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Vonex delivers record sales assisted by work from home changes

Telecommunications innovator Vonex Limited (ASX:VN8) has chalked up a record month of sales in March and delivered an all-time record quarter with Total Contract Value (TCV) of new customer sales for the three months to March 31 just shy of $2 million.

TCV excludes existing customers re-contracting and revenue is normally realised over a period of between 1 to 3 years.

March quarter sales represented a year-on-year gain of 109%, placing the company in a robust position to deliver a strong fiscal 2020 result.

It is worth noting that customer sales in March were $787,000, which would equate to a quarterly run rate of more than $2.3 million, suggesting that momentum is building as the group progresses into the June quarter.

Management said that social distancing has seen the company benefiting from an historic shift towards working from home for staff of small to medium enterprises (SME).

The proactive ‘Stay at Home with Vonex’ marketing campaigns have seen the company grow softphone sales by in excess of 1,000% in February and March over the two-month period one year earlier.

Vonex’s softphone products are the desktop and mobile apps which act as an extension of a worker’s business phone system, offered as part of the Company’s ONdesk monthly plans.

Management also noted that key marketing partner, Qantas Business Rewards, was set to launch a “Business Essentials” campaign, showcasing Vonex to its SME members in April 2020.

This will provide members with an opportunity to earn Qantas Points on Vonex’s ONdesk and NBN products.

Management expects to deliver continued growth in TCV in fiscal 2020 as a mix of upfront and recurring revenue as it meets growing demand from SME customers.

As can be seen below, Vonex has delivered exceptional TCV growth in 2019/2020.

PBX and 2SG also performing well

Active Private Branch Exchange cloud-based phone system platform user numbers exceeded the 37,500 mark with growth driven by global events superseding what can historically be a seasonally slower period for SME investment decisions.

Growth in registered PBX users indicates business development progress as Vonex penetrates the multi-billion dollar Australian market for telco services to SMEs.

The successful integration of 2SG Wholesale with Vonex has resulted in the first month of sales being a record month in mobile broadband product, up 118% on this time last year.

2SG Wholesale is providing fast stable business grade wireless broadband, meeting strong end customer demand while the nation transitions to working from home.

Strengthening Qantas partnership adding value

Management noted that the partnership with Qantas Business Rewards has added mutual value and has rapidly translated into rising Vonex brand awareness and sales.

Under the partnership, significant new Qantas Point-based incentives are available for Vonex customers.

Businesses of any size can earn uncapped Qantas points for every purchase made with Vonex’s monthly ONdesk cloud-based phone plans and NBN plans.

Vonex intends to increasingly align its brand with that of Qantas in coming months.

While changing social habits have worked in favour of Vonex, management said that it is responding to the rapidly changing economic situation by taking appropriate steps to preserve its balance sheet and ensure it is well-positioned for the future.

As an initial step, the company’s Executive and Non-Executive Directors have volunteered to reduce their fees in aggregate by 22% effective April 1, 2020 for an initial period of three months.

The board fee reductions will be reviewed on a quarterly basis or as required.