Ooma, Inc.

Good day, and thank you for standing by. Welcome to the Yuma, Inc. First Quarter Fiscal Year 2026 Financial Results Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there'll be a question and answer session. To ask a question during the session, you'll need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To ask for a question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to turn the conference over to Matt Robison. Please go ahead.

Thanks, Lisa. Good day, everyone, and welcome to the Fiscal First Quarter 2026 Earnings Call with 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 First Quarter 2026 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 one year. 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. 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 second quarter and full year fiscal 2026 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 relations section of our website, as well as the quarterly results page of the financial information 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 gap to non-gap reconciliation that also provides a resolution of gap expenses that are excluded from non-gap metrics. Now, I will hand the call over to UMA CEO, Eric Stang.

Thank you, Matt. Hi, everyone. Welcome to UMA's first quarter fiscal year 2026 earnings call. Thank you for joining us. We're pleased to report solid Q1 financial results and share with you the strong start we are making to this fiscal year. For our first quarter of FY26, we achieved $65 million of revenue, $5.6 million of non-GAAP net income, and $6.7 million of adjusted EBITDA. We're particularly pleased that our net income and adjusted EBITDA exceeded the top end of our range, and we were off to a good start toward driving higher profitability this year. Our revenue growth was 4% year-over-year, which was near the high end of our guidance range as we build momentum this year, particularly for Airdial growth. I'm pleased to say we made particularly great progress on Airdial in Q1 and are optimistic about our outlook, which I will touch on in a few moments. As you know, we focus on four market segments, cloud communications, specifically designed for smaller-sized businesses, POTS replacement for both business and residential customers, wholesale platform services, and residential telephony. We believe we're a leader in each of these segments. Our cloud communications solutions performed well in Q1, though our overall results were dampened a little by some expected rightsizing at our largest customer, Regus. Regus remains a very important customer, and I'm pleased to report that the right sizing of their business, which we announced starting two quarters ago, is now fully behind us. Both UMA Office and UMA Enterprise performed well in Q1, especially in certain verticals we target. Sequentially versus Q4, UMA Office expanded the number of new account wins and users. Success in verticals such as dental and medical, insurance and financial services, and legal helped drive this, as did an expanding number of larger-sized account wins as we enhanced Ooma Office's features to serve larger customers. Along with this, 61% of new Office users in Q1 opted for a premium service tier, which may be our highest ever. Regarding Ooma Enterprise, you'll recall that hospitality and hotels is one of our key verticals. Our steady progress in this vertical is paying off, and I'm pleased to report that we now serve more than 500 hotels across North America. Switching now to UMA Airdial, our business POTS replacement solution, I have several pieces of good news to share. First, you'll recall that we announced a quarter ago that a major cable company will be reselling Airdial, and we hoped to launch with them in Q1 of this year. I'm very pleased to share with you today that this partner of ours is Comcast, and they launched Airdial on schedule. As I'm sure you can appreciate, their reach is extensive, both with the largest companies in the United States and government entities as well. We are already engaged with them on some very large deals and are still just getting started. In addition, we have an expanding number of large deals in the sales funnel with our other resale partners as well. and achieved some notable new customer wins in Q1, which we believe will expand in scope as these customers implement Airdial in stages over time. Indicative of the Airdial momentum we see, we signed up several new Airdial reseller partners in Q1, our most ever in a single quarter. Some of these new reseller partners are SELECs, some are what you might call aggregators, and one is an end equipment provider and servicer. With these wins, we now exceed 30 reseller partners for Airdial, which we believe is significant. Finally, you'll recall I mentioned last quarter that Marriott certified Airdial for use at its properties. I can report that this relationship is underway, and we now have more than 100 Marriott properties in our sales pipeline. Our wholesale platform services, sold as 2600 Hz, also accelerated in Q1. I'm pleased to report we closed four new customers, which is our most ever in one quarter. These customers are relatively small in size and will take time to implement, but I think they are a great validation for our platform. We know these customers looked at other solutions before choosing UMA 2600 Hz. One customer is more of a CPaaS-type opportunity, much like our large customer win last year, Service Titan. As you know, we are excited that our platform offers the APIs and other requirements to win these CPaaS-type opportunities, as well as replace Broadsoft and Metaswitch in use by carriers and other UCaaS providers. So overall, I believe we made solid progress in Q1 and are off to a good start for fiscal 2026. I'll 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 first quarter financial results and then provide our outlook for the second quarter in four-year fiscal 2026. Our first quarter revenue was $65 million, at the higher end of our guidance range and was up 4% year-over-year, driven by the growth of our UMA business, including Airdial. In Q1, business subscription and services revenue accounted for 62% of total subscription and services revenue, as compared to 60% in the prior quarter. Q1 product and other revenue came in at $4.8 million as compared to $4.1 million in the prior year quarter. The year-over-year growth in product revenue was