Loss-Making Ooma, Inc. (NYSE:OOMA) Expected To Breakeven In The Medium-Term

With the business potentially at an important milestone, we thought we'd take a closer look at Ooma, Inc.'s (NYSE:OOMA) future prospects. Ooma, Inc. provides communications services and related technologies for businesses and consumers in the United States and Canada. On 31 January 2024, the US$220m market-cap company posted a loss of US$835k for its most recent financial year. The most pressing concern for investors is Ooma's path to profitability – when will it breakeven? We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.

See our latest analysis for Ooma

Consensus from 6 of the American Telecom analysts is that Ooma is on the verge of breakeven. They expect the company to post a final loss in 2026, before turning a profit of US$1.5m in 2027. Therefore, the company is expected to breakeven roughly 3 years from today. What rate will the company have to grow year-on-year in order to breakeven on this date? Using a line of best fit, we calculated an average annual growth rate of 45%, which is rather optimistic! If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

Given this is a high-level overview, we won’t go into details of Ooma's upcoming projects, however, bear in mind that typically a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.

One thing we’d like to point out is that The company has managed its capital prudently, with debt making up 20% of equity. This means that it has predominantly funded its operations from equity capital, and its low debt obligation reduces the risk around investing in the loss-making company.

Next Steps:

There are too many aspects of Ooma to cover in one brief article, but the key fundamentals for the company can all be found in one place – Ooma's company page on Simply Wall St. We've also compiled a list of essential factors you should look at:

1. Valuation: What is Ooma worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether Ooma is currently mispriced by the market.

2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Ooma’s board and the CEO’s background.

3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

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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.