10q10k10q10k.net

What changed in OOMA INC's 10-K — 2024 vs 2025

vs

Paragraph-level year-over-year comparison of OOMA INC's 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+414 added−400 removedSource: 10-K (2025-04-01) vs 10-K (2024-04-02)

Top changes in OOMA INC's 2025 10-K

414 paragraphs added · 400 removed · 342 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

179 edited+27 added−27 removed409 unchanged
Biggest changeThis summary should be read together with the more detailed description of each risk factor contained in the subheadings further below and should not be relied upon as an exhaustive summary of the material risks facing our business: Risks Related to Our Business and Industry • If we are unable to attract new users in a cost-effective manner, our business will be materially and adversely affected. • Our customers may terminate their subscriptions for our services in most cases without penalty, and increased customer turnover, as well as costs we incur to retain our customers and induce them to add users and/or functionality could materially and adversely affect our financial performance. • A significant portion of our revenues today come from small and medium-sized businesses, which may have fewer financial resources to weather an economic downturn, rising inflation, and defaults by financial institutions. • If we are unable to develop, acquire and/or sell new, or enhance existing, products, services or applications on a timely and cost-effective basis, our business, financial condition, and results of operations may be materially and adversely affected. • We may expand through acquisitions of, or investments in, other companies, each of which may divert our management’s attention, result in additional dilution to our stockholders, increase expenses, disrupt our operations and harm our results of operations. • We depend on several sole suppliers to provide the components for, and a small number of vendors to manufacture, certain on-premise devices and end-point devices we sell, and any delay or interruption in manufacturing, configuring and delivering by these third parties would result in delayed or reduced shipments to our customers and may increase our costs and harm our business and results of operations. • A ransomware attack or other security breach could delay or interrupt service to our customers, compromise the integrity of our systems or data that we collect, result in the loss of our intellectual property or confidential information, harm our reputation, or subject us to significant liability. • We rely significantly on retailers and reseller partnerships to sell our products; our failure to effectively develop, manage and maintain these sales channels could materially and adversely affect our revenue and business. • We face competition in our markets by our competitors (including mergers or other strategic transactions involving our competitors) and may lack sufficient financial or other resources to compete successfully. • We are continuing to expand our international operations, which may expose us to significant risks. • To deliver our services, we rely on third parties for our network connectivity and co‑location facilities for certain features in our services and for certain elements of providing our services. • Interruptions in our services could harm our reputation, result in significant costs to us and impair our ability to sell our services. • We rely on third parties, including third parties located in Russia, for some of our software development, quality assurance and operations, and anticipate we will continue to do so for the foreseeable future. • We rely on third parties to provide the majority of our customer service and support representatives.
Biggest changeThis summary should be read together with the more detailed description of each risk factor contained in the subheadings further below and should not be relied upon as an exhaustive summary of the material risks facing our business: Risks Related to Our Business and Industry • If we are unable to attract new users in a cost-effective manner, our business will be materially and adversely affected. • Our customers may terminate their subscriptions for our services in most cases without penalty, and increased customer turnover, as well as costs we incur to retain our customers and induce them to add users and/or functionality could materially and adversely affect our financial performance. • Interruptions in our software or services could harm our reputation, result in significant costs to us and impair our ability to sell our services. • A significant portion of our revenues today come from small and medium-sized businesses, which may have fewer financial resources to weather an economic downturn, rising inflation, and defaults by financial institutions. • If we are unable to develop, acquire and/or sell new, or enhance existing, products, services or applications on a timely and cost-effective basis, our business, financial condition, and results of operations may be materially and adversely affected. • We rely significantly on retailers, reseller partnerships, and technology services distributors (TSDs) to sell our products; our failure to effectively develop, manage and maintain these sales channels could materially and adversely affect our revenue and business. • We depend on several sole suppliers to provide the components for, and a small number of vendors to manufacture, certain on-premise devices and end-point devices we sell, and any delay or interruption in manufacturing, configuring and delivering by these third parties would result in delayed or reduced shipments to our customers and may increase our costs and harm our business and results of operations. • If additional tariffs or other restrictions are placed on our goods imported from other countries, or if the United States were to withdraw from or modify existing trade agreements or regulations, our revenue, gross margin, and results of operations may be materially harmed. • We may expand through acquisitions of, or investments in, other companies, each of which may divert our management’s attention, result in additional dilution to our stockholders, increase expenses, disrupt our operations and harm our results of operations.
Our amended and restated certificate of incorporation provides that the Court of Chancery of the State of Delaware is the sole and exclusive forum for any derivative action or proceeding brought on our behalf, any action asserting a breach of fiduciary duty owed by any of our directors, officers or other employees to us or our stockholders, any action asserting a claim against us arising pursuant to any provisions of the General Corporation Law of the State of Delaware, our amended and restated certificate of incorporation or our amended and restated bylaws, or any action asserting a claim against us that is governed by the internal affairs doctrine.
Our amended and restated certificate of incorporation provides that the Court of Chancery of the State of Delaware is the sole and exclusive forum for any derivative action or proceeding brought on our behalf, any action asserting a breach of fiduciary duty owed by any of our directors, officers or other employees to us or our stockholders, any action asserting a claim against us arising pursuant to any provisions of the Delaware General Corporation Law, our amended and restated certificate of incorporation or our amended and restated bylaws, or any action asserting a claim against us that is governed by the internal affairs doctrine.
Our level of indebtedness could have important consequences, including the following: • We may use a portion of our cash flow from operations to pay interest and principal on the revolving credit facility or any term loans, which will reduce funds available to us for other purposes such as working capital, capital expenditures, other general corporate purposes and potential acquisitions; • Our ability to refinance such indebtedness or to obtain additional financing for working capital, capital expenditures, acquisitions or general corporate purposes may be impaired; • We may be exposed to fluctuations in interest rates because borrowings under our Credit Agreement bears interest at variable rates; • Our leverage may be greater than that of some of our competitors, which may put us at a competitive disadvantage and reduce our flexibility in responding to current and changing industry and financial market conditions; • We may be more vulnerable to the current economic downturn and adverse developments in our business; and • We may be unable to comply with financial and other restrictive covenants in our debt agreements, which could result in an event of default that, if not cured or waived, may result in acceleration of certain of our debt and would have an adverse effect on our business and prospects and could force us into bankruptcy or liquidation.
Any future level of indebtedness could have important consequences, including the following: • We may use a portion of our cash flow from operations to pay interest and principal on the revolving credit facility or any term loans, which will reduce funds available to us for other purposes such as working capital, capital expenditures, other general corporate purposes and potential acquisitions; • Our ability to refinance such indebtedness or to obtain additional financing for working capital, capital expenditures, acquisitions or general corporate purposes may be impaired; • We may be exposed to fluctuations in interest rates because borrowings under our Credit Agreement bears interest at variable rates; • Our leverage may be greater than that of some of our competitors, which may put us at a competitive disadvantage and reduce our flexibility in responding to current and changing industry and financial market conditions; • We may be more vulnerable to the current economic downturn and adverse developments in our business; and • We may be unable to comply with financial and other restrictive covenants in our debt agreements, which could result in an event of default that, if not cured or waived, may result in acceleration of certain of our debt and would have an adverse effect on our business and prospects and could force us into bankruptcy or liquidation.
Accordingly, in the event of revenue shortfalls, we may not be able to mitigate the negative impact on net income (loss) and margins in the short term. If we fail to meet or exceed the expectations of securities analysts or investors, the market price of our shares could fall substantially and we could face costly lawsuits, including securities class-action suits.
Accordingly, in the event of revenue shortfalls, we may not be able to mitigate the negative impact on net loss and margins in the short term. If we fail to meet or exceed the expectations of securities analysts or investors, the market price of our shares could fall substantially and we could face costly lawsuits, including securities class-action suits.
While the Delaware Supreme Court determined that such choice of forum provisions are facially valid, a stockholder may nevertheless seek to bring such a claim arising under the Securities Act of 1933, as amended, against us, our directors, officers, or other employees in a venue other than in the federal district courts of the United States of America.
While the Delaware Supreme Court determined that such choice of forum provisions are facially valid, a stockholder may nevertheless seek to bring such a claim arising under the Securities Act of 1933, as amended, against us, our directors, officers, or other employees in a venue other than in the federal district courts of the United States.
We face risks in doing business internationally that could materially and adversely affect our business, including: • our ability to comply with differing and evolving technical and environmental standards, telecommunications regulations, and certification requirements outside the United States; • our ability to comply with different and evolving laws, rules, regulations and standards relating to data privacy, data protection, data localization and data security enacted in countries in which we operate or do business; • potential contractual and other liability to our business partners if we fail to meet their aggressive expansion schedules in new locations; • difficulties and costs associated with staffing and managing foreign operations; • potentially greater difficulty collecting accounts receivable and longer payment cycles; • the need to adapt and localize our services for specific countries; • the need to offer customer care in various languages; • reliance on third parties over which we have limited control for marketing and reselling our services; • availability of reliable broadband connectivity and wide area networks in targeted areas for expansion; • lower levels of adoption of credit or debit card usage for internet related purchases by foreign customers and compliance with various foreign regulations related to credit or debit card processing and data privacy; • difficulties in understanding and complying with local laws, regulations, and customs in foreign jurisdictions; • export controls and trade and economic sanctions administered by the Department of Commerce Bureau of Industry and Security and the Treasury Department’s Office of Foreign Assets Control; • tariffs and other non-tariff barriers, such as quotas and local content rules; • tariffs imposed by the United States on goods from other countries and tariffs imposed by other countries on U.S. goods, including the tariffs implemented and additional tariffs that have been proposed by the U.S. government on various imports from China, Canada, Mexico and the EU, and by the governments of these jurisdictions on certain U.S. goods, and any other possible tariffs that may be imposed on services such as ours, the scope and duration of which, if implemented, remain uncertain; • compliance with various anti-bribery and anti-corruption laws such as the U.S.
We face risks in doing business internationally that could materially and adversely affect our business, including: • our ability to comply with differing and evolving technical and environmental standards, telecommunications regulations, and certification requirements outside the United States; • our ability to comply with different and evolving laws, rules, regulations and standards relating to data privacy, data protection, data localization and data security enacted in countries in which we operate or do business; • potential contractual and other liability to our business partners if we fail to meet their aggressive expansion schedules in new locations; • difficulties and costs associated with staffing and managing foreign operations; • potentially greater difficulty collecting accounts receivable and longer payment cycles; • the need to adapt and localize our services for specific countries; • the need to offer customer care in various languages; • reliance on third parties over which we have limited control for marketing and reselling our services; • availability of reliable broadband connectivity and wide area networks in targeted areas for expansion; • lower levels of adoption of credit or debit card usage for internet related purchases by foreign customers and compliance with various foreign regulations related to credit or debit card processing and data privacy; • difficulties in understanding and complying with local laws, regulations, and customs in foreign jurisdictions; • export controls and trade and economic sanctions administered by the Department of Commerce Bureau of Industry and Security and the Treasury Department’s Office of Foreign Assets Control; • tariffs and other non-tariff barriers, such as quotas and local content rules; • uncertainty as to the impact of higher tariff rates imposed by the United States on goods from other countries and tariffs imposed by other countries on U.S. goods, including the tariffs implemented and additional tariffs that have been proposed by the U.S. government on various imports from China, Canada, Mexico and the EU, and by the governments of these jurisdictions on certain U.S. goods, and any other possible tariffs that may be imposed on services such as ours, the scope and duration of which, if implemented, remain uncertain; • compliance with various anti-bribery and anti-corruption laws such as the U.S.
These and other provisions in our amended and restated certificate of incorporation and our bylaws and under Delaware law could discourage potential takeover attempts, reduce the price investors might be willing to pay in the future for shares of our common stock and result in the market price of our common stock being lower than it would be without these provisions.
These and other provisions in our amended and restated certificate of incorporation and our bylaws and under Delaware law could discourage potential takeover attempts, reduce the price investors might be willing to pay for shares of our common stock and result in the market price of our common stock being lower than it would be without these provisions.
In addition, our third-party contract manufacturer facilities in Vietnam and other Asian countries and our sole third-party customer service and support facility in the Philippines are located on the Pacific Rim near known earthquake fault zones that are vulnerable to damage from earthquakes, tsunamis, volcanic eruptions and/or typhoons.
In addition, our third-party contract manufacturer facilities in China, Vietnam and other Asian countries and our sole third-party customer service and support facility in the Philippines are located on the Pacific Rim near known earthquake fault zones that are vulnerable to damage from earthquakes, tsunamis, volcanic eruptions and/or typhoons.
Accordingly, we may need to increase our investment in, and devote greater resources to, advertising, marketing, and other efforts to create and maintain brand loyalty among users. Brand promotion activities may not yield increased revenue, and even if they do, any increased revenue may not offset the expenses incurred in building our brands.
Accordingly, we may need to increase our investment in, and devote greater resources to, advertising, marketing, and other efforts to create and maintain brand loyalty among users. Brand promotion activities may not yield increased revenue, and even if they do, any increased revenue may not offset the expenses incurred in building our brand.
We primarily contract with manufacturers in Vietnam and other Asian countries to produce our on-premise devices and end-point devices and our results of operations has been and could be further affected by slowdowns in manufacturing due to external factors such as, global conflicts and other factors.
We primarily contract with manufacturers in China, Vietnam and other Asian countries to produce our on-premise devices and end-point devices and our results of operations has been and could be further affected by slowdowns in manufacturing due to external factors such as global conflicts and other factors.
The occurrence of other events outside our control, such as public health crises, natural disasters or climate change, could impact our suppliers’ facilities and component providers, many of which are located in Vietnam and other countries in Asia.
The occurrence of other events outside our control, such as public health crises, natural disasters or climate change, could impact our suppliers’ facilities and component providers, many of which are located in China, Vietnam and other countries in Asia.
We offer customer support through both our online account management website and our toll-free customer support number. Our customer support is currently provided via a third-party provider located in the Philippines, as well as our U.S. employees.
We offer customer support through both our online account management website and our toll-free customer support number. Our customer support is currently provided via a third-party provider located in the Philippines, as well as by our U.S. employees.
Our ability to make payments on and to refinance our indebtedness will depend on our ability to generate cash in the future. Our ability to generate cash will be subject to general economic, financial, competitive, legislative, regulatory and other factors, some of which are beyond our control.
Our ability to make payments on and to refinance any future indebtedness will depend on our ability to generate cash in the future. Our ability to generate cash will be subject to general economic, financial, competitive, legislative, regulatory and other factors, some of which are beyond our control.
Ooma Office Pro Plus is our top-tier service plan that offers everything in Ooma Office Pro while adding powerful employee and customer tools, including: advanced call management, call queuing for satisfying basic call center needs, hot-desking to facilitate hybrid work environments and shared workspaces, online bookings to schedule appointments and meetings, expanded videoconferencing options for Ooma Meetings, and integrations with general CRM systems such as Salesforce and Microsoft Dynamics 365, and industry specific CRM systems such as Clio and AgencyZoom.
Ooma Office Pro Plus is our top-tier service plan that offers everything in Ooma Office Pro while adding powerful employee and customer tools, including: advanced call management, call queuing for satisfying basic call center needs, hot-desking to facilitate hybrid work environments and shared workspaces, online bookings to schedule appointments and meetings, expanded videoconferencing options for Ooma Meetings, and integrations with general CRM systems such as Salesforce and Microsoft Dynamics 365, and industry specific CRM systems such as Clio and AgencyZoom, and many others.
However, our future success will also depend on our ability to introduce and sell new services, such as our fiscal 2023 launch of Ooma Office Pro Plus or our newly-acquired 2600Hz solutions, as well as products, features and functionality that enhance or are beyond the voice, fax, text and connected services we currently offer, as well as to improve usability and support and increase customer satisfaction.
However, our future success will also depend on our ability to introduce and sell new services, such as our fiscal 2023 launch of Ooma Office Pro Plus or our 2600Hz solutions, as well as products, features and functionality that enhance or are beyond the voice, fax, text and connected services we currently offer, as well as to improve usability and support and increase customer satisfaction.
Some of our competitors may enter into new alliances with each other or may establish or strengthen cooperative relationships with systems integrators, third-party consulting firms or other parties.
Some of our competitors may also enter into new alliances with each other or may establish or strengthen cooperative relationships with systems integrators, third-party consulting firms or other parties.
If we fail to promote and maintain our brand, or if we incur substantial expense in an unsuccessful attempt to promote and maintain our brands, our business could be materially and adversely affected.
If we fail to promote and maintain our brand, or if we incur substantial expense in an unsuccessful attempt to promote and maintain our brand, our business could be materially and adversely affected.
In addition, we and our subsidiaries may be able to incur substantial additional indebtedness in the future, subject to the restrictions contained in the Credit Agreement and the terms of our other indebtedness.
In addition, we and our subsidiaries may be able to incur substantial indebtedness in the future, subject to the restrictions contained in the Credit Agreement and the terms of our other indebtedness.
We aim to provide our employees competitive salaries and benefit programs that help meet the varying needs of our workforce. These programs include an employee stock purchase plan, equity awards and bonuses, a 401(k) retirement plan with a company match, healthcare benefits, paid time off and family leave, and flexible work arrangements.
We aim to provide our employees competitive salaries and benefit programs that help meet the varying needs of our workforce. These programs include an employee stock purchase plan, equity awards and bonuses, a 401(k) retirement plan with a company match, healthcare benefits, time off and family leave policy, and flexible work arrangements.
The market for our newly-acquired CPaaS and CCaaS 2600Hz solutions is rapidly evolving, significantly fragmented and highly competitive, with relatively low barriers to entry in some segments. Our competitors in this segment of the market are primarily (i) CPaaS companies that offer communications products and applications, and (ii) other software companies that compete with portions of these and CCaaS solutions.
The market for our CPaaS and CCaaS 2600Hz solutions is rapidly evolving, significantly fragmented and highly competitive, with relatively low barriers to entry in some segments. Our competitors in this segment of the market are primarily (i) CPaaS companies that offer communications products and applications, and (ii) other software companies that compete with portions of these and CCaaS solutions.
If actions we take or changes we make to our services do not receive a favorable reception from these customers, their blogging could negatively affect our brand and reputation. Complaints or negative publicity about our services or customer service could materially and adversely impact our ability to attract and retain customers and our business, financial condition and results of operations.
If actions we take or changes we make to our services do not receive a favorable reception from these customers, their posts could negatively affect our brand and reputation. Complaints or negative publicity about our services or customer service could materially and adversely impact our ability to attract and retain customers and our business, financial condition and results of operations.
Our ability to pay interest and repay principal for our level of indebtedness is dependent on our ability to manage our business operations, generate sufficient cash flows to service such debt and the other factors discussed in this section. There can be no assurance that we will be able to manage any of these risks successfully.
Our ability to pay interest and repay principal for any future level of indebtedness will be dependent on our ability to manage our business operations, generate sufficient cash flows to service such debt and the other factors discussed in this section. There can be no assurance that we will be able to manage any of these risks successfully.
As the majority of our customers pay for our subscriptions through credit and debit cards, weakness in certain segments of the credit markets and in the United States and global economies has resulted in and may in the future result in increased numbers of rejected credit and debit card payments and business failures, which could materially affect our business by increased customer default or cancellations.
As the majority of our customers pay for our subscriptions through credit and debit cards, weakness in certain segments of the credit markets and in the United States and global economies has resulted in and may in the future result in increased numbers of rejected credit and debit card payments and business failures, which could materially affect our business by increased customer defaults or cancellations.
If any or all of these factors fail to occur, our business may be materially and adversely affected. Our Ooma Residential product and services are sold primarily to individuals and families. With the growth of mobile technologies, many consumers have chosen to eliminate their home telephone service as alternative services have proliferated.
If any or all of these factors fail to occur, our business may be materially and adversely affected. Our Ooma Residential products and services are sold primarily to individuals and families. With the growth of mobile technologies, many consumers have chosen to eliminate their home telephone service as alternative services have proliferated.
In particular, we depend on third-party contractors located in Russia for engineering and software development services. We cannot assure you that our ability to continue transacting with third-party contractors in Russia would not be impacted by the effects of Russia’s ongoing invasion of Ukraine and resulting international sanctions.
In particular, we depend on third-party contractors located in Russia for engineering and software development services. We cannot assure you that our ability to continue transacting with third-party contractors in Russia will not be impacted by the effects of Russia’s ongoing invasion of Ukraine and resulting international sanctions.
In addition, the provisions of Section 203 of the Delaware General Corporate Law may prohibit large stockholders, in particular those owning 15% or more of our outstanding voting stock, from merging or combining with us for a certain period of time without the consent of our board of directors.
In addition, the provisions of Section 203 of the Delaware General Corporation Law may prohibit large stockholders, in particular those owning 15% or more of our outstanding voting stock, from merging or combining with us for a certain period of time without the consent of our board of directors.
Our dependence on third-party contractors creates numerous risks; in particular, international sanctions imposed as a result of Russia’s ongoing invasion of Ukraine could limit our ability to transact with our third-party contractors in Russia, which could disrupt or delay current or future planned research and development activities, increase our costs, or force us to shift development efforts to resources in other geographies that may not possess the same level of cost efficiencies.
Our dependence on third-party contractors creates numerous risks; in particular, international sanctions imposed as a result of the ongoing Russia-Ukraine war could limit our ability to transact with our third-party contractors in Russia, which could disrupt or delay current or future planned research and development activities, increase our costs, or force us to shift development efforts to resources in other geographies that may not possess the same level of cost efficiencies.
We believe that continuing to strengthen our current brand will be critical to achieving widespread acceptance of our services and will require continued focus on active marketing efforts. The demand for and cost of online and traditional advertising have been increasing and may continue to increase.
We believe that continuing to strengthen our current brand will be critical to achieving widespread acceptance of our services and will require continued focus on active marketing efforts. The demand for and cost of online and traditional advertising has been increasing and may continue to increase.
Risk Factors Our current and prospective investors should carefully consider the risks and uncertainties described below, together with all of the other information in this Form 10-K, including our consolidated financial statements and the related notes, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the “Cautionary Note Regarding Forward-Looking Statements,” before making investment decisions regarding our common stock.
Risk Factors Our current and prospective investors should carefully consider the risks and uncertainties described below, together with all of the other information in this Annual Report on Form 10-K, including our consolidated financial statements and the related notes, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the “Cautionary Note Regarding Forward-Looking Statements,” before making investment decisions regarding our common stock.
A portion of our revenue is derived from sales made by these partners and any one of them may later decide to sell their own products or those of third parties that may be competitive with our products.
A portion of our revenue is derived from sales made by these partners and any one of them may later decide to stop selling our products or to sell their own products or those of third parties that may be competitive with our products.
As we expand our operations internationally, we have made and will need to continue to make significant expenditures and investments in our customer service and support to adequately address the complex needs of international customers, such as support in multiple foreign languages.
As we have expanded our operations internationally, we have made and will need to continue to make significant expenditures and investments in our customer service and support to adequately address the complex needs of international customers, such as support in multiple foreign languages.
Hence, greater restrictions and/or disruptions of our contract manufacturers’ suppliers’ ability to operate facilities and/or do business in and with Taiwan may increase the cost of certain materials and/or limit the supply of products sourced from Taiwan and may result in deterioration of our profit margins, a potential need to increase our pricing and, in so doing, may decrease demand for our products and thereby adversely impact our revenue or profitability.
Hence, greater restrictions and/or disruptions of our contract manufacturers’ suppliers’ ability to operate facilities and/or do business in and with Taiwan may increase the cost of certain materials and/or limit the supply of products sourced from Taiwan and may result in deterioration of our profit margins and a potential need to increase our pricing which may decrease demand for our products and thereby adversely impact our revenue or profitability.
Furthermore, the geopolitical and economic uncertainty and/or instability that may result from changes in the relationship among the United States, Taiwan and China, may, directly or indirectly, materially harm our business, financial condition and results of operations.
Furthermore, the geopolitical and economic uncertainty and/or instability that may result from changes in the relationship among the United States, Taiwan and China and related tensions, may, directly or indirectly, materially harm our business, financial condition and results of operations.
We face continued competition from established communications providers, such as Comcast Corporation, Verizon Communications Inc. and Rogers Communications Inc.; as well as from traditional on-premise, hardware business communications providers, mobile communications app companies providing “over-the-top” solutions, large internet companies that offer services with features that compete with some of what we offer, and certain other communications companies.
