HOLMDEL, N.J., Nov. 6, 2019 /PRNewswire/ -- Vonage Holdings
Corp. (NYSE: VG), a global business cloud communications leader,
today announced results for the quarter ended September 30, 2019.
"The OneVonage platform and strategy is resonating with
customers and partners. This single platform approach, combined
with ownership of the core components, enables us to innovate
faster and deliver unique unified communications, contact center
and API solutions to help companies transform the way they engage
with their customers and employees," said Alan Masarek, Chief Executive Officer.
Mr. Masarek continued, "Vonage remains a leader in programmable
communications. Revenues from our API platform grew 48% on an
adjusted, constant currency basis. In Applications, we are
executing on a comprehensive plan to drive up-market. We've made a
lot of progress on our strategy and continue to invest in the right
areas. Market demand continues to grow, and Vonage is
well-positioned for long-term success."
Third Quarter Business Segment Results
- Vonage Business Revenues were $207
million, representing 34% GAAP growth.
- Business Service Revenues were $184
million, a 37% GAAP increase.
-
- Adjusted to include acquisitions for all periods and other
one-time items, Vonage Business Service Revenues(1)
increased 21% year-over-year or 23% in constant currency.
- API Platform Revenues (which are all service revenues) grew 46%
GAAP and 44% adjusted or 48% adjusted, constant currency.
- Applications Service Revenues grew 32% GAAP or 8% on both an
adjusted and adjusted, constant currency basis.
- Business Service Revenue Per Customer was $451, up 25% from the year-ago quarter.
- Business Service Revenue Churn was 1.0%, improving from 1.1% in
the year-ago quarter.
Third Quarter Consumer Segment Results
- Consumer Revenues were $96
million, down 11% year-over-year.
- Customer churn was 1.8%, flat compared to the year-ago
quarter.
- Average revenue per line ("ARPU") was $27.56, up $1.26
compared to the year-ago quarter.
- Ended the quarter with approximately 1.1 million Consumer
subscriber lines.
Consolidated Income and Balance Sheet
For the third quarter of 2019, Vonage reported consolidated
revenues of $303 million, up from
$262 million in the year-ago
quarter.
The Company generated income from operations of $6 million, Adjusted Operating Income Before
Depreciation and Amortization ("Adjusted OIBDA")(2) of
$45 million, and Adjusted OIBDA minus
Capex(2) of $31 million.
Net Cash from Operations was $32
million and Free Cash Flow(3) was $18 million for the quarter.
As of September 30, 2019, the
Company had a net debt to Last Twelve Months Adjusted OIBDA ratio
of 3.6 times.
Guidance
For the fourth quarter of 2019, Vonage expects the
following:
- Vonage Business Revenues in the range of $214 million to $216
million.
- Consumer Revenues in the area of $90
million to $91 million.
- Consolidated Adjusted OIBDA in the range of $43 million to $46
million. Accordingly, 2019 Adjusted OIBDA is now expected to
be in the $157 million to
$160 million range. This change
primarily reflects the increased lag in revenue recognition due to
higher Deferred Revenues driven by larger new contact center
customer bookings.
Conference Call and Webcast
The company will host a conference call to discuss its financial
results for the third quarter of 2019 and other matters at
8:30 AM Eastern Time. To participate,
please dial (866) 891-8177. International callers should dial (412)
902-6756.
A live webcast of the conference call will be available on the
Vonage Investor Relations website. A replay of the webcast will
also be available shortly after the conclusion of the call and may
be accessed through Vonage's Investor Relations website or by
dialing (877) 344-7529 or (412) 317-0088 for international callers
and entering the passcode 10136257.
About Vonage
Vonage is redefining business communications once again.
We're making communications more flexible, intelligent, and
personal, to help enterprises the world over, stay ahead. We
provide unified communications, contact centers and programmable
communications APIs, built on the world's most flexible cloud
communications platform. True to our roots as a technology
disruptor, our flexible approach helps us to better serve the
growing collaboration, communications, and customer experience
needs of companies, across all communications channels.
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 www.twitter.com/vonage. To become a fan on Facebook, go to
www.facebook.com/vonage. To subscribe on YouTube, visit
www.youtube.com/vonage.
(1) This is a non-GAAP financial
measure. Refer below to Table 5 for a reconciliation to GAAP total
business revenues and business service revenues.
(2) This is a non-GAAP financial
measure. Refer below to Table 3 for a reconciliation to GAAP income
from operations.
(3) This is a non-GAAP financial
measure. Refer below to Table 6 for a reconciliation to GAAP cash
from operations.
|
VONAGE HOLDINGS
CORP.
