Vonage Delivers Strong Second Quarter 2017 Results Highlighted by 44% Vonage Business GAAP Revenue Growth

HOLMDEL, N.J., Aug. 3, 2017 -- Vonage Holdings Corp. (NYSE: VG), a leading provider of business cloud communications, today announced results for the quarter ended June 30, 2017. Consolidated Results  "We had an outstanding second quarter, and we are pleased with the team's performance," said Alan Masarek, Vonage Chief Executive Officer. "We've taken bold steps to transform Vonage into a market leading business cloud communications company. Our value proposition is resonating well, and we are confident that our focus on delivering better business outcomes for our customers will lead to accelerated long-term growth." "Within Vonage Business, we continue to execute on our priorities to accelerate UCaaS revenue growth within the Mid-market and Enterprise segments, as well as drive strong revenue growth in CPaaS. We also continue to pull the right levers to optimize and extend the value of Consumer Services, highlighted by record low churn." For the second quarter of 2017, Vonage reported revenues of $252 million, an 8% increase from the year ago quarter. Income from Operations was $7 million, up from $5 million in the prior year. Adjusted Operating Income Before Depreciation and Amortization ("Adjusted OIBDA") ¹ was $41 million, up from $40 million in the prior year. GAAP net income was $5 million or $0.02 per share, up from $218 thousand or $0.00 per share in the year ago quarter. Adjusted net income ² was $15 million or $0.07 per share, up from $10 million or $0.05 per share in the year ago quarter. Business Segment Results

• Vonage Business revenues, which include $35 million of Nexmo revenues, were $124 million. Nexmo revenues include an incremental $3.9 millionas the Company determined it is required to report a portion of revenues on a gross rather than net basis. CPaaS organic revenue growth was 44%³.
• The Company continues to see strong traction from Enterprise customers and signed four Enterprise deals representing $30 million in total contract value in the second quarter.
• Ending seats at Vonage Business were 683,000, up from 592,000 seats in the year ago quarter, a 15% increase.
• Vonage Business revenue churn was 1.4%, flat sequentially and from the prior year.
• The Vonage API Platform increased its registered developers to 309,000, a sequential increase of 61,000, a record number of quarterly developer adds.

Consumer Segment Results

• Consumer Services revenues were $128 million in the second quarter of 2017 compared to $132 million in the first quarter of 2017. This represents the lowest sequential dollar revenue decline in 13 quarters.
• Consumer customer churn was a record reported low 1.9%.
• Average revenue per line ("ARPU") in Consumer Services was $26.33, up from $26.10 sequentially and down from $26.61 in the year ago period.
• The Consumer segment ended the second quarter with 1.6 million subscriber lines.

Patent Portfolio Vonage continues to execute on its strategy to develop innovative technologies and to protect its valuable intellectual property. The Company was granted 11 new patents in the second quarter and now has more than 160 U.S. patents. Guidance Update Vonage is updating its CPaaS revenue expectations to reflect the Company's requirement to report a portion of Nexmo revenues on a gross rather than net basis, as well as higher organic growth. The Company now expects 2017 Business revenues, which includes both UCaaS and CPaaS, to increase from prior guidance by $15 million, equating to a range of $498 million to $504 million. Corresponding total revenue guidance is likewise adjusted to between $981 million and $996 million. The Company reaffirmed 2017 Adjusted OIBDA guidance of at least $165 million. Conference Call and Webcast Management will host a conference call to discuss the second quarter 2017 results and other matters on Thursday, August 3, 2017 at 8:30 AM Eastern Time. To participate, please dial (866) 807-9684 approximately 10 minutes prior to the call. International callers should dial (412) 317-5415. 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 (877) 344-7529. International callers should dial (412) 317-0088. The replay passcode is 10110947.

1. This is a non-GAAP financial measure. Refer below to Table 3 for a reconciliation to GAAP income from operations.
2. This is a non-GAAP financial measure. Refer below to Table 4 for a reconciliation to GAAP net income.
3. We define organic growth as the increase in Business revenues after giving pro forma effect for the acquisition of Nexmo, the change in accounting treatment with respect to certain CPaaS revenues being recognized on a gross rather than net basis and the exclusion of one-time items. See Table 3 for reference.

More at http://ir.vonage.com/press-releases/2017/08-03-2017-130308022