We face continued competition from established communications providers, such as Comcast Corporation, Verizon Communications Inc., AT&T Inc., Charter Communications Inc. and Rogers Communications Inc.; as well as from traditional on-premise, hardware business communications providers, mobile communications app companies providing “over-the-top” solutions, large internet companies that offer services with features that compete with some of what we offer, and certain other communications companies.
If any of these events occurs, or is believed to occur, our reputation and brand could be damaged, our business may suffer, we could be required to expend significant capital and other resources to alleviate problems caused by such actual or perceived breaches, we could be exposed to a risk of loss, litigation or regulatory action and possible liability, and our ability to operate our business, including our ability to provide maintenance and support services to our channel partners and end-customers, may be impaired.
If any of these events occurs, or is believed to occur, our reputation and brand could be damaged, our business may suffer, we could be required to expend significant capital and other resources to alleviate problems caused by such actual or perceived breaches and improve and enhance our security measures, we could be exposed to a risk of loss, litigation or regulatory action and possible liability, and our ability to operate our business, including our ability to provide maintenance and support services to our channel partners and end-customers, may be impaired.
Our independent registered public accounting firm is required to and has issued an attestation report on the effectiveness of our internal control over financial reporting as of January 31, 2024.
Our independent registered public accounting firm is required to and has issued an attestation report on the effectiveness of our internal control over financial reporting as of January 31, 2025.
The SEC’s website, www.sec.gov, contains reports, Ooma | FY2024 Form 10-K | 12 proxy statements and other information regarding issuers that file electronically with the SEC. The content on any website referred to in this Form 10-K is not incorporated by reference in this Form 10-K unless expressly noted. ITEM 1A.
The SEC’s website, www.sec.gov, contains reports, proxy statements and other information regarding issuers that file electronically with the SEC. The content on any website referred to in this Form 10-K is not incorporated by reference in this Form 10-K unless expressly noted. ITEM 1A.
A breach of any of these covenants could result in a default in respect of the related indebtedness.
A breach of any of these covenants could result in a default in respect of any related indebtedness.
With limited exception, we believe we are generally not subject to taxes, fees, or surcharges imposed by other state and municipal jurisdictions or that such taxes, fees, or surcharges do not apply to our services.
With limited exceptions, we believe we are generally not subject to taxes, fees, or surcharges imposed by other state and municipal jurisdictions or that such taxes, fees, or surcharges do not apply to our services.
We also had state net operating loss carryforwards of $70.7 million which will expire in various amounts beginning in fiscal 2025. Additionally, we have federal and research and development tax credit carryforwards that will begin to expire in fiscal 2030 and California research and development tax credit carryforwards with no expiration date.
We also had state net operating loss carryforwards of $70.5 million which will expire in various amounts beginning in fiscal 2030. Additionally, we have federal and research and development tax credit carryforwards that will begin to expire in fiscal 2030 and California research and development tax credit carryforwards with no expiration date.
Ooma | FY2024 Form 10-K | 40 Risks Related to Being a Public Company If we fail to maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results in a timely manner, which may adversely affect investor confidence in our company and, as a result, the value of our common stock.
Ooma | FY2025 Form 10-K | 38 Risks Related to Being a Public Company If we fail to maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results in a timely manner, which may adversely affect investor confidence in our company and, as a result, the value of our common stock.
Either of these situations could result in adverse publicity, loss of revenue, higher than expected costs, delay in market acceptance or claims by customers against us, all of which could harm our reputation, business, results of operations and financial condition.
Either of these situations could result in adverse publicity, loss of revenue, higher than expected costs, delay in market acceptance or legal liabilities for claims by customers against us, all of which could harm our reputation, business, results of operations and financial condition.
Advertising is displayed within the mobile app and users can choose to purchase premium services such as ad-free usage and international calling plans. Ooma | FY2024 Form 10-K | 7 Sales and Marketing Our sales and marketing objectives are to grow our customer base and sell additional services to our existing customers using an integrated and multi-channel marketing approach.
Advertising is displayed within the mobile app and users can choose to purchase premium services such as ad-free usage and international calling plans. Ooma | FY2025 Form 10-K | 6 Sales and Marketing Our sales and marketing objectives are to grow our customer base and sell additional services to our existing customers using an integrated and multi-channel marketing approach.
Additionally, in connection with our AirDial product offering, we face competition in the POTS replacement market from a range of other companies, such as Verizon Communications Inc., Granite Telecommunications LLC, MetTel Inc., and Napco Securities Technologies, Inc., as well as other service providers that bundle their offerings with POTS-related products from POTS replacement equipment manufacturers, such as DataRemote Inc.
Additionally, in connection with our AirDial product offering, we face competition in the POTS replacement market from a range of other companies, such as Verizon Communications Inc., Granite Telecommunications LLC, MetTel Inc., AT&T Inc. and Napco Security Technologies, Inc., as well as other service providers that bundle their offerings with POTS-related products from POTS replacement equipment manufacturers, such as DataRemote Inc.
Should the FCC decide to do so, it could result in an inferior user experience for Ooma’s service, which may negatively impact our business. Ooma | FY2024 Form 10-K | 35 We may not be able to comply with FCC rules governing completion of calls to rural areas and related reporting requirements.
Should the FCC decide to do so, it could result in an inferior user experience for Ooma’s service, which may negatively impact our business. Ooma | FY2025 Form 10-K | 33 We may not be able to comply with FCC rules governing completion of calls to rural areas and related reporting requirements.
Ooma | FY2024 Form 10-K | 38 We are subject to anti-corruption and anti-money laundering laws with respect to our operations and non-compliance with such laws can subject us to criminal and/or civil liability and harm our business. We are subject to the FCPA, the U.S. domestic bribery statute contained in 18 U.S.C. § 201, the U.S.
Ooma | FY2025 Form 10-K | 36 We are subject to anti-corruption and anti-money laundering laws with respect to our operations and non-compliance with such laws can subject us to criminal and/or civil liability and harm our business. We are subject to the FCPA, the U.S. domestic bribery statute contained in 18 U.S.C. § 201, the U.S.
If we raise additional funds through the issuance of equity or convertible debt securities, our existing stockholders could suffer significant dilution. Any new equity securities we issue could have rights, preferences, and privileges superior to those Ooma | FY2024 Form 10-K | 27 of holders of our common stock.
Ooma | FY2025 Form 10-K | 25 If we raise additional funds through the issuance of equity or convertible debt securities, our existing stockholders could suffer significant dilution. Any new equity securities we issue could have rights, preferences, and privileges superior to those of holders of our common stock.
Our Continuous Voice technology for internet back-up improves call quality by sending redundant voice streams across both the primary and wireless Internet link. Ooma | FY2024 Form 10-K | 5 Ooma Enterprise Ooma Enterprise is a highly customizable, flexible, and scalable unified-communications-as-a-service (“UCaaS”) solution that complements Ooma Office and allows us to meet the needs of organizations of all sizes.
Our Continuous Voice technology for internet back-up improves call quality by sending redundant voice streams across both the primary and wireless Internet link. Ooma Enterprise Ooma Enterprise is a highly customizable, flexible, and scalable unified-communications-as-a-service (“UCaaS”) solution that complements Ooma Office and allows us to meet the needs of organizations of all sizes.
Ooma | FY2024 Form 10-K | 21 Failure to manage any of these risks could harm our future international operations and our overall business. To deliver our services, we rely on third parties for our network connectivity and co‑location facilities for certain features in our services and for certain elements of providing our services.
Ooma | FY2025 Form 10-K | 20 Failure to manage any of these risks could harm our future international operations and our overall business. To deliver our services, we rely on third parties for our network connectivity and co‑location facilities for certain features in our services and for certain elements of providing our services.
Sales, Customers and Backlog We have a diverse and growing customer base across a wide range of industries. Our business and residential products are sold through direct channels, retailers, value-added resellers, master agents and other resellers. The direct channel, value-added resellers and master agents are our primary distribution channels for business customers.
Sales, Customers and Backlog We have a diverse and growing customer base across a wide range of industries. Our business and residential products are sold through direct channels, retailers, value-added resellers, technology services distributors (TSDs) and other resellers. The direct channel, value-added resellers and master agents are our primary distribution channels for business customers.
We also have strategic partnerships with third parties, such as T-Mobile, which enables us to sell our services and products to certain of their customers. No single customer accounted for 10% or more of our total revenue for fiscal 2024, 2023 and 2022.
We also have strategic partnerships with third parties, such as T-Mobile, which enable us to sell our services and products to certain of their customers. No single customer accounted for 10% or more of our total revenue for fiscal 2025, 2024 and 2023.
Similarly, advances in technology, such as improvements in locating the geographic origin of internet voice communications, could cause our services to become subject to additional regulations, fees or taxes, or could require us to invest in or develop new technologies, which may be costly.
Similarly, advances in technology, such as improvements in locating the geographic origin of internet voice communications or applications of AI to our products and services, could cause our services to become subject to additional regulations, fees or taxes, or could require us to invest in or develop new technologies, which may be costly.
We are not able to control many of these factors. Accordingly, our cash flow may not be sufficient to allow us to pay principal and interest on our debt, including the notes, and meet our other obligations. Our existing credit agreements impose operating and financial restrictions on us.
We are not able to control many of these factors. Accordingly, our cash flow may not be sufficient to allow us to pay principal and interest on our debt, including the notes, and meet our other obligations. Our existing credit agreement imposes operating and financial restrictions on us.
Ooma | FY2024 Form 10-K | 4 Our Solutions Ooma Business Our mission is providing business communications services that are simple, easy to use, and deliver excellent value to small, medium-sized and large companies. We offer a range of solutions to fit each business’ needs, along with personalized support to resolve any issues in deploying and maintaining Ooma services.
Our Solutions Ooma Business Our mission is providing business communications services that are simple, easy to use, and deliver excellent value to small, medium-sized, and large companies. We offer a range of solutions to fit each business’ needs, along with personalized support to resolve any issues in deploying and maintaining Ooma services.
Any decreased use of our products and services or limitation on our ability to export or sell our products and services would likely adversely affect our business. Ooma | FY2024 Form 10-K | 39 We may be subject to liabilities on past services for taxes, surcharges and fees.
Any decreased use of our products and services or limitation on our ability to export or sell our products and services would likely adversely affect our business. Ooma | FY2025 Form 10-K | 37 We may be subject to liabilities on past services for taxes, surcharges and fees.
In Canada, penalties for non-compliance with certain Canadian anti-spam legislation are considerable, including administrative monetary penalties of up to $10 million and a private right of action. Ooma | FY2024 Form 10-K | 37 The EU has implemented strict laws that apply in connection with the Processing of personal information, and other customer data.
In Canada, penalties for non-compliance with certain Canadian anti-spam legislation are considerable, including administrative monetary penalties of up to $10 million and a private right of action. The EU has implemented strict laws that apply in connection with the Processing of personal information, and other customer data.
The FCC’s orders could affect the market for broadband internet access service in a way that impacts our business, for example by increasing the cost of broadband internet service and thereby depressing demand for our services, by increasing the costs of services we purchase or by creating tiers of internet access service and by either charging us for or prohibiting us from being available through these tiers, and we cannot predict the impact of these events upon our business and results of operations.
Ooma | FY2025 Form 10-K | 29 The FCC’s orders could affect the market for broadband internet access service in a way that impacts our business, for example by increasing the cost of broadband internet service and thereby depressing demand for our services, by increasing the costs of services we purchase or by creating tiers of internet access service and by either charging us for or prohibiting us from being available through these tiers, and we cannot predict the impact of these events upon our business and results of operations.
We also lease data center space from Equinix in certain cities in Europe. While our service operations are partially redundant, account provisioning and billing are operated out of the San Jose facility for most of our customers.
We also lease data center space from Equinix in certain cities in Europe, South Africa, and Asia Pacific. While our service operations are partially redundant, account provisioning and billing are operated out of the San Jose facility for most of our customers.
As we expand internationally, we are subject to telecommunications, consumer protection, data privacy and other laws and regulations in the foreign countries where we offer our services. Our international operations are potentially subject to country-specific governmental regulation and related actions that may increase our costs and prevent us from offering or providing our products and services in certain countries.
Our international operations subject us to telecommunications, consumer protection, data privacy and other laws and regulations in the foreign countries where we offer our services. Our international operations are potentially subject to country-specific government regulation and related actions that may increase our costs and prevent us from offering or providing our products and services in certain countries.
Ooma | FY2024 Form 10-K | 14 Risks Related to Our Business and Our Industry If we are unable to attract new users in a cost-effective manner, our business will be materially and adversely affected. In order to grow our business, we must continue to attract new users in a cost-effective manner.
Ooma | FY2025 Form 10-K | 12 Risks Related to Our Business and Our Industry If we are unable to attract new users in a cost-effective manner, our business will be materially and adversely affected. In order to grow our business, we must continue to attract new users in a cost-effective manner.
Our quarterly and annual results of operations and cash flows, have varied historically from period to period, and we expect that they will continue to fluctuate due to a variety of factors, many of which are outside of our control, including: • fluctuations in demand for, pricing of, or usage of, our products, including due to the effects of global macroeconomic conditions, competition, and differing levels of demand for our products based on changing customer priorities, resources, financial conditions and economic outlook; • our ability to retain existing customers, resellers, expand our existing customers' user base, and attract new customers, sell premium solutions to our existing customers and introduce new solutions; • the actions of our competitors, including pricing changes or the introduction of new solutions and products; • our ability to effectively manage our growth and successfully penetrate the communications and connected services markets for businesses, residential and mobile; • the number of monthly, annual and multi-year subscriptions at any given time and the timing of recognition of subscription revenue; • the timing, cost and effectiveness of our advertising and marketing efforts; • the timing, operating cost and capital expenditures for the operation, maintenance, and expansion of our business; • delays or disruptions in our supply chain; • the timing of our decisions with regard to product resource allocation; • increased component costs; • seasonality of consumers’ purchasing patterns and seasonality of advertising patterns; Ooma | FY2024 Form 10-K | 25 • service outages or security breaches and any related impact on our reputation; • our ability to accurately forecast revenue and appropriately plan our expenses; • our ability to effectively transact with our third-party software development contractors in Russia, including any disruptions or delays in research and development activities due to international sanctions imposed as a result of Russia’s ongoing invasion of Ukraine; • costs associated with defending and resolving intellectual property infringement and other claims; • changes in tax laws, regulations, or accounting rules; • the timing and cost of developing or acquiring technologies, services or businesses and our ability to successfully manage any such acquisitions; • how well we execute on our strategy and operating plans and the impact of changes in our business model that could adversely impact our results of operations and financial condition; • the impact of worldwide economic, industry, and market conditions, such as liquidity constraints and higher levels of inflation; and • quarantines, travel limitations, or business disruptions in regions affecting our operations, including our field sales and installation services teams, or the operations of third parties upon which we rely, stemming from the actual, imminent or perceived outbreaks of epidemics or pandemics.
Our quarterly and annual results of operations and cash flows have varied historically from period to period, and we expect that they will continue to fluctuate due to a variety of factors, many of which are outside of our control, including: • fluctuations in demand for, pricing of, or usage of, our products, including due to the effects of global macroeconomic conditions, tariffs and other trade restrictions, competition, and differing levels of demand for our products based on changing customer priorities, resources, financial conditions and economic outlook; • our ability to retain existing customers, resellers, expand our existing customers' user base, and attract new customers, sell premium solutions to our existing customers and introduce new solutions; • the actions of our competitors, including pricing changes or the introduction of new solutions and products; • our ability to effectively manage our growth and successfully penetrate the communications and connected services markets for businesses, residential and mobile; • the number of monthly, annual and multi-year subscriptions at any given time and the timing of recognition of subscription revenue; • the impact of worldwide economic, industry, and market conditions, such as liquidity constraints and higher levels of inflation; • the timing, cost and effectiveness of our advertising and marketing efforts; • the timing, operating cost and capital expenditures for the operation, maintenance, and expansion of our business; • delays or disruptions in our supply chain; • the timing of our decisions with regard to product resource allocation; • increased component costs; • seasonality of consumers’ purchasing patterns and seasonality of advertising patterns; • service outages or security breaches and any related impact on our reputation; • our ability to accurately forecast revenue and appropriately plan our expenses; • costs associated with defending and resolving intellectual property infringement and other claims; • changes in tax laws, regulations, or accounting rules; • the timing and cost of developing or acquiring technologies, services or businesses and our ability to successfully manage any such acquisitions; • how well we execute on our strategy and operating plans and the impact of changes in our business model that could adversely impact our results of operations and financial condition; and • quarantines, travel limitations, or business disruptions in regions affecting our operations, including our field sales and installation services teams, or the operations of third parties upon which we rely, stemming from the actual, imminent or perceived outbreaks of epidemics or pandemics.
Our regulatory obligations in foreign jurisdictions could have a material adverse effect on our ability to expand internationally, and on the use of our services in international locations. See the section entitled “Risks Related to Regulatory and Tax Matters” in Item 1A. "Risk Factors" below for more information.
Our regulatory obligations in foreign jurisdictions could have a material adverse effect on our ability to expand internationally, and on the use of our services in international locations. Ooma | FY2025 Form 10-K | 10 See the section entitled “Risks Related to Regulatory and Tax Matters” in Item 1A. "Risk Factors" below for more information.
To date, we have not generated significant revenue from outside of the United States and Canada, but we have continued to expand operations outside North America as we ramp up to provide services in certain countries internationally. The future success of our business will depend, in part, on our ability to expand our operations and customer base worldwide.
To date, we have not generated significant revenue from outside of the United States and Canada, but we have expanded operations outside North America to provide services in certain countries internationally. The future success of our business will depend, in part, on our ability to expand our operations and customer base worldwide.
Ooma | FY2024 Form 10-K | 34 Regulatory and Tax Matters Our services are subject to regulation and future legislative or regulatory actions could adversely affect our business and expose us to liability. Federal Regulation. Our business is regulated by the FCC.
Ooma | FY2025 Form 10-K | 32 Regulatory and Tax Matters Our services are subject to regulation and future legislative or regulatory actions could adversely affect our business and expose us to liability. Federal Regulation. Our business is regulated by the FCC.
However, a number of states have ruled that non-nomadic internet voice communications services may or do fall within the definition of “telecommunications services” or are otherwise within state telecommunications regulatory jurisdiction and therefore those states assert that they have authority to regulate the service.
The FCC has preempted much regulation of internet voice communications services. However, a number of states have ruled that non-nomadic internet voice communications services may or do fall within the definition of “telecommunications services” or are otherwise within state telecommunications regulatory jurisdiction and therefore those states assert that they have authority to regulate the service.
In addition, as of January 31, 2024, we had $14.0 million available for borrowing under our revolving credit facility under the Credit Agreement, and from time to time, we may request incremental term loans and/or additional revolving commitments in an aggregate principal amount of up to $20.0 million under the Credit Agreement.
As of January 31, 2025, we had $30.0 million available for borrowing under our revolving credit facility under the Credit Agreement, and from time to time, we may request incremental term loans and/or additional revolving commitments in an aggregate principal amount of up to $20.0 million under the Credit Agreement.
Ooma Office has three service plans, which are generally sold as monthly subscriptions: Ooma Office Essentials provides a curated set of essential business phone features that enables teams to connect seamlessly with customers and co-workers, including: virtual receptionist, SMS and MMS messaging, extension dialing, multi-device ring options, ring groups, call park, audio conferencing, digital fax, music-on-hold, intercom/paging, and voicemail-to-email audio files.
Ooma Office has three service plans, which are generally sold as monthly subscriptions: Ooma | FY2025 Form 10-K | 4 Ooma Office Essentials provides a curated set of essential business phone features that enables teams to connect seamlessly with customers and co-workers, including: virtual receptionist, extension dialing, multi-device ring options, ring groups, call park, audio conferencing, digital fax, music-on-hold, intercom/paging, and voicemail-to-email audio files.
Ooma | FY2024 Form 10-K | 26 If we do not manage inventory levels and purchase commitments effectively, we may experience excess inventory levels, inventory obsolescence, or inventory shortages that could adversely affect our results of operations.
Ooma | FY2025 Form 10-K | 24 If we do not manage inventory levels and purchase commitments effectively, we may experience excess inventory levels, inventory obsolescence, or inventory shortages that could adversely affect our results of operations.
We were and are currently subject to a class action litigation, and may be subject to other litigation in the future. The Company, its directors, and certain officers were named as defendants in a consolidated securities class action in connection with its initial public offering, and in October 2019, the Court dismissed the lawsuit with prejudice.
We have been subject to class action litigation in the past, and may be subject to other litigation in the future. The Company, its directors, and certain officers were named as defendants in a consolidated securities class action in connection with its initial public offering, and in October 2019, the Court dismissed the lawsuit with prejudice.
Although we generated cash from operations of $12.3 million for fiscal 2024, we cannot assure you that our operating cash flow will remain positive in the future as we continue to invest in efforts to scale our business. Achieving profitability will require us to increase revenue, manage our cost structure and avoid significant liabilities.
Although we generated cash from operations of $26.6 million for fiscal 2025, we cannot assure you that our operating cash flow will remain positive in the future as we continue to invest in efforts to scale our business. Achieving profitability will require us to increase revenue, manage our cost structure and avoid significant liabilities.
We believe that our platforms are particularly well-suited to enable the delivery of connected services because they are always on, monitored and interactive. We have experienced strong revenue growth in recent periods. Our total revenue was $236.7 million, $216.2 million, and $192.3 million in fiscal 2024, 2023, and 2022, respectively.
We believe that our platforms are particularly well-suited to enable the delivery of connected services because they are always on, monitored and interactive. We have experienced strong revenue growth in recent periods. Our total revenue was $256.9 million, $236.7 million, and $216.2 million in fiscal 2025, 2024, and 2023, respectively.
As a result, we may fail to meet or to exceed the expectations of analysts or investors, which could cause our stock price to fluctuate. • If we do not manage inventory levels and purchase commitments effectively, we may experience excess inventory levels, inventory obsolescence, or inventory shortages that could adversely affect our results of operations. • Our level of indebtedness could adversely affect our financial condition. • Our existing credit agreements impose operating and financial restrictions on us.
As a result, we may fail to meet or to exceed the expectations of analysts or investors, which could cause our stock price to fluctuate. • If we do not manage inventory levels and purchase commitments effectively, we may experience excess inventory levels, inventory obsolescence, or inventory shortages that could adversely affect our results of operations. • Our existing credit agreement imposes operating and financial restrictions on us.
We could incur significant costs, both monetary and with respect to management's time and attention, to investigate and remediate a data security breach. Because our onboarding and billing functions are conducted primarily through a single data center, any security breach in that data center may cause an interruption in our business operations.
Ooma | FY2025 Form 10-K | 28 We could incur significant costs, both monetary and with respect to management's time and attention, to investigate and remediate a data security breach. Because our onboarding and billing functions are conducted primarily through a single data center, any security breach in that data center may cause an interruption in our business operations.
As of January 31, 2024, our core users totaled 1,243,000 for Ooma Business and Ooma Residential. See “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” below.
As of January 31, 2025, our core users totaled 1,234,000 for Ooma Business and Ooma Residential. See “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” below.
Ooma | FY2024 Form 10-K | 24 If we are unable to effectively process local number and toll-free number portability provisioning in a timely manner, our growth may be negatively affected. We support local number and toll-free number portability, which allows our customers to transfer to us and thereby retain their existing phone numbers when subscribing to our services.
If we are unable to effectively process local number and toll-free number portability provisioning in a timely manner, our growth may be negatively affected. We support local number and toll-free number portability, which allows our customers to transfer to us and thereby retain their existing phone numbers when subscribing to our services.
Our core user churn rate could increase significantly in the future if customers are not satisfied with our service, the value proposition of our services, our ability to otherwise meet their needs and expectations, and/or other factors beyond our control, including the impact of rising inflation and a slowing economy.
Our core user churn rate could increase significantly in the future if customers are not satisfied with our service, the value proposition of our services, our ability to otherwise meet their needs and expectations, and/or other factors beyond our control, including the impact of inflation and other macroeconomic developments.
Ooma | FY2024 Form 10-K | 31 Some of the providers of broadband internet access and high-speed mobile access, such as AT&T and Verizon, market and sell products and services to our current and potential customers that directly compete with our own offerings, which can potentially give such providers a competitive advantage.
Some of the providers of broadband internet access and high-speed mobile access, such as AT&T and Verizon, market and sell products and services to our current and potential customers that directly compete with our own offerings, which can potentially give such providers a competitive advantage.
The market price of our common stock could be subject to wide fluctuations in response to, among other things, the factors described in this “Risk Factors” section or otherwise, and other factors beyond our control, such as fluctuations in the valuations of companies perceived by investors to be comparable to us.
Ooma | FY2025 Form 10-K | 39 The market price of our common stock could be subject to wide fluctuations in response to, among other things, the factors described in this “Risk Factors” section or otherwise, and other factors beyond our control, such as fluctuations in the valuations of companies perceived by investors to be comparable to us.
We also maintain an office in Boca Raton, Florida, an area that has been prone to severe weather events, such as hurricanes.
We also maintain an office in Boca Raton, Florida, an area that is prone to severe weather events, such as hurricanes.
We do not anticipate paying any cash dividends on our common stock in the foreseeable future. If we do not pay cash dividends, you would receive a return on your investment in our common stock only if the market price of our common stock increases before you sell your shares.
We do not anticipate paying any cash dividends on our common stock in the foreseeable future. If we do not pay cash dividends, stockholders would receive a return on their investment in our common stock only if the market price of our common stock increases before they sell their shares.

