Ooma, Inc.

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 risk 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 fourth quarter and full year 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 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 GAAP to non-GAAP reconciliation. It 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, and welcome to UMA's third quarter fiscal year 2026 earnings call. Thank you for joining us. We're pleased to report solid Q3 financial results and to discuss the progress we are making across our business. We will also provide more information about the two acquisitions we recently announced, one of which, FluentStream, has now closed. Financially, we grew our revenue in Q3 to 67.6 million and ended the quarter with 242.7 million of annual exit recurring revenue. We achieved new records in the quarter for non-GAAP net income, which increased to 7.7 million, and adjusted EBITDA, which increased to 8.6 million. Our adjusted EBITDA for Q3 as a percentage of revenue was 13%, up from 11% of revenue in Q2 of this year and 10% of revenue in Q1 of this year. We are proud of our increased bottom line results and believe our business has significant potential not only for revenue growth, but also for further bottom line expansion. Our business solutions performed well in Q3. We continue to invest in growth across UMA Office, UMA Enterprise, Airdial, and 2600Hz. UMA Office and UMA Enterprise added new customers in line with our expectations, and we maintained our development efforts focused on AI, contact center, vertical integrations, and other features which will boost our Pro and ProPlus service tiers and appeal to larger sized businesses. We expect to launch our AI solutions early next year. I'm pleased to note too that UMA Enterprise secured its largest hospitality win to date, a hotel in Las Vegas with nearly 1,000 rooms. Regarding Airdial, we made solid progress in Q3 as we continued our efforts to expand sales and increase awareness of our solution. I'm pleased to report that we continue to add new resale partners every quarter. In fact, in Q3, we added nine new resale partners, our strongest quarter to date. In general, we are seeing an influx of interest in reselling Airdial from entities wanting to take advantage of the POTS replacement market opportunity, including from some wanting to move away from competitive solutions. I'm also pleased to report that in Q3, We launched an updated version of Airdial which incorporates a new processor and is designed to provide improved cellular band support and longer battery life. It is also less costly to manufacture. Along with this, we launched new remote device management features for use by partners reselling Airdial. Overall, we remain committed to our long-term goal to secure 300,000 Airdial lines generating 100 million of Airdial annual recurring revenue. Regarding 2600 Hertz, we made further progress in Q3, adding UMA's IP and applications onto the platform, and were able to upsell a significant number of existing 2600 Hertz customers. We also continued our sales and marketing to new customers, focused mainly on carriers and other UCaaS providers. On the residential front, a combination of good user additions and slightly lower churn allowed us to hold our user count close to flat with Q2. And so far, we are off to a good start this quarter as well. Turning now to the two acquisitions we recently announced, this is an exciting time for UMA. As a reminder, we announced that we recently closed on the acquisition of FluentStream and are expected to close on the acquisition of Phone.com around the end of this month. Combined, these two businesses are expected to add more than 165,000 users, 45 million of revenue, and 10 million of adjusted EBITDA to UMA annually before synergies. Each acquisition is expected to be accretive to UMA's adjusted EBITDA and non-GAAP earnings per share starting on the closing date of the transaction. Approximately 155 employees and contractors will be joining UMA as a result of these two transactions. Strategically, we believe that Fluidstream and Phone.com fit well with UMA's focus on serving small and medium-sized businesses. We believe each company is well regarded by its customers, performing well, and presents an opportunity to leverage UMA's scale and investment spending over a larger base. Furthermore, we believe we have been able to acquire each business at a price which allows us to achieve cost-effective growth. Overall, these acquisitions allow us to optimize how we spend to grow our business, to achieve greater scale, and to bring new capabilities to UMA. In the case of Fluentstream, our focus will primarily be to continue Fluentstream's business success and a high level of profitability. There are, however, a few select areas where we believe synergies are possible. These include bringing UMA's scale to Fluent Stream's vendor relationships, combining certain initiatives involving new feature development, and leveraging Fluent Stream's channel relationships