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Ooma (OOMA) Swings to Q3 Profit, Testing Bullish High-Growth Valuation Narrative

Simply Wall St · 2d ago

Ooma (OOMA) just posted Q3 2026 results with revenue of about $67.6 million and basic EPS of roughly $0.05, alongside net income excluding extra items of around $1.4 million, giving investors a fresh read on how the turnaround is holding up. The company has seen revenue move from about $65.1 million in Q3 2025 to $67.6 million in Q3 2026, while basic EPS shifted from approximately -$0.09 to $0.05 over the same window. This signals a cleaner earnings profile that puts the focus squarely on how sustainably margins can hold at these levels.

See our full analysis for Ooma.

With the latest quarter in the books, it is a good moment to pit these hard numbers against the more widely held narratives about Ooma, starting with what the community expects for growth, profitability, and the durability of this shift into the black.

See what the community is saying about Ooma

NYSE:OOMA Revenue & Expenses Breakdown as at Dec 2025
NYSE:OOMA Revenue & Expenses Breakdown as at Dec 2025

Profits Swing From -$9.7m LTM Loss To $2.2m Gain

  • On a trailing twelve month basis, Ooma moved from a net loss of about $9.7 million in Q3 2025 to a profit of roughly $2.2 million by Q3 2026, while revenue over the same window rose from about $253.4 million to $264.1 million.
  • Analysts with a bullish focus on earnings quality will point to this shift into profit as evidence that operating leverage is starting to work. However, the history of five year average earnings decline of about 5.8 percent means:
    • The recent $2.2 million of LTM profit is still modest against the revenue base of roughly $264.1 million, so the business has only a thin earnings cushion.
    • Any slowdown from the current 6.5 percent expected annual revenue growth could quickly show up in that thin profit line, which is exactly what more cautious investors worry about.

43.6 Percent EPS Growth Forecast Versus 6.5 Percent Revenue

  • Looking ahead, analysts expect earnings to grow about 43.6 percent per year and revenue around 6.5 percent per year, with margins projected to improve from roughly negative 0.6 percent today to about 8 percent in three years.
  • Bulls argue that expanding business focused and AI enabled services can drive this margin lift, and the recent numbers partly align with that view but also set a high bar:
    • The move from a trailing net loss of about $6.9 million in Q4 2025 to a $2.2 million profit by Q3 2026 backs the idea that higher margin business offerings are gaining traction.
    • At the same time, revenue growth running in the mid single digits and a 2 percent year over year decline in residential subscriptions underline the bearish concern that top line momentum may not be strong enough to comfortably deliver an 8 percent margin.
Over three years of expected double digit profit growth on mid single digit sales increases, some investors see a narrow path where execution needs to stay nearly perfect to justify optimism. 🐂 Ooma Bull Case

DCF Fair Value $38.93 Versus $10.58 Price

  • On valuation, the stock trades around $10.58 per share, which sits well below an estimated DCF fair value of roughly $38.93, while the trailing price to earnings ratio of about 128.7 times is far above peer and industry averages of roughly 9.7 times and 32 times.
  • Bears focus on that 128.7 times trailing multiple as a sign the market already prices in much of the growth story, and the current financial profile offers mixed support for that caution:
    • The LTM profit of about $2.2 million on $264.1 million of revenue means today’s earnings base is still small, so even modest disappointments could make the P E look even richer.
    • Yet, the roughly 72.8 percent gap between the $10.58 share price and the DCF fair value of $38.93 is what keeps more optimistic investors arguing that the market is not giving enough credit for the projected 43.6 percent annual earnings growth.
With the share price far below DCF fair value but trading on a premium P E, skeptics question whether growth can scale fast enough to close that gap. 🐻 Ooma Bear Case

Next Steps

To see how these results tie into long-term growth, risks, and valuation, check out the full range of community narratives for Ooma on Simply Wall St. Add the company to your watchlist or portfolio so you'll be alerted when the story evolves.

See the numbers differently? Use your own lens on Ooma’s results, shape a fresh take in minutes, and Do it your way.

A good starting point is our analysis highlighting 4 key rewards investors are optimistic about regarding Ooma.

See What Else Is Out There

Despite the sharp swing into profit, Ooma still relies on thin margins, modest top line growth, and a rich earnings multiple that leaves little room for error.

If you would rather target companies where valuation and cash flow expectations already look more favourable, use our these 903 undervalued stocks based on cash flows today to uncover ideas with stronger upside and less pressure for perfect execution reflected in the price.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.