Ooma, Inc.

Ladies and gentlemen, thank you for standing by and welcome to UMA's third quarter fiscal 2020 results conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation will be a question and answer session. To ask a question during this session, you'll need to press star 1 on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star 0. I would now like to hand the conference over to your speaker today, Matt. Thank you. Please go ahead, sir.

Thanks, Christine. Good day, everyone, and welcome to the third quarter fiscal year 2020 earnings call of UMA 8. My name is Matt Robison, UMA's Director of IR and Corporate Development. With me here today are UMA's CEO, Eric Stang, and CFO, Ravi Narula. After the market closed today, UMA issued a press release via Globe Newswire. The release is also available on the company's website, UMA.com. This call is being webcast live and is accessible from a link on the events page of the investor relations section of our website. This link will be active for replay of this call for at least one year. A telephonic replay will also be available for a week starting this evening about 8 p.m. Eastern time. Dialing information for it is included in today's earnings press release. During today's presentation, our executives will make forward-looking statements within the meaning of the Federal Securities Law. Forward-looking statements generally relate to future events or future financial or operating performance. Our expectations and beliefs regarding these matters may not materialize, and actual results in financial periods are subject to risks and uncertainties that could cause actual results to differ materially from those projected. These risks include those set forth in the press release we issued earlier today, as well as those more fully described in our filings with the Securities and Exchange Commission. The forward-looking statements in this presentation are based on information available to us as of the date hereof, and we display many obligations to update any forward-looking statements except as required by law. Please note that other than revenue or as otherwise stated, financial measures to be discussed, disclosed on this call will be on a non-GAAP basis. The non-GAAP financial measures are not intended to be considered in isolation or as a substitute for results prepared in accordance with GAAP. A discussion of why we present non-GAAP financial measures and a reconciliation of the non-GAAP financial measures discussed in this call to the most directly comparable GAAP financial measures are included in our earnings press release as available on our website. On this call, we'll give guidance for fourth quarter and full year fiscal 2020 on a non-GAAP basis. Also, in addition to our press release and APA filing, the events and presentations page in the investor section as well as the quarterly results page of the financial information section of our website includes links to costs and expenses not included in our non-GAAP values and key metrics of our four subscription businesses. These are titled Supplemental Financial Disclosure 1 and Supplemental Financial Disclosure 2. Additionally, our investor presentation slides include GAAP and non-GAAP reconciliation. It also provides resolution of GAAP expenses that are excluded from our non-GAAP metrics. Now I will hand the call over to UMA's CEO, Eric Stang.