driven by growth in air dial installations. On the profitability front, Q1 non-GAAP net income was $5.6 million above our guidance range and grew 56% over the prior year quarter. Now some details on our Q1 revenue. Business subscription and services revenue grew 6% year-over-year in Q1, driven by user growth and output growth. On the residential side, subscription and services revenue was down 2% year-over-year. For the first quarter, total subscription and services revenue was $60.3 million, or 93% of total revenue, as compared to $58.4 million, or 93% of total revenue in the prior quarter. Now some details on our key customer metrics. We ended the first quarter with 1,225,000 core users, which is down from 1,234,000 core users at the end of the fourth quarter. The sequential decline in total core users was primarily due to the seat reductions with IWG, which was anticipated going into Q1. At the end of the first quarter, we had 499,000 business users, or 41% of total core users. Our blended average monthly subscription and services revenue per core user, or ARPU, increased 4% year-over-year to $15.37. driven by an increasing mix of business users, including HireApu, Office Pro, and ProPlus users. During the first quarter, we continued to see a healthy Office Pro and ProPlus take rate, with 61% of new Office users opting for these higher tier services, which was up from 57% in the prior year quarter. Overall, 36% of UMA office users have now subscribed to these higher tier services. Our annual exit recurring revenue was $234 million, up 33% year-over-year. Our net dollar subscription retention rate for the quarter was 99% as compared to 98% in the fourth quarter. Now some details on our gross margin. Our subscription and services gross margin for the first quarter was 72% as compared to 72% in the prior year. Product and other gross margin for the first quarter was negative 41% as compared to negative 67% for the same period last year. The year-over-year improvement in product and other gross margin was primarily due to a fully consuming higher cost components we had acquired during the pandemic in the first half of the last fiscal year. On an overall basis, the total gross margin for Q1 was 63% as compared to 63% in the prior quarter. The flat overall gross margin year-over-year reflects a heavier mix of product revenue in Q1 this year versus prior year due to an increase in add-on installations, which offsets an improvement in product gross margin. And now some details on our operating expenses. Total operating expenses for the first quarter were $35.4 million, up $0.2 million, or 1% from the same period last year. Sales and marketing expenses for the first quarter were $18.3 million, or 28% of total revenue, up 3% year-over-year, primarily driven by higher marketing and channel development activity for Airdial and 2600Hz. Research and development expenses were $11.3 million, or 17% of total revenue, down 6% on a year-over-year basis, primarily driven by headcount management, as we continue to focus on R&D efficiency and operating leverage. G&A expenses were $5.8 million, or 9% of total revenue for the first quarter, compared to $5.5 million for the prior quarter, The year-over-year increase in G&A expenses was primarily due to an increase in personnel-related costs. Non-GAAP net income for the first quarter was $5.6 million or diluted earnings per share of 20 cents as compared to 14 cents in the prior quarter. Adjusted EBITDA for the quarter was $6.7 million or 10.3% of total revenue and grew 33% over the prior year quarter. We ended a quarter with total cash and investments of $19 million. In Q1, we generated $3.7 million of operating cash flow and $2.5 million of free cash flow. As a reminder, we have a seasonally lower cash flow quarter in Q1 due to the timing of an annual employee bonus payout. On a trailing 12-month basis, we generated $26.7 million of operating cash flow and $20.5 million of free cash flow. With strong free cash flow generation, we spent a total of $11.8 million over the last four quarters, including $3.7 million in Q1 to buy back stock through a combination of open market repurchase and RSU net share settlement. On the headcount front, we ended a quarter with 1,132 employees and contractors. Now I'll provide guidance for the second quarter in full fiscal year 2026. Our guidance is on a non-GAAP basis and has been adjusted for expenses such as stock-based compensation and amortization of intangibles. We expect total revenue for the second quarter of fiscal 26 to be in the range of $65.5 million to $66.1 million, which includes $4.8 to $5.2 million of product revenue. We expect the second quarter net income to be in the range of $5.6 million to $5.9 million. Non-GAAP diluted EPS is expected to be between $0.20 to $0.21. We have assumed $28.2 million where the average diluted share is outstanding for the second quarter. For full fiscal year 2026, we are reaffirming our prior revenue guidance and expect total revenue to be in the range of $267 million to $270 million. The full year fiscal 2026 revenue guidance assumes business subscription and services revenue growth rate of 5% to 6% over fiscal 25, while residential subscription revenue to decline 1 to 2%. In terms of revenue mix for the year, we expect 91%, 92% of total revenue to come from subscription and services revenue and the remainder from products and other revenue. In terms of four-year non-GAAP net income guidance, we are raising the low end of the guidance range and now expected to be in the range of $22.5 million to $23.5 million. Updated non-GAAP net income guidance for fiscal 26 includes the impact of approximately $500,000 of tariffs, which is our current best estimate. Based on this guidance range, we estimate our adjusted EBITDA for fiscal 26 to be $28 million to $29 million. We expect non-GAAP diluted EPS for fiscal 26 to be in the range of 79 cents to 83 cents. We have assumed approximately 28.4 million weighted average diluted shares outstanding for fiscal 2026. In summary, we are pleased with a solid start to our fiscal 26. with a strong year-over-year growth in adjusted EBITDA, along with robust free cash flow over $20 million for the past 12 months. We're excited about growth opportunities in front of us and remain focused on executing our long-term strategy to achieve profitable growth. I'll now pass it back to Eric for some closing remarks.

