Slide 1: Smart Connected Services Investor Presentation
Smart Connected Services Investor Presentation Information as of August 28, 2018
Slide 2: Safe Harbor Statement
Safe Harbor Statement This presentation contains forward-looking statements. In particular, statements regarding future economic performance, finances, and expectations and objectives of management constitute forward-looking statements. Forward-looking statements can be identified by the fact that t
Slide 3: Ooma is a cloud/SaaS provider of telecommunications
Productivity Automation Ooma is a cloud/SaaS Network provider of telecommunications Portal App and other connected Appliance Communications services, with solutions for business, home, and mobile users Infrastructure www.ooma.com CONFIDENTIAL AND PROPRIETARY | 3
Slide 4: Company Overview
Company Overview Founded 2004 HQ: Sunnyvale, California IPO in 2015, NYSE: OOMA Multi-tenant SaaS platform ~955k Core Users ~90% Recurring revenue ~100% Recurring Revenue Retention 650+ employees/contractors CONFIDENTIAL AND PROPRIETARY | 4
Slide 5: Investment Highlights
Investment Highlights Total Revenue (in millions) Massive Connected Services Opportunity Unique Hybrid SaaS Platform Solution Disruptive Cloud Communications and Annual Quarterly Other Connected Services Core User Recurring Revenue (in millions) Efficient Integrated Go to Market Strategy Predictable
Slide 6: Mega Trends Drive Our Business
Mega Trends Drive Our Business Cloud Communications “Traditional methods for voice are ripe for replacement.” - Macquarie SMB SaaS “SMBs are expanding the SaaS market opportunity for vendors.” - JPMorgan IoT “The Internet of Things represents huge potential … need for more … systems to deploy, manag
Slide 7: Disruptive Cloud Communications Opportunity
Disruptive Cloud Communications Opportunity Business Home 62M Business Lines in 74M Home Lines in North America North America 30% 2% CAGR1 CAGR1 39% Internet/ Cloud 40% 60% Traditional Internet/ Cloud 61% Traditional We Target Communications to Drive Adoption of the Ooma Platform 1: 2013 - 2016 Sour
Slide 8: Unique SaaS Platform
Unique SaaS Platform Linux Appliance, Multi-Tenant SaaS Router, USB, Platform Network DECT/ULE Radio Mobile Services, Alerts and Control Portal User Appliance App Configurable Services Connects to Many Endpoint Devices Integrated, Managed Platform Enabling Both Communications and Other Connected Ser
Slide 9: Competitive Advantages
Competitive Advantages Breakthrough Voice • Proprietary PureVoice Technology Quality Innovative Services • Unique Applications that Create Customer Interest and Stickiness Enhanced User • Plug-and-Play Solutions, Diagnostics Experience and New Service Upgrades Superior Value • Disruptive Low Cost Ca
Slide 10: Customers Rate Ooma #1
Customers Rate Ooma #1 Office Home #1 Ranked by Readers Top Ranked by Readers 5 Years in a Row in last 7 surveys, including 2018 CONFIDENTIAL AND PROPRIETARY | 10
Slide 11: Ooma Ecosystem
Ooma Ecosystem Innovative DIY home security features & monitoring Mobile Take action Integration Home, With Remote 911 Home Business Phone Security Disruptive Quality and Value. SMB Enterprise Phone UCaaS DIY setup & Private label management for Resellers Curated business Enterprise-grade features f
Slide 12: SMB Phone: Ooma Office
SMB Phone: Ooma Office • Suite of user configurable cloud PBX features Business Services • Virtual • eFax • Broadest Solution Available Receptionist • Conferencing • Music-on-Hold • Call Forwarding • Voicemail • Ring Groups • Call Transfers • Mobile Apps • Eliminates expensive specialist IT support
Slide 13: Small Businesses Are Switching From Traditional/Cable Phone Service
Small Businesses Are Switching From Traditional/Cable Phone Service Previous Phone Service Reasons For Purchasing % Ooma Office 1. Cost Savings/Unlimited Nationwide calling 2. Easy to Install/Simple to Configure 3. Uses regular (existing) phones 4. Powerful Features 5. Great Voice Quality Source: Oo
Slide 14: Enterprise UCaaS: Ooma Enterprise
Enterprise UCaaS: Ooma Enterprise • Enterprise Targeted Solution Enterprise Services • Integrations • Collaboration • Rich Telephony • High Availability • Enhanced Quality Of Service • Contact Center • Tailored Desk • Global Service phone Experience • Mobile Apps • Reporting • Bespoke Solutions And
Slide 15: Home Phone: Ooma Telo
Home Phone: Ooma Telo • Free home phone service, just Home pay taxes and fees Services • Unlimited US • Blacklisting Calling • 911 Alerts • Voicemail • Instant 2nd Line • Innovative Premier features • Multi-ring • Alexa Skills • Ring Groups And More! • Ideal for families with children, multi-generat
Slide 16: Homes Are Switching From Traditional/Cable Phone Service
