Vonage Holdings Corp. Completes Acquisition of Vocalocity, Inc.
Launches Vonage Business Solutions
Nov. 18, 2013
HOLMDEL, N.J. – Vonage Holdings Corp. (NYSE: VG), a leading provider of communications services connecting people through cloud-connected devices worldwide, has completed the acquisition of Vocalocity, Inc., an industry-leading SaaS-based communications provider to Small and Medium Businesses ("SMBs"). The company will market to SMBs under the newly-created Vonage Business Solutions brand.
"Vocalocity’s comprehensive product suite and scalable platform, together with Vonage’s brand, scale and mobile technology, position us for rapid growth in the small and medium business communications market," said Marc Lefar, Vonage Chief Executive Officer.
Vocalocity CEO Wain Kellum, now president of Vonage Business Solutions, commented, "Everyone at Vocalocity is excited to join Vonage. The company’s strong leadership and history of innovation are a perfect fit for our business, and will help us to rapidly expand our customer base."
Launch plans are focused on delivering tangible benefits to existing customers and prospects immediately. The company also plans to expand Vocalocity’s customer referral program.
To celebrate the completion of the merger, Vonage is offering free phones to new customers who sign up for business phone service between now and December 151.
Vonage Business Solutions provides a robust suite of communications features critical to running a business, and can save businesses at least 30 percent on their domestic phone bills2. In addition, Vonage offers businesses international long distance rates to the most frequently called countries that are, on average, 75 percent lower than the competition3.
The company’s best-in-class business features now include call analytics, conference calling, call transfer, virtual receptionist, extension dialing, call forwarding, SimulRing®, mobile capabilities and more, all managed through the convenience of an online account. For more information about Vonage Business Solutions, visit Vonage.com/business.
Vocalocity is one of the fastest growing providers in the SMB hosted VoIP market. During the first half of 2013, Vocalocity had revenue of $28 million and growing, implying an annual run rate of greater than $56 million. First half 2013 revenues were 39% higher than the same period in the prior year. Vocalocity was EBITDA and free cash flow4 positive during this period, and ended the second quarter with 21,000 customers.
About the transaction
On October 10, 2013, Vonage announced it had entered into a definitive agreement to acquire Vocalocity for $130 million, including $105 million in cash, and approximately 8 million shares of Vonage common stock (which shares have an aggregate value of $25 million priced as of the day of announcement). The transaction is expected to be accretive to adjusted Earnings Per Share ("EPS")4 and on an EBITDA4 multiple basis in 2015.
Vonage financed the transaction through $30 million of cash from its balance sheet and $75 million from its credit facility.
Following the acquisition, the Company plans to continue to execute on its balanced approach to capital allocation and expects to complete its $100 million share repurchase program by the end of 2014 as planned.
- Free desk phone offer valid only on new account activations through December 15, 2013 that include an unlimited (UX) or metered (MX) extension. One phone per UX or MX extension. Accounts or extensions suspended or cancelled within 90 days of activation will be charged for the cost of the phone(s) (between $49.99 and $299.99 per phone, depending on model). Offer cannot be combined with any other discounts or promotions and is not applicable to past purchases. Good while supplies last. Allow up to 2 weeks for shipping. Other restrictions may apply.
- Savings claim is based on the average monthly recurring charge for unlimited domestic business calling plans from the top three wireline service providers. Comparison excludes promotional pricing, fees, surcharges or taxes and assumes a customer already has broadband service. Check your phone bill to determine the savings that would apply to you.
- Based on comparison of the top three wireline service providers’ per-minute rates to the top 50 markets.
- This is a non-GAAP financial measure. EBITDA is Earnings before interest, taxes, depreciation and amortization.
Vonage (NYSE: VG) is a leading provider of communications services connecting individuals through cloud-connected devices worldwide. Our technology serves approximately 2.4 million subscribers. We provide feature-rich, affordable communication solutions that offer flexibility, portability and ease-of-use for both landline and mobile phones. Our Vonage World plan offers unlimited calling to more than 60 countries with popular features like call waiting, call forwarding and visual voicemail – for one low monthly rate. Our Vonage Mobile app is a free downloadable app for iPhone® and Android™ that lets users talk, text and video call worldwide for free with anyone else who uses the app. Vonage’s service is sold on the web and through regional and national retailers including Walmart, Best Buy, Kmart and Sears, and is available to customers in the U.S. (www.vonage.com), Canada (www.vonage.ca) and the United Kingdom (www.vonage.co.uk).
Vonage Holdings Corp. is headquartered in Holmdel, New Jersey. Vonage® is a registered trademark of Vonage Marketing LLC., owned by Vonage America Inc. To follow Vonage on Twitter, please visit www.twitter.com/vonage. To become a fan on Facebook, go to www.facebook.com/vonage. To subscribe on YouTube, visit www.youtube.com/vonage.
Safe Harbor Statement
This press release contains forward-looking statements regarding the acquisition of Vocalocity, new products and related investment, financial resources, and the Company’s stock repurchase plan. In addition, other statements in this press release that are not historical facts or information may be forward-looking statements. The forward-looking statements in this release are based on information available at the time the statements are made and/or management’s belief as of that time with respect to future events and involve risks and uncertainties that could cause actual results and outcomes to be materially different. Important factors that could cause such differences include, but are not limited to: the competition the Company faces; the Company’s ability to adapt to rapid changes in the market for voice and messaging services; the Company’s ability to retain customers and attract new customers; the Company’s ability to establish and expand strategic alliances; governmental regulation and related actions and taxes in the Company’s international operations; increased market and competitive risks, including currency restrictions, in the Company’s international operations; risks related to the acquisition or integration of future businesses or joint ventures; including the risks related to the acquisition of Vocalocity; the Company’s ability to obtain or maintain relevant intellectual property licenses; intellectual property and other litigation that have been and may be brought against the Company; failure to protect the Company’s trademarks and internally developed software; security breaches and other compromises of information security; the Company’s dependence on third party facilities, equipment, systems and services; system disruptions or flaws in the Company’s technology and systems; uncertainties relating to regulation of VoIP services; liability under anti-corruption laws; results of regulatory inquiries into the Company’s business practices; fraudulent use of the Company’s name or services; the Company’s ability to maintain data security; the Company’s dependence upon key personnel; the Company’s dependence on the Company’s customers’ existing broadband connections; differences between the Company’s service and traditional phone services, including the Company’s 911 service; restrictions in the Company’s debt agreements that may limit the Company’s operating flexibility; the Company’s ability to obtain additional financing if required; any reinstatement of holdbacks by the Company’s vendors; the Company’s history of net losses and ability to achieve consistent profitability in the future; the Company’s available capital resources and other financial and operational performance which may cause the Company not to make common stock repurchases as currently anticipated or to commence or suspend such repurchases from time to time without prior notice; and other factors that are set forth in the “Risk Factors” section and other sections of Vonage’s Annual Report on Form 10-K for the year ended December 31, 2012, as well as in the Company’s Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. While the Company may elect to update forward-looking statements at some point in the future, it specifically disclaims any obligation to do so, and therefore, you should not rely on these forward-looking statements as representing the Company’s views subsequent to today.