Vonage Takes 'Nexmo' Step in Cloud Leadership

**Editor’s Note: Please click here for a recap of the biggest channel-impacting mergers in Jan.-Feb. 2015.**

Acquisition-hungry Vonage, a rapidly growing presence in the channel, is diving deeper into the cloud with its pending acquisition of Nexmo.

The VoIP and unified communications-as-a-service provider said Thursday it will buy San Francisco-based Nexmo for $230 million in cash and stock.

Nexmo, which calls itself a communications platform-as-a-service provider, specializes in application program interfaces (APIs) for voice, text and messaging. It is the second largest “CPaaS” provider in terms of revenue, Vonage said.

Vonage CEO Alan Masarek said his company decided in 2014 that it wanted to become the leader in cloud communications for businesses.

“With the acquisition of Nexmo, we are now uniquely positioned to lead the market. By combining Vonage’s rapidly growing Unified Communications as a Service business, with Nexmo, the second largest player in CPaaS, we are creating the future of cloud communications,” he said. “These companies represent a set of strategic, technology and human resources assets that deliver the broadest services offering in our industry.”{ad}

IDC has estimated that the communications platform-as-a-service market will reach $8 billion by 2018.

“Vonage’s acquisition of Nexmo creates a cloud communications company that can not only help an enterprise’s employees be more productive using robust UCaaS solutions, but can also enable enterprises to improve how they engage with their customers through embedded, contextual communications, on any platform and on any device,” said Mark Winther, IDC’s vice president of worldwide telecom consulting.

Nexmo has 350 enterprise customers as well as a presence in the Europe, the Middle East and Africa (EMEA) and Asia Pacific (APAC), which Vonage touts as an attractive feature. Tony Jamous, Nexmo co-founder and CEO, praised the deal.

“Our API technology, global network of interconnected carriers and messaging expertise, combined with Vonage’s powerful brand, industrial-strength infrastructure and second-to-none voice capabilities, will enable us to provide an unmatched value proposition to businesses,” he said.

The announcement comes as Vonage releases its first-quarter financial data. The company’s revenue was $227 million, up slightly from $220 million in the first quarter of 2015. Profit was $19 million, about the same as the year-ago quarter.

“Vonage’s strong first-quarter results demonstrate the disciplined execution of our growth strategy in Vonage Business and our continued efforts to release the inherent profitability of Consumer Services, which resulted in our highest consolidated adjusted EBITDA in five years,” Masarek said.

It’s been an active couple of years for Vonage, which has acquired a half-dozen companies to further its goal of offering a comprehensive cloud UC portfolio.