Ooma's Q3 2026: Contradictions Emerge on Acquisition Strategy & Integration Expectations, AirDial Installation Timing & Revenue Impact, AirDial's ARR Contribution, and Core Subscription Growth

Date of Call: December 02, 2025

Financials Results

• Revenue: $67.6M, up 4% year-over-year
• EPS: $0.27 per diluted share, compared to $0.17 in the prior year quarter
• Gross Margin: 62%, compared to 62% in the prior year quarter (subscription & services 71.5% vs 71.6; product & other -45% vs -56%)
• Operating Margin: Adjusted EBITDA margin 13% of revenue, up from 11% in Q2 and 10% in Q1

Guidance:

• Q4 FY26 revenue expected $71.3M to $71.9M, including $4.0M to $4.1M from FluentStream; product revenue $5.0M to $5.3M.
• Q4 non-GAAP net income expected $8.4M to $8.9M (includes ~$1.5M-$1.6M from FluentStream); Q4 non-GAAP diluted EPS $0.30-$0.32 (assumes ~28M diluted shares); estimated incremental interest expense on the $45M term loan ~ $0.5M.
• FY26 revenue guidance updated to ~$273M to $279M (includes ~$4.0M-$4.1M from FluentStream); business subscription growth ~9% YoY, residential subscription decline 1%-2%.
• FY26 non-GAAP net income $28.2M to $28.7M (includes ~$1.5M-$1.6M from FluentStream and ~$0.5M term loan interest); FY26 adjusted EBITDA $32.4M to $32.9M; FY26 non-GAAP diluted EPS $1.00-$1.02 (assumes ~28.2M shares).

Business Commentary:

* Record Financial Performance: - Ooma reported revenue of $67.6 million for Q3 Fiscal 2026, an increase of 4% year-over-year. - The growth was driven by contributions from the Business Solutions segment, particularly the expansion of AirDial, and efficient cost management.

• Profitability Improvement:
• Q3 saw a record non-GAAP net income of $7.7 million, growing 68% year-over-year, and adjusted EBITDA reached $8.6 million, up 50% year-over-year.

• This improvement was due to operational leverage in R&D, optimized sales and marketing spend, and lower-than-expected tariff impacts.

• Acquisition Strategy:

• Ooma announced two acquisitions: FluentStream and Phone.com, which are expected to add over 165,000 users, $45 million in revenue, and $10 million in adjusted EBITDA annually.

• These acquisitions are part of Ooma's strategic focus on serving small- and medium-sized businesses and leveraging cost-effective growth opportunities.

• Customer and Product Expansion:

• The Business Solutions segment performed well, with AirDial adding 9 new resale partners in Q3, the most in a quarter to date, and Ooma Enterprise securing its largest hospitality win.
• This growth was supported by increased sales and marketing efforts and product innovations, like the updated AirDial version with improved cellular band support.
  
  

Sentiment Analysis:

Overall Tone: Positive

• Company reported record adjusted EBITDA of $8.6M (up 50% YoY), revenue $67.6M (up 4% YoY), non-GAAP net income $7.7M (up 68% YoY). Management highlighted closed FluentStream and expected accretive contributions (~$45M revenue and $10M adjusted EBITDA combined run-rate pre-synergies) and raised full-year profit guidance.

Q&A:

• Question from Josh Nichols (B. Riley): It looks like there's a healthy step-up in profitability in fiscal 4Q as well with the FluentStream acquisition closing. Is that because there is a significantly higher subscription and services gross margin component or what gets you to that big jump up in EPS/EBITDA for fiscal 4Q?
  Response: Full-quarter impact of late-Q3 R&D expense reductions, continued discipline in sales & marketing, and lower-than-expected tariff costs improving flow-through to the bottom line.

• Question from Josh Nichols (B. Riley): On synergies, are you able to quantify expectations around those or when you might start to see benefits?
  Response: FluentStream synergies expected modest on cost with some revenue upside via AirDial and shared development; Phone.com has more overlap and potential for greater synergies, but timing is uncertain and early wins likely via vendor relationships.

• Question from Eric Martinuzzi (Lake Street Capital Markets): The Q4 guide was below expectations; is the ~$1.5M difference attributable to AirDial push-outs?
  Response: Yes—most of the shortfall reflects AirDial customer deployment timing and order push-outs to next fiscal year despite strong bookings.

• Question from Eric Martinuzzi (Lake Street Capital Markets): Is the AirDial timing a one-off or indicative of a macro change?
  Response: Primarily a timing issue driven by larger, more complex proof-of-concept deals and customer seasonality (holiday rollouts), not a clear macro weakness.

• Question from Eric Martinuzzi (Lake Street Capital Markets): Post-close, what actions are you taking to embrace the FluentStream customer base?
  Response: Maintain FluentStream's profitable operations, cautiously integrate vendor/channel/R&D opportunities to accelerate development and cross-sell without disrupting current performance.

• Question from Kincaid LaCorte (Citizens) on behalf of Patrick Walravens: You mentioned significant AI developments—can you provide color on what that looks like?
  Response: AI will parse call/message data for analytics (e.g., sentiment) and productivity features, rolling out early next year into Pro Plus to drive higher ARPU.

