Ooma Still Sees Opportunity With T-Mobile Despite Drop in Q2 Users

Cloud-based voice and collaboration platform company Ooma sees “a lot of opportunity with T-Mobile,” despite a drop in user count in fiscal Q2 ended July 31, said CEO Eric Stang on a Thursday earnings call. Initiatives planned for Q2 “didn’t really take hold, and we’re now looking at Q3” for some of the initiatives to happen, he said.

“We did decline marginally in the number of users we have on the residential platform -- not a lot, but a little bit,” Stang said, saying that’s something “we would like to turn around.” In the fiscal quarter ended July 31, the wireless carrier began messaging in stores about Ooma’s Telo voice-over-IP offering with its home internet, Stang said, calling that “a step forward.” Currently, most Ooma sales via T-Mobile are coming from website visits, home internet purchases or research on the website, he said: “There are other channels with them that could do more.”

The companies are discussing “other things,” said Stang, and “we’ll see how those things transpire.” There was nothing to announce Thursday, but Ooma is “hopeful that we'll have more to say about things we're doing with T-Mobile as we go forward.”

Ooma’s Telo 4G product reached its end of life in the quarter and had to be replaced, Stang said, and that affected Q2 sales through T-Mobile. Ooma replaced the device with Telo LTE, which has a dongle adapter for the LTE connection. Though the residential business is “strong and very stable and growing at the revenue line,” he said, Ooma isn’t focusing on “inorganic growth” in the home segment, he said.

Stang “would never say never for the right opportunity” in residential, but “we're about making money here, and it's a business we know very, very well.” Though it “wouldn't be a bad thing to do something there,” the company is focusing “resources and effort” on the business segment, he said. “It's much more likely that if we do more inorganic growth, it would come on the business side.”

Ooma’s residential business grew 3% year on year, Stang said. Total revenue grew 12% year on year to $52.7 million, driven by Ooma Business, which generated 51% of subscription and services revenue, up from 48% in the year-ago quarter, said Chief Financial Officer Shig Hamamatsu. Product and other revenue was $4.7 million, up from $3.5 million, primarily on accessory sales, Hamamatsu said.

Ooma announced Thursday it bought Junction Networks, which does business as OnSIP, for about $9.75 million in cash on July 22. OnSIP provides unified communications as a service for small- and medium-size businesses and brings Ooma a customer base of about 50,000.