Vonage Holdings Corp.

Size: px

Start display at page:

Download "Vonage Holdings Corp."

Adam Clyde Morgan
5 years ago
Views:

1 Vonage Holdings Corp. Unaudited Q115 Q215 Q315 Q415 Q116 Q216 Q316 Q416 Q117 Q217 Q317 Q417 SUMMARY CONSOLIDATED FINANCIAL DATA (In thousands, except per share amounts) Statement of Income Data: Operating Revenues: Total revenues $ 219,730 $ 221,858 $ 223,360 $ 230,124 $ 226,824 $ 233,675 $ 248,359 $ 246,763 $ 243,347 $ 251,836 $ 253,083 $ 254,020 Operating Expenses: Cost of service 61,853 64,209 67,193 68,513 69,150 76,078 87,377 88,768 87,596 97,674 96,632 97,058 Cost of goods sold 9,190 8,217 8,206 8,597 9,066 8,352 8,591 7,768 7,293 6,187 6,306 6,208 Sales and marketing 85,564 84,385 88,028 89,919 79,601 83,344 83,731 84,293 81,931 79,738 73,576 78,006 Engineering and development 6,605 6,864 6,830 6,921 6,834 7,243 8,075 7,607 8,370 6,670 6,956 7,634 General and administrative 23,234 27,162 28,860 29,897 26,670 35,053 27,538 34,043 35,086 36,514 26,811 24,126 Depreciation and amortization 13,945 14,463 15,446 17,979 16,979 18,218 18,018 19,070 17,947 18,394 18,179 18, , , , , , , , , , , , ,035 Income from operations 19,339 16,558 8,797 8,298 18,524 5,387 15,029 5,214 5,124 6,659 24,623 22,985 Other Income (Expense): Interest income Interest expense (1,935) (2,088) (2,222) (2,541) (2,446) (3,057) (3,974) (3,565) (3,703) (3,861) (3,821) (3,483) Other income (expense), net (577) 32 (50) (247) (495) (109) (220) (2,492) (2,035) (2,248) (2,764) (2,271) (2,928) (4,450) (3,660) (3,918) (3,171) (3,353) (3,156) Income from contining opeartions before income tax expense 16,847 14,523 6,549 5,534 16,253 2,459 10,579 1,554 1,206 3,488 21,270 19,829 Income tax expense (6,998) (6,176) (3,116) (2,128) (8,322) (2,241) (3,539) (3,592) 4,707 1,337 (10,668) (75,102) Income from continuing operations 9,849 8,347 3,433 3,406 7, ,040 (2,038) 5,913 4,825 10,602 (55,273) Discontined operations: Loss from discontinued operations (1,615) Loss on disposal, net of taxes (824) (2,439) Net income 7,410 8,347 3,433 3,406 7, ,040 (2,038) 5,913 4,825 10,602 (55,273) Plus: Net loss from discontinued operations attributable to noncontrolling interest Net income attributable to Vonage $ 7,469 $ 8,347 $ 3,433 $ 3,406 $ 7,931 $ 218 $ 7,040 $ (2,038) $ 5,913 $ 4,825 $ 10,602 $ (55,273) Net Income attributable to Vonage per common share: Net income attributable to Vonage common shareholders $ 7,469 $ 8,347 $ 3,433 $ 3,406 $ 7,931 $ 218 $ 7,040 $ (2,038) $ 5,913 $ 4,825 $ 10,602 $ (55,273) Net income per common share - continuing operations: Basic $ 0.05 $ 0.04 $ 0.02 $ 0.02 $ 0.04 $ 0.00 $ 0.03 $ (0.01) $ 0.03 $ 0.02 $ 0.05 $ (0.24) Diluted $ 0.04 $ 0.04 $ 0.02 $ 0.01 $ 0.04 $ 0.00 $ 0.03 $ (0.01) $ 0.02 $ 0.02 $ 0.04 $ (0.24) Net loss per common share - discontinued operations: Basic $ (0.01) $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - Diluted $ (0.01) $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - Net income per common share - discontinued operations attributable to Vonage: Basic $ 0.04 $ 0.04 $ 0.02 $ 0.02 $ 0.04 $ 0.00 $ 0.03 $ (0.01) $ 0.03 $ 0.02 $ 0.05 $ (0.24) Diluted $ 0.03 $ 0.04 $ 0.02 $ 0.01 $ 0.04 $ 0.00 $ 0.03 $ (0.01) $ 0.02 $ 0.02 $ 0.04 $ (0.24) Diluted 220, , , , , , , , , , , ,339 Statement of Cash Flow Data:

