Ooma's Q1 2026 Earnings: A Catalyst for UCaaS Growth and Investor Outperformance

Ooma, Inc. (OOMA) is poised to deliver a critical earnings report on May 28, 2025, that could redefine its trajectory in the unified communications as a service (UCaaS) market. With stable EPS estimates and accelerating subscription revenue growth, the company is emerging as a compelling play on two disruptive trends: the shift to cloud-based communication tools and the rapid replacement of legacy Plain Old Telephone Service (POTS) lines. Here's why investors should pay close attention—and consider buying before the report.

Stable EPS Estimates Signal Operational Resilience

Analysts project Ooma's Q1 2026 EPS to remain steady at $0.18, a 28.6% year-over-year increase that underscores the company's ability to maintain profitability amid macroeconomic uncertainty. This stability contrasts with previous quarters, where revenue and EPS often diverged, and reflects cost discipline and higher-margin subscription services driving results.

The consistency of these estimates—unchanged since March 2025—suggests analysts are confident in Ooma's execution. With a 53.4% annualized EPS growth rate projected through 2026, the stock is primed to reward investors who act now.

Subscription Revenue Growth: The Engine of Future Value

The 4.3% YoY growth in subscription revenue to $60.92 million in Q1 2026 marks a critical milestone. While this rate is slightly below Ooma's FY 2025 performance (13% YoY growth), it aligns with the company's 5%–6% annual target for business subscription revenue in 2026. This growth is being driven by two strategic pillars:

1. UCaaS Expansion: Ooma Business, its enterprise UCaaS platform, continues to gain traction, leveraging integrations with tools like Salesforce and Slack. The segment now accounts for 93% of total revenue, a testament to its dominance in a $50 billion+ UCaaS market.
2. POTS Replacement Dominance: With legacy phone lines declining by millions annually, Ooma's AirDial POTS replacement solution is capturing a leadership position. Partnerships with small businesses and regional telecom providers are fueling recurring revenue streams.

Institutional Buying Signals Strategic Confidence

Institutional investors have taken notice. Funds like Amundi and Goldman Sachs increased their stakes in Q1 2025, signaling confidence in Ooma's long-term prospects. This buying activity is particularly telling given the stock's 8.7% month-to-date gain, outpacing the S&P 500's 8.2% rise.

Why the “Hold” Rating Misses the Mark

While Ooma carries a Zacks #3 (Hold) rating, this overlooks its undervalued positioning. At a price-to-earnings (P/E) ratio of 18x versus peers averaging 25x+, the stock offers a rare entry point. Analysts project $18.25 as the 12-month price target, implying a 40% upside from current levels.

Risks to Consider—and Why They're Manageable

• Churn from legacy clients: Ooma's transition away from declining residential services (projected to shrink 1%–2% in Q1) could pressure short-term results, but this shift to higher-margin enterprise contracts is strategic.
• Market competition: While rivals like RingCentral and Vonage loom large, Ooma's focus on POTS replacement and SMB-specific UCaaS solutions creates a niche.

Conclusion: A Compelling Buy Before Earnings

Ooma's Q1 2026 report is a catalyst for re-rating the stock. Stable EPS, accelerating subscription growth, and institutional buying all point to outperformance. With the stock undervalued and the UCaaS/POTS replacement markets booming, investors who act now could capture a 40%+ return by year-end.

Action Item: Buy Ooma ahead of the May 28 earnings report. The data and trends are aligning for a breakout—don't miss it.

This analysis assumes no material changes to Ooma's guidance or macroeconomic conditions prior to earnings.