Vonage Announces Strong Fourth Quarter and Full Year 2016 Results, Highlighted by 72% Growth in 2016 Vonage Business Revenue

HOLMDEL, N.J., Feb. 14, 2017 /PRNewswire/ -- Vonage Holdings Corp. (NYSE: VG), a leading provider of cloud communications services for businesses, today announced results for the fourth quarter and full year ended December 31, 2016.

Consolidated Results

"In 2016, we utilized our strong cash flows to invest in our growth, including the strategic acquisition of Nexmo and significant investments in the Vonage Business sales infrastructure," said Vonage CEO Alan Masarek.

"With these investments, we made great progress executing on our transformation and significantly advanced our strategy to become the Clear Leader in Cloud Communications. Through the integration of our UCaaS and CPaaS solutions, we have assembled the most comprehensive product offering in the global Cloud Communications market. This unique value proposition drives better outcomes for our business customers and deepens our customer relationships. At the same time, our team continues to deliver strong financial results. We generated consolidated revenue growth for the third consecutive year and the highest adjusted OIBDA in five years, driven by the successful optimization of our Consumer segment."

For the full year 2016, Vonage reported revenue of $956 million, up from $895 million in the prior year. Income from operations was $44 million, down from $53 million in the prior year. Adjusted Operating Income Before Depreciation and Amortization ("Adjusted OIBDA")1 was $160 million, an 11% increase over the prior year. GAAP net income was $18 million or $0.08 per share for the full year 2016, down from $23 million or $0.11 per share in 2015. Adjusted net income2 was $45 million or $0.21 per share, up from $39 million, or $0.18 per share in the prior year.

For the fourth quarter of 2016, Vonage reported revenue of $247 million, up from $230 million in the year ago quarter. Income from operations was $5 million, down from $8 million in the prior year quarter. Adjusted OIBDA for the fourth quarter was $37 million, up from $34 million in the year ago quarter. GAAP net income was breakeven, or $0.00 per share, down from $3 million in the prior year period, or $0.02 per share. Adjusted net income was $7 million or $0.03 per share, down from $8 million or $0.04 per share.

Additional Reporting Information

Consistent with Vonage's continued transformation into cloud communications, the Company is providing more visibility into the financial trends in its Business and Consumer segments.  The Company will report both revenue and cost of service for its Business segment, comprised of its Unified Communications as a Service (UCaaS) and Communications Platform as a Service (CPaaS) offerings, and for its Consumer segment, comprised of its legacy residential VoIP offerings. Vonage is reporting this additional information for the fourth quarter and full year 2016 and will continue reporting these metrics in the future.

Business Segment Results

  • Total Business revenue grew 56% year-over-year to $111 million in the fourth quarter of 2016; Full year revenue increased 72% year-over-year to $376 million.
  • Business service revenue was $92 million, a 69% increase from the fourth quarter of 2015; Full year service revenue was $302 million, up 77% from the prior year.
  • UCaaS revenue churn was 1.4% in the fourth quarter, flat sequentially and up from 1.1% in the year ago quarter.
  • UCaaS ending seats were 638,000, up from 542,000 seats in the year ago quarter, reflecting strong organic growth.
  • Announced by Amazon Web Services as a launch partner for Amazon Chime. This combination brings together the power of Vonage's cloud voice communications capabilities with Amazon Chime, a web-conferencing and collaboration suite, to provide a scalable, enterprise-grade unified communications solution for Vonage Business customers.
  • The Vonage API Platform, formerly Nexmo, generated fourth quarter 2016 revenue of $27 million, a 43% pro-forma year-over-year increase.
  • The Vonage API Platform increased its registered developer count to 207,000, a 54% year-over-year increase.
  • Announced Kenny Wyatt as the Company's new Chief Revenue Officer. Mr. Wyatt will set the global direction for sales and revenue across the Company's UCaaS and CPaaS offerings.