Thanks, Matt. Hi, everyone. Welcome to UMA's Q3 FY20 earnings call. It's a pleasure to talk with you today. I'd like to cover three topics with you in my prepared remarks. The first is a review of our Q3 progress and momentum for Q4. Second, I'd like to emphasize our commitment to building shareholder value and discuss several new actions we are taking in that regard. And thirdly, I want to share our top level objectives that will guide our plan for next year. Our Q3 quarter just ended was, simply put, a fantastic quarter for UMA. Q3 revenue of $39.6 million represents 21% growth versus a year ago. And for the first time in our history, since going public, we generated a positive, non-gap net income. I'll let Ravi take you through the numbers in detail, but I do want to highlight our progress. I believe UMA has taken another big step forward by continuing to achieve strong revenue growth while also now operating profitably. Regarding our strategy to grow the number of customers using our business solutions, I feel we are executing well on all fronts. and I believe our 67% Q3 year-over-year growth in subscription revenues from business customers, inclusive of our BroadSmart acquisition, backs this up. One major element of our success is we continue to roll out our combined office and enterprise business solution to the very large customer I spoke about on our last earnings call. I'm pleased to say that we expect to add a significant number of users with this customer in Q4. and we see potential for further user additions in FY21 on a more limited basis given our progress this year. We are also executing well on growing our sales through channel resellers and VAR partners. In Q3, we expanded our activities by launching UMA Office with select resellers, by integrating UMA Enterprise and BroadSmart further from a channel perspective, and by signing up additional private label VAR partners. We have a strong, dedicated team in place to drive sales through resellers and partners, and our plan is to accelerate channel growth. A new area of development for us is our Sprint relationship. You'll recall we announced a new strategic partnership with Sprint just last quarter that included Sprint's large sales team selling Sprint-branded UMA office starting in July of this year. I'm pleased to report Sprint has now named this solution Sprint Omni, which they describe as a cloud-based commercial phone service designed to bring premium enterprise-quality landline phone technologies to small and medium-sized businesses. Now that the Omni name is announced, Sprint can begin marketing and promoting the offering. I'm confident that Sprint is fully committed to the success of our partnership, as we certainly are. Finally, separate from our Q3 results, we executed well in engineering during the quarter preparing for our launch this week of UMA Office Pro. This is a new service tier that incorporates additional functionality relevant to larger sized small businesses. We expect that with the launch of UMA Office Pro, we can expand our addressable market. We also expect to raise our ARPU for those customers who adopt the Office Pro feature set Since Office Pro will be sold at a premium to standard UMA office. Switching over briefly to our activities serving residential customers, I believe our results are on track and we are performing well. As Robbie will discuss, we grew our subscription revenues from residential customers in Q3 by 4% year over year, in line with our expectations. We also expanded retail distribution of Telo and our new Telo 4G solution during Q3. We head into Q4 and the holiday season well-placed for continued success. We are also making some adjustments to our strategy for residential customers, which I will elaborate on in just a few moments. I mentioned in my opening our commitment to building shareholder value. We are currently taking several steps which we believe will enhance shareholder value. The first is we are shifting our overall corporate focus to a greater extent on new business solutions and driving the growth of business customers. To this end, we have stopped selling UMA SmartCam video cameras and disbanded the engineering and product team for UMA SmartCam. Our judgment is the market dynamics for SmartCam deteriorated over the last two years and are not very attractive today. We have also completed the core feature development for smart security and so shifted engineering resources away from smart security onto other programs. These actions and others have led to the reduction and reassignment of personnel across engineering, product marketing, marketing, sales, and service functions. Going forward, we will continue for the foreseeable future to provide service to our small existing base of SmartCam users. For smart security, we will continue to offer it for sale to customers online and through existing retail channels, but not invest meaningfully to promote it. This is because smart security rides on the Telo base, which our Telo customers, of course, already have, and because our margins on the service, which is now fully developed, are extremely high. Overall, the strategic move we are making is to double down on the growth of our business solutions for business customers. A second step we are taking to realize shareholder value is to operate UMA profitably going forward. Over the last several years, we have invested quite significantly in the development of our solution, especially for business customers. While we have an exciting roadmap ahead for further development, We also now can leverage the advances we've made over the last several years. This leverage, along with the strategic shift I just mentioned, will allow us to bring down our engineering spend as a percent of sales to drive non-gap to profitability without compromising our growth potential. The last step I want to mention today in regard to realizing shareholder value relates to how we define and refer to our activities for business customers. We intend to increasingly combine our business products and services into one solution we refer to simply as UMA Business. We, of course, offer a range of features and capabilities to meet the particular needs of each customer we serve. Integrating those features and capabilities as UMA Business reduces complexity and allows for more focus both inside UMA and with customers, partners, and shareholders. In considering what makes UMA business special in the marketplace, our strengths versus competition derive from our ability to serve customers' specific needs better than others, to deliver breakthrough features and tailored solutions, to provide disruptive value, to capitalize on the broad scope of our business, and to extend our reach to encompass new unique customer solutions. I believe it's for these reasons that we are seeing great success today growing UMA business. I will now turn the call over to Ravi to discuss our results and outlook in more detail. But as I mentioned at the outset, when I return, I will share our top-level objectives that will guide our plan for next year.