Smart Connected Services

Investor Presentation

M a y 2 6 , 2 0 2 0

Safe Harbor Statement

This presentation contains forward-looking statements. In particular, statements regarding future economic performance, finances, and expectations and objectives of management constitute forward-looking statements. Forward-looking statements can be identified by the fact that they do not relate strictly to historical facts and generally contain words such as "believes", "expects", "may", "will", "should", "seeks", "approximately", "intends", "plans", "estimates", "anticipates", and other expressions that are predictions of or indicate future events and trends and that do not relate to historical matters. Although the forward-looking statements contained in this presentation are based upon information available at the time the statements are made and reflect management's good faith beliefs, forward-looking statements inherently involve known and unknown risks, uncertainties and other factors, which may cause the actual results, performance or achievements to differ materially from anticipated future results. Important factors that could cause actual results to differ materially from expectations include, among others: the impact of the COVID-19 pandemic on our business and the measures we take in response to the pandemic; our inability to attract new customers on a cost-effective basis; our inability to retain customers; intense competition; our reliance on retailers and reseller partnerships to sell our products; our reliance on vendors to manufacture the on-premise appliances and end-point devices we sell; our reliance on third parties for our network connectivity and co-location facilities; our reliance on third parties for some of our software development, quality assurance and operations; our reliance on third parties to provide the majority of our customer service and support representatives; and interruptions to our service. You should not place undue reliance on these forward-looking statements, which speak only as of the date hereof. We do not undertake to update or revise any forward- looking statements after they are made, whether as a result of new information, future events, or otherwise, except as required by applicable law.

The forward-looking statements contained in this presentation are also subject to other risks and uncertainties, including those more fully described in our filings with the Securities and Exchange Commission, including the risk factors contained in our annual report on form 10K for the year ended January 31, 2020, filed with the SEC on April 14, 2020. The forward-looking statements in this presentation are based on information available to Ooma as of the date hereof, and Ooma disclaims any obligation to update any forward-looking statements, except as required by law.

2

Ooma Provides Leading Communications Services

We transform sophisticated technology

into elegant, simple communications solutions

accessible to everyone.

3

Ooma Today

TOTAL REVENUE

(in millions)

$151.6

$129.2

$114.5

$34.0 $40.3

FY 2018 FY 2019 FY 2020

1QF20

1QF21

Annual

Quarterly

Founded 2003; IPO 2015 NYSE: OOMA Multi-tenant SaaS platform

1M+ core users Customers of all sizes

90%+ recurring revenue (~100% retention*) ~800 employees and contractors

HQ: Sunnyvale, CA

  • Net dollar subscription retention rate Note: Fiscal year end January 31.

4

Customers Rate Ooma #1

Business

Home

#1 Ranked by Readers

Top Ranked by Readers

7 Years in a Row

7 Times

5

Our Solutions Serve Customers Better

HOME

HOME OFFICE

SMALL / MEDIUM BUSINESS

LARGE BUSINESS ENTERPRISE

Ooma Telo

Ooma Office

Ooma Enterprise

Superior Value

Created for SMB

Extensive Features

Innovative Features

Simple to Install / Use

Flexible, Customizable

phone service

Sound like a big business

Business communications

Free home"

"

"

(just pay taxes and fees)

at a small business price

built exclusively for you

6

Our Platform Delivers Breakthrough Features

DEPENDABLE VOICE QUALITY

Overcomes Internet Congestion

  • Advanced codec
  • Adaptive redundancy
  • Router / QoS

EASE OF USE

Provides End-to-End Solution

  • Smart endpoints
  • Simple deployments

TAILORED SOLUTIONS

Enables Customization

  • Modern flexible design
  • Easy integrations

ENHANCED RELIABILITY

Ensures Real-Time Fail Over

  • Fully redundant architecture
  • Remote diagnostics

7

Our Disruptive Cost Structure Enables Superior Value

RECURRING ARPU1

(Monthly)