TABLE 1. CONSOLIDATED FINANCIAL
DATA
(Dollars in thousands, except per share
amounts)
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
September
30,
|
|
June
30,
|
|
September
30,
|
|
September
30,
|
|
2019
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
(unaudited)
|
|
(unaudited)
|
|
(unaudited)
|
|
(unaudited)
|
|
(audited)
|
|
Statement of
Operations Data:
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
$
|
302,534
|
|
|
$
|
297,584
|
|
|
$
|
261,531
|
|
|
$
|
879,659
|
|
|
$
|
774,979
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Expenses:
|
|
|
|
|
|
|
|
|
|
|
Cost of revenues
(excluding depreciation and
amortization of $9,658, $9,144, $6,386, $28,220, and
$19,046, respectively)
|
133,833
|
|
|
128,221
|
|
|
104,351
|
|
|
375,465
|
|
|
315,122
|
|
|
Sales and
marketing
|
83,628
|
|
|
95,362
|
|
|
74,380
|
|
|
274,513
|
|
|
229,201
|
|
|
Engineering and
development
|
16,901
|
|
|
16,891
|
|
|
14,309
|
|
|
50,318
|
|
|
35,504
|
|
|
General and
administrative
|
41,306
|
|
|
36,615
|
|
|
37,620
|
|
|
113,380
|
|
|
97,376
|
|
|
Depreciation and
amortization
|
21,319
|
|
|
20,662
|
|
|
16,024
|
|
|
63,195
|
|
|
51,886
|
|
|
296,987
|
|
|
297,751
|
|
|
246,684
|
|
|
876,871
|
|
|
729,089
|
|
|
Income (Loss) from
operations
|
5,547
|
|
|
(167)
|
|
|
14,847
|
|
|
2,788
|
|
|
45,890
|
|
|
Other Income
(Expense):
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
(8,454)
|
|
|
(8,487)
|
|
|
(3,036)
|
|
|
(24,517)
|
|
|
(9,294)
|
|
|
Other income
(expense), net
|
58
|
|
|
(147)
|
|
|
347
|
|
|
(505)
|
|
|
431
|
|
|
(8,396)
|
|
|
(8,634)
|
|
|
(2,689)
|
|
|
(25,022)
|
|
|
(8,863)
|
|
|
(Loss) Income before
income tax benefit/(expense)
|
(2,849)
|
|
|
(8,801)
|
|
|
12,158
|
|
|
(22,234)
|
|
|
37,027
|
|
|
Income tax (expense)
benefit
|
(18,248)
|
|
|
13,325
|
|
|
(2,570)
|
|
|
5,127
|
|
|
5,644
|
|
|
Net (loss)
income
|
$
|
(21,097)
|
|
|
$
|
4,524
|
|
|
$
|
9,588
|
|
|
$
|
(17,107)
|
|
|
$
|
42,671
|
|
|
(Loss) Earning per
common share:
|
|
|
|
|
|
|
|
|
|
|
Basic
|
$
|
(0.09)
|
|
|
$
|
0.02
|
|
|
$
|
0.04
|
|
|
$
|
(0.07)
|
|
|
$
|
0.18
|
|
|
Diluted
|
$
|
(0.09)
|
|
|
$
|
0.02
|
|
|
$
|
0.04
|
|
|
$
|
(0.07)
|
|
|
$
|
0.17
|
|
|
Weighted-average
common shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
Basic
|
242,336
|
|
|
242,475
|
|
|
239,303
|
|
|
241,786
|
|
|
236,775
|
|
|
Diluted
|
242,336
|
|
|
249,720
|
|
|
249,516
|
|
|
241,786
|
|
|
248,780
|
|
|
VONAGE HOLDINGS
CORP.
