– Income from Operations of $5 Million, Adjusted OIBDA of $37 Million
– Significant Enterprise traction, including the signing of a large Enterprise deal with a global real estate firm for more than 20,000 seats
– Repurchased 1.6 Million shares for $10 Million at an average price of $5.95
HOLMDEL, N.J., May 9, 2017 — Vonage Holdings Corp. (NYSE: VG), a leading provider of cloud communications for business, today announced results for the first quarter ended March 31, 2017.
“We are off to a solid start in 2017. Consolidated revenues were $243 million, a 7% year-over year increase and our eighth consecutive quarter of year-over-year consolidated revenue growth,” said Vonage CEO Alan Masarek. “We are transforming our Company to capitalize on the enormous cloud communications market opportunity. Our strategy remains rooted in continued investment in Vonage Business to drive faster long-term growth, leveraging the Company’s strategic assets to become the clear leader in business cloud communications.”
Mr. Masarek continued, “We are pleased with the progress we have made against our growth initiatives in Vonage Business, including accelerated traction in the enterprise segment, the build out of our multi-channel sales infrastructure, and strengthening our customer value proposition through the integration of UCaaS and CPaaS. At the same time, we continue to generate significant cash. In the first quarter, we used this strong cash flow to return value to our shareholders through opportunistic share repurchases, repurchasing 1.6 million shares for $10 million.”
For the first quarter of 2017, Vonage reported revenues of $243 million, a 7% increase from the year ago quarter. Income from Operations was $5 million, down from $19 million in the prior year. Adjusted Operating Income Before Depreciation and Amortization (“Adjusted OIBDA”)1 was $37 million, down from $42 million in the prior year. GAAP net income was $6 million or $0.03 per share, down from $8 million or $0.04 per share in the year ago quarter. Adjusted net income2 was $15 million or $0.07 per share, up from $12 million or $0.06 per share in the year ago quarter.
Business Segment Results
- Revenues at Vonage Business, which includes $26 million of Nexmo revenue, were $112 million, a 51% year-over-year increase on a GAAP basis.
- In April, Vonage signed the largest UCaaS deal in its history, with a global real estate firm. Vonage will deliver its UCaaS suite to more than 20,000 corporate seats across 550 company-owned locations. In addition, Vonage will partner with the customer’s Corporate Franchise team to offer its services to their 4,000 franchisee offices in the United States.
- Ending seats at Vonage Business were 659,000, up from 570,000 seats in the year ago quarter, a 16% increase.
- Vonage Business revenue churn was 1.4%, flat sequentially and up from 1.3% in the year ago quarter.
- The Vonage API Platform increased its registered developer count to 249,000, a sequential increase of 42,000.
- The Vonage API platform secured several enterprise wins in the first quarter, including: Microsoft, Gett, Lyft and Zoho.
Consumer Segment Results
- Revenues from Consumer Services were $132 million, down from $153 million in the prior year period, consistent with the Company’s expectations and its strategy to redeploy capital into the rapidly growing, Business Cloud Communications sector.
- Consumer customer churn was 2.2%, flat sequentially and from the prior year.
- Average revenue per line (“ARPU”) in Consumer Services was $26.10, flat sequentially and down from $26.68 in the year ago period.
- The Consumer segment ended the first quarter with 1.6 million subscriber lines.
Focus on Cloud Communications
On May 4th, the Company signed a definitive agreement to sell its hosted infrastructure services business, a mixed portfolio of products including Infrastructure as a Service, virtual desktop, hosted Microsoft Exchange and other managed services. The Company acquired this portfolio in the iCore acquisition and, after operating this business for the last year and a half, determined it is not core to its strategy. The Company expects to close this transaction at the end of May.
Vonage continues to execute on its strategy to develop innovative technologies and to protect its valuable intellectual property. The Company was granted seven new patents in the first quarter and now owns 155 U.S. patents, with more than 150 U.S. patent applications pending, along with many foreign patents and pending applications in jurisdictions worldwide.
In the first quarter, Vonage repurchased 1.6 million shares of stock for $10 million at an average price of $5.95 under its current four-year $100 million program. Since beginning its repurchase programs in August 2012, the Company has repurchased 57.2 million shares for $191 million at a highly accretive average price of $3.33.
The Company is adjusting its revenue guidance solely to reflect the divestiture of the hosted infrastructure services business. Vonage now expects 2017 consolidated revenues to be between $966 million and $981 million. Within this, the Company expects Vonage Business revenues, which include both UCaaS and CPaaS, to be in the range of $483 million to $489 million, which takes into account approximately $4 million of anticipated revenue from the divested business for the period from the end of May through the end of December.
Conference Call and Webcast
Management will host a conference call to discuss the first quarter 2017 results and other matters on Tuesday, May 9, 2017 at 8:30 AM Eastern Time. To participate, please dial (877) 359-9508 approximately 10 minutes prior to the call. International callers should dial (224) 357-2393.
A webcast will be available through Vonage’s Investor Relations website at http://ir.vonage.com. A replay of the call and webcast will be available shortly after the conclusion of the call and may be accessed through Vonage’s Investor Relations website at http://ir.vonage.com or by dialing (855) 859-2056. International callers should dial (404) 537-3406. The replay passcode is 5291957
- This is a non-GAAP financial measure. Refer below to Table 3 for a reconciliation to GAAP income from operations.
- This is a non-GAAP financial measure. Refer below to Table 4 for a reconciliation to GAAP net income.