Smart Connected Services
M a r c h 7 , 2 0 1 7
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 report on form 10-Q for the quarter ended October 31, 2016 filed with the SEC on December 9, 2016. 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.
In addition to the financials presented in accordance with U.S. generally accepted accounting principles (GAAP), this presentation includes certain non-GAAP financial measures. The non-GAAP financial measures have limitations as analytical tolls and you should not consider them in isolation or as substitute for the most directly comparable financial measures prepared in accordance with GAAP. There are a number of limitations related to the use of these non-GAAP financial measures versus their nearest GAAP equivalents. First, the non-GAAP financial measures excluded the effect of stock-based compensation expense, which has been, and will continue to be for the foreseeable future, a significant recurring expense for our business and an important part of our compensation strategy. Second, other companies, including companies in our industry, may calculate non-GAAP financial measures differently or may use other measures to evaluate their performance, all of which could reduce the usefulness of our non-GAAP financial measures as tools for comparison. We urge you to review the reconciliation of our non-GAAP financial measures to the most directly comparable GAAP financial measures set forth in the Appendix, and not rely on any single financial measure to evaluate our business.
We have filed a Registration Statement on Form S-3 (including a base prospectus) with the SEC for the offering to which this communication relates. This presentation has been prepared solely for use by prospective investors in connection with a proposed public offering of our common stock and contains a summary of selected information to be contained in a prospectus supplement to be filed with the SEC, and the accompanying prospectus. Before you invest, you should read the prospectus supplement, the accompanying prospectus and the information incorporated therein by reference, including the Risk Factors set forth in those materials. When available, copies of these documents may be obtained for free by visiting EDGAR on the SEC website at http://www.sec.gov. Alternatively, copies may be obtained from Credit Suisse Securities (USA) LLC, Attn: Prospectus Department, One Madison Avenue, New York, NY 10010, or by telephone at 1-800-211-1037, or by email at [email protected]; or JMP Securities LLC, 600 Montgomery Street, Suite 1100, San Francisco, CA 94111, or by telephone at 1-415-835-8985, or by email at [email protected].
This presentation shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale on these securities in any state or other jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or other jurisdiction
3CONFIDENTIAL AND PROPRIETARY |
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
$72$89
$105
$24 $28
FY15 FY16 FY17 Q4 '16 Q4 '17
Revenue(in millions)
Annual
1: Annual Net Dollar Subscription Retention Rate is the product of our core user annual retention rate and year-over-year change in subscription revenue per core user2: Core users include home user accounts and office user extensions.
800
933
Core Users(in thousands)
4Q’16 4Q’17
Quarterly
4CONFIDENTIAL AND PROPRIETARY |
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
5CONFIDENTIAL AND PROPRIETARY |
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
6CONFIDENTIAL AND PROPRIETARY |
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
7CONFIDENTIAL AND PROPRIETARY |
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
8CONFIDENTIAL AND PROPRIETARY |
Ooma Services for Business and Home
Home services ranking by the readers of a leading consumer research publication.
Ranked #1 for 3 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
9CONFIDENTIAL AND PROPRIETARY |
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
10CONFIDENTIAL AND PROPRIETARY |
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
11CONFIDENTIAL AND PROPRIETARY |
Compelling Customer Value
1: For 3 user extensions or 3 lines
2: After one-time purchase and monthly taxes/fees
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 Billion Saved for Ooma Customers!
12CONFIDENTIAL AND PROPRIETARY |
Why We Win
Powerful Hybrid SaaS
Platform
IntegratedMobile Solutions
Unique New Services
Breakthrough Voice Quality
Compelling Customer Value
OomaTraditional Providers
CloudProviders
13CONFIDENTIAL AND PROPRIETARY |
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
14CONFIDENTIAL AND PROPRIETARY |
Communications
NetworkingInfrastructure
Connected Services - Automation
BusinessProductivity
Security & Monitoring
HomeControl
Connected Home / IoT
…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
15CONFIDENTIAL AND PROPRIETARY |
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
+
16CONFIDENTIAL AND PROPRIETARY |
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
17CONFIDENTIAL AND PROPRIETARY |
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
19CONFIDENTIAL AND PROPRIETARY |
$72.2
$88.8
$104.5
$20.9$24.3
$27.6
FY 2015 FY 2016 FY 2017 Q4 '15 Q4 '16 Q4 '17
Note: $ Millions, Fiscal Year Ends January 31
Annual Revenue Quarterly Revenue
Strong Revenue Growth
($ in millions)
Ooma Office revenue grew ~58% on a year-over-year basis.
