Ooma, Inc.

Good afternoon. My name is Emma and I will be your conference operator today. At this time, I would like to welcome everyone to UMA's fiscal second quarter 2024 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, again, press the star 1. Thank you. Matt Robison, you may begin your conference.

Thank you, Emma. Good day, everyone, and welcome to this fiscal second quarter 2024 earnings call of UMA Inc. My name is Matt Robison, 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 fiscal second quarter 2024 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 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 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 is included in our earnings press release, which is available on our website. On this call, we will give guidance for third quarter and full year fiscal 2024 on a non-GAAP basis. Also, in addition to our press release and 8K filing, the overview page and events and presentations page and investors section of our website, as well as the results page, of the Financial Influence 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 MSCEO Eric Stang. Thank you, Matt.

Hi, everyone. Welcome to UMA's second quarter fiscal year 2024 earnings call. Thanks for joining us. I'm pleased to report UMA performed well in Q2. I'm looking forward to reviewing our accomplishments and the progress we've made on the several growth initiatives we have underway this year. Financially, UMA achieved 58.4 million in revenue, 3.8 million in non-GAAP net income, 4.9 million of EBITDA, and $3.6 million in cash flow from operations in Q2. We also managed OPEX spending well in the quarter and reduced our inventory. Regarding growth, our important business subscription services revenue grew 27% year over year. Overall, we ended the quarter with $215 million of annualized exit recurring revenue, up 15% versus a year ago. I believe we executed well in Q2 to drive these results, and that UMA is in a strong position today to pursue its strategy and growth initiatives. During Q2, we continued to invest in UMA Office, which of course is our award-winning solution specifically designed for small to medium-sized businesses which seek a combination of advanced features, ease of use, and affordability. We added to ProPlus our top service tier, several new features to facilitate collaboration and customer interaction, including online bookings, one-to-many messaging, team chat, and new CRM integrations with Zoho and Freshdesk. We also improved our Office desktop app by introducing an updated user interface and faster performance for a more cohesive user experience that simplifies interactions. These feature enhancements continue our strategy to build out the capabilities available in our ProPlus service tier, which along with our Pro service tier allow us to target slightly larger customers and drive higher revenue per user. We feel our UMA office strategy is working by allowing us to serve increasingly larger customers while maintaining our long-standing focus on making communications approachable for businesses of any size. As in past quarters, more than half of our new office users in Q2 selected one of these two premium tiers as we continue our journey to democratize advanced technology and make it accessible to small and medium-sized businesses. While UMA Office is targeted at businesses 1 to 20 users in size, I'm pleased to report our largest office customer win in Q2 with a 286 user account, which valued the flexibility and affordability of our solution. We're also seeing interest in Office from potential partners who see Office as a good fit with their products and services. Last quarter, you may recall we announced a partnership with Next Health, which focuses on the dental space, and we have additional Office partnerships in progress. For the rest of this year, our plans for UMA Office are to continue to build out the ProPlus tier feature set and to enable more partners to integrate with and, in some cases, resell UMA Office. We also continue to invest in UMA Enterprise, our solution targeted at larger-sized businesses in select verticals or in need of customization. One focus for us is hospitality customers, where we continued in Q2 to secure wins with major brand hotels. They also began working recently with a new partner to enable our core telephony and SMS capabilities in their platform in support of an artificial intelligence use case. UMA Enterprise will be incorporated into the partner solution via a CPaaS-like business model. Our partner already has several alpha customers deployed and is targeting launch this year. While we don't specifically promote UMA Enterprise as a CPaaS solution, I believe this one-off use case demonstrates the ultimate power of our platform to adapt to bespoke needs. For the rest of this year, our plans for UMA Enterprise are to continue our industry-focused strategy while also growing our network of telecom agents and resellers. We're also making investments to expand internationally. As planned, we made a major step forward in Q2 with our largest customer, by putting in place the capability to serve them in a new region of the world. Over the coming weeks, we will begin rollout in earnest in this new region. I'm also pleased to report that during Q2, we were able to add more users than we anticipated and we gained visibility for increasing to 100,000 users or more with this customer. For the balance of this year, we will focus on implementing our service for this customer in the new region plus at least one additional region, as well as on continuing to onboard their users. Our largest area of investment at this time is UMA Airdial, our integrated solution to replace aging and expensive copper lines that serve critical infrastructure and other specialized applications. As you know, we see a massive market opportunity for Airdial, both in the USA and in other countries. Our feature enhancements to AirDial continued in Q2 as we brought out version 2.0 of our remote device manager, implemented network side auto dial features to support older emergency phones, and implemented modem support to make remote programming of door access systems more reliable. There is a long tail of specialized and older equipment relying on copper lines today. and we feel our ability to control the total end-to-end solution is an advantage as we evolve Airdial to meet all the needs of the market. Owning all aspects of our platform end-to-end has allowed us to adapt the Airdial platform to serve the needs of customers with challenging use cases, including in circumstances where those customers have had another provider fail previously. Commercially, We announced earlier this month that U.S. Cellular completed its launch planning and began offering Airdial through its sales organization. In fact, I'm pleased to report that U.S. Cellular's first customer win with a customer requiring 136 lines occurred in Q2 even before the formal launch date. In this case, Airdial displaced a competitor whose products were not working well And we helped U.S. Cellular deliver a solution in a situation where the customer needed to maintain compliance in a very short timeframe. As in past quarters, our sales funnel for Airedial continued to build in Q2, and we had some notable wins in the quarter. Our largest Q2 win was a restaurant group which will deploy over 750 lines. Just days after the end of Q2, we also won a large retailer opportunity representing approximately 800 lines. Both of these opportunities came through partners of ours who are reselling Airdial. Just this week, we made a further exciting announcement regarding Airdial. I'm pleased to report that the largest REIT in the world, Prologis, will offer both UMA Airdial and UMA Office through their Essentials platform. This platform provides building and other services to Prologis' large base of customers. We're thrilled they have chosen UMA as their featured and only solution for POTS replacement and business communications. Bringing on partners is one of our key strategies to drive Airdial growth. Most typically, our partners resell Airdial, but in some cases, they refer customers to us. This last quarter, in addition to U.S. Cellular and Prologis, We also established new partnerships with two SELECs, two aggregators, and two other resellers. Our plans for the rest of this year for Airedial are to grow our sales and go-to-market resources significantly, establish more resale partnerships, and further enhance the differentiation of our solution. As I've outlined, we have a lot of initiatives underway, and it's an exciting time for us. 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.

