false0001327688--01-31Ooma IncQ20001327688us-gaap:RetainedEarningsMember2021-05-012021-07-3100013276882021-01-310001327688us-gaap:SalesRevenueNetMemberooma:OomaResidentialMemberus-gaap:ProductConcentrationRiskMember2021-02-012021-07-310001327688ooma:GlobalTelecomCorporationMember2022-07-310001327688us-gaap:GeneralAndAdministrativeExpenseMember2022-05-012022-07-310001327688us-gaap:CostOfSalesMember2021-02-012021-07-310001327688us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-02-012022-04-300001327688ooma:ProductAndOtherRevenueMember2021-02-012021-07-310001327688us-gaap:USTreasurySecuritiesMember2022-01-310001327688us-gaap:CustomerRelationshipsMember2022-01-310001327688us-gaap:FairValueInputsLevel2Memberus-gaap:CorporateDebtSecuritiesMember2022-07-310001327688us-gaap:CostOfSalesMember2022-02-012022-07-310001327688us-gaap:RetainedEarningsMember2022-04-300001327688ooma:GlobalTelecomCorporationMemberooma:ConvertiblePromissoryNoteMember2018-12-310001327688us-gaap:FairValueInputsLevel2Member2022-07-310001327688us-gaap:FairValueInputsLevel1Memberus-gaap:CashEquivalentsMember2022-07-3100013276882022-08-310001327688ooma:CreditAgreementMemberus-gaap:RevolvingCreditFacilityMembersrt:MinimumMemberus-gaap:EurodollarMember2021-01-082021-01-080001327688ooma:GlobalTelecomCorporationMember2022-02-012022-07-310001327688us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-01-310001327688us-gaap:CommonStockIncludingAdditionalPaidInCapitalMember2022-07-310001327688us-gaap:CommonStockIncludingAdditionalPaidInCapitalMember2021-04-300001327688srt:MinimumMemberus-gaap:TradeNamesMember2022-02-012022-07-310001327688us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-04-300001327688us-gaap:CustomerRelationshipsMemberooma:JunctionNetworksIncMember2022-07-2200013276882021-02-012021-07-310001327688us-gaap:CustomerRelationshipsMembersrt:MaximumMember2022-02-012022-07-310001327688us-gaap:RetainedEarningsMember2022-07-310001327688us-gaap:CustomerRelationshipsMember2022-07-310001327688us-gaap:CashEquivalentsMemberus-gaap:USTreasurySecuritiesMember2022-07-310001327688us-gaap:SalesRevenueNetMemberus-gaap:ProductConcentrationRiskMemberooma:OomaBusinessMember2022-02-012022-07-310001327688us-gaap:EmployeeStockMember2022-02-012022-07-310001327688us-gaap:TradeNamesMember2022-07-310001327688us-gaap:CommonStockIncludingAdditionalPaidInCapitalMember2021-05-012021-07-310001327688us-gaap:CommonStockIncludingAdditionalPaidInCapitalMember2021-07-310001327688us-gaap:CommonStockIncludingAdditionalPaidInCapitalMember2022-04-300001327688ooma:SubscriptionAndServicesRevenueMember2021-05-012021-07-310001327688us-gaap:CommercialPaperNotIncludedWithCashAndCashEquivalentsMember2022-01-310001327688us-gaap:FairValueInputsLevel1Memberus-gaap:USTreasurySecuritiesMember2022-01-310001327688us-gaap:ShortTermInvestmentsMember2022-07-310001327688ooma:JunctionNetworksIncMember2022-07-222022-07-220001327688us-gaap:FairValueInputsLevel1Member2022-07-310001327688us-gaap:CashMember2022-07-310001327688us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-05-012022-07-3100013276882022-02-012022-07-310001327688ooma:SubscriptionAndServicesRevenueMember2021-02-012021-07-3100013276882021-07-3100013276882022-04-300001327688ooma:SubscriptionAndServicesMember2022-01-310001327688us-gaap:DevelopedTechnologyRightsMember2022-07-310001327688us-gaap:RestrictedStockUnitsRSUMember2022-07-310001327688us-gaap:MoneyMarketFundsMemberus-gaap:FairValueInputsLevel1Memberus-gaap:CashEquivalentsMember2022-07-310001327688us-gaap:RestrictedStockUnitsRSUMember2022-02-012022-07-310001327688us-gaap:FairValueInputsLevel2Member2022-01-310001327688us-gaap:RetainedEarningsMember2022-05-012022-07-3100013276882019-02-012020-01-310001327688us-gaap:CommonStockIncludingAdditionalPaidInCapitalMember2021-01-310001327688us-gaap:CustomerRelationshipsMembersrt:MinimumMember2022-02-012022-07-310001327688us-gaap:SalesRevenueNetMemberooma:OomaResidentialMemberus-gaap:ProductConcentrationRiskMember2021-05-012021-07-310001327688ooma:JunctionNetworksIncMember2022-07-220001327688us-gaap:SalesRevenueNetMemberooma:OomaResidentialMemberus-gaap:ProductConcentrationRiskMember2022-02-012022-07-310001327688us-gaap:ShortTermInvestmentsMember2022-01-310001327688us-gaap:CustomerConcentrationRiskMemberooma:CustomerAMemberus-gaap:AccountsReceivableMember2021-02-012022-01-310001327688us-gaap:RestrictedStockUnitsRSUMember2022-01-310001327688us-gaap:RetainedEarningsMember2021-01-310001327688us-gaap:FairValueInputsLevel2Memberus-gaap:CommercialPaperNotIncludedWithCashAndCashEquivalentsMember2022-01-310001327688us-gaap:SellingAndMarketingExpenseMember2021-02-012021-07-310001327688ooma:JunctionNetworksIncMember2021-02-012021-07-310001327688us-gaap:CustomerRelationshipsMemberooma:JunctionNetworksIncMember2022-07-222022-07-220001327688us-gaap:CorporateDebtSecuritiesMember2022-07-310001327688ooma:JunctionNetworksIncMember2022-02-012022-07-3100013276882021-04-300001327688us-gaap:DevelopedTechnologyRightsMember2022-01-310001327688us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-07-310001327688ooma:NonCancelableServiceAgreementWithTelecommunicationsProviderMembersrt:MinimumMember2022-07-310001327688us-gaap:CommonStockIncludingAdditionalPaidInCapitalMember2022-01-310001327688us-gaap:SellingAndMarketingExpenseMember2021-05-012021-07-310001327688us-gaap:RetainedEarningsMember2021-02-012021-04-300001327688us-gaap:ResearchAndDevelopmentExpenseMember2022-02-012022-07-310001327688