Ooma’s recurring subscription and services operation accounted for more than 90% of fiscal second-quarter 2027 revenue, as acquisitions and continued growth in its business communications platform helped drive a significant increase in profitability.
Total revenue increased 25% year-over-year to $83.2 million.
Subscription and services revenue rose to $75.6 million from $61.1 million in the prior-year period and represented approximately 91% of total revenue.
The growing contribution from recurring services gives Ooma greater visibility into future revenue while reducing its dependence on hardware and other less predictable sales sources.
Growth during the quarter was driven primarily by Ooma Business, including contributions from the December 2025 acquisitions of FluentStream and Phone.com.
Those acquisitions expanded Ooma’s presence in cloud-based business communications and added additional customers, recurring subscription revenue and product capabilities to its platform.
Ooma provides cloud communications services to businesses and consumers, with its business operations increasingly becoming a larger part of the overall company.
The company’s business communications products are designed to provide organizations with cloud-based phone systems and related communications capabilities without requiring customers to maintain traditional on-premise telephony infrastructure.
The model generates recurring subscription revenue as customers pay for ongoing access to communications services.
That recurring structure became increasingly visible in the second quarter as subscription and services revenue reached $75.6 million.
Based on associated subscription and services costs of $22.7 million, the category generated approximately $52.9 million of gross profit during the quarter.
That represents a substantial contribution to Ooma’s overall economics and highlights the importance of the company’s growing recurring-revenue base.
The combination of revenue growth and improved operating leverage also produced significantly stronger profitability.
Adjusted EBITDA increased approximately 72% year-over-year to a record $12.4 million, compared with $7.2 million in the prior-year quarter.
Faster growth in adjusted EBITDA than revenue indicates Ooma converted a larger portion of incremental sales into operating profit.
Non-GAAP net income increased 58% to $10.2 million from $6.5 million.
GAAP net income more than doubled to $3 million from $1.3 million a year earlier.
GAAP diluted earnings per share increased to $0.10 compared with $0.04 in the prior-year period.
The profitability gains are particularly notable because Ooma has been integrating acquisitions while continuing to invest in expansion.
Acquisitions can initially create additional costs related to integration, technology consolidation, sales operations and other transition expenses.
As FluentStream and Phone.com become more fully integrated, Ooma may have opportunities to generate further efficiencies by combining infrastructure, eliminating overlapping expenses and cross-selling services across a larger customer base.
The acquisitions also give Ooma a broader position within the business communications market.
Cloud-based communications platforms are replacing traditional business phone systems as organizations move communications infrastructure toward software and subscription-based services.
For customers, cloud systems can provide greater flexibility, easier administration and access to communications tools across multiple locations and devices.
For providers such as Ooma, the model creates recurring revenue and potentially higher lifetime customer value.
The company’s 91% subscription and services revenue mix underscores how substantially Ooma has shifted toward that type of recurring business.
A larger recurring-revenue base can improve financial visibility because a significant portion of future sales comes from customers already using the company’s services.
It can also make revenue less dependent on individual equipment purchases or one-time transactions.
Ooma’s ability to generate approximately $52.9 million of subscription and services gross profit during the quarter demonstrates the scale of that recurring operation.
That gross profit funds sales and marketing, research and development, integration activities, and other corporate expenses while contributing to growing adjusted EBITDA.
The company is simultaneously working to reduce leverage following its recent acquisition activity.
Ooma ended the quarter with $47 million of debt outstanding.
Reducing that balance is an important part of the company’s post-acquisition financial strategy because lower debt can reduce interest expense and provide additional flexibility for future investments.
Strong recurring cash generation from subscription services could help support continued debt repayment while allowing Ooma to fund product development and business expansion.
The combination of acquisition-driven growth, organic expansion and improving profitability suggests that Ooma is beginning to realize benefits from its larger business communications platform.
FluentStream and Phone.com have increased the company’s scale while adding to a recurring revenue base that was already central to Ooma’s operating model.
At the same time, the company’s record $12.4 million of adjusted EBITDA indicates that growth is translating into improved earnings rather than simply increasing revenue.
The 72% increase in adjusted EBITDA substantially exceeded the 25% increase in total revenue.
That operating leverage helped drive the 58% increase in non-GAAP net income and more than doubled GAAP net income.
For Ooma, the next stage will involve continuing to integrate its acquisitions, expand its business communications customer base and maintain the profitability improvements achieved during the quarter.
The company’s increasing recurring-revenue concentration provides a more predictable foundation for that strategy.
With approximately 91% of fiscal second-quarter revenue coming from subscription and services, Ooma has become increasingly centered on ongoing communications relationships rather than one-time product sales.
The quarter therefore reflected both the scale and financial characteristics of Ooma’s evolving business model.
Revenue reached $83.2 million, subscription and services sales climbed to $75.6 million, adjusted EBITDA reached a record $12.4 million and GAAP net income increased to $3 million.
At the same time, the company continued paying down acquisition-related debt, ending the period with $47 million outstanding.
As Ooma expands further into business communications and integrates FluentStream and Phone.com, its growing recurring-revenue base could provide greater revenue visibility, stronger operating leverage, and additional cash flow to support debt reduction and future growth.
KEY QUOTE:
“We also achieved record adjusted EBITDA of $12.4 million in Q2 and reduced outstanding debt to $47 million at the end of Q2.”
Eric Stang, Chief Executive Officer of Ooma
