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Ooma: Impressive Growth For This Remote-Working Enabler

Mar. 11, 2020 8:55 AM ETOoma, Inc. (OOMA)
Chetan Woodun profile picture
Chetan Woodun


  • Ooma is a VoIP services provider whose stock price has seen some upside in the last week.
  • An important question is whether this will be a sustained.
  • There seems to be a hype around the potential of remote-working technologies and thus, it is also important to give investors a clear idea.
  • Revenues are strong and the company is finally having a grip on those expenses.

Ooma operates a communications platform for small businesses and consumers on which it offers cloud-based telephony. The company uses VoIP technology.

The market finally seems to be rewarding Ooma for its extraordinary streak of earnings beats (16 since the IPO) and more importantly the earnings surprise (+300% surprise) in the last quarter (consensus: $0.01 v/s actual: $0.04). Thus, there has been an upside of 20% in the last week. There was a prior 24% upside on Nov 21st 2019 when the company reported its first positive earnings in Q3-2019.

Figure 1: Ooma Earnings Surprises

Description: https://static.seekingalpha.com/uploads/2020/3/8/49663886-15836747235805094.png

Source : SeekingAlpha

I analyze whether this upside in the stock price is sustainable taking into consideration the market, competitive position as well as possible risks so that investors can position themselves accordingly. At the same time, I paint a picture of the technologies which enable remote working and how can Ooma benefit, more as an indirect beneficiary.

VoIP and Key Drivers for the PBX Systems Market

VoIP or Voice over the Internet Protocol allows people to communicate on a one-to-one basis or to make multiple calls over the internet. Using the Ooma Telo, subscribers can even plug in their analog (older generation land-line) phones and make calls without paying on a per-call basis except for local taxes.

Figure 2 : Ooma

Description: https://static.seekingalpha.com/uploads/2020/3/8/49663886-15836757584712818.png

Source : Ooma Telo will make you love your landline again

Interestingly, when compared to the competition, only Ooma has this feature. Also, no need for technical expertise to get going as the device just needs to be hooked to an Internet modem.

There has been a low adoption of VoIP services, whose limiting factor were the quality of the Internet connection. With the quality of Internet having improved and companies like Ooma having optimized their technologies to work on existing lines, VoIP services such as cloud

This article was written by

Chetan Woodun profile picture
As a tech-focused industry Research Analyst, my aim is to provide differentiated insights, whether it is for investing, trading, or informational reasons. For this purpose, I am not a classical equity researcher or fund manager, but, I come from the IT world as the founder of Keylogin Information and Technologies Co. Ltd. Thus, my research is often backed by analytics and I make frequent use of charts to support my position.I also invest, and thus, in this tumultuous market, I often look for strategies to preserve capital. As per my career history below, I have wide experience, initially as an implementer in virtualization and cloud, and I was subsequently a team leader and project lead, mostly working in telcos.I like to write around themes like automated supply chains, Generative AI, telcos Capex, the deflationary nature of software, semiconductors, etc and I am often contrarian. I have also covered biotechs.I have also been an entrepreneur in real estate ( a mediocre one), a business owner, and a farmer, and dedicate at least 5 hours per week to working on a non-profit basis. For this purpose, I help needy families by providing sponsored work and contributing peer reviews and opinions for enterprise tech.I have been investing for the last 25 years, initially in mutual or indexed funds before later opting for individual stocks. Got a lot of experience in the 2008/2009 downturn when I lost a lot due mostly to wrong advice. Since then I do my own research and have fallen in love with Seeking Alpha because of the unique perspectives it provides to someone investing hard-earned money as well as access to some of the best analysts.

Analyst’s Disclosure: I am/we are long OOMA. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

This is an investment thesis and is intended for informational purposes only. Investors are kindly requested to do additional research before investing and most welcome to request any clarification through the comments.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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