ooma:CreditAgreementMemberus-gaap:RevolvingCreditFacilityMember2022-02-012022-07-310001327688us-gaap:CommonStockIncludingAdditionalPaidInCapitalMember2021-02-012021-04-300001327688ooma:CreditAgreementMemberus-gaap:RevolvingCreditFacilityMembersrt:MaximumMemberus-gaap:EurodollarMember2021-01-082021-01-080001327688ooma:ProductAndOtherRevenueMember2022-05-012022-07-310001327688ooma:ProductAndOtherRevenueMember2022-02-012022-07-310001327688srt:MaximumMemberus-gaap:TradeNamesMember2022-02-012022-07-310001327688us-gaap:SalesRevenueNetMemberooma:OomaResidentialMemberus-gaap:ProductConcentrationRiskMember2022-05-012022-07-3100013276882022-05-012022-07-310001327688us-gaap:CustomerConcentrationRiskMemberooma:CustomerAMemberus-gaap:AccountsReceivableMember2022-02-012022-07-310001327688us-gaap:RetainedEarningsMember2021-07-3100013276882022-08-012022-07-310001327688us-gaap:EmployeeStockMember2021-02-012021-07-310001327688ooma:SubscriptionAndServicesRevenueMember2022-05-012022-07-310001327688us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-02-012021-04-300001327688ooma:CreditAgreementMemberus-gaap:RevolvingCreditFacilityMembersrt:MaximumMember2021-01-080001327688ooma:JunctionNetworksIncMember2022-05-012022-07-310001327688us-gaap:FairValueInputsLevel1Memberus-gaap:CashEquivalentsMemberus-gaap:USTreasurySecuritiesMember2022-07-310001327688us-gaap:SalesRevenueNetMemberooma:OomaBusinessMemberus-gaap:ProductConcentrationRiskMember2021-02-012021-07-310001327688us-gaap:MoneyMarketFundsMemberus-gaap:FairValueInputsLevel1Memberus-gaap:CashEquivalentsMember2022-01-310001327688us-gaap:SellingAndMarketingExpenseMember2022-02-012022-07-310001327688us-gaap:CommonStockIncludingAdditionalPaidInCapitalMember2022-02-012022-04-300001327688us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-04-300001327688us-gaap:SalesRevenueNetMemberus-gaap:ProductConcentrationRiskMemberooma:OomaBusinessMember2021-05-012021-07-310001327688us-gaap:USTreasurySecuritiesMember2022-07-310001327688us-gaap:FairValueInputsLevel1Memberus-gaap:USTreasurySecuritiesMember2022-07-310001327688ooma:CreditAgreementMemberus-gaap:RevolvingCreditFacilityMemberus-gaap:LetterOfCreditMember2021-01-080001327688us-gaap:EmployeeStockMember2021-07-3100013276882022-01-310001327688us-gaap:RetainedEarningsMember2022-02-012022-04-300001327688us-gaap:GeneralAndAdministrativeExpenseMember2022-02-012022-07-310001327688us-gaap:CostOfSalesMember2021-05-012021-07-3100013276882021-05-012021-07-310001327688us-gaap:EmployeeStockOptionMember2022-02-012022-07-310001327688us-gaap:FairValueInputsLevel1Memberus-gaap:CashEquivalentsMember2022-01-310001327688ooma:SubscriptionAndServicesMember2022-07-310001327688us-gaap:RetainedEarningsMember2021-04-3000013276882022-07-310001327688us-gaap:ProductMember2022-07-310001327688us-gaap:RestrictedStockUnitsRSUMember2021-02-012021-07-310001327688us-gaap:GeneralAndAdministrativeExpenseMember2021-05-012021-07-310001327688us-gaap:TradeNamesMember2022-01-310001327688us-gaap:CostOfSalesMember2022-05-012022-07-310001327688us-gaap:RetainedEarningsMember2022-01-310001327688us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-05-012021-07-310001327688us-gaap:MoneyMarketFundsMemberus-gaap:CashEquivalentsMember2022-07-310001327688us-gaap:SellingAndMarketingExpenseMember2022-05-012022-07-310001327688us-gaap:CashEquivalentsMember2022-07-310001327688us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-07-3100013276882022-02-012022-04-300001327688us-gaap:CommonStockIncludingAdditionalPaidInCapitalMember2022-05-012022-07-310001327688us-gaap:CustomerConcentrationRiskMemberus-gaap:AccountsReceivableMemberooma:CustomerBMember2021-02-012022-01-310001327688srt:MaximumMemberus-gaap:DevelopedTechnologyRightsMember2022-02-012022-07-310001327688us-gaap:GeneralAndAdministrativeExpenseMember2021-02-012021-07-310001327688us-gaap:CashEquivalentsMember2022-01-310001327688ooma:ProductAndOtherRevenueMember2021-05-012021-07-310001327688srt:MinimumMemberus-gaap:DevelopedTechnologyRightsMember2022-02-012022-07-3100013276882021-02-012021-04-300001327688us-gaap:ResearchAndDevelopmentExpenseMember2021-02-012021-07-310001327688us-gaap:ResearchAndDevelopmentExpenseMember2022-05-012022-07-310001327688us-gaap:SalesRevenueNetMemberus-gaap:ProductConcentrationRiskMemberooma:OomaBusinessMember2022-05-012022-07-310001327688ooma:SubscriptionAndServicesRevenueMember2022-02-012022-07-310001327688us-gaap:CashMember2022-01-310001327688us-gaap:EmployeeStockMember2022-07-310001327688srt:MaximumMemberus-gaap:CustomerConcentrationRiskMemberus-gaap:AccountsReceivableMemberooma:CustomerBMember2022-02-012022-07-310001327688us-gaap:ResearchAndDevelopmentExpenseMember2021-05-012021-07-310001327688ooma:CreditAgreementMemberus-gaap:RevolvingCreditFacilityMember2021-01-082021-01-080001327688us-gaap:ProductMember2022-01-310001327688us-gaap:EmployeeStockOptionMember2021-02-012021-07-310001327688us-gaap:FairValueInputsLevel1Member2022-01-310001327688ooma:CreditAgreementMemberus-gaap:RevolvingCreditFacilityMember2021-01-080001327688us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-01-310001327688us-gaap:MoneyMarketFundsMemberus-gaap:CashEquivalentsMember2022-01-310001327688ooma:JunctionNetworksIncMember2022-07-310001327688ooma:JunctionNetworksIncMember2021-05-012021-07-310001327688ooma:CreditAgreementMemberus-gaap:RevolvingCreditFacilityMember2022-07-31ooma:Countryiso4217:USDxbrli:sharesxbrli:purexbrli:sharesooma:Customerooma:Sourceiso4217:USD