… 153 more changes not shown on this page.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

4 edited+0 added−0 removed4 unchanged
Biggest changeThis process is owned by the Chief Information Security Officer (“CISO”) and is supported by both management and our board of directors. Our CISO has served in various information technology and security leadership roles for over 30 years. He has a Master of Science degree in Electrical Engineering from Stanford University.
Biggest changeOur CISO has served in various information technology and security leadership roles for over 30 years. He has a Master of Science degree in Electrical Engineering from Stanford University. Cybersecurity risks related to our business, technical operations, privacy and compliance issues are identified and addressed through a multi-faceted approach including third party assessments and reviews.
Although we continue to invest in cybersecurity and to enhance our internal controls and processes, we cannot guarantee these measures will be sufficient to protect us from a network security incident. For further information regarding the risks we face from cybersecurity threats refer to the “Risk Factors” within this Form 10-K. Ooma | FY2024 Form 10-K | 45
Although we continue to invest in cybersecurity and to enhance our internal controls and processes, we cannot guarantee these measures will be sufficient to protect us from a network security incident. For further information regarding the risks we face from cybersecurity threats refer to the “Risk Factors” within this Form 10-K.
Although the "Risk Factors" section includes further detail about the material cybersecurity risks we face, we believe that risks from prior cybersecurity threats, including as a result of any previous cybersecurity incidents, have not materially affected our business to date.
The "Risk Factors" section includes further detail about the material cybersecurity risks we face. We believe that risks from prior cybersecurity threats, including as a result of any previous cybersecurity incidents, have no t materially affected our business to date.
We have tools and protocols in place designed to prevent, detect and escalate security incidents within the Company. Identifying and assessing cybersecurity risk is integrated into our overall risk management systems and processes. Cybersecurity risks related to our business, technical operations, privacy and compliance issues are identified and addressed through a multi-faceted approach including third party assessments and reviews.
We have tools and protocols in place designed to prevent, detect and escalate security incidents within the Company. Identifying and assessing cybersecurity risk is integrated into our overall risk management systems and processes. This process is owned by the Chief Information Security Officer (“CISO”) and is supported by both management and our board of directors.

Item 2. Properties

Properties — owned and leased real estate

1 edited+0 added−0 removed2 unchanged
Biggest changeWe also lease offices in Boca Raton, Florida and several other locations throughout the United States as well as Vancouver, British Columbia. We lease space from third-party data centers under co-location agreements that support our cloud infrastructure, the most significant locations being San Jose, California; Dallas, Texas; Ashburn, Virginia; as well as several locations internationally.
Biggest changeWe also lease offices in Boca Raton, Florida and several other locations throughout the United States as well as Vancouver, British Columbia. We lease space from third-party data centers under co-location agreements that support our cloud infrastructure, the most significant locations being San Jose, California; Dallas, Texas; Ashburn, Virginia; as well as several locations domestically and internationally.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

1 edited+0 added−0 removed1 unchanged
Biggest changeOoma | FY2024 Form 10-K | 46 PART II
Biggest changeOoma | FY2025 Form 10-K | 43 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

3 edited+6 added−0 removed3 unchanged
Biggest changeThe stock price performance on this performance graph is not necessarily indicative of future stock price performance. Sales of Unregistered Securities. Not applicable. Use of Proceeds. Not applicable. Purchases of Equity Securities by Issuer and Affiliated Purchasers. None. Ooma | FY2024 Form 10-K | 47 IT EM 6. [Reserved] Ooma | FY2024 Form 10-K | 48
Biggest changeThe stock price performance on this performance graph is not necessarily indicative of future stock price performance. Sales of Unregistered Securities. Not applicable. Use of Proceeds. Not applicable. Ooma | FY2025 Form 10-K | 44 Purchases of Equity Securities by Issuer and Affiliated Purchasers.
The graph assumes $100 was invested at the close of market on the last trading day of fiscal 2019 in our common stock, the NASDAQ Telecommunications Index and the NYSE, and its relative performance is tracked through January 31, 2024, the last trading day of our fiscal year 2024.
The graph assumes $100 was invested at the close of market on the last trading day of fiscal 2020 in our common stock, the NASDAQ Telecommunications Index and the NYSE, and its relative performance is tracked through January 31, 2025, the last trading day of our fiscal year 2025.
ITEM 5. Market for Registrant’s Common Equity, Related Stoc kholder Matters and Issuer Purchases of Equity Securities Market Information for Common Stock. Our common stock has been trading on the NYSE under the symbol “OOMA” since July 17, 2015. Holders of Record. As of March 28, 2024, there were approximately 56 holders of record of our common stock.
ITEM 5. Market for Registrant’s Common Equity, Related Stoc kholder Matters and Issuer Purchases of Equity Securities Market Information for Common Stock. Our common stock has been trading on the NYSE under the symbol “OOMA” since July 17, 2015. Holders of Record. As of March 31, 2025, there were approximately 53 holders of record of our common stock.
Added
The following table presents information with respect to our repurchase of common stock during the quarter ended January 31, 2025.
Added
Period Total Number of Shares Purchased (1) Average Price Paid per Share (2) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1) Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (in thousands) (1)(3) November 1, 2024 to November 30, 2024 — $ — — $ 1,964 December 1, 2024 to December 31, 2024 162,616 $ 14.85 162,616 $ 9,550 January 1, 2025 to January 31, 2025 — $ — — $ 9,550 Total 162,616 $ 14.85 162,616 (1) In June 2024, our board of directors authorized a common stock repurchase program of up to $4.0 million.
Added
In December 2024, our board of directors approved an increase to our share repurchase program of an additional $10.0 million. For further information, see Note 8. Stockholders’ Equity to our financial statements for the fiscal year ended January 31, 2025.
Added
The Company withholds shares of common stock on behalf of certain employees in connection with the vesting of restricted stock unit awards issued to such employees to satisfy the minimum statutory tax withholding requirements.
Added
Although these withheld shares are not issued or considered common stock repurchases under our stock repurchase program and therefore are not included in the preceding table, they are treated as common stock repurchases in our financial statements as they reduce the number of shares that would have been issued upon vesting.
Added
(2) Average price per share excludes excise taxes and broker’s commissions. (3) Amounts presented excludes excise taxes and broker’s commissions on share repurchases. IT EM 6. [Reserved] Ooma | FY2025 Form 10-K | 45

