Vonage Holdings Corporation Climbs 4% on Q1 Earnings Surprise

Vonage reported strong first-quarter earnings and a good start to its brand new business-class voice services, fueling an immediate 3% share price jump.

May 1, 2014 at 12:00AM
Vg Logo

Image source: Vonage.

Vonage Holdings (NYSE:VG) just reported results for the first quarter of 2014, complete with a slide deck for the conference call with analysts. Shares climbed more than 4% higher on the earnings news.

The communications services provider's sales increased 6% year over year to $221 million, slightly ahead of analyst estimates. Adjusted earnings fell 40% to $0.06 per share, doubling the Street's $0.03 consensus target.

The company added 191,000 gross lines in the quarter, up from 148,000 in the year-ago quarter. Net additions swung from a loss of 12,000 subscribers to 13,000 new accounts.

The recent acquisition of business services specialist Vocalocity led to the creation of a new reportable division, now known as Vonage Business Solutions. This segment showed 40% year-over-year revenue growth and low subscriber churn. Reporting $19 million in first-quarter sales, the fast-growing division accounted for just 8.6% of Vonage's total revenue.

Management attributed the strong business solutions growth to expanded distribution via Vonage's sales channels, effective rebranding, and successful marketing efforts.

"Vonage Business Solutions' strong performance reflects an acceleration in growth, and we will continue to invest to further penetrate the attractive market for small and medium businesses," said Vonage CEO Marc Lefar in a prepared statement.

Anders Bylund and The Motley Fool have no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days.

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