OOMA

Ooma is a slow-but-steady UCaaS operator that just crossed a real milestone: after four straight years of losses (FY22 −$1.75M through FY25 −$6.90M), FY2026 delivered $6.46M of GAAP net income on $274M revenue (+6.5% YoY). Cash generation is the real story — $27.7M operating cash flow against just $5.59M capex leaves ~$22M free cash flow, and management's own Adjusted EBITDA of $33.9M (12% of revenue) plus $29.2M non-GAAP net income show the underlying model is healthier than the 2.4% GAAP net margin suggests. Gross margin is a stable 61%, and the Business segment (Ooma Office/AirDial/Enterprise) grew subscription revenue 10%, offsetting a fading Residential base. On EV/EBITDA (~17x) and P/S (2.0x) the stock is reasonable, not cheap; the headline 84.7x P/E overstates expensiveness because GAAP earnings absorbed $1.6M acquisition and $1.5M litigation costs and were flattered by a $2.5M valuation-allowance release.

The hesitation is what funded the growth. In December 2025 Ooma bought FluentStream ($50.5M) and Phone.com ($22.6M), financed almost entirely with new term-loan debt — from zero debt at FY2025 to $57.9M outstanding, against only $20.1M of cash. That took liabilities/equity to 1.45x and pushed total liabilities up 110.6%. Current liabilities ($71.7M) now exceed current assets ($66.7M), leaving negative working capital, and the MD&A flags that the credit agreement 'imposes operating and financial restrictions.' Retained earnings remain deeply negative at −$134M. The company is essentially buying its way to faster growth in a competitive, low-switching-cost market where the 10-K concedes customers 'may terminate their subscriptions… without penalty' and revenue leans on price-sensitive SMBs.