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  • mlambda mlambda Oct 10, 2013 6:30 AM Flag

    Vonage Holdings Corp. to Acquire Vocalocity

    HOLMDEL, N.J., Oct. 10, 2013 /PRNewswire/ -- Vonage Holdings Corp. (VG), a leading provider of communications services connecting people through cloud-connected devices worldwide, has entered into a definitive agreement to acquire privately-held Vocalocity, Inc. ("Vocalocity"), an industry-leading Software as a Service (SaaS) provider of cloud-based communication services to Small and Medium Businesses ("SMBs").

    Vonage will acquire Vocalocity for $130 million, including $105 million in cash and $25 million in Vonage common stock. The transaction is expected to be accretive to adjusted Earnings Per Share ("EPS")1 and on an EBITDA1 multiple basis in 2015.

    Vocalocity is one of the fastest growing providers in the SMB hosted VoIP market. During the first half of 2013, Vocalocity had revenue of $28 million and growing, implying an annual run rate of greater than $56 million. First half 2013 revenues were 39% higher than the same period in the prior year. Vocalocity was EBITDA1 and free cash flow1 positive during this period. Vocalocity ended the second quarter with 21,000 customers.

    The total SMB market for voice service in North America is $15 billion and 32 million lines. Vocalocity has focused on companies with 20 or fewer employees, which represents more than 60% of the total market. The long-term opportunity for growth in this segment is substantial given that 85% of SMBs still purchase voice service from traditional carriers at rates that are frequently 40-50% higher than those of Vocalocity. The SMB hosted VoIP market is forecast to grow at a compound annual rate of 27.5% over the next 5 years2.

    "Entry into the SMB segment is a key element of the growth strategy we outlined last year," said Marc Lefar, Vonage Chief Executive Officer. "Vocalocity accelerates our entry with a comprehensive, high-quality product suite and scalable platform. In addition, Vocalocity's software orientation, customer focus and innovative approach are a natural fit with our cultu

    Sentiment: Strong Buy

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    • There you it. Vonage just entered the SMB markets. Vocalocity is generating almost $60 million/year in revenue. Not sure if it is profitable. I'll bet not because they sold for 2X revenue's so that would tell me that things were not looking so good. that is why they sold. Now we have Ring Central and Vonage coming into these markets..

      So where is EGHT at this time. No news, no news, no news. Silent as ever and not telling anyone anything. It just amazing me that a company wishing to grow cannot announce any new customer wins.

      "paranoia will destroy ya"

      Sentiment: Strong Buy

      • 1 Reply to pmkhoopster
      • During the first half of 2013 Vocalocity had revenue of $28 million and growing, implying an annual run rate of greater than $56 million. First half 2013 revenues were 39% higher than the same period in the prior year.

        Yeah, sounds like things weren't looking good. Really?

        What the price tells me is that that's the going rate. EGHT should be worth somewhere close to 2-3x what this deal is priced at given the similarities. Not a whole lot more apparently. If you disagree, let me know why. TIA.

 
EGHT
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