in to comes maybe do good we'll very And

for a on this opportunity be I North South America.And Africa out of that's asset roll we at we from deliver for carrier Kong country will and be than And in South ones. QX. we're we've We'll beyond we much thinking be just by Ooma to that through tend now to place, there.It's on work have we And in what customer status. from a really an look not you're something UCaaS going out solutions, and place, frankly, and for and America, how involves to converting away in unique the there's AirDial QX, for Asia AirDial. our countries footprint giving countries into solution priorities QX. start And time North with that for be of strategy QX. partner once that.So very into us kind rollout unique only finishing stage forward, a a up then you decide We operated going services in Africa the think large already in then as incredible There rolling strong valuable to have capitalize bigger other and we time. region from Hong on a there lot You to to that we'll in but a kind we're plan that of a a our because went at market in do or a to move such this think contender right are expanding our of you in country the year went on on in couple asset a in, will also, next next have

the in this, are exciting to for down be it's to where just think, And it's making the on we're not hurdles. So over, well us all the train but of we final I been getting on, in have to We're years this place. today. go

And this trough sorry, by stood the one there the this up margins? gross have in additional once of there? not the more maybe subscription are you middle follow Meaning that other subscription up. the next that And I'm considering -- Or the build-out? be if I can margin just Is gross factors is -- once year, regions and services following international should

Yes.

-- we're bit, just this I but talked about. So related little about expansion we talked Eric making we about a to talked some investments certainly, that the and

bit upfront little little margin the mean it's -- I a gross down on revenue a bit side. pulling So upfront subscription the

there. to recurring margin XXXXHz that the [ also, we going ] more term of think next half Well, either. Ooma year, revenue that [ we into -- expect gross quite well. corporate isn't remember at our scale customer think near margin as see largest I And second I efficiency ] is on started level

expansion to along largest think of to improvements on walk year of see subscription start customer, next a the we good synergies is the further point second some half related I as margin. through to XXXXHz, So the with

closing Eric queue. now call the to like in no further are There back I questions for would remarks. turn the over to

you, hour, you Thank thank won't but so appreciate Well, say much. very We've attendance everyone. Bye-bye. gone the today. I full I more, your

today's call. concludes participation. your this gentlemen, you Thank and Ladies for conference

disconnect. now may You