$11.50

70%

Margin per user

30%

Cost per user

WHY CUSTOMERS BUY

Ooma Telo

Ooma Office

Ooma Enterprise

Free calling / no

• Value/unlimited

Customizable to

more phone bills

nationwide calling

individual needs

Uses existing

• Easy to install /

High reliability

home phones

configure

Ooma is"a brand I

Ooma for its

Ooma satisfies our

I choose"

"

recognize and trust

quality, ease of use

unique requirements

and value

1Average revenue per user for core users (approximate)

8

Our Business Scope Provides Sales Synergy

Mass Advertising

Retailers

Standard Features

DIY Installation

User Administered

Standard Internet

SOLUTIONS

Targeted Outreach

Resellers

Customization

Custom Deployments

IT Specialists

Dedicated Connectivity

45%of Telo customers and 22%of Office customers

1sthear about Ooma word of mouth

Source: Ooma customer survey

9

Our Reach Extends to New Opportunities

PARTNER-FRIENDLY SOLUTIONS

RESELLER-FRIENDLY SOLUTIONS

WIRELESS INTERNET

SECURITY

10

Massive Market Transformation Underway

Business

61MLines1

54%

46%

19%

CAGR2

Growth Opportunity

Global Cloud PBX Market

Traditional

Home

70MLines1

36%

Traditional

1North America. 22014 - 2017

Internet/

Cloud

1%

64% CAGR2

Internet/

Cloud

$18.2B

15.5%

CAGR

$5B

20192027

Source: FCC Voice Telephone Services: Status as of December 31, 2016; CRTC Communications Monitoring Report 2018; IDC: U.S. Consumer Landline Voice Services 2014-2018 Forecast; Research and Markets, June 2019

11

Integrated Growth Strategy

Advertising

Direct Sales

75%1

Customer

Resellers

Net Promoter

Referrals

and Partners

Score

ServicesRetailers

Expansion

1PC Mag 2020, for Ooma's Small Business Solution

12

Significant Growth Drivers

Small businesses with underserved needs

Large businesses with custom requirements

Telecom resellers requiring own-brand solutions

New adjacent services

Geographic expansion

Our platform

uniquely enables

solutions to

untapped

opportunities

13

Financial Overview

14

Compounding Subscriptions Drive Revenue

ANNUAL REVENUE

QUARTERLY REVENUE

(in millions)

(in millions)

$151.6

$129.2

$40.3

Other

$114.5

$34.0

Revenue

Other

Revenue

Core

Core

Subscription

$94.2

$111.7

$135.3

$30.2

$36.7

Subscription

and Services

and Services

Revenue

Revenue

FY 2018

FY 2019

FY 2020

1QF20

1QF21

Core Subscription & Services Revenue includes Ooma Business, which is the combined revenue of Office and Enterprise, and Residential. Other Revenue includes Product sales and Talkatone.

15

Ooma Business Drives User

and Subscription Revenue Growth

SUBSCRIPTION AND SERVICES REVENUE

(in millions) $135.3

$111.7

Business

$34.0

$54.6

$36.7

Home

$77.7

$80.7

$16.2

$20.5

FY 2019

FY 2020

1QF21

USERS

(in thousands)

976

1,048

1,049

156

231

236

Business

819

817

813

Home

FY 2019

FY 2020

1QF21

1QF21 Ooma Business Subscription Revenue Growth of 54% YoY

16

Key Metrics

ARPU

AERR

($ per month)

($ millions)

$10.96

$11.56

$138

$146

$9.80

$119

$8.80

$103

FY 2018 FY 2019 FY 2020

1QF21

FY 2018 FY 2019 FY 2020

1QF21

Monthly Business ARPU ~$20, Monthly Home ARPU ~$8

ARPU is blended monthly average subscription and services revenue per core user/seat. AERR is annualized exit recurring revenue.

