IPO Report: Ooma (OOMA)

Francis Gaskins |

Ooma (OOMA) is a leading provider of innovative communications solutions and other connected services to small business, home and mobile users. The company is based in Palo Alto, CA.

Seven other companies are scheduled for the week of July 13.  The full IPO calendar is available at IPO Premium.

SEC Documents

Manager, Joint-managers: Credit Suisse, BofA Merrill Lynch
Co-managers: JMP Securities, William Blair, Wunderlich

End of lockup (180 days): Wednesday, January 13, 2016
End of 25-day quiet period: Tuesday, August 11, 2015

OOMA scheduled an $85 million IPO a market capitalization of $286 million at a price range midpoint of $17 for Friday, July 17, 2015 on NYSE.

OOMA IPO Summary

OOMA is a leading provider of innovative communications solutions and other connected services to small business, home and mobile users.

OOMA’s unique hybrid SaaS platform, consisting of its proprietary cloud, on-premise appliances, mobile applications and end-point devices, provides the connectivity and functionality that power its solutions.

OOMA’s communications solutions deliver its proprietary PureVoice HD voice quality, advanced features and integration with mobile devices at extremely competitive pricing and value.

OOMA IPO Valuation

Glossary

Accumulated deficit (mm)

.

.

-$55

     

Per share dilution

.

.

-$13.07

     
             

Valuation Ratios

Mrkt Cap (mm)

Price /Sls

Price /Erngs

Price /BkVlue

Price /TanBV

% offered in IPO

Ooma (OOMA)

$286

3.6

-18.3

4.3

4.3

30%

             

OOMA IPO Conclusion

Neutral

Q1 rev +22%

Subscriptions +43% (78% of rev)

Major competition, 50% gross profit %

Adj EBITDA -9.5%

P/E -18, indicating moderate cash burn relative to market cap

4.3 price to book

3.6 price to sales

OOMA Business

OOMA is a leading provider of innovative communications solutions and other connected services to small business, home and mobile users.

OOMA’s unique hybrid SaaS platform, consisting of its proprietary cloud, on-premise appliances, mobile applications and end-point devices, provides the connectivity and functionality that power its solutions.

OOMA’s communications solutions deliver its proprietary PureVoice HD voice quality, advanced features and integration with mobile devices at extremely competitive pricing and value.

OOMA’s platform helps create smart workplaces and homes by providing value-added communications and other connected services and by integrating end-point devices to enable the Internet of Things.

OOMA’s platform and solutions have the power to provide communications, productivity, automation, monitoring, safety, security and networking infrastructure applications to its users.

OOMA drives the adoption of its platform by providing communications solutions to the large and growing markets for small business, home and mobile users and then accelerate growth by offering new and innovative connected services to its user base.

OOMA’s small business and home customers adopt its platform by making a one-time purchase of one of its on-premise appliances, connecting the appliance to the internet, and activating subscription services, for which they primarily pay on a monthly basis.

OOMA believes it has achieved high levels of customer retention and loyalty by delivering exceptional quality and customer satisfaction.

Intellectual property

As of April 30, 2015, OOMA had four issued patents, eleven patent applications pending for examination in the U.S., and two patent applications pending for examination in foreign jurisdictions, both of which are related to U.S. applications. OOMA issued patents will expire between 2028 and 2032.

Competition

OOMA faces competition from a broad range of providers of communications solutions and other connected services for small business, home, and mobile users. Some of these competitors include:

 established communications providers, such as AT&T Inc., Comcast Corporation and Verizon Communications Inc. in the U.S., and Rogers Communications Inc. and others in Canada, that resell on-premise hardware, software and hosted solutions;

 other communications companies such as 8x8 Inc., magicJack VocalTec Ltd., RingCentral, Inc. and Vonage Holdings Corp.;

 companies such as Broadsoft, Inc. and Microsoft Corporation;

 traditional on-premise, hardware business communications providers such as Avaya Inc., Cisco Systems, Inc. and ShoreTel, Inc., any of which may now or in the future also host their solutions through the cloud, and their resellers;

mobile communications app companies providing “over-the-top” solutions, such as LINE Corporation, Pinger, Inc., Viber Media S.à.r.l. and WhatsApp, Inc.; and

other large internet companies, such as Google Inc., any of which might launch its own cloud-based business communications services or acquire other cloud-based business communications companies in the future.

5% shareholders pre-IPO

Entities affiliated with Worldview Technology Partners     56.31%

WI Harper INC Fund VI Ltd         5.96%

Eric B. Stang    7.65%

James Wei        56.67%            

Dividends

No dividends are planned.

Use of proceeds

OOMA expects to receive $76 million from its IPO and use it for the following:

in short- and intermediate-term interest-bearing obligations, investment-grade instruments, certificates of deposit or guaranteed obligations of the U.S. government, pending their use as described above. OOMA cannot predict whether the invested proceeds will yield a favorable return.

$0.9 million of the net proceeds from this offering, based upon the assumed initial public offering price of $17.00 per share (the midpoint of the estimated offering price range set forth on the cover page of this prospectus), may be paid to the holder of a warrant exercisable for 70,287 shares of OOMA’s Series Alpha convertible preferred stock, which may be exercised or settled in cash, net of the aggregate exercise price, upon the closing of this offering.

$10.7 million of the net proceeds from this offering to repay the outstanding principal and accrued interest on OOMA’s existing loans with Silicon Valley Bank, which is the balance as of April 30, 2015, (assuming such repayment takes place in August 2015). Such indebtedness is being used for general corporate purposes.

In addition, OOMA may use a portion of the net proceeds from this offering to expand OOMA’s current business through acquisitions or investments in other complementary strategic businesses, products or technologies. OOMA has no commitments with respect to any acquisitions at this time.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

Companies

Symbol Name Price Change % Volume
OOMA Ooma Inc. 9.25 0.15 1.65 39,392

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