to sell other UMA products, most notably Airdial. In the case of Phone.com, our focus will be to strengthen the Phone.com brand in the market. We believe phone.com's memorable URL and website and their focus on providing a streamlined and relevant e-commerce experience represents an attractive opportunity for UMA. We also believe significant synergies are possible. Once the acquisition closes, we intend to leverage our vendor relationships, R&D activities, customer support systems, and G&A processes to make phone.com both stronger and more profitable. In sum, we believe these two acquisitions present a tremendous opportunity for UMA to build shareholder value. It is our intent to capitalize on them to increase UMA's adjusted EBITDA, cash flow, and growth, and we are excited as we look out toward the years ahead. 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. Before I dive into our third quarter financial results, I'd like to recap the status and financial aspects of the two acquisitions we announced last month. Please note that these two acquisitions did not impact our fiscal third quarter results I'm going to discuss in a minute, as each of these acquisitions either completed or expected to be completed in our fourth fiscal quarter. We completed the acquisition of FluentStream on December 1, 2025 for approximately $45 million in cash, which was funded by a $45 million term loan. FluentStream is expected to add $24 to $25 million of revenue and $9.5 to $10.5 million of adjusted EBITDA to UMA annually based on current run rates. As for the acquisition of Form.com, it is expected to be completed later in the fourth fiscal quarter. The cash purchase price for approximately $23.2 million is expected to be funded by a combination of cash on hand and a bank loan. Form.com is expected to add $22 to $23 million revenue and $0.5 to $1.5 million of adjusted EBITDA to UMA annually based on current run rates and before synergies. There are no other contingency payments for either of these acquisitions. Now I'm going to review our third quarter financial results and then provide our guidance for the fourth quarter and full year fiscal 26. Our third quarter revenue was $67.6 million, up 4% year-over-year, driven by the growth of UMA business, including Airdial. In Q3, business subscription and services revenue accounted for 63% of total subscription services revenue as compared to 61% in the prior year quarter. Q3 product and other revenue came in at $5.7 million and was up 14% year-over-year due to growth in Airdial installations. On the profitability front, Q3 non-GAAP net income was $7.7 million, meaningfully above our guidance range and grew 68% year-over-year. Higher than expected non-GAAP net income was mainly driven by an additional operating leverage realized in R&D, continuing effort to optimize sales and marketing spend, and lower than expected impact of tariffs. Now some details on our Q3 revenue. Business subscription and services revenue grew 6% year-over-year in Q3, driven by user growth and output growth. On the residential side, subscription and services revenue was down 1% year-over-year. For the third quarter, total subscription and services revenue was $61.9 million, or 91.6% of total revenue as compared to $60.1 million, or 92.3% of total revenue in the prior quarter. Now some details on our key customer metrics. We ended our third quarter with 1,233,000 core users, up from 1,230,000 core users at the end of the second quarter. At the end of the third quarter, we had 513,000 business users, or 42% of our total core users, an increase from 5,000 from Q2. Our blended average monthly subscription and services revenue per core user, or APU, increased 4% year-over-year to $15,082, driven by an increasing mix of business users, including higher APU Office Pro and ProPlus users. During the third quarter, we continued to see a healthy Office Pro and ProPlus take rate, with 57% of new Office users opting for these higher-tier services. Overall, 38% of UMA office users have now subscribed to these higher tier services. Our annual exit recurring revenue was $242.7 million, up 4% year-over-year. Our net direct subscription retention rate for the quarter was 99%. Now some details on our gross margin. Our subscription and services gross margin for the third quarter was 71.5%, as compared to 71.6% in the prior year. Product and other gross margin for the third quarter was negative 45%, as compared to negative 56% for the same period last year. On an overall basis, the total gross margin for Q3 was 62%, as compared to 62% in the prior year quarter. The flat overall gross margin in Q3 this year reflects a heavier mix of product revenue versus prior year. due to an increase in airdown installations, which offset the improvement in product gross margin. And now some details on operating expenses. Total operating expenses for the third quarter were $34.2 million and down $1.4 million year over year. Sales and marketing expenses for the third quarter were $17.9 million, or 26% of total