Vonage Holdings Corp. reported a record high profit in the first quarter as the Internet-based phone provider added 3,345 subscriber lines to end the month of March with roughly 2.4 million customer lines.
Vonage reported net income of $21 million or $0.10 per share, reversing a $42 million loss in the previous three-month period and exceeding its $14 million profit in the year-ago quarter.
The subscriber line additions represented the second consecutive quarter of growth for a company that had previously struggled and whose future appears to be getting brighter.
Vonage exceeded Wall Street’s expectations. Its diluted earnings per share of nine cents beat the Thomson Reuters consensus of $0.06 EPS, according to American Banking & Market News.
Marc Lefar, CEO of Vonage, said more than one million subscribers, or 43 percent of the companys customer base, subscribe to Vonage World the plan that offers unlimited calling in the United States and Puerto Rico and across roughly 60 countries. In April, Holmdel, N.J.-based Vonage introduced another unlimited calling plan that allows customers to contact landline telephones in 80 countries and reach mobile phone in 42 countries.
Vonage has been zeroing in on growth initiatives to increase its market share in the international long distance market, grow its customer base outside the United States and offer products to mobile users.
For the quarter ending March 31, 2011, revenues decreased $8 million year over year to $228 million while average revenue per user dipped from $31.37 in the prior year period to $30.45. A slightly greater percentage of customers left Vonage than in the previous quarter. Churn inched up sequentially to 2.5 percent from 2.4 percent in the fourth quarter, which had represented the companys lowest fourth-quarter churn in four years.
The communications provider said its strong cash flow enabled it to prepay $20 million in debt during the quarter, and the company expects to prepay another $30 million by the end of the year, reducing annual interest expense by nearly $5 million.
Vonage said it expects its term debt to total $130 million at the end of the year.
The company ended the quarter with $87 million in cash, cash equivalents and restricted cash.
Shares of Vonage (VG) opened Wednesday at $5.29 on the New York Stock Exchange and climbed to a 52-week high of $5.39 before ending the day down 8.45 percent, or 44 cents. The shares were last trading at $4.77.