Consumer Segment Results

  • Revenue in Consumer was $136 million in the fourth quarter, down 14% from the prior year's quarter. Full year 2016 revenue was $579 million, down 14%, reflecting the Company's decision to redeploy capital into the Vonage Business segment.
  • Consumer customer churn was 2.2% in the fourth quarter, in line with the year ago quarter.
  • Average revenue per line ("ARPU") in Consumer Services was $26.11, down from $26.93 in the year ago period.
  • The Consumer segment ended the fourth quarter with 1.7 million subscriber lines.

Patent Portfolio

Vonage continues to develop innovative technologies and to protect its valuable intellectual property. The Company was granted a record 40 new patents in 2016,  and as of December 31, 2016, the Company owned 146 U.S. patents, with nearly 200 U.S. patent applications pending.

Share Repurchase

Vonage repurchased 7.4 million shares for $33 million at an average price of $4.43 in 2016. This represents approximately one-third of the four-year, $100 million authorization the Company initiated in the beginning of 2015. The Company has repurchased 55.6 million shares for $181 million, at a highly accretive average price of $3.26, since the Company began repurchasing stock in August 2012. Vonage's share repurchase program has provided strong returns for shareholders and it continues to be one of the key components of the Company's capital allocation plan. The execution of the buyback program is subject to change as market conditions, M&A opportunities and capital allocation priorities warrant.

2017 Outlook

For full year 2017, Vonage expects the following:

  • Consolidated revenues in the range of $970 million to $985 million
  • Total Business revenue, which includes UCaaS and CPaaS, in the range of $487 million to $493 million
  • Consumer revenue in the range of $483 million to $492 million  reflecting the Company's continued focus on optimizing the business for profitability and cash flow 
  • Consolidated Adjusted OIBDA of at least $165 million
  • Capex of approximately $40 million 

Conference Call and Webcast

Management will host a webcast discussion of the fourth quarter, full year 2016, and other matters on Tuesday, February 14, 2017 at 8:30 AM Eastern Time. To participate, please dial (877) 359-9508 approximately 10 minutes prior to the call. International callers should dial (224) 357-2393.

The webcast will be broadcast live through Vonage's Investor Relations website at http://ir.vonage.com. A replay of the call and webcast will be available shortly after the conclusion of the call and may be accessed through Vonage's Investor Relations website at http://ir.vonage.com or by dialing (855) 859-2056. International callers should dial (404) 537-3406. The replay passcode is 63295132.

(1) This is a non-GAAP financial measure. Refer below to Table 3 for a reconciliation to GAAP income from operations.
(2) This is a non-GAAP financial measure. Refer below to Table 4 for a reconciliation to GAAP net income.

 

 

VONAGE HOLDINGS CORP.

TABLE 1. CONSOLIDATED FINANCIAL DATA

(Dollars in thousands, except per share amounts)




Three Months Ended


For the Years Ended


December 31,


September 30,


December 31,


December 31,


2016


2016


2015


2016


2015


(unaudited)


(audited)

Statement of Operations Data:










Revenues

$

246,763



$

248,359



$

230,124



$

955,621



$

895,072












Operating Expenses:










Direct cost of telephony services (excluding depreciation and amortization of $7,211, $7,460, $6,724, $28,489, and $24,868, respectively)

88,768



87,377



68,513



321,373



261,768


Cost of goods sold

7,768



8,591



8,597



33,777



34,210


Sales and marketing

84,293



83,731



89,919



330,969



347,896


Engineering and development

7,607



8,075



6,921



29,759



27,220


General and administrative

34,043



27,538



29,897



123,304



109,153


Depreciation and amortization

19,070



18,018



17,979



72,285



61,833



241,549



233,330



221,826



911,467



842,080


Income from operations

5,214



15,029



8,298



44,154



52,992


Other expense:










Interest income

14



19



24



79



89


Interest expense

(3,565)



(3,974)



(2,541)



(13,042)



(8,786)


Other (expense) income, net

(109)



(495)



(247)



(346)



(842)



(3,660)



(4,450)



(2,764)



(13,309)



(9,539)


Income from continuing operation before income tax expense

1,554



10,579



5,534



30,845



43,453


Income tax expense

(1,553)



(1,501)



(2,128)



(12,938)



(18,418)


Income from continuing operations

1



9,078



3,406



17,907



25,035


Loss from discontinued operations









(1,615)


Loss on disposal, net of taxes









(824)