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

47 edited+9 added−14 removed48 unchanged
Biggest changeGAAP net loss for fiscal 2024 includes tax benefit for the release of a $3.1 million valuation allowance resulting from the recording of certain intangible assets associated with the acquisition of 2600Hz in late October 2023, as well as a $1.0 million gain on consolidation of facility costs, partially offset by $0.7 million in acquisition related costs and $0.5 million in certain restructuring costs. • Non-GAAP net income was $15.4 million, compared to $13.6 million in fiscal 2023. • Adjusted EBITDA was $19.8 million, or 8% of revenue, compared to $17.4 million in fiscal 2023. • As of January 31, 2024, we had total cash, cash equivalents and short-term investments of $17.5 million, down $9.4 million from $26.9 million as of January 31, 2023.
Biggest changeFiscal 2025 Financial Performance • Total revenue was $256.9 million, up 8% year-over-year, primarily driven by the continued growth of Ooma Business and the acquisition of 2600Hz in late October 2023. • Subscription and services revenue from Ooma Business grew 13% year-over-year, driven by user growth. • Total gross margin was 61%, down from 62% in fiscal 2024. • GAAP net loss was $6.9 million, compared to a net loss of $0.8 million in fiscal 2024, • GAAP net loss for fiscal 2024 includes tax benefit for the release of a $3.1 million valuation allowance resulting from the recording of certain intangible assets associated with the acquisition of 2600Hz, as well as a $1.0 million gain on consolidation of facility costs, partially offset by $0.7 million in acquisition related costs and $0.5 million of certain restructuring costs, which did not recur in fiscal 2025. • Non-GAAP net income was $18.0 million, compared to $15.4 million in fiscal 2024. • Adjusted EBITDA was $23.3 million, or 9% of revenue, compared to $19.8 million in fiscal 2024. • Cash flow provided by operating activities was $26.6 million, compared to $12.3 million in fiscal 2024. • As of January 31, 2025, we had total cash and cash equivalents of $17.9 million, up $0.4 million from $17.5 million as of January 31, 2024. • As of January 31, 2025, we had no outstanding debt, compared to $16.0 million as of January 31, 2024.
We believe that the relationship that we establish with our core users positions us to sell additional premium communications services and other new connected services to them.‌ Annualized Exit Recurring Revenue grew year-over-year due to an increase in the average revenue per core user, which was largely driven by an increasing mix of business users.
We believe that the relationship that we establish with our core users positions us to sell additional premium communications services and other new connected services to them.‌ Annualized Exit Recurring Revenue ("AERR") grew year-over-year due to an increase in the average revenue per core user, which was largely driven by an increasing mix of business users.
Prior to the current fiscal year, we calculated the NDRR as a function of the year-over-year growth in average revenue per user and churn as further discussed in the FY2023 Form 10-K.
Prior to fiscal 2024, we calculated NDRR as a function of the year-over-year growth in average revenue per user and churn as further discussed in the FY2023 Form 10-K.
The last day of our fiscal year is January 31, and we refer to our fiscal year ended January 31, 2024 as fiscal 2024, our fiscal year ended January 31, 2023 as fiscal 2023 and our fiscal year ended January 31, 2022 as fiscal 2022. All other references to years are references to calendar years.
The last day of our fiscal year is January 31, and we refer to our fiscal year ended January 31, 2025 as fiscal 2025, our fiscal year ended January 31, 2024 as fiscal 2024 and our fiscal year ended January 31, 2023 as fiscal 2023. All other references to years are references to calendar years.
As of January 31, 2024, Ooma Business users comprised approximately 39% of our total core users, up from 35% as of January 31, 2023. We believe that the number of our core users is an indicator of our market penetration, the growth of our business and our anticipated future subscription and services revenue.
As of January 31, 2025, Ooma Business users comprised approximately 41% of our total core users, up from 39% as of January 31, 2024. We believe that the number of our core users is an indicator of our market penetration, the growth of our business and our anticipated future subscription and services revenue.
This section of this Form 10-K generally discusses fiscal 2024 and 2023 items and year-to-year comparisons between fiscal 2024 and 2023.
This section of this Form 10-K generally discusses fiscal 2025 and 2024 items and year-to-year comparisons between fiscal 2025 and 2024.
Ooma | FY2024 Form 10-K | 49 Key Factors Affecting Our Performance Our historical financial performance and key business metrics have been, and we expect that our financial performance and key business metrics in the future will be, primarily driven by the following factors: Core user growth.
Ooma | FY2025 Form 10-K | 46 Key Factors Affecting Our Performance Our historical financial performance and key business metrics have been, and we expect that our financial performance and key business metrics in the future will be, primarily driven by the following factors: Core user growth.
Discussion regarding our financial condition and results of operations for fiscal 2023 as compared to 2022 is included in Item 7 of our Annual Report on Form 10-K for the year ended January 31, 2023, filed with the SEC on April 7, 2023 (the "FY2023 Form 10-K").
Discussion regarding our financial condition and results of operations for fiscal 2024 as compared to 2023 is included in Item 7 of our Annual Report on Form 10-K for the year ended January 31, 2024, filed with the SEC on April 2, 2024 (the "FY2024 Form 10-K").
If in any period we are able to sell inventories that were not valued or that had been written down in a previous period, related revenues would be recorded without any offsetting charge to cost of product and other revenue resulting in a net benefit to our gross margin in that period. Ooma | FY2024 Form 10-K | 61
If in any period we are able to sell inventories that were not valued or that had been written down in a previous period, related revenues would be recorded without any offsetting charge to cost of product and other revenue resulting in a net benefit to our gross margin in that period.
Ooma | FY2024 Form 10-K | 53 General and administrative expenses consist of personnel costs for our finance, legal, human resources and other administrative employees and contractors, as well as professional service fees, certain acquisition-related costs, and allocated overhead costs. We expect our general and administrative expenses to increase in absolute dollars as we continue to grow our business.
General and administrative expenses consist of personnel costs for our finance, legal, human resources and other administrative employees and contractors, as well as professional service fees, certain acquisition-related costs, and allocated overhead costs. We expect our general and administrative expenses to increase in absolute dollars as we continue to grow our business.
Revenue Recognition 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. Subscription revenue is generally recognized ratably over the contractual service term.
Ooma | FY2025 Form 10-K | 54 Revenue Recognition 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. Subscription revenue is generally recognized ratably over the contractual service term.
Revolving Credit Facility In October 2023, we entered into the Credit Agreement with certain lenders that provided for a secured revolving credit facility under which we may borrow up to an aggregate of $30.0 million and, subject to certain conditions, may be increased to up to $50.0 million.
Revolving Credit Facility In October 2023, we entered into a credit and security agreement with certain banks that provides for a secured revolving credit facility under which we may borrow up to an aggregate of $30.0 million and, subject to certain conditions, may be increased to up to $50.0 million.
As of January 31, 2024, our total future expected payment obligations under non-cancelable operating leases with initial terms longer than one year were approximately $21.3 million, with payments of $3.8 million due in the next 12 months and $17.5 million due thereafter. See Note 7: Operating Leases in the notes to our consolidated financial statements.
As of January 31, 2025, our total future expected payment obligations under non-cancelable operating leases with initial terms longer than one year were approximately $19.1 million, with payments of $3.8 million due in the next 12 months and $15.3 million due thereafter. See Note 7: Operating Leases in the notes to our consolidated financial statements.
We then multiply that result by the number of core users at the end of the period to calculate AERR. Beginning in the third quarter of fiscal 2024, we have added $7.8 million annual recurring revenue from 2600Hz to AERR.
We then multiply that result by the number of core users at the end of the period to calculate AERR. Beginning in the third quarter of fiscal 2024, AERR includes annual recurring revenue from 2600Hz.
As of January 31, 2024 and 2023, non-cancelable inventory purchase commitments to our contract manufacturers and other suppliers totaled approximately $1.1 million and $7.8 million, respectively.
As of January 31, 2025 and 2024, non-cancelable inventory purchase commitments to our contract manufacturers and other suppliers totaled approximately $6.2 million and $1.1 million, respectively.
Additionally, some product costs have become subject to significantly higher pricing we experienced due to supply chain constraints in the global macroeconomic environment as well as certain components becoming subject to end-of-life and we may not be able to fully offset such higher costs through price increases. Another factor is the high AirDial installation costs due to ramp up efforts.
Additionally, some product costs have become subject to significantly higher pricing due to supply chain constraints in the global macroeconomic environment and increasing tariffs, as well as certain components becoming subject to end-of-life, and we may not be able to fully offset such higher costs through price increases.
The following table presents a reconciliation of GAAP net loss to non-GAAP net income for the periods indicated (in thousands): Fiscal Year Ended January 31, 2024 2023 2022 GAAP net loss $ (835 ) $ (3,655 ) $ (1,751 ) Stock-based compensation and related taxes 15,110 14,155 13,077 Amortization of acquired intangible assets 3,711 2,286 1,304 Acquisition-related costs 692 1,538 — Facilities consolidation (gain) charges (956 ) 1,402 — Legal settlement costs 300 — — Restructuring costs 477 — — Acquisition-related income tax benefit (3,131 ) (2,133 ) — Non-GAAP net income $ 15,368 $ 13,593 $ 12,630 Ooma | FY2024 Form 10-K | 58 Liquidity and Capital Resources Our material cash requirements are discussed below under “Contractual Obligations and Commitments.” As of January 31, 2024, we had $17.5 million of total cash, cash equivalents and investments and borrowing capacity of $14.0 million under our Credit Agreement, which we believe will be sufficient to meet our cash needs for at least the next 12 months.
Ooma | FY2025 Form 10-K | 52 The following table presents a reconciliation of GAAP net loss to non-GAAP net income for the periods indicated (in thousands): Fiscal Year Ended January 31, 2025 2024 2023 GAAP net loss $ (6,901 ) $ (835 ) $ (3,655 ) Stock-based compensation and related taxes 18,217 15,110 14,155 Amortization of intangible assets and acquisition-related costs 5,767 4,403 3,824 Litigation costs 340 300 — Restructuring costs 1,579 477 — Gain on note conversion (980 ) — — Acquisition-related income tax benefit — (3,131 ) (2,133 ) Facilities consolidation (gain) charges — (956 ) 1,402 Non-GAAP net income $ 18,022 $ 15,368 $ 13,593 Liquidity and Capital Resources Our material cash requirements are discussed below under “Contractual Obligations and Commitments.” As of January 31, 2025, we had $17.9 million of total cash and cash equivalents and borrowing capacity of $30.0 million under our Credit Agreement, which we believe will be sufficient to meet our cash needs for at least the next 12 months.
The following table summarizes cash flow information for the periods indicated (in thousands): Fiscal Year Ended January 31, 2024 January 31, 2023 January 31, 2022 Net cash provided by operating activities $ 12,273 8,773 $ 6,655 Net cash used in investing activities (35,328 ) (6,146 ) (4,887 ) Net cash provided by financing activities 16,454 1,843 601 Net (decrease) increase in cash and cash equivalents $ (6,601 ) $ 4,470 $ 2,369 Operating Activities The following table provides selected cash flow information for the periods indicated (in thousands): Fiscal Year Ended January 31, 2024 January 31, 2023 January 31, 2022 Net loss $ (835 ) (3,655 ) $ (1,751 ) Non-cash charges 21,735 22,245 20,095 Changes in operating assets and liabilities: (Increase) decrease in accounts receivable (2,587 ) 434 (2,082 ) Decrease (increase) in inventories and deferred inventory costs 6,341 (12,333 ) (1,571 ) Increase in prepaid expenses and other assets (2,280 ) (2,460 ) (4,609 ) (Decrease) increase in accounts payable, accrued expenses and other liabilities (9,579 ) 4,509 (3,599 ) (Decrease) Increase in deferred revenue (522 ) 33 172 Net cash provided by operating activities $ 12,273 $ 8,773 $ 6,655 For fiscal 2024, our net loss of $0.8 million included non-cash charges primarily related to stock-based compensation expense, operating lease expense, depreciation and amortization expense, facilities consolidation gain and an income tax benefit related to our business acquisition.
The following table summarizes cash flow information for the periods indicated (in thousands): Fiscal Year Ended January 31, 2025 January 31, 2024 January 31, 2023 Net cash provided by operating activities $ 26,606 $ 12,273 $ 8,773 Net cash used in investing activities (6,447 ) (35,328 ) (6,146 ) Net cash (used in) provided by financing activities (19,824 ) 16,454 1,843 Net increase (decrease) in cash and cash equivalents $ 335 $ (6,601 ) $ 4,470 Operating Activities The following table provides selected cash flow information for the periods indicated (in thousands): Fiscal Year Ended January 31, 2025 January 31, 2024 January 31, 2023 Net loss $ (6,901 ) $ (835 ) $ (3,655 ) Non-cash charges 30,313 21,735 22,245 Changes in operating assets and liabilities: Decrease (increase) in accounts receivable 1,824 (2,587 ) 434 Decrease (increase) in inventories and deferred inventory costs 6,639 6,341 (12,333 ) Increase in prepaid expenses and other assets (2,659 ) (2,280 ) (2,460 ) (Decrease) increase in accounts payable, accrued expenses and other liabilities (2,163 ) (9,579 ) 4,509 (Decrease) Increase in deferred revenue (447 ) (522 ) 33 Net cash provided by operating activities $ 26,606 $ 12,273 $ 8,773 For fiscal 2025, our net loss of $6.9 million included non-cash items of $30.3 million primarily related to stock-based compensation, operating lease expense, depreciation and amortization expense and gain on note conversion.
Cost of subscription and services revenue increased $9.2 million or 17% year-over-year, primarily due to a $4.1 million increase in personnel and contractor related costs, a $2.2 million increase in infrastructure costs, a $1.7 million increase in regulatory fees, a $0.7 million increase in intangible amortization expense and a $0.5 million increase in credit card processing fees.
Cost of subscription and services revenue increased $7.5 million or 12% year-over-year, primarily due to a $2.7 million increase in infrastructure costs, a $1.6 million increase in personnel and contractor related costs, a $1.6 million increase in regulatory fees, a $1.8 million increase in intangible amortization expense and a $0.5 million increase in credit card processing fees, partially offset by a $0.5 million decrease in software and license costs and a $0.2 million decrease in travel costs.
Net Dollar Subscription Retention Rate Effective in the first quarter of fiscal 2024, we transitioned to a new calculation methodology for our net dollar subscription retention rate (“NDRR”).
Ooma | FY2025 Form 10-K | 47 Net Dollar Subscription Retention Rate Effective in the first quarter of fiscal 2024, we transitioned to a new calculation methodology for our net dollar subscription retention rate (“NDRR”) as discussed below.
Accordingly, we expect our product and other gross margin will continue to be negatively impacted by these higher component costs and AirDial installation costs. We expect our product and other gross margin to continue to be negative for the foreseeable future. Our subscription and services gross margin is significantly higher than product and other gross margin.
Another factor is the high AirDial installation costs due to ramp up efforts. Accordingly, we expect our product and other gross margin will continue to be negatively impacted by these higher component costs and AirDial installation costs. We expect our product and other gross margin to continue to be negative for the foreseeable future.
Research and development expenses increased $4.0 million or 9% year-over-year, primarily due to a $3.5 million increase in personnel and contractor related costs, driven by higher headcount, and a $0.5 million increase in restructuring costs.
Research and development expenses increased $4.4 million or 9% year-over-year, primarily due to a $3.8 million increase in personnel and contractor related costs, driven by higher headcount, a $0.7 million increase in restructuring costs, and a $0.1 million increase in allocated overhead costs, partially offset by a $0.2 million decrease in hosting costs.
The income tax benefits were related to certain preexisting deferred tax assets realized because of deferred tax liabilities assumed in our acquisitions of 2600Hz and OnSIP in fiscal 2024 and 2023, respectively. Ooma | FY2024 Form 10-K | 57 Non-GAAP Financial Measures This Form 10-K contains certain non-GAAP financial measures, including non-GAAP net income and Adjusted EBITDA.
The income tax benefits were related to certain preexisting deferred tax assets realized because of deferred tax liabilities assumed in our acquisition of 2600Hz in fiscal 2024, which did not recur in fiscal 2025. Other Non-GAAP Financial Measures This Form 10-K contains certain non-GAAP financial measures, including non-GAAP net income and Adjusted EBITDA.
Ooma | FY2024 Form 10-K | 50 Key Business Metrics We review the key metrics below to evaluate our business, measure our performance, identify trends affecting our business, formulate financial projections and make strategic decisions (in thousands, except percentages): As of January 31, 2024 2023 2022 Core users 1,243 1,210 1,100 Annualized exit recurring revenue (AERR) $ 227,500 $ 206,700 $ 176,900 Net dollar subscription retention rate (1) 99 % 99 % 99 % Adjusted EBITDA $ 19,843 $ 17,395 $ 15,568 (1) Revised January 31, 2023 and January 31, 2022 due to new methodology as described below Core Users increased year-over-year, which was primarily driven by growth in business users.
Key Business Metrics We review the key metrics below to evaluate our business, measure our performance, identify trends affecting our business, formulate financial projections and make strategic decisions (in thousands, except percentages): As of January 31, 2025 2024 2023 Core users 1,234 1,243 1,210 Annualized exit recurring revenue (AERR) $ 234,086 $ 227,500 $ 206,700 Net dollar subscription retention rate (1) 98 % 99 % 99 % Adjusted EBITDA $ 23,257 $ 19,842 $ 17,395 (1) Revised January 31, 2023 due to new methodology as described below Core Users decreased year-over-year, which was primarily driven by a decline in Ooma Residential users, partially offset by an increase in Ooma Business users.
As a result, any significant change in revenue mix will cause our total gross margin to change. For example, in periods where we sell significantly more on-premise devices or other products, we would expect our total gross margin to be impacted.
For example, in periods where we sell significantly more on-premise devices or other products, we would expect our total gross margin to be impacted.
The following table provides a reconciliation of GAAP net loss to Adjusted EBITDA for the periods indicated (in thousands): Fiscal Year Ended January 31, 2024 2023 2022 GAAP net loss $ (835 ) $ (3,655 ) $ (1,751 ) Reconciling items: Interest and other income, net (1,188 ) (332 ) (179 ) Income tax benefit (1,978 ) (1,770 ) — Depreciation and amortization of capital expenditures 4,317 3,771 3,117 Amortization of acquired intangible assets 3,711 2,286 1,304 Acquisition-related costs 885 1,538 — Facilities consolidation (gain) charges (956 ) 1,402 — Stock-based compensation and related taxes 15,110 14,155 13,077 Legal settlement costs 300 — — Restructuring costs 477 — — Adjusted EBITDA $ 19,843 $ 17,395 $ 15,568 Ooma | FY2024 Form 10-K | 52 Components of Results of Operations Revenue 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 and, to a lesser extent, from payments associated with our Talkatone mobile application and prepaid international calls.
Ooma | FY2025 Form 10-K | 48 The following table provides a reconciliation of GAAP net loss to Adjusted EBITDA for the periods indicated (in thousands): Fiscal Year Ended January 31, 2025 2024 2023 GAAP net loss $ (6,901 ) $ (835 ) $ (3,655 ) Reconciling items: Interest and other income, net 181 (1,188 ) (332 ) Income tax provision (benefit) 760 (1,978 ) (1,770 ) Depreciation and amortization of capital expenditures 4,294 4,318 3,771 Amortization of intangible assets and acquisition-related costs 5,767 4,594 3,824 Stock-based compensation and related taxes 18,217 15,110 14,155 Litigation costs 340 300 — Restructuring costs 1,579 477 — Gain on note conversion (980 ) — — Facilities consolidation (gain) charges — (956 ) 1,402 Adjusted EBITDA $ 23,257 $ 19,842 $ 17,395 Components of Results of Operations Revenue 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 and, to a lesser extent, from payments associated with our Talkatone mobile application and prepaid international calls.
Ooma | FY2024 Form 10-K | 54 Consolidated Results of Operations The following table sets forth selected consolidated statements of operations data for each of the periods indicated (in thousands): Fiscal Year Ended January 31, 2024 2023 2022 Revenue: Subscription and services $ 221,624 $ 199,105 $ 175,942 Product and other 15,113 17,060 16,348 Total revenue 236,737 216,165 192,290 Cost of revenue: Subscription and services 63,667 54,499 49,563 Product and other 25,838 24,018 24,289 Total cost of revenue 89,505 78,517 73,852 Gross profit 147,232 137,648 118,438 Operating expenses: Sales and marketing 73,503 69,671 58,631 Research and development 49,935 45,939 38,193 General and administrative 27,795 27,795 23,544 Total operating expenses 151,233 143,405 120,368 Loss from operations (4,001 ) (5,757 ) (1,930 ) Interest and other income, net 1,188 332 179 Loss before income taxes (2,813 ) (5,425 ) (1,751 ) Income tax benefit 1,978 1,770 — Net loss $ (835 ) $ (3,655 ) $ (1,751 ) Cost of revenue and operating expenses included stock-based compensation expense and related payroll taxes as follows (in thousands): Fiscal Year Ended January 31, 2024 2023 2022 Cost of revenue $ 1,026 $ 986 $ 1,026 Sales and marketing 2,276 2,068 1,932 Research and development 4,876 4,713 4,373 General and administrative 6,932 6,388 5,746 Total stock-based compensation expense $ 15,110 $ 14,155 $ 13,077 Ooma | FY2024 Form 10-K | 55 Comparison of fiscal years 2024, 2023 and 2022 (dollars in tables are in thousands): Revenue Fiscal Year Ended January 31, Change 2024 2023 2022 2024 vs. 2023 Revenue: Subscription and services $ 221,624 $ 199,105 $ 175,942 $ 22,519 11 % Product and other 15,113 17,060 16,348 (1,947 ) (11 )% Total revenue $ 236,737 $ 216,165 $ 192,290 $ 20,572 10 % Percentage of revenue: Subscription and services 94 % 92 % 91 % Product and other 6 % 8 % 9 % Total 100 % 100 % 100 % Fiscal 2024 Compared to Fiscal 2023 We derived approximately 58% and 53% of our total revenue from Ooma Business and approximately 40% and 45% from Ooma Residential in fiscal 2024 and 2023, respectively.
