Wednesday, May 7, 2008

Vonage Reports Q1 Growth, Teams with Covad

Vonage's Q1 revenue grew to a record $225 million, up 15% from $196 million in the first quarter 2007 and up 4% sequentially, driven by an increase in subscriber lines and higher average revenue per user. There was a GAAP net loss of $9 million or $0.06 per share, down from a loss of $72 million or $0.47 per share reported in the first quarter 2007.

Some highlights:

  • Average monthly revenue per line in the first quarter 2008 was $28.85, up from $28.31 in the year-ago quarter and $28.19 reported in the fourth quarter 2007. Average monthly telephony services revenue per line for the quarter increased to $27.87, up from $27.36 reported a year ago and up from $27.42 sequentially.

  • Marketing expense for the quarter was $61 million, or 27% of revenue, down sharply from $91 million, or 46% of revenue, a year ago, and down from $63 million, or 29% of revenue, sequentially. Marketing cost per gross subscriber line addition ("SLAC") was $216 in the first quarter 2008, down from $273 in the year-ago quarter and $223 sequentially. The company expects SLAC to increase in the second quarter, consistent with prior year seasonal trends. Vonage expects to gradually increase marketing expenditures in the second half of 2008 to accelerate growth but continues to expect the cost of acquisition to fall within $225-$250 for the full year 2008.

  • Vonage added 30,000 net subscriber lines in the first quarter 2008 and finished the quarter with more than 2.6 million lines in service.

  • Average monthly customer churn increased to 3.3% in the first quarter 2008 from 3.0% in the fourth quarter 2007.

  • Vonage announced a relationship with Covad whereby Vonage will offer a DSL service to both residential and small business customers. The company expects this new service, called Vonage Broadband, to be available to customers by the end of the year.

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