Eric Stang - Chief Executive Officer Namrata Sabharwal - Interim Chief Financial Officer and Controller Matt Robison - Director of IR and Corporate Development.

Good day and thank you for standing by. Welcome to the Ooma Earnings Call. At this time all participants are in a listen-only mode. After the speakers presentation there will be a question-and-answer session. [Operator Instructions]. Thank you. And I would like to hand the conference over to your first speaker for today, Mr. Matt Robison. Thank you.

Please go ahead..

Thank you, Donna. Good day everyone and welcome to the second quarter of fiscal year 2022 earnings call of Ooma, Inc. My name is Matt Robison, Ooma's Director of IR and Corporate Development. On the call with me today are Ooma's CEO, Eric Stang and Interim CFO and Controller, Namrata Sabharwal.

After the market closed today, Ooma issued its second quarter fiscal 2022 earnings press release, as well as a press release announced appointment of Shig Hamamatsu as Vice President, CFO and Treasurer effective next Tuesday September 7 via Business Wire. These releases are also available on the company's website, ooma.com.

This call is being webcast live and is accessible from a link in the Events & Presentations page of the Investor Relations section of our website. This link will be active for replay of this call for at least one year. A telephonic replay will also be available for a week starting this evening about 8:00 PM Eastern Time.

Dialing information for it is included in today's press release. During today's presentation our executives will make forward-looking statements within the meaning of the Federal Securities Laws. Forward-looking statements generally relate to future events or future financial or operating performance.

Our expectations and beliefs regarding these matters may not materialize and actual results are subject to risks and uncertainties that could cause actual results to differ materially from those projected.

These risks include those set forth in the press release we issued earlier today and those risks more fully described in our filings with the Securities and Exchange Commission.

The forward-looking statements in this presentation are based on information available to us as of the date hereof and we disclaim any obligation to update any forward-looking statements, except as required by law.

Please note that other than revenue or as otherwise stated, the financial measures to be disclosed on this call will be on a non-GAAP basis. The non-GAAP financial measures are not intended to be considered in isolation or as a substitute for results prepared in accordance with GAAP.

A discussion of why we present non-GAAP financial measures and a reconciliation of the non-GAAP financial measures discussed in this call to the most directly comparable GAAP financial measures are included in our earnings press release, which is available on our website.

On this call we will give guidance for third quarter and full year fiscal 2022 on a non-GAAP basis.

Also, in addition to our press release and 8-K filing, the Overview page and Events & Presentations page in the Investors section of our website, as well as the Results page of the Financial Info section of our website include links to information about costs and expenses not included in our non-GAAP values and key metrics of our core subscription businesses.

These are titled Supplemental Financial Disclosure 1 and Supplemental Financial Disclosure 2. Additionally, our investor presentation slides include GAAP to non-GAAP reconciliation that also provides resolution of GAAP expenses that are excluded from non-GAAP metrics. Now, I will hand the call over to Ooma's CEO, Eric Stang..

Thank you, Matt. Hi everyone. Welcome to Ooma’s Q2 fiscal year 2022 earnings call. Thank you for joining us today. I'm excited to review our progress and results for Q2 and to update our outlook for the balance of the year. First of all, I am pleased to report strong growth for fiscal Q2.

Total revenue for the quarter was $47.1 million, which was above our guidance and represents 14% year-over-year growth. Revenue growth for business customers increased sequentially in Q2 to 26% year-over-year and revenue growth for residential customers held approximately steady at 4% year-over-year.

With the progress we are making, we remain on track to cross over to more than 50% of our subscription and services revenue coming from business customers before the end of this fiscal year. I'm also pleased to report Q2 net income and EBITDA also exceeded our expectations. EBITDA for fiscal Q2 was a record $4.1 million.

This allowed us to end the quarter with over $30 million in cash, up from a low point of $23.3 million just a few quarters ago. Overall, we believe the business is performing well and we have good momentum going into the back half of this fiscal year.

Our primary growth initiatives center on driving growth in small business customers, expanding sales through channel partners, developing our enterprise business solutions and expanding internationally. We are making good progress on each of these initiatives and they will continue to be our focus for growth.

