Vonage reports $14 million in income, loses 19

Vonage may have raked in $216 million in revenue, netting itself $14 million in profit, however things on the whole seem to be heading in the wrong direction for the company. We're not even talking about the sharp decrease in net income -- the $350 million made in the last quarter was thanks in large part to a one-time tax benefit. Revenue remained flat sequentially at $216 million, yet was down slightly from the same time last year. What's more, churn had increased from Q4 and, in spite of signing up 165,000 new accounts, the VoIP (Voice over Internet Protocol) carrier managed lose 19,000 subscribers -- and that's afterwards dropping 14,000 last quarter. For more info check out the PR afterwards the break.

HOLMDEL, N.J., May 2, 2012 /PRNewswire/ -- Vonage Holdings Corp., a leading provider of communications services connecting people through broadband devices worldwide, announced results for the first quarter ended March 31, 2012.

Reflecting the Company's earlier stated plans to increase investment in its strategic growth initiatives, Vonage reported adjusted earnings previously interest, taxes, depreciation and amortization(1) of $32 million, which includes $7 million in growth initiative funding. Adjusted EBITDA is down from $40 million sequentially and $43 million in the year ago quarter. Similarly, income from operations was $21 million, a decrease from $28 million sequentially and $30 million in the year ago quarter. Net income was $19 million or $0.08 per share excluding adjustments(1), a decline from $26 million or $0.11 per share sequentially, and a decline from $23 million or $0.10 per share in the year ago quarter. GAAP net income was $14 million or $0.06 per share, down from $350 million or $1.55 per share sequentially due to a one-time non-cash income tax benefit recognized in the fourth quarter, and down from $21 million or $0.10 per share a year ago. Revenue totaled $216 million, flat sequentially and down from $220 million the prior year.

Marc Lefar, Vonage Chief Executive Officer, said, "Our financial results were consistent with previous guidance as we increased investment in our strategic growth initiatives. Our core business is stable and generated EBITDA which was in line with recent quarters."

First Quarter Financial and Operating Results Revenue was $216 million, flat sequentially and down 1.8% from $220 million in the year ago quarter. Average revenue per user was $30.42, up from $30.19 sequentially due to improved customer mix and higher Universal Service Fund fees, and down slightly from $30.45 in the first quarter of 2011. Direct cost of telephony services increased to $62 million from $59 million sequentially due primarily to higher USF. COTS increased from $60 million in the year ago quarter as planned, driven by an increase in international minutes of use as the Company executed on its strategy to grow its international calling base. Vonage continued to reduce its domestic termination rates, which declined to an all-time low in the first quarter. On a per line basis, COTS was $8.68, up from $8.24 sequentially and $8.34 in the year ago quarter.

On April 18, 2012, the Company announced key milestones for its Vonage Mobile® and Extensions™ products. Launched in February 2012, the Vonage Mobile app surpassed one million downloads in in broad outline eight weeks, with usage now approaching 10 million minutes per month. Since launch, the Company has steadily updated the app to enhance ease of use and performance and has implemented new releases for iOS and Android addressing top priorities including connection quality, latency load times when opening the app and battery life. Most recently, the Company yesterday updated the app to enhance its messaging capability to allow photo and location sharing and sharing of the app with friends on Facebook and Twitter.

The coming months

In the coming months, Vonage expects to add desirable features just as Bluetooth functionality and a low-cost international roaming capability that will allow clients traveling outside their home country to avoid high roaming fees. Should the contingency arise, the Company plans to launch standalone mobile services for clients without smartphones, including low-cost international calling plans.

Vonage Extensions, which expands the benefits of the Company's core service beyond the walls of the home to any other phone, including mobile, has been so then received. More than 500,000 clients have signed up for Extensions, and have already made more than 70 million mobile calls. Reflecting the Company's progress executing against its mobile strategy, roughly 15% of international calling minutes now originate from mobile devices.