21st Annual Needham Growth Conference January 2019

Transcription

1 21st Annual Needham Growth Conference January

2 Safe Harbor Caution Concerning Forward-Looking Statements Various remarks that the Company makes contain forward-looking statements regarding acquisitions, acquisition integration, growth, growth priorities or plans, new products and related investment, revenues, adjusted OIBDA, churn, seats, lines or accounts, average revenue per user, cost of telephony services, the Company s share repurchase plan, new products and related investment, capital expenditures, and other statements that are not historical facts or information constitute forward-looking statements for purposes of the safe harbor provisions under The Private Securities Litigation Reform Act of The forward-looking statements are based on information available at the time the statements are made and/or management's belief as of that time with respect to future events and involve risks and uncertainties that could cause actual results and outcomes to be materially different. Important factors that could cause such differences include but are not limited to: he competition we face; the expansion of competition in the cloud communications market; our ability to adapt to rapid changes in the cloud communications market; the nascent state of the cloud communications for business market; our ability to retain customers and attract new customers cost effectively; the risk associated with developing and maintaining effective internal sales teams and effective distribution channels; risks related to the acquisition or integration of businesses we have acquired; security breaches and other compromises of information security; risks associated with sales of our services to medium-sized and enterprise customers; our reliance on third party hardware and software; our dependence on third party facilities, equipment, systems and services; system disruptions or flaws in our technology and systems; our ability to scale our business and grow efficiently; our dependence on third party vendors; the impact of fluctuations in economic conditions, particularly on our small and medium business customers; our ability to comply with data privacy and related regulatory matters; our ability to obtain or maintain relevant intellectual property licenses; failure to protect our trademarks and internally developed software; fraudulent use of our name or services; intellectual property and other litigation that have been and may be brought against us; reliance on third parties for our 911 services; uncertainties relating to regulation of business services; risks associated with legislative, regulatory or judicial actions regarding our business products; risks associated with operating abroad; risks associated with the taxation of our business; risks associated with a material weakness in our internal controls; governmental regulation and taxes in our international operations; liability under anti-corruption laws or from governmental export controls or economic sanctions; our dependence on our customers' broadband connections; restrictions in our debt agreements that may limit our operating flexibility; foreign currency exchange risk; our ability to obtain additional financing if required; any reinstatement of holdbacks by our credit card processors; our history of net losses and ability to achieve consistent profitability in the future; our ability to fully realize the benefits of our net operating loss carry-forwards if an ownership change occurs; certain provisions of our charter documents/ and other factors that are set forth in the Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2017, and in the Company s Quarterly Reports on Form 10-Q. While the Company may elect to update forward-looking statements at some point in the future, the Company specifically disclaims any obligation to do so, and therefore, you should not rely on these forward-looking statements as representing the Company's views as of any date subsequent to today. Non-GAAP Financial Measures This presentation contains non-gaap financial measures (including adjusted operating income before depreciation and amortization ( adjusted OIBDA ), adjusted OIBDA less capex, adjusted net income, net debt (cash), and free cash flow), as defined in Regulation G adopted by the SEC. The Company provides a reconciliation of these non-gaap financial measures to the most directly comparable financial measure at the end of the presentation and in the Company's quarterly earnings releases, which can be found on the Vonage Investor Relations website at 2

3 About Vonage 2001 Company Founded Headquarters: Holmdel, NJ 200+ Patents with 150 Pending 2,200+ $1B+ 700K Employees Worldwide Annual Revenue Developers Worldwide Use Our APIs $1B 20B 100K+ In Strategic Acquisitions in 5 Years Minutes & Messages Terminated Annually Business Customers 3

4 Vonage Has Transformed Into a Business Cloud Communications Leader ($ in millions) 4

5 2018 Key Accomplishments ONE Significantly increased our investment in technology and talent Strategic acquisitions of TokBox and NewVoiceMedia Building a Communications platform company - One Vonage 5

6 Communication Use Cases Are Converging as Customer Expectations Grow Employee to Employee Communications for Collaboration Business to Customer Communications for Superior Engagement 6

7 Vonage Solves Through Intelligent Interactions Tulip Boutique I received the wrong size shirt Was it Order # The Medium Blue Polo? Yes, I received a Small. We will have the correct size sent out right away! Conversation What you say Channels Through what you say it Closing Whether you solve the problem Type a message 7

8 Why Does it Matter? Contact Center Unified Communications Integrations Communication APIs Integrated Contextual Any Channel Any Device 8

9 Vonage Combines Multiple Products Into One Vonage, our Single Integrated Cloud Platform A micro-architected platform enables Vonage to lead the convergence of communication products into a single solution Unified Communications Programmable Communications Contact Center One Vonage, our Communications API Platform, is the innovation engine across all of the Vonage solutions stacks, providing: - Innovation - Contextual - Programmability ONE 9

10 One Vonage Platform Customer Benefits Enable Digital Transformation Meet Rising Customer Expectations Interoperability, Customization Multiple Development/ Consumption Options 10

