HOLMDEL, N.J., Feb. 14, 2017 /PRNewswire/ -- Vonage
Holdings Corp. (NYSE: VG), a leading provider of cloud
communications services for businesses, today announced results for
the fourth quarter and full year ended December 31, 2016.
Consolidated Results
"In 2016, we utilized our strong cash flows to invest in our
growth, including the strategic acquisition of Nexmo and
significant investments in the Vonage Business sales
infrastructure," said Vonage CEO Alan
Masarek.
"With these investments, we made great progress executing on our
transformation and significantly advanced our strategy to become
the Clear Leader in Cloud Communications. Through the integration
of our UCaaS and CPaaS solutions, we have assembled the most
comprehensive product offering in the global Cloud Communications
market. This unique value proposition drives better outcomes for
our business customers and deepens our customer relationships. At
the same time, our team continues to deliver strong financial
results. We generated consolidated revenue growth for the third
consecutive year and the highest adjusted OIBDA in five years,
driven by the successful optimization of our Consumer segment."
For the full year 2016, Vonage reported revenue of $956 million, up from $895
million in the prior year. Income from operations was
$44 million, down from $53 million in the prior year. Adjusted Operating
Income Before Depreciation and Amortization ("Adjusted
OIBDA")1 was $160 million,
an 11% increase over the prior year. GAAP net income was
$18 million or $0.08 per share for the full year 2016, down from
$23 million or $0.11 per share in 2015. Adjusted net
income2 was $45 million or
$0.21 per share, up from $39 million, or $0.18 per share in the prior year.
For the fourth quarter of 2016, Vonage reported revenue of
$247 million, up from $230 million in the year ago quarter. Income from
operations was $5 million, down from
$8 million in the prior year quarter.
Adjusted OIBDA for the fourth quarter was $37 million, up from $34
million in the year ago quarter. GAAP net income was
breakeven, or $0.00 per share, down
from $3 million in the prior year
period, or $0.02 per share. Adjusted
net income was $7 million or
$0.03 per share, down from
$8 million or $0.04 per share.
Additional Reporting Information
Consistent with Vonage's continued transformation into cloud
communications, the Company is providing more visibility into the
financial trends in its Business and Consumer segments. The
Company will report both revenue and cost of service for its
Business segment, comprised of its Unified Communications as a
Service (UCaaS) and Communications Platform as a Service (CPaaS)
offerings, and for its Consumer segment, comprised of its legacy
residential VoIP offerings. Vonage is reporting this additional
information for the fourth quarter and full year 2016 and will
continue reporting these metrics in the future.
Business Segment Results
- Total Business revenue grew 56% year-over-year to $111 million in the fourth quarter of 2016; Full
year revenue increased 72% year-over-year to $376 million.
- Business service revenue was $92
million, a 69% increase from the fourth quarter of 2015;
Full year service revenue was $302
million, up 77% from the prior year.
- UCaaS revenue churn was 1.4% in the fourth quarter, flat
sequentially and up from 1.1% in the year ago quarter.
- UCaaS ending seats were 638,000, up from 542,000 seats in the
year ago quarter, reflecting strong organic growth.
- Announced by Amazon Web Services as a launch partner for Amazon
Chime. This combination brings together the power of Vonage's cloud
voice communications capabilities with Amazon Chime, a
web-conferencing and collaboration suite, to provide a scalable,
enterprise-grade unified communications solution for Vonage
Business customers.
- The Vonage API Platform, formerly Nexmo, generated fourth
quarter 2016 revenue of $27 million,
a 43% pro-forma year-over-year increase.
- The Vonage API Platform increased its registered developer
count to 207,000, a 54% year-over-year increase.
- Announced Kenny Wyatt as the
Company's new Chief Revenue Officer. Mr. Wyatt will set the global
direction for sales and revenue across the Company's UCaaS and
CPaaS offerings.
Consumer Segment Results
- Revenue in Consumer was $136
million in the fourth quarter, down 14% from the prior
year's quarter. Full year 2016 revenue was $579 million, down 14%, reflecting the Company's
decision to redeploy capital into the Vonage Business segment.
- Consumer customer churn was 2.2% in the fourth quarter, in line
with the year ago quarter.
- Average revenue per line ("ARPU") in Consumer Services was
$26.11, down from $26.93 in the year ago period.
- The Consumer segment ended the fourth quarter with 1.7 million
subscriber lines.
