Ooma : Q4 Fiscal 2020 Presentation

Smart Connected Services

Investor Presentation

M a r c h 5 , 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: inability to achieve the intended results from our acquisition of Broadsmart; 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 quarterly filing on form 10-Q for the quarter ended October 31, 2019, filed with the SEC on December 6, 2019. 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.

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Ooma Provides Leading Communications Services

We transform sophisticated technology

into elegant, simple communications solutions

accessible to everyone.

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Ooma Today

TOTAL REVENUE

(in millions)

$151.6

$129.2

$114.5

$34.7 $40.6

FY 2018 FY 2019 FY 2020	4QF19	4QF20
	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.

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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
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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

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Our Disruptive Cost Structure Enables Superior Value

RECURRING ARPU1

(Monthly)

$11.00

$7.70

Margin per user

$3.30

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)

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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 new customer survey

Our Reach Extends to New Opportunities

PARTNER-FRIENDLY SOLUTIONS

RESELLER-FRIENDLY SOLUTIONS

WIRELESS INTERNET

SECURITY

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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

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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

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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

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Financial Overview

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Compounding Subscriptions Drive Revenue

	ANNUAL REVENUE				QUARTERLY REVENUE
	(in millions)				(in millions)
			$151.6
		$129.2					$40.6	Other
Other $114.5
				$34.7		Revenue
Revenue
				$30.2
Core								Core
Subscription	$94.2	$111.7	$135.3		$27.2	$30.9	$36.3	Subscription
and Services		and Services
Revenue								Revenue
	FY 2018	FY 2019	FY 2020		4QF18	4QF19	4QF20

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.

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Ooma Business Drives User

and Subscription Revenue Growth

SUBSCRIPTION AND SERVICES REVENUE

(in millions)

		$135.3
	$111.7
$94.2.	$34.0	$54.6
$22.5
Business
			$36.3
Home $71.7	$77.7	$80.7	$15.8
			$20.5
FY 2018	FY 2019	FY 2020	4QF20

USERS

		(in thousands)
	976	1,038	1,048
929
	221	231Business
121	156

808

819

817

817 Home

FY 2018 FY 2019 3QF20 4Q/FY20

4QF20 Ooma Business Subscription Revenue Growth of 61% YoY

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Key Metrics

ARPU		AERR
($ per month)		($ millions)
$10.96	$11.38	$138	$143

	$9.80	$119
$8.80		$103

FY 2018 FY 2019 FY 2020

4QF20

FY 2018 FY 2019 FY 2020

4QF20

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.

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Robust Gross Margin

					LONG TERM TARGET GROSS MARGIN RANGES
	Subscription/Services					High
	Total						Low
					80%
70%		70%	70%	75%
	70%
60%	62%	61%		65%

FY 2019	FY 2020	4QF20	Total	Subscriptions/Services

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Strong Financial Position

($ millions)	FY 2019	FY 2020	F4Q20
Cash and Investments	$42.6	$26.1	$26.1
Cash used in Operations	($3.9)	($7.6)	($0.8)
Capital Spending	($1.9)	($3.3)	($0.9)
Adjusted EBITDA	($1.9)	$1.0	$1.4

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Long-Term Target Model (Non-GAAP)

(% revenue)	FY 2019	FY 2020	F4Q20	1-3 Year	Long-Term
Targets	Ranges
Subscription & Services	70%	70%	70%	70%-75%	75%	- 80%
Gross Margin
Overall Gross Margin	60%	62%	61%	62%-65%	65%	- 70%
Sales & Marketing	30%	31%	30%	32%-35%	20%	- 25%
Research & Development	23%	21%	19%	17%-19%	12%	- 15%
General & Administrative	10%	10%	11%	7%-9%	6%	- 8%
Adjusted EBITDA	(1%)	1%	3%	5%	20% - 25%

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Thank You.

Appendix I GAAP to Non-GAAP Reconciliation

$ Thousands	FY 2017	FY 2018	FY 2019	FY 2020	4QF19	4QF20
GAAP Gross Profit	$59,329	$68,092	$76,491	$89,381	$19,707	$24,588
Add: Stock-based compensation expense and	1,038	1,129	957	1,311	249	305
related taxes
Amortization of Intangibles	162	183	549	480	149	73
Restructuring charges	-	-	-	2,289	-	-
Non-GAAP Gross Profit	$60,529	$69,404	$77,997	$93,461	$20,105	$24,966
GAAP Sales and Marketing	$33,768	$37,302	$40,761	$50,497	$10,612	$12,999
Add: Stock-based compensation expense and	(1,455)	($1,857)	(1,501)	(2,004)	(385)	(459)
related taxes
Amortization of Intangibles	-	-	(159)	(736)	(45)	(253)
Restructuring charges	-	-	-	(162)	-	-
Non-GAAP Sales and Marketing	$32,313	$35,445	$39,101	$47,595	$10,182	$12,287
GAAP Research and Development	$24,239	$29,328	$33,903	$37,770	$8,345	$8,652
Add: Stock-based compensation expense and	(3,619)	(4,046)	(3,906)	(4,773)	(984)	(1,116)
related taxes
Amortization of Intangibles	(7)	(6)	(5)	(6)	(1)	(1)
Restructuring charges	-	-	-	(634)	-	0
Non-GAAP Research and Development	$20,613	$25,276	$29,992	$32,357	$7,360	$7,535

GAAP General and Administrative

Add: Stock-based compensation expense and related taxes

Amortization of Intangibles

Acquistion related costs

Litigation costs

Change in fair value of acquisition-related contingent consideration

Non-GAAP General and Administrative

$14,598	$15,186	$17,613	$20,825	$4,577	$5,409
(3,754)	(4,086)	(4,331)	(5,061)	(1,074)	(1,265)
(179)	(124)	(27)	(5)	(5)	-
-	(118)	(423)	(262)	-	-
-	-	(142)	(606)	(142)	-
-	-	342	200	214	200
$10,665	$10,858	$13,032	$15,091	$3,570	$4,344

GAAP Operating Loss

Add: Stock-based compensation expense and related taxes

Amortization of Intangibles

Acquistion related costs

Litigation costs

Change in fair value of acquisition-related contingent consideration

Restructuring charges

Non-GAAP Operating Income (Loss)

($13,276)	($13,724)	($15,786)	($19,711)	($3,827)	($2,472)
9,866	11,118	10,695	13,149	2,692	3,145
348	313	740	1,227	200	327
-	118	81	262	(214)	-
-	-	142	606	142	-
-	-	-	(200)	-	(200)
-	-	-	3,085	-	-
($3,062)	($2,175)	($4,128)	($1,582)	($1,007)	$800

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