Smart Connected Services

Transcription

1 Smart Connected Services Investor Presentation I n f o r m a t i o n a s o f N o v e m b e r 2 8,

2 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 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 July 31, 2017, filed with the SEC on September 7, 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. 2

3 Productivity Automation Network Portal App Appliance Communications Infrastructure Ooma is a cloud/saas provider of telecommunications and other connected services, with solutions for business, home, and mobile users 3

4 Investment Highlights Massive Connected Services Opportunity Unique Hybrid SaaS Platform Solution Revenue (in millions) $72.2 $88.7 $104.5 $27.0 $28.5 Disruptive Cloud Communications and Other Connected Services Efficient Integrated Go to Market Strategy FY15 FY16 FY17 3Q17 3Q18 Core Users (in thousands) Annual Quarterly Predictable SaaS Subscription Business/Financial Model 3Q17 3Q18 1: Core users include home user accounts and office user extensions. 4

5 Mega Trends Drive Our Opportunity Cloud Communications Traditional methods for voice are ripe for replacement. - Macquarie SMB SaaS IoT SMBs are expanding the SaaS market opportunity for vendors. - JPMorgan The Internet of Things represents huge potential need for more systems to deploy, manage and make use of devices. - IDC 5

6 Massive Market Opportunity Communications Mobile 2.1B Users Worldwide $38B 1 $6 Additional Connected Services Opportunity Home 77.9M Home Lines in North America $13 Infrastructure Business 32.8M Businesses in North America (Up to 20 Employees) $19 Productivity Automation 1: At Ooma s Pricing 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 6

7 Unique Hybrid SaaS Connected Services Platform Multi-Tenant SaaS Platform Network Linux Based Appliance, Router, USB, DECT Radio Mobile Alerts and Control User Configurable Services Portal Appliance App Connected to Many Endpoint Devices Integrated, Managed Platform Enabling Both Communications and Other Connected Services 7

8 Disruptive Cloud Communications Opportunity Business 61M Business Lines in North America Home 78M Home Lines in North America 33% Internet/ Cloud 67% Traditional 33% CAGR 1 43% Traditional 57% Internet/ Cloud 4% CAGR 1 We Target Communications to Drive Adoption of the Ooma Platform 1: Source: FCC Voice Telephone Services: Status as of December 31, 2015, CRTC Communications Monitoring Report 2016, IDC; U.S. Consumer Landline Voice Services Forecast 8

9 Ooma Services for Business and Home Virtual Receptionist Music-on-Hold Voic efax Business Services Extension Dialing Conferencing Call Forwarding Ring Groups And More! Unlimited US Calling Voic Multi-ring Ring Groups Home Services Blacklisting 911 Alerts And More! Instant 2 nd Line Google Voice Extensions Ooma Office Ooma Telo Analog Phones IP Phones Mobile Phones Ranked #1 for 4 years in a row Wireless/ Bluetooth Consumer Research Leading Publication DECT Headset Ranked #1 for 5 years in a row Home services ranking by the readers of a leading consumer research publication. 9

10 Leading Mobile Solutions Mobile for Office/Home Ooma (Home) Ooma (Business) Talkatone Mobile for Everyone Full Featured, Integrated User Experience Pure Voice HD Call Quality Powerful Advertising Based Business Model Extends Ooma s Customer Reach 10

11 PureVoice TM Voice Quality Overcoming Internet Congestion Ooma PureVoice TM % Packet Loss 40% Clear and Intelligible Despite Internet Congestion Full Router/QoS Advanced Codec Adaptive Redundancy HD Voice Encryption 10% 3-5% Unintelligible Artifacts in Voice Adaptive Redundancy Up to 4x Deep Competitors Smaller Packet Size 10x More Complex Codec 11