Patent Portfolio
Vonage continues to develop innovative technologies and to
protect its valuable intellectual property. The Company was granted
a record 40 new patents in 2016, and as of December 31, 2016, the Company owned 146 U.S.
patents, with nearly 200 U.S. patent applications pending.
Share Repurchase
Vonage repurchased 7.4 million shares for $33 million at an average price of $4.43 in 2016. This represents approximately
one-third of the four-year, $100
million authorization the Company initiated in the beginning
of 2015. The Company has repurchased 55.6 million shares for
$181 million, at a highly accretive
average price of $3.26, since the
Company began repurchasing stock in August
2012. Vonage's share repurchase program has provided strong
returns for shareholders and it continues to be one of the key
components of the Company's capital allocation plan. The
execution of the buyback program is subject to change as market
conditions, M&A opportunities and capital allocation priorities
warrant.
2017 Outlook
For full year 2017, Vonage expects the following:
- Consolidated revenues in the range of $970 million to $985 million
- Total Business revenue, which includes UCaaS and CPaaS, in the
range of $487 million to $493
million
- Consumer revenue in the range of $483
million to $492 million reflecting the Company's
continued focus on optimizing the business for profitability and
cash flow
- Consolidated Adjusted OIBDA of at least $165 million
- Capex of approximately $40
million
Conference Call and Webcast
Management will host a webcast discussion of the fourth quarter,
full year 2016, and other matters on Tuesday, February 14, 2017 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. 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
63295132.
(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.
VONAGE HOLDINGS
CORP.
TABLE 1.
CONSOLIDATED FINANCIAL DATA
(Dollars in
thousands, except per share amounts)
|
|
|
|
Three Months Ended
|
|
For the Years Ended
|
|
December 31,
|
|
September 30,
|
|
December 31,
|
|
December 31,
|
|
2016
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
(unaudited)
|
|
(audited)
|
Statement of
Operations Data:
|
|
|
|
|
|
|
|
|
|
Revenues
|
$
|
246,763
|
|
|
$
|
248,359
|
|
|
$
|
230,124
|
|
|
$
|
955,621
|
|
|
$
|
895,072
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Expenses:
|
|
|
|
|
|
|
|
|
|
Direct cost of
telephony services (excluding depreciation and amortization of
$7,211, $7,460, $6,724, $28,489, and $24,868,
respectively)
|
88,768
|
|
|
87,377
|
|
|
68,513
|
|
|
321,373
|
|
|
261,768
|
|
Cost of goods
sold
|
7,768
|
|
|
8,591
|
|
|
8,597
|
|
|
33,777
|
|
|
34,210
|
|
Sales and
marketing
|
84,293
|
|
|
83,731
|
|
|
89,919
|
|
|
330,969
|
|
|
347,896
|
|
Engineering and
development
|
7,607
|
|
|
8,075
|
|
|
6,921
|
|
|
29,759
|
|
|
27,220
|
|
General and
administrative
|
34,043
|
|
|
27,538
|
|
|
29,897
|
|
|
123,304
|
|
|
109,153
|
|
Depreciation and
amortization
|
19,070
|
|
|
18,018
|
|
|
17,979
|
|
|
72,285
|
|
|
61,833
|
|
|
241,549
|
|
|
233,330
|
|
|
221,826
|
|
|
911,467
|
|
|
842,080
|
|
Income from