Discontinued operations









(2,439)


Net income

1



9,078



3,406



17,907



22,596


Plus: Net loss from discontinued operations attributable to noncontrolling interest









59


Net income attributable to Vonage

$

1



$

9,078



$

3,406



$

17,907



$

22,655


Net income per common share - continuing operations:










Basic

$



$

0.04



$

0.02



$

0.08



$

0.12


Diluted

$



$

0.04



$

0.01



$

0.08



$

0.11


Net loss per common share - discontinued operations attributable to Vonage:










Basic

$



$



$



$



$

(0.01)


Diluted

$



$



$



$



$

(0.01)


Net income per common share - attributable to Vonage:










Basic

$



$

0.04



$

0.02



$

0.08



$

0.11


Diluted

$



$

0.04



$

0.01



$

0.08



$

0.10


Weighted-average common shares outstanding:










Basic

$

218,375



$

217,000



$

213,864



$

215,751



$

213,147


Diluted

237,670



234,868



227,751



231,941



224,110


 

 

VONAGE HOLDINGS CORP.

TABLE 1. CONSOLIDATED FINANCIAL DATA - (Continued)

(Dollars in thousands, except per share amounts)




Three Months Ended


For the Years Ended


December 31,


September 30,


December 31,


December 31,


2016


2016


2015


2016


2015


(unaudited)


(audited)

Statement of Cash Flow Data:










Net cash provided by operating activities

$

21,757



$

26,694



$

46,105



$

87,012



$

129,731


Net cash used in investing activities

(2,836)



(5,751)



(14,413)



(190,733)



(152,696)


Net cash (used in) provided by financing activities

(23,125)



(12,666)



(33,622)



74,498



40,205


Capital expenditures, intangible assets, and development of software assets

(8,767)



(7,364)



(13,996)



(37,734)



(34,006)


 

 



For the years ended December 31,



2016


2015



(audited)


(audited)

Balance Sheet Data:





Cash and cash equivalents


$

29,078



$

57,726


Marketable securities


601



9,908


Restricted cash


1,851



2,587


Accounts receivable, net of allowance


36,688



19,913


Inventory, net of allowance


4,116



5,542


Prepaid expenses and other current assets


29,176



15,659


Deferred customer acquisition costs


3,136



4,505


Property and equipment, net


48,415



49,483


Goodwill


357,916



222,106


Software, net


21,971



20,710


Debt related costs, net


2,333



2,053


Intangible assets, net


199,256



138,199


Total deferred tax assets, including current portion, net


191,368



226,572


Other assets


14,459



9,603


Total assets


$

940,364



$

784,566


Accounts payable and accrued expenses


$

139,888



$

138,925


Deferred revenue


32,892



33,456


Total notes payable and indebtedness under revolving credit facility, including current portion


318,874



210,392


Capital lease obligations


3,428



7,761


Other liabilities


3,985



5,291


Total liabilities


$

499,067



$

395,825


Total stockholders' equity


$

441,297



$

388,741


 

 

VONAGE HOLDINGS CORP.

TABLE 2. SUMMARY CONSOLIDATED OPERATING DATA

(unaudited)



The table below includes revenues and cost of revenues that our management uses to measure the growth and operating performance of the business focused portion of our business:


 Business

Three Months Ended


For the Years Ended


December 31,


September 30,


December 31,


December 31,


2016


2016


2015


2016


2015

Revenues:










   Service

$

91,663



$

86,662



$

54,169



$

301,877



$

170,489


   Product (1)

12,655



13,618



12,646



52,450



35,545


      Service and Product

104,318



100,280



66,815



354,327



206,034


   USF

6,193



6,029



4,134



22,025



12,993


Total Business Revenues

$

110,511



$

106,309



$

70,949



$

376,352



$

219,027












Cost of Revenues:










   Service (2)

$

38,697



$

34,858



$

14,363



$

111,485



$

44,997


   Product (1)

12,664



13,101



11,573



51,129



31,185


      Service and Product

51,361



47,959



25,936



162,614



76,182


   USF

6,193



6,029



4,152



22,036



13,022


Cost of Revenues

$

57,554



$

53,988



$

30,088



$

184,650



$

89,204












Service margin %

57.8

%


59.8

%


73.5

%


63.1

%


73.6

%

Gross margin % ex-USF (Service and product margin %)

50.8

%


52.2

%


61.2

%


54.1

%


63.0

%

Gross margin %

47.9

%


49.2

%


57.6

%


50.9

%


59.3

%


(1) Includes customer premise equipment, access, professional services, and shipping and handling.