Thank you, Eric, and good afternoon, everyone. I'm going to review our second quarter financial results and then provide our outlook for the third quarter and full year fiscal 2024. We delivered another strong quarter with a total revenue of $58.4 million, exceeding our guidance range of $57.4 million to $57.9 million. On a year-over-year basis, total revenue grew 11% in the second quarter, driven by the strength of UMA business as well as the addition of Onset. In the second quarter, business subscription and services revenue accounted for 57% of total subscription and services revenue as compared to 51% in the prior year quarter. Q2 product and other revenue came in at $3.6 million as compared to $4.7 million in the prior year quarter. The prior year Q2 product revenue included certain accessory sales that did not recur this year. On the profitability front, the second quarter non-GAAP net income was $3.8 million at the high end of our guidance range of $3.5 million to $3.8 million and represented 26% increase over $3 million in the prior quarter. Now some details on our Q2 revenue. UMA business subscription and services revenue grew 27% year-over-year in Q2, driven by user growth and the addition of ONSIP. Excluding the effect of ONSIP revenue contribution, UMA business subscription services revenue grew 15% year-over-year. On the residential side, subscription and services revenue were flat year-over-year. As a reminder, we had a one-time churn event during the first quarter with a particular customer with an unusual application where we lost approximately 4,000 fellow users, and we saw a full-quarter impact of it in Q2. We expect residential subscription revenue growth to resume at the low single-digit percentage on a year-over-year basis in the second half of this fiscal year. For the second quarter, total subscription and services revenue was $54.7 million or 94% of total revenue as compared to $48 million or 91% of total revenue in the prior year quarter. Now some details on our key customer metrics. We ended the second quarter with 1,237,000 core users, up from 1,225,000 core users at the end of the first quarter. At the end of the second quarter, we had 467,000 business users, or 38% of total core users, an increase of 18,000. From Q1, our blended average monthly subscription and services revenue per core user, or ARPU, increased 5% year-over-year to $14.51, driven by an increasing mix of business users, including higher ARPU Office Pro and Pro Plus users. During the second quarter, we continued to see a healthy Office Pro and Pro Plus take rate, with 55% of new office users opting for these higher tier services, which was up from 47% in the prior year quarter. Overall, 27% of UMA office users have now subscribed to our Pro or Pro Plus tier. Our annual exit recurring revenue grew to $215.4 million and was up 15% year over year. Our net dollar subscription retention rate for the quarter was 99% as compared to 99% in the first quarter. Now some details on our gross margin. Our subscription and services gross margin for the second quarter was 72% as compared to 74% in the prior year. As a reminder, Subscription and services gross margin for the second quarter this fiscal year included the impact of ONSIP gross margin, which is running lower relative to UMA's subscription gross margin of 73% when ONSIP is excluded. Q2 subscription and services gross margin this year was also impacted by certain upfront investments we made for our largest customer as we prepare for further expansion into new regions in the second half of this fiscal year. Product and other gross margin for the second quarter was negative 73% as compared to negative 31% for the same period last year. As mentioned on the last call, the decline in Q2 product gross margin this year versus last year was anticipated and was primarily due to the following three factors. First, we saw the sell-through impact of certain higher cost components that we had procured in the last fiscal year to stay ahead of pandemic-driven supply chain issues. Second, that prior year Q2 product gross margin benefited from certain accessory sales that did not recur this year. And third, we incurred non-recurring facility costs as we completed our move to a new warehouse facility during the quarter. We continue to expect product and other gross margin for the remainder of fiscal 2024 to be