Ooma Inc. reported second-quarter fiscal 2027 results on August 26 that showed substantial top-line expansion alongside margin improvements. Revenue reached $83.2 million, representing 25% year-over-year growth, while business subscription and services revenue climbed 38%. Adjusted EBITDA jumped 74% to $12.4 million, and non-GAAP net income rose 58% to $10.2 million. Operating cash flow hit a record $13.1 million, and the company reduced its debt balance to $47 million after a $6.5 million repayment.
The growth was driven primarily by AirDial, Ooma’s alternative to aging copper phone lines, which saw services revenue grow 75% year over year with a 50% increase in installations. The company expanded its resale partner network to more than 40 partners after adding two during the quarter, including a Verizon Platinum partner. A notable competitive win involved a hospital system that purchased approximately 200 AirDial lines along with more than 1,000 unified communications seats and internet backup.
Ooma also introduced new artificial intelligence features and consumer products during the quarter. AI Transcriptions and AI Insights were integrated into the Pro Plus tier, while standalone AI Answering Service and AI Receptionist tools launched with monthly fees ranging from single digits to $50. A ten-feature AI Productivity Pack is scheduled for the third quarter. The company’s MyPhone product for younger children added 3,000 net new residential users and gained distribution through major retailers including Costco, Amazon, Best Buy, Walmart, and Target. A companion StarDial product for Starlink users is due in the third quarter.
However, a substantial portion of the reported growth came from the acquisitions of FluentStream and Phone.com completed in the previous year. Excluding these deals, total revenue growth would have been approximately 8% rather than 25%, and business subscription and services revenue growth would have been 8% instead of 38%. Business user additions of 4,000 in the quarter included offsets from 4,000 users lost to churn from IWG and a one-time count correction, indicating underlying organic growth closer to 11,000 users.
Margin pressures persist in certain areas. The company’s product and other gross margin remained negative 25%, or closer to negative 30% without a one-time tariff recovery benefit. CFO Shig Hamamatsu noted that memory costs have increased, impacting residential device margins. Residential subscription revenue remained flat year over year despite MyPhone’s initial success, with full-year guidance indicating flat to 1% growth in that segment. Hedge fund ownership increased to 24 funds from 21 in the prior quarter, while short interest remained at 4.74% of the float. The stock carried a forward price-to-earnings multiple of 15.85.
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