Vonage Holdings Corp. Reports Third Quarter 2013 Results
PR Newswire Association LLC |
Adjusted earnings before interest, taxes, depreciation and amortization1 ("EBITDA") of
GAAP net income was
"We continued to gain traction with BasicTalk, which launched nationally in May," said
"We are making important strides towards our launch in
"In November we expect to close our deal to acquire Vocalocity. This transformative acquisition will place
"While we continued to invest for growth, we also met our commitment to return capital to shareholders, repurchasing approximately five million shares of our stock for
Third Quarter Financial and Operating Results
Revenue was
Average Revenue per User was
Direct cost of telephony services ("COTS") was
Direct cost of goods sold was
Selling, general and administrative ("SG&A") expense was
Marketing expense was
As of
Share Repurchase Program
During the third quarter,
Growth Priorities
Building on the successful national launch of BasicTalk,
Mobile is a central component of the Company's core service offering, international expansion opportunities and standalone products. The Vonage Mobile app continues to attract new downloads and active users aided by the recent addition of video calling. Approximately 20% of all calls made on the Vonage Mobile app are video calls. In the coming weeks, the Company expects to launch a unique video messaging feature, followed by the U.S. launch of its patented international roaming feature, ReachMe Roaming. Vonage Mobile Extensions continues to grow in popularity and use, with 80% of
Vocalocity Acquisition
On
After the close,
Patent Portfolio
Outlook
(1) |
This is a non-GAAP financial measure. Refer below to Table 3 for a reconciliation to GAAP income (loss) from operations. |
(2) |
This is a non-GAAP financial measure. Refer below to Table 4 for a reconciliation to GAAP net income (loss). |
(3) |
Direct margin is defined as revenues less direct cost of telephony services and direct cost of goods sold as a percentage of revenues. |
(4) |
This is a non-GAAP financial measure. Refer below to Table 5 for a reconciliation to GAAP net cash provided by operating activities. |
(5) |
Frost and Sullivan North American Hosted IP Telephony and UCC Services Market report, |
TABLE 1. CONSOLIDATED FINANCIAL DATA (Dollars in thousands, except per share amounts) |
||||||||||||||||||
Three Months Ended |
Nine Months Ended |
|||||||||||||||||
|
|
|
|
|||||||||||||||
2013 |
2013 |
2012 |
2013 |
2012 |
||||||||||||||
(unaudited) |
(unaudited) |
|||||||||||||||||
Statement of Operations Data: |
||||||||||||||||||
Revenues |
$ |
203,984 |
$ |
204,776 |
$ |
207,584 |
$ |
617,847 |
$ |
635,403 |
||||||||
Operating Expenses: |
||||||||||||||||||
Direct cost of telephony services (excluding |
||||||||||||||||||
depreciation and amortization of |
</td> | |||||||||||||||||
|
52,882 |
53,527 |
55,245 |
161,590 |
175,063 |
|||||||||||||
Direct cost of goods sold |
9,535 |
9,217 |
10,444 |
27,630 |
29,565 |
|||||||||||||
Selling, general and administrative |
64,752 |
61,481 |
59,676 |
189,143 |
179,907 |
|||||||||||||
Marketing |
59,133 |
58,330 |
51,361 |
169,132 |
159,739 |
|||||||||||||
Depreciation and amortization |
8,459 |
8,205 |
8,110 |
24,639 |
25,272 |
|||||||||||||
