Ooma (OOMA) Q4 2026 Earnings Call Transcript

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DATE

Wednesday, March 4, 2026 at 5 p.m. ET

CALL PARTICIPANTS

• Chief Executive Officer — Eric Stang
• Chief Financial Officer — Shig Hamamatsu
• Director of Investor Relations and Corporate Development — Matt Robison

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TAKEAWAYS

• Revenue -- $74.6 million in the quarter, reflecting 15% year-over-year growth.
• Business Subscription and Services Revenue -- Accounted for 67% of total subscription and services revenue, up from 61% in the prior year quarter.
• FluentStream and Phone.com Revenue Contribution -- approximately $6.1 million added in the quarter, nearly all ($6.0 million) from business subscription.
• Product and Other Revenue -- $5.9 million, up 30% year over year, attributed to growth in add-on installations.
• Adjusted EBITDA -- $11.5 million in the quarter (15% margin), up from 11% margin a year ago.
• Quarterly Non-GAAP Net Income -- $9.4 million, a 62% increase year over year.
• Annual Exit Recurring Revenue -- $291 million, up 24% year over year, incorporating acquired users.
• Net Dollar Subscription Retention Rate -- 99%, unchanged from the previous quarter.
• ARPU -- $15.99, representing a 5% increase year over year, excluding the acquisitions’ partial-quarter effect.
• Core Users -- 1,404,000 at quarter end, including 164,000 acquired business users; business users now represent 49% of the total.
• Operating Cash Flow -- $10.7 million generated in the quarter.
• Free Cash Flow -- $9.1 million in the quarter; $22 million over the trailing twelve months.
• Stock Repurchase Spend -- $4.6 million in the quarter; $16.8 million over the last four quarters.
• Debt Repayment -- $6.5 million paid down on the term loan in the quarter, reducing the outstanding balance to $58.5 million.
• 2027 Revenue Guidance -- $321 million to $325 million projected for the year, with business subscription and services revenue expected to grow approximately 30% and residential subscription revenue to decline by 1%-2%.
• 2027 Adjusted EBITDA Guidance -- Forecasted at $43 million to $44.5 million.
• New AirDial Reseller Partners -- Four added in the quarter, bringing the total to 41, with a goal to surpass 50.
• AI Product Initiatives -- Multiple AI features launching, including AI-powered transcription, summarization, answering service, and full receptionist solution. The service tier strategy is expected to drive ARPU growth.
• AirDial Line Growth -- Lines installed in the quarter more than doubled versus the same quarter a year ago.
• Residential User Stability -- Total residential user base remained essentially flat, as higher-than-anticipated user additions offset headwinds.
• Acquisition Strategy -- Management focused on rapid integration, extracting synergies, and maintaining a pipeline for potential new deals.
• 2027 Profitability Guidance -- Non-GAAP net income expected between $35.5 million and $37 million, with diluted EPS guidance in the range of $1.26 to $1.31.
• Share Count -- Approximately 28.2 million weighted average diluted shares projected for full-year 2027 earnings calculations.

SUMMARY

Management stated the 2027 profitability outlook does not include potential cost synergies from integrating phone.com, indicating possible upside if these are realized in future periods. The company achieved a record for AirDial with over 80 new hospitality segment customers in the quarter and highlighted that a key strategic relationship with Marriott contributed to this result. Ooma (NYSE:OOMA) completed the FluentStream acquisition for $45 million and phone.com for $23.2 million in cash, with no further contingent payments, funded mainly by a $65 million term loan. Operating expenses excluding acquisitions declined $700,000 from the prior year quarter, demonstrating leveraging of the core cost structure. The company’s AI product strategy is designed to move customers to higher service tiers and introduce new monetization avenues beyond the existing subscription base.

• CFO Shig Hamamatsu said, "you know, as we start the year, we wanted to take that as an upside as we realize then probably second half of the year. That is what we are targeting to see a more meaningful cost synergy."
• Ooma’s management views further accretive acquisitions as part of their ongoing strategy, reiterating intent to pursue new deals as opportunities arise.
• The MyPhone product targeting families with young children is planned for launch in the first half of the current year, potentially expanding the addressable residential market.
• CEO Eric Stang noted, "We are dismayed that our advances have not yet translated into a meaningfully higher market capitalization but we are also confident that that will come in time."

INDUSTRY GLOSSARY

• POTS (Plain Old Telephone Service): Legacy analog telephone service infrastructure, referenced as being replaced by solutions such as AirDial.
• AirDial: Ooma’s POTS line replacement solution targeted at both enterprise and hospitality markets, enabling digital communication over legacy copper line infrastructure exits.
• ARPU (Average Revenue Per User): Monthly average subscription and services revenue generated per core user.
• UCaaS (Unified Communications as a Service): Cloud-based suite of communications and collaboration tools provided as a subscription, which includes Ooma Office and Ooma Enterprise offerings.