revenue, of 2% year-over-year, primarily driven by higher channel development activity for Airdial. Research and development expenses were $10.8 million, or 16% of total revenue, down 10% 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 $5.5 million or 8% of total revenue compared to $6.1 million for the prior year. Non-GAAP net income for the third quarter was $7.7 million or diluted earnings per share of 27 cents as compared to 17 cents in the prior year quarter. Adjusted EBITDA for the quarter was a record $8.6 million or 13% or total revenue, and grew 50% year over year. We ended a quarter with total cash and investments of $21.7 million. In Q3, we generated $6.9 million of operating cash flow and $5.4 million of free cash flow. On a trailing 12-month basis, we generated $25 million of operating cash flow and $19 million of free cash flow. With strong free cash flow generation, we spent a total of $16.2 million over the last four quarters, including $4 million in Q3 to buy back stock through a combination of open market repurchase and RSU net share settlement. As mentioned earlier, we completed the acquisition of Fluvent Stream with a $45 million term loan with an interest rate of approximately 6.4% on December 1st, 2025, although the new term loan has a five-year amortization schedule, we expect to use a portion of free cash flow in the future to pay it down faster. We also expect to draw an additional $20 million in term loan with a similar interest rate when we complete form.com acquisition later in the fourth quarter. The additional details on the term loans are available in a Form 8-K filed on December 2nd, 2025, as well as in a Q3 Form 10-Q to be filed later this week. On the headcount front, we ended a quarter with 1,223 employees and contractors. Now I'll provide guidance for the fourth quarter and full fiscal year 26. Please note that the guidance does Guidance does include the impact of full and stream acquisition completed on December 1, 2025, but does not include the impact of Form.com acquisition, as it is expected to close later in the fourth quarter. Guidance is on a non-GAAP basis and has been adjusted for expenses such as stock-based compensation, amortization of intangibles, and acquisition-related expenses. We expect total revenue for the fourth quarter of fiscal 26 to be in the range of $71.3 million to $71.9 million, which includes $4 to $4.1 million of revenue contribution from Fluent Stream. Within this total revenue guidance, we expect $5 to $5.3 million of product revenue. We expect the fourth quarter non-GAAP net income to be in the range of $8.4 million to $8.9 million, which includes approximately $1.5 to $1.6 million of non-GAAP net income contribution from Fluentstream. Q4 non-GAAP net income guidance also includes an impact of interest expense related to the $45 million term loan, which is estimated to be approximately $0.5 million. Non-GAAP diluted EPS is expected to be between $0.30 to 32 cents, we have assumed 28 million weighted average diluted shares for the fourth quarter. For four-year fiscal 26, we're raising the guidance and expect total revenue to be in the range of $270.3 million to $270.9 million, which includes approximately $4 million to $4.1 million of revenue contribution from Fluent Stream. The updated revenue guidance also reflects our current expectation for the timing of add-on installations, some of which have been pushed out to the next fiscal year due to the timing of customer orders and the impact of normal seasonality associated with the holiday schedule in Q4, which limits customers' availability for installations. The four-year fiscal 26 revenue guidance assumes business subscription and services revenue growth rate of approximately 9% over fiscal 25, while residential subscription revenue to decline 1 to 2%. In terms of revenue mix for the year, we expect approximately 92% of total revenue to come from subscription and services revenue and the remainder from products and other revenue. As for the four-year fiscal 26 non-GAAP net income, we are also raising the guidance and now expected to be in the range of $28.2 million to $28.7 million, which includes approximately $1.5 to $1.6 million contribution from Fluent Stream and $0.5 million of term loan interest expense I mentioned earlier. Based on this guidance range, we estimate our adjusted EBITDA for fiscal year 26 to be $32.4 to $32.9 million. We expect non-GAAP diluted EPS for fiscal 26 to be in the range of $1 to $1.02. We have assumed approximately 28.2 million weighted average diluted shares for fiscal 26. In summary, we are pleased with our solid results for the third quarter with a record adjusted EBITDA of $8.6 million. which grew 50% year-over-year and improved our adjusted EBITDA margin to 13%. We are also very excited about the prospect of adding Fluent Stream and Form.com to the UMA family and continuing to grow revenue, profitability, and free cash flow in the fourth quarter and the next fiscal year. I'll now pass it back to Eric for some closing remarks. Eric.