It is a bull market, stocks are close to all-time highs, and many investors still are in love with chasing initial public offerings (IPOs). Still, some IPOs turn out to not be that hot.
Ooma Inc. (NYSE: OOMA) has so far debuted in its trading as a dud. The cloud-based telephony and connected services provider priced its initial public offering of 5,000,000 shares of common stock at a price of $13.00 per share.
The good news here is that all of the shares were sold by Ooma. The bad news is that the IPO was expected to price between $16.00 and $18.00 per share.
Credit Suisse, BofA Merrill Lynch and JMP Securities were Ooma’s joint book-running managers; William Blair & Company and Wunderlich Securities were listed as Ooma’s co-managers. Ooma also granted the underwriters a 30-day option to purchase up to an additional 750,000 shares of common stock.
Ooma claims to have grown its “core users” from approximately 174,000 as of January 31, 2011 to approximately 678,000 as of April 30, 2015/ Those “core” users are the number of home user accounts, office user extensions, and standalone Business Promoter accounts. The company also claims to have one of the lowest customer churn rates in the industry of 0.55% for the 12-month period ending on April 30, 2015.
Ooma also represented in its SEC filings that it had an additional 1.5 million and 1.6 million Talkatone monthly active users as of January 31, 2015 and April 30, 2015, respectively. Total revenue was $39.2 million in 2013, $53.7 million in 2014 and $72.2 million in fiscal 2015. Unfortunately, Ooma has also had net losses of -$3.7 million, -$2.0 million and -$6.4 million in fiscal 2013, fiscal 2014 and fiscal 2015, respectively.
Ooma’s IPO opened up at $12.10 on Friday, and after 2:30 p.m. Eastern Time the stock had traded only 2.9 million shares and the stock was at $10.95 against an intraday range of $10.75 to $12.44.