As we've discussed previously, small businesses have unique needs and represent a large and relatively untapped segment of the UCaaS market. We believe at least two-thirds of small businesses have yet to convert to a cloud UCaaS solution. In addition, there are indications that small business formation is currently at a record high.

We believe Ooma is the leader in serving small business customers with our Ooma Office and Ooma Office Pro Solutions. Our premium price to Office Pro Solution introduced about 1.5 years ago now was adopted by 45% of our new Office users in Q2, an increase versus Q1. Overall 17% of our Office users have now stepped up to our Pro Tier.

We are investing to make our Pro Tier even more attractive to customers. To this end, in Q2 we announced a Video Remote Control, which allows users of our video meetings to control remote screens, and we also announced Caller Info Match, which we discussed on our last conference call.

We're also investing in new breakthrough features that will enable us in the future to launch a new higher priced tier above Office Pro. These efforts are part of our leadership strategy in the small business segment.

For Ooma Office, our small business solution, our largest new customer in Q2 was a 127 user implementation for a restaurant establishment with about 20 locations. Other notable Ooma Office customer wins in Q2 included 40-plus user implementations at several companies, including a trucking company, a realtor company and an industrial business.

We added 20 locations with a national entity where we now serve over 100 locations, including with Ooma Connect Internet Service at some of those locations. And we added an additional approximately 150 locations with a large national brand where we now serve over 1,500 of their locations.

We're excited by the expanded market potential serving larger size businesses that we see from Office Pro with its advanced features. As you know, we have a long term strategy to expand our channel partners and sales through resellers, which we feel is a large opportunity given our historical concentration on direct and retail sales.

In Q2 we grew to 46% of our business sales through resellers, our highest level yet. We also announced our new partnership with AppSmart to offer business phone and unified communication services through AppSmart’s extensive technology advisor network.

Our contract with AppSmart opens the door for us to build relationships with AppSmart’s network of advisors. Finally, during Q2 we completed much of the customization work needed to support a new private label channel partner who we mentioned a quarter ago.

We see potential with this partner to onboard several thousand users over the balance of this year. We continue to expand our Ooma Enterprise feature set and target select opportunities where we can provide a differentiated solution.

One such area is hospitality, where we secured several new hotel customers, including some very well respected names in the industry. As part of this strategy, we announced a new partnership with Jazzware, which offers hotel management solutions and other services.

Together, Ooma and Jazzware can now offer Jazzware’s hospitality applications and universal connection middleware using the Ooma Enterprise UCaaS platform, connecting hotel premise and contact centers to the Public Switched Telephone Network.

This is one example of Ooma Enterprises strategy to provide customized solutions, meeting customers’ unique needs. We also announced a new partnership with UJET. Ooma now offers an integrated solution combining Ooma Enterprise with UJET’s leading omni-channel contact center solution.

In addition, UJET will deliver referrals to Ooma when UJET clients or prospects are in need of UCaaS services. We are already seeing new sales opportunities coming from this partnership.

Finally, we are investing this year in international expansion, driven by the opportunity to serve our largest customer in new countries across Europe and other parts of the world. The effort to accomplish this progressed well in Q2.

We are currently bringing up a number of locations newly established by this customer across a number of countries, and we are poised to begin a more extensive rollout of services in Q3.

In Q2, we also began collaborating on some new initiatives with this customer, which we are excited about though our focus of course remains on rolling out our current services further this fall when the customer is ready to proceed. On the residential front our business remains solid and we once again grew revenues in line with expectations.

Our supply chain is in relatively good shape and we expect to be able to meet the demand we anticipate in the back half of this year. Turning to the pandemic, we noted in the past that it creates challenges for direct customer engagement and hiring.

Nonetheless, our organization is stable and we have the right people in place across our business to execute our growth plans. And lastly, I'm very pleased to welcome Shig Hamamatsu who will be starting on September 7 as Ooma’s new CFO. Hiring Shig is the result of an extensive search process and we are thrilled that he will be joining Ooma next week.