20CONFIDENTIAL AND PROPRIETARY |
Subscription/Services
Product/Other
FY15 FY16 FY17 Q4'16 Q4'17
Annual Quarterly
Expanding Subscription &Services Revenue
$104.5
$88.8
$72.2
$24.3 $27.6
75% 82% 87%
85% 87%
25% 18% 13%15% 13%
Note: $ Millions, Fiscal Year Ends January 31
21CONFIDENTIAL AND PROPRIETARY |
Q4 '15 Q4 '16 Q4 '17
800,000
933,000
Core Users
46%
58%
48%
52%
46%
54%
Premium Users
Basic Users
Average revenue per core user around $8.00 per month.
Q4 '15 Q4 '16 Q4 '17
368,000
448,000
272,000
Strong Customer Growth
Premium Users
54%
42%
678,000
22CONFIDENTIAL AND PROPRIETARY |
Increasing Gross Margin
49%54%
58%55%
58%
66% 66%69%
67%70%
FY15 FY16 FY17 Q4 '16 Q4 '17
Gross Margin% Revenue
• 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
23CONFIDENTIAL AND PROPRIETARY |
Improving Adjusted EBITDAA
dju
ste
d E
BIT
DA
(in
$'0
00)
($2,538)
($1,885) ($1,827)
($1,549)
($1,251)($1,124)
($542)
$81 $171
Q4 '15 Q1 '16 Q2 '16 Q3 '16 Q4 '16 Q1 '17 Q2 '17 Q3 '17 Q4 '17
24CONFIDENTIAL AND PROPRIETARY |
Long-Term Target Model (Non-GAAP)
% REVENUE FY16 FY17 4Q’16 4Q’17TARGETRANGE
Subscription/Services
Gross Margin66% 69% 67% 70% 75% - 80%
Total
Gross Margin54% 58% 55% 58% 65% - 70%
S&M 31% 31% 33% 30% 20% - 25%
R&D 19% 20% 18% 20% 12% - 15%
G&A 12% 10% 11% 9% 6% - 8%
Adjusted EBITDA (7%) (1%) (5%) 1% 20% - 25%
Note: Non-GAAP Excludes Amortization of Intangibles and FASB Topic 718 Charges Related to Stock Options and Preferred Stock Warrants
Thank you
26CONFIDENTIAL AND PROPRIETARY |
GAAP to Non GAAP Reconciliation
27CONFIDENTIAL AND PROPRIETARY |
Consolidated Balance Sheet
$ T housands Q1-17 Q2-17 Q3-17 Q4-17 FY2017
Assets
Current assets :
Cash and cash equivalents $27,413 $8,982 $6,712 $6,308 $3,990
S hort-term investments 27,991 44,695 47,126 47,054 49,211
Accounts receivable, net 5,609 5,022 4,478 4,866 4,714
Inventories 5,011 3,909 4,564 4,592 5,830
Deferred inventory costs 2,013 1,841 2,037 1,443 1,620
Prepaid expenses and other current assets 1,318 1,513 1,637 2,033 1,891
T otal current assets 69,355 65,962 66,554 66,296 67,256
Property and equipment, net 4,291 4,272 4,478 4,212 4,176
Intangible assets , net 885 787 703 620 537
Goodwill 1,117 1,117 1,117 1,117 1,117
Other assets 888 830 307 303 252
T otal assets $76,536 $72,968 $73,159 $72,548 $73,338
L iabilities and stockholders ' equity
Current liabilities :
Accounts payable $4,786 $4,160 $5,493 $4,778 $5,857
Accrued expenses 13,010 11,979 10,805 11,972 11,579
S hort-term debt and capital lease 632 - - - -
Convertible preferred s tock warrant liability - - - - -
Deferred revenue 15,036 14,351 15,134 14,899 15,521
T otal current liabilities 33,464 30,490 31,432 31,649 32,957
Other liabilities 182 543 225 543 561
T otal liabilities 33,646 31,033 31,657 32,192 33,518
Convertible Preferred S tock - - - - -
S tockholders ' equity:
Common s tock 2 2 2 2 2
Additional paid-in capital 107,679 110,972 113,562 115,314 117,639
Accumulated other comprehens ive (loss ) income 17 30 42 18 (11)
Accumulated deficit (64,808) (68,764) (72,104) (74,978) (77,810)
T otal s tockholders ' equity 42,890 42,240 41,502 40,356 39,820T otal liabilities and stockholders ' equity $76,536 $73,273 $73,159 $72,548 $73,338