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VoIP – It’s only just begun? 8×8, Metaswitch say “Yes!”

While Wall Street and the mainstream media have become, well, bored of Voice over IP (yes, VoIP), two of the most financially successful companies in the space say that IP voice’s greatest potential has yet to come.

Data point one comes from 8×8’s (www.8×8.com) annual shareholder meeting presentation on August 31, 2010.  Slide 5 of the deck (data from 2008 Atlantic ACM) shows that Business VoIP is only a $1.6 billion business – with circuit-switched business voice at $40 billion.

8×8 reported that its last quarter (ending June 30, 2010) of $16.8 million was the largest quarterly revenue figure in the company’s 23 year history.  Further, 8×8 reports it has both generated net income in 10 of the last 11 quarters and increased cash and cash equivalents 11 of the last 12 quarters.

On June 30, 2010, the company had more than $18 million in cash and cash equivalents and no debit.  Topping it all off, the company repurchased nearly 500, 000 shares during the month of August and plans to buy back another $3 million shares.

Total business customers at the end of June was over 21,000; going back two year to June 2008, that number was a hair short of 12,000 – in two years through a down economy, 8×8 has nearly DOUBLED their business customer count.

Average revenue per business customer took a hit between September 2008 ($220) – when the economy went to hell – but is now currently on the upswing, between $205 and $210.

Data point two is from the “Define your Decade” folks: Metaswitch sees a big opportunity as carriers in many cases just start to migrate out of TDM to an all-IP world.    Over the next two years, the company’s expansion motto is “Going Global, going mobile.”

Metaswitch doesn’t need to rush into an IPO; it’s got enough cash and profitability to fund its expansion at a steady pace on a financially solid basis and its investors are in not in a dot.com hurry.  The company will ultimately go public, but it is not going to happen in the next 12 month is my bet.

When Metaswitch does go public, it will do so because it will need liquid stock to facilitate other mergers.  But there won’t be a lot of those, because of the company’s core values; Metaswitch will want the “right” fit in terms of supplementing/adding to its existing product lines.

Bottom line here is that there are two very financially successful companies in the VoIP space who are bullish on the IP voice future.  And their fortunes are likely to increase as 1) Businesses look for healthy firms for services and products 2) Everybody migrates to IP communications and 3) Other VoIP/IP communication firms start to lose customers due to financial woes and bad service.

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