Vonage Holdings profits jumps as monthly fees rise, but subscriber losses continue

Vonage 1Q profit jumps on international plan

HOLMDEL, N.J. — Internet phone company Vonage posted a sharp increase in net income Wednesday, largely on its popular international calling plan.

Its stock prices jumped 10 percent in premarket trading.

The company, based in Holmdel, N.J., had net income of $14 million, or 6 cents per share, up from $5.3 million, or 3 cents per share, in the same period a year ago. Excluding a one-time benefit from an accounting adjustment for its convertible debt, Vonage would have posted a loss in the year-ago quarter.

The profit was a record for the company, which has a long history of losses.

Revenue was $228 million, up from $224 million, as the average monthly fee per subscriber rose to $31.37 from $28.86, helped by the Vonage World plan, introduced last fall. It includes unlimited calls to many countries in the flat monthly fee.

The company doesn’t expect average fees to keep increasing this quarter, because of a promotion offering Vonage World for $14.99 per month for six months.

And Vonage continues to hold onto more subscribers. “Churn,” or the share of subscribers canceling service every month, declined to 2.6 percent from 3.1 percent a year ago.

However, recruitment of new subscribers kept dropping, and Vonage lost a net 25,779 subscribers in the quarter, to end with 2.4 million.

Vonage supplies subscribers with an adapter that allows them to connect their home phone to their Internet connection. It was a pioneer in the field and is the largest remaining independent Internet phone company. Cable companies and their phone services have gobbled up much of the opportunity once envisioned for companies like Vonage.

Shares of Vonage Holdings Inc. rose 16 cents to $1.74 before the market opened.