Consolidated Results of Operations The following table sets forth selected consolidated statements of operations data for each of the periods indicated (in thousands): Fiscal Year Ended January 31, 2025 2024 2023 Revenue: Subscription and services $ 238,641 $ 221,624 $ 199,105 Product and other 18,211 15,113 17,060 Total revenue 256,852 236,737 216,165 Cost of revenue: Subscription and services 71,199 63,667 54,499 Product and other 29,635 25,838 24,018 Total cost of revenue 100,834 89,505 78,517 Gross profit 156,018 147,232 137,648 Operating expenses: Sales and marketing 77,325 73,503 69,671 Research and development 54,287 49,935 45,939 General and administrative 31,346 27,795 27,795 Total operating expenses 162,958 151,233 143,405 Loss from operations (6,940 ) (4,001 ) (5,757 ) Interest and other income, net 799 1,188 332 Loss before income taxes (6,141 ) (2,813 ) (5,425 ) Income tax (provision) benefit (760 ) 1,978 1,770 Net loss $ (6,901 ) $ (835 ) $ (3,655 ) Cost of revenue and operating expenses included stock-based compensation expense and related payroll taxes as follows (in thousands): Fiscal Year Ended January 31, 2025 2024 2023 Cost of revenue $ 1,049 $ 1,026 $ 986 Sales and marketing 3,969 2,276 2,068 Research and development 5,589 4,876 4,713 General and administrative 7,610 6,932 6,388 Total stock-based compensation expense $ 18,217 $ 15,110 $ 14,155 Ooma | FY2025 Form 10-K | 50 Comparison of fiscal years 2025, 2024 and 2023 (dollars in tables are in thousands): Revenue Fiscal Year Ended January 31, Change 2025 2024 2023 2025 vs. 2024 Revenue: Subscription and services $ 238,641 $ 221,624 $ 199,105 $ 17,017 8 % Product and other 18,211 15,113 17,060 3,098 20 % Total revenue $ 256,852 $ 236,737 $ 216,165 $ 20,115 8 % Percentage of revenue: Subscription and services 93 % 94 % 92 % Product and other 7 % 6 % 8 % Total 100 % 100 % 100 % Fiscal 2025 Compared to Fiscal 2024 We derived approximately 61% and 58% of our total revenue from Ooma Business and approximately 36% and 40% from Ooma Residential in fiscal 2025 and 2024, respectively.
Contractual Obligations and Commitments Our principal commitments consist of obligations under operating leases for our headquarters located in Sunnyvale, California, as well as office space and co-location data center facilities in several locations.
As of January 31, 2025, we had zero outstanding borrowings and were in compliance with all loan covenants. Contractual Obligations and Commitments Our principal commitments consist of obligations under operating leases for our headquarters located in Sunnyvale, California, as well as office space and co-location data center facilities in several locations.
Ooma | FY2024 Form 10-K | 56 Operating Expenses Fiscal Year Ended January 31, Change 2024 2023 2022 2024 vs. 2023 Sales and marketing $ 73,503 $ 69,671 $ 58,631 $ 3,832 6 % Research and development 49,935 45,939 38,193 3,996 9 % General and administrative 27,795 27,795 23,544 — — Total operating expenses $ 151,233 $ 143,405 $ 120,368 $ 7,828 5 % Fiscal 2024 Compared to Fiscal 2023 Sales and marketing expenses increased $3.8 million or 6% year-over-year, primarily due to a $4.1 million increase in personnel and contractor related costs, a $0.4 million increase in commission costs, and a $0.7 million increase in intangible asset amortization, offset in part by a $1.6 million decrease in advertising and marketing expense.
Ooma | FY2025 Form 10-K | 51 Operating Expenses Fiscal Year Ended January 31, Change 2025 2024 2023 2025 vs. 2024 Sales and marketing $ 77,325 $ 73,503 $ 69,671 $ 3,822 5 % Research and development 54,287 49,935 45,939 4,352 9 % General and administrative 31,346 27,795 27,795 3,551 13 % Total operating expenses $ 162,958 $ 151,233 $ 143,405 $ 11,725 8 % Fiscal 2025 Compared to Fiscal 2024 Sales and marketing expenses increased $3.8 million or 5% year-over-year, primarily due to a $4.7 million increase in personnel and contractor related costs, and a $0.6 million increase in commission costs, partially offset by a $1.5 million decrease in advertising and marketing expense.
GAAP, which requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses, cash flows and the related disclosures. We base our estimates on historical experience and on other assumptions we believe to be reasonable under the circumstances. Actual results could differ materially from these estimates.
Critical Accounting Policies and Estimates We prepare our consolidated financial statements in accordance with U.S. GAAP, which requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses, cash flows and the related disclosures. We base our estimates on historical experience and on other assumptions we believe to be reasonable under the circumstances.
Cash usage reflected our acquisition of 2600Hz, including the repayment of borrowings under our Credit Agreement. Reconciliations of non-GAAP adjusted measures to the most directly comparable GAAP measures are presented below under Adjusted EBITDA and Non-GAAP Financial Measures.
Reconciliations of non-GAAP adjusted measures to the most directly comparable GAAP measures are presented below under Adjusted EBITDA and Non-GAAP Financial Measures.
Note 2 to the notes to consolidated financial statements of this Form 10-K describes the significant accounting policies and methods used in the preparation of the consolidated financial statements. We believe that the accounting policies discussed below are critical to understanding our historical and future performance as these policies involve a greater degree of judgment and complexity.
We believe that the accounting policies discussed below are critical to understanding our historical and future performance as these policies involve a greater degree of judgment and complexity.
NDRR was flat year-over-year due to relatively consistent level of user churn and increase in Average Monthly Recurring Subscription Revenue. Ooma | FY2024 Form 10-K | 51 Adjusted EBITDA increased year-over-year in line with our revenue growth, representing approximately 8% of our total revenues for fiscal 2024 and fiscal 2023.
NDRR declined slightly year-over-year due to user churn offset by an increase in Average Monthly Recurring Subscription Revenue. Adjusted EBITDA increased year-over-year in line with our revenue growth, representing approximately 9% and 8% of our total revenues for fiscal 2025 and fiscal 2024, respectively.
Investing Activities Cash used in investing activities was $35.3 million for fiscal 2024, which consisted of cash consideration paid for the 2600Hz business acquisition of $32.2 million, and capital expenditures of $6.2 million, partly offset by proceeds of $2.8 million from maturities of short-term investments and $0.3 million of cash received for working capital adjustments from the seller related Ooma | FY2024 Form 10-K | 59 to the acquisition of OnSIP in the second fiscal quarter of 2023.
Cash used in investing activities was $35.3 million for fiscal 2024, which consisted of cash consideration paid for the 2600Hz business acquisition of $32.2 million, and capital expenditures of $6.2 million, partly offset by proceeds of $2.8 million from maturities of short-term investments. We did not have any acquisitions in fiscal 2025.
Operating asset and liability changes for fiscal 2024 included: • an increase of $2.6 million in accounts receivable due to the timing of cash collections; • a decrease of $6.3 million in inventories and deferred inventory costs; • an increase of $2.3 million in prepaid expenses and other current and non-current assets primarily due to the capitalization of sales commissions and the timing of prepayments; and • a decrease of $9.6 million in accounts payable, accrued expenses and other liabilities due to the timing of payments Cash provided by operating activities for fiscal 2024 increased $3.5 million year-over-year, which primarily reflected working capital impacts resulting from the timing of payments.
Operating asset and liability changes for fiscal 2025 included: • a decrease of $1.8 million in accounts receivable due to the timing of cash collections; • a decrease of $6.6 million in inventories and deferred inventory costs; Ooma | FY2025 Form 10-K | 53 • an increase of $2.7 million in prepaid expenses and other current and non-current assets primarily due to the capitalization of sales commissions and the timing of prepayments; and • a net decrease of $2.2 million in accounts payable, accrued expenses and other liabilities due to the timing of payments • a decrease of $0.4 million in deferred revenue.
This change was primarily due to the usage of certain higher cost components that we had procured in the prior fiscal year to stay ahead of pandemic driven supply chain issues. Product and other gross margin for fiscal 2023 benefited from certain accessory sales that did not recur in fiscal year 2024.
Product and other revenue gross margin improved to negative 63% from negative 71% in the prior year period, primarily due to the depletion of certain higher cost components that we procured in prior fiscal years to stay ahead of pandemic driven supply chain issues.
Cost of Revenue and Gross Margin Fiscal Year Ended January 31, Change 2024 2023 2022 2024 vs. 2023 Cost of revenue: Subscription and services $ 63,667 $ 54,499 $ 49,563 $ 9,168 17 % Product and other 25,838 24,018 24,289 1,820 8 % Total cost of revenue $ 89,505 $ 78,517 $ 73,852 $ 10,988 14 % Gross margin: Subscription and services 71 % 73 % 72 % Product and other (71 )% (41 )% (49 )% Total 62 % 64 % 62 % Fiscal 2024 Compared to Fiscal 2023 Subscription and services gross margin of 71% decreased year-over-year from 73%.
Cost of Revenue and Gross Margin Fiscal Year Ended January 31, Change 2025 2024 2023 2025 vs. 2024 Cost of revenue: Subscription and services $ 71,199 $ 63,667 $ 54,499 $ 7,532 12 % Product and other 29,635 25,838 24,018 3,797 15 % Total cost of revenue $ 100,834 $ 89,505 $ 78,517 $ 11,329 13 % Gross margin: Subscription and services 70 % 71 % 73 % Product and other (63 )% (71 )% (41 )% Total 61 % 62 % 64 % Fiscal 2025 Compared to Fiscal 2024 Subscription and services gross margin of 70% decreased year-over-year from 71%.
Financing Activities Cash provided by financing activities was $16.5 million for fiscal 2024, which consisted of proceeds from the issuance of long-term debt of $18.0 million to provide funding for the 2600Hz acquisition, proceeds of $2.7 million from the issuance of common stock from our Employee Stock Purchase Plan (“ESPP”) and stock option exercises, partly offset by payments of $1.7 million related to shares repurchased for tax withholdings on vesting of restricted stock units (“RSUs”), $2.0 million repayment of long-term debt, and $0.5 million debt issuance costs.
Financing Activities Cash used in financing activities was $19.8 million for fiscal 2025, which consisted of $16.0 million in debt repayments, payments of $4.4 million related to shares repurchased for tax withholdings on vesting of RSUs, and payments of $4.5 million under our stock repurchase plan, offset by proceeds of $5.1 million from the issuance of common stock from our ESPP and stock option exercises.
Adjusted EBITDA represents net income before interest and other income, income taxes, depreciation and amortization of capital expenditures, amortization of intangible assets, acquisition-related costs, certain litigation settlement costs, restructuring costs, non-recurring gains, and stock-based compensation expense and related taxes. See "Non-GAAP Financial Measures" below for additional information.
Adjusted EBITDA represents net income before interest and other income, income taxes, depreciation and amortization of capital expenditures, amortization of intangible assets and acquisition related costs, stock-based compensation and related taxes, litigation costs, restructuring costs, gain on note conversion, and facilities consolidation (gain) charges.
Some of these limitations are: • Adjusted EBITDA does not consider the impact of interest and other income/expense and does not reflect income tax payments that may represent a reduction in cash available to us; • Adjusted EBITDA does not consider any expenses for assets being depreciated and amortized that are necessary to our business; although these are non-cash charges, the property and equipment being depreciated and amortized often will have to be replaced in the future, and Adjusted EBITDA does not reflect any cash capital expenditure requirements for such replacements; • Adjusted EBITDA and non-GAAP net income exclude stock-based compensation expense and related payroll taxes because we believe these adjustments provide better comparability to peer company results and because these charges are not viewed by management as part of our core operating performance ; • Adjusted EBITDA and non-GAAP net income exclude acquisition-related costs, including the amortization of acquired intangible assets and restructuring costs, as well as third-party transaction costs incurred for legal and other professional services, and an acquisition-related income tax benefit.
Some of these limitations are: • Adjusted EBITDA does not consider the impact of income tax provisions or benefits, other income/expense, stock-based compensation and related taxes, amortization of intangible assets and acquisition-related costs, restructuring costs and costs that are not recurring in nature; and • Adjusted EBITDA does not consider any expenses for assets being depreciated and amortized that are necessary to our business; although these are non-cash charges, the property and equipment being depreciated and amortized often will have to be replaced in the future, and Adjusted EBITDA does not reflect any cash capital expenditure requirements for such replacements; • Other companies, including companies in our industry, may calculate Adjusted EBITDA differently, which reduces its usefulness as a comparative measure.
Overall, the year-over-year increase in the cost of subscription and services reflects both organic growth and growth related to our acquisitions of 2600Hz and OnSIP in fiscal 2024 and 2023, respectively. Product and other revenue gross margin changed to negative 71% from negative 41% in the prior year.
Overall, the year-over-year increase in the cost of subscription and services reflects both organic growth and growth related to our acquisition of 2600Hz in fiscal 2025.
We refer to Ooma Office, Ooma Enterprise, Ooma AirDial, 2600Hz, and OnSIP collectively as Ooma Business. Ooma Residential includes Ooma Telo basic and premier services, as well as Ooma Telo LTE services. See Item 1. Business above for additional information regarding our business, including products and services offered, competitive market and regulatory matters.
We primarily offer our solutions in the United States and Canada, with limited offerings in certain other countries. We refer to Ooma Office, Ooma Enterprise, Ooma AirDial, 2600Hz, and OnSIP collectively as Ooma Business. Ooma Residential includes Ooma Telo basic and premier services, as well as Ooma Telo LTE services. See Item 1.
Although we have generated cash from operations in recent periods, our operating cash flow may not remain positive in the future as we continue to invest in efforts to scale our business and paydown borrowings under our Credit Agreement.
Cash provided by operating activities for fiscal 2025 increased $14.3 million year-over-year, which primarily reflected working capital impacts resulting from the timing of payments. Although we have generated cash from operations in recent periods, our operating cash flow may not remain positive in the future as we continue to invest in efforts to scale our business.
A significant portion of the year-over-year increase in personnel and contractor related costs for operating expenses was due to increases in headcount attributable to the 2600Hz and OnSIP acquisition in fiscal 2024 and 2023, respectively.
A significant portion of the year-over-year increase in personnel-related costs and amortization of intangible assets for operating expenses was due to the 2600Hz acquisition near the end of the third quarter of fiscal 2024. Income Taxes We recorded an income tax benefit of $3.1 million in fiscal 2024, offset by $1.1 million of income tax expense in fiscal 2024.
Additionally, we have a non-cancelable service agreement with a telecommunications provider that contains total annual minimum purchase commitments of $1.5 million between August 2022 and February 2024 and $2.5 million between March 2024 and February 2025. Ooma | FY2024 Form 10-K | 60 Critical Accounting Policies and Estimates We prepare our consolidated financial statements in accordance with U.S.
Additionally, we have a non-cancelable service agreement with a telecommunications provider pursuant to which we are obligated to total minimum purchase commitments of $11.9 million between March 2024 and February 2029, of which $10.2 million was outstanding as of January 31, 2025, and a non-cancelable service agreement with a cloud service provider pursuant to which we are obligated to total annual minimum purchase commitments of $1.1 million between March 2024 and February 2025, of which $0.1 million was outstanding as of January 31, 2025.
Subscription and services revenue increased $22.5 million or 11% year-over-year, primarily attributable to an increase in our core users and an increase in the average revenue per core user.
Subscription and services revenue increased $17.0 million or 8% year-over-year, primarily attributable to an increase in the average revenue per core user, driven by organic growth, which was in part due to higher sales to our Office and Enterprise customers, revenue contributed from 2600Hz, which we acquired at the end of third quarter of fiscal 2024, and an increase in AirDial lines.
Product and other revenue decreased $1.9 million or 11% year-over-year, primarily attributable to the sale of certain legacy inventories and accessories in fiscal 2023. These sales did not recur in fiscal 2024.
Product and other revenue increased $3.1 million or 20% year-over-year, primarily attributable to the increase of AirDial units shipped, sale of accessories to Ooma Enterprise customers, and professional service revenue from 2600Hz.
Removed
We primarily offer our solutions in the United States and Canada, with limited offerings in certain other countries. On October 20, 2023, we completed the acquisition of 2600hz, Inc. (“2600Hz”) a provider of cloud-based business applications targeted at resellers and carriers, for a base purchase price of approximately $33.0 million in cash.
Added
Business above for additional information regarding our business, including products and services offered, competitive market and regulatory matters.
Removed
The final aggregate purchase price was approximately $32.2 million, reflecting reduction for customary working capital adjustments, and was funded in part by the incurrence of $18.0 million of borrowings under our Credit Agreement. We believe the acquisition of 2600Hz will accelerate overall growth of Ooma Business.
Added
Adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our results as reported under GAAP.
Removed
Fiscal 2024 Financial Performance • Total revenue was $236.7 million, up 10% year-over-year, primarily driven by the continued growth of Ooma Business and the acquisition of 2600Hz. • Subscription and services revenue from Ooma Business grew 22% year-over-year, driven by user growth. • Total gross margin was 62%, down from 64% in fiscal 2023. • GAAP net loss was $0.8 million, compared to a net loss of $3.7 million in fiscal 2023.
Added
Because of these limitations, you should consider Adjusted EBITDA alongside other financial performance measures, including net loss and our other GAAP results.
Removed
Revenue increase year-over-year is also attributable to inclusion of revenue from 2600Hz, which we acquired at the end of third quarter of fiscal 2024 and revenue for the entire fiscal year from OnSIP, which we acquired in the second quarter of fiscal 2023.
Added
Ooma | FY2025 Form 10-K | 49 Our subscription and services gross margin is significantly higher than product and other gross margin. As a result, any significant change in revenue mix will cause our total gross margin to change.
Removed
General and administrative expenses remained the same year-over-year with key movements including a $2.5 million increase in personnel and contractor related costs to scale with the overall growth of our business, offset by a $2.4 million change in facility consolidation gain.
Added
General and administrative expenses increased $3.6 million or 13% year-over-year, primarily due to a $2.9 million increase in personnel-related costs, driven by higher headcount, an absence of a $1.0 million facility consolidation gain which did not recur in fiscal year 2025, a $0.3 million increase in restructuring costs, and a $0.3 million increase in allocated overhead costs, partially offset by a $0.9 million decrease in acquisition-related costs.
Removed
Income Taxes We recorded an income tax benefit of $3.1 million and $2.1 million in fiscal 2024 and 2023, respectively, offset by $1.1 million and $0.3 million of income tax expense in the respective fiscal years.
Added
Therefore, both GAAP financial measures of Ooma’s financial performance and the respective non-GAAP measures should be considered together. See page 57 for a discussion of Adjusted EBITDA.
Removed
Therefore, both GAAP financial measures of Ooma’s financial performance and the respective non-GAAP measures should be considered together. These non-GAAP financial measures have limitations as an analytical tool, in that they do not reflect all of the amounts associated with our results of operations as determined in accordance with GAAP.
Added
Investing Activities Cash used in investing activities was $6.4 million for fiscal 2025, which consisted of capital expenditures of $6.4 million.
Removed
These items are not factored into our evaluation of potential acquisitions, or of our performance after completion of the acquisitions, because they are not related to our core operating performance or reflective of ongoing operating results in the period, and their frequency and amount vary significantly based on the timing and magnitude of our acquisition transactions and the maturities of the businesses being acquired.
Added
Cash used in financing activities increased $36.3 million year-over-year, which primarily reflected a borrowing of $18.0 million under our Credit Agreement for the 2600Hz acquisition in fiscal 2024, which did not recur in fiscal 2025, and repayments of borrowings outstanding under our Credit Agreement in fiscal 2025.
Removed
Although we exclude the amortization of acquired intangible assets from these non-GAAP measures, management believes that it is important for investors to understand that such intangible assets were recorded as part of purchase accounting and contribute to revenue generation; • Adjusted EBITDA and non-GAAP net income exclude facilities consolidation gain or charges recorded in connection with vacated office facilities assumed in the OnSIP acquisition.
Added
Actual results could differ materially from these estimates. Note 2 to the notes to consolidated financial statements of this Form 10-K describes the significant accounting policies and methods used in the preparation of the consolidated financial statements.
Removed
These charges do not reflect expected future operating expenses and do not contribute to a meaningful evaluation of current operating performance or comparisons to the operating performance in other periods; • Adjusted EBITDA and non-GAAP net income exclude certain legal settlement costs.
Removed
These charges do not reflect expected future operating expenses and do not contribute to a meaningful evaluation of current operating performance or comparisons to the operating performance in other periods; • other companies may calculate these non-GAAP financial measures differently than we do, limiting their usefulness as comparative measures.
Removed
Cash used in investing activities increased $29.2 million year-over-year primarily due to the 2600Hz acquisition.
Removed
Cash provided by financing activities increased $14.6 million year-over-year, which primarily reflected cash proceeds from borrowings under our Credit Agreement.
Removed
As of January 31, 2024, we have $16.0 million of outstanding borrowings and were in compliance with all loan covenants, including having liquidity of $10 million and trailing four-quarter recurring revenue of $180 million at that date. On June 7, 2023, we terminated our credit and security agreement with KeyBank National Association.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

