Executive Summary
Ooma reported Q1 FY2026 revenue of $65.0 million, up 4% year over year, with non-GAAP net income of $5.6 million and adjusted EBITDA of $6.7 million, surpassing the high end of guidance. The quarterly performance reflects solid progress across Ooma’s four market segments, highlighted by Airdial momentum and expanding Enterprise and Office deployments, even as a scheduled rightsizing episode with Regus moderated near-term growth. Management emphasized that the Airdial resale program with Comcast launched on schedule and that Marriott properties are now in a sales pipeline exceeding 100 properties, signaling meaningful ramp potential in hospitality and POTS replacement offerings.
Key profitability dynamics improved modestly versus the prior year: total gross margin remained 63% with subscription gross margin at 72%, while product and other gross margins improved to negative 41% from negative 67% a year earlier — a reflection of previously embedded pandemic-related cost components that have since been largely absorbed. Operating expenses were contained, with R&D at 17% of revenue, and S&M at 28% of revenue. Net income declined on a GAAP basis but the company remains focused on high-ROI investments in Airdial, 2600 Hertz, and ongoing Office/Enterprise enhancements to accelerate profitable growth.
The management outlook balances continued near-term profitability with growth investments. For Q2, revenue is guided to $65.5–$66.1 million, with non-GAAP net income of $5.6–$5.9 million and non-GAAP diluted EPS of $0.20–$0.21. Full-year FY2026 targets imply roughly $267–270 million in revenue, low-to-mid single-digit subscription revenue growth alongside a modest decline in residential revenue, and annual non-GAAP net income of $22.5–$23.5 million, with adjusted EBITDA of $28–$29 million and EPS of roughly $0.79–$0.83. Tariff impact is expected to be about $0.5 million in FY2026. Investors should monitor Airdial adoption cadence (especially large carrier engagements), Marriott hospitality momentum, and the integration trajectory of 2600 Hertz as potential accelerants to revenue and margin expansion.
Key Performance Indicators
Key Insights
Revenue: $65.0M in Q1 2026, YoY +4.0%, QoQ -0.1%; Gross margin: 63.0% total; Subscription and services gross margin: 72.0%; Product and other gross margin: -41.0% (improved from -67.0% YoY); Operating income: -$0.057M; EBITDA: $3.085M; EBITDA margin: 4.75%; Net income (GAAP): -$0.141M; EPS (GAAP): -$0.01; Non-GAAP net income: $5.6M; Non-GAAP diluted EPS: $0.20; Weighted average diluted shares: 27.445M; D&A: $3.142M.
Cash flow: Net cash provided by operating activities $3.703M; Free cash flow...
Financial Highlights
Revenue: $65.0M in Q1 2026, YoY +4.0%, QoQ -0.1%; Gross margin: 63.0% total; Subscription and services gross margin: 72.0%; Product and other gross margin: -41.0% (improved from -67.0% YoY); Operating income: -$0.057M; EBITDA: $3.085M; EBITDA margin: 4.75%; Net income (GAAP): -$0.141M; EPS (GAAP): -$0.01; Non-GAAP net income: $5.6M; Non-GAAP diluted EPS: $0.20; Weighted average diluted shares: 27.445M; D&A: $3.142M.
Cash flow: Net cash provided by operating activities $3.703M; Free cash flow $2.480M; Operating cash flow (TTM): $26.7M; Free cash flow (TTM): $20.5M; Capex: -$1.223M; Net change in cash: +$1.118M; Cash and cash equivalents: $18.988M; Total debt: $15.604M; Net debt: $(3.384)M (net cash).
Key operating metrics: End of Q1 core users 1.225M; Business users 499k (41% of total); ARPU $15.37 (YoY +4%); 61% of new Ooma Office users on premium tiers; Annual Exit Recurring Revenue (ARR) $234M (YoY +33%); Net dollar subscription retention 99% (vs 98% in Q4); Subscription revenue $60.3M (YoY +6%); Total subscription mix 93% of revenue; Marriott pipeline >100 properties; Ooma Office premium adoption with large enterprise traction.
