Vonage (NASDAQ: VG) reported Q4 EPS of $0.06, $0.01 better than the analyst estimate of $0.05. Revenue for the quarter came in at $309.69 million versus the consensus estimate of $305.51 million.

Fourth Quarter 2019 GAAP Highlights:

• Business Service Revenues of $196 Million, a 32% Year-Over-Year Increase
• API Platform Revenues Increased 50%
• Applications Mid-market and Enterprise Growth Accelerated to 14%
• Income from Operations of $4 Million and Adjusted OIBDA of $44 million
• Announcing Strategic Review of Consumer Segment

“In 2019, we took a number of decisive actions to enable long-term success,” said Alan Masarek, Chief Executive Officer. “We completed the move to our own technology across our core UCaaS, CCaaS and CPaaS products, and invested significantly in product innovation and platform enhancement. We also invested in and focused our go-to-market efforts to further drive revenue growth in high-value APIs and Mid-market and Enterprise customers in Applications.”

Fourth Quarter 2019 Business Segment Results

• Vonage Business Revenues of $218 million, representing 28% GAAP growth.
• Business Service Revenues of $196 million, a 32% GAAP increase• Adjusted to include acquisitions for all periods and other one-time items, Vonage Business Service Revenues(1) increased 24% year-over-year.
• API Platform Revenues (which are all Service revenues) grew 50% GAAP.
• Applications Service Revenues grew 20% GAAP and 8% adjusted.

Other Fourth Quarter Business Segment Highlights

• Revenue growth from Applications customers with greater than $12,000 of Annual Recurring Revenue (ARR) accelerated to 14% in the fourth quarter of 2019 from 12% in the third quarter of 2019. Bookings from this cohort represented 62% of total bookings in the fourth quarter of 2019 compared to 37% in the fourth quarter of 2018.
• Revenue growth from customers with greater than $120,000 of ARR accelerated to 21% in the fourth quarter of 2019 from 17% in the third quarter of 2019.
• Welcomed former SAP executive Rodolpho Cardenuto to the company as President of the Applications Group.
• High Value API revenue grew at nearly twice the rate of overall API Platform revenues.
• Business Service Revenue per Customer was $476 per month, up 21% from the year-ago quarter.
• Business Service Revenue Churn was 1.2%, up from 1.1% in the year-ago quarter.

GUIDANCE:

Vonage sees Q1 2020 revenue of $277 million, versus the consensus of $305.69 million.

Vonage sees FY2020 revenue of $1.165-1.185 billion, versus the consensus of $1.28 billion.

2020 Outlook

To better reflect the Company’s transformation into a Business SaaS company, Vonage expects to make several changes to its reporting and disclosure in the first quarter of 2020. These changes include:

• Moving from Adjusted OIBDA to Adjusted EBITDA;
• Moving Applications customer subscription references from MRR, monthly recurring revenue, to ARR, annual recurring revenue;
• Providing more comparable customer retention metrics; and
• Reviewing the application and reporting structure of its Universal Service Fund (USF) fees to better highlight operating performance. Vonage collects USF fees for payment to the FCC, and these revenues are a 100% pass-through and do not impact adjusted EBITDA or cash flow. As a result, the Company’s 2020 guidance does not include what it estimates would have been 2020 USF revenues of $46 million in Business and $37 million in Consumer (if reporting and collecting USF were under the fourth quarter 2019 approach).

For the first quarter of 2020, Vonage expects the following, excluding USF:

• Consolidated revenues in the $277 million area
• Vonage Business revenues in the $200 million area• Business Service revenues in the $190 million area
• Consumer revenues in the $77 million area
• Consolidated Adjusted EBITDA in the $32 million area.

For the full year 2020, Vonage expects the following (based on constant currency as of February 2020; percentage references represent mid-point of the guidance range), excluding USF:

• Consolidated revenues in the range of $1.165 billion to $1.185 billion
• Vonage Business segment revenues in the range of $875 million to $895 million; within this:• Business Service revenues are expected to grow 16% to 18% on an adjusted basis• Product and access revenues will decline by approximately $10 million from 2019 levels
• Consumer revenues in the area of $290 million
• Consolidated Adjusted EBITDA of at least $155 million
• Capex in the area of $60 million.

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