negatively impacted by one-time excess component costs running through the P&L and currently estimate product and other gross margin for the second half of this fiscal year to be in the neighborhood of negative 65%. On an overall basis, total gross margin for Q2 was 63%, as compared to 65% in the prior year quarter. And now some details on operating expenses. Total operating expenses for the second quarter were $33.2 million, up $2.1 million, or 7%, from the same period last year. Excluding the impact of onset, the total operating expenses increased $1.1 million, or 4%, from the same period last year. Sales and marketing expenses for the second quarter were $17.7 million, or 30% of total revenue, up 7% year-over-year, driven by higher marketing and channel development activity for UMA business, which includes Airdial, as well as the addition of ONCIP-related expenses. Research and development expenses were $10.6 million, or 18% of total revenue, up 7% on a year-over-year basis from $9.9 million, driven by investments in new features for both UMA Office and UMA Enterprise, as well as new products such as Airdial. A portion of the year-over-year increase in R&D expense was also for the activities related to international expansion with our largest customer, and the addition of ONSEP team members. G&A expenses were $4.9 million, or 8% of total revenue for the second quarter, compared to $4.5 million for the prior quarter. The year-over-year increase in G&A expenses was primarily due to an increase in personnel costs and the addition of ONSEP. Non-GAAP net income for the second quarter was $3.8 million or diluted earnings per share of 14 cents as compared to 12 cents in the prior quarter. Adjusted EBITDA for the quarter was $4.9 million or 8% of total revenue and represented 22% increase over $4 million for the prior quarter. We ended a quarter with total cash and investments of $29.5 million, which increased from $28.4 million at the end of Q1. We generated cash from operations of $3.6 million, which was up from $2.2 million in the same period last year. On the headcount front, we ended a quarter with 1,108 employees and contractors. Now I'll provide a guidance for the third quarter and the full fiscal year 2024. Our guidance is on a non-GAAP basis and has been adjusted for expenses such as stock-based compensation, amortization of intangibles, and certain non-recurring expenses. We expect total revenue for the third quarter of fiscal 2024 to be in the range of $59 million to $59.6 million. which includes 3.7 to $4 million of product revenue. We expect third quarter net income to be in the range of 3.8 to $4.1 million. Non-GAAP diluted EPS is expected to be between 14 cents to 16 cents. We have assumed 26.3 million with average diluted shares outstanding for the third quarter. For four-year fiscal 2024, we expect total revenue to be in the range of $235.5 million to $237 million. The adjustment to the high end of the guidance range is related to our expectation around the timing of airdial product revenue within this fiscal year. While we are very excited about growing pipeline of airdial opportunities, we believe some shipments of airdial hardware will be deferred to next fiscal year, primarily due to customer-driven timeline. As for business subscription and services revenue for the year, we expect a year-over-year growth rate of 18 to 20%, which is unchanged from our prior expectation. In terms of revenue mix for the year, we expect approximately 93% of the total revenue to come from subscription and services revenue and the remainder from products and other revenue. In terms of profitability, we are raising the bottom end of our prior guidance range. We expect non-GAAP net income for fiscal 2024 to be in the range of $15.5 million to $16.5 million. Based on this guidance range, we estimate our adjusted EBITDA for fiscal 2024 to be $19.5 million to $20.5 million for approximately 9% of revenue at the upper end of the range. We expect non-GAAP diluted EPS for fiscal 2024 to be in the range of $0.59 to $0.63. We have assumed approximately 26.4 million weighted average diluted shares outstanding for fiscal 2024. In summary, we are pleased with a solid performance in the second quarter and remain focused on executing to a long-term strategy to achieve profitable growth. I will now pass it back to Eric for some closing remarks. Eric?