Full Conference Call Transcript

Matt Robison: Thank you, Michelle. Good day, everyone, and welcome to the fourth quarter and fiscal year 2026 earnings call of Ooma, Inc. My name is Matt Robison, Ooma, Inc.'s Director of IR and Corporate Development. On the call with me today are Ooma, Inc.'s CEO, Eric Stang, and CFO, Shig Hamamatsu. After the market closed today, Ooma, Inc. issued its fourth quarter and fiscal 2026 earnings press release. This release is also available on the company's website, ooma.com. This call is being webcast live and is accessible from a link on the Events and Presentations page of the investor relations section of our website at investors.ooma.com. This link will be active for replay of this call for one year.

During today's presentation, our executives will make forward-looking statements within the meaning of the federal securities laws. Forward-looking statements generally relate to future events or future financial or operating performance. Our expectations and beliefs regarding these matters may not materialize and actual results are subject to risks and uncertainties that could cause actual results to differ materially from those projected. These risks include those set forth in the press release we issued earlier today, and those risks more fully described in our filings with the Securities and Exchange Commission.

The forward-looking statements in this presentation are based on information available to us as of the date hereof, and we disclaim any obligation to update any forward-looking statements except as required by law. Please note that other than revenue or as otherwise stated, financial measures to be disclosed on this call will be on a non-GAAP basis. The non-GAAP financial measures are not intended to be considered in isolation or as a substitute for results prepared in accordance with GAAP.

A discussion of why we present non-GAAP financial measures and a reconciliation of the non-GAAP financial measures discussed in this call to the most directly comparable GAAP financial measures is included in our earnings press release which is available on our website. On this call, we will give guidance for April and full year fiscal 2027 on a non-GAAP basis.

Also, in addition to our press release and 8-K filing, the Overview page and Events and Presentations page in the investor section of our website as well as the Quarterly Results page of the Financial Information section of our website include links to information about cost and expenses not included in our non-GAAP values and key metrics of our core subscription businesses. These are titled Supplemental Financial Disclosure 1 and Supplemental Financial Disclosure 2. Additionally, our investor presentation slides include GAAP to non-GAAP reconciliation and also provides resolution of GAAP expenses that are excluded from non-GAAP metrics.

Before I turn this over to Eric, I would like you to know that we will participate in the 38th Annual ROTH Conference at Dana Point on March. I will now turn the call over to Ooma, Inc.'s CEO, Eric Stang.

Eric Stang: Thank you, Matt. Hi, everyone. Welcome to Ooma, Inc.'s fourth quarter and fiscal 2026 year-end earnings call. We are pleased to report strong Q4 financial results, to update you on our progress integrating our two Q4 acquisitions FluentStream and phone.com, and to discuss our strategy and the positive momentum we see for fiscal 2027. Financially, we are pleased with our Q4 results, which included solid revenue growth and new records for net income, for adjusted EBITDA, and for cash flow from operations. Our adjusted EBITDA in Q4 reached $11,500,000, which equates to 15% of revenue. This result compares favorably to adjusted EBITDA of 11% of revenue just a year ago.

Total adjusted EBITDA for fiscal 2026 was $33,900,000, up from $23,200,000 the prior year and $19,800,000 year before that. Looking forward, expect our fiscal 2027 adjusted EBITDA to be comfortably above $40,000,000 and as we continue to grow and expand our business, we expect our adjusted EBITDA to go even higher, which is strategic to our outlook as higher adjusted EBITDA affords us greater opportunity to make acquisitions, repurchase stock, and invest in business growth. On the business front, we achieved solid growth in Q4, particularly due to our two acquisitions and a record quarter for AirDial. Additions of FluentStream and phone.com provide us new avenues for growth as well as the potential to capture significant synergies.

Today, we have only just started the process of integrating these acquisitions, and making the most of the opportunity they present. Also in Q4, I am pleased to report that AirDial added more lines than ever before. The number of Q4 AirDial lines installed was more than double the number that we installed in the same quarter a year ago. Particularly I am pleased to say too that other parts of Ooma, Inc. also performed well in Q4. our residential solution, Umatello. As was also the case for Q3, Lumatelo in Q4 added more users than anticipated such that our total residential user base remained essentially flat in number.

All in, Q4 was a strong quarter that positions us well for fiscal year 2027. And looking ahead now to fiscal 2027, I would like to highlight a handful of our most exciting initiatives. The first is the introduction of AI solutions on our Ooma Office platform. This quarter, we intend to introduce several new AI solutions for our customers. These include transcription and summarization of calls, ability to drive insights from call data using third-party AI platforms, such as ChatGPT or others, an AI-powered answering service and a full AI receptionist solution.