He brings deep financial understanding and experience, both as an auditor and as a public company CFO and has a demonstrated track record of leadership and strategic business development. I look forward to partnering with Shig to drive Ooma’s growth, and I hope you will join me in warmly welcoming him to Ooma.

I will now turn the call over to Namrata Sabharwal, our acting CFO, to discuss our results and outlook in more detail and then return with some closing remarks. .

Thank you, Eric and good afternoon everyone. I will begin with a review of our second quarter financial results, then provide our outlook for the third quarter and full year fiscal 2022. We achieved record total revenues of $47.1 million, which was above the high end of our previously issued guidance range of $46 million to $46.8 million.

On a year-over-year basis total revenue increased 14%, driven by Ooma Business, which grew 26% year-over-year. Omar Business now accounts for 48% of total revenue compared to 43% in the prior year quarter. Net income for the second quarter 2022 was $3.3 million, which exceeded our previously issued guidance range of $1.9 million to $2.4 million.

This was largely driven by higher subscription and services revenue and improved overall gross margins. Now, some details on our Q2 revenue results. Our subscription and services revenue grew 13% year-over-year to $43.5 million with Ooma Business subscription and services revenue growing 25 % year-over-year and 5% sequentially from Q1.

Subscription and services revenue as a percentage of total revenue was 93% similar to the prior year quarter. Residential subscription and services revenue grew 3% year-over-year. Products and other revenue for the second quarter was $3.5 million up from $2.9 million for the prior year quarter. Now some details on our key customer metrics.

We ended the second quarter with 1,091,000 core users, up from 1,053,000 users at the end of the second quarter last year. This was driven by continued growth in business users through sales and marketing activity. Our total business users grew 19% from a year ago, and we now have 293,000 business users.

At the end of the second quarter, 27% of our total core users were business users, up year-over-year from 23%. Our average monthly subscription and services revenue per core user or ARPU increased 10% year-over-year to $13.1, which is due to an increasing mix of Office Pro users.

In the second quarter of fiscal 2022, 45% of new Office users opted for Office Pro service, which was up significantly from 25% in the prior year quarter. Our annual exit recurring revenue increased to $170 million growing 13% year-over-year.

Our net dollar subscription retention rate for the second quarter was 98%, comparable sequentially and improved from 95% in the prior year quarter. Now, some perspective on gross margin. Subscription and services gross margin for the second quarter were 72%, up from 71% for the same period last year.

These higher gross margins were driven in-part by the growth and business customers with higher ARPU and overall economies of scale. Products and other gross margins for the second quarter were negative 53% compared to negative 45% the same period last year.

The decline is directly attributable to a write down charge of $400,000 related to some excess inventory that is not expected to be functional on the legacy network under T-Mobile. On an overall basis, total gross margins increased 63%, up from 62% in the prior year quarter. Now, on to operating expenses.

Operating expenses for the second quarter were $26.4 million up $3.5 million or 15% year-over-year. Sales and marketing expenses were $13.6 million or 29% of total revenue. This $2.5 million or 23% year-over-year increase was driven by the growth of marketing and channel development activities for Ooma Business.

Research and development expenses were $8.3 million or 18% of total revenue, up $400,000 or 4% year-over-year as we continue to develop and add new products and features. G&A expenses were $4.5 million or 10% of total revenue compared to $3.9 million for the prior year quarter.

This is due to an increase in professional services fees related to our international expansion effort. Net income for Q2 was $3.3 million, resulting in diluted earnings per share of $0.13, compared to a net income of $3.1 million and $0.13 per share in the prior year quarter.

Adjusted EBITDA earnings for the second quarter was $4.1 million, 9% of total revenue compared to $3.7 million and 9% in the prior year quarter. We ended Q2 with total cash and investments of $30 million with no debt.

Cash generated from operations for the second quarter of fiscal 2022 was $2.6 million compared to $2.5 million during the prior year quarter. This was our fifth consecutive quarter of positive cash flow from operations.