(2) Excludes depreciation and amortization of $5,013, $5,015, $4,310 for the quarters ended December 31, 2016, September 30, 2016 and December 30, 2015, respectively and $18,820 and $15,819 for the years ended December 31, 2016 and 2015, respectively.


The table below includes revenues and cost of revenues that our management uses to measure the growth and operating performance of the consumer focused portion of our business:


Consumer

Three Months Ended


For the Years Ended


December 31,


September 30,


December 31,


December 31,


2016


2016


2015


2016


2015

Revenues:










   Service

$

123,114



$

128,167



$

144,346



$

522,515



$

612,822


   Product (1)

188



207



213



702



645


      Service and Product

123,302



128,374



144,559



523,217



613,467


   USF

12,950



13,676



14,616



56,052



62,578


Total Business Revenues

$

136,252



$

142,050



$

159,175



$

579,269



$

676,045












Cost of Revenues:










   Service (2)

$

22,834



$

24,972



$

28,011



$

100,054



$

123,580


   Product (1)

3,198



3,331



4,394



14,394



20,616


      Service and Product

26,032



28,303



32,405



114,448



144,196


   USF

12,950



13,676



14,616



56,052



62,578


Cost of Revenues

$

38,982



$

41,979



$

47,021



$

170,500



$

206,774












Service margin %

81.5

%


80.5

%


80.6

%


80.9

%


79.8

%

Gross margin % ex-USF (Service and product margin %)

78.9

%


78.0

%


77.6

%


78.1

%


76.5

%

Gross margin %

71.4

%


70.4

%


70.5

%


70.6

%


69.4

%


(1) Includes customer premise equipment, access, professional services, and shipping and handling.

(2) Excludes depreciation and amortization of $2,198, $2,445, $2,414 for the quarters ended December 31, 2016, September 30, 2016 and December 30, 2015, respectively and $9,669 and $9,049 for the years ended December 31, 2016 and 2015, respectively.


The table below includes key operating data that our management uses to measure the growth and operating performance of the business focused portion of our business:


 Business

Three Months Ended


For the Years Ended


December 31,


September 30,


December 31,


December 31,


2016


2016


2015


2016


2015

Revenues (1)

$

110,511



$

106,309



$

70,949



$

376,352



$

219,027


Average monthly revenues per seat (2)

$

44.65



$

45.50



$

44.79



$

44.94



$

42.79


Seats (at period end) (2)

638,096



615,728



541,884



638,096



541,884


Revenue churn (2)

1.4

%


1.4

%


1.1

%


1.4

%


1.2

%

Registered developers (3)

206,734



175,759



N/A



206,734



N/A



(1) Includes revenues of $26,541 and $23,909, respectively, of CPaaS revenue for the three months ended December 31, 2016 and September 30, 2016, and $58,148 for the year ended December 31, 2016.

(2) UCaaS only.

(3) CPaaS only.


The table below includes key operating data that our management uses to measure the growth and operating performance of the consumer focused portion of our business:


Consumer

Three Months Ended


For the Years Ended


December 31,


September 30,


December 31,


December 31,


2016


2016


2015


2016


2015

Revenues

$

136,252



$

142,050



$

159,175



$

579,269



$

676,045


Average monthly revenues per line

$

26.11



$

26.36



$

26.93



$

26.43



$

27.58


Subscriber lines (at period end)

1,711,366



1,767,212



1,940,825



1,711,366



1,940,825


Customer churn

2.2

%


2.2

%


2.2

%


2.2

%


2.3

%

 

 

VONAGE HOLDINGS CORP.