2 Net cash provided by operating activities $ 10,724 $ 35,237 $ 37,665 $ 46,105 $ 17,468 $ 25,059 $ 27,087 $ 23,842 $ 17,261 $ 15,432 $ 47,907 $ 47,458 Net cash used in investing activities (7,994) (29,141) (101,148) (14,413) (10,877) (171,908) (5,852) (2,812) (6,759) (7,518) $ (9,349) $ (7,111) Net cash provided by (used in) financing activities 8,860 (9,959) 74,926 (33,622) (28,995) 135,318 (13,059) (25,210) (13,540) (7,838) $ (35,379) $ (39,485) Capital expenditures, intangible assets, and development of software assets (4,314) (6,188) (9,508) (13,996) (11,207) (10,396) (7,364) (8,767) (7,081) (8,798) $ (9,349) $ (8,061) Balance Sheet Data (at period end): Cash and cash equivalents $ 52,224 $ 48,486 $ 59,777 $ 57,726 $ 35,889 $ 24,331 $ 33,236 $ 29,078 $ 26,220 $ 26,825 $ 29,869 $ 31,360 Marketable securities 8,332 9,535 9,537 9,908 9,600 8,074 6, $ - $ - Restricted cash 2,401 2,407 2,588 2,587 1,860 1,938 1,836 1,851 1,799 1,802 $ 1,827 $ 1,967 Accounts receivable, net of allowance 21,239 24,778 22,669 19,913 20,846 35,272 33,259 36,688 32,108 36,185 $ 42,435 $ 44,159 Inventory, net of allowance 10,963 7,887 7,828 5,542 5,587 4,288 4,440 4,116 3,644 3,503 $ 2,683 $ 2,971 Prepaid expenses and other assets 15,024 16,403 18,363 15,659 18,600 21,557 21,192 29,188 30,895 28,111 $ 26,010 $ 30,196 Deferred customer acquisition costs 4,312 4,073 4,112 4,074 2,929 3,102 2,092 3,136 2,184 1,945 $ 1,863 $ 1,418 Property and equipment, net 46,350 44,759 48,063 49,483 51,881 52,563 49,791 48,415 45,722 44,688 $ 45,760 $ 46,754 Goodwill 142, , , , , , , , , ,806 $ 371,535 $ 373,764 Software, net 17,662 18,088 17,531 20,710 20,293 21,288 22,082 21,971 22,966 23,867 $ 23,574 $ 22,252 Intangible assets, net 105, , , , , , , , , ,076 $ 181,522 $ 173,270 Total deferred tax assets, including current portion, net 241, , , , , , , , , ,286 $ 192,879 $ 110,892 Other assets 9,478 9,675 11,633 12,087 11,650 6,472 5,786 16,793 16,112 15,302 $ 14,662 $ 19,678 Total assets 677, , , , , , , , , ,396 $ 934,619 $ 858,681 Accounts payable and accrued expenses 107, , , , , , , , , ,215 $ 109,233 $ 115,176 Deferred revenue 35,232 35,385 35,121 33,456 32,576 33,662 32,393 32,892 31,564 31,531 $ 31,694 $ 30,576 Total notes payable, indebtedness under revolving credit facility, including current portion 171, , , , , , , , , ,703 $ 278,111 $ 232,515 Capital lease obligations 9,405 8,585 8,795 7,761 6,786 5,682 4,558 3,428 2,265 1,067 $ 227 $ 140 Other liabilities 1,998 2,240 4,809 5,291 2,940 19,436 2,816 3,985 3,931 4,710 $ 5,740 $ 7,220 Total liabilities 325, , , , , , , , , ,226 $ 425,005 $ 385,627 Noncontrolling interest Total stockholders' equity $ 351,863 $ 367,198 $ 378,397 $ 388,741 $ 392,512 $ 414,397 $ 438,017 $ 436,541 $ 445,348 $ 482,170 $ 509,614 $ 472,898 SUMMARY CONSOLIDATED OPERATING DATA (Dollars in thousands, except per line amounts) Business: Revenues Service 33,013 39,045 44,261 54,170 56,473 67,079 86,662 91,663 92, , , ,992 Product 6,570 7,107 9,222 12,646 12,912 13,265 13,618 12,655 13,360 13,392 13,085 12,661 Service and Product 39,583 46,152 53,483 66,816 69,385 80, , , , , , ,653 USF 2,317 2,950 3,592 4,134 4,435 5,368 6,029 6,193 6,151 6,497 6,738 7,447 Total Business Revenue 41,900 49,102 57,075 70,950 73,820 85, , , , , , ,100 Cost of Revenues Service 8,719 10,274 11,641 14,363 15,403 22,527 34,858 38,697 39,195 49,246 50,777 51,716 Product 5,430 6,079 8,102 11,574 12,462 12,902 13,101 12,664 13,202 12,456 12,702 12,666 Service and Product 14,149 16,353 19,743 25,937 27,865 35,429 47,959 51,361 52,397 61,702 63,479 64,382 USF Costs 2,317 2,950 3,602 4,153 4,445 5,369 6,029 6,193 6,151 6,497 6,738 7,447 Cost of Revenues 16,466 19,303 23,345 30,090 32,310 40,798 53,988 57,554 58,548 68,199 70,217 71,829 Service Margin % 73.6% 73.7% 73.7% 73.5% 72.7% 66.4% 59.8% 57.8% 57.5% 52.6% 53.6% 54.6% Gross Margin % ex-usf (Service and product margin%) 64.3% 64.6% 63.1% 61.2% 59.8% 55.9% 52.2% 50.8% 50.4% 47.4% 48.2% 49.2% Gross Margin % 60.7% 60.7% 59.1% 57.6% 56.2% 52.4% 49.2% 47.9% 47.6% 44.9% 45.7% 46.4% Consumer: Revenues Service 161, , , , , , , , , , , ,674 Product Service and Product 161, , , , , , , , , , , ,701