12 Compelling Customer Value Business Home Starts as Low as $19.95/mo 2 Sample Savings vs. $200 Typical Monthly Bill 1 Free for Basic Service 2 Sample Savings vs. $40 Typical Monthly Bill 1 Year $1,346 1 Year $336 2 Years $2,892 2 Years $771 3 Years $4,438 3 Years $1,205 1: For 3 user extensions or 3 lines 2: After one-time purchase and monthly taxes/fees 3: Customer savings based on Ooma estimates >$1.5 Billion Saved for Ooma Customers! 3 12

13 Why We Win Ooma Traditional Providers Cloud Providers Unique New Services Powerful Hybrid SaaS Platform Integrated Mobile Solutions Breakthrough Voice Quality Compelling Customer Value 13

14 Connected Services - Automation Smart Home Security Today Partnerships 146M Residences in North America Nest Amazon Echo Philips Hue Internet Security Business Productivity 5% Home 15% Control CAGR 1 New Motion Sensor Home Monitoring Window Sensor Door Sensor Water Sensor (More) 95% Unserved and more Future Connected Home/IoT 1 = Source: Parks Associates, , U.S. and Canada Census Data 14

15 Driving Adoption and Monetization of the Platform Strengthen Ooma Brand Awareness + Differentiate with Unique Features Increase Ooma Retail Presence and Customer Adoption Security and Peace of Mind Never Before Possible Monetize via Increased Premier Take Rate More IoT Partnerships in Development 15

16 Connected Services - Infrastructure Customer Relationship Management Contact Center and more Business Marketing & Promotion Communications Home Automation Ooma Internet Security Powered by ZScaler 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 Networking Infrastructure 16

17 Integrated Growth Strategy Efficient Marketing TV / Traditional Media Cost-Effective Sales Leading Retailers Broad Reach Low Cost Builds Brand Image Online Targeted Campaigns Directly Through Retailers Word of Mouth Direct Sales Resellers 68% Net Promoter Score 1 OEM Digital Agencies 1: PC Magazine, 2016, for Ooma s Small Business Solution 17

18 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 18

19 Financial Overview

20 Consistent Revenue Growth Annual Revenue Quarterly Revenue $72.2 $88.8 $ Q18 core subscription revenue growth of 20% yr./yr. $23.5 $27.0 $28.5 FY 2015 FY 2016 FY 2017 $ Millions 3Q16 3Q17 3Q18 20

21 Strong Office Revenue Growth Annual Revenue Quarterly Revenue $16.2 3Q18 Office subscription revenue growth of 59% yr./yr. $6.4 $10.0 $4.3 $4.8 $2.5 FY 2015 FY 2016 FY Q16 3Q17 3Q18 $ Millions 21

22 Residential Growth Continues Annual Revenue Quarterly Revenue $61.0 $68.0 $75.4 3Q18 Telo subscription revenue growth of 11% yr./yr. $20.6 $19.5 $17.7 FY 2015 FY 2016 FY Q16 3Q17 3Q18 $ Millions 22

23 Annualized Exit Recurring Revenue $85 $97 $71 $81 $55 $67 FY 2015 FY 2016 FY Q16 3Q17 3Q18 $ Millions, excluding Business Promoter and Talkatone 23

24 Expanding Subscription & Services Revenue Office Residential Other $86 $69 17% 12% $49 6% 90% 79% 75% 16.9% $ % $ % 70.9% FY15 FY16 FY17 Annual $ Millions, % of Total Subscription & Service Revenue, excluding Business Promoter 3Q17 Quarterly 3Q18 24

25 Strong Customer Growth Core Users (000) Premium Users Basic Users % % % % Office users 3Q18 Office user growth of 37% yr./yr. 60% 58% 56% 55% 56% FY15 FY16 FY17 3Q18 Core users include home user accounts and office user extensions. Excludes Business Promoter and Talkatone. Premium users include Office customers and Premier subscribers. 25

26 Blended Average Revenue Per User $8.83 $8.14 $8.13 $8.14 $7.67 $7.78 FY 2015 FY 2016 FY Q16 3Q17 3Q18 ARPU is blended monthly average subscription & services revenue per core user. Excludes Business Promoter and Talkatone. 26

