Back in May, Vonage reported its first quarter financial results. As hard as it is to believe, another quarter has already come and gone, and another financial report from the company has found its way into our inbox. There’s a lot of information here, so let’s get right to it.
Revenue was $205 million, down from $209 million sequentially and $212 million from the prior year period primarily due to the impact of prior period line losses, retention activities, and the non-operational impact of lower Universal Service Fund (“USF”) fees, which contributed $1 million of the decline sequentially and $3 million of the decline from the prior year.
Marketing expense was $58 million, up from $55 million a year ago. As of June 30, 2013, cash and cash equivalents, including $4 million in restricted cash, totaled $103 million. Capital expenditures, including the acquisition and development of software assets, were $8 million, up from $4 million sequentially a year ago. Free Cash Flow in the quarter was $11 million, down from $25 million in the year ago quarter primarily due to lower net income, excluding adjustments, and higher capital expenditures and software assets.
“We are making steady progress on our growth priorities highlighted by a strong early response to BasicTalk, launched in May, which contributed to higher sequential gross line additions and positive net lines for the quarter,” Vonage Chief Executive Officer Marc Lefar said. “Our core business results were solid. Churn declined to 2.4% – its lowest level since 2010, and adjusted EBITDA was in line with our expectations.
Consistent with our stated strategy, we are continuing to invest in our growth priorities and are excited about the opportunities for long term revenue growth in Brazil and from our mobile platform. We are balancing this investment in growth with the return of capital to shareholders, having repurchased five million shares of our stock during the quarter. We remain on target to complete our $100 million buyback by the end of 2014.”
Vonage continues to increase the quality and capabilities of its highly-rated voice, video and messaging mobile app. The Company expects to add to the app’s feature set in the second half of 2013 and continues to make progress toward the commercial launch of its international roaming feature, which allows users to save on high-cost roaming fees when traveling internationally much like global travel SIM card services do today.