operations
|
5,214
|
|
|
15,029
|
|
|
8,298
|
|
|
44,154
|
|
|
52,992
|
|
Other
expense:
|
|
|
|
|
|
|
|
|
|
Interest
income
|
14
|
|
|
19
|
|
|
24
|
|
|
79
|
|
|
89
|
|
Interest
expense
|
(3,565)
|
|
|
(3,974)
|
|
|
(2,541)
|
|
|
(13,042)
|
|
|
(8,786)
|
|
Other (expense)
income, net
|
(109)
|
|
|
(495)
|
|
|
(247)
|
|
|
(346)
|
|
|
(842)
|
|
|
(3,660)
|
|
|
(4,450)
|
|
|
(2,764)
|
|
|
(13,309)
|
|
|
(9,539)
|
|
Income from
continuing operation before income tax expense
|
1,554
|
|
|
10,579
|
|
|
5,534
|
|
|
30,845
|
|
|
43,453
|
|
Income tax
expense
|
(1,553)
|
|
|
(1,501)
|
|
|
(2,128)
|
|
|
(12,938)
|
|
|
(18,418)
|
|
Income from
continuing operations
|
1
|
|
|
9,078
|
|
|
3,406
|
|
|
17,907
|
|
|
25,035
|
|
Loss from
discontinued operations
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,615)
|
|
Loss on disposal, net
of taxes
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(824)
|
|
Discontinued
operations
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,439)
|
|
Net income
|
1
|
|
|
9,078
|
|
|
3,406
|
|
|
17,907
|
|
|
22,596
|
|
Plus: Net loss from
discontinued operations attributable to noncontrolling
interest
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
59
|
|
Net income
attributable to Vonage
|
$
|
1
|
|
|
$
|
9,078
|
|
|
$
|
3,406
|
|
|
$
|
17,907
|
|
|
$
|
22,655
|
|
Net income per common
share - continuing operations:
|
|
|
|
|
|
|
|
|
|
Basic
|
$
|
—
|
|
|
$
|
0.04
|
|
|
$
|
0.02
|
|
|
$
|
0.08
|
|
|
$
|
0.12
|
|
Diluted
|
$
|
—
|
|
|
$
|
0.04
|
|
|
$
|
0.01
|
|
|
$
|
0.08
|
|
|
$
|
0.11
|
|
Net loss per common
share - discontinued operations attributable to Vonage:
|
|
|
|
|
|
|
|
|
|
Basic
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(0.01)
|
|
Diluted
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(0.01)
|
|
Net income per common
share - attributable to Vonage:
|
|
|
|
|
|
|
|
|
|
Basic
|
$
|
—
|
|
|
$
|
0.04
|
|
|
$
|
0.02
|
|
|
$
|
0.08
|
|
|
$
|
0.11
|
|
Diluted
|
$
|
—
|
|
|
$
|
0.04
|
|
|
$
|
0.01
|
|
|
$
|
0.08
|
|
|
$
|
0.10
|
|
Weighted-average
common shares outstanding:
|
|
|
|
|
|
|
|
|
|
Basic
|
$
|
218,375
|
|
|
$
|
217,000
|
|
|
$
|
213,864
|
|
|
$
|
215,751
|
|
|
$
|
213,147
|
|
Diluted
|
237,670
|
|
|
234,868
|
|
|
227,751
|
|
|
231,941
|
|
|
224,110
|
|
VONAGE HOLDINGS
CORP.
TABLE 1.
CONSOLIDATED FINANCIAL DATA - (Continued)
(Dollars in
thousands, except per share amounts)
|
|
|
|
Three Months Ended
|
|
For the Years Ended
|
|
December 31,
|
|
September 30,
|
|
December 31,
|
|
December 31,
|
|
2016
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
(unaudited)
|
|
(audited)
|
Statement of Cash
Flow Data:
|
|
|
|
|
|
|
|
|
|
Net cash provided by
operating activities
|
$
|
21,757
|
|
|
$
|
26,694
|
|
|
$
|
46,105
|
|
|
$
|
87,012
|
|
|
$
|
129,731
|
|
Net cash used in
investing activities
|
(2,836)
|
|
|
(5,751)
|
|
|
(14,413)
|
|
|
(190,733)
|
|
|
(152,696)
|
|
Net cash (used in)
provided by financing activities
|
(23,125)
|
|
|
(12,666)
|
|
|
(33,622)
|
|
|
74,498
|
|
|
40,205
|
|
Capital expenditures,
intangible assets, and development of software assets
|
(8,767)
|
|
|
(7,364)
|
|