The first of these the first two of these will be part of our top Pro Plus tier of service, helping us to trade up customers to higher ARPU. The second two will be priced independently in addition to the cost of our current service offerings. Communications is a fertile ground for the use of AI, we believe AI can bring new business opportunity for Ooma, Inc. The second initiative I would like to highlight is our plans for AirDial. Are seeing increased market interest as POTS prices continue to rise and the pace of POTS line shutdowns accelerates. AT&T announced POTS line price increases last fall, and has signaled there will be further price increases this spring.

We are also seeing an increasing number of shutdown announcements with many forecast for late this year. We believe these are quite positive trends that will expand the opportunity for AirDial. In part due to these trends, we added four more AirDial reseller partners in Q4 bringing the total number of partners we have to 41. Some of these partners are switching to Ooma, Inc. from competitive solutions which we believe also validates the competitive strength of Ooma AirDial. And in select cases, our resellers are being driven to act as the cost they pay for the POTS lines they have purchased and resold can even sometimes exceed the revenue they are receiving from their end customers.

We are working more closely with our reseller partners than ever before and are seeing them increase their sales and marketing efforts and expand their sales pipelines. It remains our goal to add at least two new reseller partners each quarter and in total, our goal remains to grow our number of AirDial reseller partners to over 50. As far as we have already come with AirDial, still believe it is early days. Most of the POTS line shutdowns we have seen announced so far have come from AT&T. We do not see Verizon active yet. Also believe AT&T has years of shutdowns to go.

Airdominal remains a key investment area for Ooma, Inc. in fiscal 2027, we expect to continue our fast expansion. The third initiative I would like to mention is our plans for our recent acquisitions FlumeStream and phone.com, along with this, our desire to make further acquisitions in the future. In a nutshell, our plans have not changed from the announcements we made last fall. FluentStream is a solid business generating high EBITDA that brings us increased channel strength and another outlet to sell AirDial.

We phone.com has low EBITDA today, but we expect it can be dramatically improved through scale economies, and phone.com also affords us a second small business brand in the market with a name and URL that can be highly leveraged. While it is difficult to forecast the timing and impact, we will be working through fiscal 2027 to bring Ooma, Inc.'s marketing and sales expertise, lean operations, and product strengths to phone.com. As a reminder, we were able to acquire both FluentStream and phone.com at prices that made their acquisitions accretive just one quarter forward. We believe acquisitions such as these provide highly cost effective business expansion.

It is a goal of ours for fiscal 2027 to move quickly to pay down the debt we assumed for our recent acquisitions and to make further acquisitions. At this time in our industry, we believe Ooma, Inc. is well positioned to do so there are many targets to consider. For fiscal 2027, I would like also to comment on our residential business. As I mentioned above, Telo sales the last two quarters have been remarkably robust. We believe there are three main drivers for this. One is POTS lines are also going away in the residential space. A second is wireless 5G home Internet, which allows more consumers to unbundle Internet from telephony.

And a third is the desire of parents to give their younger kids a phone but avoid screen time. 's a movement happening among parents, to wait until eighth grade before letting a child receive a smartphone. Ooma, Inc.'s family bundle, consisting of the Ooma Telo, a family friendly phone, is one way families use our solutions. In fiscal 2027, we intend to launch a new product called MyPhone, which we hope parents will find particularly attractive for use by younger people in the home. We will have more to say on this as our strategy unfolds. We believe fiscal 2027 is shaping up nicely for us.

With upside opportunities in each of the four areas I have just mentioned and more. We also believe we are going into fiscal 2027 in our strongest position ever. Ooma, Inc. now serves over 1,400,000 core users, is growing solidly, has over $290,000,000 in annual exit recurring revenue, is achieving approximately 99% net dollar retention, and is driving meaningful double-digit adjusted EBITDA as a percent of revenues. With our growth and significantly improved adjusted EBITDA we have built a more valuable company. We are dismayed that our advances have not yet translated into a meaningfully higher market capitalization but we are also confident that will come in time.

Our strong position in each of our four business areas, market momentum we see in our favor, especially for AirDial, the great strategic partners we have secured who are helping propel our growth, our potential for further accretive acquisitions to layer on additional inorganic growth and our estimation that Ooma, Inc. can continue to increase adjusted EBITDA and become more profitable in the future, all have us excited about the road ahead. I will now turn the call over to Shig, our CFO, to discuss our results and outlook in more detail and then return with some closing remarks.