• Question from Kincaid LaCorte (Citizens): You've done eight acquisitions in 11 years—any learnings?
  Response: Acquire businesses aligned with core capabilities; stick close to what you know to ease integration and realize better economics—avoid unrelated adjacencies.

• Question from Matthew Harrigan (Benchmark Company): Any feel for non-GAAP charges (noncash comp, acquisition expenses) related to FluentStream and details on the Vegas hotel win?
  Response: Cannot yet estimate intangibles/tax-related non-GAAP entries post-close; there was minimal stock-based comp (no stock issued); hotel win was nearly 1,000 rooms and part of goal to add >50 hotels/quarter.

• Question from Matthew Harrigan (Benchmark Company): Are you seeing anything on the SMB side that gives pause on the economy?
  Response: No—management reported no signs of weakness in the SMB business.

• Question from Arjun Bhatia (Win Blair): Can you absorb and integrate FluentStream and Phone.com simultaneously through FY27?
  Response: Yes—management is comfortable integrating both at a deliberate pace without derailing Ooma’s ongoing operations; FluentStream already high-performing and Phone.com offers e-commerce growth optionality.

• Question from Arjun Bhatia (Win Blair): In hospitality wins like the Vegas hotel, who are you displacing and how has the competitive landscape changed?
  Response: Primarily replacing legacy on-prem PBX systems as hotels migrate to cloud; competitive landscape remains stable with cloud migration as the main trend.

Contradiction Point 1

Acquisition Strategy and Integration Expectations

It involves the company's approach to acquisitions and expectations regarding synergy benefits, which can impact strategic decisions and investor confidence.

Can you quantify any expected synergies from the FluentStream and Phone.com acquisitions, given that no synergy benefits are included in the full-year run rate and Phone.com remains pending in Q4 guidance? - Josh Nichols (B. Riley Securities, Inc., Research Division)

20251209-2026 Q3: With FluentStream, synergies on the cost side are expected to be modest. With Phone.com, there's more overlap in capabilities, and we expect synergies through vendor relationships and rationalizing work over a larger base. - Eric Stang(CEO)

Since synergy benefits aren't included in the full-year run rate for the two acquisitions, can you quantify expected synergies? - Eric Martinuzzi (Lake Street Capital Markets, LLC, Research Division)

2026Q3: With FluentStream, synergies are modest. We expect maybe a rollout of some savings there. With Phone.com, we have a number of cost synergies that we expect to start realizing there as well. - Eric Stang(CEO)

Contradiction Point 2

Timing of AirDial Installations and Revenue Impact

It involves the timing of AirDial installations and their impact on revenue, which are important for understanding the company's financial performance and growth trajectory.

Is the legacy business' Q4 guidance shortfall entirely due to AirDial pushouts? - Eric Martinuzzi (Lake Street Capital Markets, LLC, Research Division)

20251209-2026 Q3: These are both very large opportunities. We're in the process of completing installations in Q4, with a small handful of installations expected to spill into Q1, and then we'll be done with all the installations. - Shigeyuki Hamamatsu(CFO)

Is this behavior different from 12 months ago, a one-off, or a macroeconomic read-through? - Eric Martinuzzi (Lake Street Capital Markets, LLC, Research Division)

2026Q3: We're behind on our AirDial installation cycle. We're seeing some pushouts, and I think that's due to some very specific customer situations where certain customers have very large environments and are requiring additional time to deploy. - Shigeyuki Hamamatsu(CFO)

Contradiction Point 3

AirDial Contribution to ARR

It directly impacts expectations regarding the financial performance of a key product, potentially influencing company revenue and investor expectations.

What drove the increase in profitability for fiscal Q4, especially in EPS and EBITDA? - Josh Nichols (B. Riley)

20251209-2026 Q3: AirDial is now in meaningful contribution to the growth of ARR and is starting to contribute meaningfully. - Shigeyuki Hamamatsu(CFO)

Is AirDial contributing a meaningful percentage to ARR currently? And when will you start providing more detailed breakdowns as it continues to grow? - Michael Joshua Nichols (B. Riley Securities)

2026Q2: AirDial is contributing to the growth of ARR and is starting to contribute meaningfully. - Shigeyuki Hamamatsu(CFO)

Contradiction Point 4

Business-side Core Subscription Services Growth

It involves interpretations of financial performance, specifically regarding the growth rate of core subscription services, which are critical indicators for investor analysis.

What drove the significant increase in Q4 profitability, especially the EPS and EBITDA jump? - Josh Nichols (B. Riley)

20251209-2026 Q3: The increase in profitability is due to operating leverage, with actions taken in Q3 affecting Q4. - Shigeyuki Hamamatsu(CFO)

What drove the 6% growth in core subscription services? Is it due to conservative management or incremental churn? - Eric Martinuzzi (Lake Street Capital Markets)

2026Q2: It's not about incremental churn, but rather the timing of AirDial installations in the second half. - Shigeyuki Hamamatsu(CFO)