|
(13,996)
|
|
|
(37,734)
|
|
|
(34,006)
|
|
|
|
For the years
ended December 31,
|
|
|
2016
|
|
2015
|
|
|
(audited)
|
|
(audited)
|
Balance Sheet
Data:
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
29,078
|
|
|
$
|
57,726
|
|
Marketable
securities
|
|
601
|
|
|
9,908
|
|
Restricted
cash
|
|
1,851
|
|
|
2,587
|
|
Accounts receivable,
net of allowance
|
|
36,688
|
|
|
19,913
|
|
Inventory, net of
allowance
|
|
4,116
|
|
|
5,542
|
|
Prepaid expenses and
other current assets
|
|
29,176
|
|
|
15,659
|
|
Deferred customer
acquisition costs
|
|
3,136
|
|
|
4,505
|
|
Property and
equipment, net
|
|
48,415
|
|
|
49,483
|
|
Goodwill
|
|
357,916
|
|
|
222,106
|
|
Software,
net
|
|
21,971
|
|
|
20,710
|
|
Debt related costs,
net
|
|
2,333
|
|
|
2,053
|
|
Intangible assets,
net
|
|
199,256
|
|
|
138,199
|
|
Total deferred tax
assets, including current portion, net
|
|
191,368
|
|
|
226,572
|
|
Other
assets
|
|
14,459
|
|
|
9,603
|
|
Total
assets
|
|
$
|
940,364
|
|
|
$
|
784,566
|
|
Accounts payable and
accrued expenses
|
|
$
|
139,888
|
|
|
$
|
138,925
|
|
Deferred
revenue
|
|
32,892
|
|
|
33,456
|
|
Total notes payable
and indebtedness under revolving credit facility, including current
portion
|
|
318,874
|
|
|
210,392
|
|
Capital lease
obligations
|
|
3,428
|
|
|
7,761
|
|
Other
liabilities
|
|
3,985
|
|
|
5,291
|
|
Total
liabilities
|
|
$
|
499,067
|
|
|
$
|
395,825
|
|
Total stockholders'
equity
|
|
$
|
441,297
|
|
|
$
|
388,741
|
|
VONAGE HOLDINGS
CORP.
TABLE 2. SUMMARY
CONSOLIDATED OPERATING DATA
(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
|
|
For the Years Ended
|
|
December 31,
|
|
September 30,
|
|
December 31,
|
|
December 31,
|
|
2016
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Revenues:
|
|
|
|
|
|
|
|
|
|
Service
|
$
|
91,663
|
|
|
$
|
86,662
|
|
|
$
|
54,169
|
|
|
$
|
301,877
|
|
|
$
|
170,489
|
|
Product
(1)
|
12,655
|
|
|
13,618
|
|
|
12,646
|
|
|
52,450
|
|
|
35,545
|
|
Service and Product
|
104,318
|
|
|
100,280
|
|
|
66,815
|
|
|
354,327
|
|
|
206,034
|
|
USF
|
6,193
|
|
|
6,029
|
|
|
4,134
|
|
|
22,025
|
|
|
12,993
|
|
Total Business
Revenues
|
$
|
110,511
|
|
|
$
|
106,309
|
|
|
$
|
70,949
|
|
|
$
|
376,352
|
|
|
$
|
219,027
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
Revenues:
|
|
|
|
|
|
|
|
|
|
Service
(2)
|
$
|
38,697
|
|
|
$
|
34,858
|
|
|
$
|
14,363
|
|
|
$
|
111,485
|
|
|
$
|
44,997
|
|
Product
(1)
|
12,664
|
|
|
13,101
|
|
|
11,573
|
|
|
51,129
|
|
|
31,185
|
|
Service and Product
|
51,361
|
|
|
47,959
|
|
|
25,936
|
|
|
162,614
|
|
|
76,182
|
|
USF
|
6,193
|
|
|
6,029
|
|
|
4,152
|
|
|
22,036
|
|
|
13,022
|
|
Cost of
Revenues
|
$
|
57,554
|
|
|
$
|
53,988
|
|
|
$
|
30,088
|
|
|
$
|
184,650
|
|
|
$
|
89,204
|
|
|
|
|
|
|
|
|
|
|
|
Service margin
%
|
57.8
|
%
|
|
59.8
|
%
|
|
73.5
|
%
|
|
63.1
|
%
|
|
73.6
|
%
|
Gross margin % ex-USF
(Service and product margin %)
|
50.8
|
%
|
|
52.2
|
%
|
|
61.2
|
%
|
|
54.1
|
%
|
|
63.0
|
%
|
Gross margin
%
|
47.9
|
%
|
|
49.2
|
%
|
|
57.6
|
%
|
|
50.9
|
%
|
|
59.3
|
%
|
|
(1) Includes customer
premise equipment, access, professional services, and shipping and
handling.