Shig Hamamatsu: Thank you, Eric, and good afternoon, everyone. Before I dive into our fourth quarter financial results, I would like to quickly recap financial terms of the two acquisitions we completed during the fourth quarter. We completed the acquisition of FluentStream on 12/01/2025, for approximately $45,000,000 in cash. We also completed the acquisition of form.com on twenty sixth twenty five for approximately $23,200,000 in cash. The financial results of these acquired businesses, included in Ooma, Inc.'s financial results starting from their respective acquisition completion date in Q4. There are no other contingency payments for either of these acquisitions and the aggregate cash acquisition price was mostly funded by a $65,000,000 term loan with an interest rate of 66.4%.

Now I am going to review our fourth quarter financial results and then provide our outlook for the first quarter and full year fiscal 2027. We had a solid finish to fiscal '26 with the fourth quarter revenue of $74,600,000, up 15% year over year. Driven by the growth of Ooma Business, including AirDial, and the additions of FluentStream and foam.com. On a combined basis, FluentStream and form.com added approximately $6,100,000 of revenue in Q4, of which $6,000,000 was in business subscription. Excluding the impact of these acquisitions, total revenue in Q4 grew five year over year.

In Q4, business subscription and services revenue accounted for 67% of total subscription and services revenue as compared to 61% in the prior year quarter. Q4 product and other revenue came in at $5,900,000 and was up 30% year over year driven by the growth of add-on installations. Despite Q4 being a holiday quarter, we had a record number of add-on installations, which more than doubled over the prior year quarter. New bookings for AirDial was also robust full year on the full year basis, and grew approximately 80% year over year in Q4.

Total revenue was $273,600,000 for fiscal '26 as compared to $256,900,000 in the prior year, representing 7% growth year over year including 10% growth in business subscription and services revenue. Excluding the impact of the acquisitions, total revenue and the business subscription revenue, for fiscal '26 grew 46% year over year, respectively. On the profitability front, Q4 non-GAAP net income was $9,400,000 and grew 62% year over year as we continue to focus on operating leverage in R&D and optimizing our sales and marketing spend. On a full year basis, non-GAAP net income was $29,200,000 compared to $18,000,000 in the prior year and also grew 62% year over year. Now some details on our Q4 revenue.

Business subscription and services revenue grew 23% year over year in Q4, driven by user growth and ARPU growth, for Ooma Business and the additions of FluentStream and form.com. Excluding the impact of the acquisitions, business subscription and services revenue in Q4 grew 7% year over year. On the residential side, subscription and services revenue was down 1% year over year. For the fourth quarter, total subscription and services revenue was $68,700,000 or 92% of total revenue as compared to $60,600,000 or 93% of total revenue in the prior year quarter. Now some details on our key customer metrics.

Please note that Q4 ARPU as well as net dollar retention rate exclude the impact of the Q4 acquisitions, as these businesses only had a partial quarter starting from their respective acquisition date. We plan to incorporate them into these metrics starting in '27 when they have a full quarter with us which is consistent with our past practice. As for the number of core users and annual exit recurring revenue at the end of Q4, they do incorporate the impact of the acquisitions.

Our blended average month subscription and services revenue per core user or ARPU increased 5% year over year to $15.99 driven by an increase in mix of business users, including AirDial, as well as higher Ooma Office Pro and Pro Plus users. Overall, 39% of Ooma Office users have now subscribed to these higher tier services. Net dollar subscription retention rate for the quarter was 99% as compared to 99% in the third quarter. We ended our fourth quarter with 1,404,000 core users, including 164,000 business core users from the acquisitions up from 1,233,000 core users at the end of the third quarter.

At the end of the fourth quarter, we had 684,000 business users or 49% of our total core users, an increase of 171,000 from Q3. Our annual exit recurring revenue was $291,000,000, up 24% year over year. Excluding the impact of the acquisitions in Q4, our annual exit recurring revenue grew 5% year over year. Now some details on our gross margin. Our subscription and services gross margin for the fourth quarter was 72% as compared to 72% in the prior year. Product and other gross margin for the fourth quarter was negative 42% as compared to negative 55% for the same period last year.

The year-over-year improvement in product and other gross margin was primarily due to fully consuming higher cost components we had procured a few years ago. On an overall basis, the total gross margin for Q4 was 63% as compared to 63% in the prior year quarter. The flat overall gross margin in Q4 this year reflects the heavier mix of product revenue versus prior year due to an increase in AIDA installations, offset the improvement in product gross margin. And now some details on operating expenses. Total operating expenses for the fourth quarter were $37,000,000, an increase of $1,900,000 year over year due to the additions of Fluence Stream and form.com.

