Ooma, Inc.

Hello and welcome everyone to the UMA third quarter fiscal year 2023 financial results call. Today's call is being recorded. All lines have been placed on mute to prevent any background noise. And after the speaker's remarks, there will be a question and answer session. If you would like to ask a question during that time, simply press star one on your telephone keypad. If you would like to withdraw your question, please press star one again. Thank you. And I would now like to turn the conference over to Mr. Robinson. Please go ahead.

Thank you, Savannah. Good day, everyone, and welcome to the third quarter fiscal year 2023 earnings call of 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 Stang, and CFO, Shig Hamamatsu. After the market closed today, UMA issued its third quarter fiscal year 2023 earnings press release. This 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 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. 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 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 were 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 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. 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 is included in our earnings press release, which is available on our website. On this call, we will give guidance for fourth quarter and full year fiscal 2023 on a non-GAAP basis. Also, in addition to our press release and AK filing, the overview page and events and presentations page in the investors 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 core subscription businesses. These are titled 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's CEO, Eric Stang.

Thank you, Matt. Hi, everyone. Welcome to UMA's Q3 Fiscal Year 2023 Earnings Call. Thank you for joining us. It's my pleasure to talk with you today about our excellent results for the Q3 quarter just ended and the many growth initiatives we have underway for Q4 and next year. I'm delighted to report for Q3 FY23 that UMA outperformed on both the top line and bottom line. Q3 revenue of 56.7 million was up 4 million sequentially and up 7.5 million year over year through a combination of growth across all parts of our business in the acquisition of onset which we announced last quarter. Similarly, non-GAAP net income of $3.5 million was up over previous periods in line with our plan announced last quarter to trim spending modestly, bolster cash flow from operations, and position ourselves better to take advantage of additional inorganic growth opportunities in the future should they come along. All in, Q3 was an excellent quarter. Turning now to UMA Office, which of course is our solution for serving small to medium-sized businesses, we announced during Q3 the addition of five new features to our top service tier plan, the ProPlus tier. These added features bring even more sophisticated capabilities to small to medium businesses in an intuitive and easy-to-use way and include enhancements to improve simple call center activities and integration with Microsoft Dynamics 365. These new features represent one step in an ongoing effort we have underway over the next several quarters to add new features to the ProPlus service tier, allowing us to serve even larger sized businesses with UMA Office and continue to raise our revenue per user. I'm happy to report that during Q3, 50% of our new Office users I adopted a premium service tier, either Pro or Pro Plus. And then about 10% of the users who did select a premium tier chose our highest tier, Pro Plus. We believe our strategy to provide even more advanced features for small to medium businesses in an easy and intuitive way is working, and we are excited about our plans for Q4 and next year. Regarding UMA Enterprise, which of course is our offering for serving larger sized businesses that need extensive and customized solutions, we continue to make good progress in our targeted verticals. One such vertical is hospitality, where we added more than 40 new properties in the quarter, up from about 25 the quarter before and about 15 the quarter before that. To further support growth, we are developing relationships with larger hotel groups as part of our strategy to continue to expand in this vertical. We believe our strategy with UMA Enterprise to target customers who need flexible solutions is finding traction in the market. Now in regard to international expansion with our largest customer, we continue to execute well in Q3. I'm pleased to report we now serve more than 50,000 users with this customer. We have achieved this one quarter ahead of the plan we set at the start of this year. Our outlook for growth in Q4 remains robust, but lower than in Q3 given the holiday period in Q4. Looking out to next year, we believe at this time that Q1 will line up to be the highest growth quarter so far with this customer, and that we will continue significant growth in users throughout next year. We are thrilled to enable a unique solution for this customer and are excited about planning for rollout to new regions next year beyond North America and Europe. We discussed at length on our last conference call that our acquisition of ONCEP affords us an additional opportunity for profitable growth. As a reminder, ONCEP operates its own internally developed UCaaS platform that is used today by approximately 5,000 customers comprising approximately 50,000 users. The short-term goals we laid out last quarter for onset were to maintain low churn, integrate the team, drive cost synergies at the gross margin line, and make the acquisition accretive in this Q4. I'm pleased to report that we are ahead on each of these goals and that ONCEP turned EBITDA accretive in Q3, one quarter early. We're very appreciative of the hard work that both the UMA team and the ONCEP team have put into making this acquisition a success. As you know, in addition to our strategic efforts to grow UMA office and UMA enterprise, integrate ONCEP and expand internationally, We are heavily engaged in capturing the large opportunity to replace the sunsetting of copper lines with our new solution, Airdial. We continue to make great progress with Airdial in Q3. As was the case in Q2, Airdial orders outpaced installations as customers require time to test Airdial and to plan equipment installation across multiple sites. Our largest Airdial order in Q3 was for 300 lines to an organization with a large number of locations. As anticipated, Airdial was also opening up new agent relationships, and we were able to add more agents in Q3 than in previous quarters. One particularly exciting development is T-Mobile for Business began reselling Airdial in Q3. Based on the progress we've made over the last three months, We are excited about the potential of this partnership and anticipate that T-Mobile will become a significant reseller of Airdial. One particular benefit of our T-Mobile partnership is that T-Mobile opens up access for Airdial to government entities that procure through special purchasing vehicles. This can be essential in selling to state, local, and educational entities. Including T-Mobile, we now have six strategic partners signed up or already reselling Airdial. Looking forward, we are in active discussions with several other potential resale partners, some of whom are national in scope. Finally, regarding Airdial, it was exciting in Q3 to win several awards. In August, we announced that Airdial won Best Endpoint Product for 2022 and the prestigious UC Awards from the publication UC Today. And in November, we announced that TMC named Ume Airdial as a 2022 TMC Labs Internet Telephony Innovation Award winner. There is growing awareness of the sunsetting of copper lines, and we are committed to building recognition of Airdial, which we believe is the best solution in the market today for serving elevator, gate, pool, and door phones, fire and burglar alarm panels, and other devices that require an analog line connection. I'm also excited to report that UMA Business was named a UCAS leader in Frost and Sullivan's October Frost Radar Report. The report states that through innovation, organic growth, and strategic acquisitions, UMA has quickly earned a top spot in the North American hosted IP telephony and unified communications market. And the report goes on to say that UMA's dedication to removing the complexity of purchasing and using business phone service makes the company particularly well positioned to capitalize on the rise in hybrid work. I'm very happy for the entire UMA team to see Frost and Sullivan recognize our efforts. Switching now to the residential front, we continue to drive modest growth with subscription and service revenues up 2% year over year in line with our residential strategy. Our sales made in conjunction with T-Mobile Home Internet were approximately the same as in Q2, and both we and T-Mobile continue to look for ways to increase the visibility of the UMA offering for T-Mobile customers. Overall for Q4, we remain excited about our many growth initiatives. Unlike the actions taken by some of our competitors, we are currently not cutting back on key investments. and we're currently not planning any personnel layoffs. As we've previously said, in these times, we do believe that customers are sometimes taking longer to make a decision and are sometimes being more careful in what they buy, but we also feel we have leading solutions for the marketplace and there's significant demand for improved communication, especially at the price points we can offer. We're cautious about our outlook, most of all for the timing of Airdial installations and revenue, given that Airdial is a new product and market segment for us, but overall for our business, we continue to see significant opportunity and to execute our strategy to drive growth and profitability. I will now turn the call over to Shig, our CFO, to discuss our results and outlook in more detail and then return with some closing remarks.