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Vonage Continues its Growth to Become a Pure-play Business SaaS and Cloud Contact Center as a Service Provider

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Vonage Holdings Corp., a global business cloud communications leader, announced results for the quarter and full year ended December 31, 2019.

“In 2019, we took a number of decisive actions to enable long-term success,” said Alan Masarek, Chief Executive Officer. “We completed the move to our own technology across our core UCaaS, CCaaS and CPaaS products, and invested significantly in product innovation and platform enhancement. We also invested in and focused our go-to-market efforts to further drive revenue growth in high-value APIs and Mid-market and Enterprise customers in Applications.”

Strategic Review of Consumer Segment

In light of the significant scale and growth of the Business segment, the Company is initiating a strategic review of its Consumer segment, including the feasibility of its divestiture, to further the Company’s goal of becoming a pure-play Business SaaS company. The review will be led by the Board, working with management and with the assistance of financial and legal advisors, and will include an operational review with the assistance of consultants.

Mr. Masarek continued, “We finished the year with solid momentum. I’m energized by the tremendous opportunity ahead as we execute our strategy. Given the progress we have made transforming Vonage away from Consumer and into a Business SaaS company, we are undertaking a strategic review of our Consumer segment, with the aim of enhancing shareholder value.”

Fourth Quarter 2019 Business Segment Results

  • Vonage Business Revenues of $218 million, representing 28% GAAP growth.
  • Business Service Revenues of $196 million, a 32% GAAP increase
    • Adjusted to include acquisitions for all periods and other one-time items, Vonage Business Service Revenues(1) increased 24% year-over-year.
  • API Platform Revenues (which are all Service revenues) grew 50% GAAP.
  • Applications Service Revenues grew 20% GAAP and 8% adjusted.

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Other Fourth Quarter Business Segment Highlights

  • Revenue growth from Applications customers with greater than $12,000 of Annual Recurring Revenue (ARR) accelerated to 14% in the fourth quarter of 2019 from 12% in the third quarter of 2019. Bookings from this cohort represented 62% of total bookings in the fourth quarter of 2019 compared to 37% in the fourth quarter of 2018.
  • Revenue growth from customers with greater than $120,000 of ARR accelerated to 21% in the fourth quarter of 2019 from 17% in the third quarter of 2019.
  • Welcomed former SAP executive Rodolpho Cardenuto to the company as President of the Applications Group.
  • High Value API revenue grew at nearly twice the rate of overall API Platform revenues.
  • Business Service Revenue per Customer was $476 per month, up 21% from the year-ago quarter.
  • Business Service Revenue Churn was 1.2%, up from 1.1% in the year-ago quarter.

Full Year 2019 Business Segment Results

  • Business Revenues were $804 million, representing 32% GAAP growth.
  • Business Service Revenues were $720 million, a 37% GAAP increase.
    • Adjusted to include acquisitions for all periods and other one-time items, Vonage Business Service Revenues(1) increased 22% year-over-year.
  • API Platform Revenues (which are all service revenues) grew 47% GAAP.
  • Applications Service Revenues grew 30% GAAP and 10% adjusted.

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Other Business Segment Highlights

  • Unveiled the revitalized Vonage brand, unifying around a single global corporate identity.
  • Named a Leader in Gartner’s CCaaS Magic Quadrant for Western Europe and a Visionary in Gartner’s CCaaS Magic Quadrant for North America. Frost & Sullivan recognized Vonage as a CPaaS Market Growth and Innovation Leader and as CPaaS Provider of the Year in the Asia-Pacific (APAC) region.
  • Invested significantly in the Vonage Communications Platform. The Company deployed Artificial Intelligence across Vonage Business Cloud (VBC) and the API Platform leveraging its acquisition of Over.ai. Vonage also launched Vonage Meetings, the Company’s native video collaboration solution integrated with VBC. Vonage also launched Conversation API, which enables developers and enterprises to create customized, real-time conversations that maintain context across multiple channels, including messaging and voice.
  • Registered developers on Vonage’s API Platform increased to 940,000.

Fourth Quarter 2019 Consumer Segment Results

  • Consumer Revenues were $92 million, down 11% compared to the year-ago quarter.
  • Customer churn was 1.7%, down 0.1% compared to the year-ago quarter.
  • Average revenue per line (“ARPU”) was $27.57, up $1.25 compared to the year-ago quarter.
  • Ended the quarter with approximately 1.1 million Consumer subscriber lines. More than 90% of these customers are tenured, defined as customers for more than two years.

Full Year 2019 Consumer Segment Results

  • Consumer Revenues were $385 million, down 13% from the prior year.
  • Customer churn was 1.8%, unchanged from the prior year.
  • Average revenue per line (“ARPU”) was $27.04, up $0.62 from the prior year.

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