Vonage 2008 Annual Report Download - page 4

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2008 RESULTS
Vona
g
e weathered a storm
y
2008 as well as we could in these
t
urbulent times. The com
p
an
y
delivered four consecutive
q
uarters
o
f
increasing adjusted operating pro
t, and improved the loyalty o
f
our highly pro
table customer base. And despite extremely
dif cult market conditions, we mana
g
ed to re nance our debt
a
nd stabilize our  nancial
p
osition.
FINANCIAL HIGHLIGHTS:
°
Exceeded
$
900 million in revenue
,
a 9% increase over 200
7
°Reduced SG&A ex
p
ense excludin
g
certain char
g
es* b
y
$23 million,
or 7%
y
ear over
y
ear
°
Increased adjusted operating pro
t to $54 million*, a positive swing
of more than
$
100 million excluding certain charges over 2007
°Narrowed net loss excludin
g
certain char
g
es* to $34 million from
2007’s
$
93 million
With an existing-customer incremental margin o
f
60%
, our business
has a predictable, stable revenue stream and an attractive level o
f
pro
tability. Our business model is strong.
In addition to improving our 
nanc
i
a
l
resu
l
ts, we ma
d
e mater
i
a
l
i
mprovements
i
n un
d
er
l
y
i
ng
b
us
i
ness operat
i
ons an
d
customer care
metr
i
cs.
W
e are respon
di
ng to customer ca
ll
s more qu
i
c
kl
y an
d
e
f
ciently, and have reduced the level of customer churn from the
be
g
innin
g
of the
y
ear. However, the
q
ualit
y
of our overall customer
ex
p
er
i
ence must cont
i
nue to
i
m
p
rove.
A
n
d
, we must cont
i
nue to
provide new reasons
f
or customers to choose and stay with Vonage.
CONCLUSION
Vona
g
e enters 2009 with a renewed focus on our fundamentals
—
customer satisfaction,
g
rowth and ultimate
p
ro tabilit
y
.
O
ur market opportunity remains strong. Digital voice service
p
enetration of broadband households is still below 30%. Be
y
ond
this, the markets for innovative mobile a
pp
lications, inte
g
rated
communications and messa
g
in
g
, and small business solutions
are ro
b
ust.
I
n a t
i
me w
h
en consumers an
d
sma
ll
b
us
i
nesses are
see
ki
ng qua
li
ty an
d
va
l
ue,
V
onage
i
s we
ll
pos
i
t
i
one
d
to meet
this o
pp
ortunit
y
.
Des
p
ite a challen
g
in
g
g
lobal economic climate and historicall
y
low
levels o
f
consumer con
dence, there is reason
f
or optimism. We
h
ave never
b
een more rea
d
y to
b
u
ild
on t
h
e core
V
onage strengt
h
s
o
f so
p
histicated technolo
g
ies and disru
p
tive innovation.
I
’m es
p
eciall
y
p
roud that 76% of our customers sa
y
the
y
“can’t
e
nvision changing their service
f
rom Vonage.” That is the
f
oundation
of
a strong, sustainable business.
W
ith an intense focus on our customers, old and new, alon
g
with
s
uccessful im
p
lementation of our strate
g
ic im
p
eratives, Vona
g
e
w
ill continue to set the pace as the independent choice
f
or quality,
value and customer satis
f
action.
Sincerely,
Marc P. Lefar
C
hie
f
Executive
Of
cer
2
*Please see non-GAAP reconciliation on back cover
.