107 edited+30 added−17 removed86 unchanged
Biggest changeNotes to Consolidated Financial Statements The tax effects of temporary differences that give rise to significant portions of the Company’s deferred tax assets and liabilities are as follows (in thousands): As of January 31, 2024 2023 Deferred tax assets: Net operating loss carryforwards $ 18,486 $ 28,771 Tax credit carryover 14,928 12,205 Operating lease liabilities 4,405 3,547 Stock-based compensation 1,095 923 Capitalized research and development 17,131 6,061 State Taxes 232 — Deferred revenue 4 8 Other — 22 Gross deferred tax assets 56,281 51,537 Valuation allowance ( 42,530 ) ( 43,545 ) Net deferred tax assets $ 13,751 $ 7,992 Deferred tax liabilities: Operating lease right-of-use assets $ ( 4,309 ) $ ( 3,202 ) Deferred sales commissions and other ( 2,119 ) ( 2,396 ) Acquired intangible assets ( 6,100 ) ( 1,543 ) Fixed assets depreciation ( 1,223 ) ( 851 ) Gross deferred tax liabilities $ ( 13,751 ) $ ( 7,992 ) Net deferred taxes $ — $ — Under the Tax Cuts and Jobs Act of 2017, research and development costs are no longer fully deductible and are required to be capitalized and amortized for U.S. tax purposes effective January 1, 2022.
Biggest changeNotes to Consolidated Financial Statements Income tax provision (benefit) differed from the amount computed by applying the U.S. federal income tax rate to pre-tax loss as a result of the following (dollars in thousands): Fiscal Year Ended January 31, 2025 Rate 2024 Rate 2023 Rate Federal tax at statutory rate $ ( 1,290 ) 21 % $ ( 603 ) 21 % $ ( 1,139 ) 21 % State taxes, net of federal benefit ( 402 ) 7 % ( 128 ) 4 % ( 40 ) 1 % Foreign income and withholding taxes 284 ( 5 )% ( 139 ) 5 % ( 172 ) 3 % Permanent tax adjustment ( 167 ) 3 % 294 ( 10 )% 543 ( 10 )% Section 162(m) 808 ( 13 )% 802 ( 28 )% 843 ( 16 )% Stock-based compensation 881 ( 14 )% 812 ( 28 )% 530 ( 10 )% Change in valuation allowance 2,669 ( 44 )% ( 1,015 ) 35 % ( 1,566 ) 29 % Research and development credit ( 1,355 ) 22 % ( 2,095 ) 73 % ( 1,288 ) 24 % Provision to return adjustments ( 834 ) 14 % 4 — 533 ( 10 )% Other 166 ( 3 )% 90 ( 3 )% ( 14 ) 1 % Income tax provision (benefit) at effective tax rate $ 760 ( 12 )% $ ( 1,978 ) 69 % $ ( 1,770 ) 33 % The tax effects of temporary differences that give rise to significant portions of the Company’s deferred tax assets and liabilities are as follows (in thousands): As of January 31, 2025 2024 Deferred tax assets: Net operating loss carryforwards $ 13,409 $ 18,486 Tax credit carryover 15,790 14,928 Operating lease liabilities 3,993 4,405 Stock-based compensation 626 1,095 Capitalized research and development 23,148 17,131 State Taxes 187 232 Deferred revenue 3 4 Gross deferred tax assets 57,156 56,281 Valuation allowance ( 45,199 ) ( 42,530 ) Net deferred tax assets $ 11,957 $ 13,751 Deferred tax liabilities: Operating lease right-of-use assets $ ( 3,833 ) $ ( 4,309 ) Deferred sales commissions and other ( 2,138 ) ( 2,119 ) Acquired intangible assets ( 4,716 ) ( 6,100 ) Fixed assets depreciation ( 1,270 ) ( 1,223 ) Gross deferred tax liabilities $ ( 11,957 ) $ ( 13,751 ) Net deferred taxes $ — $ — Under the Tax Cuts and Jobs Act of 2017, research and development costs are no longer fully deductible and are required to be capitalized and amortized for U.S. tax purposes effective January 1, 2022.
Per the terms of the note, in the event of an equity financing all of the outstanding principal and accrued but unpaid interests would be converted to a number of shares of standard preferred stock equal to the Conversion Amount divided by the Conversion Price. Conversion Amount is defined as outstanding principal plus unpaid accrued interest.
Per the terms of the note, in the event of an equity financing all of the outstanding principal and accrued but unpaid interest would be converted to a number of shares of standard preferred stock equal to the Conversion Amount divided by the Conversion Price. "Conversion Amount" is defined as outstanding principal plus unpaid accrued interest.
During the nine months ended October 31, 2023 , the Company received $ 0.3 million from the seller for certain working capital adjustments, which is recorded in investing activities in the Company's condensed consolidated statement of cash flows.
During the nine months ended October 31, 2023 , the Company received $ 0.3 million from the seller for certain working capital adjustments, which is recorded in investing activities in the Company's consolidated statement of cash flows.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of January 31, 2024 and 2023, and the results of its operations and its cash flows for each of the years in the three-year period ended January 31, 2024, in conformity with U.S. generally accepted accounting principles.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of January 31, 2025 and 2024, and the results of its operations and its cash flows for each of the years in the three-year period ended January 31, 2025, in conformity with U.S. generally accepted accounting principles.
See Note 7: Leases for disclosure of impairment charges recorded in fiscal 2024. The Company did no t record any material impairment charges for fiscal 2023 or fiscal 2022. Advertising. Advertising costs are expensed as incurred, except for production costs associated with television and radio advertising, which are expensed on the first date of airing.
See Note 7: Leases for disclosure of impairment charges recorded in fiscal 2023. The Company did no t record any material impairment charges for fiscal 2025 or fiscal 2024 . Advertising. Advertising costs are expensed as incurred, except for production costs associated with television and radio advertising, which are expensed on the first date of airing.
On March 8, 2024 ("Financing Date"), GTC completed an equity financing which qualified as a conversion event under the convertible note.
On March 8, 2024 ("Financing Date"), GTC completed an equity financing which qualified as a conversion event under the convertible promissory note.
References to fiscal 2024, fiscal 2023, and fiscal 2022 refer to the fiscal years ended January 31, 2024, January 31, 2023, and January 31, 2022, respectively. Use of Estimates. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the Company’s consolidated financial statements and accompanying notes.
References to fiscal 2025, fiscal 2024, and fiscal 2023 refer to the fiscal years ended January 31, 2025, January 31, 2024, and January 31, 2023 , respectively. Use of Estimates. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the Company’s consolidated financial statements and accompanying notes.
Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of January 31, 2024 based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of January 31, 2025 based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
The Company does not have any tax positions for which it is reasonably possible the total amount of gross unrecognized benefits will significantly increase or decrease within 12 months of the year ended January 31, 2024 .
The Company does not have any tax positions for which it is reasonably possible the total amount of gross unrecognized benefits will significantly increase or decrease within 12 months of the year ended January 31, 2025 .
We also have audited the Company’s internal control over financial reporting as of January 31, 2024, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
We also have audited the Company’s internal control over financial reporting as of January 31, 2025, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
As of January 31, 2024, the mandatory capitalization requirement resulted in an increase to the Company’s gross deferred tax assets above, which was fully offset by the valuation allowance, and increases the Company's cash tax liabilities.
As of January 31, 2025, the mandatory capitalization requirement resulted in an increase to the Company’s gross deferred tax assets above, which was fully offset by the valuation allowance, and increases the Company's cash tax liabilities.
The Company determines revenue recognition through the following steps: • identification of the contract(s) with a customer; • identification of the performance obligations in the contract; • determination of the transaction price; • allocation of the transaction price to the performance obligations in the contract; and • recognition of revenue when, or as, the Company satisfies a performance obligation Subscription and Services Revenue.
The Company determines revenue recognition through the following steps: • identification of the contract(s) with a customer; • identification of the performance obligations in the contract; • determination of the transaction price; • allocation of the transaction price to the performance obligations in the contract; and • recognition of revenue when, or as, the Company satisfies a performance obligation.
As of January 31, 2024, the majority of the Company’s deferred revenue balance was composed of subscription contracts that were invoiced during the fourth quarter of fiscal 2024. Remaining performance obligations .
As of January 31, 2025, the majority of the Company’s deferred revenue balance was composed of subscription contracts that were invoiced during the fourth quarter of fiscal 2025. Remaining performance obligations .
Ooma | FY2024 Form 10-K | 69 Ooma, Inc. Notes to Consolidated Financial Statements Note 1: Overview and Basis of Presentation 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 SaaS and unified communications platforms. The Company is headquartered in Sunnyvale, California.
Ooma | FY2025 Form 10-K | 62 Ooma, Inc. Notes to Consolidated Financial Statements Note 1: Overview and Basis of Presentation 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 SaaS and unified communications platforms. The Company is headquartered in Sunnyvale, California.
The Company recorded $221.6 million of subscription and services revenue for the year ended January 31, 2024. We identified the evaluation of the sufficiency of audit evidence over certain subscription revenue as a critical audit matter. This matter required especially subjective auditor judgment because the revenue recognition process is automated and reliant upon complex IT systems.
The Company recorded $238.6 million of subscription and services revenue for the year ended January 31, 2025. We identified the evaluation of the sufficiency of audit evidence over certain subscription revenue as a critical audit matter. This matter required especially subjective auditor judgment because the revenue recognition process is automated and reliant upon complex IT systems.
The Company periodically evaluates whether there have been any changes in its business, the market conditions in which it operates or other events which would indicate that its amortization period should be changed or if there are potential indicators of impairment. To date, there have been no material impairment losses related to the costs capitalized.
The Company periodically evaluates whether there have been any changes in its business, the market conditions in which it operates or other events which would indicate that its amortization period should be changed or if there are potential indicators of impairment. To date, there have been no material impairment losses related to the costs capitalized. Property and Equipment, net.
On a pro forma basis, had the OnSIP acquisition been included in the Company's consolidated results of operations beginning February 1, 2021, the Company’s total revenue would have approximated $ 222.2 million for fiscal 2023 and approximated $ 205.1 million for fiscal 2022.
On a pro forma basis, had the OnSIP acquisition been included in the Company's consolidated results of operations beginning February 1, 2022, the Company’s total revenue would have approximated $ 222.2 million for fiscal 2023.
The Company withheld an aggregate amount of $ 1.7 million, $ 1.6 million and $ 2.1 million in fiscal 2024, 2023 and 2022, respectively, which were classified as financing cash outflows in the consolidated statements of cash flows. The Company canceled and returned these shares to the 2015 Plan, which became available under the plan terms for future issuance.
The Company withheld an aggregate amount of $ 4.4 million, $ 1.7 million and $ 1.6 million in fiscal 2025, 2024 and 2023, respectively, which were classified as financing cash outflows in the consolidated statements of cash flows. The Company canceled and returned these shares to the 2015 Plan, which became available under the plan terms for future issuance.
The Company’s ability to utilize the domestic net operating losses (NOLs) and tax credit carryforwards may be limited due to ownership change limitations that may have occurred or that could occur in the future, as required by Internal Revenue Code Section 382, as well as similar state provisions.
Notes to Consolidated Financial Statements The Company’s ability to utilize the domestic net operating losses (NOLs) and tax credit carryforwards may be limited due to ownership change limitations that may have occurred or that could occur in the future, as required by Internal Revenue Code Section 382, as well as similar state provisions.
Notes to Consolidated Financial Statements Note 2: Significant Accounting Policies Revenue Recognition The Company derives its revenue from two sources: (1) subscription and services revenue, which is derived primarily from the sale of subscription plans for communications services and other connected services; and (2) product and other revenue. Subscriptions and services are sold directly to end-customers.
Note 2: Significant Accounting Policies Revenue Recognition The Company derives its revenue from two sources: (1) subscription and services revenue, which is derived primarily from the sale of subscription plans for communications services and other connected services; and (2) product and other revenue. Subscriptions and services are sold directly to end-customers.
These pro forma revenue amounts do not necessarily represent what would have occurred if the business combination had taken place on February 1, 2021, nor do these amounts represent the results that may occur in the future. Pro forma net losses have not been presented because the impact was not material to the consolidated statements of operations .
This pro forma revenue amount does not necessarily represent what would have occurred if the business combination had taken place on February 1, 2022, nor do these amounts represent the results that may occur in the future. Pro forma net losses have not been presented because the impact was not material to the consolidated statements of operations .
Long-lived assets, such as property and equipment, capitalized website development costs intangible assets and operating lease right-of-use assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.
Long-lived assets, such as property and equipment, capitalized website development costs, intangible assets, goodwill, operating lease right-of-use assets, and non-marketable equity investments, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.
In July 2023, upon the lessor's sale of the property, the Company wrote off the remaining $ 1.0 million lease liability related to the lease as facilities consolidation gain in general and administrative expense in the condensed consolidated statements of operations. Ooma | FY2024 Form 10-K | 80 Ooma, Inc.
In July 2023, upon the lessor's sale of the property, the Company wrote off the remaining $ 1.0 million lease liability related to the lease as facilities consolidation gain in general and administrative expense in the consolidated statements of operations. Ooma | FY2025 Form 10-K | 70 Ooma, Inc.
Ooma | FY2024 Form 10-K | 64 Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.
Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.
Canadian Litigation On February 3, 2021, plaintiff Fiona Chiu filed a class action complaint against the Company and Ooma Canada Inc. in the Federal Court of Canada, alleging violations of Canada’s Trademarks Act and Competition Act.
Notes to Consolidated Financial Statements Canadian Litigation On February 3, 2021, plaintiff Fiona Chiu filed a class action complaint against the Company and Ooma Canada Inc. in the Federal Court of Canada, alleging violations of Canada’s Trademarks Act and Competition Act.
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.
In De cember 2018, the Company invested $ 1.3 million in cash in GTC, a privately-held technology company, in exchange for a convertible promissory note that would convert to shares of GTC stock upon the occurrence of certain future events.
The fair value of employee stock options and ESPP was estimated using the Black–Scholes model with the following assumptions: Fiscal Year Ended January 31, 2024 (1) 2023 2022 Stock Options: Expected volatility NA 49 % 51 % Expected term (in years) NA 6.1 6.1 Risk-free interest rate NA 1.6 % 0.9 % Dividend yield NA NA NA (1) No option was granted in fiscal 2024.
The fair value of employee stock options and ESPP was estimated using the Black–Scholes model with the following assumptions: Fiscal Year Ended January 31, 2025 (1) 2024 (1) 2023 Stock Options: Expected volatility NA NA 49 % Expected term (in years) NA NA 6.1 Risk-free interest rate NA NA 1.6 % Dividend yield NA NA NA (1) No options were granted in fiscal 2025 and fiscal 2024.
The following table summarizes the activity related to unrecognized tax benefits (in thousands): Fiscal Year Ended January 31, 2024 2023 2022 Unrecognized tax benefits, beginning of fiscal year $ 9,060 $ 8,090 $ 6,642 Increase (decrease) related to prior year tax positions 670 ( 331 ) — Increase related to current year tax positions 1,313 1,301 1,448 Unrecognized tax benefits, end of fiscal year $ 11,043 $ 9,060 $ 8,090 The Company had no interest or penalty accruals associated with uncertain tax benefits in its balance sheets and statements of operations.
The following table summarizes the activity related to unrecognized tax benefits (in thousands): Fiscal Year Ended January 31, 2025 2024 2023 Unrecognized tax benefits, beginning of fiscal year $ 11,043 $ 9,060 $ 8,090 (Decrease) Increase related to prior year tax positions ( 252 ) 670 ( 331 ) Increase related to current year tax positions 1,343 1,313 1,301 Unrecognized tax benefits, end of fiscal year $ 12,134 $ 11,043 $ 9,060 The Company had no interest or penalty accruals associated with uncertain tax benefits in its balance sheets and statements of operations.
As of January 31, 2024, there was $ 27.2 million of unrecognized compensation expense related to unvested RSUs, stock options and stock purchase rights under the ESPP, which is expected to be recognized over a weighted-average vesting period of 2.2 years.
As of January 31, 2025, there was $ 19.7 million of unrecognized compensation expense related to unvested RSUs, stock options and stock purchase rights under the ESPP, which is expected to be recognized over a weighted-average vesting period of 2.3 years.
In connection with the substitution of Mr. Zanin as the new plaintiff, the Federal Court of Canada deemed the proceeding as having commenced on November 8, 2021 instead of February 3, 2021. In January 2022, the Federal Court of Canada heard arguments from counsel representing each of the Company and Mr.
In connection with the substitution of Mr. Zanin as the new plaintiff, the Federal Court of Canada deemed the proceeding as having commenced on November 8, 2021 instead of February 3, 2021. In January 2022, the Federal Court of Canada heard arguments from counsel representing each of the Company and Mr. Zanin regarding jurisdiction and class action certification issues.
As of January 31, 2024, contract revenue that had not yet been recognized for open contracts with an original expected length of greater than one year was approxima tely $ 26.5 million. The Company expects to recognize revenue on approximately 41 % of this amount over the next 12 month s, with the balance to be recognized thereafter.
As of January 31, 2025, contract revenue that had not yet been recognized for open contracts with an original expected length of greater than one year was approxima tely $ 32.7 million. The Company expects to recognize revenue on approximately 45 % of this amount over the next 12 month s, with the balance to be recognized thereafter.
Ooma | FY2024 Form 10-K | 87 Note 12: Financing Arrangements Revolving Credit Facility On October 20, 2023 , the Company, as borrower, entered into a three-year credit and security agreement (“Credit Agreement”) with Citizens Bank N.A., as Administrative Agent (“Agent”) and lender.
Note 12: Financing Arrangements Revolving Credit Facility On October 20, 2023 , the Company, as borrower, entered into a three-year credit and security agreement (“Credit Agreement”) with Citizens Bank N.A., as Administrative Agent (“Agent”) and lender.
Indemnification The Company enters into standard indemnification arrangements in the ordinary course of business. Pursuant to these arrangements, the Company indemnifies, holds harmless and agrees to reimburse the indemnified parties for certain losses suffered or incurred by the indemnified party. In some cases, the term of these indemnification agreements is perpetual.
Pursuant to these arrangements, the Company indemnifies, holds harmless and agrees to reimburse the indemnified parties for certain losses suffered or incurred by the indemnified party. In some cases, the term of these indemnification agreements is perpetual.
For fiscal years presented, expected volatility was derived from the average historical volatility of the Company’s own common stock. The risk-free interest rate was based on the yields of U.S. Treasury securities with maturities similar to the expected term. Ooma | FY2024 Form 10-K | 83 Ooma, Inc.
For fiscal years presented, expected volatility was derived from the average historical volatility of the Company’s own common stock. The risk-free interest rate was based on the yields of U.S. Treasury securities with maturities similar to the expected term.
