Ooma, Inc. (OOMA) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen. I'm Eric Stang, President, Chief Executive Officer and Chairman of the Board of Directors of Ooma, Inc., and it is a pleasure to welcome you to Ooma, Inc.'s Annual Meeting of Stockholders. Thank you for joining us today live via our Internet webcast. We're excited to be hosting a virtual meeting which allows us to be more inclusive and reach a greater number of our stockholders no matter where they are located in the world today. Before I continue, I would like, first, to mention that I hope everyone participating on this call today is safe and healthy. These are certainly strange times, but I can report that Ooma remains strong and is navigating through them well. I will act as chairperson of this meeting, and I've asked Jenny Yeh, our Vice President, General Counsel and Secretary, to record the minutes of this meeting. Before proceeding further, let me introduce the directors and director nominees of the company who, in addition to myself, are with us today. They are Susan Butenhoff, Andrew Galligan, Pete Goettner, Judi Hand, Russ Mann, Ravi Narula, William Pearce and Jenny Yeh. I would also like to introduce the corporate officer who is in attendance, who is James Gustke, Vice President of Marketing. Also with us today are [ Barry Shoemake ] and [ Qing Jie Zhang ], representing Deloitte & Touche LLP, our independent registered public accountants; Bill Hughes, representing Orrick, Herrington & Sutcliffe LLP, our outside corporate counsel; and [ Anita Gillespie ], representing Broadridge Financial Solutions, acting as our inspector of elections. As we proceed, if you would like to submit a question, you can do so online at the bottom left-hand side of the screen. I will now turn the meeting over to Jenny Yeh, the company's general counsel and secretary, who will conduct the formal part of the meeting. Upon completion of the formal part of the meeting, I will provide some additional comments regarding the company and then take your questions. Jenny?

Thank you, Eric. The annual meeting is being held in accordance with the company's bylaws and Delaware law. The items on the agenda for the formal meeting are: the reelection of 3 Class III directors; the ratification of the appointment of Deloitte & Touche as independent public accountants for the fiscal year ending January 31, 2022; to hold a nonbinding advisory vote on the compensation of our named executive officers; and to hold a nonbinding advisory vote on whether future nonbinding advisory votes to approve the compensation of our named executive officers should be held every 1, 2 or 3 years. After we vote on these matters, an announcement will be made regarding the preliminary results and the formal meeting will be adjourned. After we complete the formal meeting, our Chairman will provide some comments regarding the company and an opportunity for the stockholders to ask questions. Only validated stockholders will be able to ask questions in the designated field on the web portal. Out of consideration for others, please limit yourself to one question. Please note that this meeting is being recorded. However, no one attending is permitted to use any audio recording device. During the formal meeting, we will only respond to questions regarding the procedures for the meeting and the proposals under consideration. Thank you for your understanding. After we complete the formal meeting, there will be an opportunity for the stockholders to ask questions. All stockholders can submit questions while the meeting's in progress. Please stay online after the formal meeting has been adjourned to participate in the question-and-answer session. I have proof by affidavit that notice of the meeting has been duly given and that the notice of annual meeting of stockholders, proxy statement and proxy and the annual report on Form 10-K for the year ended January 31, 2021 were made available on or about April 15 to all stockholders of record at the close of business on April 14, the record date for the meeting. We have at this meeting a record of stockholders as of that date. The affidavit, together with copies of the proxy statement, proxy card and the annual report on Form 10-K, will be filed with the minutes of the meeting. We have appointed [ Anita Gillespie ], a representative of Broadridge Financial Solutions, to act as inspector of elections for this annual meeting. The inspector of elections has signed an oath of office, which will be filed with the minutes of the meeting. The inspector of election has advised that we have present, online or by proxy, a sufficient number of shares to constitute a quorum. Therefore, the meeting is duly constituted and we may proceed with business. Let me briefly describe the voting procedures. We will vote by proxy and by online ballot. Each holder of common stock is entitled to one vote for each share of common stock held of record at the close of business on the record date. Stockholders attending the meeting via Internet webcast may vote their shares in real-time until the polls are closed. The polls to vote online are currently open. Upon receipt of all proxies and online ballots, the polls will officially be closed. The votes cast today will be counted in the final tally, along with the proxies previously received. The inspector of elections will provide the preliminary results of the voting at the end of the meeting. If you've not yet voted or if you have previously voted and you now wish to revoke your proxy and change your vote, you may do so by clicking on the Vote Here button on the right-hand side of the screen. Any proxy may be revoked at any time before polling is closed by the electronic submission of a later-dated vote at the meeting, as I just described. The polls for each matter to be voted on at this meeting are now open. The first item of business is the election of directors. This item is discussed on Page 47 in the proxy statement. The company's Board of Directors presently has 9 members and is divided into 3 classes, each with a 3-year term. There are 3 Class I directors, 3 Class II directors and 3 Class III directors. 3 Class III directors will be elected at today's meeting. Those 3 nominees receiving the highest number of votes of the shares present in person or represented by proxy at this meeting and entitled to vote will be elected as directors. Directors elected at today's meeting will hold office until the 2024 Annual Meeting of Stockholders or until their successors are duly elected and qualified. Stockholders do not have the right to accumulate their votes in the election of directors. As indicated in the company's proxy statement, Andrew Galligan, Judi Hand and William Pearce have been nominated by the Board of Directors to serve as Class III directors. All of these nominees are currently serving as directors of the company. Pursuant to the notice of this annual meeting and the proxy statement dated April 15, 2021, the proxies solicited by the Board of Directors will be voted in favor of these nominees. The company's bylaws require that a stockholder provide advance notice to the company of a stockholder's intent to nominate persons as directors. No such notice was received. Accordingly, I declare the nominations for directors closed. Those of you who are voting should mark your online ballot on proposal 1 to indicate how you're voting. Proxies submitted with no instructions