Amount Vonage raised in its IPO: $531 million - butthere are costs associated with fighting innumerable shareholderlawsuits. Even assuming they win them all, lets say that the real amount raised is $475 million. That’s Vonage’s cash fund for buying new customers.
Cost to acquire a new customer - $239 -according to Vonage itself.
Number of customers that $475 million will buy: 1.99 million customers (calculated).
Pre-existing customers: 1.4 million or so - various public numbers.
Churn rate (rate at which Vonage loses existing customers) - 2.3% per month
Revenue per customer per month: $27.70 - reported in Vonage’s quarterly results.
EBITDA (earnings before interest, taxes and depreciation) per customer per month: $5.39 (unable to verify this - in fact every calculation I could do based solely on public numbers makes it lower than this).
Vonage has stated that it thinks it will become profitable early in2008. However, my calculations show it running out of money in April2008. So which will come first?
We’ve decided to harness the power of public opinion. Put your voteon the odds and your prediction of what willhappen in the comments here.
Here’s our take:
Odds of Vonage going broke before it becomes profitable: 5-4
Odds of Vonage becoming profitable before it runs out of its IPO cash: 2-3
Odds of being acquired before June 2008: 1-3
Place your bets…