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended July 31, 2022

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-37493

 

 

Ooma, Inc.

(Exact Name of Registrant as Specified in its Charter)

 

 

Delaware

06-1713274

(State or other jurisdiction

of incorporation or organization)

(I.R.S. Employer

Identification No.)

525 Almanor Avenue, Suite 200, Sunnyvale, California 94085

(Address of principal executive offices)

(650) 566-6600

(Registrant’s telephone number, including area code)

 

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol

Name of each exchange on which registered

Common Stock, par value $0.0001

OOMA

The New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large Accelerated Filer

 

 

Accelerated Filer

 

 

 

 

 

Non-Accelerated Filer

 

 

Smaller reporting company

 

 

 

 

 

 

 

 

Emerging growth company

 

 

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. Yes No

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No

As of August 31, 2022, there were 24.3 million shares of the registrant’s common stock outstanding.

 

 

 


 

TABLE OF CONTENTS

 

 

 

Page

PART I. FINANCIAL INFORMATION

 

Item 1.

Financial Statements (unaudited):

3

 

Condensed Consolidated Balance Sheets

3

 

Condensed Consolidated Statements of Operations

4

 

Condensed Consolidated Statements of Cash Flows

5

 

Condensed Consolidated Statements of Stockholders’ Equity

6

 

Notes to Condensed Consolidated Financial Statements

7

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

19

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

29

Item 4.

Controls and Procedures

29

PART II. OTHER INFORMATION

 

Item 1.

Legal Proceedings

30

Item 1A.

Risk Factors

30

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

59

Item 6.

