Vonage Growth Fades As Churn Rises

Vonage (VG) this morning reported Q1 revenue of $225 million, a bit ahead of the Street consensus of $223.2 million. The company posted a loss for the quarter of 6 cents a share, a penny better than expectations.

But the company added just 30,133 net new customers in the quarter, to more than 2.6 million total, down from 56,016 net adds in the previous quarter and 165,646 in the year-ago quarter. Gross subscriber adds were about flat with the December quarter, but churn increased to 3.3% monthly from 3% in the December quarter and 2.4% a year ago.

Vonage said marketing costs in the quarter fell to $216 per subscriber, from $223 in the previous quarter and $273 a year earlier; but the company expects the number to rise in Q2, and still sees marketing costs per new subscriber for the year of $225 to $250.

The voice-over-IP provider today also announced a deal to resell Covad’s broadband service.

Vonage midday was off a penny at $1.87.

Comments

[JohnPseudonym]

Keep an eye on this....

Cable/DSL companies want to sell VOIP.

Vonage depends on high speed access which is provided by Cable/DSL.

In my area, unless you're willing to pay extra for faster service, the Cable/DSL companies are slowing down upload speeds.

That slow upload speed makes VOIP useless.

If you buy VOIP from the Cable/DSL providers, then they pump up the uploads to make it work...

So, pay extra for high upload speeds or buy VOIP from the Cable/DSL companies and get the high speeds for free with the VOIP service.

In my area, it's cheaper to use VOIP from the Cable/DSL providers...VONAGE is in trouble.