Vonage Holdings Corp. (VG) has reported a 99.97 percent plunge in profit for the quarter ended Dec. 31, 2016. On an adjusted basis, net profit for the quarter was $7 million, when compared with $8.07 million in the last year period.
Revenue during the quarter grew 7.23 percent to $246.76 million from $230.12 million in the previous year period. Gross margin for the quarter contracted 561 basis points over the previous year period to 60.88 percent. Total expenses were 97.89 percent of quarterly revenues, up from 96.39 percent for the same period last year. That has resulted in a contraction of 149 basis points in operating margin to 2.11 percent.
Operating income for the quarter was $5.21 million, compared with $8.30 million in the previous year period.
"In 2016, we utilized our strong cash flows to invest in our growth, including the strategic acquisition of Nexmo and significant investments in the Vonage Business sales infrastructure," said Vonage chief executive officer Alan Masarek. "With these investments, we made great progress executing on our transformation and significantly advanced our strategy to become the Clear Leader in Cloud Communications. Through the integration of our UCaaS and CPaaS solutions, we have assembled the most comprehensive product offering in the global Cloud Communications market. This unique value proposition drives better outcomes for our business customers and deepens our customer relationships."
For financial year 2017, Vonage Holdings Corp. projects revenue to be in the range of $970 million to $985 million.
Operating cash flow drops significantly
Vonage Holdings Corp. has generated cash of $87.01 million from operating activities during the year, down 32.93 percent or $42.72 million, when compared with the last year.
The company has spent $190.73 million cash to meet investing activities during the year as against cash outgo of $152.70 million in the last year.
Cash flow from financing activities was $74.50 million for the year, up 85.30 percent or $34.29 million, when compared with the last year.
Debt increases substantially
Vonage Holdings Corp. has witnessed an increase in total debt over the last one year. It stood at $322.30 million as on Dec. 31, 2016, up 47.74 percent or $104.15 million from $218.15 million on Dec. 31, 2015. Total debt was 34.27 percent of total assets as on Dec. 31, 2016, compared with 27.81 percent on Dec. 31, 2015. Debt to equity ratio was at 0.73 as on Dec. 31, 2016, up from 0.56 as on Dec. 31, 2015. Interest coverage ratio deteriorated to 1.46 for the quarter from 3.27 for the same period last year.
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