Vonage CEO: Coronavirus outbreak ‘will create a permanent shift’ in how people work outside the office, exercise and visit their doctor
We’ve heard plenty from the usual suspects who are benefiting from millions of people working from home.
Zoom Video Communications Inc.
, Slack Technologies Inc.
, and Microsoft Corp.’s
Teams have all reported steep increases in use amid a surge in remote work and entertainment because of the coronavirus pandemic.
Now, add another name to the mix: Vonage Holdings Corp.
, whose telemedicine business has soared 2,000% in usage since mid-March. In that time, Vonage shares have jumped about 60%. The broader S&P 500 index
, by comparison, is down 11.5% this year.
“Most people are focusing on remote work as a consequence of COVID-19, but another major trend is the remote delivery of services for telehealth, distance learning, and fitness,” Alan Masarek, chief executive of the telecommunications company, told MarketWatch in a phone interview Monday. He said Vonage is seeing “turbocharged” growth through its partnerships with telehealth players Teladoc Health Inc.
, Cigna Corp.
, Doxy.com, Babylon Health, and Doctolib in Europe. Use of Vonage’s video service, meanwhile, is up 800% through fitness companies like Peloton Interactive Inc.
Teladoc last week said it was providing technology for more than 20,000 online medical visits a day in the U.S., double what it did in the first week of March. The company also released preliminary financial results for its fiscal first quarter: It forecast revenue of between $180 million and $181 million, compared with $128.6 million a year ago. Previously, Teladoc projected first-quarter revenue of $169 million to $172 million. Analysts polled by FactSet are expecting $178.5 million.
Teladoc’s surge in virtual medical appointments symbolizes the accelerated growth of remotely delivered services, a key factor in Vonage’s push into enterprise markets and away from residential services. Six years ago, residential/consumer services represented 90% of Vonage’s sales; today, it is less than 25%. Vonage now has 110,000 business customers, said Masarek, who took over as CEO in late 2014.
“We are uniquely positioned to deliver embedded video experiences,” said Masarek, who expects the outbreak “will create a permanent shift” in how people work outside the office, exercise, and see their doctor.
Vonage is expected to report its first-quarter results early next month. Analysts polled by FactSet expect earnings per share of a penny and revenue of $280 million. The earnings expectation implies a drop of more than 75% from the year-ago period, though revenue is seen rising about 1% year-over-year. For the year, Masarek expects revenue of $885 million.
“We‘re not envisioning COVID-related layoffs period,” Masarek said of the company’s 2,500-person workforce. Vonage is in the process of hiring another 200 people.