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Smart Connected Services March 10, 2016

Smart Connected Servicess2.q4cdn.com/233611324/files/doc_presentations/... · 3/10/2016  · Source: FCC Wireline Retail Local Telephone Service Connections 12/31/2013, CRTC Communications

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Page 1: Smart Connected Servicess2.q4cdn.com/233611324/files/doc_presentations/... · 3/10/2016  · Source: FCC Wireline Retail Local Telephone Service Connections 12/31/2013, CRTC Communications

Smart Connected Services

M a r c h 1 0 , 2 0 1 6

Page 2: Smart Connected Servicess2.q4cdn.com/233611324/files/doc_presentations/... · 3/10/2016  · Source: FCC Wireline Retail Local Telephone Service Connections 12/31/2013, CRTC Communications

2CONFIDENTIAL AND PROPRIETARY |

Safe Harbor StatementThis presentation contains forward-looking statements. In particular, statements regarding future economic performance, finances, and expectations and objectives of management constitute forward-looking statements. Forward-looking statements can be identified by the fact that they do not relate strictly to historical facts and generally contain words such as "believes," "expects," "may," "will," "should," "seeks," "approximately," "intends," "plans," "estimates," "anticipates," and other expressions that are predictions of or indicate future events and trends and that do not relate to historical matters. Although the forward-looking statements contained in this presentation are based upon information available at the time the statements are made and reflect management's good faith beliefs, forward-looking statements inherently involve known and unknown risks, uncertainties and other factors, which may cause the actual results, performance or achievements to differ materially from anticipated future results. Important factors that could cause actual results to differ materially from expectations include, among others: inability to attract new customers on a cost-effective basis; our inability to retain customers; intense competition; our reliance on retailers and reseller partnerships to sell our products; our reliance on vendors to manufacture the on-premise appliances and end-point devices we sell; our reliance on third parties for our network connectivity and co-location facilities; our reliance on third parties for some of our software development, quality assurance and operations; our reliance on third parties to provide the majority of our customer service and support representatives; our limited operating history; and interruptions to our service. You should not place undue reliance on these forward-looking statements, which speak only as of the date hereof. We do not undertake to update or revise any forward-looking statements after they are made, whether as a result of new information, future events, or otherwise, except as required by applicable law.

The forward-looking statements contained in this presentation are also subject to other risks and uncertainties, including those more fully described in our filings with the Securities and Exchange Commission, including the risk factors contained in our final prospectus filed with the SEC on July 17, 2015. The forward-looking statements in this presentation are based on information available to Ooma as of the date hereof, and Ooma disclaims any obligation to update any forward-looking statements, except as required by law.

Page 3: Smart Connected Servicess2.q4cdn.com/233611324/files/doc_presentations/... · 3/10/2016  · Source: FCC Wireline Retail Local Telephone Service Connections 12/31/2013, CRTC Communications

3CONFIDENTIAL AND PROPRIETARY |

Investment Highlights

Massive Connected Services Opportunity

Unique Hybrid SaaS Platform Solution

Disruptive Cloud Communications and Other Connected Services

Predictable SaaS Subscription

Business/Financial Model

Efficient Integrated Go to Market Strategy

$54M

$72M

$89M

FY14 FY15 FY16

Revenue

Year End January 31st

1: Annual Net Dollar Subscription Retention Rate is the product of our core user annual retention rate and year-over-year change in subscription revenue per core user2: Core users include home user accounts, office user extensions, and standalone Business Promoter accounts

645K

800K

Core Users

F’15 F’16

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4CONFIDENTIAL AND PROPRIETARY |

Mega Trends Drive Our Opportunity

“Traditional methods for voice are ripe for replacement.” - Macquarie

Cloud Communications

“SMBs are expanding the SaaS market opportunity for vendors.” - JPMorgan

SMB SaaS

“The Internet of Things represents huge potential … need for more … systems to deploy, manage

and make use of … devices.” - IDC

IoT

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5CONFIDENTIAL AND PROPRIETARY |

Massive Market Opportunity

2.1B Users Worldwide

Home

Business31.5M Businessesin North America

(Up to 20 Employees)

