I think there are many countries that have the same challenges as we see here with the sun setting of copper lines. And I do think AirDial could be a great product in several other countries. But again, that’s down the road for us at this point in time. So I hope that it’s a little speculative of what I just told you, and I have to be careful about that. But the one answer I can give is, I do expect as of now that our large customer will add more users next year than they have this year.
Josh Nichols: Thanks for the detail on that. And then I just want to touch a little bit — looking at the fourth quarter guide, you should be north of 8% EBITDA margin, it looks like around 8% for the full year. I know there’s been an increasing focus on profitability. It looks like cash flow and things have been moving upwards and to the right. As you complete some of these investments that you’ve made over this past year or so, do you expect that you’d be able to achieve some incremental EBITDA margin expansion next year given that’s kind of what is a bigger focus for most of the investor base nowadays.
Shig Hamamatsu: Yes. Josh, obviously, we are not ready to guide for next year. But I think the — directionally speaking, we want to start to show some level of additional operating leverage. And so, I think we’re happy with where we think we’re going to land about 8% for the year this year. And we certainly want to make next few years, the progress towards our long-term model, EBITDA margin. So I’ll just leave it at that and look forward to chatting with you about guidance next time we talk.
Josh Nichols: And then last question for me. I guess like it’s only been a couple of quarters since you launched AirDial, right? But you do have these new partnerships now. I think T-Mobile represents a pretty sizable opportunity, how long until you get a little bit better visibility into this? Do you think by the time you’re reporting fiscal 4Q earnings that you have that pretty dialed in? I’m just — or are you likely — it’s still too early and you’ve been taking a pretty conservative stance on this product offering. I’m just thinking about how long it will take to have a better handle for what this demand could translate to and how long it may take to actually get these units in sale to install?
Eric Stang: Yes. That’s a good question. I said one thing in opening remarks, which I’ll highlight again here. We are talking with other potential partners, strategic partners who would resell AirDial. If some of those partners come to fruition, I think that would be a nice boost for us as well. I think we’ll have a lot better visibility the next time we talk because we’ll be talking kind of end of February, early March. And we’ll have the momentum that comes with starting off the New Year already underway. So yes, I’m thinking that, that timing should allow us to be more definite for you.
Josh Nichols: Appreciate it. Thanks.
Eric Stang: You bet.
Operator: Our next question will come from Joe Goodwin with JMP Securities. Please go ahead.
Joe Goodwin: Great. Thank you so much for taking my question. I guess first on OnSIP, can you talk about any plans that you may have here in the works now that you’ve had the asset for a few months here and actually increasing the average pricing per seat for OnSIP user or if there’s plans to maybe lift some of those folks on to a or something like that?
Eric Stang: So it’s our longer-term plan to bring the OnSIP users over on to the office platform. But there’s no urgency to that really. What matters more is that we do it well and don’t cause any issues or challenges for customers. So we’re just moving slowly looking at what we need to do with the office platform to tick all the boxes for an OnSIP customer. And there is — there are some things that office already does better than the OnSIP platform. There are some things that the OnSIP platform has that are part of Office’s road map that we have not yet implemented. But we were going to do these things anyway as a business. So we’ve been trying to pull in some of that development effort. So our view right now is that, it will be an ongoing process with us — for us with OnSIP over 12 months or longer.
As long as an OnSIP customer is happy with the features they’ve got on OnSIP, we don’t really need to do much for them. When a customer wants to enable more features that maybe are in Office that aren’t yet in OnSIP, that’s when we would want to move people over, particularly because we don’t want to put development effort into the OnSIP platform. But right now, customers are very happy. They’ve got a good relationship with OnSIP. OnSIP is very good at customer support. And we’re going to treat the — it’s not that long a list of customers. It’s 5,000 total, but there’s an 80-20 in — on this a little bit in terms of the largest ones. And we’re going to approach those kind of one by one and see how to handle them. So — it’s a long way of saying we think we’ll be operating the OnSIP platform for the foreseeable future as we go through this process in a careful way.
Joe Goodwin: Got it. Okay. Great. Thank you for that. And then just last question for me. So you added around $20 million in ARR sequentially and of which is about $12 million coming from OnSIP. So $8 million organic and that’s a pretty good add just looking at the historical ARR adds. Can you just talk about what’s driving that incremental organic improvement? Is it all the international expansion with the large customer? Or any other things you want to call out?
Shig Hamamatsu: So yes, I mean it’s really the rest of the piece is really what you’re pointing out. International customers, user adds. It’s been pretty healthy the last two quarters, as you heard. And we continue to add office users. And as you also heard, again, half of the new customers that take office users are taking Premier tier services. So all these are contributing to the other pieces you’re pointing out.
Eric Stang: I mean I think you know we have several growth vectors as a company. And we’re fortunate to have that. And I think we’re seeing results in each of them, and that’s how we want to accelerate growth as we go forward.
Joe Goodwin: Got it. Thank you.
Operator: And we will take our next question from Matt Harrigan with Benchmark. Please go ahead.
Matthew Harrigan: Good afternoon. I was just curious on the hospitality side where you are showing nice sequential momentum. What are the prospects for landing a real elephant or even a mammoth deal, if you would? I mean, it feels like that’s a great vertical for you and you’re relatively nascent on the penetration at this point to say, at least. Thanks.
Eric Stang: Yes. So — the way we see that vertical operating is that, even though you can have relationships at a, call it, corporate level with a large provider of hospitality, you still often end up having to sell at the individual property level. It might be that some of these properties that are independently owned. It might just be that every property has a different situation and needs to work under its situation. Now we are — obviously, our drive there is for Ooma Enterprise, but we are also seeing AirDial in these locations that are significant as well. So we get a nice combination of opportunity in this vertical now. I’m not sure what you call Wolle Mammoth, but we do have hotels, for instance, that are hundreds of rooms that are now running on Ooma and then we have smaller ones as well.
We have ones in very major cities. We have ones in out of the way locations. And you can see by how I talked in my script about how we’ve increased the number of wins, so to speak, each quarter through this year that it’s a focus for us to keep doing that. We’ll be — yes, let me just say, there are something like 80,000 hotel properties across North America. And then there’s other kinds of managed living quarters that you can also look at for these kinds of solutions. So it’s a pretty big vertical. And I think that we’re starting to get recognized by — at a more corporate level by some of the larger players in the space. And that’s a good step forward for us. And I think that will help with getting us known across the opportunities. And that’s our biggest challenge.