TABLE 3. RECONCILIATION OF GAAP INCOME FROM OPERATIONS

TO ADJUSTED OIBDA AND TO ADJUSTED OIBDA MINUS CAPEX

(Dollars in thousands)

(unaudited)




Three Months Ended


For the Years Ended


December 31,


September 30,


December 31,


December 31,


2016


2016


2015


2016


2015

Income from operations

$

5,214



$

15,029



$

8,298



$

44,154



$

52,992


Depreciation and amortization

19,070



18,018



17,979



72,285



61,833


Share-based expense

9,462



6,526



7,460



30,253



27,541


Acquisition related transaction and integration costs

(219)



(68)



71



4,863



2,610


Acquisition related consideration accounted for as compensation

6,813



6,655





16,780




Change in contingent consideration

(4,110)



(7,362)





(11,472)




Organizational transformation



2,435





2,435




Loss on sublease

744







744




Loss from discontinued operation, excluding income tax









(1,615)


Depreciation from discontinued operation









132


Net loss attributable to noncontrolling interest









59


Adjusted OIBDA

$

36,974



$

41,233



$

33,808



$

160,042



$

143,552


Less:










Capital expenditures

$

(6,166)



$

(4,032)



$

(7,745)



$

(26,146)



$

(17,323)


Intangible assets

$

(50)



$



$



$

(50)



$

(2,500)


Acquisition and development of software assets

$

(2,551)



$

(3,332)



$

(6,251)



$

(11,538)



$

(14,183)


Adjusted OIBDA Minus Capex

$

28,207



$

33,869



$

19,812



$

122,308



$

109,546


 

 

VONAGE HOLDINGS CORP.
TABLE 4. RECONCILIATION OF GAAP NET INCOME ATTRIBUTABLE TO VONAGE TO
NET INCOME ATTRIBUTABLE TO VONAGE EXCLUDING ADJUSTMENTS
(Dollars in thousands, except per share amounts)
(unaudited)




Three Months Ended


For the Years Ended


December 31,


September 30,


December 31,


December 31,


2016


2016


2015


2016


2015

Net income attributable to Vonage

$

1



$

9,078



$

3,406



$

17,907



$

22,655


Amortization of acquisition - related intangibles

8,706



8,074



7,880



32,016



24,592


Acquisition related transaction and integration costs

(219)



(68)



71



4,863



2,610


Acquisition related consideration accounted for as compensation

6,813



6,655





16,780




Change in contingent consideration

(4,110)



(7,362)





(11,472)




Organizational transformation



2,435





2,435




Loss on sublease

744







744




Tax effect on adjusting items

(4,932)



(4,022)



(3,286)



(18,745)



(11,240)


Net income attributable to Vonage excluding adjustments

$

7,003



$

14,790



$

8,071



$

44,528



$

38,617


Net income attributable to Vonage per common share:










Basic

$



$

0.04



$

0.02



$

0.08



$

0.11


Diluted

$



$

0.04



$

0.01



$

0.08



$

0.10


Weighted-average common shares outstanding:










Basic

218,375



217,000



213,864



215,751



213,147


Diluted

237,670



234,868



227,751



231,941



224,110


Net income attributable to Vonage excluding adjustments per common share, excluding adjustments:










Basic

$

0.03



$

0.07



$

0.04



$

0.21



$

0.18


Diluted

$

0.03



$

0.06



$

0.04



$

0.19



$

0.17


Weighted-average common shares outstanding:










Basic

218,375



217,000



213,864



215,751



213,147


Diluted

237,670



234,868



227,751



231,941



224,110


 

 

VONAGE HOLDINGS CORP.

TABLE 5. FREE CASH FLOW

(Dollars in thousands)

(unaudited)




Three Months Ended


For the Years Ended


December 31,


September 30,


December 31,


December 31,


2016


2016


2015


2016


2015

Net cash provided by operating activities

$

21,757



$

26,694



$

46,105



$

87,012



$

129,731


Less:










Capital expenditures

(6,166)



(4,032)



(7,745)



(26,146)



(17,323)


Intangible assets

(50)







(50)



(2,500)


Acquisition and development of software assets

(2,551)



(3,332)



(6,251)



(11,538)



(14,183)


Free cash flow

$

12,990



$

19,330



$

32,109



$

49,278



$

95,725


 

 

VONAGE HOLDINGS CORP.