(2) Excludes
depreciation and amortization of $5,013, $5,015, $4,310 for the
quarters ended December 31, 2016, September 30, 2016 and December
30, 2015, respectively and $18,820 and $15,819 for the years ended
December 31, 2016 and 2015, 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
|
|
For the Years Ended
|
|
December 31,
|
|
September 30,
|
|
December 31,
|
|
December 31,
|
|
2016
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Revenues:
|
|
|
|
|
|
|
|
|
|
Service
|
$
|
123,114
|
|
|
$
|
128,167
|
|
|
$
|
144,346
|
|
|
$
|
522,515
|
|
|
$
|
612,822
|
|
Product
(1)
|
188
|
|
|
207
|
|
|
213
|
|
|
702
|
|
|
645
|
|
Service and Product
|
123,302
|
|
|
128,374
|
|
|
144,559
|
|
|
523,217
|
|
|
613,467
|
|
USF
|
12,950
|
|
|
13,676
|
|
|
14,616
|
|
|
56,052
|
|
|
62,578
|
|
Total Business
Revenues
|
$
|
136,252
|
|
|
$
|
142,050
|
|
|
$
|
159,175
|
|
|
$
|
579,269
|
|
|
$
|
676,045
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
Revenues:
|
|
|
|
|
|
|
|
|
|
Service
(2)
|
$
|
22,834
|
|
|
$
|
24,972
|
|
|
$
|
28,011
|
|
|
$
|
100,054
|
|
|
$
|
123,580
|
|
Product
(1)
|
3,198
|
|
|
3,331
|
|
|
4,394
|
|
|
14,394
|
|
|
20,616
|
|
Service and Product
|
26,032
|
|
|
28,303
|
|
|
32,405
|
|
|
114,448
|
|
|
144,196
|
|
USF
|
12,950
|
|
|
13,676
|
|
|
14,616
|
|
|
56,052
|
|
|
62,578
|
|
Cost of
Revenues
|
$
|
38,982
|
|
|
$
|
41,979
|
|
|
$
|
47,021
|
|
|
$
|
170,500
|
|
|
$
|
206,774
|
|
|
|
|
|
|
|
|
|
|
|
Service margin
%
|
81.5
|
%
|
|
80.5
|
%
|
|
80.6
|
%
|
|
80.9
|
%
|
|
79.8
|
%
|
Gross margin % ex-USF
(Service and product margin %)
|
78.9
|
%
|
|
78.0
|
%
|
|
77.6
|
%
|
|
78.1
|
%
|
|
76.5
|
%
|
Gross margin
%
|
71.4
|
%
|
|
70.4
|
%
|
|
70.5
|
%
|
|
70.6
|
%
|
|
69.4
|
%
|
|
(1) Includes customer
premise equipment, access, professional services, and shipping and
handling.
(2) Excludes
depreciation and amortization of $2,198, $2,445, $2,414 for the
quarters ended December 31, 2016, September 30, 2016 and December
30, 2015, respectively and $9,669 and $9,049 for the years ended
December 31, 2016 and 2015, 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
|
|
For the Years Ended
|
|
December 31,
|
|
September 30,
|
|
December 31,
|
|
December 31,
|
|
2016
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Revenues
(1)
|
$
|
110,511
|
|
|
$
|
106,309
|
|
|
$
|
70,949
|
|
|
$
|
376,352
|
|
|
$
|
219,027
|
|
Average monthly
revenues per seat (2)
|
$
|
44.65
|
|
|
$
|
45.50
|
|
|
$
|
44.79
|
|
|
$
|
44.94
|
|
|
$
|
42.79
|
|
Seats (at period end)
(2)
|
638,096
|
|
|
615,728
|
|
|
541,884
|
|
|
638,096
|
|
|
541,884
|
|
Revenue churn
(2)
|
1.4
|
%
|
|
1.4
|
%
|
|
1.1
|
%
|
|
1.4
|
%
|
|
1.2
|
%
|
Registered developers
(3)
|
206,734
|
|
|
175,759
|
|
|
N/A
|
|
|
206,734
|
|
|
N/A
|
|
|
(1) Includes revenues
of $26,541 and $23,909, respectively, of CPaaS revenue for the
three months ended December 31, 2016 and September 30, 2016, and
$58,148 for the year ended December 31, 2016.
(2) UCaaS
only.
