Vonage (VG) Delivers Upbeat Presentation at Needham Growth Conference - Analyst

Needham & Company analyst Richard Valera weighed in on Vonage (NYSE: VG) after CEO, Alan Mazarek, and CFO, Dave Pearson, delivered an upbeat presentation to a standing room only crowd at the 19th Annual Needham Growth Conference.

Valera commentedm ". Mr. Mazarek sees the company serving two main growth markets: UCaaS, which it sees growing from $9B in 2015 to $20B in 2018, and CPaaS, which it sees growing from <$1B in 2015 to $8B in 2018. Vonage entered the UCaaS market with its purchase of Vocalocity about three years ago, which was focused on the SMB markets. Three subsequent acquisitions of Broadsoft-based UCaaS players provided entry into the mid-market/enterprise markets. VG sees its competitive advantage in the SMB market as the brand awareness from the Vonage brand, which enables it to have lower lead costs than its competitors. In the higher end of the market, VG uses its ability to offer a managed service, including bundled MPLS service and SD-WAN services, to differentiate itself. VG’s Nexmo CPaaS platform had 125,000 developers using it when they acquired it in early 2016. This has grown to 175,000 developers exiting 2016, with most of that increase coming in the last few months since the voice API, or VAPI, was introduced in late 3Q16. It was noted that VG's rate of developer acquisition exiting 2016 was about 5x what it was when they purchased the company. We see these initial metrics on VAPI as encouraging, and likely suggestive of healthy growth for the Nexmo business in 2017. With respect to potential M&A, management noted that they felt they had the assets they needed, but would remain open to potential acquisitions to gain customers (most likely in the UCaaS space)."

The firm reiterated an Buy rating and price target of $9.00

For an analyst ratings summary and ratings history on Vonage click here. For more ratings news on Vonage click here.

Shares of Vonage closed at $7.51 yesterday.

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