Smart Connected Services · 2018-03-06 · "intends," "plans," "estimates," "anticipates," and...

Smart Connected Services

Investor Presentation

I n f o r m a t i o n a s o f M a r c h 6 , 2 0 1 8

2CONFIDENTIAL AND PROPRIETARY |

Safe Harbor StatementThis 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 they do not relate strictly to historical facts and generally contain words such as "believes," "expects," "may," "will," "should," "seeks," "approximately," "intends," "plans," "estimates," "anticipates," and other expressions that are predictions of or indicate future events and trends and that do not relate to historical matters. Although the forward-looking statements contained in this presentation are based upon information available at the time the statements are made and reflect management's good faith beliefs, forward-looking statements inherently involve known and unknown risks, uncertainties and other factors, which may cause the actual results, performance or achievements to differ materially from anticipated future results. Important factors that could cause actual results to differ materially from expectations include, among others: inability to attract new customers on a cost-effective basis; our inability to retain customers; intense competition; our reliance on retailers and reseller partnerships to sell our products; our reliance on vendors to manufacture the on-premise appliances and end-point devices we sell; our reliance on third parties for our network connectivity and co-location facilities; our reliance on third parties for some of our software development, quality assurance and operations; our reliance on third parties to provide the majority of our customer service and support representatives; our limited operating history; and interruptions to our service. You should not place undue reliance on these forward-looking statements, which speak only as of the date hereof. We do not undertake to update or revise any forward-looking statements after they are made, whether as a result of new information, future events, or otherwise, except as required by applicable law.

The forward-looking statements contained in this presentation are also subject to other risks and uncertainties, including those more fully described in our filings with the Securities and Exchange Commission, including the risk factors contained in our quarterly filing form 10Q for the quarter ended October 31, 2017, filed with the SEC on December 8, 2017. The forward-looking statements in this presentation are based on information available to Ooma as of the date hereof, and Ooma disclaims any obligation to update any forward-looking statements, except as required by law.


Productivity Automation

Infrastructure

www.ooma.com

Ooma is a cloud/SaaS

provider of

telecommunications

and other connected

services, with solutions

for business, home, and

mobile users

Portal

Network

AppAppliance

Communications


Investment Highlights

Massive Connected Services Opportunity

Unique Hybrid SaaS Platform Solution

Disruptive Cloud Communications and Other Connected Services

Predictable SaaS Subscription

Business/Financial Model

Efficient Integrated Go to Market Strategy

$88.8$104.5

$114.5

$27.6 $30.2

FY16 FY17 FY18 4Q17 4Q18

Revenue(in millions)

Annual

1: Core users include home user accounts and office user extensions.

858

929

Core Users(in thousands)

4Q17 4Q18

Quarterly


Mega Trends Drive Our Opportunity

“Traditional methods for voice are ripe for replacement.” - Macquarie

Cloud Communications

“SMBs are expanding the SaaS market opportunity for vendors.” - JPMorgan

SMB SaaS

“The Internet of Things represents huge potential … need for more … systems to deploy, manage

and make use of … devices.” - IDC

IoT


Massive Market Opportunity

2.1B Users Worldwide

Home

Business32.8M Businessesin North America

(Up to 20 Employees)

77.9M Home Lines in North

America

Mobile

$19

$13

$6

$38B1

Communications

Source: U.S. Census, 2014 Non-employer Statistics; U.S. Census, 2014 County Business Patterns; 2016 County Business Patterns Industry Canada, Key Small Business Statistics; Statistics Canada – Self Employment Historical Summary 2016; Infonetics Research, VoLTE and OTT Mobile VoIP Services and Subscribers 6/23/14

Productivity

Automation

Infrastructure

AdditionalConnected

ServicesOpportunity

1: At Ooma’s Pricing


Unique Hybrid SaaS Connected Services Platform

Portal

Network

AppAppliance

Multi-Tenant SaaS Platform

Linux Based Appliance, Router, USB,DECT Radio

Mobile Alerts and Control

Connected to Many Endpoint Devices

User Configurable Services

Integrated, Managed Platform Enabling Both

Communications and Other Connected Services


Disruptive CloudCommunications Opportunity

Source: FCC Voice Telephone Services: Status as of December 31, 2015, CRTC Communications Monitoring Report 2016, IDC; U.S. Consumer Landline Voice

Services 2014-2018 Forecast

61M Business Lines in

North America

67%Traditional

33%Internet/

Cloud

Business

33%CAGR1

43%Traditional

57%Internet/

Cloud

78M Home Lines in

North America

Home

4%CAGR1

We Target Communications to Drive

Adoption of the Ooma Platform

1: 2012 - 2015


Ooma Services for Business and Home

Home services ranking by the readers of a leading consumer research publication.

Ranked #1 for 4 years in a row

• Virtual Receptionist

• Music-on-Hold

• Voicemail

• eFax

• Extension Dialing

• Conferencing

• Call Forwarding

• Ring Groups

Business Services

And More!

