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Vonage Announces First Quarter 2015 Results; Delivers Adjusted EBITDA of $38 Million, the Highest in 13 Quarters, and 49% Organic Revenue Growth at Vonage BusinessHOLMDEL, N.J., May 6, 2015 /PRNewswire/ -- Vonage Holdings Corp. (NYSE: VG), a leading provider of cloud communications services for consumers and businesses, today announced results for the first quarter ended March 31, 2015. This is the Company's first full quarter of results including Telesphere, a Vonage Company, which was acquired on December 15, 2014. First Quarter Consolidated Financial Results "We are off to a strong start in 2015. We delivered 49% year-over-year organic revenue growth at Vonage Business driven by the strong demand for our robust UCaaS product suite and ability to serve the full spectrum of the SMB market from 1 to 1,000 employees and more," said Alan Masarek, Chief Executive Officer of Vonage. "Our 28% year-over-year increase in consolidated adjusted EBITDA demonstrates the successful execution of our strategy to increase profitability in the Consumer business. This strong cash generation provides the strategic flexibility to invest in growth opportunities to drive long-term shareholder value." For the first quarter of 2015, Vonage reported revenue of $220 million compared to $221 million in the year ago quarter. Adjusted earnings before interest, taxes, depreciation and amortization1 ("adjusted EBITDA") for the first quarter were $38 million, the highest in 13 quarters. GAAP net income was $7 million or $0.04 per share, up from $5 million or $0.02 per share in the year ago quarter. Adjusted net income2 was $20 million or $0.10 per share, up from $13 million or $0.06 per share in the year ago quarter. Vonage Business Results
gUnify Acquisition The Company announced today that it signed a definitive agreement to acquire gUnify LLC, (pronounced "gee-unify") a cloud-based technology company whose middleware solution integrates the Company's cloud communications platform with today's most widely used SaaS business applications, including Google for Work, Zendesk, Salesforce's Sales Cloud, Clio, and other CRM solutions. With this functionality, Vonage can better address the needs of larger SMBs by enabling them to extend their unified communications to core business applications. gUnify is recognized as a leading integration technology within the BroadSoft ecosystem, which has more than 10 million unified communications lines. Terms of the acquisition were not disclosed. Consumer Results
Changes to Vonage's Consolidated Statement of Income and Summary Operating Data In view of the substantial evolution of the Company's business over the past year and a half, with UCaaS now accounting for a substantial and growing portion of overall revenues, the Company has updated its Consolidated Statement of Income and Summary Operating Data, also referred to as key performance indicators ("KPIs"), to provide greater visibility into the operating metrics of the business. The Company believes these changes will enable shareholders to better understand its operations. The key changes to the income statement are as follows:
The reclassifications are reflected in all periods presented and do not have any impact on income from operations, adjusted EBITDA or net income. The Company's updated KPIs provide more detail for each of the Consumer and Business operations. The KPI changes are as follows:
Patent Portfolio Vonage continues to execute on its strategy to develop and protect its valuable intellectual property. In the first quarter of 2015, the Company was granted seven new patents and now owns 83 U.S. patents, with nearly 250 U.S. patent applications pending, along with numerous foreign patents and pending applications in jurisdictions worldwide. Share Repurchase Vonage repurchased 2 million shares of stock for $8 million in the first quarter. Since beginning its repurchase programs in August of 2012, the Company has repurchased 47 million shares for $141 million at an average price of $3.02. The Company is now executing on a $100 million, four-year buyback program that began January 2, 2015. Updated Guidance The Company is updating its 2015 revenue guidance to include the impact of the SimpleSignal acquisition. Vonage expects total 2015 revenue to be in the range of $862 million to $877 million. The Company continues to believe it can grow 2015 Vonage Business revenue 40% on a pro forma, organic, basis, as if Telesphere and Simple Signal were owned for all of 2014 and 2015. The Company continues to expect adjusted EBITDA to be at least $135 million and capital expenditures to be approximately $30 million. This revenue and EBITDA outlook reflects the Company's disciplined approach to Consumer customer life-time value, and includes significant growth from and accelerated investment into Vonage Business as the Company continues to drive growth and scale its infrastructure in UCaaS. Conference Call and Webcast Management will host a webcast discussion of the quarter on Wednesday, May 6, 2015 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. The webcast will be broadcast live through Vonage's Investor Relations website at http://ir.vonage.com. Windows Media Player or RealPlayer is required to listen to this webcast. 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 30757820. (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.