TABLE 1. CONSOLIDATED FINANCIAL DATA -
(Continued)
(Dollars in thousands, except per share
amounts)
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
September
30,
|
|
June
30,
|
|
September
30,
|
|
September
30,
|
|
2019
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
(unaudited)
|
|
(unaudited)
|
|
(unaudited)
|
|
(unaudited)
|
|
(audited)
|
|
Statement of Cash
Flow Data:
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by
operating activities
|
$
|
31,783
|
|
|
$
|
25,317
|
|
|
$
|
28,528
|
|
|
$
|
59,850
|
|
|
$
|
94,463
|
|
|
Net cash used in
investing activities
|
(16,809)
|
|
|
(11,679)
|
|
|
(37,177)
|
|
|
(39,262)
|
|
|
(49,184)
|
|
|
Net cash (used in)
provided by financing activities
|
(14,259)
|
|
|
(12,761)
|
|
|
6,841
|
|
|
(6,234)
|
|
|
(50,130)
|
|
|
Capital expenditures
and acquisition and development of
software assets
|
(13,809)
|
|
|
(11,679)
|
|
|
(4,878)
|
|
|
(36,262)
|
|
|
(16,885)
|
|
|
|
September
30,
|
|
December
31,
|
|
|
2019
|
|
2018
|
|
|
(unaudited)
|
|
(audited)
|
|
Balance Sheet Data
(at period end):
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
18,741
|
|
|
$
|
5,057
|
|
|
Restricted
cash
|
|
2,054
|
|
|
2,047
|
|
|
Accounts receivable,
net of allowance
|
|
94,423
|
|
|
75,342
|
|
|
Inventory, net of
allowance
|
|
970
|
|
|
1,470
|
|
|
Prepaid expenses and
other current assets
|
|
36,256
|
|
|
34,130
|
|
|
Deferred customer
acquisition costs, current and non-current
|
|
63,201
|
|
|
49,636
|
|
|
Property and
equipment, net
|
|
48,330
|
|
|
49,262
|
|
|
Goodwill
|
|
589,923
|
|
|
598,499
|
|
|
Operating lease right
of use assets
|
|
53,561
|
|
|
—
|
|
|
Software,
net
|
|
34,269
|
|
|
17,430
|
|
|
Intangible assets,
net
|
|
255,256
|
|
|
299,911
|
|
|
Deferred tax
assets
|
|
103,302
|
|
|
102,560
|
|
|
Other
assets
|
|
32,148
|
|
|
24,144
|
|
|
Total
assets
|
|
$
|
1,332,434
|
|
|
$
|
1,259,488
|
|
|
Accounts payable and
accrued expenses
|
|
$
|
163,646
|
|
|
$
|
140,632
|
|
|
Operating lease
liabilities, current and non-current
|
|
61,132
|
|
|
—
|
|
|
Deferred revenue,
current and non-current
|
|
61,105
|
|
|
53,447
|
|
|
Total notes payable,
net and indebtedness under revolving credit facility, including
current portion
|
|
235,500
|
|
|
519,228
|
|
|
Convertible senior
notes, net
|
|
273,265
|
|
|
—
|
|
|
Other
liabilities
|
|
3,021
|
|
|
10,413
|
|
|
Total
liabilities
|
|
$
|
797,669
|
|
|
$
|
723,720
|
|
|
Total stockholders'
equity
|
|
$
|
534,765
|
|
|
$
|
535,768
|
|
|
VONAGE HOLDINGS
CORP.
TABLE 2. SUMMARY CONSOLIDATED OPERATING
DATA
(Dollars in thousands, except per line
amounts)
(unaudited)
|
|
|
The table below
includes revenues and cost of revenues that our management uses to
measure the growth and operating performance of the business
focused portion of our business:
|
|
|
Business
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
September
30,
|
|
June
30,
|
|
September
30,
|
|
September
30,
|
|
2019
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
Service
revenues
|
$
|
183,701
|
|
|
$
|
180,014
|
|
|
$
|
133,709
|
|
|
$
|
523,060
|
|
|
$
|
377,703
|
|
|
Access
and product revenues(1)
|
12,120
|
|
|
11,707
|
|
|
12,427
|
|
|
35,524
|
|
|
37,674
|
|
|
Service, access and product
revenues
|
195,821
|
|
|
191,721
|
|
|
146,136
|
|
|
558,584
|
|
|
415,377
|
|
|
USF
revenues
|
10,709
|
|
|
8,299
|
|
|
7,499
|
|
|
27,563
|
|
|
22,768
|
|
|
Total
revenues
|
$
|
206,530
|
|
|
$
|
200,020
|
|
|
$
|
153,635
|
|
|
$
|
586,147
|
|
|
$
|
438,145
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
Revenues:
|
|
|
|
|
|
|
|
|
|
|
Service
cost of revenues(2)
|
$
|
87,352
|
|
|
$
|
86,290
|
|
|
$
|
59,600
|
|
|
$
|
243,496
|
|
|
$
|
172,917
|
|
|
Access
and product cost of revenues(1)
|
13,858
|
|
|
13,594
|
|
|
14,887
|
|
|
41,323
|
|
|
43,291
|
|
|
Service, access and product cost of
revenues
|
101,210
|
|
|
99,884
|
|
|
74,487
|
|
|
284,819
|
|
|
216,208
|
|
|
USF
revenues
|
10,709
|
|
|
8,299
|
|
|
7,499
|
|
|
27,563
|
|
|
22,773
|
|
|
Total cost of
revenues
|
$
|
111,919
|
|
|
$
|
108,183
|
|
|
$
|
81,986
|
|
|
$
|
312,382
|
|
|
$
|
238,981
|
|
|
|
|
|
|
|
|
|
|
|
|
Service margin
%
|
52.4
|
%
|
|
52.1
|
%
|
|
55.4
|
%
|
|
53.4
|
%
|
|
54.2
|
%
|
|
Gross margin % ex-USF
(Service, access and product margin %)
|
48.3
|
%
|
|
47.9
|
%
|
|
49.0
|
%
|
|
49.0
|
%
|
|
47.9
|
%
|
|
Gross margin
%
|
45.8
|
%
|
|
45.9
|
%
|
|
46.6
|
%
|
|
46.7
|
%
|
|
45.5
|
%
|
(1) Includes customer premise equipment, access, professional
services, and shipping and handling.(2) Excludes depreciation and
amortization of $8,492, $7,978, and $5,141
for the quarters ended September 30, 2019, June 30, 2019
and September 30, 2018, respectively, and $24,684 and $15,092
for the nine months ended September 30, 2019 and 2018,
respectively.