will be voted in favor of this proposal. The next item of business is to ratify the appointment of Deloitte & Touche as independent auditors for the company for the fiscal year ending January 31, 2022. This item is discussed on Page 48 in the proxy statement. The Audit Committee of the Board, which is comprised entirely of nonemployee directors, recommended to the Board of Directors that Deloitte & Touche be appointed as independent auditors. The Board approved the selection of Deloitte & Touche as independent auditors for the fiscal year ending January 31, 2022 and is asking the stockholders for ratification of this election. If the stockholders do not approve the selection of Deloitte & Touche as independent auditors, the Board and Audit Committee will reconsider the appointment. The Board of Directors recommends that stockholders vote in favor of this proposal and the proxies solicited by the Board will be voted in favor of this proposal. [ Barry Shoemake ] and [ Qing Jie Zhang ] are present from Deloitte & Touche and are available to answer any appropriate questions that you may have at this time. Are there any questions concerning this proposal? Those of you who are voting should click on the Vote Here button on the lower right-hand side of the screen and follow the instructions there. Proxies submitted with no instructions will be voted in favor of this proposal. The next order of business is the vote to approve the compensation of the company's named executive officers for the fiscal year ended January 31, 2021. This proposal is a nonbinding advisory vote by the stockholders. This item is discussed on Page 49 in the proxy statement. Those of you who are voting should mark their online ballot on proposal 3 to indicate how you're voting. Proxies submitted with no instructions will be voted in favor of this proposal. The fourth and final order of business is the vote on the frequency of a holding of a stockholder advisory vote on the compensation of the company's named executive officers. This proposal is a nonbinding stockholder advisory vote. This item is discussed on Page 50 in the proxy statement. Those of you who are voting should mark your online ballot on proposal 4 to indicate how you're voting. Proxies submitted with no instructions will be voted in favor of the 1-year frequency of future nonbinding advisory votes on the compensation of the company's named executive officers. The polls for each matter to be voted on at this meeting are now closed. No additional ballots, proxies or votes and no changes or revocations will be accepted. The proxies and ballots will be tabulated by the inspector of elections. At this time, based upon preliminary information provided by the inspector of elections, I can report that, with regard to proposal 1, the 3 nominees who received the highest number of affirmative votes were Andrew Galligan, Judi Hand and William Pearce. Each of these individuals have therefore been elected as a director of the company to hold office until the 2024 Annual Meeting of Stockholders or until his or her successor is duly elected and qualified. With regard to proposal 2, the appointment of Deloitte & Touche to act as the company's independent auditor for the fiscal year ending January 31, 2022, has been ratified by a majority of the shares present online or by proxy. With regard to proposal 3, the compensation of the company's named executive officers for the fiscal year ended January 31, 2021, has been approved by a majority of the shares present online or by proxy. With regard to proposal 4, the 1-year frequency of future nonbinding advisory votes on the compensation of the company's named executive officers received the highest number of affirmative votes. These are the preliminary results of voting. The final results of voting, including any online ballots and proxies recorded during this meeting, will be set forth in the report of the inspector of elections and will be included in the minutes of the meeting. The final results will also be reported in our reports filed with the SEC. This Annual Meeting of Stockholders is now adjourned. Thank you for your attendance. Our Chairman will now provide some additional comments. After the conclusion of his remarks, we will entertain questions. Before we go any further, I would like to note that during the course of the following discussion, representatives of the company may make forward-looking statements regarding future events or the future financial performance of the company. Such statements are only predictions and actual events or results could differ materially from those predictions due to a number of risks and uncertainties. I refer you to the documents the company files from time to time with the Securities and Exchange Commission, including the company's last filed annual report on Form 10-K, which was filed on April 7. These documents contain and identify important factors that could cause actual results to differ materially from those contained in our projections or forward-looking statements. I will now turn over the meeting to Eric.

Thanks, Jenny. Hi, everyone. We're very proud of our results for this last fiscal year. We call it our fiscal year '21 because it ended end of January 2021. We grew the company's business revenues and its residential revenues. And in total, the company grew about 11% versus its prior year, approaching $170 million in revenue. We also did that while generating positive cash flow from operations and resulting in more cash in the bank at the end of our last fiscal year than the prior year. So exciting to see the progress for the company. But what's most exciting for us is as we look forward, we're serving a very large market opportunity. And we believe we are bringing leading solutions to the market, both for small business customers and larger business customers as well as our residential business. On all 3 fronts, we believe we're doing innovative things that will lead to growth for the future. On the small business front, we are certainly expanding our capabilities and with that, our price points that we can charge with some customers. We're expanding internationally and also expanding horizontally with Ooma Connect and Ooma Wi-Fi to offer a more complete solution to customers. All 3 of those growth vectors are exciting for us. On the Ooma Enterprise side, we are expanding our distribution through resellers and VARs and also targeting select verticals and other opportunities where we see tremendous potential. We're excited about the -- where we think we can continue to go, moving forward, and building a bigger and more successful enterprise for you, our shareholders. So with that, let me say, I will now entertain questions concerning matters that any of the stockholders of record may have. We will proceed as follows. We'll begin with a few of the questions that we received in advance of the meeting. We will then take stockholders' questions that are being entered now on the web portal. Please note, we will attempt to answer as many questions as time allows. But only questions, of course, that are germane to the meeting will be addressed. Do we have any questions? Being told we do not have any questions, so with that, I want to thank all of you for attending today's meeting and for the interest you have shown in the affairs of our company. We very much appreciate your attendance. And as always, thank you for your support. Thank you.