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Why Shares of Vonage Holdings Popped Today

What happened

Shares of Vonage Holdings (NYSE: VG) jumped on Thursday following the release of the telecom services provider's second-quarter report. The company beat analyst estimates for both revenue and earnings, driven by strong organic growth in portions of its business. As of 1:27 p.m. EDT, the stock was up 12%.

So what

Vonage reported second-quarter revenue of $251.8 million, up 7.7% year over year and about $10 million above the average analyst estimate. Total business revenue soared 45%, driven by acquisitions and 23% organic growth. Within the business segment, unified-communications-as-a-service (UCaaS) revenue rose 9.6% to $85.5 million, while communications-platform-as-a-service (CPaaS) revenue rose 357% to $35.2 million. Adjusted for acquisitions, CPaaS organic revenue grew by 44%.

Image source: Vonage.

"Within Vonage Business, we continue to execute on our priorities to accelerate UCaaS revenue growth within the Mid-market and Enterprise segments, as well as drive strong revenue growth in CPaaS," said Vonage CEO Alan Masarek. "We also continue to pull the right levers to optimize and extend the value of Consumer Services, highlighted by record low churn."

Non-GAAP EPS came in at $0.07, up from $0.05 in the prior-year period and $0.01 above what analysts were expecting. Higher revenue and a reduction in sales and marketing costs helped drive the bottom line higher.

Now what

Vonage expects to report business revenue between $498 million and $504 million for the full year, up $15 million from previous guidance due to both organic growth and a revenue recognition change related to the acquisition of Nexmo. Total revenue is expected between $981 million and $996 million. Vonage didn't provide earnings guidance, but it does expect operating income before depreciation and amortization of at least $165 million.

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Timothy Green has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.