The table below includes revenues and cost of revenues that our
management uses to measure the growth and operating performance of
the consumer focused portion of our business:
|
Consumer
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
September
30,
|
|
June
30,
|
|
September
30,
|
|
September
30,
|
|
2019
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
Service
revenues
|
$
|
83,981
|
|
|
$
|
87,244
|
|
|
$
|
97,093
|
|
|
$
|
260,225
|
|
|
$
|
301,954
|
|
|
Access
and product revenues(1)
|
69
|
|
|
60
|
|
|
92
|
|
|
197
|
|
|
472
|
|
|
Service, access and product
revenues
|
84,050
|
|
|
87,304
|
|
|
97,185
|
|
|
260,422
|
|
|
302,426
|
|
|
USF
revenues
|
11,954
|
|
|
10,260
|
|
|
10,711
|
|
|
33,090
|
|
|
34,408
|
|
|
Total
revenues
|
$
|
96,004
|
|
|
$
|
97,564
|
|
|
$
|
107,896
|
|
|
$
|
293,512
|
|
|
$
|
336,834
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
Revenues:
|
|
|
|
|
|
|
|
|
|
|
Service
cost of revenues(2)
|
$
|
8,587
|
|
|
$
|
8,861
|
|
|
$
|
10,661
|
|
|
$
|
26,706
|
|
|
$
|
37,050
|
|
|
Access
and product cost of revenues(1)
|
1,373
|
|
|
917
|
|
|
993
|
|
|
3,287
|
|
|
4,657
|
|
|
Service, access and product cost of
revenues
|
9,960
|
|
|
9,778
|
|
|
11,654
|
|
|
29,993
|
|
|
41,707
|
|
|
USF
revenues
|
11,954
|
|
|
10,260
|
|
|
10,711
|
|
|
33,090
|
|
|
34,434
|
|
|
Total cost of
revenues
|
$
|
21,914
|
|
|
$
|
20,038
|
|
|
$
|
22,365
|
|
|
$
|
63,083
|
|
|
$
|
76,141
|
|
|
|
|
|
|
|
|
|
|
|
|
Service margin
%
|
89.8
|
%
|
|
89.8
|
%
|
|
89.0
|
%
|
|
89.7
|
%
|
|
87.7
|
%
|
|
Gross margin % ex-USF
(Service, access and product margin %)
|
88.1
|
%
|
|
88.8
|
%
|
|
88.0
|
%
|
|
88.5
|
%
|
|
86.2
|
%
|
|
Gross margin
%
|
77.2
|
%
|
|
79.5
|
%
|
|
79.3
|
%
|
|
78.5
|
%
|
|
77.4
|
%
|
(1) Includes customer premise equipment, access, professional
services, and shipping and handling.(2) Excludes depreciation and
amortization of $1,166, $1,166, $1,245 for
the quarters ended September 30, 2019, June 30, 2019 and
September 30, 2018, respectively. and $3,536 and $3,954
for the nine months ended September 30, 2019 and 2018,
respectively.
The table below includes key operating data that our management
uses to measure the growth and operating performance of the
business focused portion of our business:
|
Business
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
September
30,
|
|
June
30,
|
|
September
30,
|
|
September
30,
|
|
2019
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
Service revenue per
customer
|
$
|
451
|
|
|
$
|
440
|
|
|
$
|
362
|
|
|
$
|
435
|
|
|
$
|
345
|
|
|
Business revenue
churn
|
1.0
|
%
|
|
1.0
|
%
|
|
1.1
|
%
|
|
1.1
|
%
|
|
1.2
|
%
|
The table below includes key operating data that our management
uses to measure the growth and operating performance of the
consumer focused portion of our business:
|
Consumer
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
September
30,
|
|
June
30,
|
|
September
30,
|
|
September
30,
|
|
2019
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
Average monthly
revenues per line
|
$
|
27.56
|
|
|
$
|
26.89
|
|
|
$
|
26.30
|
|
|
$
|
26.91
|
|
|
$
|
26.41
|
|
|
Subscriber lines (at
period end)
|
1,136,112
|
|
|
1,185,835
|
|
|
1,341,662
|
|
|
1,136,112
|
|
|
1,341,662
|
|
|
Customer
churn
|
1.8
|
%
|
|
1.7
|
%
|
|
1.8
|
%
|
|
1.8
|
%
|
|
1.8
|
%
|
|
VONAGE HOLDINGS
CORP.