82.8M Home Lines in North

America

Mobile

$15

$14

$6

$35B1

Communications

Source: U.S. Census, 2012 Non-employer Statistics; 2011 County Business Patterns Industry Canada, Key Small Business Statistics; Statistics Canada – Self Employment Historical Summary; IDC, U.S. Consumer Landline Voice Services 2014-2018 Forecast; Infonetics Research, VoLTE and OTT Mobile VoIP Services and Subscribers 6/23/14

Productivity

Automation

Infrastructure

AdditionalConnected

ServicesOpportunity

1: At Ooma’s Pricing

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6CONFIDENTIAL AND PROPRIETARY |

Unique Hybrid SaaS Connected Services Platform

Portal

Network

AppAppliance

Multi-Tenant SaaS Platform

Linux Based Appliance, Router, USB,DECT Radio

Mobile Alerts and Control

Connected to Many Endpoint Devices

User Configurable Services

Integrated, Managed Platform Enabling Both

Communications and Other Connected Services

Page 7: Smart Connected Servicess2.q4cdn.com/233611324/files/doc_presentations/... · 3/10/2016  · Source: FCC Wireline Retail Local Telephone Service Connections 12/31/2013, CRTC Communications

7CONFIDENTIAL AND PROPRIETARY |

Disruptive CloudCommunications Opportunity

Source: FCC Wireline Retail Local Telephone Service Connections 12/31/2013, CRTC Communications Monitoring Report 2014, IDC; U.S. Consumer Landline

Voice Services 2014-2018 Forecast

64M Business Lines in

North America

83%Traditional

17%Internet/

Cloud

Business

29%CAGR1

50%Traditional

50%Internet/

Cloud

83M Home Lines in

North America

Home

11%CAGR1

We Target Communications to Drive

Adoption of the Ooma Platform

1: 2010-2013

Page 8: Smart Connected Servicess2.q4cdn.com/233611324/files/doc_presentations/... · 3/10/2016  · Source: FCC Wireline Retail Local Telephone Service Connections 12/31/2013, CRTC Communications

8CONFIDENTIAL AND PROPRIETARY |

Ooma Services for Business and Home

*Coming in 2015

Home services ranking by the readers of a leading consumer research publication.

Ranked #1 for 2 years in a row

• Virtual Receptionist

• Music-on-Hold

• Voicemail

• eFax

• Extension Dialing

• Conferencing

• Call Forwarding

• Ring Groups

Business Services

And More!

Analog Phones IP Phones* Mobile Phones

OomaOffice

Ranked #1 for 5 years in a row

OomaTelo

HomeServices

• Unlimited US Calling

• Voicemail

• Multi-ring

• Ring Groups

• Blacklisting

• 911 Alerts

• Instant 2nd Line

• Google Voice Extensions

And More!

Wireless/ Bluetooth

DECT Headset

Consumer Research Leading Publication

Page 9: Smart Connected Servicess2.q4cdn.com/233611324/files/doc_presentations/... · 3/10/2016  · Source: FCC Wireline Retail Local Telephone Service Connections 12/31/2013, CRTC Communications

9CONFIDENTIAL AND PROPRIETARY |

Leading Mobile Solutions

Ooma(Home)

Ooma(Business)

• Full Featured, Integrated User

Experience

• Pure Voice HD Call Quality

Mobile for Office/Home

Talkatone

By Ooma

• Powerful Advertising Based

Business Model

• Extends Ooma’s Customer Reach

Mobile for Everyone

• Free Calling and Texting

• >1.5M Users and Growing Quickly

Page 10: Smart Connected Servicess2.q4cdn.com/233611324/files/doc_presentations/... · 3/10/2016  · Source: FCC Wireline Retail Local Telephone Service Connections 12/31/2013, CRTC Communications

10CONFIDENTIAL AND PROPRIETARY |

PureVoiceTM Voice Quality

Ooma

PureVoiceTM

• Full Router/QoS

• Advanced Codec

• Adaptive Redundancy

• HD Voice

• Encryption

“Clear and Intelligible Despite Internet

Congestion”

