HOLMDEL, N.J., Aug. 06, 2020 (GLOBE NEWSWIRE) -- Vonage Holdings Corp. (Nasdaq: VG), a global leader in cloud communications helping businesses accelerate their digital transformation, today announced results for the quarter ended June 30, 2020.
“We executed well in the second quarter and delivered strong financial results,” said Rory Read, Chief Executive Officer. “Business segment service revenues grew 18% year over year, driven by increasing demand for our Vonage Communications Platform. API Platform revenues grew 32%, with 163% year-over-year growth in high-value API services, an area where we will continue to invest to support future growth. API Platform revenue now accounts for 47% of our Business revenues up from 41% a year ago.
“Our results in unified communications and contact center applications grew 7%, in line with expectations, despite COVID-19 headwinds. And, we continue to see momentum with larger customers, signing 11 new seven-figure total contract value deals. Going forward, we have more work to do and are building a highly-scalable streamlined go-to-market machine for our Applications products. We will focus on those customer segments where our products best fit, and where we create the most value and capture a disproportionate share of the market.”
Second Quarter 2020 Business Segment Highlights
- Business segment revenues were $226 million. Business service revenues were $212 million, an 18% year-over-year increase
- API Platform revenues grew 32%
- High-Value API services revenues grew 163%, driven by strength in programmable video
- Service Revenues from Applications customers grew 7% year over year
- Service Revenues from Mid-market and Enterprise Applications customers (those with greater than $12,000 of ARR) grew 14%
- Service Revenues from Enterprise Applications customers (those with greater than $120,000 of ARR) grew 22%
- Business Service Revenue per Customer was $509 per month, up 16% from the year-ago quarter
- Business Service Revenue Churn improved to 0.9% from 1.0% in the year-ago quarter
Read added, “We are at the beginning of a huge market-wide communications revolution as companies all over the world accelerate their digital transformation journeys. To capitalize on this opportunity, we are undertaking a business optimization and alignment project over the next 90 days to determine how to best focus our resources and guide our operating plans and execution over the next 30 months. We will balance investing for strong growth with financial discipline and efficiency.”
Second Quarter 2020 Consumer Segment Results
- Consumer Revenues were $84 million, down 14% compared to the year-ago quarter
- Customer churn improved to 1.5% from 1.7%
- Average revenue per line ("ARPU") was $27.59, up $0.70
- Ended the quarter with approximately 1 million Consumer subscriber lines
- 93% of these customers are tenured over two years and 76% are tenured over five years
Consolidated Income and Balance Sheet
For the second quarter of 2020, Vonage reported consolidated revenues of $311 million, up from $298 million in the year-ago quarter. GAAP net loss was $8 million, or ($0.03) per share, versus a net income of $5 million in the prior-year period, or $0.02 per share. Second quarter adjusted net income(1) was $10 million or $0.04 per share, a decrease from $20 million or $0.08 per share in the prior-year period.
For the second quarter, the Company generated Adjusted EBITDA(2) of $42 million, and Adjusted EBITDA minus Capex(2) of $30 million. Net Cash from Operations was $36 million and Free Cash Flow(3) was $24 million for the quarter. As of June 30, 2020, the Company had a Net Debt to Last Twelve Months Adjusted EBITDA ratio of 3.2 times.
Update on Strategic Review of Consumer Segment
The Company plans to complete the review of the Consumer segment as part of its business optimization and alignment project. The project is expected to be completed in the fourth quarter of 2020.
Updated 2020 and Third Quarter Outlook
The Company is updating its 2020 guidance to reflect the strong second quarter, as well as an updated view on how COVID-19 and the current macroeconomic environment is affecting its business.
The Company is increasing its revenue guidance for 2020. For the full year, Vonage now expects the following, (based on constant currency as of August 2020):
- Consolidated revenues in the range of $1.215 billion to $1.230 billion
- Total Business Segment Revenues in the range of $885 million to $900 million (which includes approximately $21 million of USF revenues)
- Total Consumer Segment Revenues in the $330 million area (which includes approximately $41 million of USF revenues)
- Consolidated Adjusted EBITDA of between $150 to $155 million
- Capex in the $55 million area
For the third quarter of 2020, Vonage expects the following:
- Consolidated Revenues in the range of $307 million to $309 million
- Total Business Segment Revenues in the range of $226 million to $228 million (which includes approximately $6 million of USF revenues)
- Total Consumer Revenues in the $81 million area (which includes approximately $11 million of USF revenues)
- Consolidated Adjusted EBITDA in the $36 million area
About Vonage
Vonage (Nasdaq:VG), a global cloud communications leader, helps businesses accelerate their digital transformation. Vonage's Communications Platform is fully programmable and allows for the integration of Video, Voice, Chat, Messaging and Verification into existing products, workflows and systems. Vonage's fully programmable unified communications and contact center applications are built from the Vonage platform and enable companies to transform how they communicate and operate from the office or anywhere, providing enormous flexibility and ensuring business continuity.
Vonage Holdings Corp. is headquartered in New Jersey, with offices throughout the United States, Europe, Israel, Australia and Asia. To follow Vonage on Twitter, please visit twitter.com/vonage. To become a fan on Facebook, go to facebook.com/vonage. To subscribe on YouTube, visit youtube.com/vonage.