Notably, we achieved positive operating cash flow of $3 million in the first half of fiscal 2022 compared to cash used in operations of $300,000 in the first half of fiscal 2021. We ended the second quarter with 977 employees and contractors, up from 934 same quarter last year. Now onto our third quarter and full year fiscal 2022 guidance.

Again, our guidance is non-GAAP and has been adjusted for expenses such as stock based compensation and amortization of intangibles. We expect total revenue for the third quarter of fiscal 2022 to be in the range of $47.8 million to $48.5 million. We expect third quarter non-GAAP net income to be in the range of $2 million to $2.8 million.

Non-GAAP diluted earnings per share is expected to be between $0.08 to $0.11. We have assumed 23.6 million weighted average basic shares and 24.9 million weighted average diluted shares outstanding for Q3.

For our full year fiscal 2022 guidance we expect total revenue to be in the range of $188.5 million to $190 million, an increase from the previously issued guidance range of $185 million to $187 million. We now expect our non-GAAP net income for fiscal 2022 to be in the range of $10 million to $11.5 million.

This is an increase from our previously issued guidance range of $7.5 million to $9.5 million. Non-GAAP diluted earnings per share is expected to be in the range of $0.40 to $0.46. We have assumed $23.5 million weighted average basic shares and $25 million weighted average diluted shares outstanding for fiscal 2022.

With that, I will pass it back to Eric for some closing remarks. Eric..

Thank you. And first of all, Namrata I want to thank you for stepping into the CFO role these past few months. We've been in good hands and I really appreciate the extra effort you have made to get us through this transition period. .

Thank you, Eric. .

Summing up, our strong results for the first half of the year, combined with the many growth initiatives we have underway across the business, give us confidence as we look forward. We're pleased to increase our guidance once again for fiscal 2022 and look forward to Q3 and the balance of the fiscal year. Thank you. We will now take questions..

[Operator Instructions] Thank you, and your first question comes from the line of Matt Stotler from William Blair – I'm sorry. Matt Stotler from William Blair, your line is now open. .

Hi! This is Sharon [Inaudible] on behalf of Mike Latimore of Northland Capital Market. Congratulations on the great results. I have two questions for you guys, the first one is on the business churn rate. Has it improved our work in this quarter. And second question is, how is the pipeline business for the [inaudible]. Thank you..

I’m sorry, you’re a little bit hard to understand, but I think you asked how is the business churn rate and how is the pipeline for business? Is that the two questions?.

Yes, that's right. .

Terrific! The churn rate on business has been – you have to say the words the right way. It's been good. It's not been high. It's been – the churn rate’s been well under control and has improved from where it – you know from last year when it went up with the COVID times. So we're feeling pretty good about where we're at on that.

I think our overall churn rate as a company is around 10% and obviously business blends into that along with residential. But no, we're seeing – we’re doing well in that front. In terms of pipeline, a lot of our business on the Office side, selling to small business customers is not really pipeline based.

We tend to close customers in the month that we generate a dialogue with them.

But the pipeline on the enterprise side of our business continues to grow, as do the number of resellers and agents that we have representing us out in the field and so I don't think there's anything special to note there, other than things are in good shape and improving where we'd like to see them. .

Okay, thank you. .

Thank you. .

Thank you. Your next question comes from the line of Matthew Harrigan from Benchmark. Your line is now open. .

Congratulations on the numbers as well. I was just curious on the new business formation. There was an interesting study I guess from the University of Maryland. It really talked about the consumer basin start-ups.

It was supported by Shopify and to try really demand customer eligible UK app solutions, which is obviously something Ooma is a wheelhouse for.

Would you think that's an adequate characterization? I mean, it felt like your comp care is a little bit different from one of your very large competitors that recently reported it, and that company also sounded like they were really hell-bent on increasing the number of enterprise customers and we're really not all that energetic on the segment that you’re emphasizing? There seems to be – I apologize for the background noise.

.

Go ahead. .

I was just apologizing for the background noise but my other phone just rang. Go ahead, Eric. I'm sorry. .

