Venture Global, Inc. Q1 FY2021 earnings call

• Digital transformation is accelerating, with businesses accelerating e-commerce and e-support plans, and industries like telehealth, remote education, and virtual events seeing unprecedented growth. Vonage's cloud-based communication solution is well-positioned to address the $80 billion+ market opportunity by 2023. • Strong first quarter results with improving execution across business, including API, UC, and CC. • API showed real strength across geographies and industries, with clean API demands, net dollar expansion, and new logos. Video and verifying messaging APIs are particularly strong, addressing fraud and online transaction needs. • Progress on strategic initiatives: accelerating product development investment, focusing on go-to-market with Vonage Accelerate program, and investing in software development and sales/marketing to drive growth.

Consolidated revenues increased 12% to $333 million, driven by a 21% increase in DCP revenues, which now represent 77% of consolidated revenue (up from 71% in the prior year's first quarter), offset by an 11% decline in consumer. VCP service revenues increased 23% to $240 million. Consolidated gross margin was 53% due to faster growth of relatively lower margin VCP revenues. Consolidated operating expenses were $167 million, up 1% year-over-year, with expense to revenue ratio improving by six points. Consolidated first quarter adjusted EBITDA was $48 million, up $9 million year-over-year.

• Consolidated revenues guidance was updated, with second quarter and full-year guidance revised. • CapEx is increasing due to investment in software development to drive functionality across technology platforms and support sales and marketing growth. • Full-year adjusted EBITDA guidance was adjusted with investments in product development and go-to-market strategies.

• Competitive pricing pressures in the API business, where competitors could offer lower prices and take volume. • Regulatory and compliance risks in different geographies that could impact operations. • Potential churn if competitors successfully undercut pricing or offer more attractive solutions.

Q: Great to see API strength in the quarter, especially behind improving net redemption. Could you give more color on API growth drivers?

A: API showed strength across geographies and industries, with clean demands, net dollar expansion from existing customers, and new logos. Video and verifying messaging APIs are key, addressing fraud and online transaction needs.

Q: You mentioned dollar net expansion in API increased to 135%. How does this compare to prior year trends?

A: The 135% is up sequentially, historically a good range, with the current range being at the upper end of the 110% to 140% range seen historically.

Q: Any near-term disruption risk with the channel program?

A: The Vonage Accelerate program is well-received, with positive feedback from partners. The program is designed to support growth, with improved portal, technology, and documentation, and is expected to continue improving with positive traction in pipeline volume.

Q: Could you talk more about cross-sell between UC, CC, and API business?

A: There's significant cross-sell opportunity across UC, CC, and API, with sellers now selling across all product areas. The Vonage Communication Platform strategy enables shared selling, and there's strong uptake in cross-pollination, especially with integrations like Microsoft Teams, ServiceNow, and Salesforce.