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How Vonage Holdings, Inc. Stock Rose 25% in November

By Anders Bylund - Updated Dec 7, 2017 at 5:02PM

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The third-quarter earnings report showed a more profitable business mix and surprisingly strong sales. Investors sat up and took notice.

What happened

Shares of Vonage Holdings (VG 5.01%) gained 25.2% in November 2017, according to data from S&P Global Market Intelligence. The bulk of that rocket fuel came from a solid earnings report.

So what

The provider of digital communications services reported strong third-quarter results on Nov. 7. Earnings came in at $0.07 per share, down from $0.09 per share in the year-ago quarter and in line with analyst projections. On the top line, revenues grew 2% year over year to $253 million, while the Street was looking for a flat sales performance. Revenue guidance for the fourth quarter also landed slightly ahead of analyst estimates. The stock closed 8% higher the next day, triggering a steady climb throughout the rest of November.

An excited businessman with a phone and a tablet, celebrating good news.

Image source: Getty Images.

Now what

Vonage CEO Alan Masarek underscored the strength of his company's business-grade services, whose quarterly revenues exceeded the consumer platform's for the first time in company history.

"Our results demonstrate that we're delivering on our strategic priorities, using our full suite of cloud communications services to deliver better business outcomes to our customers, and successfully transforming Vonage into a market leader in business cloud communications," Masarek said in a prepared statement.

The business division's sales rose 22% year over year, while the consumer operations declined by 13%. The company is shifting gears to a more profitable and less price-sensitive clientele, and Vonage investors have enjoyed a market-beating 77% return over the last two years.

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