Vonage (NYSE: VG) reported Q1 EPS of $0.11, $0.05 better than the analyst estimate of $0.06. Revenue for the quarter came in at $227 million versus the consensus estimate of $227.04 million.

Guidance:

Vonage is adjusting its full year 2016 revenue guidance to reflect the acquisition of Nexmo and the Company's current visibility on the business. Vonage now expects consolidated 2016 GAAP revenue of $950 million to $960 million. The Company also now expects 2016 Vonage Business GAAP revenues, which will include Nexmo's results, to be in the $365 to $370 million range, reflecting a year-over-year growth rate in the high-60% range. Vonage continues to expect consolidated adjusted EBITDA of at least $150 million, despite a projected small EBITDA loss from Nexmo for the remainder of 2016.

*** The Street sees FY16 revenue of $913.4 million.

Acquisition:

Vonage also announced entering a definitive agreement to acquire privately-held Nexmo, Inc. (Nexmo), a global leader in the Communications Platform as a Service ("CPaaS") segment of the Cloud Communications market. Vonage is acquiring Nexmo for $230 million in cash and stock, with an additional earn-out opportunity of up to $20 million dollars contingent upon Nexmo achieving certain performance targets.

Vonage + Nexmo Create Cloud Communications Leader

San Francisco-based Nexmo provides communication Application Program Interfaces ("APIs") for text messaging and voice communication services, allowing developers and enterprises to embed contextual communications into mobile apps, websites and business workflows via text, social media, chat apps and voice; creating better customer engagement for their business.

This acquisition propels Vonage into a global leadership position in the high growth CPaaS market segment of the Cloud Communications market and significantly expands the Company's total addressable market. Industry analyst IDC expects CPaaS to grow annually to an $8 billion market by 2018. This rapid growth is being driven by the demand for communications within business apps and workflows, and the needs of new economy companies such as Uber, Alibaba and Snapchat, and traditional companies like KLM Airlines and Daimler, all of which are important Nexmo customers. With the addition of Nexmo, Vonage will have a total addressable market of nearly $28 billion by 2018.

"In 2014, we set out on a mission to become the clear leader in Cloud Communications for business. With the acquisition of Nexmo, we are now uniquely positioned to lead the market," said Vonage CEO Alan Masarek. "By combining Vonage's rapidly growing Unified Communications as a Service ("UCaaS") business, with Nexmo, the second largest player in CPaaS, we are creating the future of Cloud Communications. These companies represent a set of strategic, technology and human resources assets that deliver the broadest services offering in our industry."

Vonage is paying less than 2 times projected Nexmo 2017 revenue, including full payout of the earn-out. Annual cost synergies of $5 million are projected, primarily in the areas of Cost of Telephony Services and G&A.

Vonage issued a separate press release today with more detail on this transaction.

For earnings history and earnings-related data on Vonage (VG) click here.