Adaptive Redundancy

Up to 4x Deep

• Smaller

Packet Size

• 10x More

Complex

Codec

40%

10%

3-5%

% Packet Loss

“Unintelligible”

“Artifacts inVoice”

Competitors

Overcoming Internet Congestion

Page 11: Smart Connected Servicess2.q4cdn.com/233611324/files/doc_presentations/... · 3/10/2016  · Source: FCC Wireline Retail Local Telephone Service Connections 12/31/2013, CRTC Communications

11CONFIDENTIAL AND PROPRIETARY |

Compelling Customer Value

1: For 5 extensions, minimum 3 lines, 1 phone number

2: After one-time purchase and monthly taxes/fees

Starts as Low as $19.98/mo2

Sample Savings vs. $200 Typical Monthly Bill1

Business

$4,323

$2,882

$1,191

3 Years

2 Years

1 Year

$1,146

$714

$282

3 Years

2 Years

1 Year

Free for Basic Service2

Sample Savings vs. $40 Typical Monthly Bill

Home

>$750m Saved for Ooma Customers!

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12CONFIDENTIAL AND PROPRIETARY |

Why We Win

Powerful Hybrid SaaS

Platform

IntegratedMobile Solutions

Unique New Services

Breakthrough Voice Quality

Compelling Customer Value

OomaTraditional Providers

CloudProviders

Page 13: Smart Connected Servicess2.q4cdn.com/233611324/files/doc_presentations/... · 3/10/2016  · Source: FCC Wireline Retail Local Telephone Service Connections 12/31/2013, CRTC Communications

13CONFIDENTIAL AND PROPRIETARY |

Communications

Business Marketing & Promotion

CustomerRelationship

Management

ContactCenter

…and more

Connected Services - Productivity

• Driving New Customer Calls to

Small Businesses

• Core Technology Increases Web

Presence So Local Businesses Get

Noticed

• Pay per Lead Model

• Integrated in Ooma Office and

also Serving Standalone Businesses

HomeAutomation

NetworkingInfrastructure

Business Promoter: Lead Generation Services for Small Businesses

Page 14: Smart Connected Servicess2.q4cdn.com/233611324/files/doc_presentations/... · 3/10/2016  · Source: FCC Wireline Retail Local Telephone Service Connections 12/31/2013, CRTC Communications

14CONFIDENTIAL AND PROPRIETARY |

Communications

NetworkingInfrastructure

Connected Services - Automation

BusinessProductivity

Security & Monitoring

HomeControl

Connected Home / IoT

…and more Connected Home/IoT

Partnerships

Nest

Today

Home Monitoring

Future

Door

Sensor

Water

Sensor

Motion

Sensor

Window

Sensor

Next

…(More)

Amazon Echo Philips Hue (More)

Page 15: Smart Connected Servicess2.q4cdn.com/233611324/files/doc_presentations/... · 3/10/2016  · Source: FCC Wireline Retail Local Telephone Service Connections 12/31/2013, CRTC Communications

15CONFIDENTIAL AND PROPRIETARY |

Driving Adoption and Monetization of the Platform

More IoT Partnerships in Development

Strengthen Ooma Brand

Awareness

Differentiate with Unique

Features

Increase Ooma Retail

Presence and Customer

Adoption

Monetize via Increased

Premier Take Rate

Security and Peace of Mind

Never Before Possible

+

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16CONFIDENTIAL AND PROPRIETARY |

Integrated Growth Strategy

TV / Traditional Media

• Broad Reach

• Low Cost

• Builds Brand Image

Efficient Marketing

Word of Mouth

85% Net PromoterScore1

Online

Targeted Campaigns

• Directly

• Through Retailers

1: PC Magazine, 2014, for Ooma’s Small Business Solution

Cost-Effective Sales

Leading Retailers

Direct Sales

Resellers

Digital Agencies

Page 17: Smart Connected Servicess2.q4cdn.com/233611324/files/doc_presentations/... · 3/10/2016  · Source: FCC Wireline Retail Local Telephone Service Connections 12/31/2013, CRTC Communications