27 Increasing Gross Margin Subscription/Services Total Long-Term Target 49% 66% 66% 54% 69% 69% 58% 58% 61% 71% 65% 75% 70% 80% Growth Drivers Mix of SMB Increases Upselling Premium Services Introduction of New Services Scale Efficiencies FY15 FY16 FY17 3Q17 3Q18 Low High 27

28 Adjusted EBITDA ($'000) Improving Adjusted EBITDA (200) (400) (600) (800) (1,000) (1,200) (1,400) (1,600) (1,800) 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 Adjusted EBITDA represents the net loss before interest and other income, depreciation and amortization and other non-gaap expenses. 28

29 Strong Financial Position ($ millions) FY17 3Q18 Cash and Short-Term Investments, No Debt $53.2 $53.5 Adjusted EBITDA ($1.4) ($0.0) Cash Flow from Operations $0.4 $0.9 Capital Spending $1.6 $0.7 29

30 Long-Term Target Model (Non-GAAP) % REVENUE FY16 FY17 3Q17 3Q18 TARGET RANGE Subscription & Services Gross Margin 66% 69% 69% 71% 75% - 80% Total Gross Margin 54% 58% 58% 61% 65% - 70% Sales & marketing 31% 31% 29% 31% 20% - 25% Research & development 19% 20% 20% 23% 12% - 15% General & administrative 12% 10% 10% 10% 6% - 8% Adjusted EBITDA (7%) (1%) 0% (0%) 20% - 25% Note: Non-GAAP Excludes amortization of Intangibles and stock based compensation expenses 30

31 Thank you

32 GAAP to Non-GAAP Reconciliation $ Thousands FY2014 FY2015 FY 2016 FY Q17 3Q18 GAAP Gross Profit $ 22,198 $ 35,477 $ 46,910 $ 59,329 $ 15,343 $ 17,166 Add : Stock-based compensation expense and related taxes , Amortization of Intangibles Non-GAAP Gross Profit $ 22,205 $ 35,635 $ 47,510 $ 60,529 $ 15,657 $ 17,468 GAAP Sales and Marketing $ 13,192 $ 22,276 $ 28,534 $ 33,768 $ 8,302 $ 9,127 Add : Stock-based compensation expense and related taxes (6) (41) (611) (1,455) (362) (406) Non-GAAP Sales and Marketing $ 13,186 $ 22,235 $ 27,923 $ 32,313 $ 7,940 $ 8,721 GAAP Research and Development $ 7,888 $ 12,290 $ 18,502 $ 24,239 $ 6,244 $ 7,476 Add : Stock-based compensation expense and related taxes (26) (169) (1,683) (3,619) (901) (1,038) Amortization of Intangibles (5) (5) (6) (7) (2) (1) Non-GAAP Research and Development $ 7,857 $ 12,116 $ 16,813 $ 20,613 $ 5,341 $ 6,437 GAAP General and Administrative $ 2,573 $ 6,650 $ 12,561 $ 14,598 $ 3,705 $ 3,890 Add : Stock-based compensation expense and related taxes (33) (180) (1,922) (3,754) (910) (1,016) Amortization of Intangibles (146) (179) (224) (179) (41) (39) Change in fair value of acquisition-related contingent consideration - (656) Non-GAAP General and Administrative $ 2,394 $ 5,635 $ 10,696 $ 10,665 $ 2,754 $ 2,835 GAAP Operating (loss) $ (1,455) $ (5,739) $ (12,687) $ (13,276) $ (2,908) $ (3,327) Add : Stock-based compensation expense and related taxes ,653 9,866 2,447 2,722 Amortization of Intangibles Change in fair value of acquisition-related contingent consideration (281) Non-GAAP Operating Loss $ (1,232) $ (4,351) $ (7,922) $ (3,062) $ (378) $ (525) 32