TABLE 3. RECONCILIATION OF GAAP INCOME FROM
OPERATIONS
TO ADJUSTED OIBDA AND TO ADJUSTED OIBDA MINUS
CAPEX
(Dollars in
thousands)
(unaudited)
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
September
30,
|
|
June
30,
|
|
September
30,
|
|
September
30,
|
|
2019
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
Income (Loss) from
operations
|
$
|
5,547
|
|
|
$
|
(167)
|
|
|
$
|
14,847
|
|
|
$
|
2,788
|
|
|
$
|
45,890
|
|
|
Depreciation and
amortization
|
21,319
|
|
|
20,662
|
|
|
16,024
|
|
|
63,195
|
|
|
51,886
|
|
|
Amortization of costs
to implement cloud computing
arrangements
|
411
|
|
|
146
|
|
|
—
|
|
|
682
|
|
|
—
|
|
|
Share-based
expense
|
12,941
|
|
|
11,271
|
|
|
8,484
|
|
|
32,152
|
|
|
23,690
|
|
|
Acquisition related
transaction and integration costs
|
174
|
|
|
256
|
|
|
9,509
|
|
|
621
|
|
|
9,941
|
|
|
Acquisition related
consideration accounted for as
compensation
|
—
|
|
|
—
|
|
|
39
|
|
|
—
|
|
|
1,425
|
|
|
Organizational
transformation
|
4,331
|
|
|
5,371
|
|
|
923
|
|
|
14,360
|
|
|
4,043
|
|
|
Adjusted
OIBDA
|
44,723
|
|
|
37,539
|
|
|
49,826
|
|
|
113,798
|
|
|
136,875
|
|
|
Less:
|
|
|
|
|
|
|
|
|
|
|
Capital
expenditures
|
(5,970)
|
|
|
(4,179)
|
|
|
(2,900)
|
|
|
(15,426)
|
|
|
(10,687)
|
|
|
Acquisition and
development of software assets
|
(7,839)
|
|
|
(7,500)
|
|
|
(1,978)
|
|
|
(20,836)
|
|
|
(6,198)
|
|
|
Adjusted OIBDA Minus
Capex
|
$
|
30,914
|
|
|
$
|
25,860
|
|
|
$
|
44,948
|
|
|
$
|
77,536
|
|
|
$
|
119,990
|
|
|
VONAGE HOLDINGS
CORP.
TABLE 4. RECONCILIATION OF GAAP NET INCOME TO
NET INCOME EXCLUDING ADJUSTMENTS
(Dollars in thousands, except per share amounts)
(unaudited)
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
September
30,
|
|
June
30,
|
|
September
30,
|
|
September
30,
|
|
2019
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
Net (loss)
income
|
$
|
(21,097)
|
|
|
$
|
4,524
|
|
|
$
|
9,588
|
|
|
$
|
(17,107)
|
|
|
$
|
42,671
|
|
|
Amortization of
acquisition - related intangibles
|
13,962
|
|
|
13,818
|
|
|
8,746
|
|
|
41,959
|
|
|
26,170
|
|
|
Amortization of costs
to implement cloud computing
arrangements
|
411
|
|
|
146
|
|
|
—
|
|
|
682
|
|
|
—
|
|
|
Amortization of debt
discount
|
2,948
|
|
|
487
|
|
|
—
|
|
|
3,435
|
|
|
—
|
|
|
Acquisition related
transaction and integration costs
|
174
|
|
|
256
|
|
|
9,509
|
|
|
621
|
|
|
9,941
|
|
|
Acquisition related
consideration accounted for as
compensation
|
—
|
|
|
—
|
|
|
39
|
|
|
—
|
|
|
1,425
|
|
|
Organizational
transformation
|
4,331
|
|
|
5,371
|
|
|
923
|
|
|
14,360
|
|
|
4,043
|
|
|
Tax effect on
adjusting items
|
(4,583)
|
|
|
(4,217)
|
|
|
(7,283)
|
|
|
(12,822)
|
|
|
(14,761)
|
|
|
Net (loss) income
excluding adjustments
|
$
|
(3,854)
|
|
|
$
|
20,385
|
|
|
$
|
21,522
|
|
|
$
|
31,128
|
|
|
$
|
69,489
|
|
|
(Loss) Earnings per
common share:
|
|
|
|
|
|
|
|
|
|
|
Basic
|
$
|
(0.09)
|
|
|
$
|
0.02
|
|
|
$
|
0.04
|
|
|
$
|
(0.07)
|
|
|
$
|
0.18
|
|
|
Diluted
|
$
|
(0.09)
|
|
|
$
|
0.02
|
|
|
$
|
0.04
|
|
|
$
|
(0.07)
|
|
|
$
|
0.17
|
|
|
Weighted-average
common shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
Basic
|
242,336
|
|
|
242,475
|
|
|
239,303
|
|
|
241,786
|
|
|
236,775
|
|
|
Diluted
|
242,336
|
|
|
249,720
|
|
|
249,516
|
|
|
241,786
|
|
|
248,780
|
|
|
(Loss) Earnings per
common share, excluding adjustments:
|
|
|
|
|
|
|
|
|
|
|
Basic
|
$
|
(0.02)
|
|
|
$
|
0.08
|
|
|
$
|
0.09
|
|
|
$
|
0.13
|
|
|
$
|
0.29
|
|
|
Diluted
|
$
|
(0.02)
|
|
|
$
|
0.08
|
|
|
$
|
0.09
|
|
|
$
|
0.12
|
|
|
$
|
0.28
|
|
|
Weighted-average
common shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
Basic
|
242,336
|
|
|
242,475
|
|
|
239,303
|
|
|
241,786
|
|
|
236,775
|
|
|
Diluted
|
242,336
|
|
|
249,720
|
|
|
249,516
|
|
|
250,094
|
|
|
248,780
|
|
|
VONAGE HOLDINGS
CORP.
