Unified Communications

Vonage Continues Its Expansion Strategy with iCore Acquisition

By Special Guest
Paula Bernier & Joe Rizzo
  |  October 13, 2015

Vonage (News - Alert) in April completed the acquisition of Simple Signal, a provider of unified communications-as-a-service and collaboration solutions to small and medium businesses. The deal closed with a price tag of $25.25 million, comprised of approximately $20 million in cash and about 1.1 million shares in Vonage common stock. At the time, Vonage CEO Alan Masarek said the deal represented another important step in the execution of the company’s growth strategy for becoming the clear leader in UCaaS business.

Turns out it wasn’t the last step.

Vonage in August announced a $92 million deal to buy iCore Networks.

"iCore is an excellent strategic fit and a natural complement to Vonage's rapidly expanding UCaaS business,” Masarek said. “This acquisition will deepen our penetration at the higher end of the business market and further strengthen our industry leadership."

As discussed in the CEO Spotlight in INTERNET TELEPHONY’s September issue, Vonage is now executing upon what Masarek calls a historic business transformation – from a residential landline replacement for traditional telecoms serving consumers only to a software-as-a-service company for businesses and consumers. In less than two years Vonage has become the fastest-growing provider of UCaaS solutions for business.

iCore’s experience delivering UCaaS solutions to mid-market and enterprise companies, its success in combining hosted communications with complementary cloud services to create a robust unified communications experience, and its strong sales force were among the things that drew Vonage to this particular marriage.

"Our strategy is to serve businesses of any size via a multi-channel distribution approach,” Masarek added. “With the addition of iCore, Vonage will have what we believe is the largest sales force in the UCaaS market, addressing mid-market and enterprise companies through a field sales organization that sells directly to customers and a channel sales organization that supports our extensive nationwide network of indirect channel partners.” 

The companies are also a good match from a technology standpoint given both use the BroadSoft (News - Alert) BroadWorks platform.

iCore supports more than 85,000 customer seats, with monthly ARPU per customer of more than $4,000. In addition, it derives more than 60 percent of its revenue from customers with 100 or more seats.

The iCore and Simple Signal deals are just two of the companies Vonage has acquired in the recent past. In late 2013, the company purchased Vocalocity (rebranded Vonage Business Solutions) to enter the UCaaS SMB market. And it completed the acquisition of Telesphere (News - Alert) Networks in 2014. It also acquired gUnify, a SaaS integration company whose technology connects the Vonage communications platform with popular platforms such as Salesforce for CRM and Google (News - Alert) for Work for productivity.

Vonage made the biggest jump this year in the IHS Infonetics 2015 Cloud UC Service Provider North America Scorecard by accelerating its customer base through acquisitions. However, 8x8 hung on to the title of the leader in the hosted UC market for the second year in a row. “Although its installed base is still heavily small businesses, 8x8 is successfully moving upmarket," Diane Myers, research director for VoIP, UC and IMS at IHS (News - Alert) Infonetics, commented. Others noted in the study are West IP Communications, RingCentral and Comcast. Second-tier leaders on the scorecard are Broadview Networks, Mitel, Star2Star, Thinking Phone Networks and Verizon.

Joe Rizzo is a contributing writer for TMCnet (www.tmcnet.com), the online entity of INTERNET TELEPHONY parent company Technology Marketing Corp.

Edited by Kyle Piscioniere