Q1 FY27 revenue up 25%, raised FY27 guidance, new AI products and MyPhone launch propel the stock.
OOMA · Earnings Call · 2026-05-26
A Strong Quarter, a Clear Strategic Shift
Ooma's fiscal Q1 results, reported on May 26, 2026, mark a clear inflection point. Revenue grew 25% year-over-year to $81.1 million, with non-GAAP net income up 73% and adjusted EBITDA up 78% to a record $11.8 million. As CEO Eric Stang put it, “We are pleased to report strong Q1 financial results and a good start to our fiscal 27 year.” — Eric Stang, Chief Executive Officer (CEO) · 2026-05-26 The market has responded: the stock is up 58% over the last 90 days, reflecting growing conviction that the company's dual bet on POTS line replacement and AI-driven services is paying off.
AirDial: From Good to Accelerating
The biggest driver of the upside was AirDial, the company's copper-line replacement solution. Management noted that new lines installed more than doubled year-over-year, and bookings grew over 75% for the quarter. CFO Shigeyuki Hamamatsu acknowledged the conservatism embedded in guidance, “the booking in Q1 year over year grew 75%, and that looks like 3 or 4 quarters in a row, we had a growth rate of bookings.” — Shigeyuki Hamamatsu, Chief Financial Officer (CFO) · 2026-05-26 This is not a new story—a year earlier, the company was already seeing “The demand environment for Ooma Airdial is accelerating. There is no question about that.” — Shig Hamamatsu · 2025-05-28 But now the funnel is converting into revenue. Eric Stang highlighted the structural driver:
We are excited about the outlook in The US and in Canada. As we look forward and think that the market is building and we are we are growing. We have opportunity to grow significantly as we move forward.
With 40-plus resellers, including T-Mobile and Comcast, and AT&T shutting off more lines, AirDial looks set to become a multi-year growth engine.
Ooma AI: Monetizing the Invisible Data
The launch of Ooma AI is a strategic move to layer AI onto the company's existing small-business communications platform. The suite includes AI transcription, answering service, AI receptionist, AI insights, and an OpenAI integration. Three features are already live, with two more in beta. Eric Stang sees this as a revenue accelerator: “Today, a single-digit percentage of our customers take Ooma Pro Plus, which is the highest tier of service we have. And some of our AI services are going into that tier.” — Eric Stang, Chief Executive Officer (CEO) · 2026-05-26 The AI answering service and receptionist carry separate monthly charges, offering an upsell path. In the prior quarter, the company hinted at this potential: “My Phone, when we announced it, will be specifically targeted towards that market opportunity we see where parents want to have something in their home for their kids to use...” — Eric Stang, Chief Executive Officer · 2026-03-04 The parallel is clear—just as MyPhone taps a new consumer niche, AI taps a new SMB spend category. The company is hosting AI internally, with margins expected to align with overall levels, making it a high-margin add-on.
MyPhone and the Residential Revival
For the first time in many quarters, Ooma grew its residential user base, driven by strong Telo sales and the early promise of MyPhone, a modern landline for families with kids. The product is now available on Walmart.com, with in-store rollout planned for fall. Management remains conservative, guiding residential revenue to be flat to down 1% for the year, but Eric Stang noted the phenomenon: “for the first time in many quarters, we grew our base of residential users in Q1.” — Eric Stang, Chief Executive Officer (CEO) · 2026-05-26 MyPhone's premium subscription pricing should be accretive to residential ARPU, which currently sits at about $9–10 per month.
Financial Execution and Outlook
The quarter demonstrated improving profitability. Total gross margin was 62.4%, subscription gross margin held at 72%, and the company generated $6.4M operating cash flow and $4.9M free cash flow. Revenue reached a record $81M, up 25% Y/Y. Operating income turned positive at $4M, a milestone after years of losses. Operating margin improved to 4.3% from breakeven a year ago. Debt was paid down to $53.5M, and the company raised full-year FY27 revenue guidance to $326–$328.5M, with non-GAAP EPS of $1.29–$1.34. The balance sheet remains leveraged, with effective net cash at -$36M, but the trend of positive operating leverage is clear.
The quarter is a validation that Ooma's investments in AirDial, AI, and MyPhone are coalescing into a coherent growth story. With organic business subscription growth stepping up to 9% and acquisitions adding 25% total revenue growth, the company is showing it can execute on multiple fronts simultaneously. The key risk is the pace of AirDial installations, which remains lumpy, but with a record backlog and expanding channel, the bias appears to be to the upside.