Ooma Targets AI, POTS Growth as TELUS Deal and Margin Goals Take Shape

Key Points

• AirDial is targeting a large POTS-replacement market: Ooma estimates up to 8 million business legacy phone lines remain in the U.S., while Frost & Sullivan estimates at least 12 million total lines need replacement. TELUS has selected AirDial for Canadian deployments, with an initial launch planned for the second half of Ooma’s fiscal year.
• AI products are gaining early traction: Ooma said AI-enabled Pro Plus nearly doubled its take rate among new customers, while voice-agent products achieved double-digit attach rates. The company is also launching a $15-per-account productivity-agent bundle and plans to introduce Ooma CX at $49.95 per agent monthly.
• Ooma is targeting significant financial expansion: The company expects roughly $333 million in fiscal-year revenue and $48 million in adjusted EBITDA, with a longer-term goal of doubling revenue and reaching adjusted EBITDA margins above 20%–25%. Acquisitions remain part of its strategy, focused mainly on North American UCaaS businesses.

Ooma NYSE: OOMA outlined growth plans across its business communications, POTS replacement, wholesale platform and residential phone offerings during an investor presentation, highlighting new artificial intelligence products, a Canadian carrier relationship and long-term profitability targets.

Chief Executive Officer Eric Stang said the cloud communications provider serves more than 1.4 million core users and generated $307 million in revenue over the trailing four quarters, up 17% year over year. The company reported about $300 million in annual recurring revenue, recurring non-GAAP gross margins above 70%, and 99% retention.

Ooma’s strategy centers on combining advanced features, ease of use and value in targeted market segments rather than seeking to serve every type of customer, Stang said. Its business spans small-business unified communications, enterprise communications, POTS replacement through AirDial, wholesale communications software through 2600Hz, and residential offerings.

AirDial targets POTS replacement opportunity

Several speakers emphasized the opportunity created by the ongoing retirement of traditional copper telephone networks. Frost & Sullivan VP and Senior Fellow Elka Popova said deregulation has enabled telecommunications carriers to increase prices and discontinue legacy POTS services, creating urgency for businesses and residential customers to migrate to next-generation services.

Popova said Frost & Sullivan estimates there are at least 12 million POTS lines requiring replacement in the U.S. She said the research firm recognized Ooma’s AirDial product with a best-practices award, citing its integrated approach for mission-critical analog uses such as fire alarms and elevator phones.

Chris Burgy, Ooma’s senior vice president of corporate development, said the company estimates that up to 8 million business POTS lines remain in the U.S., excluding residential lines. He said AT&T has begun shutdown actions and filings extending into 2027 and 2028, while Verizon has begun addressing legacy Frontier assets following its acquisition of Frontier.

Ooma also announced that TELUS selected AirDial for business POTS replacement in Canada. Burgy said TELUS Business Solutions has up to 300,000 lines and that the companies have executed a contract and begun launch planning. Ooma expects an initial go-live using U.S.-based infrastructure during the second half of its fiscal year, followed by Canadian data-center deployment for government requirements.

AirDial is generally sold on contracts, often lasting three years or longer, according to Burgy. Ooma said its average revenue per AirDial line is approximately $25, blending direct and reseller sales. The company has about 45 reseller partners and typically adds two or more per quarter.

Thad White, vice president of product management, said AirDial’s differentiators include multi-path redundancy that simultaneously transmits voice traffic over multiple connections, device and call notifications, equipment-disconnect alerts, and remote monitoring tools. Ooma plans enhancements including dual-modem active-active LTE, a 5G version, a high-density deployment product for buildings with more than 50 lines, and FedRAMP early-start certification efforts.

AI products expand UCaaS offering

Dennis Peng, Ooma’s senior vice president of product management, said the company recently added AI transcriptions, summaries, insights and Ask AI features to its Pro Plus service tier. Ooma has also begun selling voice-agent add-ons consisting of a basic answering service and a full receptionist.

Peng said early inside-sales results showed Pro Plus take rates for new customers nearly doubled after the AI additions, while voice agents achieved double-digit attach rates on new deals. The company is still in its first quarter of selling the products and has only begun marketing them to its installed base, he said.

Ooma is also launching an AI productivity-agent bundle priced at $15 per account per month, with usage-based credits. The initial bundle includes four agents designed to review calls for issues or sales opportunities, prepare customer interaction summaries and automate other business tasks. Peng said Ooma plans to add more agents through the remainder of the year and early next year.

The company said it uses a combination of internally operated and external AI models, and aims to remain flexible as model performance and pricing change. Stang said customer data used in the products is used for that customer rather than being shared across customers.

Ooma also plans to launch Ooma CX, a call-center offering priced at $49.95 per agent per month, in the fall. The product is intended for teams needing more functionality than Ooma’s Pro Plus tier but less complexity than an enterprise contact-center deployment.

Residential products and wholesale platform

In residential communications, Ooma introduced MyPhone, a screen-free calling product for families with children. The offering includes a trusted contact circle, party-line calling, address-based 911, parental call logs and scheduled quiet hours. Jim Gustke, senior vice president of marketing and residential sales, said MyPhone will begin in-store availability with an unnamed major brick-and-mortar retailer in November.

Ooma also announced StarDial, designed for satellite internet households using Starlink. Gustke said StarDial incorporates HD Voice and adaptive redundancy for satellite-internet latency, and that an unnamed major retailer will carry the product as part of its Starlink assortment.

Burgy said the company’s 2600Hz platform, acquired in October 2023, provides wholesale UCaaS, contact-center-as-a-service and communications-platform capabilities. The platform targets legacy-platform operators, fiber companies with voice-service requirements and vertical SaaS providers seeking embedded communications. Burgy cautioned that sales cycles can be longer because customers may operate thousands or hundreds of thousands of users and must complete migrations.

Financial targets and acquisition strategy

CFO Shig Hamamatsu said Ooma’s fiscal-year revenue guidance is about $333 million. In the second quarter, business subscription revenue increased 38% year over year, annual exit recurring revenue reached $299 million, up 25%, and adjusted EBITDA and free cash flow increased 68% and 50%, respectively, on a year-over-year basis.

Ooma guided to about $48 million in adjusted EBITDA for the year. Hamamatsu said the company generated more than $44 million in trailing-12-month adjusted EBITDA and $30 million in free cash flow at the end of the second quarter, while converting roughly 70% of EBITDA to free cash flow.

Over a three- to four-year period, Ooma aims to roughly double revenue, with about $100 million of incremental revenue each from business UCaaS and AirDial in its framework. The company’s long-term adjusted EBITDA margin target is more than 20% to 25%, compared with 15% in the second quarter.

Stang said acquisitions remain part of Ooma’s strategy, primarily to add UCaaS users cost-effectively. The company prefers North American acquisition targets with $10 million to $50 million in revenue and seeks transactions that become accretive within a few quarters. Ooma said it aims to complete one or two acquisitions per year when opportunities and valuations align.

About Ooma (NYSE:OOMA)

Ooma, Inc is a cloud communications company that provides voice, collaboration, and related services to small and midsize businesses, enterprises, and consumers. Its business offerings are designed to replace or complement traditional business phone systems with internet-based communications delivered through software and connected devices.

Ooma's business products include Ooma Office, Ooma Pro, and Ooma Enterprise, which provide cloud-based phone systems, business texting, virtual extensions, conferencing, call management, and other unified communications features.

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