Vonex rallies 15% following strong September quarter growth

By Trevor Hoey. Published at Nov 7, 2019, in Technology

Telecommunications innovator Vonex Limited (ASX:VN8) has recorded an outstanding quarter on quarter increase in user growth, as well as achieving promising levels of satisfaction in its retail business.

This news prompted significant interest in the company on Thursday morning with its shares up 15.8% to 11 cents in the first hour of trading.

Vonex has employed a new system of disclosure which shows a success metric that indicates the levels of annualised recurring revenue (ARR).

ARR excludes one-off sales revenue and does not factor in net churn as the business continues to deliver positive net growth in active users.

The chart below displays the consistent growth in ARR that Vonex has delivered as its retail and wholesale businesses have gained scale in in calendar year 2019.

Vonex has experienced consistent growth.
Vonex has experienced consistent growth.

Growth driven by SMEs moving to cloud based services

Discussing Vonex prospects of sustaining these high levels of growth, managing director Matthew Fahey said, ‘’The company is well-positioned to continue growing its ARR and expanding its base of higher margin, higher average revenue per user (ARPU) business, as strong demand continues from small and medium enterprises (SMEs) moving to cloud-based telco services.

‘’Vonex's recurring business model promotes stable revenue, maximises customer lifetime value and supports scalability.’’

The continued strong performance of the company’s Private Branch Exchange (PBX) business augurs well for the future.

Registered users of these Private Branch Exchange (PBX) connections are a key indicator of business development progress as Vonex penetrates the multi-billion dollar Australian market for telco services to SMEs.

The company has passed the 35,000 active PBX users milestone, having achieved significant growth in signed contracts.

Achieving this milestone reflects the company's strong start to the December quarter of fiscal 2020, signing Total Contract Value (TCV) of new customer sales worth more than $500,000 in October 2019, an increase of 65% compared to October 2018.

TCV of provisioned customers is calculated using the minimum monthly commitment multiplied by the contract length and is typically realised over a period of between two and three years.

Vonex plans to deliver continued growth in TCV in fiscal 2020 as a mix of upfront and recurring revenue as it meets healthy demand from SME customers.

Customer satisfaction important in transitioning to NBN

Management is buoyed by the high levels of customer satisfaction being achieved with Fahey saying, ‘’Enhancing the customer experience is increasingly critical as the migration of customers to services delivered over the National Broadband Network (NBN) reaches its peak.’’

The Telecommunications Industry Ombudsman (TIO) recently reported a total of 32,801 complaints relating to the provision of Australian phone and internet services in September quarter of fiscal 2020, an increase of more than 6% compared to September quarter of 2019.

Management noted that Vonex received zero TIO complaints from customers in September quarter of fiscal 2020.

View Our Investment Portfolios

S3 Consortium Pty Ltd (CAR No.433913) is a corporate authorised representative of LeMessurier Securities Pty Ltd (AFSL No. 296877). The information contained in this article is general information only. Any advice is general advice only. Neither your personal objectives, financial situation nor needs have been taken into consideration. Accordingly you should consider how appropriate the advice (if any) is to those objectives, financial situation and needs, before acting on the advice.

Conflict of Interest Notice

S3 Consortium Pty Ltd does and seeks to do business with companies featured in its articles. As a result, investors should be aware that the Firm may have a conflict of interest that could affect the objectivity of this article. Investors should consider this article as only a single factor in making any investment decision. The publishers of this article also wish to disclose that they may hold this stock in their portfolios and that any decision to purchase this stock should be done so after the purchaser has made their own inquires as to the validity of any information in this article.

Publishers Notice

The information contained in this article is current at the finalised date. The information contained in this article is based on sources reasonably considered to be reliable by S3 Consortium Pty Ltd, and available in the public domain. No “insider information” is ever sourced, disclosed or used by S3 Consortium.

Australian ASX Small Cap stocks | Why Finfeed.com is Australia’s leading small cap publication

Founded seven years ago, Finfeed.com is Australia’s leading and longest standing website for investor and finance news, education and expert opinion.

Published by StocksDigital, Finfeed was created to report daily on the comings and goings of ASX listed stocks in the small cap market.

As the first digital publication dedicated specifically to this space, Finfeed soon became the most trusted publication in the market, quickly garnering over two million page views – a number that continues to rise.

Finfeed.com provides its readers with informative articles that tackle the latest in market moving #ASX small cap news, plus exclusive content you won’t find anywhere else. It is aimed at those with an interest in investing, market education, company performance, start-ups and much more.

Finfeed.com is the only media organisation operating under the strength of a Financial Services License and is backed by leading journalists and analysts all with brands of their own.

The website aims to inform, educate and entertain with content that drills down into the heart of financial matters.

Finfeed is a leading source of investor and market information, with everything investors need to know about how to invest written in a way that anyone can understand. 

Over the years, the website has expanded beyond exclusively reporting on small caps, to profile Australia’s leading ASX listed small, mid and large caps as well as some of the country’s most successful CEOs and business leaders to find out what makes them tick.

Every day you will find fresh content covering:

Fast Facts

Over 4,000 articles published

Over 2.3 Million Page Views and counting

Over 10,000 followers on social media

Subscriber list growing by 2% monthly

Thanks for subscribing!