3 USF 16,198 16,078 15,686 14,616 15,085 14,341 13,676 12,950 12,225 12,285 11,770 12,219 Total Consumer Revenue 177, , , , , , , , , , , ,920 Cost of Revenues Service 31,855 32,102 31,613 28,010 26,520 25,727 24,973 22,834 22,100 21,435 19,434 17,485 Product 6,524 4,943 4,755 4,394 4,301 3,564 3,331 3,198 2,016 1,942 1,517 1,733 Service and Product 38,379 37,045 36,368 32,404 30,821 29,291 28,304 26,032 24,116 23,377 20,951 19,218 USF Costs 16,198 16,078 15,686 14,616 15,085 14,341 13,676 12,950 12,225 12,285 11,770 12,219 Cost of Revenues 54,577 53,123 52,054 47,020 45,906 43,632 41,980 38,982 36,341 35,662 32,721 31,437 Service Margin % 80.3% 79.5% 79.0% 80.6% 80.8% 80.7% 80.5% 81.5% 81.4% 81.5% 82.6% 83.8% Gross Margin % ex-usf (Service an dproduct margin%) 76.3% 76.4% 75.9% 77.6% 77.7% 78.1% 78.0% 78.9% 79.8% 79.8% 81.3% 82.2% Gross Margin % 69.3% 69.2% 68.7% 70.5% 70.0% 70.5% 70.4% 71.4% 72.4% 72.2% 73.6% 73.8% Business: Revenues (1) $ 41,900 $ 49,102 $ 57,075 $ 70,950 $ 73,820 $ 85,712 $ 106,309 $ 110,511 $ 111,802 $ 123,714 $ 129,306 $ 134,100 Average monthly revenues per seat (2) $ $ $ $ $ $ $ $ $ $ $ $ Seats (at period end) (2) 337, , , , , , , , , , , ,085 Revenue churn (2) 1.4% 1.3% 1.3% 1.1% 1.3% 1.4% 1.4% 1.4% 1.4% 1.4% 1.2% 1.2% (1) Includes revenue of $7,698, $23,909, $26,541, $26,245, $35,171, $38,364, $39,885 from Nexmo, which was acquired on June 3, 2016, for the three months ended June 30, 2016, September 30, 2016, December 31, 2016, March 31, 2017, June 30, 2017, September 30, 2017, and December 31, 2017 respectively. (2) UCaaS only. Consumer: Revenues $ 177,830 $ 172,756 $ 166,285 $ 159,174 $ 153,004 $ 147,963 $ 142,050 $ 136,252 $ 131,545 $ 128,122 $ 123,777 $ 119,920 Average monthly revenues per line $ $ $ $ $ $ $ $ $ $ $ $ ,094,365 2,049,424 1,998,982 1,940,825 1,881,826 1,824,668 1,767,212 1,711,366 1,648,927 1,594,857 1,543,760 1,492,067 Customer churn 2.4% 2.2% 2.2% 2.2% 2.2% 2.1% 2.2% 2.2% 2.1% 1.9% 1.9% 1.9% RECONCILIATION OF GAAP BUSINESS REVENUES TO ADJUSTED BUSINESS REVENUES Total Business revenues(1) 41,900 49,102 57,075 70,950 73,820 85, , , , , , ,100 Total UCaaS revenues (1) 41,900 49,102 57,075 70,950 73,820 78,014 82,400 83,971 85,557 88,543 90,942 94,215 Early termination letter - (500) Bad debt policy reclassification - (431) Accounts receivable write-down - - (300) Adjusted total UCaaS revenues 41,900 49,102 57,075 70,950 73,820 77,083 82,100 84,271 85,876 88,543 90,942 94,215 Hosted Infrastructure Sale (1,447) (1,575) (1,580) (1,660) (1,621) (1,100) - - Adjusted total UCaaS revenues 41,900 49,102 57,075 70,950 72,373 75,508 80,520 82,611 84,255 87,443 90,942 94,215 Product revenues 12,912 13,265 13,618 12,655 13,360 13,392 13,085 12,661 USF revenues 4,435 5,368 6,029 6,193 6,151 6,497 6,738 7,447 Adjusted total UCaaS service revenues 41,900 49,102 57,075 70,950 55,026 56,875 60,873 63,763 64,744 67,554 71,119 74,107 Total CPaaS revenues (1) ,698 23,909 26,541 26,245 35,171 38,364 39,885 Nexmo pre-acquisition revenues 20,027 14, Pro forma CPaaS revenues ,027 21,896 23,909 26,541 26,245 35,171 38,364 39,885 Net-to-gross revenue reporting adjustment 2,429 2,481 2,530 2,827 3, Adjusted total CPaaS revenues ,456 24,377 26,439 29,368 29,619 35,171 38,364 39,885 (1) Total Business revenues is comprised of revenues from UCaaS and CPaaS RECONCILIATION OF GAAP INCOME FROM OPERATIONS TO ADJUSTED OIBDA AND TO ADJUSTED OIBDA MINUS CAPEX

