Vonage wraps $230M Nexmo acquisition, accelerates position in the SMB cloud service market

Vonage has completed its $230 million acquisition of Nexmo, advancing its position in the Communications Platform as a Service (CPaaS) segment of the cloud communications market that it has been building to better target small to medium businesses (SMBs).

Under the terms of the acquisition agreement, Nexmo shareholders will receive $230 million, with an additional earn-out opportunity of up to $20 million contingent upon Nexmo achieving certain performance targets. Vonage paid $195 million at the close of the acquisition, consisting of $163 million of cash and approximately 6.8 million in shares of Vonage common stock valued at $32 million.

Nexmo provides application program interfaces (APIs) for text messaging and voice communications, allowing developers and enterprises to embed contextual, programmable communications into mobile apps, websites and business systems, creating better customer engagement and integrated workflows.

"Nexmo enhances Vonage's UCaaS offering by incorporating messaging and web/app-based voice to address businesses' rapidly increasing mobile, social media and contextual communications needs," said Alan Masarek, Vonage's CEO, in a release.

By adding Nexmo's product suite to its portfolio, Vonage will be able to enhance its global presence in EMEA and Asia Pacific with new offices in three key markets -- London, Hong Kong and Singapore -- and over 650 carrier interconnection agreements. Having access to a broader scope of carrier interconnection agreements means Vonage can target a larger audience of potential users with a broader package that combines each company's services.

Additionally, Vonage will gain access to over 350 of Nexmo's enterprise customers and over 114,000 registered developers that process over 5 billion API calls annually.

Nexmo will also benefit from being able to access Vonage's voice network, brand, U.S. sales distribution channels, and larger operational and financial scale and resources.  

Acquisitions like Nexmo have been important to Vonage's strategy in growing its UCaaS and cloud capabilities. Besides Nexmo, Vonage has acquired other similar companies throughout the past year, including iCore Networks, SimpleSignal and Telesphere.

As a result of its own internal efforts and acquisitions, Vonage has continued grow its stake in the UCaaS market, advancing to the number two position on IHS' 2016 UC as a Service (UCaaS) Scorecard: North America.

"Vonage jumped to second place by accelerating its customer base through yet more acquisitions in 2015 -- namely Simple Signal and iCore Networks," said Diane Myers, senior research director for VoIP, UC and IMS at IHS Technology.

For more:
- see the release

Related articles:
8X8, Vonage take hold of UCaaS market, says research firm
Vonage offers software-defined WAN to multisite businesses, enhances voice service QoS
Vonage says direct number rules will help accelerate VoIP interconnection
Vonage acquires iCore Networks for $92M, enhances UC strategy
Vonage says there's still 85% of the SMB market left to penetrate with cloud services

Read more on