Oct. 10, 2013
/PRNewswire/ -- Vonage Holdings Corp. (NYSE: 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
in cash and
in Vonage common stock. The transaction is expected to be accretive to adjusted Earnings Per Share ("EPS")
and on an EBITDA
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
and growing, implying an annual run rate of greater than
. First half 2013 revenues were 39% higher than the same period in the prior year. Vocalocity was EBITDA
and free cash flow
positive during this period. Vocalocity ended the second quarter with 21,000 customers.
The total SMB market for voice service in
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 years
"Entry into the SMB segment is a key element of the growth strategy we outlined last year," said
, 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 culture."
Vocalocity CEO Wain Kellum commented, "As business VoIP moves from the early adopter phase to the mainstream, a Vocalocity and Vonage combination delivers the scale, quality and feature set to best serve customers and create phenomenal opportunities for growth. I am impressed with what Vonage has built, and look forward to joining the team."