Yeah, no. Hi Matthew! Gosh, I don't think it's a choose one, choose the other ones, that one is good. I mean as you know, we're trying to serve, both the small business segment and the larger of what we call enterprise segments with different solutions. We think the needs of each segment are different.

We think one size does not fit all and our vision of the small business customer is they care about getting a lot of powerful features. So they want them to be simple and easy to use, and they want them to be kind of just what they need and not a lot of complexity beyond that.

And we think with our Ooma Office and Ooma Pro Solutions we kind of hit the sweet spot for what they need you know. Those solutions are very powerful. They are absent untech or call center capabilities and integrations. They pretty much are a complete Ucaas solutions.

But with everything from mobile apps to e-fax and conferencing and video and call reporting and a whole bunch of other features, but nonetheless it's delivered in a way that a small business can really make the most out of it.

Most of our small business customers tell us they didn't realize they could get such a powerful solution and what they're searching away from is really much less capable. Usually, it's just a few phone lines and maybe a ring group or apps provided from a cable provider or a local telco.

So we think we've architected the complete solution with that small business customer, cost savings being another key driver of their decision making, along with simplicity and ease of use. And when we look at that segment, its 5 million plus businesses in North America, 1 to 20 employees.

I talked about a study at the end of my – a quarter or two ago that said that more than two-thirds of these businesses have yet to move to the kind of solution we offer. So we think it's a huge untapped opportunity.

That isn’t to say that enterprise isn’t also very interesting to us and also a great opportunity for growth, but there you know our strategy is more targeted. We're focused on certain verticals, we’re focused on customers who need, some special customization for their solution.

Our largest customer, which is over 25,000 seats today is actually a blend of these two platforms where we’re able to bring the power of each together for them in a way that really met their needs uniquely.

So we are just bullish on the market in general, and don’t really try to make a big distinction between the two, although it is certainly true that our heritage started at the small business level and most of our sales and marketing efforts today is still at that level as we build out our enterprise solution to be more and more capable. .

You know I probably should have framed the question a little bit better. I guess firstly, are you seeing a real change in the composition of your small enterprise, sorry small business customers coming on. Again, just looking at where the business activity formation in the U.S. has changed.

And again, I mean you made it clear in your opening remarks that you're making a lot of progress in the enterprise side. I probably – my question probably didn't reflect that.

But do you get the sense that some of your larger competitors are still neglectful of SMB and maybe even overly focused on the global 2000 if you would?.

Well, to take your second question first. I don't think anybody in our industry has been neglectful. Every player in the industry has their areas where they focus and where they target and I think we've brought more focus to the small business space than any anyone.

I also think our growth rates there are faster than others, and we're very excited about the potential for the segment. Now you asked, are things changing for us. I highlighted the change in my opening remarks, which is with the advances we've made with Office Pro, we're not just getting the one, two, five, 10 person businesses.

We're also getting the 20, 40, 50, 100 person businesses, because Office Pro has gotten pretty complete in what it can do. And so our mix is changing a little bit in that. I think we're getting or having more success at larger sized small businesses.

But no, we still get a lot of customers who take one or two seats and that's it, and are just getting started or just have of a very small business and want to as we say sound and look like a big business at a small business price, which is what we think Ooma Office is all about. .

Great! That’s your strength there..

Absolutely. .

Thank you. Your next question comes from the line of Matt Stotler from William Blair. Your line is now open. .

Yes, hi guys! Thank you for taking the questions. I guess first off, maybe one on ARPU. Obviously you know pretty strong growth on a year-over-year and sequential basis there. You noted that – I think it was almost 20% of office users now on Pro. Just that this is a pretty rapid expansion.

I think it was about 10% earlier this year, 5% last year, so clearly some rapid adoption in that front. Is that kind of the primary driver as you look at this kind of ARPU expansion and the growth you're seeing there.

Is there anything else that you can call out, whether it's – Connect obviously has some potentially solid ASPs and Contact Center as well, the enterprise.

Anything else to call out there in the ARPU front?.

