Vonage U-Turns on Sale of Consumer Business

Sales rise four per cent in Q4

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Vonage U-Turns on Sale of Consumer Business copy
Unified Communications

Published: February 19, 2021

Tom Wright

Managing Editor

Vonage has scrapped the sale of its consumer business following a strategic review.

The firm announced in February last year that it was considering the sale of the division, before indicating in November that it had engaged advisors to proceed with the potential sale.

But Rory Read, CEO at Vonage, revealed the U-turn during a quarterly earnings call with investors, adding that Vonage had spoken to “70 strategic and financial sponsors” across two rounds of discussions. He added that there were a number of interested parties.

“It really came down to [the business being] a very efficient access to capital for us,” Read said.

“We can run it efficiently without distraction and this gives us real flexibility as we continue the strategic pivot of Vonage from this traditional heritage to this leader in the global communications platform space”

Read was speaking as Vonage revealed that sales had climbed four per cent year on year to $323.3m during Q4.

The Vonage Communications Platform (VCP), which is seen as the future of the business, saw sales climb 12 per cent to $245m during the same period. API Platform sales were up 33 per cent.

The consumer business continued to struggle, however, with revenue down 15 per cent to $79m.

Investors had reacted favourably when Vonage revealed plans to sell the business last year, but the firm’s share price plummeted as much as 15 per cent on the news that it would be keeping the unit.

Rory Read
Rory Read

Vonage said that retaining the arm will “ensure a strong balance sheet and flexibility to invest in VCP capabilities and potential M&A”.

Read added that Vonage’s API platform is key to future growth.

“From the standpoint of API there no question about it; it’s a key component of the strategy,” he said.

“The Vonage Communication Platform is built on that API platform and really leverages those APIs to build once and sell many across the purpose-built capabilities.

“We think we’re at the beginning of a five to seven-year trend in this kind of programming technique and this kind of approach around API. You’re going to see us continue to invest in that platform using the dollars and capabilities of the business to enable us to continue to grow that.”

 

 

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