Vonage Holdings' CEO Discusses Q2 2012 Results - Earnings Call Transcript

In Mobile, we delivered an important improvement to our Vonage Mobile App enhancing call and connection quality and adding key features including Bluetooth and the ability to share photos and locations. In the next few weeks, we’ll invite smartphone users to participate in the beta trial of our innovative mobile roaming solution as an important step toward a broader market launch.

Lastly, based upon our progress over the past few years, we have great confidence in the strength and sustainability of the company’s cash flow; combined with a pristine balance sheet and our belief that our stock represents a very attractive value, the Board of Directors has authorized a share repurchase of up to $50 million to be concluded by the end of 2013. This is consistent with our strategy of taking a balanced approach to capital allocation by investing in growth and returning value to shareholders while maintaining ample cash to fund the operational needs of our business.

Let me now move to a discussion of our financial and operating results. Our financial performance remains strong as we generated $35 million in adjusted EBITDA. Continuing operational improvements including lower cost of telephony services, both domestically and internationally and a 6% reduction in customer care cost per line contributed to the sequential improvement in EBITDA. Sequential revenue decline modestly and Barry will talk through the details in a few minutes.

Free cash flow increased by $23 million to $25 million, up from $2 million in the seasonally lower first quarter. Gross line additions or GLAs of a 163,000 were up 5,000 lines compared to a year ago. Similar to last year, we experienced seasonally higher media costs in the second quarter which elevated subscriber acquisition cost.

While GLAs for the full quarter were relatively flat sequentially acceleration throughout the quarter was encouraging and supported by the addition of Pakistan to Vonage World and the introduction of an enhanced plan with mobile minute to Latin America.

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