Thank you, Sheg. This month marks 20 years since the original two founders of UMA hired a small team and got to work. In that time since, we have developed into a successful, growing public company with over 2 million users and over 1,100 employees and contractors. Over the last 20 years, we believe we have saved our customers billions of dollars in the aggregate compared to what they would have paid with traditional phone service solutions, while also bringing them advanced features previously unavailable to smaller businesses and consumers. Perhaps most exciting for us is that we have become a leader in the disruptive change underway in communications, made possible by cloud technology. With the strong market position we have built over the last 20 years and the multiple growth initiatives we have underway, we're excited about our outlook.

Thank you. We'll now take your questions.

As a reminder, if you would like to ask a question, press star followed by the number one in your telephone keypad. Your first question comes from the line of Mike Lattimore with Northland Capital. Your line is open.

Great.

Thanks, Jen.

Congrats on the good, solid results there. The ProLogis partnership is interesting. What are the next steps there in terms of getting that fully launched?

It will take at least a few weeks, maybe a little longer. It depends on how fast they move. They have to put us into their Essentials platform, which is a web-based solution for their customers to draw on. They have certain categories of capabilities they have in that platform. We'll be kind of a new area for them with communications. But I think it's not only important for being part of the Essentials platform, but also I think it demonstrates to the whole REIT community what UMA can bring. And I know many REITs out there look to Prologis because they are clearly the leader in the world in that space. So I think it was important for us to get the press release out and just continue the awareness building that we're trying to do for that space.

Great. And then on your largest customer, you talked about seeing a path towards 100,000 users there. Can you... Just mention what is the user count presently and also just why did some of your Airdial customers push out their timings?

So with our largest customer, they're obviously taking a combination of UMA Office and UMA Enterprise from us. We're over 80,000 users with them today and I can see us being at 100,000 or more by fiscal year end. And we've always thought we'd get there, but I feel I have even more visibility now than we've had about our path there. It's great to have our new node up and running in a new region of the world and to have some customers on it already and be planning the major rollout that now comes with that. And having got that one up and running, I think we've worked out the kinks a fair bit in terms of putting up the next one and the next one. So I feel like we did some lifting in Q2, and we're in a great position as we go forward to Q3. On the airdial front, the second part of your question, it baffles me a little bit, Mike, because we save our customers so much money compared to what POTS is now costing them. It baffles me sometimes why they don't move faster. But The savings are clearly compelling, and I think that's what I really turn to in terms of my confidence in Airdial and where we're going. To be honest, we just need to look forward with what we know and not speculate on what we think we can also achieve. And I can tell you we have a significant pipeline. We have deals out for, you know, signing. We have a lot of things that we think are going to come in the back half of this year, but we'll have to, you know, it's a little bit harder to predict in our traditional areas of the company that we've been at longer and which are more steady. So as things happen, we'll keep you guys updated, and we'll see where we're at at the end of Q3.

Sounds good. Thanks.

Your next question comes from the line of Matt Stotler with William Blair. Your line is now open.