TABLE 5. RECONCILIATION OF BUSINESS SEGMENT - GAAP
REVENUES AND SERVICE REVENUES
TO BUSINESS SEGMENT -
ADJUSTED REVENUES, ADJUSTED SERVICE REVENUES, ADJUSTED APPLICATIONS
GROUP SERVICE REVENUES AND ADJUSTED API PLATFORM GROUP SERVICE
REVENUES
(Dollars in
thousands)
(unaudited)
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
September
30,
|
|
June
30,
|
|
September
30,
|
|
September
30,
|
|
2019
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
|
|
|
|
|
|
|
|
|
|
Business total
revenues
|
$
|
206,530
|
|
|
$
|
200,020
|
|
|
$
|
153,635
|
|
|
$
|
586,147
|
|
|
$
|
438,145
|
|
|
Deferred revenue
adjustment from acquired companies
|
760
|
|
|
1,656
|
|
|
—
|
|
|
4,915
|
|
|
—
|
|
|
Revenue from acquired
companies (prior to acquisition) less
revenue from divested businesses
|
—
|
|
|
—
|
|
|
19,052
|
|
|
—
|
|
|
57,089
|
|
|
Outage credits and
significant one-time items
|
—
|
|
|
(440)
|
|
|
—
|
|
|
(440)
|
|
|
933
|
|
|
Adjusted Business
total revenues
|
$
|
207,290
|
|
|
$
|
201,236
|
|
|
$
|
172,687
|
|
|
$
|
590,622
|
|
|
$
|
496,167
|
|
|
|
|
|
|
|
|
|
|
|
|
Business service
revenues
|
$
|
183,701
|
|
|
$
|
180,014
|
|
|
$
|
133,709
|
|
|
$
|
523,060
|
|
|
$
|
377,703
|
|
|
Deferred revenue
adjustment from acquired companies
|
760
|
|
|
1,656
|
|
|
—
|
|
|
4,915
|
|
|
—
|
|
|
Revenue from acquired
companies (prior to acquisition) less
revenue from divested businesses
|
—
|
|
|
—
|
|
|
18,961
|
|
|
—
|
|
|
56,776
|
|
|
Outage credits and
significant one-time items
|
—
|
|
|
(440)
|
|
|
—
|
|
|
(440)
|
|
|
933
|
|
|
Adjusted Business
service revenues
|
$
|
184,461
|
|
|
$
|
181,230
|
|
|
$
|
152,670
|
|
|
$
|
527,535
|
|
|
$
|
435,412
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Business service
revenues
|
$
|
183,701
|
|
|
$
|
180,014
|
|
|
$
|
133,709
|
|
|
$
|
523,060
|
|
|
$
|
377,703
|
|
|
Less: API Platform
Group service revenue
|
80,331
|
|
|
78,082
|
|
|
55,106
|
|
|
218,276
|
|
|
149,412
|
|
|
Applications Group
service revenue
|
103,370
|
|
|
101,932
|
|
|
78,603
|
|
|
304,784
|
|
|
228,291
|
|
|
Deferred revenue
adjustment from acquired companies
|
760
|
|
|
1,656
|
|
|
—
|
|
|
4,915
|
|
|
—
|
|
|
Revenue from acquired
companies (prior to acquisition) less
revenue from divested businesses
|
—
|
|
|
—
|
|
|
18,148
|
|
|
—
|
|
|
50,805
|
|
|
Outage credits and
significant one-time items
|
—
|
|
|
(440)
|
|
|
—
|
|
|
(440)
|
|
|
933
|
|
|
Adjusted Applications
Group service revenues
|
$
|
104,130
|
|
|
$
|
103,148
|
|
|
$
|
96,751
|
|
|
$
|
309,259
|
|
|
$
|
280,029
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Business service
revenues
|
$
|
183,701
|
|
|
$
|
180,014
|
|
|
$
|
133,709
|
|
|
$
|
523,060
|
|
|
$
|
377,703
|
|
|
Less: Applications
Group service revenue
|
103,370
|
|
|
101,932
|
|
|
78,603
|
|
|
304,784
|
|
|
228,291
|
|
|
API Platform Group
service revenue
|
80,331
|
|
|
78,082
|
|
|
55,106
|
|
|
218,276
|
|
|
149,412
|
|
|
Revenue from acquired
companies prior to acquisition
|
—
|
|
|
—
|
|
|
813
|
|
|
—
|
|
|
5,971
|
|
|
Adjusted API Platform
Group service revenues
|
$
|
80,331
|
|
|
$
|
78,082
|
|
|
$
|
55,919
|
|
|
$
|
218,276
|
|
|
$
|
155,383
|
|
|
VONAGE HOLDINGS
CORP.
