Friday, January 22, 2016

Faruqi & Faruqi Alert: Ooma, Inc.

Faruqi & Faruqi, LLP, a leading national securities law firm, reminds investors in Ooma, Inc. (“Ooma” or the “Company”) (NYSE:OOMA) of federal securities class action lawsuit filed against the Company, certain officers, shareholders controlling over 56% of the Company’s shares and the Underwriters of the Company’s initial public offering (the “IPO”).
The lawsuit has been filed in the Superior Court of the State of California, County of San Mateo on behalf of all those who purchased Ooma common stock in or traceable to the Company’s July 17, 2015 IPO (the “Class Period”).  The case, Barnett v. Ooma, Inc., No. CIV536959 was filed on January 14, 2016.
The lawsuit focuses on whether the Company and its executives violated federal securities laws by failing to disclose material information in the Company’s Registration Statement and Prospectus (the “Offering Documents”) filed in connection with the IPO.  Specifically, it is alleged that Ooma’s Registration Statement concealed: (i) that certain exceptionally large prior fiscal year sales to its largest outside reseller, emphasized in the Offering Documents to be a very significant Ooma partner, were not recurring or being replaced in the fiscal year leading into the IPO; (ii) Ooma’s customer churn rate, emphasized repeatedly throughout the Offering Documents as being at an industry low rate of 0.55%, had increased significantly as of the IPO as a result of customers having endured eight-hour service outages in April and May 2015; (iii) technological difficulties in the Company’s lead generation business were causing leads to get lost in the internet before reaching their intended targets, negatively impacting sales of that service and Ooma’s business; (iv) Ooma’s subscription revenue growth and operating and pretax profit margins were both decreasing; and (v) Ooma’s subscription retention rate was dropping and net losses were doubling on a year-over-year basis, as of the IPO.
As of the time of the filing of the complaint, the share price fell $6.44 per share from the $13 IPO to close at $6.56 per share, a 49.5% drop, on January 14, 2016.
Take Action
If you invested in in or traceable to the Company’s July 17, 2015 IPO and would like to discuss your legal rights, you can contact us by calling Richard Gonnello toll free at 877-247-4292 or at 212-983-9330 or by sending an e-mail to rgonnello@faruqilaw.comFaruqi & Faruqi, LLP also encourages anyone with information regarding Ooma’s conduct to contact the firm, including whistleblowers, former employees, shareholders and others.

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