Hey, guys. This is Alex. I'm for Matt. Thanks for taking our questions. Just a first one for me. Maybe could you touch on the progress that's been made with JASWR and Next Health, those partnerships that were announced earlier in the year? How is the progress going with those rollouts and maybe how you see those layering into the overall business going forward? Sure.

So on the first one, the progress with Jazzware, they're a partner of ours for the hospitality space with our enterprise solution. And that's gone well. We continue to grow in that space. Like I was just describing for Airdial, we have some significant opportunities in front of us as well. They're more of a technology enabler for us because with the JASH water capability combined with ours, we can make our system do more for the customer. So I would say that's rolling well. Next health, I think we had slower progress than anticipated in Q2, and that's turning around now for Q3. As we brought the solution into the market, we realized some additional integrations that we wanted to have with it. we and they together. And so we have customers using it and all that, but we did some further development in Q2, and I think we're really just turning up sales efforts on it more this quarter.

Got it. Sounds good. Thank you for that. And then maybe just one on OMSIP. Can you give us an update on how the acquired business from Onsip is integrating with the rest of the UMA portfolio alongside maybe any growth contribution you can share to the overall business? Thanks.

Sure. So from an integration into our business standpoint, it's been seamless in everything we planned and more. The members of the Onsip team have folded into UMA. Some activities have changed for some people. Some people are working on what we were doing on the UMA side before we got together. But nonetheless, on the Onset platform, we continue to drive development in certain areas and certainly continue to drive sales and marketing for it. I will tell you that when we make our decisions now, we don't think so much about We want to do this for ONSIP or we want to do that for UMA. We think about customer acquisition cost, payback, and channels to market, and we're always measuring what we do. And so I would say that we aren't spending all that much on growth for the ONSIP platform today. We found that some of the things we're doing more under the UMA brand, if you will, have been more powerful for us, but we are still investing in ONSIP, and they brought on a a meaningful number of users last quarter. But we're not driving a lot of growth in Onsip per se. But certainly, it's fungible where we spend the money. With Onsip here, they're positively contributing to our bottom line. And we have sales and marketing budget from that. And we just allocate where we think we can make the biggest impact. So that's kind of how we look at it. And we were fortunate. Onsip was a very mature platform that runs very, very well. We did bring out, I should say they were already well along with, but we finished up and brought out a new admin portal that I think is a nice step forward for them. We've made some additions and changes to their mobile app. But really, we can kind of view this as part of the UMA portfolio now and kind of run our sales and marketing as one company, and that's how we're doing it.

Got it. Perfect. Thank you. I'll pass it on. Thank you. Thanks, Alex.

Your next question comes from the line of Josh Nichols with B Reilly. Your line is open.

Yeah, thanks for taking my question. Just to dig in a little bit more, it's good to hear about all the new wins in the growing funnel for Airdal. But where do we stand today as far as how many units have been installed, and if you could kind of pontificate a little bit about where the backlog is today in terms of number of units so we could get some idea of what that growth potential should look like whenever the deliveries and installations do start to ramp?

So I can frame it a little for you, Josh. As you know, we haven't given those specifics yet. You know, when we get a large customer, it can take six months to do rollout. In fact, our large customer from last fall that we announced two quarters ago, I think we're mopping up now, the stragglers, but there's a handful of installations still to go. But they're pretty much getting done after six months of effort. Frankly, a month or two of planning and then six months of effort. So rollout does take time. I think we've gotten a lot better at rollout. We work with multiple third parties for, you know, when a customer wants to, you know, have a third party do installation and pay for it, by the way. It's something we charge for. And some of those new third parties are relatively new compared to where we started. We've revamped our team internally. We have discovered that we need to dedicate more resources to this. We are actively hiring in the sales and sales engineering side of our company to try to support the growth of Airdial. I don't feel like we're keeping up with the opportunities we're seeing in the market. And I know it's a shame to say that, but it's kind of a new area for us, this kind of direct strategic sales capability. We've got significant ambitions to add to the team through the balance of this year. On the partner front, I mean, we've had some big wins. I mean, T-Mobile, now U.S. Cellular, frankly, Prologis because of what they represent in the industry. And we're achieving new partners every quarter on Airdial. And it takes a little while to train them. It takes a while to get out in the market. But I can tell you that... We routinely get surprised when a partner, you know, we expect some of these partners to deliver opportunities that are a few lines here, a few lines there, but, you know, it's amazing how some can bring in a larger-sized opportunity. So it's an exciting time for us, but I don't feel like we have enough presence in the market, and I worry about the deals we're not seeing. I think if you look at our – well, I know if you look at our pipeline – Our pipeline, which is to say opportunities in our sales funnel, which are not yet closed, there are tens of thousands of lines. And that's the kind of opportunity we aspire to achieve. But in any case, I hope that frames in a little bit. I know it is maybe a little frustrating not to know it more specifically than that, but you do have our overall guidance, and you know what we're trying to do. Yeah, the largest wins that we achieve, I have been announcing those, and it gives you a sense that there is bigger potential here, I hope, as we go forward.