Analog Phones IP Phones Mobile Phones

OomaOffice

Ranked #1 for 5 years in a row

OomaTelo

HomeServices

• Unlimited US Calling

• Voicemail

• Multi-ring

• Ring Groups

• Blacklisting

• 911 Alerts

• Instant 2nd Line

• Google Voice Extensions

And More!

Wireless/ Bluetooth

DECT Headset

Consumer Research Leading Publication


Leading Mobile Solutions

Ooma(Home)

Ooma(Business)

• Full Featured, Integrated User

Experience

• Pure Voice HD Call Quality

Mobile for Office/HomeTalkatone

• Powerful Advertising Based

Business Model

• Extends Ooma’s Customer Reach

Mobile for Everyone


PureVoiceTM Voice Quality

Ooma

PureVoiceTM

• Full Router/QoS

• Advanced Codec

• Adaptive Redundancy

• HD Voice

• Encryption

“Clear and Intelligible Despite Internet

Congestion”

Adaptive Redundancy

Up to 4x Deep

• Smaller

Packet Size

• 10x More

Complex

Codec

40%

10%

3-5%

% Packet Loss

“Unintelligible”

“Artifacts inVoice”

Competitors

✗

✓

Overcoming Internet Congestion


Compelling Customer Value

1: For 3 user extensions or 3 lines

2: After one-time purchase and monthly taxes/fees

3: Customer savings based on Ooma estimates

Starts as Low as $19.95/mo2

Sample Savings vs. $200 Typical Monthly Bill1

Business

$4,438

$2,892

$1,346

3 Years

2 Years

1 Year

$1,205

$771

$336

3 Years

2 Years

1 Year

Free for Basic Service2

Sample Savings vs. $40 Typical Monthly Bill

Home

>$1.5 Billion Saved for Ooma Customers!3


Why We Win

Powerful Hybrid SaaS

Platform

IntegratedMobile Solutions

Unique New Services

Breakthrough Voice Quality

Compelling Customer Value

OomaTraditional Providers

CloudProviders


Connected Services - Automation

BusinessProductivity

HomeControl

…and more Connected Home/IoT

Partnerships

Nest

Today

Home Monitoring

Future

Door

Sensor

Water

Sensor

Motion

Sensor

Window

Sensor

New

…(More)

Amazon Echo Philips Hue Internet Security

1 = Source: Parks Associates, 2016 – 2021, U.S. and Canada Census Data

146M Residences in

North America

Smart Home Security

15% CAGR1

95%Unserved

5%

http://www.thecrowgroup.com/Products_Systems/wireless_flood_dtector/wireless_flood_dtector/

http://www.thecrowgroup.com/Products_Systems/wireless_pir_neo_detector/wireless_pir_neo_detector/

http://www.thecrowgroup.com/Products_Systems/wireless_gbd_detector/wireless_gbd_detector/


Driving Adoption and Monetization of the Platform

More IoT Partnerships in Development

✓ Strengthen Ooma Brand

Awareness

✓ Differentiate with Unique

Features

✓ Increase Ooma Retail

Presence and Customer

Adoption

✓ Monetize via Increased

Premier Take Rate

Security and Peace of Mind

Never Before Possible

+


Communications

Business Marketing & Promotion

CustomerRelationship

Management

ContactCenter

…and more

Connected Services - Infrastructure

• Protect all home devices from

internet threats

• Filter unwanted websites

• Threat database updated up to

100,000 times a day in real time

from the cloud

• Monthly subscription Model

HomeAutomation

NetworkingInfrastructure

Ooma Internet SecurityPowered by ZScaler


Integrated Growth Strategy

TV / Traditional Media

• Broad Reach

• Low Cost

• Builds Brand Image

Efficient Marketing

Word of Mouth

68% Net PromoterScore1

Online

Targeted Campaigns

• Directly

• Through Retailers

1: PC Magazine, 2016, for Ooma’s Small Business Solution

Cost-Effective Sales

Leading Retailers

Direct Sales

Resellers

Digital Agencies

OEM


Investment Highlights

Massive Connected Services Opportunity

Unique Hybrid SaaS Platform Solution

Disruptive Cloud Communications and Other Connected Services

Predictable SaaS Subscription Business/Financial Model

Efficient Integrated Go to Market Strategy

Financial Overview


$88.8

$104.5

$114.5

FY 2016 FY 2017 FY 2018

$ Millions

Annual Revenue Quarterly Revenue

4Q18 core subscription revenue growth of 22% yr./yr.

Consistent Revenue Growth

$24.3

$27.6

$30.2

4Q16 4Q17 4Q18


$10.0

$16.2

$24.9

FY 2016 FY 2017 FY 2018

$ Millions


4Q18 Office subscription revenue

growth of 55% yr./yr.

Strong Office Revenue Growth

$3.0

$4.8

$7.1

4Q16 4Q17 4Q18


$68.0

$75.4

$81.8

FY 2016 FY 2017 FY 2018


4Q18 Telo subscription revenue growth

of 13% yr./yr.

