Vonage 2009 Annual Report Download - page 3

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DEAR SHAREHOLDERS:
2009 was a year of substantial progress for Vonage. We dramatically increased pro tability in our core business, generating positive income
from operations for the  rst time in our history. We executed on our vision for international and mobile opportunities by introducing Vonage World
and Vonage Mobile, and we continued to build a talented leadership team to drive our ongoing transformation. That’s solid progress considering
the dif cult position the company was in at the end of 2008 as we re nanced more than $250 million of debt in the most dif cult credit
market in memory.
Our team has reason to take pride in our 2009 accomplishments. We demonstrated our operational discipline and provided clear evidence of our
ability to build long-term value. We are grati ed that the market recognized our progress as our stock price more than doubled during the year.
We also recognize that we have much work to do. Through our focus on the fundamentals, we have substantially improved our bottom line and
our market position. As we look forward, our key priority is top-line growth. Building on our signi cant progress in establishing a secure
nancial and operational base, we are dedicating ourselves to this important work in the year ahead. We will leverage our core assets to take
advantage of the compelling opportunities we see in the large and rapidly evolving market for communications.
Let me highlight our key accomplishments for 2009 and offer a glimpse into our vision for the future.
2009 ACCOMPLISHMENTS
DELIVERED STRONG FINANCIAL PERFORMANCE
° Generated positive income from operations for the  rst time in our history
° More than doubled adjusted EBITDA to $119 million
° Reduced operating expenses by $75 million, eight percent year-over-year
° Grew revenue-per-user every quarter by improving our price and promotions mix and increasing
the number of customers taking higher priced rate plans
IMPROVED THE CUSTOMER EXPERIENCE
° Reduced customer churn to its lowest level in two years
° Improved the customer value proposition by offering Vonage World and Vonage World for Mobile,
which provide unlimited international calling for one  at rate
° Improved customer satisfaction and cut return rates in half
STRENGTHENED OUR TEAM
° Added to the experience of our leadership team by hiring several key executives to help drive the transformation of our business
° Continued to develop our employee base through fresh training and education programs
° Improved employee satisfaction, driving a 15 percent increase in the number of our employees who consider Vonage a “great place to work”
according to our most recent employee survey
These accomplishments are noteworthy in any year — but 2009 was no ordinary year. We are particularly pleased to have achieved these results
in a period of weak economic conditions. Vonage’s ability to drive  nancial progress in this environment is a testament to the strength of our
business model, the loyalty of our customers and the dedication of our employees.
While we made steady progress in many areas of our business, subscriber growth fell short of our expectations. We are focused on improving
acquisition ef ciency in our core business as well as in new markets, such as mobile, where we have recently started to deliver services.
LEVERAGED OUR KEY NETWORK ASSETS
Our core asset is our  exible, scalable VoIP (Voice over Internet Protocol) network, a robust platform which supports more than six billion
communications annually. Its scale and interconnection between the Internet and the public switched telephone network  rmly position us to
provide groundbreaking services that address the emerging needs of the rapidly evolving communications market. For example, our network
allows customers to use a single identity to access and utilize services and features from any location, device or Internet connection.
By leveraging this platform, we can develop affordable, high-quality, integrated communication solutions that operate seamlessly across a
range of devices and networks around the world.
Our evolution comes at the ideal time for our market. Consumers are using a growing array of devices to meet their connectivity needs,
including smart phones, tablets and gaming consoles. Broadband access is becoming more ubiquitous, enabling the development of real-time,
synchronized communications applications. Vonage has the sophisticated technologies and culture of disruptive innovation required to
capitalize on these opportunities.