Homes Are Switching From Traditional/Cable Phone Service Previous Phone Service Reasons For Purchasing % Ooma Telo 1. Free Calling/No More Phone Bills 2. Uses Existing Home Phones 3. Easy Installation 4. Great Voice Quality 5. Bundled Calling Features/Premier Features Source: Ooma Survey for Feb. 20
Slide 17: Home Security: Ooma Home
Home Security: Ooma Home • Do-it-yourself home security that Security Services leverages the Ooma Telo Remote 911 Facial Recognition Automatic Arm/Disarm Video Battery Backup Phone call Alerts Video On-board Memory Text & Push Notifications DIY Installation • Rich notifications And More! • Remote 91
Slide 18: Smart Home Growth Opportunity
Smart Home Growth Opportunity Smart Home Security Ooma Opportunity Market Growth* North America • Large, growing market • Unique integrated solution 18% 27% CAGR • Leverage existing Household Penetration: platform/customers • Disrupt expensive traditional security *Source: https://www.statista.com/o
Slide 19: Integrated Growth Strategy
Integrated Growth Strategy Efficient Marketing Cost-Effective Sales TV / Traditional Media Leading Retailers • Broad Reach • Low Cost • Builds Brand Image Online Targeted Campaigns • Directly Direct Sales • Through Retailers Social / Word of Mouth Net Promoter Resellers And Partners 72% Score1 1: PC
Slide 20: Growth Drivers
Growth Drivers • SMB/Home Cloud Communications Productivity Automation Network • Enterprise UCaaS Portal Appliance App • Security and Other Communications Connected Services • International Markets Infrastructure CONFIDENTIAL AND PROPRIETARY | 20
Slide 21: Investment Highlights
Investment Highlights Massive Connected Services Opportunity Unique Hybrid SaaS Platform Solution Disruptive Cloud Communications and Other Connected Services Efficient Integrated Go to Market Strategy Predictable SaaS Subscription Business/Financial Model CONFIDENTIAL AND PROPRIETARY | 21
Slide 22: Financial Overview
€3 ooma Financial Overview
Slide 23: Consistent Revenue Growth
Consistent Revenue Growth Annual Revenue Quarterly Revenue 2Q19 combined business and residential subscription revenue growth of 19% yr./yr. $ Millions CONFIDENTIAL AND PROPRIETARY | 23
Slide 24: Strong Business Revenue Growth
Strong Business Revenue Growth Annual Revenue Quarterly Revenue $ Millions, including subscription and product revenue for Ooma Business CONFIDENTIAL AND PROPRIETARY | 24
Slide 25: Residential Growth Continues
Residential Growth Continues Annual Revenue Quarterly Revenue 2Q19 Telo subscription revenue growth of 10% yr./yr. $ Millions, including subscription and product revenue for Ooma Residential CONFIDENTIAL AND PROPRIETARY | 25
Slide 26: Blended Average Revenue Per User
Blended Average Revenue Per User ARPU is blended monthly average subscription & services revenue per core user. Excludes Business Promoter and Talkatone. CONFIDENTIAL AND PROPRIETARY | 26
Slide 27: Annualized Exit Recurring Revenue
Annualized Exit Recurring Revenue 20% CAGR $ Millions, Residential and Business Subscription Revenue CONFIDENTIAL AND PROPRIETARY | 27
Slide 28: Expanding Subscription & Services Revenue
Expanding Subscription & Services Revenue Business Residential Other $100.2 $85.7 22% $68.7 $28.4 17% $24.4 12% 27.9% 72% 21.9% 75% 79% 67.9% 72.1% Annual Quarterly $ Millions, % of Total Subscription & Service Revenue, excluding Business Promoter CONFIDENTIAL AND PROPRIETARY | 28
Slide 29: Increasing Gross Margin
Increasing Gross Margin Subscription/Services Total Long-Term Target Growth Drivers • Mix of Business Increases • Upselling Premium Services • Introduction of New Services • Scale Efficiencies CONFIDENTIAL AND PROPRIETARY | 29
Slide 30: Strong Financial Position
Strong Financial Position ($ millions) FY17 FY18 F2Q19 Cash and Investments (no debt) $53.2 $51.8 $48.6 Cash from Operations $0.4 $3.2 ($0.8) Capital Spending $1.6 $2.5 $0.5 Adjusted EBITDA ($1.4) ($0.2) ($0.6) CONFIDENTIAL AND PROPRIETARY | 30
Slide 31: Long-Term Target Model (Non-GAAP)
Long-Term Target Model (Non-GAAP) TARGET % REVENUE FY17 FY18 F2Q18 F2Q19 RANGE Subscription & Services Gross Margin 69% 70% 70% 70% 75% - 80% Total Gross Margin 58% 61% 60% 60% 65% - 70% Sales & marketing 31% 31% 31% 32% 20% - 25% Research & development 20% 22% 22% 24% 12% - 15% General & administra
Slide 32: Thank you
€3 ooma Thank you
Slide 33: GAAP to Non-GAAP Reconciliation
GAAP to Non-GAAP Reconciliation $ Thousands FY2015 FY 2016 FY 2017 FY 2018 F2Q18 F2Q19 GAAP Gross Profit $35,477 $46,910 $59,329 $68,092 $16,581 $18,773 Add : Stock-based compensation expense and 36 437 1,038 1,129 348 249 related taxes Amortization of Intangibles 122 163 162 183 40 139 Non-GAAP Gro