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Talk about adding insult to injury. Fresh from one of the most disastrous initial public offerings of recent times, Vonage managed to miss revenue expectations when it unveiled its first quarterly earnings as a public company. Revenue still more than doubled against last year. But it was off a low base of $59m and has to be strong to give the internet telephony company’s business model a chance of working. On top of that, the company revealed that about one quarter of its customers who signed up to buy shares at the IPO had failed to pay for them – forcing Vonage to pay about $18m to its underwriters.

The fall-out from the botched IPO will clearly not help the two key numbers that investors should focus on. The first is how much it costs for Vonage to buy its growth. At the moment, that is still rising. Marketing costs in the quarter were a whopping $90m, or $239.2 per gross subscriber addition and, worryingly, 14 per cent higher than the previous quarter.

The other key number is how long each expensively acquired customer stays. That too, is heading in the wrong direction. Customer churn, or the proportion of customers that leave every month, hit 2.3 per cent from 2.1 per cent in the first quarter.

Vonage needs to continue growing fast, while bringing customer acquisition costs and churn down to lure investors back to the stock – now trading about 60 per cent below its $17-a-share offer price. But with both of those heading in the wrong direction and internet telephony competition hotting up, it is no time for investors to get involved. The only silver lining so far is that by pricing its IPO so aggressively Vonage raised $492m – which should fund its heavy losses for some time to come.

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