TORONTO, Aug. 15,
2022 /CNW/ - TERAGO
Inc. ("TERAGO" or the "Company") (TSX: TGO)
(https://terago.ca/), today reported financial and
operating results for the second quarter and fiscal year ended June
30, 2022.
Key Developments
- Delivered another quarter of core connectivity revenue growth
and positive Net Monthly Recurring Revenue ("Net MRR" which is the
difference between new revenue booked and revenue that has
churned).
- Achieved a Net Promoter Score ("NPS"), a widely utilized
industry measurement of customer loyalty and relationships, of 58
for Q2 which compares extremely favourably to scores for other
network operators.
Financial Highlights
- Connectivity revenues increased year over year to $6.63 million for the three months ended
June 30, 2022, compared to
$6.58 million in the second quarter
of 2021.
- Total revenue decreased to $6.7
million for the three months ended June 30, 2022, compared to $10.9 million for the same period in 2021. The
decrease in revenue was driven by the divestiture of the cloud and
colocation lines of business.
- Net loss for the three months ended June
30, 2022, was $3.1 million
compared to a loss of $1.8 million in
the same period in 2021. The higher net loss was driven by one-time
restructuring and transaction expenses related to the
divestiture.
- Adjusted EBITDA was $1.0 million
for the three months ended June 30,
2022, compared to $3.4 million
for the same period in 2021. The decrease was mainly driven by the
impact of the divestiture transaction.
Management Commentary
"The second quarter was encouraging as we saw continued momentum
and growth in our core Fixed Wireless Access business and achieved
improved quarter over quarter bookings, backlog and revenues," said
TERAGO CEO Matthew Gerber. "We also
saw increasing interest in 5G private networks with significantly
more customer engagement and interest in these applications this
past quarter, which bodes well for our strategic focus on
connectivity for Canadian businesses. We are proud of our
team's ability to string together a series of growth quarters and
look forward to capitalizing on the momentum during this important
period of our operating history."
_______________________________________
|
1 See
"Definitions – Key Performance Indicators, IFRS, Additional GAAP
and Non-GAAP Measures"
|
|
RESULTS OF OPERATIONS
Comparison of the three- and six-months ended June 30, 2022, and 2021
(In
thousands of dollars, except with respect to gross profit margin,
earnings per share, Backlog MRR, and
ARPU)
(unaudited)
|
|
|
Three months
ended
June
30
|
|
Six months
ended
June
30
|
|
|
|
2022
|
2021
|
|
2022
|
2021
|
Financial
|
|
|
|
|
|
|
|
Cloud and
Colocation Revenue *
|
$
|
|
-
|
4,324
|
|
1,355
*
|
8,427
*
|
Connectivity Revenue *
|
$
|
|
6,625
|
6,579
|
|
13,059
*
|
13,305
*
|
Other
Revenue
|
$
|
|
106
|
-
|
|
241
|
-
|
Total
Revenue
|
$
|
|
6,731
|
10,903
|
|
14,655
|
21,732
|
Cost of
Services1
|
$
|
|
1,828
|
2,683
|
|
4,060
|
5,197
|
Selling, General,
& Administrative Costs
|
$
|
|
4,998
|
5,377
|
|
10,495
|
11,281
|
Gross profit
margin
|
|
|
72.8 %
|
75.4 %
|
|
72.3 %
|
76.1 %
|
Adjusted EBITDA
1,2
|
$
|
|
1,019
|
3,369
|
|
2,132
|
6,602
|
Net loss
|
$
|
|
(3,112)
|
(1,796)
|
|
(6,252)
|
(3,962)
|
Basic loss per
share
|
$
|
|
(0.16)
|
(0.09)
|
|
(0.32)
|
(0.22)
|
Diluted loss per
share
|
$
|
|
(0.16)
|
(0.09)
|
|
(0.32)
|
(0.22)
|
Operating
|
|
|
|
|
|
|
|
Backlog
MRR1
|
|
|
|
|
|
|
|
Connectivity
|
$
|
|
133,436
|
126,834
|
|
133,436
|
126,834
|
Churn
Rate1
|
|
|
|
|
|
|
|
Connectivity
|
|
|
0.9 %
|
1.4 %
|
|
0.9 %
|
1.4 %
|
ARPU1*
|
|
|
|
|
|
|
|
Connectivity
|
$
|
|
1,118
|
1,032
|
|
1,118
*
|
1,035
*
|
|
|
|
|
|
|
|
|
|
*The three and six months ended June 30,
2021, comparative numbers for Cloud and Colocation Revenue,
Connectivity Revenue, and ARPU have changed to conform with the
presentation of revenue stream allocations for Q2 2022.
(1) See
"Non-IFRS Measures" below.
|
(2) See
"Adjusted EBITDA" below for a reconciliation of net loss to
Adjusted EBITDA.
|
|
Conference Call
Management will host a conference call on August 15, 2022, at 10:00
AM ET to discuss these results.