Exhibits

59

Signatures

 

61

 

Ooma | FY2023 Form 10-Q | 2


 

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

OOMA, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited, amounts in thousands, except share and per share data)

 

 

 

July 31,
2022

 

January 31,
2022

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

16,192

 

$

19,667

Short-term investments

 

 

6,277

 

 

11,613

Accounts receivable, net

 

 

6,592

 

 

7,310

Inventories

 

 

21,075

 

 

13,841

Other current assets

 

 

14,968

 

 

13,598

Total current assets

 

 

65,104

 

 

66,029

Property and equipment, net

 

 

7,698

 

 

6,481

Operating lease right-of-use assets

 

 

14,663

 

 

14,396

Intangible assets, net

 

 

11,690

 

 

4,208

Goodwill

 

 

8,695

 

 

4,264

Other assets

 

 

15,132

 

 

13,875

Total assets

 

$

122,982

 

$

109,253

 

 

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

12,968

 

$

7,507

Accrued expenses and other current liabilities

 

 

22,904

 

 

22,823

Deferred revenue

 

 

17,686

 

 

16,600

Total current liabilities

 

 

53,558

 

 

46,930

Long-term operating lease liabilities

 

 

11,076

 

 

11,194

Other long-term liabilities

 

 

48

 

 

73

Total liabilities

 

 

64,682

 

 

58,197

Commitments and contingencies (Note 11)

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

Common stock

 

 

5

 

 

4

Additional paid-in capital

 

 

187,571

 

 

179,860

Accumulated other comprehensive loss

 

 

(60)

 

 

(20)

Accumulated deficit

 

 

(129,216)

 

 

(128,788)

Total stockholders’ equity

 

 

58,300

 

 

51,056

Total liabilities and stockholders’ equity

 

$

122,982

 

$

109,253

 

See notes to condensed consolidated financial statements

 

Ooma | FY2023 Form 10-Q | 3


 

OOMA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited, amounts in thousands, except share and per share data)

 

 

 

Three Months Ended

 

Six Months Ended

 

 

 

July 31,
2022

 

July 31,
2021

 

July 31,
2022

 

July 31,
2021

Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

Subscription and services

 

$

47,995

 

$

43,537

 

$

94,718

 

$

85,502

Product and other

 

 

4,658

 

 

3,520

 

 

8,272

 

 

7,127

Total revenue

 

 

52,653

 

 

47,057

 

 

102,990

 

 

92,629

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of revenue:

 

 

 

 

 

 

 

 

 

 

 

 

Subscription and services

 

 

12,675

 

 

12,326

 

 

25,884

 

 

24,665

Product and other

 

 

6,161

 

 

5,428

 

 

11,337

 

 

10,579

Total cost of revenue

 

 

18,836

 

 

17,754

 

 

37,221

 

 

35,244

Gross profit

 

 

33,817

 

 

29,303

 

 

65,769

 

 

57,385

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Sales and marketing

 

 

17,432

 

 

14,331

 

 

33,583

 

 

28,347

Research and development

 

 

11,119

 

 

9,416

 

 

21,617

 

 

18,723

General and administrative

 

 

6,912

 

 

6,014

 

 

12,974

 

 

11,739

Total operating expenses

 

 

35,463

 

 

29,761

 

 

68,174

 

 

58,809

Loss from operations

 

 

(1,646)

 

 

(458)

 

 

(2,405)

 

 

(1,424)

Interest and other income, net

 

 

17

 

 

19

 

 

50

 

 

98

Loss before income taxes

 

 

(1,629)

 

 

(439)

 

 

(2,355)

 

 

(1,326)

Income tax benefit

 

 

1,967

 

 

 

 

1,927

 

 

Net income (loss)

 

$

338

 

$

(439)

 

$

(428)

 

$

(1,326)

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) per share of common stock:

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted

 

$

0.01

 

$

(0.02)

 

$

(0.02)

 

$

(0.06)

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average shares of common stock outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

24,388,275

 

 

23,359,715

 

 

24,254,465

 

 

23,209,151

Diluted

 

 

24,873,764

 

 

23,359,715

 

 

24,254,465

 

 

23,209,151

 

 

 

See notes to condensed consolidated financial statements

 

Ooma | FY2023 Form 10-Q | 4


 

OOMA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited, amounts in thousands)

 

 

 

Six Months Ended

 

 

July 31,
2022

 

 

July 31,
2021

Cash flows from operating activities:

 

 

 

 

 

 

Net loss

 

$

(428)

 

$

(1,326)

Adjustments to reconcile net loss to net cash provided by operating activities:

 

 

 

 

 

 

Stock-based compensation expense

 

 

6,842

 

 

6,515

Depreciation and amortization of capital expenditures

 

 

1,739

 

 

1,548

Amortization of intangible assets

 

 

698

 

 

652

Amortization of operating lease right-of-use assets

 

 

1,449

 

 

1,531

Deferred income tax benefit

 

 

(2,043)

 

 

                      —

Other

 

 

26

 

 

24

Changes in operating assets and liabilities:

 

 

 

 

 

 

Accounts receivable, net

 

 

973

 

 

400

Inventories and deferred inventory costs

 

 

(7,158)

 

 

(1,600)

Prepaid expenses and other assets

 

