Ooma Posts 53% EPS Jump in Fiscal Q2

Key Points

• Non-GAAP earnings per share rose 53.3%, reaching $0.23 compared to $0.15 in Q2 FY2025.

• Revenue beat guidance, rising 3% to $66.4 million for the quarter ended July 31, 2025.

• The full-year profit outlook was raised, but annual revenue guidance remains unchanged for FY2026.

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Ooma (NYSE:OOMA), a provider of cloud-based communications solutions for businesses and consumers, released its earnings on August 26, 2025. The company reported revenue of $66.4 million, rising 3% over the prior year and coming in above its previous guidance range. Non-GAAP earnings per share increased to $0.23 from $0.15 a year ago, while adjusted EBITDA grew to $7.2 million from $5.6 million a year earlier. Ooma posted a GAAP net profit of $1.3 million, marking a turnaround from a $2.1 million net loss in the prior-year period. The period saw substantial profit growth driven by strong cost control, while overall revenue growth remained modest. The company maintained its full-year revenue outlook but raised its guidance for both GAAP and non-GAAP net income for FY2026.

Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2026 earnings report.

Overview of Ooma's Business and Strategic Focus

Ooma is a provider of communications services delivered through cloud platforms. It serves both businesses and residential customers with services that include voice, video, messaging, and virtual call management. Its offerings are primarily delivered as software-as-a-service (SaaS), which means customers pay recurring fees to access the platform rather than investing in physical infrastructure.

The company’s recent strategic focus centers on expanding in the business market, particularly with its unified communications solutions and its AirDial product for replacing aging copper landlines. Innovation remains a top priority, with development aimed at improving feature sets and integrating Ooma’s services with popular workplace productivity tools. Key success factors include driving adoption in business segments, maintaining superior customer satisfaction, adapting to evolving regulations, and competing against larger telecommunication providers by offering a combination of value and reliability.

Quarter Highlights: Financial and Operational Developments

Ooma’s revenue (GAAP) increased by 3% year over year, reaching $66.4 million. This figure exceeded the company’s earlier guidance, which targeted up to $66.1 million in total revenue. The bulk of Ooma’s sales—92%—came from recurring subscription and services revenue. Product and other revenue, while a smaller part of the mix, rose 16.1% year-over-year from Q1 FY2025 to Q1 FY2026, partly due to hardware shipments related to AirDial rollouts. Despite these gains, overall revenue growth remains at the lower end of recent company trends.

Profitability was the clear standout in the quarter. Ooma reported GAAP net income of $1.3 million, swinging from a loss in the previous year. Adjusted EBITDA, a metric for operating performance excluding certain non-cash and one-time items, improved 27.1% year over year. Operating expenses fell by 2% year-over-year, reflecting management’s cost discipline. Research and development spending declined by 6% year-over-year in Q1 FY2026, while general and administrative costs edged higher. The company’s non-GAAP gross margin remained flat at 62%.

Ooma’s business offerings anchor its growth strategy, especially solutions for small and midsize business users. The Ooma Office suite provides an all-in-one business phone application, including virtual fax and video conferencing. AirDial enables organizations to replace traditional landline connections as telecommunications networks transition away from copper infrastructure—a key opportunity as businesses face regulatory deadlines to upgrade. The 2600Hz platform brings wholesale communications features and customizable phone system solutions. Management again cited progress in each area, though no specific revenue or adoption figures by product were shared in the earnings release.

Recurring revenue and high customer retention give Ooma substantial revenue predictability. Subscription revenue represents the vast majority of revenue, and historical third-party surveys rank Ooma highly in customer satisfaction. In previous quarters, the company reported retention rates near 99 % for recurring revenue. These strong retention rates help offset slowdowns in legacy residential services, which continue to face industry-wide declines.

One notable trend during the period was Ooma’s continued focus on innovation but combined with cost efficiency. The company highlighted ongoing development of new software features for its unified communications platforms and new integrations with other business productivity tools. However, research and development spending fell in Q1 FY2026. This signals a strategy focused on incremental improvements rather than aggressive expansion. Inventory increased from $14,141,000 as of April 30, 2025, to $14,776,000 as of July 31, 2025.

Payments for repurchases of common stock totaled $3.2 million. Ooma’s cash and cash equivalents (GAAP) rose to $19.6 million, and total liabilities declined, resulting in increased stockholders’ equity.

Looking Ahead: Guidance and Key Trends

Ooma projects total revenue between $67.2 million and $67.9 million for Q3 FY2026, which would be a modest sequential rise. The company expects non-GAAP net income between $6.0 million and $6.4 million, or $0.22 to $0.23 per diluted share. Ooma reaffirmed its full-year revenue outlook for FY2026 in the range of $267 million to $270 million—unchanged from its earlier forecast. However, management raised expectations for both GAAP and non-GAAP net income. GAAP net income is now forecast at $3.5 million to $4.0 million, much higher than earlier guidance of $0.6 million to $1.6 million. Non-GAAP net income is projected at $24.5 million to $25.0 million, up from a previous range of $22.5 million to $23.5 million.

However, the choice not to raise revenue forecasts, despite recent overachievement, signals cautious expectations for the pace at which newer offerings like AirDial and 2600Hz will drive future sales. Investors should watch for greater disclosure on business segment adoption in future reports.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.

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