Residential Growth Continues

$18.2

$19.7

$21.5

4Q16 4Q17 4Q18

$ Millions


$7.46

$8.13

$8.79

$7.97

$8.28

$9.24

FY 2016 FY 2017 FY 2018 4Q16 4Q17 4Q18

ARPU is blended monthly average subscription & services revenue per core user. Excludes Business Promoter and Talkatone.

Blended Average Revenue Per User


Annualized Exit Recurring Revenue

$ Millions, excluding Business Promoter and Talkatone

$88.3 $92.5

$96.8

$103.0

1Q18 2Q18 3Q18 4Q18

$71.4

$85.2

$103.0

FY 2016 FY 2017 FY 2018


Annual Quarterly

Expanding Subscription & Services Revenue

$ Millions, % of Total Subscription & Service Revenue, excluding Business Promoter

Office

Residential

Other

FY16 FY17 FY18

12%

17%

22%

79% 75% 72%

4Q17 4Q18

24.1%18.3%

72.8% 69.9%

$68.7

$85.7

$100.2

$27.2

$23.0


Increasing Gross Margin

54%58%

61%58%

61%

66% 69%70% 69% 70%

FY16 FY17 FY18 4Q17 4Q18

• Mix of SMB Increases

• Upselling Premium

Services

• Introduction of New

Services

• Scale Efficiencies

Growth Drivers

Subscription/Services

Total

Long-Term Target

65%

70%

75%

80%

Low High


Adjusted EBITDAA

dju

ste

d E

BIT

DA

($'0

00

)

Adjusted EBITDA represents the net loss before interest and other income, depreciation and amortization and other non-GAAP expenses.

(1,400)

(1,200)

(1,000)

(800)

(600)

(400)

(200)

0

200

400

4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18


Strong Financial Position

($ millions)FY17 FY18 4Q18

Cash and Short-term Investments $53.2 $51.8 $51.8

Debt $0.0 $0.0 $0.0

Cash Flow from Operations $0.4 $3.2 $0.8

Capital Spending $1.6 $2.5 $0.7

Adjusted EBITDA ($1.4) ($0.2) ($0.2)


Long-Term Target Model (Non-GAAP)

% REVENUE FY17 FY18 4Q17 4Q18TARGETRANGE

Subscription & Services

Gross Margin69% 70% 69% 70% 75% - 80%

Total

Gross Margin58% 61% 58% 61% 65% - 70%

Sales & marketing 31% 31% 30% 31% 20% - 25%

Research & development 20% 22% 20% 24% 12% - 15%

General & administrative 10% 9% 9% 9% 6% - 8%

Adjusted EBITDA (1%) (0%) 0% (0%) 20% - 25%

Note: Non-GAAP Excludes amortization of Intangibles and stock based compensation expenses

Thank you


GAAP to Non-GAAP Reconciliation

$ Thousands FY 2015 FY 2016 FY 2017 FY 2018 4Q17 4Q18

GAAP Gross Profit $35,477 $46,910 $59,329 $68,092 $15,788 $18,312

Add : Stock-based compensation expense and

related taxes 36 437 1,038 1,129 286 197

Amortization of Intangibles 122 163 162 183 40 63

Non-GAAP Gross Profit $35,635 $47,510 $60,529 $69,404 $16,114 $18,572

GAAP Sales and Marketing $22,276 $28,534 $33,768 $37,302 $8,793 $9,776


related taxes (41) (611) (1,455) (1,857) (412) (420)

Non-GAAP Sales and Marketing $22,235 $27,923 $32,313 $35,445 $8,381 $9,356

GAAP Research and Development $12,290 $18,502 $24,239 $29,328 $6,415 $7,968


related taxes (169) (1,683) (3,619) (4,046) (911) (764)

Amortization of Intangibles (5) (6) (7) (6) (2) (1)

Non-GAAP Research and Development $12,116 $16,813 $20,613 $25,276 $5,502 $7,203

GAAP General and Administrative $6,650 $12,561 $14,598 $15,186 $3,493 $3,675


related taxes (180) (1,922) (3,754) (4,086) (937) (851)

Amortization of Intangibles (179) (224) (179) (124) (41) (5)

Acquistion related costs - - - (118) (118)

Change in fair value of acquisition-related

contingent consideration (656) 281 - - - -

Non-GAAP General and Administrative $5,635 $10,696 $10,665 $10,858 $2,515 $2,701

GAAP Operating (loss) ($5,739) ($12,687) ($13,276) ($13,724) ($2,913) ($3,107)


related taxes 426 4,653 9,866 11,118 2,546 2,232

Amortization of Intangibles 306 393 348 313 83 69

Acquistion related costs - - - 118 118

Change in fair value of acquisition-related

contingent consideration 656 (281) - - - -

Non-GAAP Operating Loss ($4,351) ($7,922) ($3,062) ($2,175) ($284) ($688)

Smart Connected Services · 2018-03-06 · "intends," "plans," "estimates," "anticipates," and...

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Transcript of Smart Connected Services · 2018-03-06 · "intends," "plans," "estimates," "anticipates," and...