Vonage Losses Narrow

Vonage (VG Quote - Cramer on VG - Stock Picks) lost less money in the second quarter, as cuts in marketing spending slowed user growth.

The Holmdel, N.J., Internet calling shop posted an adjusted net loss of $18 million, or 12 cents a share. Those numbers compare with a loss of $61 million in the prior quarter. Analysts expected a 34-cent loss, according to Reuters Research.

Sales in the quarter ended June 30 rose 43% from a year ago to $206 million. Analysts were looking for $208 million in sales for the second quarter.

"We made significant strides this quarter in reducing costs and narrowing our losses," interim CEO Jeff Citron said in a press release. He said the gains came "despite the continued challenges associated with the Verizon (VZ Quote - Cramer on VZ - Stock Picks) litigation."

In March, a jury found in favor of Verizon's claim that Vonage was infringing on three technology patents concerning voice over Internet protocol, or VoIP. The decision, requiring that Vonage stop selling its Web calling service to new customers, crushed the stock. In April, Vonage was granted a stay allowing it to pursue new customers.

The company says it has developed two workarounds to the contested patents and is working on a third.

"We look forward to the court's ultimate decision and remain confident in the strength of our appeal," Citron said in the press release.

Vonage says it added 57,000 net subscriber lines during the quarter, but saw its monthly defection rate rise to 2.5% from 2.4% in the previous quarter. Looking ahead, the company says it expects new subscriber growth to be "higher than in the second quarter."

Vonage shares rose 15 cents to $2.35 early Thursday.