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Vonage, AT & T may settle; Vonage grows in Q3

Thu, 11/08/2007 - 8:07am
Brian Santo

Settling the patent infringement suits against it appears to have had a positive effect on Vonage Holdings’ third quarter financials. Vonage added 78,000 net subscriber lines during the quarter, finishing with more than 2.5 million lines in service.

Revenue grew to a record $211 million, up from $162 million in the third quarter 2006, driven, the company said, by customer line growth. ARPU was up year to year, to $28.24, from $27.59 in the year-ago quarter, but it actually dropped on a sequential basis, from $28.38 in Q2 2007.

The company’s loss narrowed significantly, from $63 million in last year’s Q3, to $16 million in the third quarter just ended.

Vonage Chairman Jeffrey Citron said, "We are executing against our strategy to fix the fundamentals of our business. We are acquiring customers more effectively and running the business at an improved cost structure."

During the quarter, Vonage paid $80 million to settle a suit brought against it by Verizon, put another $40 million into escrow pending further legal action associated with the Verizon suit, paid $80 million to Sprint, and another $2 million in other IP litigation settlements. Most of the money was taken out of cash.

Meanwhile, Vonage said it reached an agreement in principle with AT&T to settle yet another IP litigation suit. The general terms being discussed by the parties, Vonage said, would require Vonage to pay $39 million over five years.

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