Notes to Consolidated Financial Statements Note 10: Income Taxes The domestic and foreign components of loss before income taxes were as follows (in thousands): Fiscal Year Ended January 31, 2024 2023 2022 United States $ ( 491 ) $ ( 2,557 ) $ 1,340 Foreign ( 2,322 ) ( 2,868 ) ( 3,091 ) Loss before income taxes $ ( 2,813 ) $ ( 5,425 ) $ ( 1,751 ) Income tax benefit consisted of the following: Fiscal Year Ended January 31, 2024 2023 2022 Current: Federal $ — $ — $ — State 1,153 363 — Foreign — — — Total current 1,153 363 — Deferred: Federal ( 2,661 ) ( 1,783 ) — State ( 470 ) ( 350 ) — Foreign — — — Total deferred ( 3,131 ) ( 2,133 ) — Income tax benefit $ ( 1,978 ) $ ( 1,770 ) $ — The income tax benefit of $ 2.0 million for fiscal 2024 was primarily attributable to the release of a $ 3.1 million valuation allowance on certain preexisting deferred tax assets realized as a result of deferred tax liabilities assumed in the Company's acquisition of 2600Hz.
Note 10: Income Taxes The domestic and foreign components of loss before income taxes were as follows (in thousands): Fiscal Year Ended January 31, 2025 2024 2023 United States $ ( 6,126 ) $ ( 491 ) $ ( 2,557 ) Foreign ( 15 ) ( 2,322 ) ( 2,868 ) Loss before income taxes $ ( 6,141 ) $ ( 2,813 ) $ ( 5,425 ) Income tax provision (benefit) consisted of the following: Fiscal Year Ended January 31, 2025 2024 2023 Current: Federal $ 168 $ — $ — State 592 1,153 363 Foreign — — — Total current 760 1,153 363 Deferred: Federal — ( 2,661 ) ( 1,783 ) State — ( 470 ) ( 350 ) Foreign — — — Total deferred — ( 3,131 ) ( 2,133 ) Income tax provision (benefit) $ 760 $ ( 1,978 ) $ ( 1,770 ) The income tax benefit of $ 2.0 million for fiscal 2024 was primarily attributable to the release of a $ 3.1 million valuation allowance on certain preexisting deferred tax assets realized as a result of deferred tax liabilities assumed in the Company's acquisition of 2600Hz.
Ooma | FY2024 Form 10-K | 89 Note 14: Net Loss Per Share Basic and diluted net loss per share of common stock is calculated by dividing the net loss allocable to common stockholders by the weighted-average number of common shares outstanding during the period.
Note 14: Net Loss Per Share Basic and diluted net loss per share of common stock is calculated by dividing the net loss allocable to common stockholders by the weighted-average number of common shares outstanding during the period.
Upon the occurrence of any event of default, the interest rate on the borrowings increases by 5.00 %. The Company is required to pay a commitment fee on the unused portion of the Credit Facility of 0.25 % per annum.
Upon the occurrence of any event of default, the interest rate on the borrowings increases by 5.00 %. The Company is required to pay a commitment fee on the unused portion of the Credit Facility of 0.25 % per annum. Ooma | FY2025 Form 10-K | 76 Ooma, Inc.
We evaluated the sufficiency of audit evidence obtained by assessing the results of procedures performed, including the appropriateness of such evidence. /s/ KPMG LLP We have served as the Company's auditor since 2021. Santa Clara, California April 2, 2024 Ooma | FY2024 Form 10-K | 65 OOMA, INC.
We evaluated the sufficiency of audit evidence obtained by assessing the results of procedures performed, including the appropriateness of such evidence. /s/ KPMG LLP We have served as the Company's auditor since 2021. Santa Clara, California April 1, 2025 Ooma | FY2025 Form 10-K | 58 OOMA, INC.
The following table sets forth the computation of basic and diluted net loss per share (in thousands, except share and per share data): Fiscal Year Ended January 31, 2024 2023 2022 Numerator Net loss $ ( 835 ) $ ( 3,655 ) $ ( 1,751 ) Denominator Weighted-average common shares 25,573,288 24,506,525 23,473,849 Basic and diluted net loss per share $ ( 0.03 ) $ ( 0.15 ) $ ( 0.07 ) Potentially dilutive securities of approximately 0.6 million, 0.7 million and 1.4 million in fiscal 2024 , 2023 and 2022, respectively, were excluded from the computation of diluted net loss per share as their inclusion would have been anti-dilutive.
The following table sets forth the computation of basic and diluted net loss per share (in thousands, except share and per share data): Fiscal Year Ended January 31, 2025 2024 2023 Numerator Net loss $ ( 6,901 ) $ ( 835 ) $ ( 3,655 ) Denominator Weighted-average common shares 26,685,598 25,573,288 24,506,525 Basic and diluted net loss per share $ ( 0.26 ) $ ( 0.03 ) $ ( 0.15 ) Potentially dilutive securities of approximately 0.8 million, 0.6 million and 0.7 million in fiscal 2025, 2024 and 2023 , respectively, were excluded from the computation of diluted net loss per share as their inclusion would have been anti-dilutive.
Income taxes are recorded using the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards.
Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards.
Consolidated Financial Statements and Supplementary Data Index Report of Independent Registered Public Accounting Firm – KPMG LLP (PCAOB ID No. 185 ) 64 Consolidated Balance Sheets 66 Consolidated Statements of Operations 67 Consolidated Statements of Stockholders’ Equity 68 Consolidated Statements of Cash Flows 69 Notes to Consolidated Financial Statements 70 Ooma | FY2024 Form 10-K | 63 R EPORT OF INDEPENDENT REGIST ERED PUBLIC ACCOUNTING FIRM To the Stockholders and the Board of Directors Ooma, Inc.: Opinions on the Consolidated Financial Statements and Internal Control Over Financial Reporting We have audited the accompanying consolidated balance sheets of Ooma, Inc. and subsidiaries (the Company) as of January 31, 2024 and 2023, the related consolidated statements of operations, stockholders’ equity, and cash flows for each of the years in the three-year period ended January 31, 2024, and the related notes (collectively, the consolidated financial statements).
Consolidated Financial Statements and Supplementary Data Index Report of Independent Registered Public Accounting Firm – KPMG LLP ( Santa Clara, CA ; PCAOB ID No. 185 ) 57 Consolidated Balance Sheets 59 Consolidated Statements of Operations 60 Consolidated Statements of Stockholders’ Equity 61 Consolidated Statements of Cash Flows 62 Notes to Consolidated Financial Statements 63 Ooma | FY2025 Form 10-K | 56 R EPORT OF INDEPENDENT REGIST ERED PUBLIC ACCOUNTING FIRM To the Stockholders and the Board of Directors Ooma, Inc.: Opinions on the Consolidated Financial Statements and Internal Control Over Financial Reporting We have audited the accompanying consolidated balance sheets of Ooma, Inc. and subsidiaries (the Company) as of January 31, 2025 and 2024, the related consolidated statements of operations, stockholders’ equity, and cash flows for each of the years in the three-year period ended January 31, 2025, and the related notes (collectively, the consolidated financial statements).
Supplemental balance sheet information related to leases was as follows (in thousands): As of January 31, 2024 January 31, 2023 Assets Operating lease right-of-use assets $ 17,041 $ 12,702 Total leased assets $ 17,041 $ 12,702 Liabilities Short-term operating lease liabilities $ 3,742 $ 3,617 Long-term operating lease liabilities 13,676 10,426 Total lease liabilities $ 17,418 $ 14,043 Weighted-average remaining lease term 6.0 years 4.8 years Weighted-average discount rate 6.2 % 4.5 % The components of lease expense were as follows (in thousands): Fiscal Year Ended January 31, 2024 2023 2022 Operating lease costs (1) $ 4,581 $ 4,030 $ 3,861 Variable lease costs (2) 1,217 1,117 972 Total lease cost $ 5,798 $ 5,147 $ 4,833 (1) Recognized on a straight-line basis over the lease term.
Supplemental balance sheet information related to leases was as follows (in thousands): As of January 31, 2025 January 31, 2024 Assets Operating lease right-of-use assets $ 15,311 $ 17,041 Total leased assets $ 15,311 $ 17,041 Liabilities Short-term operating lease liabilities $ 3,713 $ 3,742 Long-term operating lease liabilities 12,234 13,676 Total lease liabilities $ 15,947 $ 17,418 Weighted-average remaining lease term 5.2 years 6.0 years Weighted-average discount rate 6.3 % 6.2 % The components of lease expense were as follows (in thousands): Fiscal Year Ended January 31, 2025 2024 2023 Operating lease costs (1) $ 5,025 $ 4,581 $ 4,030 Variable lease costs (2) 1,427 1,217 1,117 Total lease cost $ 6,452 $ 5,798 $ 5,147 (1) Recognized on a straight-line basis over the lease term.
CONSOLIDATED STATEM ENTS OF CASH FLOWS (Amounts in thousands) Fiscal Year Ended January 31, 2024 January 31, 2023 January 31, 2022 Cash flows from operating activities: Net loss $ ( 835 ) $ ( 3,655 ) $ ( 1,751 ) Adjustments to reconcile net loss to net cash provided by operating activities: Stock-based compensation expense 14,833 13,903 12,682 Depreciation and amortization of capital expenditures 4,317 3,771 3,117 Amortization of intangible assets 3,711 2,286 1,304 Amortization of operating lease right-of-use assets 2,966 2,978 2,939 Deferred income tax benefit ( 3,131 ) ( 2,133 ) — Facilities consolidation (gain) charge ( 956 ) 1,402 — Other ( 5 ) 38 53 Changes in operating assets and liabilities: Accounts receivable, net ( 2,587 ) 434 ( 2,082 ) Inventories and deferred inventory costs 6,341 ( 12,333 ) ( 1,571 ) Prepaid expenses and other assets ( 2,280 ) ( 2,460 ) ( 4,609 ) Accounts payable, accrued expenses and other liabilities ( 9,579 ) 4,509 ( 3,599 ) Deferred revenue ( 522 ) 33 172 Net cash provided by operating activities 12,273 8,773 6,655 Cash flows from investing activities: Proceeds from maturities of short-term investments 2,750 12,705 16,505 Proceeds from sales of short-term investments — — 300 Purchases of short-term investments — ( 3,869 ) ( 17,488 ) Capital expenditures ( 6,159 ) ( 5,211 ) ( 4,204 ) Business acquisition ( 31,919 ) ( 9,771 ) — Net cash used in investing activities ( 35,328 ) ( 6,146 ) ( 4,887 ) Cash flows from financing activities: Proceeds from issuance of common stock 2,664 3,397 2,706 Shares repurchased for tax withholdings on vesting of restricted stock units ("RSU") ( 1,741 ) ( 1,554 ) ( 2,105 ) Proceeds from issuance of long-term debt 18,000 — — Repayment of long-term debt ( 2,000 ) — — Credit facility issuance costs ( 469 ) — — Net cash provided by financing activities 16,454 1,843 601 Net (decrease) increase in cash and cash equivalents ( 6,601 ) 4,470 2,369 Cash and cash equivalents at beginning of period 24,137 19,667 17,298 Cash and cash equivalents at end of period $ 17,536 $ 24,137 $ 19,667 Supplementary cash flow disclosure: Cash paid for income taxes, net $ 765 $ 409 $ 34 Non-cash investing and financing activities: Capital expenditures included in accounts payable at period-end $ 188 $ 243 $ 324 Purchase price receivable for business acquisition (see Note 13) $ — $ 300 $ — See notes to consolidated financial statements.
CONSOLIDATED STATEM ENTS OF CASH FLOWS (Amounts in thousands) Fiscal Year Ended January 31, 2025 January 31, 2024 January 31, 2023 Cash flows from operating activities: Net loss $ ( 6,901 ) $ ( 835 ) $ ( 3,655 ) Adjustments to reconcile net loss to net cash provided by operating activities: Stock-based compensation expense 17,915 14,833 13,903 Depreciation and amortization of capital expenditures 4,294 4,317 3,771 Amortization of intangible assets 5,767 3,711 2,286 Amortization of operating lease right-of-use assets 3,074 2,966 2,978 Gain on note conversion ( 980 ) — — Deferred income tax benefit — ( 3,131 ) ( 2,133 ) Facilities consolidation (gain) charge — ( 956 ) 1,402 Other 243 ( 5 ) 38 Changes in operating assets and liabilities: Accounts receivable, net 1,824 ( 2,587 ) 434 Inventories and deferred inventory costs 6,639 6,341 ( 12,333 ) Prepaid expenses and other assets ( 2,659 ) ( 2,280 ) ( 2,460 ) Accounts payable, accrued expenses and other liabilities ( 2,163 ) ( 9,579 ) 4,509 Deferred revenue ( 447 ) ( 522 ) 33 Net cash provided by operating activities 26,606 12,273 8,773 Cash flows from investing activities: Capital expenditures ( 6,447 ) ( 6,159 ) ( 5,211 ) Business acquisition — ( 31,919 ) ( 9,771 ) Proceeds from maturities of short-term investments — 2,750 12,705 Purchases of short-term investments — — ( 3,869 ) Net cash used in investing activities ( 6,447 ) ( 35,328 ) ( 6,146 ) Cash flows from financing activities: Proceeds from issuance of common stock 5,056 2,664 3,397 Shares repurchased for tax withholdings on vesting of RSUs ( 4,410 ) ( 1,741 ) ( 1,554 ) Payments for repurchases of common stock ( 4,470 ) — — Repayment of long-term debt ( 16,000 ) ( 2,000 ) — Proceeds from issuance of long-term debt — 18,000 — Credit facility issuance costs — ( 469 ) — Net cash (used in) provided by financing activities ( 19,824 ) 16,454 1,843 Net increase (decrease) in cash and cash equivalents 335 ( 6,601 ) 4,470 Cash and cash equivalents at beginning of period 17,536 24,137 19,667 Cash and cash equivalents at end of period $ 17,871 $ 17,536 $ 24,137 Supplementary cash flow disclosure: Cash paid for income taxes, net $ 643 $ 765 $ 409 Non-cash investing and financing activities: Capital expenditures included in accounts payable at period-end $ 205 $ 188 $ 243 Purchase price receivable for business acquisition (see Note 13) $ — $ — $ 300 See notes to consolidated financial statements.
The Company determines the stand-alone selling price (“SSP”) for its communications services based on observable historical stand-alone sales to customers, for which a substantial majority of selling prices must fall within a reasonably narrow pricing range.
The contract transaction price is then allocated to the separate performance obligations on a relative stand-alone selling price basis. The Company determines the stand-alone selling price (“SSP”) for its communications services based on observable historical stand-alone sales to customers, for which a substantial majority of selling prices must fall within a reasonably narrow pricing range.
As of January 31, 2024 January 31, 2023 Subscription and services $ 17,034 $ 17,239 Product and other 22 8 Total deferred revenue $ 17,056 17,247 Less: current deferred revenue 17,041 17,216 Non-current deferred revenue included in other long-term liabilities $ 15 $ 31 During fiscal 2024, the Company recognized revenue of approximately $ 17.2 million pertaining to amounts deferred as of January 31, 2023.
As of January 31, 2025 January 31, 2024 Subscription and services $ 16,601 $ 17,034 Product and other 8 22 Total deferred revenue $ 16,609 17,056 Less: current deferred revenue 16,586 17,041 Non-current deferred revenue included in other long-term liabilities $ 23 $ 15 During fiscal 2025, the Company recognized revenue of approximately $ 17.0 million pertaining to amounts deferred as of January 31, 2024.
Conversion Price is 70 % of the per share price for the preferred stock. As of the Financing Date, the carrying value of the convertible note of $ 2.3 million, including accrued interest was converted to 8.2 million shares of preferred stock of GTC.
"Conversion Price" is 70 % of the per share price for the preferred stock. As of the Financing Date, the carrying value of the convertible promissory note of $ 2.3 million, including accrued interest, was converted to 8.2 million shares of preferred stock of GTC. Upon the conversion event, GTC is no longer a variable interest entity for accounting purposes.
RSU activity for fiscal 2024 was as follows: Shares (in thousands) Weighted-Average Grant Date Fair Value Per Share Balance as of January 31, 2023 1,466 $ 15.81 Granted 1,507 $ 12.30 Vested ( 835 ) $ 14.65 Canceled ( 63 ) $ 15.24 Balance as of January 31, 2024 2,075 $ 13.74 Vested RSUs included shares of common stock that the Company withheld on behalf of certain employees to satisfy the minimum statutory tax withholding requirements, as defined by the Company.
RSU activity for fiscal 2025 was as follows: Shares (in thousands) Weighted-Average Grant Date Fair Value Per Share Balance as of January 31, 2024 2,075 $ 13.74 Granted 1,126 $ 8.72 Vested ( 1,283 ) $ 12.72 Canceled ( 62 ) $ 12.63 Balance as of January 31, 2025 1,856 $ 11.44 Vested RSUs included shares of common stock that the Company withheld on behalf of certain employees to satisfy the minimum statutory tax withholding requirements, as defined by the Company.
Ooma | FY2024 Form 10-K | 72 Ooma, Inc. Notes to Consolidated Financial Statements Property and Equipment, net. Property and equipment, net is stated at cost, less accumulated depreciation and amortization. Depreciation and amortization is computed on a straight-line basis over the estimated useful lives of those assets, generally two to five years .
Property and equipment, net is stated at cost, less accumulated depreciation and amortization. Depreciation and amortization is computed on a straight-line basis over the estimated useful lives of those assets, generally two to five years .
Remeasurement and transaction gains and losses are included in interest and other income, net and were not material for any periods presented. Ooma | FY2024 Form 10-K | 70 Ooma, Inc.
Remeasurement and transaction gains and losses are included in interest and other income, net and were not material for any periods presented.
The net change in the total valuation allowance was a decrease of $ 1.0 million and $ 1.6 million for fiscal 2024 and 2023, respectively.
The net change in the total valuation allowance was an increase of $ 2.7 million and a decrease of $ 1.0 million for fiscal 2025 and 2024, respectively.
As of January 31, 2024 and 2023, the Company did no t have any accrued liabilities recorded for loss contingencies in its consolidated financial statements.
As of January 31, 2025 and 2024 , the Company did no t have any accrued liabilities recorded for loss contingencies in its consolidated financial statements. Ooma | FY2025 Form 10-K | 75 Ooma, Inc.
Ea ch period, the Company evaluates the estimated remaining useful life of its intangible assets and whether events or changes in circumstances warrant a revision to the remaining period of amortization. Impairment Assessment.
Acquired intangible assets, which primarily consist of customer relationships, are amortized over their estimated useful lives. Ea ch period, the Company evaluates the estimated remaining useful life of its intangible assets and whether events or changes in circumstances warrant a revision to the remaining period of amortization. Impairment Assessment.
Product and other revenue is generated primarily from the sale of on-premise devices and end-point devices, including Ooma AirDial, and to a lesser extent from porting fees that enable customers to transfer their existing phone numbers. The Company recognizes product and other revenue from sales to direct end-customers and channel partners at the point-in-time that control is transferred.
Product and Other Revenue. Product and other revenue is generated primarily from the sale of on-premise devices and end-point devices, including Ooma AirDial, professional services revenue, and to a lesser extent from porting fees that enable customers to transfer their existing phone numbers.
Bad debt expense recorded in the consolidated statement of operations was not material for the periods presented. Inventories. Inventories, which consist of raw materials and finished goods, include the cost to purchase manufactured products, allocated labor and overhead. Inventories are stated at the lower of actual cost and net realizable value on a first-in, first-out basis.
Inventories, which consist of raw materials and finished goods, include the cost to purchase manufactured products, allocated labor and overhead. Inventories are stated at the lower of actual cost and net realizable value on a first-in, first-out basis.
Fiscal Year Ended January 31, 2024 2023 2022 ESPP: Expected volatility 32 %- 43 % 41 %- 55 % 41 %- 58 % Expected term (in years) 0.5 - 2.0 0.5 - 2.0 0.5 - 2.0 Risk-free interest rate 3.9 %- 5.5 % 0.9 %- 4.0 % 0.1 %- 0.2 % Dividend yield NA NA NA The expected term of options granted to employees was based on the simplified method because the Company does not have sufficient historical exercise data for the fiscal years presented, and the expected term of the ESPP is based on the contractual term.
Fiscal Year Ended January 31, 2025 2024 2023 ESPP: Expected volatility 39 %- 57 % 32 %- 43 % 41 %- 55 % Expected term (in years) 0.5 - 2.0 0.5 - 2.0 0.5 - 2.0 Risk-free interest rate 3.6 %- 5.4 % 3.9 %- 5.5 % 0.9 %- 4.0 % Dividend yield NA NA NA The expected term of options granted to employees was based on the simplified method, and the expected term of the ESPP is based on the contractual term.
The majority of the Company's stock-based compensation is derived from RSUs granted to employees and non-employee directors. Stock-based compensation is generally measured based on the closing market price of the Company’s common stock on the date of grant and recognized on a straight-line basis over the vesting period. Forfeitures are recorded in the period in which they occur. Income Taxes.
Stock-based compensation is generally measured based on the closing market price of the Company’s common stock on the date of grant and recognized on a straight-line basis over the vesting period. Forfeitures are recorded in the period in which they occur. Income Taxes. Income taxes are recorded using the asset and liability method.
Acquisition-related costs charged to general and administrative expense during fiscal 2024 were approximately $ 0.9 million. During the second quarter of fiscal 2023, the Company acquired Junction Networks, Inc. which does business as OnSIP for $ 9.5 million.
