JMP reiterates Market Perform rating on Ooma stock after Q2 results

Ooma (NYSE:OOMA) reported second-quarter fiscal 2026 results that slightly surpassed analyst expectations, with non-GAAP EPS of $0.22 and revenue of $66.4 million, while adjusted EBITDA met consensus. Despite revenue growth slowing to 3% year-over-year, the communications technology company improved its net dollar subscription retention rate to 100%, leading to a 3% after-hours stock increase. JMP Securities maintained its Market Perform rating, as the stock's modest gain partially offsets a significant 13% year-to-date decline.

Analysis

Ooma, Inc. (OOMA) reported second-quarter fiscal 2026 results that modestly exceeded analyst expectations, though they revealed a continued slowdown in top-line growth. The company posted revenue of $66.4 million, beating the $65.7 million consensus, and non-GAAP EPS of $0.22, surpassing the $0.20 estimate, while its adjusted EBITDA of $7.2 million met projections. A key positive metric was the improvement in the annual net dollar subscription retention rate to 100% from 99% in the prior quarter, suggesting strong customer value and stability in its subscriber base. However, this was set against a backdrop of decelerating year-over-year revenue growth, which slowed to 3% from 4% in the previous quarter. The market reacted with a 3% after-hours stock price increase, but this gain does little to offset the stock's 13% year-to-date decline, a significant underperformance compared to the flat Russell 3000 index. JMP Securities' decision to maintain its "Market Perform" rating reflects this mixed picture: a solid operational quarter with positive earnings revisions from seven analysts, but constrained by decelerating revenue growth and challenging stock performance.

Key Decisions for Investors

• Investors may view the 100% net dollar retention rate and consistent earnings beats as signs of operational strength, potentially representing value given the stock's 13% year-to-date decline.
• Caution is warranted due to the deceleration in year-over-year revenue growth to 3%, a key metric that appears to be limiting the stock's upside and driving its underperformance against the broader market.
• Before taking a significant position, it would be prudent to monitor for a reversal of the slowing growth trend in upcoming quarters, as the current "Market Perform" rating suggests a neutral outlook until a catalyst for re-acceleration emerges.