Loss from abandonment of software assets |
— |
— |
— |
— |
25,262 |
|||||||||||||
194,761 |
190,760 |
184,836 |
572,134 |
594,808 |
||||||||||||||
Income from operations |
9,223 |
14,016 |
22,748 |
45,713 |
40,595 |
|||||||||||||
Other income (expense): |
||||||||||||||||||
Interest income |
97 |
74 |
30 |
208 |
80 |
|||||||||||||
Interest expense |
(1,509) |
(1,732) |
(1,402) |
(4,698) |
(4,719) |
|||||||||||||
Other (expense) income, net |
(15) |
(17) |
28 |
(71) |
5 |
|||||||||||||
(1,427) |
(1,675) |
(1,344) |
(4,561) |
(4,634) |
||||||||||||||
Income before income tax expense |
7,796 |
12,341 |
21,404 |
41,152 |
35,961 |
|||||||||||||
Income tax expense |
(3,811) |
(4,894) |
(8,191) |
(16,673) |
(12,167) |
|||||||||||||
Net income |
3,985 |
7,447 |
13,213 |
24,479 |
23,794 |
|||||||||||||
Plus: Net loss attributable to noncontrolling interest |
222 |
— |
— |
222 |
— |
|||||||||||||
Net income attributable to |
<span class="prnews_span">$ |
4,207 |
$ |
7,447 |
$ |
13,213 |
$ |
24,701 |
$ |
23,794 |
||||||||
Net income attributable to |
||||||||||||||||||
Basic |
$ |
0.02 |
$ |
0.04 |
$ |
0.06 |
$ |
0.12 |
$ |
0.11 |
||||||||
Diluted |
$ |
0.02 |
$ |
0.03 |
$ |
0.06 |
$ |
0.11 |
$ |
0.10 |
||||||||
Weighted-average common shares outstanding: |
||||||||||||||||||
Basic |
209,589 |
212,169 |
225,555 |
212,124 |
225,904 |
|||||||||||||
Diluted |
217,059 |
219,837 |
233,708 |
222,321 |
233,677 |
Three Months Ended |
Nine Months Ended |
||||||||||||||||||
|
|
|
|
||||||||||||||||
2013 |
2013 |
2012 |
2013 |
2012 |
|||||||||||||||
(unaudited) |
(unaudited) |
||||||||||||||||||
Statement of |
|||||||||||||||||||
Net cash provided by operating activities |
$ |
23,550 |
$ |
18,852 |
$ |
18,157 |
$ |
52,154 |
$ |
58,797 |
|||||||||
Net cash used in investing activities |
(3,760) |
(7,657) |
(1,120) |
(14,504) |
(13,461) |
||||||||||||||
Net cash used in financing activities |
(19,292) |
(17,567) |
(15,513) |
(34,213) |
(30,128) |
||||||||||||||
Capital expenditures, intangible asset purchases and development of software assets |
(3,758) |
(7,656) |
(1,402) |
(15,758) |
(14,741) |
TABLE 1. SUMMARY CONSOLIDATED FINANCIAL DATA - (Continued) (Dollars in thousands, except per share amounts) |
||||||||
|
|
|||||||
2013 |
2012 |
|||||||
(unaudited) |
(audited) |
|||||||
Balance Sheet Data (at period end): |
||||||||
Cash and cash equivalents |
$ |
99,915 |
$ |
97,110 |
||||
Restricted cash |
4,401 |
5,656 |
||||||
Accounts receivable, net of allowance |
21,932 |
20,416 |
||||||
Inventory, net of allowance |
11,492 |
5,470 |
||||||
Prepaid expenses and other current assets |
19,374 |
15,487 |
||||||
Deferred customer acquisition costs |
6,199 |
5,765 |
||||||
Property and equipment, net |
52,657 |
60,533 |
||||||
Software, net |
20,337 |
19,560 |
||||||
Debt related costs, net |
1,638 |
772 |
||||||
Intangible assets, net |
4,901 |
6,681 |
||||||
Total deferred tax assets, including current portion, net |
290,170 |
306,113 |
||||||
Other assets |
1,970 |
3,826 |
||||||
Total assets |
$ |
534,986 |
<br /> |
$ |
547,389 |
|||
Accounts payable and accrued expenses |
$ |
115,152 |
$ |
129,815 |
||||
Deferred revenue |
35,548 |
36,533 |
||||||
Total notes payable, including current portion |
52,500 |
42,500 |
||||||
Capital lease obligations |
13,751 |
15,561 |