11 One Vonage: An Integrated Fully Programmable Communications Software Platform That Delivers Intelligent Interactions Communication Applications (UCaaS, CCaaS) Programmable Communications (One Vonage) API Platform (CPaaS) VOICE SMS VERIFY SIP TRUNKING MESSAGES VIDEO DISPATCH NUMBERS INSIGHT Public Cloud Infrastructure SaaS Integration Vonage Global Carrier Network CARRIER RELATIONSHIPS PHONE NUMBERS GLOBAL PEERING INTELLIGENT ROUTING 11

12 Vonage Addresses the Entire Cloud Communications TAM $18B $3B Programmable Communications Programmable Communications $9B CCaaS $38B $38B UCaaS $38B UCaaS UCaaS $50B $11B CCaaS $50B UCaaS The Cloud Communications TAM is expected to grow by 60% over the next 5 years $79B Source: Vonage, Industry Research 12

13 At Scale, Industry Leader in Business Cloud Communications ($MM) Single Cloud Platform, One Vonage, delivering a broad portfolio of Communications solutions Go-to-market through Applications and API Platform groups Large scale network terminating billions of minutes and messages Leveraging cash flows from Consumer segment and strong balance sheet to drive growth 13

14 Vonage Business Go to Market 14

15 Applications Group Vonage Business Cloud Contact Center 15

16 Applications Growth Initiatives Expand Enterprise Presence Omni-Channel Sales Execution Integrated UCaaS/CCaaS/CPaaS products 16

17 The Vonage API Platform Enables Developers to Easily Embed Communications to Drive Better Business Outcomes Enterprise-Grade Developer Platform Key APIs Voice SIP Trunks Developer focused platform Backed by the Vonage network Enhanced Customer Engagement AI/Chatbots Social Media Multi-channel communications More personal, relevant interactions Direct to carrier connections Global reach with sales presence in 3 regions Workflow Integration Phone numbers in 85 countries In-App Calling & Messaging Geo-fenced Communications Analytics SMS Limitless Use Cases Security Chat User Verification Proxy Communications Video 17

18 Nexmo, the Vonage API Platform, Continues to Produce Strong Results Customers & Partners % Organic Excludes unqualified developer signups Includes approx. 100,000 developers from the acquisition of TokBox 18

19 API Platform Growth Initiatives Grow the Long-tail Customer Base Diversify Geographic Footprint Expand Product Mix 19

20 Continued Investments in Sales Distribution Are Producing Results Inside Sales Channel Sales Omni-channel Distribution Strategy Field Sales Enterprise Sales Land and Expand Strategy Developers Addressing the Global Opportunity The Vonage Partner Network continues to accelerate mid-market and enterprise growth All four seven-figure TCV UCaaS deals in 3Q 18 included Contact Center Nexmo APAC revenues increased 70% YoY in 3Q 18 New bookings from customers with greater than 25 seats increased 65% YoY in 3Q 18 Revenues from Nexmo customers added in 3Q 17 increased 8x in 3Q 18 Significant new customer wins in 3Q 18 include: Red Hat, Delivery Hero, Myelefant, Mobike, Tix.ID (Indonesia) Channel sales increased 43% YoY in 3Q 18 20

21 Consumer Segment Overview 21

22 Optimization of Consumer Segment Yielding Strong Results ($ in millions) Consumer Revenues Consumer ARPU $26.29 $26.37 $26.30 Consumer Customer Churn 22

23 Capital Allocation Strategy Invest to grow Vonage Business organically Invest in new markets, sales force and product expansion Maintain strategic and financial flexibility Operate Consumer for cash flow and profitable subscriber base Manage leverage Acquire selectively to grow Vonage Business Accretively acquire customers, sales force, technologies, geographic footprint and / or product Proactively manage share count Repurchased $57.5M in stock since 1Q 15 Deployed capital via discretionary moves to minimize share issuance 23

24 Financial Strength $1.03B $188M $163M $566M 190+ LTM Consolidated Revenues LTM Adjusted OIBDA LTM Adjusted OIBDA - CAPEX NOLs Financial Strength and Complementary Assets are a Strategic and Competitive Advantage U.S. Patents 24

25 Thank You 25

26 Travel Solution - Cancelled Flight Alert Cancelled flight sends SMS alert to travelers... Nexmo SMS Messaging TRAVEL ALERT: Flight 42 from London (LHR) to NYC (JFK) has been cancelled. Call this number and a travel representative will help you book another flight and hotel, if needed. Nexmo Voice connects call to InContact and provides context BOT: Hi Lisa, John is calling regarding his cancelled flight from LHR to JFK. He needs help booking another flight and hotel. LISA: Hi John, happy to help! Contact Center Representative 2018 Vonage Analyst Event 26

27 Non-GAAP Reconciliation 27

28 Non-GAAP Reconciliation 28

29 Non-GAAP Reconciliation 29

30 Non-GAAP Reconciliation 30