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Why Vonage Holdings Corp. Stock Fell on Friday

By Daniel Sparks - Nov 2, 2018 at 5:19PM

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Revenue was weaker than expected, but management is upbeat.

What happened

Shares of cloud-based communications services company Vonage Holdings (VG 1.27%) took a hit on Friday, falling as much as 15%. But shares closed the trading day down 12.6%.

The stock's decline followed Vonage's third-quarter earnings release, which included non-GAAP earnings per share that were in line with analyst expectations and revenue below the consensus forecast for the key metric -- helping explain the market's response to the earnings report.

A chalkboard sketch of a chart showing a stock price moving lower

Image source: Getty Images.

So what

For its third quarter, Vonage reported revenue of $262 million, up 3% year over year. Non-GAAP earnings per share were $0.09, up from $0.07 in the year-ago quarter. On average, analysts expected Vonage to report revenue and non-GAAP earnings per share of $264 million and $0.09,  respectively.

Vonage CEO Alan Masarek was happy with the quarter. "Vonage delivered another strong quarter, as Business service revenues grew 23% and total Business revenues accounted for 59% of consolidated revenues," he noted in the company's third-quarter earnings release. "These results underscore the tremendous progress that we are making with the development of our OneVonage technology platform, and in sales and marketing execution within the mid-market and enterprise segments."

Now what

Since Vonage acquired cloud contact center-as-a-service provider NewVoiceMedia on Oct. 31, the company updated its guidance to reflect financials from this acquisition. Vonage said it now expects full-year 2018 consolidated revenue to be between $1.048 billion and $1.052 billion.

For its Vonage business, management said it expects full-year revenue to be $608 to $612 million. This is up from a previous forecast for Vonage business revenue between $600 million and $610 million.

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