About Vonage Vonage's portfolio of business products covers the full spectrum of small and medium business communications needs, serving single-person companies to those with more than 1000 employees spread over multiple locations. Vonage provides bring-your-own-broadband (BYOB) cloud products and those that offer carrier-grade reliability and Quality of Service (QoS) across BYOB service options and its private, national MPLS broadband network. For more information visit www.vonage.com Vonage Holdings Corp. is headquartered in Holmdel, New Jersey. Vonage® is a registered trademark of Vonage Marketing LLC, owned by Vonage America Inc. Use of Non-GAAP Financial Measures Adjusted EBITDA Vonage uses adjusted EBITDA as a principal indicator of the operating performance of its business. Vonage defines adjusted EBITDA as GAAP income (loss) from operations excluding depreciation and amortization, share-based expense, acquisition related costs, loss from discontinued operation, depreciation from discontinued operation, and net loss attributable to noncontrolling interest. Vonage believes that adjusted EBITDA permits a comparative assessment of its operating performance, relative to its performance based on its GAAP results, while isolating the effects of depreciation and amortization, which may vary from period to period without any correlation to underlying operating performance, of share-based expense, which is a non-cash expense that also varies from period to period, of one-time acquisition related costs, and of loss from discontinued operation, depreciation from discontinued operation, and net loss attributable to our noncontrolling interest, each of which relate to one time effects caused by the termination of our Brazilian joint venture. The Company provides information relating to its adjusted EBITDA so that investors have the same data that the Company employs in assessing its overall operations. The Company believes that trends in its adjusted EBITDA are valuable indicators of the operating performance of the Company on a consolidated basis and of its ability to produce operating cash flow to fund working capital needs, to service debt obligations, and to fund capital expenditures. Adjusted EBITDA less Capex Vonage uses adjusted EBITDA less Capex as an indicator of the operating performance of its business. The Company provides information relating to its adjusted EBITDA less Capex so that investors have the same data that the Company employs in assessing its overall operations. The Company believes that trends in its adjusted EBITDA less Capex are valuable indicators of the operating performance of the Company on a consolidated basis because they provide our investors with insight into current performance and period-to-period performance regarding the Company's ability to generate cash from continuing operations. Adjusted net income Vonage defines adjusted net income, as GAAP net income (loss) excluding amortization of acquisition-related intangible assets, acquisition-related costs, and income tax expense. The Company has excluded amortization of acquisition-related intangible assets, acquisition-related costs, and income tax expense from its net income (loss). The Company believes that excluding these items will assist investors in evaluating the Company's operating performance and in better understanding its results of operations as income tax expense does not reflect the taxes that we pay during the periods reported due to the availability of significant net operating losses, amortization of acquisition-related intangible assets which is a non-cash item, and one-time acquisition-related costs. Net debt (cash) Vonage defines net debt (cash) as the current maturities of capital lease obligations, current portion of notes payable, notes payable and indebtedness under revolving credit facility, net of current maturities, and capital lease obligations, net of current maturities, less unrestricted cash and marketable securities. Vonage uses net debt (cash) as a measure of assessing leverage, as it reflects the gross debt under the Company's credit agreements and capital leases less cash available to repay such amounts. The Company believes that net cash is also a factor that third parties consider in valuing the Company. Free cash flow Vonage defines free cash flow as net cash provided by operating activities minus capital expenditures and acquisition and development of software assets. Vonage considers free cash flow to be a liquidity measure that provides useful information to management about the amount of cash generated by the business that, after the acquisition of equipment and software, can be used by Vonage for debt service and strategic opportunities. Free cash flow is not a measure of cash available for discretionary expenditures since the Company has certain non-discretionary obligations such as debt service that are not deducted from the measure. The non-GAAP financial measures used by Vonage may not be directly comparable to similarly titled measures reported by other companies due to differences in accounting policies and items excluded or included in the adjustments, which limits its usefulness as a comparative measure. These non-GAAP financial measures should be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for, or superior to, GAAP results. Safe Harbor Statement This press release contains forward-looking statements including statements about potential acquisitions, acquisition integration, growth priorities or plans, new products and related investment, revenues, adjusted EBITDA, churn, seats, lines or accounts, average revenue per user, cost of telephony services, the Company's share repurchase plan, capital expenditures, and, other statements that are not historical facts or information constitute forward-looking statements for purposes of the safe harbor provisions under The Private Securities Litigation Reform Act of 1995. In addition, other statements in this press release that are not historical facts or information may be forward-looking statements. The forward-looking statements in this release are based on information available at the time the statements are made and/or management's belief as of that time with respect to future events and involve risks and uncertainties that could cause actual results and outcomes to be materially different. Important factors that could cause such differences include, but are not limited to: the competition we face; our ability to adapt to rapid changes in the market for voice, messaging, and communications services; our ability to retain customers and attract new customers; the expansion of competition in the unified communications market; the impact of fluctuations in economic conditions, particularly on our small and medium business customers; security breaches and other compromises of information security; risks related to the acquisition or integration of businesses, including the risks related to the acquisition of Simple Signal, Telesphere, and Vocalocity; the risk associated with developing and maintaining effective distribution channels; our ability to establish and expand strategic alliances; governmental regulation and taxes in our international operations; our ability to obtain or maintain relevant intellectual property licenses; intellectual property and other litigation that have been and may be brought against us; failure to protect our trademarks and internally developed software; obligations and restrictions associated with data privacy; our dependence on third party facilities, equipment, systems and services; system disruptions or flaws in our technology and systems; uncertainties relating to regulation of VoIP services; risks associated with operating abroad; liability under anti-corruption laws; results of regulatory inquiries into our business practices; fraudulent use of our name or services; our dependence upon key personnel; our dependence on our customers' existing broadband connections; differences between our service and traditional phone services; restrictions in our debt agreements that may limit our operating flexibility; our ability to obtain additional financing if required; any reinstatement of holdbacks by our vendors; our history of net losses and ability to achieve consistent profitability in the future; and other factors that are set forth in the "Risk Factors" section and other sections of Vonage's Annual Report on Form 10-K for the year ended December 31, 2014, in the Company's Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. While the Company may elect to update forward-looking statements at some point in the future, the Company specifically disclaims any obligation to do so, and therefore, you should not rely on these forward-looking statements as representing the Company's views as of any date subsequent to today. (vg-f) To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/vonage-announces-first-quarter-2015-results-delivers-adjusted-ebitda-of-38-million-the-highest-in-13-quarters-and-49-organic-revenue-growth-at-vonage-business-300078421.html SOURCE Vonage Holdings Corp. |