(3) CPaaS
only.
|
|
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
|
|
For the Years Ended
|
|
December 31,
|
|
September 30,
|
|
December 31,
|
|
December 31,
|
|
2016
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Revenues
|
$
|
136,252
|
|
|
$
|
142,050
|
|
|
$
|
159,175
|
|
|
$
|
579,269
|
|
|
$
|
676,045
|
|
Average monthly
revenues per line
|
$
|
26.11
|
|
|
$
|
26.36
|
|
|
$
|
26.93
|
|
|
$
|
26.43
|
|
|
$
|
27.58
|
|
Subscriber lines (at
period end)
|
1,711,366
|
|
|
1,767,212
|
|
|
1,940,825
|
|
|
1,711,366
|
|
|
1,940,825
|
|
Customer
churn
|
2.2
|
%
|
|
2.2
|
%
|
|
2.2
|
%
|
|
2.2
|
%
|
|
2.3
|
%
|
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
|
|
For the Years Ended
|
|
December 31,
|
|
September 30,
|
|
December 31,
|
|
December 31,
|
|
2016
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Income from
operations
|
$
|
5,214
|
|
|
$
|
15,029
|
|
|
$
|
8,298
|
|
|
$
|
44,154
|
|
|
$
|
52,992
|
|
Depreciation and
amortization
|
19,070
|
|
|
18,018
|
|
|
17,979
|
|
|
72,285
|
|
|
61,833
|
|
Share-based
expense
|
9,462
|
|
|
6,526
|
|
|
7,460
|
|
|
30,253
|
|
|
27,541
|
|
Acquisition related
transaction and integration costs
|
(219)
|
|
|
(68)
|
|
|
71
|
|
|
4,863
|
|
|
2,610
|
|
Acquisition related
consideration accounted for as compensation
|
6,813
|
|
|
6,655
|
|
|
—
|
|
|
16,780
|
|
|
—
|
|
Change in contingent
consideration
|
(4,110)
|
|
|
(7,362)
|
|
|
—
|
|
|
(11,472)
|
|
|
—
|
|
Organizational
transformation
|
—
|
|
|
2,435
|
|
|
—
|
|
|
2,435
|
|
|
—
|
|
Loss on
sublease
|
744
|
|
|
—
|
|
|
—
|
|
|
744
|
|
|
—
|
|
Loss from
discontinued operation, excluding income tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,615)
|
|
Depreciation from
discontinued operation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
132
|
|
Net loss attributable
to noncontrolling interest
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
59
|
|
Adjusted
OIBDA
|
$
|
36,974
|
|
|
$
|
41,233
|
|
|
$
|
33,808
|
|
|
$
|
160,042
|
|
|
$
|
143,552
|
|
Less:
|
|
|
|
|
|
|
|
|
|
Capital
expenditures
|
$
|
(6,166)
|
|
|
$
|
(4,032)
|
|
|
$
|
(7,745)
|
|
|
$
|
(26,146)
|
|
|
$
|
(17,323)
|
|
Intangible
assets
|
$
|
(50)
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(50)
|
|
|
$
|
(2,500)
|
|
Acquisition and
development of software assets
|
$
|
(2,551)
|
|
|
$
|
(3,332)
|
|
|
$
|
(6,251)
|
|
|
$
|
(11,538)
|
|
|
$
|
(14,183)
|
|
Adjusted OIBDA Minus
Capex
|
$
|
28,207
|
|
|
$
|
33,869
|
|
|
$
|
19,812
|
|
|
$
|
122,308
|
|
|
$
|
109,546
|
|
VONAGE HOLDINGS
CORP.
