magicJack Announces Launch of New SMB Subsidiary
magicJack Announces Launch of New SMB Subsidiary
- Plans to make investment in new subsidiary of approximately $10-12 million in 2016
- Launching sales of first SMB product offering in Q2 2016
- Projecting immaterial revenues in 2016 and annualized exit revenues of $15-20 million for 2017
- Expecting consistent double digit year over year revenue growth after 2017
- Targeting gross and EBITDA margins for SMB operations of 65-70% and 20-25%, respectively
WEST PALM BEACH, Fla. and NETANYA, Israel, Feb. 19, 2016 (GLOBE NEWSWIRE) – magicJack VocalTec Ltd. (Nasdaq:CALL), a leading VoIP cloud-based communications company, today announced the launch of a new SMB (Smallto Medium-Sized Business) subsidiary.
The new SMB subsidiary will leverage magicJack’s ultra-low cost network infrastructure and proprietary telecom software to deliver easy-to-buy, simple-to-use VOIP services to small- and medium-sized businesses at disruptive prices.
The company has conducted in-depth market research on product positioning, pricing, go-to-market strategy and competition and is committed to making a significant investment to enter the fast-growing SMB VOIP category. The company plans to spend approximately $10-12 million in the SMB subsidiary in fiscal year 2016.
The company is currently in final stages of product development for its first SMB product offering and expects to begin sales in Q2 2016. While 2016 revenues from the new SMB subsidiary are not expected to be material, the company projects annualized exit revenues for 2017 in the range of $15-20 million, with double digit year-over-year revenue growth targeted for subsequent years.
The company is targeting gross margins for the new SMB business subsidiary to be in the range of 65-70% and EBITDA margins to settle in the range of 20-25%.
“We are pleased to be extending our value proposition for enterprise beyond the hotel initiative which we launched in Q4 2015,” said Gerald Vento, President and CEO of magicJack VocalTec. “Our new SMB subsidiary will leverage our core assets, including our proprietary ultra-low cost termination structure, our softswitch assets and the enterprise software we have developed, to sell VOIP services to small and medium sized businesses at disruptive pricing. We believe we are well positioned to strongly compete for market share in the SMB VOIP category, which is expected to experience continuing growth for years to come. We look forward to reporting fourth quarter 2015 financial results and issuing 2016 guidance for our core business in March.”
The new SMB business subsidiary will be led by Keith Reed, who joined magicJack in December 2015 as its General Manager and Senior Vice President of Enterprise Sales. Reed has over 15 years of experience building and leading enterprise sales, business development and channel sales teams to maximize growth and market penetration. Prior to joining magicJack, Reed was at Intuit, where he spent the majority of his career in various sales positions, most recently as Vice President Sales Marketing for the Americas.
magicJack plans to classify the new SMB subsidiary as a separate operating segment for financial reporting purposes. This will allow current and potential investors to track the performance of the SMB subsidiary separately from the financial results of magicJack’s core consumer VOIP business.
Forward Looking Statements
This press release contains forward-looking statements that involve substantial risks and uncertainties. All statements, other than statements of historical facts, contained in this press release, including statements about our planned investment in our new SMB subsidiary, the timing of launching our first SMB product offering, projections regarding future revenues, the rate of revenue growth, gross margins and EBITDA margins, and earnings per share, and our plans to classify our new SMB subsidiary as a separate operating segment, are forward-looking statements. Many factors could cause our actual results, performance or achievements to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements. These factors include, among other things: changes to our business resulting from increased competition; our ability to develop, introduce and market innovative SMB and other products, services and applications; our ability to expand our network of small and medium-sized businesses; our ability to successfully monetize our SMB products and market them [in the [United States/globally]; delays in development we may experience with respect to the launch of our first SMB product; our customer turnover rate and our customer acceptance rate; changes in general economic, business, political and regulatory conditions; availability and costs associated with our new SMB subsidiary and with operating our network and our ability to control costs; potential liability resulting from pending or future litigation, or from changes in the laws, regulations or policies; the degree of legal protection afforded to our products; changes in the composition or restructuring of us or our subsidiaries and the successful completion of acquisitions, divestitures and joint venture activities; and the various other factors discussed in the “Risk Factors” section of our Annual Report on Form 10-K, our Quarterly Reports on Form 10-Q and other filings with the Securities and Exchange Commission. Such factors, among others, could have a material adverse effect upon our business, results of operations and financial condition. We do not assume any obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
About magicJack VocalTec Ltd.
magicJack VocalTec Ltd. (Nasdaq:CALL), the inventor of magicJack and a pioneer in Voice over IP (VoIP) technology and services, is a leading cloud communications company. With its easy-to-use, low cost solution for telecommunications, the Company has sold more than 11 million award-winning magicJack devices, now in its fifth generation, has millions of downloads of its free calling app, and holds more than 30 technology patents. magicJack is the largest-reaching CLEC (Competitive Local Exchange Carrier) in the United States in terms of area codes available and number of states in which it is certified.