TABLE 6. RECONCILIATION OF NOTES PAYABLE, INDEBTEDNESS UNDER REVOLVING CREDIT FACILITY, AND CAPITAL LEASES TO NET DEBT

(Dollars in thousands)

(unaudited)





For the years ended December 31,



2016


2015






Current maturities of capital lease obligations


$

3,288



$

4,398


Current portion of notes payable


18,750



15,000


Notes payable and indebtedness under revolving credit facility, net of current maturities and debt related costs


300,124



195,392


Unamortized debt related costs


1,064



1,108


Capital lease obligations, net of current maturities


140



3,363


Gross debt


323,366



219,261


Less:





Unrestricted cash and marketable securities


29,679



67,634


Net debt


$

293,687



$

151,627


 

About Vonage

Vonage (NYSE: VG) is a leading provider of cloud communications services for business. Vonage transforms the way people work and businesses operate through a portfolio of cloud-based communications solutions that enable internal collaboration among employees, while also keeping companies closely connected with their customers, across any mode of communication, on any device. Vonage's API Platform provides tools for voice, messaging and phone verification services, allowing developers to embed contextual, programmable communications into mobile apps, websites and business systems, enabling enterprises to easily communicate relevant information to their customers in real time, anywhere in the world, through text messaging, chat, social media and voice. The Company also provides a robust suite of feature-rich residential communication solutions. In 2015 and 2016, Vonage was named a Visionary in the Gartner Magic Quadrant for Unified Communications as-a-Service, Worldwide. Vonage has also earned the Frost & Sullivan Growth Excellence Leadership Award for Hosted IP and Unified Communications and Collaboration (UCC) Services. For more information, visit www.vonage.com.

Use of Non-GAAP Financial Measures

This press release includes measures defined as non-GAAP financial measures by the Securities and Exchange Commission, including: adjusted Operating Income Before Depreciation and Amortization ("adjusted OIBDA"), adjusted OIBDA less Capex, adjusted net income, net debt (cash) and free cash flow.

Adjusted OIBDA

Vonage uses adjusted OIBDA as a principal indicator of the operating performance of its business.

Vonage defines adjusted OIBDA as GAAP income (loss) from operations excluding depreciation and amortization, share-based expense, acquisition related costs, acquisition related consideration accounted for as compensation, change in contingent consideration, costs associated with organizational transformation, loss on sublease, loss from discontinued operation excluding income tax, depreciation from discontinued operation, and net loss attributable to noncontrolling interest.

Vonage believes that adjusted OIBDA permits a comparative assessment of its operating performance, relative to its performance based on its GAAP results, while isolating the effects of depreciation and amortization, which may vary from period to period without any correlation to underlying operating performance; of share-based expense, which is a non-cash expense that also varies from period to period; of one-time acquisition related costs, acquisition related consideration accounted for as compensation and change in contingent consideration; of one-time costs associated with organizational transformation; and of loss from discontinued operation, depreciation from discontinued operation, and net loss attributable to our noncontrolling interest, each of which relate to one time effects caused by the termination of our Brazilian joint venture.

The Company provides information relating to its adjusted OIBDA so that investors have the same data that the Company employs in assessing its overall operations. The Company believes that trends in its Adjusted OIBDA are valuable indicators of the operating performance of the Company on a consolidated basis.

Adjusted OIBDA less Capex

Vonage uses adjusted OIBDA less Capex as an indicator of the operating performance of its business. The Company provides information relating to its adjusted OIBDA less Capex so that investors have the same data that the Company employs in assessing its overall operations. The Company believes that trends in its Adjusted OIBDA less Capex are valuable indicators of the operating performance of the Company on a consolidated basis because they provide our investors with insight into current performance and period-to-period performance.

Adjusted net income

Vonage defines adjusted net income, as GAAP net income (loss) excluding amortization of acquisition - related intangibles, acquisition related transaction and integration costs, acquisition related consideration accounted for as compensation, change in contingent consideration, organizational transformation, loss on sublease, and tax effect on adjusting items.