Eric? Thank you, Shig. As Shig said, we now have a solid Q1 behind us. And more importantly, we increased momentum and added new partners in multiple parts of our business to support our plans this year. We've made significant investments to develop leading solutions in each of our four target segments and are executing well to capitalize on the significant opportunities in front of us. We look forward to sharing our progress in future quarters. Thank you. We will now take your questions.

Thank you. As a reminder, if you would like to ask a question, please press star 11 on your telephone. you'll hear an automated message advising your hand is raised. We also ask that you please wait for your name and company to be announced before proceeding with your question. One moment. The first question that we have today is coming from Alinda Lee from William Blair. Your line is open.

Perfect. Thank you. What contributed to the 1% increase in NRR this quarter? And can we expect NRR to stay at around 99 or above going forward with IWG fully realized with their seat terms?

Yes. So the retention rate improvement was largely due to the improvement in non-Regis subscription revenue. So we're talking about traditional UCAS solutions, offerings, and the residential solutions. In Q1, we saw the improvement in the retention rate for the other businesses, which offset the anticipated decline that came through for Regis. So that's really what happened. Overall, I think we should be remaining 99%, which we had been at prior to Regis' turn that we experienced in the last couple of quarters.

Perfect. That's helpful. And what did you see in the demand environment in Q1, and what are you seeing in the recent months as well?

