Vonage shares slide as revenue continues to fall in Q1
VoIP provider Vonage (Nasdaq: VG) today reported a second consecutive quarter of lower revenue, as well as lower earnings in the first quarter of 2012; the combination sent the company's share price down to a new low of $1.85, nearly 10 percent off its opening price, in late-morning trading.
Shares of Holmdel, N.J.-based Vonage Holdings Corp. began the day at $2.08, and have traded in a 52-week range of $1.85 to $5.39.
The company said lower operating income and higher income taxes hurt its bottom line. Additionally, higher churn in the quarter among minority customers continued to have a major impact on its returns.
Vonage's non-GAAP net income was $19 million, or 8 cents a share, down from $23 million, or 10 cents a share, a year ago. Analysts had expected earnings of 7 cents per share. GAAP net income was $14 million, or 6 cents a share, down from $21 million, or 10 cents a share.
Revenue, for Q1 2012, slipped nearly 2 percent from a year ago, to $215.9 million, beating analyst expectations, but continuing a two-quarter slide. In Q4 2011, revenue was down 0.9 percent from a year earlier, to $215.7 million.
For fiscal year 2012, Vonage said it expects to achieve adjusted EBITDA of $120 million to $140 million.
Analysts, meanwhile, are taking an increasingly negative view of the company, expecting it to show per-share earnings of 28 cents for 2012, down from estimates of 41 cents at the end of Q4.
CEO Mark Lefar maintained that performance was in line with earlier guidance, and said the company's "core business is stable and generated EBITDA, which was in line with recent quarters."
During the firm's earnings call, he said coast of customer acquisition had risen and that the company would increasingly look to sell its product online, saving money in the process. But acknowledged some of Vonage's audience that didn't have access to the Internet would be disadvantaged.
Lefar reiterated the company's desire to grow its international calling business, especially to the Hispanic audience. Vonage announced it was partnering with Globe, a telecom operator in the Philippines, to leverage the Filipino market in the United States.
With more than 3 million Filipinos living in the United States, the Filipino calling segment represents a substantial growth opportunity for Vonage and for Globe, Lefar said.
"This alliance marks a significant milestone in Vonage's strategy to expand our services beyond North America," Lefar said. "By leveraging our heritage of VoIP innovation and expertise in international long distance, we can offer partners such as Globe the ability to expand their communications businesses in their local markets and beyond."
And, he said, the company remains "actively involved in discussions with several prospective partners and look forward to announcing additional alliances before the end of this year."
He said, specifically, the company was looking hard at a deal that would "increase services for 700,000 people of Pakistani descent living in U.S.," adding the company was "actively developing additional partnerships that parallel the Globe relationship."
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