TABLE 4. RECONCILIATION OF GAAP NET INCOME ATTRIBUTABLE TO VONAGE
TO
NET INCOME ATTRIBUTABLE TO VONAGE EXCLUDING ADJUSTMENTS
(Dollars in thousands, except per share amounts)
(unaudited)
|
|
|
|
Three Months Ended
|
|
For the Years Ended
|
|
December 31,
|
|
September 30,
|
|
December 31,
|
|
December 31,
|
|
2016
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Net income
attributable to Vonage
|
$
|
1
|
|
|
$
|
9,078
|
|
|
$
|
3,406
|
|
|
$
|
17,907
|
|
|
$
|
22,655
|
|
Amortization of
acquisition - related intangibles
|
8,706
|
|
|
8,074
|
|
|
7,880
|
|
|
32,016
|
|
|
24,592
|
|
Acquisition related
transaction and integration costs
|
(219)
|
|
|
(68)
|
|
|
71
|
|
|
4,863
|
|
|
2,610
|
|
Acquisition related
consideration accounted for as compensation
|
6,813
|
|
|
6,655
|
|
|
—
|
|
|
16,780
|
|
|
—
|
|
Change in contingent
consideration
|
(4,110)
|
|
|
(7,362)
|
|
|
—
|
|
|
(11,472)
|
|
|
—
|
|
Organizational
transformation
|
—
|
|
|
2,435
|
|
|
—
|
|
|
2,435
|
|
|
—
|
|
Loss on
sublease
|
744
|
|
|
—
|
|
|
—
|
|
|
744
|
|
|
—
|
|
Tax effect on
adjusting items
|
(4,932)
|
|
|
(4,022)
|
|
|
(3,286)
|
|
|
(18,745)
|
|
|
(11,240)
|
|
Net income
attributable to Vonage excluding adjustments
|
$
|
7,003
|
|
|
$
|
14,790
|
|
|
$
|
8,071
|
|
|
$
|
44,528
|
|
|
$
|
38,617
|
|
Net income
attributable to Vonage per common share:
|
|
|
|
|
|
|
|
|
|
Basic
|
$
|
—
|
|
|
$
|
0.04
|
|
|
$
|
0.02
|
|
|
$
|
0.08
|
|
|
$
|
0.11
|
|
Diluted
|
$
|
—
|
|
|
$
|
0.04
|
|
|
$
|
0.01
|
|
|
$
|
0.08
|
|
|
$
|
0.10
|
|
Weighted-average
common shares outstanding:
|
|
|
|
|
|
|
|
|
|
Basic
|
218,375
|
|
|
217,000
|
|
|
213,864
|
|
|
215,751
|
|
|
213,147
|
|
Diluted
|
237,670
|
|
|
234,868
|
|
|
227,751
|
|
|
231,941
|
|
|
224,110
|
|
Net income
attributable to Vonage excluding adjustments per common share,
excluding adjustments:
|
|
|
|
|
|
|
|
|
|
Basic
|
$
|
0.03
|
|
|
$
|
0.07
|
|
|
$
|
0.04
|
|
|
$
|
0.21
|
|
|
$
|
0.18
|
|
Diluted
|
$
|
0.03
|
|
|
$
|
0.06
|
|
|
$
|
0.04
|
|
|
$
|
0.19
|
|
|
$
|
0.17
|
|
Weighted-average
common shares outstanding:
|
|
|
|
|
|
|
|
|
|
Basic
|
218,375
|
|
|
217,000
|
|
|
213,864
|
|
|
215,751
|
|
|
213,147
|
|
Diluted
|
237,670
|
|
|
234,868
|
|
|
227,751
|
|
|
231,941
|
|
|
224,110
|
|
VONAGE HOLDINGS
CORP.
TABLE 5. FREE CASH
FLOW
(Dollars in
thousands)
(unaudited)
|
|
|
|
Three Months Ended
|
|
For the Years Ended
|
|
December 31,
|
|
September 30,
|
|
December 31,
|
|
December 31,
|
|
2016
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Net cash provided by
operating activities
|
$
|
21,757
|
|
|
$
|
26,694
|
|
|
$
|
46,105
|
|
|
$
|
87,012
|
|
|
$
|
129,731
|
|
Less:
|
|
|
|
|
|
|
|
|
|
Capital
expenditures
|
(6,166)
|
|
|
(4,032)
|
|
|
(7,745)
|
|
|
(26,146)
|
|
|
(17,323)
|
|
Intangible
assets
|
(50)
|
|
|
—
|
|
|
—
|
|
|
(50)
|
|
|
(2,500)
|
|
Acquisition and
development of software assets
|
(2,551)
|
|
|
(3,332)
|
|
|
(6,251)
|
|
|
(11,538)
|
|
|
(14,183)
|
|
Free cash
flow
|
$
|
12,990
|
|
|
$
|
19,330
|
|
|
$
|
32,109
|
|
|
$
|
49,278
|
|
|
$
|
95,725
|
|
VONAGE HOLDINGS
CORP.
TABLE 6.
