Ooma is no longer the residential gadget company the ticker still evokes. Two December cash deals and a copper-line replacement product have recast the July quarter as a test of whether a mid-market communications vendor can buy scale and still convert it into cash. Management closed FluentStream and Phone.com late last fiscal year, then posted a print in which revenue rose 25% and adjusted cash earnings, a proxy that strips stock pay and one-time items, reached a company record. Shares last changed hands near $23, implying about $630 million of equity value. The case turns on whether that growth is a new operating system or a purchased spike sitting on a still-modest organic core.
Under the hood the mix has flipped. Business now supplies about 70% of revenue, and subscription still accounts for more than nine tenths of the print. AirDial services rose 75% as carriers keep retiring analog copper that fire panels and elevator phones still need. That is the organic story the acquisitions cannot fake. The offset is honesty about the rest of the stack. FluentStream and Phone.com together contributed more than $22 million in the first half, so a large slice of the 25% headline is bought users, not newly won ones. Residential finally added users after the June launch of MyPhone, a parent-controlled landline aimed at delaying a child's first cell phone, but that base had been slowly shrinking for years.
Cash conversion is the other half of the argument. Adjusted cash earnings hit a record $12 million in the quarter, and the company prepaid more than $11 million of the Citizens Bank term loan in the first half. Management guides full-year revenue of about $333 million and non-GAAP earnings, which add back stock pay and deal amortization, of about $40 million. The question the next two quarters resolve is whether AirDial and the acquired books keep compounding after the easy overlap anniversary, or whether organic business-user adds stall the way the IWG account already did.