Excluding the impact of the acquisitions, total operating expenses decreased $700,000 from the same period last year. Sales and marketing expenses for the fourth quarter were $18,400,000 or 25% of total revenue, up 4% year over year due to the addition of FluentStream and form.com expenses. R&D expenses were $12,200,000 or 16% of total revenue, up 9% year over year due to the addition of FluentStream and form.com team members. G&A expenses were $6,400,000 or 9% of total revenue for the fourth quarter compared to $6,200,000 for the prior year quarter. Non-GAAP net income for the fourth quarter was $9,400,000 or diluted earnings per share of $0.34 as compared to $0.21 in the prior year quarter.

Adjusted EBITDA for the quarter was a record $11,500,000 or 15% of total revenue and grew 67% over the prior year quarter. On a full year basis, adjusted EBITDA was $33,900,000 or 12.4% of total revenue compared to $23,300,000 or 9% of total revenue in the prior year. We are pleased with the meaningful step up in adjusted EBITDA margin realized in fiscal '26 as we continue to focus on growing profitability towards our long-term financial goals. We ended the quarter with total cash and investments of $20,100,000. In Q4, we generated $10,700,000 of operating cash flow and $9,100,000 of free cash flow.

On a trailing twelve months basis, we generated $27,700,000 of operating cash flow and $22,000,000 of free cash flow. We spent a total of $16,800,000 over the last four quarters including $4,600,000 in Q4, to buy back stock through a combination of open market repurchase and our issue net share settlement. In addition, we already paid down the term loan by $6,500,000 in Q4 and reduced the outstanding debt balance from $65,000,000 to $58,500,000 at the end of Q4. With strong free cash flow generation, we believe we can continue to maintain a reasonable level of stock repurchase while paying down a debt at a healthy pace. On the headcount front, we ended the quarter with 1,420 employees and contractors.

Now I will provide guidance for the first quarter and full fiscal year 2027. Our guidance is on a non-GAAP basis and has been adjusted for expenses such as stock-based compensation, amortization of intangibles, and acquisition-related and other expenses. We expect total revenue for the 2027 to be in the range of $79,600,000 to $80,400,000, which includes $5,700,000 to $6,100,000 of product and other revenue. We expect the first quarter non-GAAP net income to be in the range of $8,800,000 to $9,200,000. Non-GAAP diluted EPS is expected to be between $0.31 and $0.33. We estimate 28,000,000 weighted average diluted shares outstanding for the first quarter.

For full year fiscal '27, we expect total revenue to be in the range of $321,000,000 to $325,000,000. The full year fiscal '27 revenue guidance assumes business subscription and services revenue growth rate of approximately 30% over fiscal '26, while residential subscription revenue to decline 1% to 2%. In terms of revenue mix for the year, we expect 92% to 93% of total revenue to come from subscription and services revenue and the remainder from products and other revenue. We expect non-GAAP net income for fiscal 2027 to be in the range of $35,500,000 to $37,000,000. Based on this guidance range, we estimate our adjusted EBITDA for fiscal '27 to be $43,000,000 to $44,500,000.

We expect non-GAAP diluted EPS for fiscal '27 to be in the range of $1.26 to $1.31. We have assumed approximately 28,200,000 weighted average diluted shares outstanding for fiscal '27. In summary, we are pleased with a solid finish to our fiscal '26 with a record adjusted EBITDA of $33,900,000 for the year which grew 46% year over year along with a record free cash flow of $22,000,000. As we start our new fiscal year, we are excited about both organic and inorganic growth opportunities in front of us and remain focused on achieving another meaningful progress towards our long-term financial targets. I will now pass it back to Eric for some closing remarks. Eric?

Eric Stang: Thank you, Shig. On nearly every metric, Ooma, Inc. is a stronger company today than ever before. As we now enter fiscal 2027, we are encouraged by our past execution, the positive market tailwinds we see, particularly for AirDial, our expanding number of strategic partners, in the addition of our two acquisitions last quarter. Our team is committed to making fiscal 2027 a great year for Ooma, Inc. Thank you for joining our call today. We will now open for questions.

Operator: Thank you. As a reminder, to ask a question, please press 11 on your telephone and wait for your name to be announced. To withdraw your question, please press 11 again. Our first question is going to come from the line of Josh Nichols with B. Riley Securities. Your line is open. Please go ahead.

Josh Nichols: Hey. Thanks for taking my question. Always good to see record EBITDA margins and free cash flow profitability. For the company. I just was curious. You mentioned it on the call that, you know, FluentStream is already, you know, doing quite well from a EBITDA margin perspective, but you mentioned that you think that there is room for pretty significant increases for phone.com. Does the fiscal year 2027 guidance you layout include very much in the way of potential cost synergies on that front, or would that potentially be some upside to the 2027 outlook that you laid out?