 

(2,326)

 

 

(3,007)

Accounts payable, accrued expenses and other liabilities

 

 

2,690

 

 

(2,127)

Deferred revenue

 

 

520

 

 

384

Net cash provided by operating activities

 

 

2,982

 

 

2,994

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

Proceeds from maturities and sales of short-term investments

 

 

9,125

 

 

9,900

Purchases of short-term investments

 

 

(3,869)

 

 

(8,859)

Capital expenditures

 

 

(2,812)

 

 

(1,742)

Business acquisition

 

 

(9,771)

 

 

                      —

Net cash used in investing activities

 

 

(7,327)

 

 

(701)

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

Proceeds from issuance of common stock

 

 

1,554

 

 

1,621

Shares repurchased for tax withholdings on vesting of restricted stock units ("RSU")

 

 

(684)

 

 

(1,145)

Net cash provided by financing activities

 

 

870

 

 

476

Net (decrease) increase in cash and cash equivalents

 

 

(3,475)

 

 

2,769

Cash and cash equivalents at beginning of period

 

 

19,667

 

 

17,298

Cash and cash equivalents at end of period

 

$

16,192

 

$

20,067

 

 

See notes to condensed consolidated financial statements

 

Ooma | FY2023 Form 10-Q | 5


 

OOMA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited, amounts in thousands)

 

 

 

Common stock

 

 

 

 

Accumulated

 

Stockholders'

Fiscal 2023

 

and APIC (1)

 

AOCL (2)

 

Deficit

 

Equity

BALANCE - February 1, 2022

 

$

179,864

 

$

(20)

 

$

(128,788)

 

$

51,056

Issuance of common stock under equity-based plans

 

 

1,554

 

 

 

 

 

 

1,554

Shares repurchased for tax withholdings on RSU vesting

 

 

(348)

 

 

 

 

 

 

(348)

Stock-based compensation

 

 

3,337

 

 

 

 

 

 

3,337

Changes in other comprehensive loss

 

 

 

 

(39)

 

 

 

 

(39)

Net loss

 

 

 

 

 

 

(766)

 

 

(766)

BALANCE - April 30, 2022

 

$

184,407

 

$

(59)

 

$

(129,554)

 

$

54,794

Shares repurchased for tax withholdings on RSU vesting

 

 

(336)

 

 

 

 

 

 

(336)

Stock-based compensation

 

 

3,505

 

 

 

 

 

 

3,505

Changes in other comprehensive loss

 

 

 

 

(1)

 

 

 

 

(1)

Net income

 

 

 

 

 

 

338

 

 

338

BALANCE - July 31, 2022

 

$

187,576

 

$

(60)

 

$

(129,216)

 

$

58,300

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock

 

 

 

 

Accumulated

 

Stockholders'

Fiscal 2022

 

and APIC

 

AOCI

 

Deficit

 

Equity

BALANCE - February 1, 2021

 

$

166,581

 

$

7

 

$

(127,037)

 

$

39,551

Issuance of common stock under equity-based plans

 

 

1,469

 

 

 

 

 

 

1,469

Shares repurchased for tax withholdings on RSU vesting

 

 

(485)

 

 

 

 

 

 

(485)

Stock-based compensation

 

 

3,194

 

 

 

 

 

 

3,194

Changes in other comprehensive income

 

 

 

 

(4)

 

 

 

 

(4)

Net loss

 

 

 

 

 

 

(887)

 

 

(887)

BALANCE - April 30, 2021

 

$

170,759

 

$

3

 

$

(127,924)

 

$

42,838

Issuance of common stock under equity-based plans

 

 

152

 

 

 

 

 

 

152

Shares repurchased for tax withholdings on RSU vesting

 

 

(660)

 

 

 

 

 

 

(660)

Stock-based compensation

 

 

3,321

 

 

 

 

 

 

3,321

Changes in other comprehensive income

 

 

 

 

(2)

 

 

 

 

(2)

Net loss

 

 

 

 

 

 

(439)

 

 

(439)

BALANCE - July 31, 2021

 

$

173,572

 

$

1

 

$

(128,363)

 

$

45,210

(1) Additional paid-in capital

(2) Accumulated other comprehensive (loss) income

See notes to condensed consolidated financial statements

Ooma | FY2023 Form 10-Q | 6


Ooma, Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

 

Note 1: Overview

Ooma, Inc. and its wholly-owned subsidiaries (collectively, “Ooma” or the “Company”) provides leading communications services and related technologies for businesses and consumers, delivered from its smart software-as-a-service (“SaaS”) and unified communications platforms. The Company is headquartered in Sunnyvale, California.

On July 22, 2022, the Company completed the acquisition of Junction Networks, Inc., which does business as OnSIP, a provider of cloud-based phone and unified communications services for small and mid-size businesses. See Note 13: Business Acquisition.

Fiscal Year. The Company’s fiscal year ends on January 31. References to fiscal 2023 and fiscal 2022 refer to the fiscal year ending January 31, 2023 and the fiscal year ended January 31, 2022, respectively.

