VONAGE HOLDINGS CORP. (Exact Name of Registrant As Specified in Charter)
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ____________________________ FORM 8-K ____________________________ CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): August 1, 2018 ____________________________ VONAGE HOLDINGS CORP. (Exact Name of Registrant as Specified in Charter) ____________________________ Delaware 001-32887 11-3547680 (State or Other Jurisdiction (Commission (IRS Employer of Incorporation) File Number) Identification No.) 23 Main Street, Holmdel, NJ 07733 (Address of Principal Executive Offices) (Zip Code) Registrant's telephone number, including area code: (732) 528-2600 (Former Name or Former Address, if Changed Since Last Report) ____________________________ Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions ( see General Instruction A.2. below): o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter). Emerging growth company o If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o Item 2.02. Results of Operations and Financial Condition On August 1, 2018, Vonage Holdings Corp. (the “Company”) announced its financial results for the quarter ended June 30, 2018. The full text of the press release issued in connection with the announcement is furnished as Exhibit 99.1 to this Current Report on Form 8-K. Item 7.01. Regulation FD Disclosure On August 1, 2018, the Company issued a press release announcing that, through its wholly-owned subsidiary Nexmo Inc., it had acquired 100% of the issued and outstanding shares of Telefonica Digital, Inc. (“TDI”), a subsidiary of Telefonica, S.A., and TDI’s subsidiaries, TokBox, Inc. (“TokBox”) and TokBox Australia Pty Limited, in an all-cash transaction for an enterprise value of $35 million, including certain assumed net liabilities. The acquisition is effective immediately. San Francisco-based TokBox develops and operates the OpenTok Platform and is the industry leader in the WebRTC programmable video segment of the cloud communications market. The full text of the press release issued in connection with the announcement is furnished as Exhibit 99.2 to this Current Report on Form 8-K and is incorporated herein by reference. The information in these Items 2.02 and 7.01 (including Exhibit 99.1 and Exhibit 99.2) shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such a filing. The Company is making references to non-GAAP financial information in both the press release and the referenced conference call. A reconciliation of these non-GAAP financial measures to the comparable GAAP financial measures is contained in the attached press release. Item 9.01. Financial Statements and Exhibits (d) Exhibits The following exhibits relating to Item 2.02 and Item 7.01 shall be deemed to be furnished, and not filed: 99.1 Earnings Release issued by Vonage Holdings Corp. on August 1, 2018 99.2 Press Release issued by Vonage Holdings Corp. on August 1, 2018 2 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. VONAGE HOLDINGS CORP. Date: August 1, 2018 By: /s/ David T. Pearson David T. Pearson Chief Financial Officer 3 Exhibit Index 99.1 Earnings Release issued by Vonage Holdings Corp. on August 1, 2018 99.2 Press Release issued by Vonage Holdings Corp. on August 1, 2018 4 Exhibit 99.1 Vonage Business Drives Strong Second Quarter Revenue Growth; TokBox Acquisition Accelerates Growth and Broadens Platform with Leading Global Video API Offering • Vonage Business GAAP Revenues of $148 Million, a 20% increase ◦ Business Service GAAP Revenues up 24% • Consolidated GAAP Revenues of $260 Million, a 3% increase • Income from Operations of $13 Million; Adjusted OIBDA of $45 Million • Completed acquisition of TokBox Inc. for $35 million in all cash transaction ◦ Expands API portfolio to global leadership in video • Completed new $600 million credit facility to increase strategic flexibility, lower cost and extend maturity Holmdel, NJ, August 1, 2018 - Vonage Holdings Corp. (NYSE: VG), a business cloud communications leader, today announced results for the quarter ended June 30, 2018. Consolidated Results “Vonage delivered another quarter of strong business growth while executing our transformation into a communications software company,” said Vonage CEO Alan Masarek. “Vonage Business service revenue grew 24 percent, driven by strong performance in CPaaS and continued adoption of Vonage Business Cloud. Our strategic focus is to deliver a differentiated, fully programmable communications solution that drives Better Business Outcomes for our customers.” Mr. Masarek continued, “We are incredibly excited to announce the acquisition of TokBox, the global leader in programmable video API’s. With TokBox, our API portfolio expands beyond voice, SMS and IP messaging to include global leadership in programmable video. TokBox significantly expands our total addressable market, and it is a major step towards global leadership in cloud communications.” For the second quarter of 2018, Vonage reported revenues of $260 million, a 3% increase from the year ago quarter. Income from Operations was $13 million, up from $7 million in the prior year quarter. Adjusted Operating Income Before Depreciation and Amortization (“Adjusted OIBDA”)1 was $45 million, up from $41 million in the prior year quarter. GAAP net income was $9 million or $0.03 per share, up from $5 million or $0.02 per share in the year ago quarter. Adjusted net income2 was $17 million or $0.07 per share, up from $15 million or $0.06 per share in the year ago quarter. Acquisition of TokBox Vonage has acquired TokBox Inc., a subsidiary of Telefonica, S.A., in an all-cash transaction for an enterprise value of $35 million, including assumed liabilities. San Francisco-based TokBox is the industry-leader in WebRTC programmable video. The acquisition of TokBox places Vonage in the leadership position in the programmable video sector with the strongest level of global adoption among video API providers. TokBox enables developers and enterprises to integrate live video into websites, mobile apps, and IoT devices with just a few lines of code. Fast Growing Addressable Market According to IDC, the U.S. programmable video market will be a $7.4 billion opportunity by 2022, representing more than a 140% four-year CAGR. This growth is being driven by three key factors: - The adoption of WebRTC, which has emerged as the worldwide standard for high quality video communications - The reduction in cost and complexity that programmable video provides developers to integrate live video - The near ubiquity of video-capable devices, coupled with improvements in network infrastructure which minimize video latency High Quality, Enterprise Level Video Communications Founded in 2007, TokBox has the highest level of global adoption among programmable video providers using WebRTC. TokBox has more than 2,300 global customers across a range of applications including: online education, financial institutions, help desks, telemedicine, field services, interactive broadcasts and social media. Today, over 1,700 mobile apps use the TokBox software development kit across Android and iOS. With the addition of TokBox to the Vonage platform, developers will benefit from a simple, flexible and scalable programmable video solution to create engaging, embedded communications experiences. Scott Lomond, CEO of TokBox, commented, "TokBox established itself early on as an industry leader based on the belief that the WebRTC standard had significant potential to drive a wave of innovation and value creation. As WebRTC has gained traction, our growth has been supported by the ability of our platform to simplify the integration of live video into websites and mobile apps for developers.” Business Segment Results and Highlights • Vonage Business total revenues were $148 million, representing 57% of total consolidated revenues and 20% GAAP growth. • Vonage Business service revenues grew 24% to $128 million. • Service Revenue per Customer, which includes all Business services, was $348 in the second quarter of 2018, a 6% year-over-year increase. • Monthly Business service revenue churn was 1.2% in the second quarter of 2018, up from 1.1% in the year ago quarter. • UCaaS revenues for accounts billing more than $1,000 in monthly recurring revenue increased 27%. • Registered developers on the Nexmo API Platform increased to 546,000, representing a sequential increase of 62,000. Consumer Segment Results and Highlights • Consumer revenues were $112 million in the second quarter of 2018 compared to $128 million in the prior year quarter, a decline of 13%. • Consumer customer churn was a record low 1.7%, down from 1.9% in the year ago quarter.