Vonage acquiring SMB-focused VoIP services firm, shares soar

|About: Vonage Holdings Corp. (VG)|By:, SA News Editor

Vonage (VG +18.4%) is acquiring Vocalocity, a provider of fairly inexpensive cloud-based VoIP services and value-added features for SMBs, for $130M ($105M in cash + $25M in stock). Investors are quite pleased with the news. (PR)

Vocalocity had 1H revenue of $28M (+39% Y/Y), and was free cash flow positive during the period. The company focuses on companies with less than 20 employees, and had 21K customers at the end of Q2.

The market for hosted/cloud-based business telecom services market has been growing quickly (hence the enthusiasm for RingCentral's recent IPO), and generally features higher margins than the consumer VoIP market Vonage remains dependent on.

The deal is expected to close in Q4, and Vonage eventually expects annual synergies in "the high single-digit million dollar range." Vonage is paying for the cash portion of the deal using $30M in existing cash and $75M drawn from a credit facility.