17

Robust Gross Margin

LONG TERM TARGET GROSS MARGIN RANGES

Subscription/Services

High

Total

Low

80%

70%

70%

71%

75%

70%

60%

62%

63%

65%

FY 2019

FY 2020

1QF21

Total

Subscriptions/Services

18

Improving EBITDA

1-3 Year

2QF19

3QF19

4QF19

1QF20

2QF20

3QF20

4QF20

1QF21

Target

8%

$3,500

6%

$3,000

5%

$2,500

4%

$2,000

2%

$1,500

$1,000

0%

$500

-2%

$0

($500)

-4%

EBITDA/Rev. (%)

EBITDA (000)

($1,000)

19

Strong Financial Position

($ millions)

FY 2019

FY 2020

1QF21

Cash and Investments

$42.6

$26.1

$23.3

Cash used in Operations

($3.9)

($7.6)

($2.8)

Capital Spending

($1.9)

($3.3)

($0.8)

Adjusted EBITDA

($1.9)

$1.0

$3.0

20

Long-Term Target Model (Non-GAAP)

(% revenue)

FY 2019

FY 2020

1QF21

1-3 Year

Long-Term

Targets

Ranges

Subscription & Services

70%

70%

71%

70%-75%

75%

- 80%

Gross Margin

Overall Gross Margin

60%

62%

63%

62%-65%

65%

- 70%

Sales & Marketing

30%

31%

29%

32%-35%

20%

- 25%

Research & Development

23%

21%

19%

17%-19%

12%

- 15%

General & Administrative

10%

10%

9%

7%-9%

6%

- 8%

Adjusted EBITDA

(1%)

1%

8%

5%

20% - 25%

21

Thank You.

Appendix GAAP to Non-GAAP Reconciliation

$ Thousands

FY 2018

FY 2019

FY 2020

1QF20

1QF21

GAAP Gross Profit

$68,092

$76,491

$89,381

$20,433

$25,175

Add: Stock-based compensation and related taxes

1,129

957

1,311

304

270

Amortization of Intangibles

183

549

480

155

73

Restructuring charges

-

-

2,289

-

-

Non-GAAP Gross Profit

$69,404

$77,997

$93,461

$20,892

$25,518

GAAP Sales and Marketing

$37,302

$40,761

$50,497

$11,459

$12,446

Add: Stock-based compensation and related taxes

(1,857)

(1,501)

(2,004)

(475)

(505)

Amortization of Intangibles

-

(159)

(736)

(45)

(253)

Restructuring charges

-

-

(162)

-

-

Non-GAAP Sales and Marketing

$35,445

$39,101

$47,595

$10,939

$11,688

GAAP Research and Development

$29,328

$33,903

$37,770

$8,882

$8,846

Add: Stock-based compensation and related taxes

(4,046)

(3,906)

(4,773)

(1,155)

(1,095)

Amortization of Intangibles

(6)

(5)

(6)

(2)

-

Restructuring charges

-

-

(634)

-

-

Non-GAAP Research and Development

$25,276

$29,992

$32,357

$7,725

$7,751

GAAP General and Administrative

$15,186

$17,613

$20,825

$5,112

$5,028

Add: Stock-based compensation and related taxes

(4,086)

(4,331)

(5,061)

(1,189)

(1,264)

Amortization of Intangibles

(124)

(27)

(5)

(5)

-

Acquistion related costs

(118)

(423)

(262)

(36)

-

Litigation costs

-

(142)

(606)

(534)

-

Change in fair value of acquisition-related

-

342

200

-

-

contingent consideration

Non-GAAP General and Administrative

$10,858

$13,032

$15,091

$3,348

$3,764

GAAP Operating Loss

($13,724)

($15,786)

($19,711)

($5,020)

($1,145)

Add: Stock-based compensation and related taxes

11,118

10,695

13,149

3,123

3,134

Amortization of Intangibles

313

740

1,227

207

326

Acquistion related costs

118

81

262

36

-

Litigation costs

-

142

606

142

-

Change in fair value of acquisition-related

-

-

(200)

-

-

contingent consideration

Restructuring charges

-

-

3,085

-

-

Non-GAAP Operating Income (Loss)

($2,175)

($4,128)

($1,582)

($1,512)

$2,315

23

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Ooma Inc. published this content on 26 May 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 26 May 2020 20:32:03 UTC