4 Income from operations $ 19,339 $ 16,558 $ 8,797 $ 8,298 $ 18,524 $ 5,387 $ 15,029 $ 5,214 $ 5,124 $ 6,659 $ 24,623 $ 22,985 Depreciation and amortization 13,945 14,463 15,446 17,979 16,979 18,218 18,018 19,070 17,947 18,394 18,179 18,003 Share-based expense 5,488 6,704 7,889 7,460 6,303 7,962 6,526 9,462 7,064 7,412 7,594 8,035 Acquisition related transaction and integration costs , ,057 (68) (219) Change in contingent consideration (7,362) (4,110) Organizational transformation , ,000-1,101 Acquisition related consideration accounted for as compensaton ,312 6,655 6,813 6,763 4, Loss on sublease Loss from discountined operations (1,615) Depreciation from discontinued operation Net loss attributable to noncontrolling interest Adjusted OIBDA 37,803 37,955 33,986 33,808 41,899 39,936 41,233 36,974 37,037 40,793 51,297 50,947 Capital expenditures (2,056) (2,904) (4,618) (7,745) (8,895) (7,053) (4,032) (6,166) (3,701) (5,294) (6,795) (6,125) Intangible assets - - (2,500) (50) Acquisition and development of software assets (2,258) (3,284) (2,390) (6,251) (2,312) (3,343) (3,332) (2,551) (3,380) (3,504) (2,554) (1,936) Adjusted OIBDA Minus Capex 33,489 31,767 24,478 19,812 30,692 29,540 33,869 28,207 29,956 31,995 41,948 42,886 RECONCILIATION OF GAAP NET INCOME TO ADJUSTED NET INCOME (In thousands, except per share amounts) Net income attributable to Vonage $ 7,469 $ 8,347 $ 3,433 $ 3,406 $ 7,931 $ 218 $ 7,040 $ (2,038) $ 5,913 $ 4,825 $ 10,602 $ (55,273) Amortization of acquisition - related intangibles 5,306 5,382 6,023 7,881 6,962 8,274 8,074 8,706 8,999 9,069 9,257 9,220 Acquisition related transaction and integration costs , ,057 (68) (219) Change in contingent consideration (7,362) (4,110) Organizational transformation , ,000-1,101 Acquisition related consideration accounted for as compensaton ,312 6,655 6,813 6,763 4, Loss on sublease Tax impact on TCJA 69,378 Tax effect on adjusting items (2,381) (2,319) (3,254) (3,285) (2,915) (6,876) (4,022) (4,931) (6,569) (7,188) (4,197) (4,604) Adjusted net income attributable to Vonage $ 10,849 $ 11,640 $ 8,056 $ 8,073 $ 12,071 $ 9,985 $ 12,752 $ 4,965 $ 15,245 $ 15,034 $ 16,563 $ 20,645 Net income attributable to Vonage per common share: Basic $ 0.04 $ 0.04 $ 0.02 $ 0.02 $ 0.04 $ 0.00 $ 0.03 $ (0.01) $ 0.03 $ 0.02 $ 0.05 $ (0.24) Diluted $ 0.03 $ 0.04 $ 0.02 $ 0.01 $ 0.04 $ 0.00 $ 0.03 $ (0.01) $ 0.02 $ 0.02 $ 0.04 $ (0.24) Diluted 220, , , , , , , , , , , ,339 Adjusted net income attributable to Vonage per common share: Basic $ 0.05 $ 0.05 $ 0.04 $ 0.04 $ 0.06 $ 0.05 $ 0.06 $ 0.02 $ 0.07 $ 0.07 $ 0.07 $ 0.09 Diluted $ 0.05 $ 0.05 $ 0.04 $ 0.04 $ 0.05 $ 0.04 $ 0.05 $ 0.02 $ 0.06 $ 0.06 $ 0.07 $ 0.08 Diluted 220, , , , , , , , , , , ,725 FREE CASH FLOW Net cash provided by operating activities $ 10,724 $ 35,237 $ 37,665 $ 46,105 $ 17,468 $ 25,059 $ 27,087 $ 23,842 $ 17,261 $ 15,432 $ 47,907 $ 47,458 Capital expenditures (2,056) (2,904) (4,618) (7,745) (8,895) (7,053) (4,032) (6,166) (3,701) (5,294) (6,795) (6,125) Intangible assets - - (2,500) (50) Acquisition and development of software assets (2,258) (3,284) (2,390) (6,251) (2,312) (3,343) (3,332) (2,551) (3,380) (3,504) (2,554) (1,936) Free cash flow $ 6,410 $ 29,049 $ 28,157 $ 32,109 $ 6,261 $ 14,663 $ 19,723 $ 15,075 $ 10,180 $ 6,634 $ 38,558 $ 39,397