Basis of Presentation. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. The condensed consolidated balance sheet as of January 31, 2022 included herein was derived from the audited financial statements as of that date, but does not include all the disclosures required by GAAP. Therefore, the information included in this Quarterly Report on Form 10-Q should be read in conjunction with the audited consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended January 31, 2022 filed with the SEC on April 8, 2022 (“Annual Report”).

The accompanying condensed consolidated financial statements reflect all normal recurring adjustments that management believes are necessary for a fair presentation of the interim periods presented. The results for the three and six months ended July 31, 2022 are not necessarily indicative of the results to be expected for any subsequent quarter or for the fiscal year ending January 31, 2023.

Principles of Consolidation. The condensed consolidated financial statements include the accounts of Ooma, Inc. and its wholly-owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation.

Comprehensive Income (Loss). For all periods presented, comprehensive income (loss) approximated net income (loss) in the condensed consolidated statements of operations and differences were not material. Therefore, the condensed consolidated statements of comprehensive income (loss) have been omitted.

Use of Estimates. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the Company’s condensed consolidated financial statements and notes thereto. Significant estimates include, but are not limited to, those related to revenue recognition, inventory valuation, deferred sales commissions, valuation of goodwill and intangible assets, operating lease assets and liabilities, regulatory fees and indirect tax accruals, loss contingencies, stock-based compensation and income taxes (including valuation allowances). The Company bases its estimates and assumptions on historical experience, where applicable, and other factors that it believes to be reasonable under the circumstances. These estimates are based on information available as of the date of the consolidated financial statements, and assumptions are inherently subjective in nature. Therefore, actual results could differ from management’s estimates.

Ooma | FY2023 Form 10-Q | 7


Ooma, Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

 

Significant Accounting Policies. Except for the addition of business combinations below, there have been no material changes to the Company’s significant accounting policies from those disclosed in the Annual Report.

Business Combinations. The Company accounts for its business combinations using the acquisition method of accounting. The purchase consideration is allocated to the assets acquired and liabilities assumed from the acquiree based on their respective fair values as of the acquisition date. The excess of the fair value of purchase consideration over the fair value of these assets acquired and liabilities assumed is recorded as goodwill. Management is required to make significant estimates and assumptions in determining fair values, especially with respect to intangible assets. Significant judgments and estimates in valuing intangible assets include, but are not limited to, the selection of valuation methodologies, expected future revenue and cash flows, expected customer attrition rates from acquired customers, future changes in technology, and discount rates. Fair value estimates are based on the assumptions that management believes a market participant would use in pricing the asset or liability. These estimates are inherently uncertain and, therefore, actual results may differ from the estimates made. As a result, during the measurement period of up to one year from the acquisition date, the Company may record adjustments to the assets acquired and liabilities assumed with the corresponding offset to goodwill as information on the facts and circumstances that existed as of the acquisition date becomes available. Upon the conclusion of the measurement period or final determination of the fair value of the purchase price of an acquisition, whichever comes first, any subsequent adjustments are recorded in the consolidated statements of operations.

 

Ooma | FY2023 Form 10-Q | 8


Ooma, Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

 

Note 2: Revenue and Deferred Revenue

The Company derives its revenue from two sources:

Subscription and Services Revenue is derived primarily from recurring subscription fees related to service plans such as Ooma Business, Ooma Residential and other communications services. Service plans are generally sold as monthly subscriptions; however, certain plans are also offered as annual and multi-year subscriptions, typically ranging up to three years. Subscription revenue is generally recognized ratably over the contractual service term.

Product and Other Revenue is generated primarily from the sale of on-premise appliances and end-point devices, including shipping and handling fees for direct customers. The Company recognizes product and other revenue from sales to direct end-customers and channel partners at the point-in-time that control transfers, which is typically when it delivers the product.

Revenue disaggregated by revenue source consisted of the following (in thousands):

 

 

Three Months Ended

 

Six Months Ended

 

 

July 31,
2022

 

 

July 31,
2021

 

July 31,
2022

 

July 31,
2021

Subscription and services revenue

 

$

47,995

 

$

43,537

 

$

94,718

 

$

85,502

Product and other revenue

 

 

4,658

 

 

3,520

 

 

8,272

 

 

7,127

Total revenue

 

$

52,653

 

$

47,057

 

$

102,990

 

$

92,629

The Company derived approximately 50% and 48% of its total revenue from Ooma Business and approximately 47% and 50% from Ooma Residential for the three months ended July 31, 2022 and 2021, respectively. The Company derived approximately 50% and 47% of its total revenue from Ooma Business and approximately 47% and 50% from Ooma Residential for the six months ended July 31, 2022 and 2021, respectively. No individual country outside of the United States, and no single customer, represented 10% or more of total revenue for the periods presented.

Customers who represented 10% or more of net accounts receivable were as follows:

 

 

 

 

 

As of

 

 

 

 

 

July 31,
2022

 

 

January 31,
2022

Customer A

 

 

 

 

16%

 

 

19%

Customer B

 

 

 

 

*

 

 

11%

* Less than 10% of net accounts receivable for the period indicated.