I think you pretty much hit it. It's moving more of our customers up to Office Pro. It's also just mix and growth, because our ARPU numbers are blend of our entire business customer base, and as we grow on the business side, those customers actually have a higher revenue per user. So that blends in as well.

But no, I think you hit the nail in the head and that's why we're also excited. I talked to my opening remarks about doing the investments today to at some point in the future be able to offer even another Tier that goes beyond Office Pro, hopefully to drive a little bit more value and opportunity with our customer base. .

Got it! That's helpful. And then maybe just one more on the Contact Center opportunity. Obviously some at least one very large combination announcement of the competitor in the quarter, and you had a nice announcement on your side, the partner standpoint with UJET that you touched on.

Obviously it seems to be kind of more of a trend or bundle you see in Contact Centers, especially moving into kind of larger deals. Any thoughts on when you think ahead, medium to long term. How much of that you think is there's value a partner with how much of that you think you should bring internal over time.

We’d love to get your thoughts on that context and that opportunity and what fits best for Ooma?.

Sure. So yes, your right. We’ve announced a new partnership with UJET. We’re excited about UJET and what they're doing, They have a leading solution for particularly mobile based businesses where you want to in fact imbed an FDK so to speak into a mobile app and have your users contact you through that kind of means.

They also have a number of other features and capabilities and very strong security with their platform. We work together well with them and we're integrated with them now and we can sell our customer a combined solution on our paper so to speak, and they can do the same.

But in terms of our outlook, vis-a-vis contact center, we focus on Call Center today and we have a number of customers who use our call center capabilities and we think they are pretty strong. All the major features that you'd want to see in a call center capability, we have on our enterprise platform.

But we don't have plans today to extend that into Contact Center and omni-channel and some of the other more advanced things that are going on today. We think partnering with it is a very effective way for us to do it, and yes, so far that's been working well for us. .

Great! Thanks again. .

Thank you. Your next question comes from the line of Josh Nichols from B. Riley. Your line is now open, sir. .

Yeah, thanks for taking my question. And then Eric, clearly a lot of the momentum here headed into the second half. I kind of was curious if you could help.

How would you kind of rank orders some of the opportunities you have international expansion with your largest customer, growing reseller channel and Ooma Office Pro and what do you think the company's biggest opportunities are over the next six to 12 months?.

Yes. Well, as you know we're pretty transparent and we talked about four major areas for growth in my - I did in my prepared remarks, and really those are the areas that we're focused on today. We haven't yet seen a lot of impacts from the international expansion from our largest customer.

That has taken some time to roll out and particularly on their side and some things they need to do to make it happen. So, if you look at the next six, to nine months, I’m expecting some pretty significant developments from that.

And then you look across our business, growing resellers and channel partners, that's kind of steady execution related effort.

Resellers and channel partners need to get to know you and they need to have an experience with you and understand how you bring a unique capability in the market, and that's something I think we do well, and with our partnership now with AppSmart. AppSmart has about 5,000 technology advisors in their network.

That's a huge opportunity for us to target and get to know, but it will take time. So that's kind of a steady developing ramp for us.

With Ooma Enterprise, we have a strong growth plan in place, but there's always you know the Bluebird opportunity is there to land a very large customer, which for us at our size is still meaningful and we're always cultivating those kinds of opportunities and looking at what we might, what we might be able to achieve.

And then finally, just Office and Office Pro, and at some point here over the next quarters, a tier above Office Pro, the market is just so vast that it comes down to the amount of sales and marketing effort we can make and just driving the execution and the growth, and that's also something we've been doing for years, and are going to continue to do.

Each quarter we expanded it. In the last two quarters, we have not grown our team substantially, and we would like to accelerate our hiring and move faster and we've got programs in place to do that. But I think all of them are good drivers for us and in reasons why I said at the end of the prepared remarks that we have confidence as we look forward. .

Thanks. And then just as a follow-up, you hit on it really briefly. I'm not sure how much you're able to divulge this moment.

But anything you can kind of talk about this new higher tier offering that you're looking to do that's even a notch above Office Pro as far as when it might be released to or who you really trying to target for that market in terms of features and functionality?.