Shig Hamamatsu: Yes. Thanks for the question, Josh. And our profitability guidance we do not assume the synergy yet. We want to start the year conservatively on that note. And as we said before, we have a pretty good, you know, track record going back to prior acquisitions. To achieve the cost synergies ultimately. On SIP as an example again. And so but, you know, as we start the year, we wanted to take that as an upside as we realize then probably second half of the year. That is what we are targeting to see a more meaningful cost synergy. So long story short, the guidance does not assume the synergy benefit yet.

Josh Nichols: Great. Well, that is good to hear. And then just in terms of the AirDial catch up, I know you said you thought there was, like, some customers because of weather and seasonality was going to be a little bit slower, but the numbers for 4Q that you kind of mentioned for airedale seem quite strong. And when you look at some of those, like, larger reseller partners, do you expect, like, the pace of deployments to increase pretty significantly this year relative to last year? What is the expectation there?

Eric Stang: Hi, Josh. Yeah. In short, we do. It is difficult to forecast, and, you know, we do not wanna get out in front of committed agreements that are not in place yet. But if you look at, you know, funnels and backlogs of opportunity in the you know, customer response we are seeing out in the market, and just the momentum which AT&T is moving at to increasingly raise prices and retire more POTS lines. We think we have the potential for a very good year ahead. But, you know, we put some of that into our guidance, but, we think there is there is definitely upside there. As things unfold. Great. And I guess last question for me.

I mean, you really have a pretty well rounded capital allocation strategy or you are buying back stock, you are generating cash flow. Improving the margins, and you are also looking at M&A. Is the expectation right now with what has been going on in the market that you would probably close at least, like, one additional acquisition this year based on the pipeline, or what is the expectation now?

Eric Stang: Well, as I said in my remarks, we think acquisitions like FluentStream and phone.com are another great avenue for growth for the company. And it is part of our strategy today. You can never handicap when something is gonna happen. There are targets out there. But, yeah, I you know, I am hopeful that every year, we will be we will be doing some acquisition or acquisitions to augment what we are doing ourselves. Just because of the opportunity we see.

Josh Nichols: Thanks. I will hop back in the queue.

Eric Stang: Thank you. And one moment for our next question.

Operator: Our next question comes from the line of Patrick Walravens with Citizens. Your line is open. Please go ahead.

Kincaid: Oh, great. This is Kincaid on for Patrick Walravens. Thanks for taking the question. Eric, just wanted to follow up on two comments that you have made last quarter. Number one, you said that there was some of the AirDial installations had been pushed out you mentioned January, so I would love to get a follow up on that. And then I understand that you may not want to give this every quarter, but you mentioned 50 hotels per quarter was your goal. Love to hear how that is going.

Eric Stang: You bet. So, yes, some of what was pushed out last fall did come in Q4 or particularly January. We had a very strong January for AirDial. And, you know, that momentum is actually carried into February as well. So think we are off to a great start for the year on AirDial. And then, you know, on the hotel hospitality front, you know, our goal is to add 50 new hospitality customers every quarter. I think we did a little over 80 in Q4, which is a nice step for us. That might be a record in terms of the number in any particular quarter.

And I will say our marriage Marriott relationship is also finally starting to, pay off some in contributing to that number. So you know, continued good momentum there too.

Kincaid: Spectacular. And then just one last one for me. On the family phone bundle, do you have a sense of what the TAM on that would look like?

Eric Stang: That is a good question. The family phone bundle is one of three or four bundles we have in the market today. More focused around giving something easy for families to use and have 911 capability for, you know, real landline 911 and things like that. But MyPhone, when we announced it, will be specifically targeted towards, you know, that market opportunity we see where parents want to have something in their home for the kids to use that, you know, is not putting, you know, the Internet and screen time in front of them. We think it is a very, very real segment there.

And I think that is partly what has been booing our last two quarters success on the residential front. So I think MyPhone is gonna take us the next step and we should have it out in the market in the first half of this year. We have previewed it with a couple of our retail partners, and they love it. And we are, you know, we really believe every family with kids at home you know, eighth grade or less, is a potential customer for that. So in US and Canada. So it is a it is a real opportunity.

Kincaid: That is great. I love it from a values perspective as well. Spectacular. But thanks for the time.

Eric Stang: Thank you.

Operator: Thank you. One moment for our next question. Our next question will come from the line of Matthew Harrigan with Benchmark. Your line is open. Please go ahead.

