Ooma, Inc.

Good day and thank you for standing by. Welcome to the UMA earnings call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during this session, you will need to press star 1 on your telephone's keypad. If you require any further assistance, please press star 0. Thank you, and I would like to hand the conference over to your first speaker for today, Mr. Matt Robinson. Thank you. Please go ahead.

Thank you, Donna. Good day, everyone, and welcome to the second quarter fiscal year 2022 earnings call with UMA Inc. My name is Matt Robinson, UMA's Director of IR and Corporate Development. On the call with me today are UMA's CEO, Eric Stank, and Interim CFO and Controller, Amrata Sarghalwal. After the market closed today, UMA issued its second quarter fiscal 2022 earnings call. earnings press release, as well as a press release announcing the appointment of Shig Hamamatsu as vice president, CFO, and treasurer, effective next Tuesday, September 7th, via Business Wire. These releases are also available on the company's website, uma.com. This call is being webcast live and is accessible from our link on the events and presentations page of the investor relations section of our website. This link will be active for replay of this call for at least one year. The 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 press release. During today's presentation, our executives will make forward-looking statements within the meaning of the federal securities laws. 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 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 and those risks more fully described in our filings for 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 disclaim any obligation to update any forward-looking statements except as required by law. Please note that, other than revenue, or as otherwise stated, the financial measures to be 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. The 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, which is available in our website. On this call, we will give guidance for third quarter and full year fiscal 2022 on a non-GAAP basis. Also, in addition to our press release and 8K filing, the overview page and events and presentations page in the investor section of our website, as well as the results page of the financial info section of our website, include links to information about costs and expenses not included in our non-GAAP values, and key metrics of our subscription purposes. These are called Supplemental Financial Disclosure 1 and Supplemental Financial Disclosure 2. Additionally, our investor presentation slides include GAAP to non-GAAP reconciliation that also provides resolution of GAAP expenses that are excluded from non-GAAP metrics. Now, I will hand the call over to UMA CEO, Eric Stang.

Thank you, Matt. Hi, everyone. Welcome to UMA's Q2 fiscal year 2022 earnings call. Thank you for joining us today. I'm excited to review our progress and results for Q2 and to update our outlook for the balance of the year. First of all, I'm pleased to report strong growth for fiscal Q2. Total revenue for the quarter was $47.1 million, which was above our guidance and represents 14% year-over-year growth. Revenue growth for business customers increased sequentially in Q2 to 26% year-over-year, and revenue growth for residential customers held approximately steady at 4% year-over-year. With the progress we are making, we remain on track to cross over to more than 50% of our subscription and services revenue coming from business customers before the end of this fiscal year. I'm also pleased to report Q2 net income and EBITDA also exceeded our expectations. EBITDA for fiscal Q2 was a record $4.1 million. This allowed us to end the quarter with over $30 million in cash, up from a low point of $23.3 million just a few quarters ago. Overall, we believe the business is performing well, and we have good momentum going into the back half of this fiscal year. Our primary growth initiatives center on driving growth in small business customers and expanding sales through channel partners, developing our enterprise business solutions, and expanding internationally. We are making good progress on each of these initiatives, and they will continue to be our focus for growth. As we've discussed previously, small businesses have unique needs and represent a large and relatively untapped segment of the UCAS market. We believe at least two-thirds of small businesses have yet to convert to a cloud UCaaS solution. In addition, there are indications that small business formation is currently at a record high. We believe UMA is the leader in serving small business customers with our UMA Office and UMA Office Pro solutions. Our premium price to Office Pro solution, introduced about one and a half years ago now, was adopted by 45% of our new office users in Q2, an increase versus Q1. Overall, 17% of our office users have now stepped up to our pro tier. We are investing to make our pro tier even more attractive to customers. To this end, in Q2, we announced Video Remote Control, which allows users of our video meetings to control remote screens. And we also announced Caller Info Match, which we discussed on our last conference call. We're also investing in new breakthrough features that will enable us in the future to launch a new, higher-priced tier above Office Pro. These efforts are part of our leadership strategy in the small business segment. For UMA Office, our small business solution, our largest new customer in Q2 is was a 127-user implementation for a restaurant establishment with about 20 locations. Other notable UMA office customer wins in Q2 included 40-plus user implementations at several companies, including a trucking company, a realtor company, and an industrial business. We added 20 locations with a national entity where we now serve over 100 locations, including with UMA Connect Internet service at some of those locations. And we added an additional approximately 150 locations with a large national brand where we now serve over 1,500 of their locations. We're excited by the expanded market potential serving larger-sized businesses that we see from Office Pro with its advanced features. As you know, we have a long-term strategy to expand our channel partners and sales through resellers, which we feel is a large opportunity given our historical concentration on direct and retail sales. In Q2, we grew to 46% of our business sales through resellers, our highest level yet. We also announced our new partnership with AppSmart to offer business phone and unified communication services to through AppSmart's extensive technology advisor network. Our contract with AppSmart opens the door for us to build relationships with AppSmart's network of advisors. Finally, during Q2, we completed much of the customization work needed to support a new private label channel partner who we mentioned a quarter ago. We see potential with this partner to onboard several thousand users over the balance of this year. We continue to expand our UMA enterprise feature set and target select opportunities where we can provide a differentiated solution. One such area is hospitality, where we secured several new hotel customers, including some very well respected names in the industry. As part of this strategy, we announced a new partnership with Jazzware, which offers hotel management solutions and other services. Together, UMA and Jazzware can now offer Jazzware's hospitality applications in universal connection middleware using the UMA Enterprise UCAS platform for connecting hotel premise and contact centers to the public switch telephone network. This is one example of UMA Enterprise's strategy to provide customized solutions meeting customers' unique needs. We also announced a new partnership with UJET, UMA now offers an integrated solution combining UMA Enterprise with UJET's leading omnichannel contact center solution. In addition, UJET will deliver referrals to UMA when UJET clients or prospects are in need of UCAS services. We are already seeing new sales opportunities coming from this partnership. Finally, we are investing this year in international expansion. driven by the opportunity to serve our largest customer in new countries across Europe and other parts of the world. The effort to accomplish this progressed well in Q2. We are currently bringing up a number of locations newly established by this customer across a number of countries, and we are poised to begin a more extensive rollout of services in Q3. In Q2, we also began collaborating on some new initiatives with this customer, which we are excited about, though our focus, of course, remains on rolling out our current services further this fall when the customer is ready to proceed. On the residential front, our business remains solid, and we once again view revenues in line with expectations. Our supply chain is in relatively good shape, We expect to be able to meet the demand we anticipate in the back half of this year. Turning to the pandemic, we noted in the past that it creates challenges for direct customer engagement and hiring. Nonetheless, our organization is stable, and we have the right people in place across our business to execute our growth plans. And lastly, I'm very pleased to welcome Shig Hamamatsu, who will be starting on September 7th as UMA's new CFO. Hiring Shig is the result of an extensive search process, and we are thrilled that he will be joining UMA next week. He brings deep financial understanding and experience both as an auditor and as a public company CFO and has a demonstrated track record of leadership and strategic business development. I look forward to partnering with SHIG to drive UMA's growth, and I hope you will join me in warmly welcoming them to UMA. I will now turn the call over to Namrata Sabharwal, our acting CFO, to discuss our results and outlook in more detail, and then return with some closing remarks.