Ooma's Strategic Acquisitions and Earnings Outperformance: A Pathway to Sustained Growth in 2026?

In the high-margin communications sector, where competition is fierce and innovation cycles are rapid, companies must balance aggressive growth with disciplined margin management. Ooma Inc. (NYSE: OOMA) has emerged as a compelling case study in this dynamic, leveraging strategic acquisitions and operational efficiency to outperform peers. As the company approaches the close of 2025, its recent moves-namely the acquisitions of FluentStream and Phone.com-have positioned it to capitalize on the growing demand for business communication services while expanding its already robust profit margins.

Strategic Acquisitions: Fueling Revenue and EBITDA Growth

Ooma's acquisition strategy in 2025 underscores its focus on accelerating revenue growth and enhancing profitability. The completion of the $45 million acquisition of FluentStream, a provider of cloud-based voice and messaging solutions, is expected to add $24–$25 million in annual revenue and $9.5–$10.5 million in adjusted EBITDA, with accretion beginning on December 1, 2025 according to the announcement. Similarly, the $23.2 million deal for Phone.com, a domain name and voice-over-IP (VoIP) services provider, is projected to contribute $22–$23 million in annual revenue and $1.0–$1.5 million in adjusted EBITDA by late December 2025 as reported.

These acquisitions align with Ooma's broader strategy to deepen its penetration in the small and medium-sized business (SMB) market, where customers demand scalable, cost-effective communication tools. By integrating FluentStream's enterprise-grade features and Phone.com's domain expertise, Ooma is not only expanding its product portfolio but also solidifying its position as a one-stop provider for SMBs. As stated by CEO Eric Stang, these moves are designed to "drive long-term value for shareholders" by accelerating growth in a sector with high customer retention and recurring revenue potential.

Financial Performance: A Recipe for Margin Expansion

Ooma's financials in 2025 reflect the success of this strategy. For the fiscal year, the company reported total revenue of $256.9 million, an 8% year-over-year increase, with subscription and services revenue accounting for 93% of total sales. This shift toward recurring revenue streams has been pivotal in stabilizing cash flow and improving margins. In Q4 2025, business subscription and services revenue grew by 13% year-over-year to $60.6 million, driven by a strategic focus on higher-ARPU business customers. The average revenue per user (ARPU) for business customers reached $15.26 in Q4, a 12% increase from the prior year as reported.

The company's gross margin expansion has been equally impressive. Ooma's subscription and services gross margin hit 72% in Q4 2025, while total gross margin stood at 63% according to Q4 financials. These figures, though slightly below the communications sector's Q4 2024 industry benchmark of 78.09% as per industry data, highlight Ooma's potential for further improvement. The company has set ambitious targets to raise its subscription and services gross margin to 75–80% and total gross margin to 65–70% by 2026 as outlined in Q3 2026 presentation. Such progress would not only narrow the gap with industry averages but also enhance Ooma's ability to reinvest in innovation and acquisitions.

Sustained Growth: Challenges and Opportunities

While Ooma's trajectory appears promising, investors must weigh the risks of over-reliance on acquisition-driven growth. Integrating FluentStream and Phone.com seamlessly will require careful execution to avoid operational hiccups or customer attrition. Additionally, the communications sector's competitive landscape-marked by players like Zoom, RingCentral, and 8x8-demands continuous differentiation. Ooma's emphasis on SMBs, however, offers a strategic advantage: this segment remains underserved by larger competitors, who often prioritize enterprise clients.

Moreover, Ooma's long-term Adjusted EBITDA margin target of 20–25% as reported hinges on maintaining its current pace of margin expansion. While Q3 2026 results showed subscription and services gross margin climbing to 71% according to Q3 2026 results, achieving the upper end of the target will require navigating cost pressures and sustaining ARPU growth.

Conclusion: A Compelling Case for 2026

Ooma's strategic acquisitions and earnings outperformance in 2025 present a compelling case for sustained growth in 2026. By targeting high-margin SMBs and leveraging accretive deals, the company is building a durable business model that balances top-line expansion with bottom-line discipline. While challenges remain, Ooma's disciplined approach to margin management and its ability to adapt to sector trends position it as a standout in the communications space. For investors seeking exposure to a company that combines strategic agility with financial rigor, Ooma's path forward is worth watching closely.