Deferred Revenue primarily consists of billings or payments received in advance of meeting revenue recognition criteria. Deferred services revenue is recognized on a ratable basis over the term of the contract as the services are provided.

 

 

 

 

As of

 

 

 

 

July 31,
2022

 

January 31,
2022

Subscription and services

 

 

 

$

17,671

 

$

16,614

Product and other

 

 

 

 

63

 

 

59

Total deferred revenue

 

 

 

$

17,734

 

 

16,673

Less: current deferred revenue

 

 

 

 

17,686

 

 

16,600

Non-current deferred revenue included in other long-term liabilities

 

 

 

$

48

 

$

73

During the three and six months ended July 31, 2022, the Company recognized revenue of approximately $3.0 million and $13.0 million, respectively, pertaining to amounts deferred as of January 31, 2022. As of July 31, 2022, deferred revenue was primarily composed of subscription contracts invoiced during the first half of fiscal 2023, as well as amounts recorded during fiscal 2022 for annual contracts.

Remaining Performance Obligations. As of July 31, 2022, contract revenue that had not yet been recognized for open contracts with an original expected length of greater than one year was approximately $10.5 million. The Company expects to recognize revenue on approximately 52% of this amount over the next 12 months, with the balance to be recognized thereafter.

Ooma | FY2023 Form 10-Q | 9


Ooma, Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

 

Note 3: Fair Value Measurements

The Company estimates and categorizes fair value by applying the following hierarchy:

Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets.

Level 2: Observable prices based on inputs not quoted in active markets, but are corroborated by market data.

Level 3: Unobservable inputs that are supported by little or no market activity.

Financial assets measured at fair value on a recurring basis by level were as follows (in thousands):

 

 

 

Balance as of July 31, 2022

 

 

Level 1

 

Level 2

 

Total

Cash and cash equivalents:

 

 

 

 

 

 

 

 

 

Money market funds

 

$

6,609

 

$

 

$

6,609

U.S. treasury securities

 

 

1,001

 

 

 

 

1,001

Total cash equivalents

 

$

7,610

 

$

 

 

7,610

Cash

 

 

 

 

 

 

 

 

8,582

Total cash and cash equivalents

 

 

 

 

$

16,192

 

 

 

 

 

 

 

 

 

 

Short-term investments:

 

 

 

 

 

 

 

 

 

U.S. treasury securities

 

$

2,462

 

$

 

$

2,462

Corporate debt securities

 

 

 

 

3,815

 

 

3,815

Total short-term investments

 

$

2,462

 

$

3,815

 

$

6,277

 

 

 

 

 

 

 

 

 

 

 

 

Balance as of January 31, 2022

 

 

Level 1

 

 

Level 2

 

 

Total

Cash and cash equivalents:

 

 

 

 

 

 

 

 

 

Money market funds

 

$

2,275

 

$

 

$

2,275

Total cash equivalents

 

$

2,275

 

$

 

 

2,275

Cash

 

 

 

 

 

 

 

 

17,392

Total cash and cash equivalents

 

 

 

 

$

19,667

 

 

 

 

 

 

 

 

 

 

Short-term investments:

 

 

 

 

 

 

 

 

 

U.S. treasury securities

 

$

7,065

 

$

 

$

7,065

Commercial paper

 

 

 

 

4,548

 

 

4,548

Total short-term investments

 

$

7,065

 

$

4,548

 

$

11,613

The Company classifies its cash equivalents and short-term investments within Level 1 or Level 2 because it uses quoted market prices or alternative pricing sources and models utilizing market observable inputs to determine their fair value. The Company has no Level 3 assets or liabilities. For the periods presented, the amortized cost of cash equivalents and marketable securities approximated their fair value and there were no material realized or unrealized gains or losses, either individually or in the aggregate.

Contractual maturities of short-term investments were as follows (in thousands):

 

 

 

 

 

As of

 

 

 

 

 

 

July 31,
2022

 

January 31,
2022

Due in one year or less

 

 

 

 

$

5,793

 

$

10,377

Due after one year to two years

 

 

 

 

 

484

 

 

1,236

Total

 

 

 

 

$

6,277

 

$

11,613

 

Ooma | FY2023 Form 10-Q | 10


Ooma, Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

 

Note 4: Balance Sheet Components

The following sections and tables provide details of selected balance sheet items (in thousands):

Inventories

 

 

 

 

As of

 

 

 

 

July 31,
2022

 

January 31,
2022

Finished goods

 

 

 

$

12,196

 

$

10,452

Raw materials

 

 

 

 

8,879

 

 

3,389

Total inventory

 

 

 

$

21,075

 

$

13,841

Other current and non-current assets

 

 

 

 

As of

 

 

 

 

July 31,
2022

 

January 31,
2022

Deferred sales commissions, current

 

 

 

$

7,036

 

$

6,395

Inventory prepayments

 

 

 

 

2,516

 

 

1,462

Convertible note receivable (see "GTC" below)

 

 

 

 

1,865

 

 

1,773

Prepaid expenses and other

 

 

 

 

3,551

 

 

3,968

Total other current assets

 

 

 

$

14,968

 

$

13,598

 

 

 

 

 

 

 

 

 

Deferred sales commissions, non-current

 

 

 

$

13,396

 

$

13,228

Other assets

 

 

 

 

1,736

 

 

647

Total other non-current assets

 

 

 

$

15,132

 

$

13,875

 

Customer Acquisition Costs. Amortization expense for deferred sales commissions was $1.8 million and $1.4 million for the three months ended July 31, 2022 and 2021, respectively, and $3.6 million and $2.8 million for the six months ended July 31, 2022 and 2021, respectively. There was no impairment in relation to the costs capitalized for the periods presented.

