Vonage Stresses Positive in Fourth-Quarter Earnings Report

Press Release - February 19, 2008

Independent VoIP provider, Vonage Inc., is trying to put a positive spin on its results for the final quarter of 2007 – a period in which it added just 56,000 new broadband voice subscribers, compared to 78,000 in the three months previous.

Vonage did manage to draw in $215.9 million in fourth-quarter revenue, up from $211 million in Q3, and just $181 million in the fourth quarter of 2006. It also reduced its net operating loss to $11.1 million, down from $16 million in Q3, and a substantial improvement from $117.1 million in Q4/2006.

Declining advertising expenditure, however, combined with apprehension following a number of massive lawsuits against the company last year (since settled at great cost), have cut into subscriber additions – the life blood of a company which has yet to post a quarterly profit.

Vonage spent $63 million on advertising in the fourth quarter, meaning that each new subscriber cost the company more than $1,000 to attract.

But despite this, Vonage’s future is looking somewhat more rosy than it did a few months ago, giving company founder and Chairman, Jeffry Citron, some basis for optimism.

“Although 2007 was a difficult period marked by numerous legal challenges, Vonage maintained its focus on improving the business,” Citron stated. “Looking to 2008, we are confident in our ability to grow the business profitably and provide customers innovative, feature-rich and cost-effective communications services.”