Vonage Posts a Profit–On Paper

vonage Well, what do you know. Vonage posted a quarterly profit. The Iong-suffering Internet phone company reported first-quarter earnings today and with them its first profit ever: $5 million on revenue of $224 million. Sadly, that profit was only made possible by “a $13 million mark-to-market adjustment relating to the derivative liability in the Company’s convertible debt.” Without the adjustment, Vonage would have reported a net loss of $7.7 million.

That’s not nearly as bad as the $10.3 million loss the company posted in the fourth quarter of 2008. Still, it’s not pretty. Especially given some of the company’s other metrics. Vonage (VG) lost 6,000 net subscriber lines during the quarter at a time when you’d expect the souring economy to be driving cost-conscious consumers into its waiting arms. Churn rose to 3.1 percent from 2.9 percent. And ultimately, the company ended the quarter with 2,583,861 subscribers, fewer than the 2,610,360 it had a year ago.

In its earnings release, Vonage said it has tapped TBWA\Chiat\Day, “a firm known for creating impactful messaging on highly regarded brands,” to do something similar for it. But is that even possible with a not-so-highly-regarded brand like Vonage?

Scot Brees

Count me as lost subscriber #6,000. I sucked it up and kept my Vonage account for 2 years longer than I should have (had it for 2yrs 2mo). While the basic service worked for me, and worked well, the customer service was atrocious. Features were slow coming and not up to par. And don’t get me started on the way they dealt with their famous phantom outage.

Save the company, bundle it with my ISP and the added value is only about $10/mo, but at least I’d keep the service.

BTW…I have almost never seen a company more eager to bring me back with offers of multiple months of free service. They played hard ball by not offering these until I actually canceled the service though.

Vonage Posts a Profit–On Paper

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