The Company believes that excluding these items will assist investors in evaluating the Company's operating performance and in better understanding its results of operations as  amortization of acquisition-related intangible assets is a non-cash item, one-time acquisition related costs, acquisition related consideration accounted for as compensation, change in contingent consideration, and one-time costs associated with organizational transformation are not reflective of operating performance.

Net debt (cash)

Vonage defines net debt (cash) as the current maturities of capital lease obligations, current portion of notes payable, notes payable and indebtedness under revolving credit facility, net of current maturities and debt related costs, unamortized debt related costs, and capital lease obligations net of current maturities, less unrestricted cash and marketable securities.

Vonage uses net debt (cash) as a measure of assessing leverage, as it reflects the gross debt under the Company's credit agreements and capital leases less cash available to repay such amounts. The Company believes that net cash is also a factor that first parties consider in valuing the Company.

Free cash flow

Vonage defines free cash flow as net cash provided by operating activities minus capital expenditures, intangible assets, and acquisition and development of software assets.

Vonage considers free cash flow to be a liquidity measure that provides useful information to management about the amount of cash generated by the business that, after the acquisition of equipment and software, can be used by Vonage for debt service and strategic opportunities. Free cash flow is not a measure of cash available for discretionary expenditures since the Company has certain non-discretionary obligations such as debt service that are not deducted from the measure.

The non-GAAP financial measures used by Vonage may not be directly comparable to similarly titled measures reported by other companies due to differences in accounting policies and items excluded or included in the adjustments, which limits its usefulness as a comparative measure. These non-GAAP financial measures should be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for, or superior to, GAAP results.

Safe Harbor Statement

This press release contains forward-looking statements, including statements about acquisitions, acquisition integration, growth priorities or plans, revenues, adjusted OIBDA, churn, seats, lines or accounts, average revenue per user, cost of telephony services, the Company's share repurchase plan, capital expenditures, new products and related investment, and other statements that are not historical facts or information, that constitute forward-looking statements for purposes of the safe harbor provisions under The Private Securities Litigation Reform Act of 1995. 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 we face; the expansion of competition in the unified communications market; our ability to adapt to rapid changes in the market for voice and messaging services; risks associated with the market for CPaaS products and services; our ability to retain customers and attract new customers, including in a cost effective manner; the risk associated with developing and maintaining effective internal sales teams; the risk associated with developing and maintaining effective distribution channels; risks related to the acquisition or integration of future businesses; security breaches and other compromises of information security; risks associated with sales of our UCaaS services to medium-sized and enterprise customers; our dependence on third party facilities, equipment, systems and services; system disruptions or flaws in our technology and systems; our ability to scale our business and grow efficiently; risks associated with our third-party vendor cloud infrastructure; our reliance on third party hardware and software; our dependence on third party vendors; the impact of fluctuations in economic conditions, particularly on our small and medium business customers; our ability to obtain or maintain relevant intellectual property licenses; intellectual property and other litigation that have been and may be brought against us; failure to protect our trademarks and internally developed software; obligations and restrictions associated with data privacy; uncertainties relating to regulation of VoIP services; results of regulatory inquiries into our business practices; uncertainties regarding the regulation of CPaaS services; customer misuse of our CPaaS products; the impact of export controls and economic sanctions regulations; fraudulent use of our name or services; our ability to establish and expand strategic alliances; risks associated with operating abroad; liability under anti-corruption laws; governmental regulation and taxes in our international operations; the impact of domestic and international tax regulations on our CPaaS products and services; our dependence upon key personnel; our dependence on our customers' existing broadband connections; restrictions in our debt agreements that may limit our operating flexibility; foreign currency fluctuations; our ability to obtain additional financing if required; any reinstatement of holdbacks by our vendors; our history of net losses and ability to achieve consistent profitability in the future; 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, 2015, 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, the Company specifically disclaims any obligation to do so, and therefore, you should not rely on these forward-looking statements as representing the Company's views as of any date subsequent to today.

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To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/vonage-announces-strong-fourth-quarter-and-full-year-2016-results-highlighted-by-72-growth-in-2016-vonage-business-revenue-300406944.html

SOURCE Vonage Holdings Corp.

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