Technology

Vonage Lowers Subscriber Expectations

10/31/2006 4:47 AM Eastern

Despite reporting its seventh consecutive quarter of 200,000-plus customer additions, Internet-phone-service provider Vonage Holdings anticipated that its year-end subscriber count will come in below previous expectations.

Vonage added 205,000 net new subscribers in the third quarter, ending the period with more than 2 million customers. Revenue more than doubled to $160.7 million from $73.9 million one year ago, and net losses declined to $62.2 million (40 cents per share) from $65.9 million last year.

Despite those gains, Vonage continued to be plagued by high churn rates -- 2.6% per month in the quarter versus 2.3% a year ago. Marketing expenses -- one of Vonage’s biggest line items -- also continued to grow, rising to $254.26 per gross line addition from $208.76 last year.

Vonage reaffirmed full-year revenue guidance of $600 million-$615 million and marketing expenses of $360 million-$380 million. However, it reduced full-year subscriber-addition guidance to 2.2 million-2.3 million from previous estimates of 2.3 million-2.45 million.

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