5 RECONCILIATION OF NOTES PAYABLE, INDEBTEDNESS UNDER REVOLVING CREDIT FACILITY, AND CAPITAL LEASES TO NET DEBT Current maturities of capital lease obligations $ 3,493 $ 3,626 $ 4,311 $ 4,398 $ 4,521 $ 4,615 $ 4,332 $ 3,288 $ 2,184 $ 1, Current portion of notes payable 20,000 20,000 15,000 15,000 15,000 18,750 18,750 18,750 18,750 18,750 18,750 18,750 Notes payable and indebtedness under revolving credit facility, net of current maturities and 151, , , , , , , , , , , ,766 Unamortized debt related cost ,219 1,108 1,001 1,286 1,173 1, Capital lease obligations, net of current maturities 5,912 4,959 4,484 3,363 2,265 1, Gross debt 181, , , , , , , , , , , ,328 Unrestricted cash and marketable securities 60,556 58,021 69,314 67,634 45,489 32,405 39,795 29,679 26,520 26,825 29,869 31,360 Net debt $ 120,849 $ 117,564 $ 184,731 $ 151,627 $ 159,047 $ 332,590 $ 309,388 $ 293,687 $ 305,995 $ 289, , ,968 Last 12 months Adjusted EBITDA $ 132,014 $ 140,537 $ 144,565 $ 143,552 $ 147,648 $ 148,854 $ 150,810 $ 150,510 $ 142,927 $ 134,621 $ 149,603 $ 180,074 Gross debt to Adjusted EBITDA Net debt to Adjusted EBITDA COMMON STOCK REPURCHASE: (Dollars and shares in thousands, except average cost) Shares repurchased in quarter 1,779 1, ,653 5, , $ amount of shares repurchased $ 7,769 $ 5,605 $ 1,821 $ - $ 8,008 $ 24,753 $ - $ - $ 9,510 $ - $ - $ - Average cost $ 4.37 $ 4.79 $ 4.90 $ - $ 4.84 $ 4.31 $ - $ - $ 5.95 $ - $ - $ - Cumulative shares repurchased 46,643 47,812 48,184 48,184 49,837 55,584 55,584 55,584 57,183 57,183 57,183 57,183 Cumulative $ amount of shares repurchased $ 140,868 $ 146,473 $ 148,294 $ 148,294 $ 156,302 $ 181,056 $ 181,056 $ 181,056 $ 190,566 $ 190,566 $ 190,566 $ 190,566 Average cost $ 3.02 $ 3.06 $ 3.08 $ 3.08 $ 3.14 $ 3.26 $ 3.26 $ 3.26 $ 3.33 $ 3.33 $ 3.33 $ 3.33

Vonage 2017 Results Powered by 33% GAAP Business Revenue Growth; Company Continues to Execute on Its Strategic Growth Initiatives

2018 Outlook Vonage 2017 Results Powered by 33% GAAP Business Revenue Growth; Company Continues to Execute on Its Strategic Growth Initiatives Feb 21, 2018-2017 Consolidated Revenues of $1.0 Billion, a