I'm sorry, demand in what? Environment. Oh, in the demand environment. Yes. I would almost say steady as she goes. I mean, we haven't seen it improve or deteriorate to any noticeable degree. Yeah, I mean, that's really the best I can say about it. You know, that answer is mainly from a UCAS, a NUMA office, a NUMA enterprise perspective. The demand environment for UMA Airdial is accelerating. There's no question about that. More and more companies are realizing they need to do something. Prices continue to go up. And so we're seeing much more interest and willingness to act on that front than perhaps a year ago.

That's helpful.

Thank you. Thank you.

Thank you. One moment for the next question. And the next question will be coming from the line. of Brian Kinslinger of Alliance Global Partners. Your line is open.

Great. Thanks so much. Two questions for me. It's great to hear all the details around Airdial. You mentioned just now demand is accelerating. The fiscal 2026 outlook's unchanged, so I'm curious, is there any change to visibility and when you think adoption will begin to ramp in terms of revenue dollars and in terms of larger scale implementations?

Yeah, so we are, I kind of put it in my script. We have opportunities before us that are greater in size than we've won in the past. And we're excited about them. And I think they're moving along well. So that gives us some perspective on Outlook. Our relationship with Comcast is still very early days. and it will be rolling out within Comcast across their sales teams over the rest of this year in a way. And it does take time with larger accounts to move through the sales cycle. So we're optimistic that the early opportunities we're seeing bode well for what we're going to continue to see growing through the rest of this year.

Okay. My second question is, You mentioned tariffs in your business, which is relatively small, but tariffs have certainly had a disproportionate impact on SMBs in the short term. What's the impact on this on your subscriber base as well as the sales cycle for new logos in your new cast business?

Yeah, I think that's something we all wonder about, but I can't point to any effect on our customer base or sales opportunity driven from tariffs today. Maybe some of the pauses in tariffs have contributed to that, but we're not hearing from our customer base that because of tariffs, they're going to do something differently. And I said in my script that sequentially versus Q4, we had a nice uptick in number of accounts and users that we want in Q1. Now, Q1 is typically a stronger quarter than Q4, but still... if you look at it versus a year ago, it was also strong. So no evidence of that being an issue at this time. Okay, thanks.

Thank you. One moment for the next question. And the next question is coming from the line of Eric Martuzini from Lake Street Capital Markets. Your line is open.

Yeah, I wanted to congratulate you on the profit performance It looks to be in the operating expense items that you're getting good productivity there. And given the guidance, I'm assuming that that productivity persists. Is there anything that we should be anticipating in the out quarters as far as areas maybe that you'll be investing in? Obviously, the R&D is down here, but anything puts and takes between the three buckets, between sales, R&D, and G&A?

Yeah. Hi, Eric. Happy to go into that. I make two observations. One is within the bucket of sales and marketing, which runs 27, 28% of revenue, we are making a slow and steady shift towards Airdial and to some degree towards 2600 Hertz versus the other two segments we serve. Not enough to really call out a fundamental change, but still, rather than grow the sales and marketing spend, we are allocating where we see our biggest and most significant opportunities. Now, R&D running at 17% last quarter is still quite a sizable amount of spend. We spend close to $50 million a year on R&D in the company. And we do have several significant feature enhancements that we're driving towards this year. And they kind of, you know, differ by segment. But in a nutshell, with UMA Office, we're bringing out more advanced capabilities that make Office appeal to a little bit larger-sized businesses, and that expands our TAM. And, you know, we're seeing some success with that. We We have customers now up to 300, 400 users. One of our office customers is over 600 users. So we like that trend. AirDial is in pretty good feature shape, but we continue to make remote device management and the way customers can monitor and operate the device more effective. Well, not effective, more extensive. And that is well liked by our customers and a source of differentiation among many for Airdial. And on 2600Hz, we are still in the process of bringing all of the UMA IP and applications onto that platform, which will appeal to new customers who want a more turnkey solution. And that's going to be a long-term project through this year, but we're making 2600Hz significantly stronger with that investment. So there's a lot going on in the company. We're also on 2,600 hertz, continuing to invest particularly in contact center capability. That's at the core of some of our recent customer wins. And so those are the areas we're working on. But yes, overall, our longer-term target, our mid-range target is to R&D as a percent of revenue would be a little bit lower from what we're spending currently.

