Vonage filed its S-1 with the SEC yesterday. The company incurred a cumulative net loss of $310.0 million from inception through September 2005. Inexpensive service, pretty expensive business. Excerpts from the filing (emphasis added):
Our revenue was $18.7 million in 2003, $79.7 million in 2004 and $174.0 million for the nine months ended September 30, 2005.
While our revenue has grown rapidly, we have incurred a cumulative net loss of $310.0 million from our inception through September 30, 2005. Although our net losses initially were driven primarily by start-up costs and the cost of developing our technology, more recently our net losses have been driven by our growth strategy.
In order to grow our customer base and revenue, we have chosen to increase our marketing expenses significantly, rather than seeking to generate net income. We are pursuing growth, rather than profitability, in the near term to capitalize on the current expansion of the broadband and VoIP markets and to establish and maintain a leading position in the market for broadband telephone services.
We incurred marketing expense of $176.3 million for the first nine months of 2005 and a net loss of $189.6 million for the same period. We intend to continue to pursue growth because we believe it will position us as a strong competitor in the long term. This strategy, however, will result in further net losses, which generally have increased quarterly since our inception and amounted to $66.0 million for the quarter ended September 30, 2005.
Since our launch, we have experienced rapid subscriber line growth. For example, we grew from 85,717 subscriber lines as of December 31, 2003 to 390,566 as of December 31, 2004, and last year more than tripled our subscriber lines to 1,269,038 as of December 31, 2005. We believe we will continue to add a significant number of subscriber lines in future periods; however, we do not expect to sustain our historical subscriber line growth rate on a percentage basis due to a combination of increased competition, a significantly larger and growing customer base and increasing saturation among our initial target customer base, which included many early adopters.
The full filing can be viewed at the SEC website.
Vonage Operating Loss 2002-September 2005