||||||
Other liabilities |
1,612 |
1,565 |
||||||
Total liabilities |
$ |
218,563 |
$ |
225,974 |
||||
Redeemable noncontrolling interest |
$ |
233 |
$ |
— |
||||
Total stockholders' equity |
$ |
316,190 |
$ |
321,415 |
TABLE 2. SUMMARY CONSOLIDATED OPERATING DATA (unaudited) |
|||||||||||||||||||
Three Months Ended |
Nine Months Ended |
||||||||||||||||||
|
|
|
|
||||||||||||||||
2013 |
2013 |
2012 |
2013 |
2012 |
|||||||||||||||
Gross subscriber line additions |
174,670 |
155,412 |
171,628 |
478,085 |
500,431 |
||||||||||||||
Change in net subscriber lines |
10,738 |
2,541 |
9,440 |
879 |
(9,363) |
||||||||||||||
Subscriber lines (at period end) |
2,360,695 |
2,349,957 |
2,365,524 |
2,360,695 |
2,365,524 |
||||||||||||||
Average monthly customer churn |
2.6 |
% |
2.4 |
% |
2.5 |
% |
2.5 |
% |
2.6 |
% |
|||||||||
Average monthly operating revenue per line |
$ |
28.87 |
$ |
29.06 |
$ |
29.31 |
$ |
29.09 |
$ |
29.79 |
|||||||||
Average monthly direct cost of telephony services per line |
$ |
7.48 |
$ |
7.60 |
$ |
7.80 |
$ |
7.61 |
$ |
8.21 |
|||||||||
Marketing costs per gross subscriber line addition |
$ |
339 |
$ |
375 |
$ |
299 |
$ |
354 |
$ |
319 |
|||||||||
Employees (excluding temporary help) (at period end) |
933 |
946 |
971 |
933 |
971 |
||||||||||||||
Direct margin as a % of revenues |
69.4 |
% |
69.4 |
% |
68.4 |
% |
69.4 |
% |
67.8 |
% |
TABLE 3. RECONCILIATION OF GAAP INCOME FROM OPERATIONS TO ADJUSTED EBITDA (Dollars in thousands) (unaudited) |
|||||||||||||||||||
Three Months Ended |
Nine Months Ended |
||||||||||||||||||
|
|
|
|
||||||||||||||||
2013 |
2013 |
2012 |
2013 |
2012 |
|||||||||||||||
Income from operations |
$ |
9,223 |
$ |
14,016 |
$ |
22,748 |
$ |
45,713 |
$ |
40,595 |
|||||||||
Depreciation and amortization |
8,459 |
8,205 |
8,110 |
24,639 |
25,272 |
||||||||||||||
Loss from abandonment of software assets |
— |
— |
— |
— |
25,262 |
||||||||||||||
Share-based expense |
4,684 |
4,419 |
3,473 |
13,085 |
9,601 |
||||||||||||||
Acquisition related costs |
680 |
— |
— |
680 |
— |
||||||||||||||
Net loss attributable to noncontrolling interest |
222 |
— |
— |
222 |
— | ||||||||||||||
Adjusted EBITDA |
23,268 |
26,640 |
34,331 |
84,339 |
100,730 |
|
|||||||||||||||||||
Three Months Ended |
Nine Months Ended |
||||||||||||||||||
|
|
|
|
||||||||||||||||
2013 |
2013 |
2012 |
2013 |
2012 |
|||||||||||||||
Net income attributable to |
$ |
4,207 |
$ |
7,447 |
$ |
13,213 |
$ |
24,701 |
$ |
23,794 |
|||||||||
Loss from abandonment of software assets |
— |
— |
— |
— |
25,262 |
||||||||||||||
Acquisition related costs |
680 |
— |
— |
680 |
— |
||||||||||||||
Income tax expense |
3,811 |
4,894 |
8,191 |
16,673 |
12,167 |
||||||||||||||
Net income attributable to |
$ |
8,698 |
$ |
12,341 |
$ |
21,404 |
$ |
42,054 |
$ |
61,223 |
|||||||||
Net income attributable to |
|||||||||||||||||||
Basic |
$ |
0.02 |
$ |
0.04 |
$ |
0.06 |
$ |
0.12 |
$ |
0.11 |
|||||||||
Diluted |
$ |
0.02 |
$ |
0.03 |
$ |
0.06 |
$ |
0.11 |
$ |
0.10 |
|||||||||
Weighted-average common shares outstanding: |
|||||||||||||||||||
Basic |
209,589 |
212,169 |
225,555 |
212,124 |
225,904 |
Diluted |
217,059 |
219,837 |
233,708 |
222,321 |
233,677 |
||||||||
Net income attributable to |
|||||||||||||||||||
Basic |
$ |
0.04 |
$ |
0.06 |
$ |
0.09 |
$ |
0.20 |