RECONCILIATION OF NOTES PAYABLE, INDEBTEDNESS UNDER REVOLVING
CREDIT FACILITY, AND CAPITAL LEASES TO NET DEBT
(Dollars in
thousands)
(unaudited)
|
|
|
|
|
For the years
ended December 31,
|
|
|
2016
|
|
2015
|
|
|
|
|
|
Current maturities of
capital lease obligations
|
|
$
|
3,288
|
|
|
$
|
4,398
|
|
Current portion of
notes payable
|
|
18,750
|
|
|
15,000
|
|
Notes payable and
indebtedness under revolving credit facility, net of current
maturities and debt related costs
|
|
300,124
|
|
|
195,392
|
|
Unamortized debt
related costs
|
|
1,064
|
|
|
1,108
|
|
Capital lease
obligations, net of current maturities
|
|
140
|
|
|
3,363
|
|
Gross debt
|
|
323,366
|
|
|
219,261
|
|
Less:
|
|
|
|
|
Unrestricted cash and
marketable securities
|
|
29,679
|
|
|
67,634
|
|
Net debt
|
|
$
|
293,687
|
|
|
$
|
151,627
|
|
About Vonage
Vonage (NYSE: VG) is a leading provider of cloud communications
services for business. Vonage transforms the way people work and
businesses operate through a portfolio of cloud-based
communications solutions that enable internal collaboration among
employees, while also keeping companies closely connected with
their customers, across any mode of communication, on any device.
Vonage's API Platform provides tools for voice, messaging and phone
verification services, allowing developers to embed contextual,
programmable communications into mobile apps, websites and business
systems, enabling enterprises to easily communicate relevant
information to their customers in real time, anywhere in the world,
through text messaging, chat, social media and voice. The Company
also provides a robust suite of feature-rich residential
communication solutions. In 2015 and 2016, Vonage was named a
Visionary in the Gartner Magic Quadrant for Unified Communications
as-a-Service, Worldwide. Vonage has also earned the Frost &
Sullivan Growth Excellence Leadership Award for Hosted IP and
Unified Communications and Collaboration (UCC) Services. For more
information, visit www.vonage.com.
Use of Non-GAAP Financial Measures
This press release includes measures defined as non-GAAP
financial measures by the Securities and Exchange Commission,
including: adjusted Operating Income Before Depreciation and
Amortization ("adjusted OIBDA"), adjusted OIBDA less Capex,
adjusted net income, 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 costs, acquisition related
consideration accounted for as compensation, change in contingent
consideration, costs associated with organizational transformation,
loss on sublease, loss from discontinued operation excluding income
tax, depreciation from discontinued operation, and net loss
attributable to noncontrolling interest.
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
costs, acquisition related consideration accounted for as
compensation and change in contingent consideration; of one-time
costs associated with organizational transformation; 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 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.
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 intangibles,
acquisition related transaction and integration costs, acquisition
related consideration accounted for as compensation, change in
contingent consideration, organizational transformation, 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 costs, acquisition related
consideration accounted for as compensation, change in contingent
consideration, and one-time costs associated with organizational
transformation are not reflective of operating performance.
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, unamortized 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, 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.
Safe Harbor Statement
This press release contains forward-looking statements,
including statements about acquisitions, acquisition integration,
growth priorities or plans, revenues, adjusted OIBDA, churn, seats,
lines or accounts, average revenue per user, cost of telephony
services, the Company's share repurchase plan, 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
unified communications market; our ability to adapt to rapid
changes in the market for voice and messaging services; risks
associated with the market for CPaaS products and services; our
ability to retain customers and attract new customers, including in
a cost effective manner; the risk associated with developing and
maintaining effective internal sales teams; the risk associated
with developing and maintaining effective distribution channels;
risks related to the acquisition or integration of future
businesses; security breaches and other compromises of information
security; risks associated with sales of our UCaaS services to
medium-sized and enterprise customers; our dependence on third
party facilities, equipment, systems and services; system
disruptions or flaws in our technology and systems; our ability to
scale our business and grow efficiently; risks associated with our
third-party vendor cloud infrastructure; our reliance on third
party hardware and software; 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; 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; uncertainties relating to regulation of VoIP
services; results of regulatory inquiries into our business
practices; uncertainties regarding the regulation of CPaaS
services; customer misuse of our CPaaS products; the impact of
export controls and economic sanctions regulations; fraudulent use
of our name or services; our ability to establish and expand
strategic alliances; risks associated with operating abroad;
liability under anti-corruption laws; governmental regulation and
taxes in our international operations; the impact of domestic and
international tax regulations on our CPaaS products and services;
our dependence upon key personnel; our dependence on our customers'
existing broadband connections; restrictions in our debt agreements
that may limit our operating flexibility; foreign currency
fluctuations; 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, 2015, 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)
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SOURCE Vonage Holdings Corp.