Okay, and I guess I should have started with the gross margin. You're 72% on the subscription and service, and is that expected to persist at that same level?

In a short-term, yes. And the main reason for that is we're also investing in the infrastructure and team resources to support the growing installed base and growing new installation as well, the air dials. You know, we got the, you know, near-term investment in those capacity a bit. And so, you know, perhaps we start to see a little more, you know, better improvement towards the back end of the year. But the near term, that's a reason I see a relatively stable 72% subscription gross margin.

Okay. And then my last question is on your Airdial partners. You know, a year ago you had 15 Airedial partners and today we're over 30. Curious to know about, you know, I'm less concerned about the number of partners you have and really more concerned about how productive the partners are that you have. What about those 15 from a year ago? Have you been pleased with the traction they've got? Have you been disappointed? What have you learned?

So when we bring on a partner, really a reseller, Airdial reseller, we know from the status of their business kind of what to expect. And some of them are smaller, some of them are more significant. We're very pleased with our largest relationships, T-Mobile, U.S. Cellular, Comcast, some of the larger aggregators we work with like Spectratel and others. Some of our partners are more focused. There might be a small SELEC with only 5,000 to 10,000 users or something like that. But they're all contributing, and that's the main thing. We did bring on what I call a medium-sized SELEC, if you can say it that way, a SELEC with the potential for 100,000 users for Airdial. We brought them on last fall, and we talked about them. And they have started rolling out Airdial to their base and are discussing with us about accelerating how fast they go with that. It's very hard to put things like that into our forecast until they happen. And so we're pretty conservative about trying to, you know, forecast things that are likely to develop until we see them developing. But we're excited that they're now, you know, having good success with Airdial and growing it. So, yeah, across our range of projects, of resellers. They're all important. We support them all. And, you know, we think it's a great example of the strength of our product solution in the market because they have other folks they could go to and they've come to us.

Thanks for taking my questions.

Sure. Thank you. One moment for the next question. And the next question will be coming from the line of Josh Nichols. Oh, B. Riley, your line is open.

Thanks for taking my question. Real quick, just to touch on, I don't think it's been brought up, but I mean, you've seen some really good traction in the hospitality space, 500 hotels across North America. That's one of the largest end markets. I'm just kind of curious if you could elaborate on how quickly that's been ramping up. And do you think that, you know, that could be a significant driver going forward and what you think the opportunity set there is over the next year?

Yeah. It is significant. When we stopped and looked at it, we were surprised ourselves in a way. We target winning 50 to 100 hotels a quarter. That's roughly where we aim. Now, we hope that we can do better than that perhaps now that the Marriott relationship has been solidified and we can leverage our certification there with Marriott properties. But all in, that's kind of the range we try to work in. And generally, we achieve just sales each quarter in that range. Some hotels take UMA Enterprise, some take UMA Airdial, and some take both. And in either case, getting one success with the customer is an opportunity to then build with the other. But yeah, it's actually quite an extensive segment in terms of opportunity, and I think we could run with it for quite some time.

Thanks. Just to take a little bit deeper dive, we touched on Airdial a good amount, but also 2600 Hertz. You don't break those out. I assume there's still a relatively immaterial piece of revenue today, and what's the plans in the future? to maybe start divulging a little bit more into, like, maybe some segment reporting or whatnot? And is there a timeline where you think that that may come into play, given the backlog that you've been seeing build up over the last year or so?