The estimated fair value of these awards of $ 4.3 million is recorded as stock compensation expense over the service period. Acquisition-related costs charged to general and administrative expense during fiscal 2024 were approximately $ 0.9 million. During the second quarter of fiscal 2023, the Company acquired Junction Networks, Inc. which does business as OnSIP for $ 9.5 million.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (Amounts in thousands, except shares and share data) Common Stock and Additional Paid-In Capital Accumulated Other Comprehensive Accumulated Stockholders' Shares Amount Income (Loss) Deficit Equity BALANCE - January 31, 2021 22,873,020 166,581 7 ( 127,037 ) 39,551 Issuance of common stock under equity-based plans 1,168,245 2,706 — — 2,706 Shares repurchased for tax withholdings on vesting of RSUs ( 105,072 ) ( 2,105 ) — — ( 2,105 ) Stock-based compensation — 12,682 — — 12,682 Other comprehensive loss — — ( 27 ) — ( 27 ) Net loss — — — ( 1,751 ) ( 1,751 ) BALANCE - January 31, 2022 23,936,193 $ 179,864 $ ( 20 ) $ ( 128,788 ) $ 51,056 Issuance of common stock under equity-based plans 1,174,532 3,397 — — 3,397 Shares repurchased for tax withholdings on vesting of RSUs ( 114,633 ) ( 1,554 ) — — ( 1,554 ) Stock-based compensation — 13,903 — — 13,903 Other comprehensive loss — — ( 3 ) — ( 3 ) Net loss — — — ( 3,655 ) ( 3,655 ) BALANCE - January 31, 2023 24,996,092 $ 195,610 $ ( 23 ) $ ( 132,443 ) $ 63,144 Issuance of common stock under equity-based plans 1,116,166 2,664 — — 2,664 Shares repurchased for tax withholdings on vesting of RSUs ( 137,387 ) ( 1,741 ) — — ( 1,741 ) Stock-based compensation — 14,833 — — 14,833 Other comprehensive income — — 22 — 22 Net loss — — — ( 835 ) ( 835 ) BALANCE - January 31, 2024 25,974,871 $ 211,366 $ ( 1 ) $ ( 133,278 ) $ 78,087 See notes to consolidated financial statements.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (Amounts in thousands, except shares and share data) Common Stock and Additional Paid-In Capital Accumulated Other Comprehensive Accumulated Stockholders' Shares Amount Loss Deficit Equity BALANCE - January 31, 2022 23,936,193 $ 179,864 $ ( 20 ) $ ( 128,788 ) $ 51,056 Issuance of common stock under equity-based plans 1,174,532 3,397 — — 3,397 Shares repurchased for tax withholdings on vesting of restricted stock units ("RSU") ( 114,633 ) ( 1,554 ) — — ( 1,554 ) Stock-based compensation — 13,903 — — 13,903 Other comprehensive loss — — ( 3 ) — ( 3 ) Net loss — — — ( 3,655 ) ( 3,655 ) BALANCE - January 31, 2023 24,996,092 $ 195,610 $ ( 23 ) $ ( 132,443 ) $ 63,144 Issuance of common stock under equity-based plans 1,116,166 2,664 — — 2,664 Shares repurchased for tax withholdings on vesting of RSUs ( 137,387 ) ( 1,741 ) — — ( 1,741 ) Stock-based compensation — 14,833 — — 14,833 Other comprehensive income — — 22 — 22 Net loss — — — ( 835 ) ( 835 ) BALANCE - January 31, 2024 25,974,871 $ 211,366 $ ( 1 ) $ ( 133,278 ) $ 78,087 Issuance of common stock under equity-based plans 2,048,283 5,056 — — 5,056 Shares repurchased for tax withholdings on vesting of RSUs ( 399,798 ) ( 4,410 ) — — ( 4,410 ) Repurchases of common stock ( 366,825 ) ( 4,470 ) — — ( 4,470 ) Stock-based compensation — 17,915 — — 17,915 Other comprehensive income — — 1 — 1 Net loss — — — ( 6,901 ) ( 6,901 ) BALANCE - January 31, 2025 27,256,531 $ 225,457 $ — $ ( 140,179 ) $ 85,278 See notes to consolidated financial statements.
The Company is in compliance with the covenants contained in the Credit Agreement as of January 31, 2024 . Accordingly, $ 14.0 million of borrowing capacity was available for the purposes permitted by the Credit Agreement.
As of January 31, 2025, the Company had zero outstanding borrowings and was in compliance with the covenants contained in the Credit Agreement. Accordingly, $ 30.0 million of borrowing capacity was available for the purposes permitted by the Credit Agreement.
As a result, some of our revenue is subject to fluctuations due to changes in the Canadian dollar relative to the U.S. dollar. Substantially all of our operating expenses have been denominated in U.S. dollars. The functional currency for all of our entities is the U.S. dollar.
Foreign Currencies To date, our revenue has been primarily denominated in U.S. dollars with a small portion denominated in Canadian dollars. As a result, some of our revenue is subject to fluctuations due to changes in the Canadian dollar relative to the U.S. dollar. Substantially all of our operating expenses have been denominated in U.S. dollars.
Notes to Consolidated Financial Statements Note 3: Revenue and Deferred Revenue Disaggregated revenue Revenue disaggregated by revenue source consisted of the following (in thousands): Fiscal Year Ended January 31, 2024 2023 2022 Subscription and services revenue $ 221,624 $ 199,105 $ 175,942 Product and other revenue 15,113 17,060 16,348 Total revenue $ 236,737 $ 216,165 $ 192,290 The Company derived approximately 58 % , 53 % and 49 % of its total revenue from Ooma Business and approximately 40 % , 45 % and 49 % of its total revenue from Ooma Residential in fiscal 2024, 2023, and 2022, respectively.
Note 3: Revenue and Deferred Revenue Disaggregated revenue Revenue disaggregated by revenue source consisted of the following (in thousands): Fiscal Year Ended January 31, 2025 2024 2023 Subscription and services revenue $ 238,641 $ 221,624 $ 199,105 Product and other revenue 18,211 15,113 17,060 Total revenue $ 256,852 $ 236,737 $ 216,165 The Company derived approximately 61 % , 58 % and 53 % of its total revenue from Ooma Business and approximately 36 % , 40 % and 45 % of its total revenue from Ooma Residential in fiscal 2025, 2024, and 2023, respectively.
Notes to Consolidated Financial Statements Note 5: Balance Sheet Components The following sections and tables provide details of selected balance sheet items (in thousands): Inventories As of January 31, 2024 January 31, 2023 Finished goods $ 12,024 $ 13,715 Raw materials 7,758 12,531 Total inventory $ 19,782 $ 26,246 Property and equipment, net As of Estimated life (in years) January 31, 2024 January 31, 2023 Computer hardware and software 3 - 4 $ 6,995 $ 6,847 Network and engineering equipment 3 - 5 7,504 6,283 Website development costs 3 - 5 9,046 6,251 Customer premise equipment 3 - 5 7,466 5,954 Office furniture and fixtures 5 204 497 Leasehold improvements 1 - 5 637 124 Total property and equipment 31,852 25,956 Less: accumulated depreciation and amortization ( 21,955 ) ( 17,960 ) Property and equipment, net $ 9,897 $ 7,996 Depreciation and amortization of property and equipment totaled $ 4.3 million, $ 3.8 million and $ 3.1 million in fiscal 2024, 2023 and 2022, respectively.
Note 5: Balance Sheet Components The following sections and tables provide details of selected balance sheet items (in thousands): Inventories As of January 31, 2025 January 31, 2024 Finished goods $ 9,156 $ 12,024 Raw materials 3,912 7,758 Total inventory $ 13,068 $ 19,782 Property and equipment, net As of Estimated life (in years) January 31, 2025 January 31, 2024 Computer hardware and software 3 - 4 $ 6,979 $ 6,995 Network and engineering equipment 3 - 5 9,391 7,504 Website development costs 3 - 5 11,782 9,046 Customer premise equipment 3 - 5 6,342 7,466 Office furniture and fixtures 5 204 204 Leasehold improvements 1 - 5 708 637 Total property and equipment 35,406 31,852 Less: accumulated depreciation and amortization ( 23,424 ) ( 21,955 ) Property and equipment, net $ 11,982 $ 9,897 Depreciation and amortization of property and equipment totaled $ 4.3 million, $ 4.3 million and $ 3.8 million in fiscal 2025, 2024 and 2023, respectively.
CONSOLIDATED STATEMENTS OF OPERATIONS (Amounts in thousands, except shares and per share data) Fiscal Year Ended January 31, 2024 2023 2022 Revenue: Subscription and services $ 221,624 $ 199,105 $ 175,942 Product and other 15,113 17,060 16,348 Total revenue 236,737 216,165 192,290 Cost of revenue: Subscription and services 63,667 54,499 49,563 Product and other 25,838 24,018 24,289 Total cost of revenue 89,505 78,517 73,852 Gross profit 147,232 137,648 118,438 Operating expenses: Sales and marketing 73,503 69,671 58,631 Research and development 49,935 45,939 38,193 General and administrative 27,795 27,795 23,544 Total operating expenses 151,233 143,405 120,368 Loss from operations ( 4,001 ) ( 5,757 ) ( 1,930 ) Interest and other income, net 1,188 332 179 Loss before income taxes ( 2,813 ) ( 5,425 ) ( 1,751 ) Income tax benefit 1,978 1,770 — Net loss $ ( 835 ) $ ( 3,655 ) $ ( 1,751 ) Net loss per share of common stock: Basic and diluted $ ( 0.03 ) $ ( 0.15 ) $ ( 0.07 ) Weighted-average shares of common stock outstanding: Basic and diluted 25,573,288 24,506,525 23,473,849 See notes to consolidated financial statements.
CONSOLIDATED STATEMENTS OF OPERATIONS (Amounts in thousands, except shares and per share data) Fiscal Year Ended January 31, 2025 2024 2023 Revenue: Subscription and services $ 238,641 $ 221,624 $ 199,105 Product and other 18,211 15,113 17,060 Total revenue 256,852 236,737 216,165 Cost of revenue: Subscription and services 71,199 63,667 54,499 Product and other 29,635 25,838 24,018 Total cost of revenue 100,834 89,505 78,517 Gross profit 156,018 147,232 137,648 Operating expenses: Sales and marketing 77,325 73,503 69,671 Research and development 54,287 49,935 45,939 General and administrative 31,346 27,795 27,795 Total operating expenses 162,958 151,233 143,405 Loss from operations ( 6,940 ) ( 4,001 ) ( 5,757 ) Interest and other income, net 799 1,188 332 Loss before income taxes ( 6,141 ) ( 2,813 ) ( 5,425 ) Income tax (provision) benefit ( 760 ) 1,978 1,770 Net loss $ ( 6,901 ) $ ( 835 ) $ ( 3,655 ) Net loss per share of common stock: Basic and diluted $ ( 0.26 ) $ ( 0.03 ) $ ( 0.15 ) Weighted-average shares of common stock outstanding: Basic and diluted 26,685,598 25,573,288 24,506,525 See notes to consolidated financial statements.
The weighted-average grant date fair value of options granted during fiscal 2023 and 2022, was $ 8.06 and $ 7.89 , respectively. No options were granted in fiscal 2024. Restricted Stock Units. Under the 2015 Plan, RSUs may be granted to employees, non-employee directors and consultants.
The weighted-average grant date fair value of options granted during fiscal 2023 was $ 8.06 . No options were granted in fiscal 2024 and 2025. Ooma | FY2025 Form 10-K | 71 Ooma, Inc. Notes to Consolidated Financial Statements Restricted Stock Units. Under the 2015 Plan, RSUs may be granted to employees, non-employee directors and consultants.
CONSOLIDATED B ALANCE SHEETS (Amounts in thousands, except share and per share data) January 31, 2024 January 31, 2023 Assets Current assets: Cash and cash equivalents $ 17,536 $ 24,137 Short-term investments — 2,723 Accounts receivable, net 9,864 7,131 Inventories 19,782 26,246 Other current assets 16,497 14,368 Total current assets 63,679 74,605 Property and equipment, net 9,897 7,996 Operating lease right-of-use assets 17,041 12,702 Intangible assets, net 27,952 10,463 Goodwill 23,069 8,655 Other assets 17,615 16,584 Total assets $ 159,253 $ 131,005 Liabilities and Stockholders’ Equity Current liabilities: Accounts payable $ 7,848 $ 13,462 Accrued expenses and other current liabilities 26,586 26,726 Deferred revenue 17,041 17,216 Total current liabilities 51,475 57,404 Long-term operating lease liabilities 13,676 10,426 Debt, net of current portion 16,000 — Other long-term liabilities 15 31 Total liabilities 81,166 67,861 Commitments and contingencies (Note 11) Stockholders’ equity: Preferred stock $ 0.0001 par value: 10 million shares authorized; none issued and outstanding — — Common stock $ 0.0001 par value: 100 million shares authorized; 26.0 million and 25.0 million shares issued and outstanding, respectively 5 5 Additional paid-in capital 211,361 195,605 Accumulated other comprehensive loss ( 1 ) ( 23 ) Accumulated deficit ( 133,278 ) ( 132,443 ) Total stockholders’ equity 78,087 63,144 Total liabilities and stockholders’ equity $ 159,253 $ 131,005 See notes to consolidated financial statements.
CONSOLIDATED B ALANCE SHEETS (Amounts in thousands, except share and per share data) January 31, 2025 January 31, 2024 Assets Current assets: Cash and cash equivalents $ 17,871 $ 17,536 Accounts receivable, net 8,040 9,864 Inventories 13,068 19,782 Other current assets 17,198 16,497 Total current assets 56,177 63,679 Property and equipment, net 11,982 9,897 Operating lease right-of-use assets 15,311 17,041 Intangible assets, net 22,184 27,952 Goodwill 23,069 23,069 Other assets 20,472 17,615 Total assets $ 149,195 $ 159,253 Liabilities and Stockholders’ Equity Current liabilities: Accounts payable $ 6,007 $ 7,848 Accrued expenses and other current liabilities 29,067 26,586 Deferred revenue 16,586 17,041 Total current liabilities 51,660 51,475 Long-term operating lease liabilities 12,234 13,676 Debt, net of current portion — 16,000 Other long-term liabilities 23 15 Total liabilities 63,917 81,166 Commitments and contingencies (Note 11) Stockholders’ equity: Preferred stock $ 0.0001 par value: 10 million shares authorized; none issued and outstanding — — Common stock $ 0.0001 par value: 100 million shares authorized; 27.2 million and 26.0 million shares issued and outstanding, respectively 5 5 Additional paid-in capital 225,452 211,361 Accumulated other comprehensive loss — ( 1 ) Accumulated deficit ( 140,179 ) ( 133,278 ) Total stockholders’ equity 85,278 78,087 Total liabilities and stockholders’ equity $ 149,195 $ 159,253 See notes to consolidated financial statements.
Stock option activity for fiscal 2024 was as follows: Weighted-Average Aggregate Shares Exercise Price Intrinsic Value (in thousands) Per Share (in thousands) Balance as of January 31, 2023 1,217 $ 9.93 $ 5,949 Granted — $ — Exercised ( 54 ) $ 4.90 Canceled ( 2 ) $ 13.36 Balance as of January 31, 2024 1,161 $ 10.14 $ 2,522 Vested and exercisable as of January 31, 2024 1,068 $ 9.63 $ 2,520 The aggregate intrinsic value of vested options exercised during fiscal 2024 , 2023 and 2022 was $ 0.5 million, $ 1.7 million and $ 1.9 million, respectively.
Stock option activity for fiscal 2025 was as follows: Weighted-Average Aggregate Shares Exercise Price Intrinsic Value (in thousands) Per Share (in thousands) Balance as of January 31, 2024 1,161 $ 10.14 $ 2,522 Exercised ( 494 ) $ 6.18 Canceled ( 14 ) $ 9.71 Balance as of January 31, 2025 653 $ 13.14 $ 1,325 Vested and exercisable as of January 31, 2025 617 $ 12.94 $ 1,325 The aggregate intrinsic value of vested options exercised during fiscal 2025, 2024 and 2023 was $ 2.9 million, $ 0.5 million and $ 1.7 million, respectively.
The Company had no interest or penalty accruals associated with uncertain tax benefits in its consolidated balance sheets and statements of operations for any periods presented. Ooma | FY2024 Form 10-K | 74 Ooma, Inc.
The Company had no interest or penalty accruals associated with uncertain tax benefits in its consolidated balance sheets and statements of operations for any periods presented. Recent Accounting Pronouncements Not Yet Adopted.
Ooma | FY2024 Form 10-K | 86 Note 11: Commitments and Contingencies Purchase Commitments As of January 31, 2024 and 2023, non-cancelable inventory purchase commitments to contract manufacturers and other parties were approximately $ 1.1 million and $ 7.8 million, respectively.
Note 11: Commitments and Contingencies Purchase Commitments As of January 31, 2025 and 2024, non-cancelable inventory purchase commitments to contract manufacturers and other parties were approximately $ 6.2 million and $ 1.1 million, respectively.
Other current and non-current assets As of January 31, 2024 January 31, 2023 Deferred sales commissions, current $ 8,579 $ 7,826 Prepaid expenses and other 4,177 2,777 Convertible note receivable (see "GTC" below) 2,257 1,899 Other current assets 1,484 1,866 Total other current assets $ 16,497 $ 14,368 Deferred sales commissions, non-current $ 15,257 $ 14,467 Other assets 2,358 2,117 Total other non-current assets $ 17,615 $ 16,584 Customer Acquisition Costs.
Other current and non-current assets As of January 31, 2025 January 31, 2024 Deferred sales commissions, current $ 9,301 $ 8,579 Prepaid expenses and other 5,613 4,177 Convertible note receivable (see "GTC" below) — 2,257 Other current assets 2,284 1,484 Total other current assets $ 17,198 $ 16,497 Deferred sales commissions, non-current $ 14,635 $ 15,257 Other assets 5,837 2,358 Total other non-current assets $ 20,472 $ 17,615 Customer Acquisition Costs.
The Credit Agreement contains customary representations, warranties, affirmative and negative covenants, events of default and indemnification provisions in favor of the Agent, lenders and their affiliates. Among other covenants, the Credit Agreement includes restrictive financial covenants that require the Company to meet minimum recurring revenue levels and maintain specified amounts of available liquidity on a quarterly basis.
Among other covenants, the Credit Agreement includes restrictive financial covenants that require the Company to meet minimum recurring revenue levels and maintain specified amounts of available liquidity on a quarterly basis.
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the reporting date.
The cost of securities sold is based upon the specific identification method. Fair Value of Financial Instruments. The Company records its financial assets and liabilities at fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the reporting date.
Deferred tax assets associated with these unrecognized tax benefits are fully offset by a valuation allowance. If recognized, these benefits would not affect the effective tax rate before consideration of the valuation allowance.
If recognized, these benefits would not affect the effective tax rate before consideration of the valuation allowance.
Accounts receivable are recorded net of an allowance for doubtful accounts for expected credit losses. Allowances are recorded based upon assessment of several factors, including historical experience, aging of receivable balances and economic conditions. As of January 31, 2024 and 2023, the allowance for doubtful accounts was $ 0.3 million.
Allowances are recorded based upon assessment of several factors, including historical experience, aging of receivable balances and economic conditions. As of January 31, 2025 and 2024 , the allowance for doubtful accounts was $ 0.3 million and $ 0.3 million, respectively. Bad debt expense recorded in the consolidated statement of operations was not material for the periods presented. Inventories.
The Company’s distribution agreements with channel partners typically contain clauses for price protection and right of return. Credits and/or rebates issued for expected product returns and customer sales incentives are deemed to be variable consideration, which the Company estimates and records as a reduction to revenue at the point of sale.
Credits and/or rebates issued for expected product returns and customer sales incentives are deemed to be variable consideration, which the Company estimates and records as a reduction to revenue at the point of sale. Product returns and sales incentives are estimated based on the Company’s historical experience, current trends and expectations regarding future experience.
Notes to Consolidated Financial Statements and related shipping costs of approximately $ 0.4 million and $ 2.6 million in fiscal 2024 and 2023, respectively. As of January 31, 2024 and 2023, the Company did no t have any material non-cancelable inventory purchase commitments to GTC.
The Company made total payments to GTC for inventory purchases and related shipping costs of approximately $ 1.0 million and $ 0.4 million in fiscal 2025 and 2024, respectively. As of January 31, 2025 and 2024, the Company had $ 0.2 million and no non-cancelable inventory purchase commitments to GTC, respectively.
The ESPP provides for a 24 -month offering period comprised of four purchase periods of approximately six months . Employees are able to purchase shares at 85 % of the lower of the fair market value of the Company’s common stock as of the first date or the ending date of each six-month offering period.
Employees are able to purchase shares at 85 % of the lower of the fair market value of the Company’s common stock as of the first date or the ending date of each six-month offering period. The offering periods are scheduled to start on the first trading day on or after March 15 and September 15 of each year.
A small portion of revenue is recognized on a point-in-time basis from services such as prepaid international calls, directory assistance, and advertisements displayed through the Talkatone mobile application. Product and Other Revenue.
Service plans are generally sold as monthly subscriptions; however, certain plans are also offered as annual or multi-year subscriptions. Subscription revenue is generally recognized ratably over the contractual service term. A small portion of revenue is recognized on a point-in-time basis from services such as prepaid international calls, directory assistance, and advertisements displayed through the Talkatone mobile application.
Upon the conclusion of the measurement period, any subsequent adjustments are recorded in the consolidated statements of operations . Acquisition-related expenses are recognized separately from business combinations and are expensed as incurred. Intangible Assets. Acquired intangible assets, which primarily consist of customer relationships, are amortized over their estimated useful lives.
Upon the conclusion of the measurement period, any subsequent adjustments are recorded in the consolidated statements of operations . Acquisition-related expenses are recognized separately from business combinations and are expensed as incurred. Ooma | FY2025 Form 10-K | 65 Ooma, Inc. Notes to Consolidated Financial Statements Intangible Assets.
Additionally, the Company has a non-cancelable service agreement with a telecommunications provider that contains total annual minimum purchase commitments of $ 1.5 million between August 2022 and February 2024 and $ 2.5 million between March 2024 and February 2025.
Additionally, the Company has a non-cancelable service agreement with a telecommunications provider pursuant to which the Company is obligated to total minimum purchase commitments of $ 11.9 million between March 2024 and February 2029, of which $ 10.2 million was outstanding as of January 31, 2025, and a non-cancelable service agreement with a cloud service provider pursuant to which the Company is obligated to total annual minimum purchase commitments of $ 1.1 million between March 2024 and February 2025, of which $ 0.1 million was outstanding as of January 31, 2025.

… 74 more changes not shown on this page.

Other OOMA 10-K year-over-year comparisons