Thanks for providing a little bit of clarity there.

And then last question for me. You mentioned it just now in your comments, but I haven't talked about it too much. I know You have some partnerships with T-Mobile on Airdial, but also some residential solutions. Just any updates on progress that's going on with that partnership?

Sure. That partnership's been in place for over a year now, and it's been pretty steady in the greater sense over the last several quarters. We get some customers out of that relationship that mainly are customers there who saw our presence on T-Mobile's website and feel they want to get phone service with their internet. What T-Mobile has not done is enabled marketing, if you will, marketing sales through their inside teams and some other things due mainly to systems challenges and other things. You know, it's not been a big driver of our residential business to date, but it's a nice adder. We do see other opportunities similar in some respects to this to go after. And I don't know how far we'll get with those, but we are working other opportunities as well to try to use partners as well as our own sales activities on the residential side of our business.

Great. Thank you. Thanks.

Your next question comes from the line of Brian Kintzlinger with Align Global Partners. Your line is open.

Great. Thanks for taking my questions. First, can you comment on how active T-Mobile and U.S. Cellular have been as partners to Airdal and have either closed deals?

Oh, goodness. Both have closed deals. I talked about the very first deal from U.S. Cellular that happened even before they announced the program formally to their sales teams. Yeah, our two largest deals from last quarter both came through partners. And so, you know, it takes time to ramp up. There's no question. It takes time for salespeople to get comfortable with things. And to be honest with you, There's a lot to know about Airdial. It's not the typical kind of thing that some of these entities would normally sell. But we have staff to work with them in deals and to support the process. And I think it's a really important part of our strategy because we also sell Airdial through our channel partners that also sell, in particular, UMA Enterprise. And they're finding us a lot of deals, but a lot of deals they find us are, you know, a few lines or a dozen lines. And I think what will really make Airdial the breakout success that we all aspire it to be is winning the 500, 1,000, or even bigger line opportunities. And our partners have good relationships for that, and we're excited about what we're seeing with them.

Right. And then what is it that takes? about six months for a large implementation. Is it that the process needs to be changed for customers? Does technology have to be changed to prepare? And then once the actual, once the customer's ready, how long does it actually take for UMA for their process to actually install?

So you need to wrap your head around a little bit the scope of a large customer. Let's say That large customer I've talked about from last fall, more than 2,500 lines, more than 700 locations. If you're going to do this in six months, you're doing, what, 115 locations a month, 30 locations a week. And every location, you don't really know maybe where your lines even terminate in your buildings. And once you find them and get the aerodial put in and test its reception, which, you know, usually works fine, but we can switch, as we've talked in the past, to a variety of cellular providers if needed to get better reception. But once you get the aerodial and test it, then you've got to plug the equipment into it and test the equipment. But all that said, you know, a couple hours, three hours will get an installation at a site done. If that installation needs two air dials and six lines, it goes pretty fast per location. So it's really the number of locations that drives the timeline and the effort, just the project planning and the pre-installation process analysis you need to do to know how you're going to make the conversion happen.

Got it. Last question for me is on the international front, you've obviously used your largest customer to expand internationally. At what point does the company make the investment necessary to begin selling to other customers outside this large customer? Is that in the next 12 to 24 months? Is there too much on your plate to think about that right now?