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
65.03M |
4.05% |
-0.10% |
| Gross Profit |
40.21M |
9.77% |
0.69% |
| Operating Income |
-57.00K |
97.19% |
82.24% |
| Net Income |
-141.00K |
93.41% |
45.98% |
| EPS |
-0.01 |
87.75% |
-4.17% |
Management Commentary
Management commentary during the Q1 FY2026 earnings call highlighted several themes:
- Strategy and market position: Eric Stang emphasized leadership across four market segments (cloud UCaaS for SMBs, POTS replacement, wholesale platform services, and residential telephony) and noted that Airdial momentum is a primary growth driver this year. He cited Comcast as a pivotal reseller partner for Airdial that launched on schedule, with additional large-scale opportunities in the pipeline.
- Airdial and partnerships: Stang announced over 30 Airdial reseller partners in Q1 (a quarterly high) and highlighted Marriott certification with >100 properties in the sales pipeline, signaling strong hospitality upside. The CPaaS angle (via 2600 Hertz) and diversification away from reliance on any single customer were underscored as durable competitive advantages.
- Customer dynamics and churn: CFO Shig Hamamatsu explained that NRR rose to 99% in the quarter largely due to non-Regus subscription revenue improvements, offsetting Regus-related churn. He suggested the firm should maintain ~99% NRR as the Regus churn effect normalizes.
- Margin and profitability: The company reiterated a near-term stable gross margin profile—subscription gross margin at 72% and total gross margin at 63%—while investment in Airdial, 2600 Hertz, and Office/Enterprise features supports longer-term margin expansion. Opex discipline remains a priority, with R&D at 17% of revenue and S&M at 28% of revenue; management indicated a goal of modestly improving R&D efficiency over time.
- Outlook and cadence: Management reaffirmed FY2026 revenue guidance and highlighted Tariff headwinds as a modest drag (~$0.5M) on earnings. They expect Q2 revenue of $65.5–$66.1M and FY2026 revenue of $267–270M, with non-GAAP net income of $22.5–$23.5M and non-GAAP EPS of $0.79–$0.83. The cadence of new Airdial wins and 2600 Hertz onboarding remains a key driver of the trajectory.
"We achieved $65 million of revenue, $5.6 million of non-GAAP net income, and $6.7 million of adjusted EBITDA. Revenue growth was 4% year over year, which was near the high end of our guidance range, and we made particularly great progress on Airdial in Q1."
— Eric Stang
"The retention rate improvement was largely due to the improvement in non-Regus subscription revenue. So we are talking about traditional UCaaS solutions offerings and the residential solutions. In Q1, we saw the improvement in the retention rate for the other businesses, which offset the anticipated decline that came through for Regus. So that is really what happened. And overall, I think we should be remaining at 99%, which we have been at prior to Regus churn that we experienced in the last couple of quarters."
— Shig Hamamatsu
Forward Guidance
Management’s guidance for FY2026 is conservative yet constructive, anchored by continued Airdial adoption and 2600 Hertz ramp and a healthy UCaaS market. Key assumptions include: total revenue of $267–$270M, with subscription revenue growing 5–6% and residential revenue declining 1–2%; subscription mix at 91–92% of total revenue; non-GAAP net income of $22.5–$23.5M and non-GAAP diluted EPS of $0.79–$0.83; adjusted EBITDA of $28–$29M. Tariffs are estimated to reduce earnings by approximately $0.5M in FY2026. The outlook hinges on several factors: (1) the pull-through and ramp of Airdial with Comcast and other partners, (2) Marriott/hotel vertical adoption, (3) multi-quarter sales cycles for carrier-scale deals via 2600 Hertz, and (4) the company’s ability to execute on cost controls and R&D efficiency.
Investment implications: If Airdial accelerates meaningfully and Enterprise/Office monetization scales with larger customer deployments (as early 600-user Office references suggest), Ooma could trend toward mid-to-high single-digit revenue growth with a higher EBITDA margin profile over the next 2–3 years. Investors should monitor: (a) the pace of Airdial adoption in large enterprise and carrier channels, (b) progression of 2600 Hertz integrations and customer wins, (c) stability/sustainability of the 99% NRR, and (d) gross margin progression as subscription mix remains elevated and product costs normalize post-pandemic cost absorption.