17CONFIDENTIAL AND PROPRIETARY |

Investment Highlights

Massive Connected Services Opportunity

Unique Hybrid SaaS Platform Solution

Disruptive Cloud Communications and Other Connected Services

Predictable SaaS Subscription Business/Financial Model

Efficient Integrated Go to Market Strategy

Page 18: Smart Connected Servicess2.q4cdn.com/233611324/files/doc_presentations/... · 3/10/2016  · Source: FCC Wireline Retail Local Telephone Service Connections 12/31/2013, CRTC Communications

Financial Overview

Page 19: Smart Connected Servicess2.q4cdn.com/233611324/files/doc_presentations/... · 3/10/2016  · Source: FCC Wireline Retail Local Telephone Service Connections 12/31/2013, CRTC Communications

19CONFIDENTIAL AND PROPRIETARY |

$15.1$20.9

$24.3

Fiscal 2014 Fiscal 2015 Fiscal 2016 Q4'14 Q4'15 Q4'16

Strong Revenue Growth

Revenue$ Millions

$53.7

$72.2

$88.8

Note: Fiscal Year Ends January 31

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20CONFIDENTIAL AND PROPRIETARY |

Expanding Subscription & Services Revenue

Product/Other

Subscription/Services

Total Revenue$ Millions

FY14 FY15 FY16 Q4'15 Q4'16

$89

$54

$72

34%

25%

18%

66%

75%

82%

$20.9 $24.3

76% 85%

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21CONFIDENTIAL AND PROPRIETARY |

Increasing Gross Margin

41%

49%

54%

47%

55%55%

66% 66%68% 67%

FY14 FY15 FY16 Q4'15 Q4'16

Gross Margin% Revenue

• Scale Efficiencies

• Upselling Premium

Services

• Introduction of New

Services

Growth Drivers

Subscription/Services

Total

Long-Term Target

65%

70%

75%

80%

Low High

+13 pts

Page 22: Smart Connected Servicess2.q4cdn.com/233611324/files/doc_presentations/... · 3/10/2016  · Source: FCC Wireline Retail Local Telephone Service Connections 12/31/2013, CRTC Communications

22CONFIDENTIAL AND PROPRIETARY |

Strong Core User Growth

Q4'15 Q4'16

645,000

800,000

Core Users

Note: Core users include home user accounts, office user extensions, and standalone Business Promoter accounts

42%

58%

46%

54%

Premium Users

Basic Users

$8.00 $8.01

Q4'15 Q4'16

Subscription/

Services Revenue$ Per Core User/Month

Page 23: Smart Connected Servicess2.q4cdn.com/233611324/files/doc_presentations/... · 3/10/2016  · Source: FCC Wireline Retail Local Telephone Service Connections 12/31/2013, CRTC Communications

23CONFIDENTIAL AND PROPRIETARY |

Long-Term Target Model (Non-GAAP)

% REVENUE FY14 FY15 FY16TARGETRANGE

Subscription/Services Gross Margin

55% 66% 66% 75% - 80%

Total

Gross Margin41% 49% 54% 65% - 70%

S&M 25% 31% 31% 20% - 25%

R&D 15% 17% 19% 12% - 15%

G&A 4% 8% 12% 6% - 8%

Adjusted EBITDA (1%) (5%) (7%) 20% - 25%

Note: Non-GAAP Excludes Amortization of Intangibles and FASB Topic 718 Charges Related to Stock Options

and Preferred Stock Warrants

Page 24: Smart Connected Servicess2.q4cdn.com/233611324/files/doc_presentations/... · 3/10/2016  · Source: FCC Wireline Retail Local Telephone Service Connections 12/31/2013, CRTC Communications

Thank you

Page 25: Smart Connected Servicess2.q4cdn.com/233611324/files/doc_presentations/... · 3/10/2016  · Source: FCC Wireline Retail Local Telephone Service Connections 12/31/2013, CRTC Communications

25CONFIDENTIAL AND PROPRIETARY |

GAAP to Non GAAP Reconciliation