TABLE 6. FREE CASH FLOW
(Dollars in
thousands)
(unaudited)
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
September
30,
|
|
June
30,
|
|
September
30,
|
|
September
30,
|
|
2019
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
Net cash provided by
operating activities
|
$
|
31,783
|
|
|
$
|
25,317
|
|
|
$
|
28,528
|
|
|
$
|
59,850
|
|
|
$
|
94,463
|
|
|
Less:
|
|
|
|
|
|
|
|
|
|
|
Capital
expenditures
|
(5,970)
|
|
|
(4,179)
|
|
|
(2,900)
|
|
|
(15,426)
|
|
|
(10,687)
|
|
|
Acquisition and
development of software assets
|
(7,839)
|
|
|
(7,500)
|
|
|
(1,978)
|
|
|
(20,836)
|
|
|
(6,198)
|
|
|
Free cash
flow
|
$
|
17,974
|
|
|
$
|
13,638
|
|
|
$
|
23,650
|
|
|
$
|
23,588
|
|
|
$
|
77,578
|
|
|
VONAGE HOLDINGS
CORP.
TABLE 7. RECONCILIATION OF NOTES PAYABLE,
INDEBTEDNESS UNDER REVOLVING CREDIT FACILITY, AND CAPITAL LEASES TO
NET DEBT
(Dollars in
thousands)
(unaudited)
|
|
|
|
September
30,
|
|
December
31,
|
|
|
2019
|
|
2018
|
|
|
|
|
|
|
Current portion of
notes payable
|
|
—
|
|
|
10,000
|
|
|
Notes payable and
indebtedness under revolving credit facility, net of current
maturities
|
|
235,500
|
|
|
509,228
|
|
|
Convertible senior
notes, net
|
|
273,265
|
|
|
—
|
|
|
Unamortized discount
on debt
|
|
64,229
|
|
|
—
|
|
|
Unamortized debt
related costs
|
|
7,506
|
|
|
772
|
|
|
Gross debt
|
|
580,500
|
|
|
520,000
|
|
|
Less:
|
|
|
|
|
|
Unrestricted
cash
|
|
18,741
|
|
|
5,057
|
|
|
Net debt
|
|
$
|
561,759
|
|
|
$
|
514,943
|
|
|
|
|
|
|
|
|
|
|
Use of Non-GAAP Financial Measures
This press release includes measures defined as non-GAAP
financial measures by Regulation G adopted by the Securities and
Exchange Commission, including: adjusted Operating Income Before
Depreciation and Amortization ("adjusted OIBDA"), adjusted OIBDA
less Capex, adjusted net income, adjusted business total revenue,
adjusted business service revenue, constant currency, net debt
(cash), and free cash flow.
Adjusted OIBDA
Vonage uses adjusted OIBDA as a principal indicator of the
operating performance of its business.
Vonage defines adjusted OIBDA as GAAP income (loss) from
operations excluding depreciation and amortization, share-based
expense, acquisition related transaction and integration costs,
change in contingent consideration, acquisition related
consideration accounted for as compensation, organizational
transformation costs and loss on sublease.
Vonage believes that adjusted OIBDA 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
transaction and integration costs, acquisition related
consideration accounted for as compensation and change in
contingent consideration, organizational transformation costs and
loss on sublease.
The Company provides information relating to its adjusted OIBDA
so that investors have the same data that the Company employs in
assessing its overall operations. The Company believes that trends
in its Adjusted OIBDA are valuable indicators of the operating
performance of the Company on a consolidated basis.
The Company does not reconcile its forward-looking adjusted
OIBDA to the corresponding GAAP measure of income from operations
due to the significant variability and difficulty in making
accurate forecasts with respect to the various expenses we exclude,
as they may be significantly impacted by future events the
timing and nature of which are difficult to predict or are not
within the control of management. As such, the Company has
determined that reconciliations of this forward-looking non-GAAP
financial measure to the corresponding GAAP measure is not
available without unreasonable effort.