Well, let me give a general answer, and maybe Shig will add to what I say. You know, our outlook this year is built with acceleration of Airdial. It's built with acceleration of new customer wins on 2600 hertz, but we don't expect them to contribute much until next year because of the time to ramp customers. So between the two, we expect more growth out of Airdial than we do out of 2600 hertz this year. Both, of course, started from small bases, and so I think we're a ways away from being in a position where we think about trying to break them out separately, but I don't know if Shig wants to share more.

Yeah, I mean, you know, you're obviously right, Josh, in that it's still a low single-digit percentage of revenue, you know, that's in the total revenue report today, but we're excited about the, you know, new customers coming on and pipeline, longer sales cycle. But kind of a second part of your question, you know, we don't necessarily have a bright line sort of rule or expectation as to when we could start to report more separately. But I think, you know, once it starts to get into, you know, 10%, 15% of revenue kind of scale, I think we would start to consider being a little bit more, you know, granular about how we disclose and inform the investors in our analyst community to, to, share a little more detail.

Sounds fair. I appreciate it. Thank you.

Yeah? Thank you. One moment for the next question. And the next question is going to come from the line of Patrick Walravens of Citizens. Your line is open.

Hi, team. This is Kincaid on for Patrick Walravens. I was just wondering if you guys had any significant changes to the competitive environment that you could highlight for us. Thanks.

Yeah, we're in a competitive environment all the time. And that's why we focus on the four segments we do where we think we can really bring the leading solution. And that's how we get competitive advantage and win. And in the segments we target, I think they're more immune to some of the pressures that our industry has had generally. Certainly Airdial, we're selling most of our customers on three- or five-year contracts. And these are applications where once they get installed, they just want them to run and aren't going to be wanting to touch them. There's installation effort to put them in place, so that's also a barrier once you get in. Small business UCAS. Small businesses need a unique combination of easy and turnkey applications installation and great support along with great value. And we've architected a solution built in that way. And we think, you know, half or more of the small businesses out there across North America, one to 20 employees have yet to move to a cloud type solution. So we keep just going at that market pretty straightforwardly. And I don't know that we've seen any particular change in competition in that. So, you know, I think the general answer is not anything to call out specifically for you here. We'll keep monitoring that, but I really think our outlook depends most of all on our own execution.

All right, thanks so much.

Thank you. One moment for the next question. Our next question is coming from the line of Matthew Harrigan. of the benchmark company. Your line is open.

Thank you.

As we all well know, the cable companies tend to emulate each other on the product pipeline and the tech roadmap, particularly since they don't directly compete, and particularly on the business side, they tend to, obviously they don't have national footprints, so they work together there especially well. Are you already talking with other cable companies? I mean, you've got the largest guinea pig or maybe Capybara and Comcast instance. Are people kind of waiting to see how everything hardens out as far as their execution? And then secondly, in response to your earlier question, you said, I think largely with reference to Airdial, that there are other people that your clients could talk to. When you look at Europe, and I know Europe and Asia are not your point of emphasis right now, to say the least, but what are people doing there on the workaround on the copper line replacement, and are there competitors over there that aren't present in North America, or are they some of the very large telecom equipment companies? Because you have a tremendously large camp for Airdial, and it's just, I don't know what the workarounds would be other than paying a lot more money for your copper line right now. I mean, you know, specifically, you know, who are you seeing as competitors as some semblance of a comparable technology solution? Thanks.

Sure. Yeah, thank you. So on your first question, we do have a broad effort trying to engage with new reseller partners for Airedial, as you would expect. And our goal is to add at least a couple partners every quarter, and we've met that goal now for two years straight. Yes, you're right that when you work with one cable company, others will notice, and they don't directly compete often, and that can open some doors for collaboration or just referencing. So, yeah, we're... We're excited that we can continue to add more reseller partners on Airdial, and I think that'll be an important driver of growth for us. On your second question, which I think was particularly focused on Europe, we have some engagements in Europe. Obviously, we're in 32 countries with IWG, but that's on the UCAS side. We have some engagements in Europe with 2600Hz, customers, and I think I mentioned a quarter ago that we won a new one in Europe just a quarter ago, which was kind of exciting in the Netherlands. But with Airdial, today Airdial is not sold, it's not used, I guess I would say, outside of North America. We would love to win large carriers for Airdial in Europe or other parts of the world. We don't have a big sales effort going on on that, but But at any point in time, we have some discussions going, I would say. And generally, our experience so far has been companies taking a slow approach to the problem and seeing if they can't delay the need or implement something internally that will get by. But I do think opportunities will continue to unfold as we look forward. Thanks, Eric.