$ |
0.27 |
|||||||||
Diluted |
$ |
0.04 |
$ |
0.06 |
$ |
0.09 |
$ |
0.19 |
$ |
0.26 |
|||||||||
Weighted-average common shares outstanding: |
|||||||||||||||||||
Basic |
209,589 |
212,169 |
225,555 |
212,124 |
225,904 |
||||||||||||||
Diluted |
217,059 |
219,837 |
233,708 |
222,321 |
233,677 |
TABLE 5. FREE (Dollars in thousands) (unaudited) |
|||||||||||||||||||
Three Months Ended |
Nine Months Ended |
||||||||||||||||||
|
|
|
|
||||||||||||||||
2013 |
2013 |
2012</b> |
2013 |
2012 |
|||||||||||||||
Net cash provided by operating activities |
$ |
23,550 |
$ |
18,852 |
$ |
18,157 |
$ |
52,154 |
$ |
58,797 |
|||||||||
Less: |
|||||||||||||||||||
Capital expenditures |
(1,205) |
(3,772) |
(865) |
(7,008) |
(4,557) |
||||||||||||||
Acquisition and development of software assets |
(2,553) |
(3,884) |
(537) |
(8,750) |
(10,184) |
||||||||||||||
Free cash flow |
$ |
19,792 |
$ |
11,196 |
$ |
16,755 |
$ |
36,396 |
$ |
44,056 |
TABLE 6. RECONCILIATION OF NOTES PAYABLE AND CAPITAL LEASES TO NET CASH (Dollars in thousands) (unaudited) |
||||||||
|
|
|||||||
2013 |
2012 |
|||||||
Current maturities of capital lease obligations |
$ |
2,779 |
$ |
2,471 |
||||
Current portion of notes payable |
23,333 |
28,333 |
||||||
Notes payable, net of discount and current maturities |
29,167 |
14,167 |
||||||
Capital lease obligations, net of current maturities |
10,972 |
13,090 |
||||||
Gross debt |
66,251 |
58,061 |
||||||
Less: |
||||||||
Unrestricted cash |
99,915 |
97,110 |
||||||
Net cash |
$ |
(33,664) |
$ |
(39,049) |
About
To follow
Use of Non-GAAP Financial Measures
This press release includes the following measures defined as non-GAAP financial measures by the
The Company provides information relating to its adjusted EBITDA so that investors have the same data that the Company employs in assessing its overall operations. The Company believes that trends in its adjusted EBITDA are valuable indicators of the operating performance of the Company on a consolidated basis and of its ability to produce operating cash flow to fund working capital needs, to service debt obligations, and to fund capital expenditures.
The Company has also excluded income tax expense, loss from abandonment of software assets, and acquisition-related costs from its net income (loss). The Company believes that excluding these item will assist investors in evaluating the Company's operating performance and in better understanding its results of operations as income tax expense does not reflect the taxes that we pay during the periods reported due to the availability of significant net operating losses, loss from abandonment of software assets was due to a one-time, non-cash write-off, and one-time acquisition-related costs.
The non-GAAP financial measures used by
Conference Call and Webcast
Management will host a webcast discussion of the quarter on
The webcast will be broadcast live through
Safe Harbor Statement
This press release contains forward-looking statements regarding growth priorities, including new products and related investment, gross line additions and net lines, revenues, churn, financial resources, the Company's stock repurchase plan, capital and software expenditures, and the acquisition of
(vg-f)
SOURCE
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