Not much more. I can really say at this point. We hope to have it out by this time next year, if not sooner than that in earlier next year. And it will bring added features that go beyond what we do today with Office Pro and there'll be things that some customers, appeal to some customers and not others.

Generally think there will be future and _ that appealed a little bit larger customers, and it will just fit it again to our strategy of expanding our addressable market and growing our ARPU. We also put us in a position of having a good, better, best offering.

And I don't know, but I know a lot of times when customers look at that, they kind of gravitate to the middle a little bit and if that gravitates a little bit more to Office Pro, which will be in the middle now, I think that'd be a good thing for us. But no, we'll get more color on this in our next conference call and then at the end of the year. .

Thanks. And then last question for me is, I mean a lot of traction here, numerous reseller partnerships announced and it’s getting close to 50% of sales.

Is that expected to continue to take some significant share? How should we think about the sales allocation between direct versus indirect if we kind of think 12, 18 months out from now?.

Well, if you think 12 to 18 months out, I would like to see resellers and channel part have a higher percentage than where we're at today. We've nominally said for lack of a better estimate that we'd like to be around 50/50 with each channel and I don't see things stopping us from getting there.

Each quarter, you know we look at this metric, but in any particular quarter it isn't as instructed because it can bounce around a little bit based on just the nature of our business in the quarter. But I think from a steady longer term perspective you can see the growth.

I think a year ago we were about 37% of sales through channel and reseller partners. So you can see how we're moving up over the last 12 months. It's a big untapped opportunity for us, because it's not something we traditionally – it wasn’t in our heritage early on as a company as we were developing Ooma and it's just such a vast network of potential.

We've talked about one new relationship with AppSmart. AppSmart is one or may master agents in the channel today, and they alone, although they are one of the big ones, they alone can represent 5,000 advisors. So, you can get a sense of potential here as more people get to know us. .

Thanks. That’s it from me. .

Sure. .

Thank you. And your next question comes from the line of Brian Kinstlinger from Alliance Global Partners. Your line is now open. .

Hi! This is Jacob on for Brian. Thanks for taking my questions. The number of business subscribers choosing Ooma Office Pro is I think 45% this quarter and that’s roughly in line with the past few quarters.

Can we expect you to maintain the pace and how the recent offerings improved your ability to sell Ooma Office Pro?.

Well, you can certainly expect us to maintain the pace. When we launched Office Pro, we didn't know how far we could go with it, and we thought 20%, 25% of our new customers taking it would be a good result. So, we're thrilled that at 45%.

And I think accelerated some of our effort to also introduce it to our installed base, and I think that also helped drive the 17% or so that we said of our entire base that now take Ooma Office Pro.

So it's just a, it's for the one or two person company, often they aren't going to step up to this tier, but for companies that have a need for what's in Pro, it's a great value and a great opportunity.

Now with the Ooma Office Pros some of the biggest capabilities there are call recording, video meetings, voicemail transcription, I'm going to forget, there’s like a dozen things in it. But those are some of the big reasons that our customers adopt.

Also call blocking, which can help save a business from unwanted spam calls, which we all desperately want. So it's a great solution and I think it just fits right for the small business customer.

They get something they can operate themselves, customize, put their own greetings in, use the IVR, connect out of the office on the mobile apps that work terrific. Our mobile apps are very extensive today and just get what they need, and I think that's one reason why our churn is so well.

Even though we're serving small business customers, our churn, I don't think is any higher than what I see with others in the industry and so I think that's a testament to what Office is doing for our customers. So I hope that helps a little bit on what you're asking. .

Yeah, thank you..

No problem..

Thank you. [Operator Instructions] There are no further questions at this time. I would like to turn the call over back to Eric Stang, CEO of Ooma Inc. for closing remarks. .

Thank you and thanks everyone for listening today. Everyone on the Ooma team is working hard and we're pleased with our results this past quarter, but we're also excited as we look forward and you know I really appreciate everyone's support and confidence as we build the business. Well, thank you everyone.

Good bye!.

This concludes today's conference call. Thank you for participating. You may now disconnect..