Global Telecom Corporation (“GTC”). In December 2018, the Company invested $1.3 million in cash in GTC, a privately-held technology company, in exchange for a convertible promissory note that will convert to shares of GTC stock upon the occurrence of certain future events. As amended, the promissory note and accrued interest is due and payable upon the Company’s demand at any time after September 30, 2022. GTC is a variable interest entity for accounting purposes and the Company does not consolidate GTC into its financial statements because the Company is not the primary beneficiary. As of July 31, 2022, the Company’s maximum exposure to loss is equal to the carrying value of the convertible note receivable of $1.9 million, including accrued interest. During the six months ended July 31, 2022, the Company made total payments to GTC of approximately $2.3 million for inventory purchases and related shipping costs. As of July 31, 2022, the Company did not have any non-cancelable inventory purchase commitments to GTC.

Accrued expenses and other current liabilities

 

 

 

 

As of

 

 

 

 

July 31,
2022

 

January 31,
2022

Payroll and related expenses

 

 

 

$

8,907

 

$

10,853

Regulatory fees and taxes

 

 

 

 

3,991

 

 

3,933

Short-term operating lease liabilities

 

 

 

 

3,711

 

 

3,260

Customer-related liabilities

 

 

 

 

1,457

 

 

1,587

Other

 

 

 

 

4,838

 

 

3,190

Total accrued expenses and other current liabilities

 

 

 

$

22,904

 

$

22,823

 

 

Ooma | FY2023 Form 10-Q | 11


Ooma, Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

 

Note 5: Acquired Intangible Assets and Goodwill

 

For the three and six months ended July 31, 2022, the Company recognized intangibles of $8.2 million and goodwill of $4.4 million in connection with a business acquisition completed in July 2022. See Note 13: Business Acquisition. The carrying amount of goodwill was $8.7 million and $4.3 million as of July 31, 2022 and January 31, 2022, respectively.

The gross value, accumulated amortization and carrying values of intangible assets were as follows (in thousands):

 

 

 

 

 

As of July 31, 2022

 

As of January 31, 2022

 

 

Estimated life
(in years)

 

Gross
Value

 

Accumulated Amortization

 

Carrying
Value

 

Gross
Value

 

Accumulated Amortization

 

Carrying
Value

Customer relationships

 

 

5-7

 

$

14,395

 

$

(3,467)

 

$

10,928

 

$

6,735

 

$

(2,921)

 

$

3,814

Developed technology

 

 

2-5

 

 

2,209

 

 

(1,688)

 

 

521

 

 

1,809

 

 

(1,584)

 

 

225

Trade names

 

 

2-5

 

 

684

 

 

(443)

 

 

241

 

 

564

 

 

(395)

 

 

169

Total intangible assets

 

 

 

 

$

17,288

 

$

(5,598)

 

$

11,690

 

$

9,108

 

$

(4,900)

 

$

4,208

Amortization expense for acquired intangible assets was $0.4 million and $0.3 million for the three months ended July 31, 2022 and 2021, respectively, and $0.7 million for each of the six months ended July 31, 2022 and 2021.

At July 31, 2022, the estimated future amortization expense for intangible assets is as follows (in thousands):

Fiscal Years Ending January 31,

 

 

 

 

Total

2023 remainder

 

 

 

 

$

1,548

2024

 

 

 

 

 

2,732

2025

 

 

 

 

 

2,507

2026

 

 

 

 

 

2,365

2027

 

 

 

 

 

1,810

Thereafter

 

 

 

 

 

728

Total

 

 

 

 

$

11,690

 

 

Ooma | FY2023 Form 10-Q | 12


Ooma, Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

 

Note 6: Operating Leases

The Company leases its headquarters located in Sunnyvale, California, as well as office and data center space in various locations under non-cancelable operating lease agreements.

Supplemental balance sheet information related to leases was as follows (in thousands):

 

 

 

 

 

 

 

 

 

As of

 

 

 

 

 

 

 

 

July 31,
2022

 

January 31,
2022

Assets

 

 

 

 

 

 

 

 

 

 

 

 

Operating lease right-of-use assets

 

 

 

 

 

 

 

$

14,663

 

$

14,396

Total leased assets

 

 

 

 

 

 

 

$

14,663

 

$

14,396

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Short-term operating lease liabilities

 

 

 

 

 

 

 

$

3,711

 

$

3,260

Long-term operating lease liabilities