Well, it's not in our plan for this fiscal year, which is the next six months, but I think it's fair to say that we aspire to it being in the time frame you mentioned or something like that. You know, we're also going to have to question what we lead first with internationally. We see tremendous air dial opportunity internationally as well. But most likely, if we're going to dovetail off what we've done with this large customer, we would begin selling our UMA office solution in particular probably in Western European countries and, you know, to third parties, to other parties. We would love to do that with certain partners or certain entrees into the market, and we are thinking about our strategy in that regard. But this year, we are not working on those next steps yet.

Great. Thanks for taking my question. You bet.

As a reminder, if you would like to ask a question, press star followed by the number one on your telephone keypad. Your next question comes from the line. of Matthew Harrigan with Benchmark. Your line is open.

Thank you. Thank you. Congratulations on the results and the guidance. I just had a couple dangling things. One, I guess in the nature of the vacuum category, you've got a huge TAM for Airdial, and clearly there's a crying need right now. Are you seeing anything in the way of incipient competition or people you see who are at least desires coming into space. And then anecdotally, in the U.S., I mean, despite their AT&T working hard to phase out copper lines and all that, you're seeing something that's almost price gouging in terms of what they're charging as the current alternative. Are you seeing the same type of this pricing when you look at Europe and other markets in terms of, you know, the copper lines just being – way out of whack and that increasing the urgency of people wanting to move on. Thank you.

Yeah. So on your second part of your question, it varies a little bit. We don't see it so much in Canada. I believe in Canada pricing is still relatively controlled, although we are seeing Canadian customers in need of Airdial and asking for it. And currently we're not providing Airdial in Canada. So even though the market I don't think is as far along as it is here in the U.S., it's certainly going that way, but it's not there yet. When we look at Europe, it varies a little bit by country. In fact, it varies a lot by country. Some countries haven't started their journey, but they know they need to, and they're in the very early days of looking for what they might do. Others are kind of getting started, and now looking at Europe, what's the best approach to take? And I feel like whenever we can get in front of a partner in one of these countries, because keep in mind, we need a cellular provider to at least provide the Internet connection that goes with Airdial. We find that once we explain what Airdial does and how it works, there's no product like it in the market. And so it's a really compelling story, and I really believe that. And it's just getting better every day, too. We've made so many improvements to it even over the last six months and extensions to it. So, you know, we're actively thinking at that level, you know, more broadly than the U.S. But I don't think there's new – I don't think the other markets have turned the corner like the U.S. has over the last 12 months. Over the last 12 months, really over the last six months even, since the start of this year, we've seen – customers are a lot more aware of the need to do something. I think word starts to get out, and they start to notice their bills. And so the U.S. is clearly farther along than other countries, but you can definitely see it coming. I hope that addresses your question. I don't know if there was a first-party question I didn't get to or not.

The first part of the question was really, is 50 in competition? I know there's a long... sales cycle. It takes a while to get product out and all that, but there's a crying need. It's a massive market opportunity. Do you see anyone at all who's at least working on a comparable solution incipiently? Because it doesn't feel like you would necessarily have to go four or five years to address this massive market before someone else or other people aggressively came in.

I don't know of anyone that's working on a new solution for this market or any development underway to change the solutions that are out there today. I think the biggest challenge we face is making sure customers know we have Airdial and know what it can do for them. And we need a lot more outreach and branding and marketing. to do that. But, you know, if you're a large aggregator today, you have a lot of POTS lines that you've sold and you know where they are and you can just walk into those customers. We need to get them to realize there's a viable alternative. We have a significant opportunity we're working right now where they got introduced to us through a a third party, and they were just thrilled to find out about us, but they had no idea. They just didn't know. And it's the kind of customer we should be reaching out to. And so we're really trying to build our sales and marketing capability to be able to do more of that.

And that's, I think, what will drive the business.

Great. Nice problem to have. Thanks, Eric.

Thank you.

There are no further questions at this time and concludes our Q&A session. I turn the call back to Eric for closing remarks.

Well, thank you, everyone. You know, we were excited to outperform on the revenue. And frankly, our $3.6 million in cash flow from operations is, I think, the most we've ever had as a company. And we're doing it while we're investing in these new strategic initiatives. I feel like we're on track. And I realize from all the questions here and just in general talking with all of you, you know, we as well want to be able to show you even more Airdial success, and I want you to know we're working hard towards that. With that, thank you, everyone. We'll stop here. Thank you.

This concludes today's conference call.