Adjusted OIBDA less Capex
Vonage uses adjusted OIBDA less Capex as an indicator of the
operating performance of its business. The Company provides
information relating to its adjusted OIBDA 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 OIBDA 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.
Adjusted net income
Vonage defines adjusted net income, as GAAP net income (loss)
excluding amortization of acquisition-related intangible assets,
acquisition related transaction and integration costs, change in
contingent consideration, acquisition related consideration
accounted for as compensation, organizational transformation costs,
loss on sublease and tax effect on adjusting items.
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 amortization of
acquisition-related intangible assets is a non-cash item, one-time
acquisition related transaction and integration costs, change in
contingent consideration, acquisition related consideration
accounted for as compensation, loss on sublease and tax effect on
adjusting items are not reflective of operating performance.
Constant Currency
Vonage reviews its results of operations on both an as reported
and on a constant currency basis. The constant currency
presentation, which is a non-GAAP measure, excludes the impact of
fluctuations in foreign currency exchange rates. We believe
providing constant currency information provides valuable
supplemental information regarding our results of operations,
consistent with how we evaluate our performance. We calculate
constant currency percentages by converting our current period
local currency financial results using the prior period exchange
rates and comparing these adjusted amounts to our prior period
reported results.
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 debt related costs, 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 first parties
consider in valuing the Company.
Free cash flow
Vonage defines free cash flow as net cash provided by operating
activities minus capital expenditures, purchase of intangible
assets, 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.
Adjusted business total revenue and Adjusted business service
revenue
Vonage defines adjusted business total revenue and adjusted
business service revenues as business segment revenue and business
segment service revenues to give effect for acquisition-related
activities and other one-time items.
The Company does not reconcile its forward-looking adjusted
business total revenue and adjusted business service revenue to the
corresponding GAAP measures due to the significant variability and
difficulty in making accurate forecasts with respect to the various
acquisition-related and one-time events that we exclude, as they
may be significantly impacted by future events the timing and
nature of which are difficult to predict or are not within the
control of management. As such, the Company has determined
that reconciliations of these forward-looking non-GAAP financial
measures to the corresponding GAAP measures is not available
without unreasonable effort.
Safe Harbor Statement
This press release contains forward-looking statements,
including statements about acquisitions, acquisition integration,
financing activity, growth priorities or plans, revenues, adjusted
OIBDA, churn, seats, lines or accounts, average revenue per
customer, cost of communications services, capital expenditures,
new products and related investment, and other statements that are
not historical facts or information, that 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; the expansion of competition in the cloud
communications market; risks related to the acquisition or
integration of businesses we have acquired; our ability to adapt to
rapid changes in the cloud communications market; the nascent state
of the cloud communications for business market; our ability to
retain customers and attract new customers cost-effectively; the
risk associated with developing and maintaining effective internal
sales teams and effective distribution channels; security breaches
and other compromises of information security; risks associated
with sales of our services to medium-sized and enterprise
customers; our reliance on third-party hardware and software; our
dependence on third-party facilities, equipment, systems and
services; system disruptions or flaws in our technology and
systems; our ability to comply with data privacy and related
regulatory matters; our ability to scale our business and grow
efficiently; our dependence on third party vendors; the impact of
fluctuations in economic conditions, particularly on our small and
medium business customers; our ability to obtain or maintain
relevant intellectual property licenses or to protect our
trademarks and internally developed software; restrictions in our
debt agreements that may limit our operating flexibility; our
ability to obtain additional financing if required; our ability to
raise funds necessary to settle conversion of the 2024 convertible
senior notes; conditional conversion features of the convertible
senior notes; the cash settlement of the convertible senior notes;
the effects of the capped call transactions in connection with the
convertible senior notes; fraudulent use of our name or services;
intellectual property and other litigation that have been and may
be brought against us; reliance on third parties for our 911
services; uncertainties relating to regulation of business
services; risks associated with legislative, regulatory or judicial
actions regarding our business products; risks associated with
operating abroad; risks associated with the taxation of our
business; governmental regulation and taxes in our international
operations; liability under anti-corruption laws or from
governmental export controls or economic sanctions; our dependence
on our customers' unimpeded access to broadband connections;
foreign currency exchange risk; our history of net losses and
ability to achieve consistent profitability in the future; our
ability to fully realize the benefits of our net operating loss
carry-forwards if an ownership change occurs; certain provisions of
our charter documents; and other factors that are set forth in the
"Risk Factors" in our Annual Report on Form 10-K for the year ended
December 31, 2018 and in the
Company's Quarterly Reports on Form 10-Q filed with the SEC. 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 except as required by law, 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)
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SOURCE Vonage Holdings Corp.