Matthew Harrigan: Thank you. Given the awareness of the copper line replacement, quandary is increasing. What are the it really feels like you are making accelerations in the approval process and all that, and you have kinda an inflection point. But the guys who are not running with you yet, what are the kind of the ad hoc solutions that they are adapting? And I know adopting. I know that I have asked you this question before, but are you seeing anything in terms of competition from other, you know, providers where there where there is any innovation? Because it feels like as we have all also talked about before, this has been going on. For a long time.

And you have made a, I think, a fairly conscious decision not to push the sales and marketing, you know, that heavily right now. I know R&D is coming down a lot, you know, hence the improvement in margins. But are you just generating a tremendous amount of pull demand and you feel vindicated but not pushing sales and marketing, you know, harder? Or do you think you could still grow even faster if you if you push the sales and marketing? Thank you.

Eric Stang: Yeah. Hi. We are growing sales and marketing in our outlook this year. But we have something buoying our efforts, which is all our partners. 41 now. Who, have signed up to resell AirDial. They are they are driving a lot of our success too. And, yes, our pricing is lower with them because they are reselling, but they are taking the sales and marketing lift on their shoulders. So, it is part of our business model to leverage ourselves with the strength of others. To go faster than we can go just ourselves. But I will say that I think we ended Q4 with sales and marketing about 25% of revenue.

I certainly would not wanna see that go lower. And we may see it go higher a little bit as we go through this year. But we are we are definitely getting out ahead right now of additional growth opportunities that we think are coming our way on AirDial, and we are hiring in key areas.

Matthew Harrigan: Are you seeing anything in the way of presenting other people presenting alternative solutions?

Eric Stang: Well, we do have a handful competitors out there. And depending on the nature of the deal, and who the customer is and all, they might be stronger or weaker you know, in terms of relationship with that customer or opportunity. But I will say that I still believe I believe strongly that the features and capabilities in our solution are ahead of others in the market. And that allows us to really bring it all together for a customer and that is I think that is why we are we are winning so many of these, you know, partner resellers because they recognize the strength of our solution.

I think last fall, we took some additional steps to make our remote device management even more robust, for our partners to use. And we have other improvements planned on AirDial this year or really, I would say, feature additions. So I think we are gonna stay ahead. But it is we you know, I think that know, the AirDial market today or the POTS replacement market, some of these gonna break through as the winning solution in the market. And I think our I think it is ours to go get. And we are executing to try to do that.

Matthew Harrigan: Great. Thanks, Eric.

Operator: Thank you. Thank you. One moment for our next question. Our next question will come from the line of Arjun Bhatia with William Blair. Your line is open. Please go ahead.

Arjun Bhatia: Thank you. Can you guys just touch a little bit on the AirDial strength and you know, I know in the past, you have talked about implementation hurdles. Just us understand where we are on that. Is this, like, a permanent sort of or more durable tailwind going into 2026? Or could there still be some kind of bumps just as we are thinking about the outlook?

Eric Stang: Yeah. So our AirDial grows in a couple of ways. There is a steady stream of business we know or can reasonably forecast we are going to drive every quarter through our channel agents, through our own direct sales, through what we know some of our partners have been doing and will keep doing. But there is also big deals out there, larger size deals, and they are lumpy, and you do not know when a customer is gonna pull the trigger I think that there has been a lot of budgeting to address this segment by larger customers this year that was not in place last year.

I know that some of our key reseller partners are putting more emphasis today than they were a year or two ago on this segment. And I am hopeful we will keep winning partners every quarter to bring on board. It is not all it is not all perfect, but you know, there is there is certainly an increased momentum But because it is lumpy and because one customer can be five or ten thousand lines, ultimately, if it is a very large customer, you just do not know when you are gonna win those and who is gonna win those. But so we are a little more conservative on how we forecast aerosol today.

But the business is certainly out there, and we feel like things are going well for us. For all these opportunities.

Arjun Bhatia: Okay. Perfect. Got it. Thank you. And then just you know, when we are thinking of the sort of residential business, you know, you had a better Q4. You are kinda talking about MyPhone. Might come in. This year. What like, can that be a growth? Can that grow in '26? Or how are you thinking about the sort of range of outcomes?

Eric Stang: I do think it can grow, but I can tell you in our guidance, we have not modeled it that way. But you know, it is we do not expect it to decline either. And, you know, residential is close to a $100,000,000 of revenue for us and a very nice segment for us to be in. And the these you know, we have had a little bit of decline over the last year and all. Not a lot, but a little. Like 1% year over year.

But I think with MyPhone and some of the trends we are seeing, I mean, and when MyPhone comes in, maybe we Essentially, end users did not decline in Q3 and did not decline in Q4. we will see the users grow a little bit. I think that is all I wanna predict at this time. Once we get MyPhone in the market, depending on what retail placement it has, you know, we will be updating you. But, certainly, it is great to see that the residential phone is not dead. There is some very good powerful reasons to have one in the home.

