What happened
Shares of Vonage Holdings (VG) gained 25.6% in August 2017, according to data from S&P Global Market Intelligence. The inveterate operator of digital voice communications services delivered a fantastic second-quarter report in early August, followed by positive analyst notes. Share prices immediately surged 25% higher on that one-two punch.
So what
In the second quarter, Vonage's sales rose 7.7% year over year to $252 million. Adjusted earnings increased by 40% to $0.07 per share. Both figures exceeded Wall Street's consensus targets, driven by 23% organic growth in the segment for business-class communications services.
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Now what
Vonage is building most of its current growth around small- to medium-business clients, but also signed four new enterprise contracts in the second quarter. The consumer service also held up better than expected, supported by a large number of international callers.
The company has exceeded Wall Street's expectations across the board in 10 of the last 11 reports. Share prices followed suit by doubling in 16 months. Vonage's stock is expensive by most metrics, but supported by solid sales growth and the ongoing shift into more profitable enterprise contracts. I might not be a Vonage buyer today, but the stock deserves a spot on my watchlist as this growth story unfolds.
