Vonage (VG) is trading at a four-month high after reporting solid first quarter results. Revenue was up 7% to $243 million. Business Revenue was up 51% to $112 million while Consumer revenue fell 14% to $132 million.
In April, Vonage signed the largest Unified Communications as-a-service (UCaaS) deal in its history, with a global real estate firm. Vonage will deliver its UCaaS suite to more than 20,000 corporate seats across 550 company-owned locations.
Vonage also provided some interesting color on Nexmo, its Communications Platform as-a-service (CPaaS) business. Nexmo grew revenue 31% to $26 million. More importantly, management guided for 40% growth in the second quarter after a strong April. Nexmo won business from Lyft and Gett during the quarter, two ride-sharing firms. Recall, Nexmo's biggest competitor Twilio (TWLO) lowered guidance last week citing reduced business from Uber. Nexmo continues to work with Uber and noted that a couple dozen companies multi-source CPaaS. Last year, Nexmo did $92 mln in revenue: 90% was SMS and 94% of the traffic was outside the United States. So there is a big opportunity in the US and with the Nexmo's new Voice API. Vonge's legacy Consumer business is the leading VoIP phone service.
Vonage reaffirmed guidance for mid-teens UCaaS revenue growth and mid-30s CPaaS revenue growth this year. Vonage is the only company to offer both UCaaS and CPaaS, which is synergistic in terms of cost and increases the value proposition to enterprise customers.
Vonage's enterprise value trades at just over 12x EBITDA and 2x sales estimates for the year. Twilio trades at ~6x sales.