911 being one, something for the kids to use, having a home office with better voice quality, having a parent or mother or father-in-law in the home, there is all kinds of reasons why it is a nice convenience. And it may be not be a nice convenience that you know, $30.40 dollars a month, but with Ooma, it can be as little as just know, a few dollars of taxes and fees a month. And that is powerful. So, yeah, we see real market opportunity there, and we are we are not you know we are investing in it today.

Arjun Bhatia: Alright. Great. Appreciate the color. Thank you.

Eric Stang: You bet.

Operator: Thank you. And as a reminder, if you would like to ask a question, please press and our next question will come from the line of Maxwell Michaels with Lake Street Capital Markets. Your line is open. Please go ahead.

Maxwell Michaels: Hey, guys. Thanks for taking my questions. First one, just kind of want to focus on ARPU. You noted fluentstreamandphone.com were not included in this year this quarter's numbers. But can you give us a sense of what that looks like in Q1? And then or just give us a sense on what their ARPU looks like compared to Ooma? And then if we look at sort of the AI offerings you guys mentioned earlier in the call, you give us a sense of what ARPU looks like for a customer who is using the highest tier of all the AI offerings?

Shig Hamamatsu: So the in terms of, you know, what we could expect once we incorporate those two acquisitions, you know, they are relatively comparable to Ooma Office ARPU. I would say slightly lower than Ooma Office, but not too much. So might see a little bit of pull down on ARPU just because of that, but they are not too far off from Ooma Office. Is. In a higher tier services, I think your second question was the higher tier services on Ooma Office. Well, it was AI. AI. With AI. Okay. Yeah.

Eric Stang: Well, okay. So the first two services I talked about will be part of Pro Plus, which sells for $29.95 a month. A single digit percentage of our customers today take the Pro Plus tier but we think with AI included in it, we could move that up, and that will bring our ARPU up. Our Pro tier is $24.95. Our Essentials tier is $19.95. Most of our customers take our Pro tier. And then, you know, the other two services I mentioned will be priced separately and they will be both a we have not announced pricing on them, so I cannot give you a specific answer here today. I apologize.

But they will they will most likely be a fixed price per month and a usage charge as well. Basically, if you go over a certain level of usage. I think you can look at these solutions in the market today and see they are priced above generally, those solutions on their own are priced above where our current Ooma Office ARPU is at. So I think that they have the potential to bring thing bring our overall average up as well.

Maxwell Michaels: And then last one for me. Just around acquisitions. I mean, I think the combined revenue multiple you guys paid for both the companies were around 1.4 times sales I mean, is there a criteria you guys are following or a multiple you guys are willing to pay for higher growth that you guys can share with us?

Eric Stang: Yeah. You know, it is it is interesting. If you look at the acquisitions we have done, we have we have bought two businesses for less than one times revenue. One for about one times revenue, and FluidStream for more than one times revenue, but with very strong EBITDA coming from the company. We it is a it is a balance and a and a trade off. A business that has low EBITDA, but we think with our synergies, we can improve. You know, that is work on our side, and we are not gonna pay us up as much for that.

But when we see a business with higher EBITDA that we think is stable, and that we can leverage for the future, we are we are gonna pay a little more. You know, either way, I think our biggest metric is it accretive? And do we think putting our dollars there is gonna have more impact than putting them into sales and marketing? And I, you know, I think that know, we are of a unique company in this whole UCaaS space as well because these businesses in the kind of the $10 to $30,000,000 revenue range they are they are meaningful for us.

But they you know, they are not a lot of other players out there who would want to buy something that size or you know, have the financial position to do so. I think we have got good opportunities. And, it is, you know, but always it is it is a it is a case by case discussion for us over what is appropriate for that business and what it is doing.

Maxwell Michaels: Alright. Thanks, guys.

Operator: You. And I am showing no further questions at this time. And I would like to hand the conference back over to management for any further remarks.

Eric Stang: Well, you, everyone. We are up to around I think we got it around $3,325,000,000 in revenue for this year. If we can do more acquisitions this year, we will be moving that up. And I think that part of what we are doing here is becoming a bigger company. With more reach and more breadth and I think also appealing to a larger investor base, which is also something we are trying to do as we look forward. We are excited about these initiatives we went over with you. Four clear initiatives, one around AI, one around AI, Dial, one about one around capitalizing the acquisitions we have done. And one around our better than expected performance on residential.

And I think those are great trends for us as we go into fiscal 2027. So you for your time today, and I will stop there. Thank you, everyone. Bye.

Operator: This concludes today's conference call. Thank you for participating, and you may now disconnect. Everyone have a great day.

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