Why Vonage Holdings Shares Rose 22% in May

What happened

Shares of Vonage Holdings (NYSE: VG) gained 21.8% in May, according to data from S&P Global Market Intelligence. The principal gains arrived in a single helping on May 8, aided by a strong first-quarter earnings report.

So what

Vonage's first-quarter revenue rose 10% year over year, stopping at $279.5 million. On the bottom line, adjusted earnings fell from $0.12 to $0.06 per diluted share. The average Wall Street analyst would have settled for a $0.02 profit per share on sales in the neighborhood of $278 million.

A businessman launches a rocket from his smartphone.

Image source: Getty Images.

Now what

The company's consumer sales fell 15% while revenue from business-grade equipment and services soared 31%. Vonage is reshaping itself into a business-to-business service provider, shrugging off an increasingly obsolete consumer business. Analyst firm Jefferies sees Vonage as a "legit contender" in several niche markets involving communications as a service, and it expects business-class revenue to grow by an average of 26% over the next five years. This growth story may have been a slow starter, but the runway ahead looks nice and clear.

10 stocks we like better than Vonage Holdings
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has quadrupled the market.*

David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and Vonage Holdings wasn't one of them! That's right -- they think these 10 stocks are even better buys.

See the 10 stocks


*Stock Advisor returns as of March 1, 2019


Anders Bylund has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story


The Motley Fool

Founded in 1993 in Alexandria, VA., by brothers David and Tom Gardner, The Motley Fool is a multimedia financial-services company dedicated to building the world's greatest investment community. Reaching millions of people each month through its website, books, newspaper column, radio show, television appearances, and subscription newsletter services, The Motley Fool champions shareholder values and advocates tirelessly for the individual investor. The company's name was taken from Shakespeare, whose wise fools both instructed and amused, and could speak the truth to the king -- without getting their heads lopped off.

Learn More