Sure. Thank you. One moment for the next question. And our next question is coming from the line of Matt Lattimore. Sorry, excuse me, Mike Lattimore of Northland Capital Markets. Your line is open.

Hi, this is Vijay Devar for Mike Lattimore. Two questions. One, when will you be done integrating UMA apps into 2600 Herbs?

I would say end of this year, and I know that seems like a long time, and maybe a little bit longer than we originally intended, but 2600 Hertz really operates in three ways that it goes to market. There's our shared hosted, our private cloud, and our global infrastructure. And each one operates a little bit differently, so we actually have to enable the capabilities in each one. We have already, though, launched our mobile app for some customers. and our desktop app as well. And so we're making, I think, good progress. Okay.

The second one, have you seen any change in sales cycles for 2600 Hertz given the Metaswitch acquisition?

That's hard to answer because it's only really since that acquisition that we've invested in sales for 2,600 hertz, and we do have a small team there today, and I will say they're doing a fantastic job. We had multiple wins of new customers in Q1, and so we are seeing customers receptive. One of the customers we won has their own solution in a vertical space and wants to add communications to it, and they could have built it using CPaaS. They instead went with us, and that was after looking at competitor solutions, so that was a really nice win for us. And another customer, that company also is small, but the person running it has a lot of deep knowledge and experience with large carriers in the industry and chose us over others. I'm seeing good momentum, but I don't know if it's us or if it's the market.

Understood. Thank you. You bet.

Thank you. As a reminder, if you would like to ask a question, please press star 11 on your telephone. We now have a follow-up coming from the line of Brian Kesslinger of Alliance. Please go ahead. Your line is open.

Great. Thanks so much. I have two questions. Again, The first one is, I'm wondering if you can quantify the number of lines that churned over the last two quarters at Regus so we could evaluate the underlying growth of the business.

Yeah, Brian. It was about what we got. It is. But I guess you're asking for specific quantify, asking us to quantify. Yeah, it was about, you know, $12,000, $13,000 in that range in the last two quarters. And a year ago, we talked about churning in total about $19,000 to $20,000 over the course of last fiscal year and a good chunk of that slipped into Q1. So again, I remind you that with the $10,000 or so that churned in Q1, we ended up churning about the same as what we had expected in total a year ago. Got it.

So 19 to 20 in total, 12 to 13 in the last two quarters.

Correct. And roughly 10 in the last quarter.

Yeah, that's helpful. I mean, obviously we can see the growth there. And then you've clearly in the last, I'd say two quarters, shifted your focus to driving stronger profits. Assuming Aerodial does enjoy solid adoption, what's a reasonable goal for adjusted EBITDA margin maybe three years out or more?

A lot higher than where we're at. You know, we've brought our adjusted EBITDA up nicely over the last 12 to 18 months, but I think it's just the start. There's no reason why this business can't be very profitable with 72% margins. And our core solutions, each in our four segments, pretty well developed and not needing the level of R&D they've taken in the past.

Okay, thanks.

Thank you. And at this time, I'm not showing any more questions. I'd like to turn it back to Eric for closing remarks. Please go ahead.

Well, thank you, Lisa. And thank you, everyone, for joining us today. We really appreciate it. And, you know, I think we're off to a good start for the year. So thank you. I'll let you go. Bye-bye.

Thank you all for participating in today's conference call. You may now disconnect.