B.Riley Reiterates Buy Rating on Ooma (OOMA)

B.Riley analyst Josh Nichols reiterated a Buy rating and $27.00 price target on Ooma (NYSE: OOMA).

The analyst comments "Buy-rated Ooma (OOMA, $27 PT) hosted its Investor Day on 9/29, where management sized AirDial's incremental revenue opportunity (+$100M) on par with Business UCaaS's own incremental contribution (+$100M), reinforcing the multi-engine growth story we outlined following the F2Q print. By our math, AirDial is only ~$20M of ARR (~7% of total ARR), so the bridge positions it as a second core franchise rather than an adjacency. The long-term model targets >$500M of revenue at a 20%–25% EBITDA margin within 3–4 years, implying a ~16%– 22% revenue CAGR from the FY26 (Jan) base of $274M and 500-1,000 bps of margin expansion from the 15% achieved in F2Q27. That equates to $100M–$125M of EBITDA (2.1x-2.6x FY27 EBITDA guidance) and $70M–$88M of FCF at management's ~70% conversion. The most consequential announcement, in our view, was Canadian Tier 1 carrier Telus as a new AirDial reseller, with ~300k lines at Telus Business Solutions alone, and go-live expected in F2H27 (Jan). Unlike most resellers, Telus owns the copper it is retiring and is expected to convert lines with its own technicians, which we believe removes the two gating factors on AirDial growth—lead generation and installation capacity. Every $10 of net monthly revenue per line equates to ~ $36M of annual revenue at full conversion, which would be nearly 2x today’s entire AirDial base. Management also provided its most detailed view yet of AirDial unit economics, including typical three-year contracts, ~60% of bookings through partners, and recurring gross margin targeted at or above the company's ~72% Non-GAAP subscription and services average. On AI, the new AI Productivity Agent Bundle ($15/month per account) launched with Pro Plus take rates for new customers nearly doubling in inside sales, before any marketing to the ~534K business UCaaS users (703K total business users). We believe the debate is now shifting from whether these engines exist to how fast they scale."

For an analyst ratings summary and ratings history on Ooma click here. For more ratings news on Ooma click here.

Shares of Ooma closed at $21.29 yesterday.

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