To access the conference call, please dial 888-440-2078 or
438-803-0565, and use conference ID 7662670 if applicable. Please
call the conference telephone number 15 minutes prior to the start
time so that you are in the queue for an operator to assist in
registering and patching you through.
An archived recording of the conference call will be available
until Monday, August 22, 2022. To
listen to the recording, call 800-770-2030 or 647-362-9199 and
enter passcode 7662670 if applicable.
(1) Non-IFRS
Measures
This press release contains references to "Cost of Services",
"Gross Profit Margin", "Adjusted EBITDA", "Backlog MRR", "ARPU",
and "churn" which are not measures prescribed by International
Financial Reporting Standards (IFRS).
Cost of Services consists of expenses related to delivering
service to customers and servicing the operations of our networks.
These expenses include costs for the lease of intercity facilities
to connect our cities, internet transit and peering costs paid to
other carriers, network real estate lease expense, spectrum lease
expenses and lease and utility expenses for the data centres and
salaries and related costs of staff directly associated with the
cost of services.
Gross Profit Margin % consists of gross profit margin divided by
revenue where gross profit margin is revenue less cost of
services.
Adjusted EBITDA - The Company believes that Adjusted
EBITDA is useful additional information to management, the Board
and investors as it provides an indication of the operational
results generated by its business activities prior to taking into
consideration how those activities are financed and taxed and also
prior to taking into consideration asset depreciation and
amortization and it excludes items that could affect the
comparability of our operational results and could potentially
alter the trends analysis in business performance. Excluding these
items does not necessarily imply they are non-recurring, infrequent
or unusual. Adjusted EBITDA is also used by some investors and
analysts for the purpose of valuing a company. The Company
calculates Adjusted EBITDA as earnings before deducting interest,
taxes, depreciation and amortization, foreign exchange gain or
loss, finance costs, finance income, gain or loss on disposal of
network assets, property and equipment, impairment of property,
plant, & equipment and intangible assets, stock-based
compensation and restructuring, acquisition-related and integration
costs. Investors are cautioned that Adjusted EBITDA should not be
construed as an alternative to operating earnings (losses) or net
earnings (losses) determined in accordance with IFRS as an
indicator of our financial performance or as a measure of our
liquidity and cash flows. Adjusted EBITDA does not take into
account the impact of working capital changes, capital
expenditures, debt principal reductions and other sources and uses
of cash, which are disclosed in the consolidated statements of cash
flows.
A reconciliation of net loss to Adjusted
EBITDA is found
below and in the MD&A
for the three and twelve months ended June 30, 2022. Adjusted EBITDA does not have any
standardized meaning under IFRS/GAAP. TERAGO's method of
calculating Adjusted EBITDA may differ from other issuers and,
accordingly, Adjusted EBITDA may not be comparable to similar
measures presented by other issuers.
________________________________________
|
2 See
"Adjusted EBITDA" for a reconciliation of net loss to Adjusted
EBITDA
|
|
The table below reconciles net loss to Adjusted
EBITDA1 for the three and six months
ended June 30, 2022, and
2021.
(in thousands of
dollars)
(unaudited)
|
|
Three months
ended
June
30
|
|
Six months
ended
June
30
|
|
|
2022
|
2021
|
|
2022
|
2021
|
Net earnings (loss)
for the period
|
$
|
(3,112)
|
(1,796)
|
|
(6,252)
|
(3,962)
|
Foreign exchange loss
(gain)
|
|
39
|
(19)
|
|
34
|
(40)
|
Finance
costs
|
|
508
|
1,049
|
|
1,264
|
2,052
|
Finance
income
|
|
(32)
|
(12)
|
|
(47)
|
(24)
|
Impairment loss on held
for sale assets
|
|
-
|
-
|
|
107
|
-
|
Earnings (loss) from
operations
|
|
(2,597)
|
(778)
|
|
(4,894)
|
(1,974)
|
Add:
|
|
|
|
|
|
|
Depreciation of
network assets, property and equipment and amortization of
intangible assets
|
|
2,502
|
3,621
|
|
4,994
|
7,228
|
Loss on disposal of
network assets and leases
|
|
-
|
117
|
|
171
|
123
|
Impairment of assets
and related charges
|
|
254
|
70
|
|
374
|
227
|
Stock-based
compensation expense (recovery)
|
|
171
|
250
|
|
344
|
479
|
Restructuring,
acquisition-related, integration costs and other
|
|
689
|
89
|
|
1,143
|
519
|
Adjusted EBITDA
1
|
$
|
1,019
|
3,369
|
|
2,132
|
6,602
|
|
|
|
|
|
|
|
Backlog MRR - The term "Backlog MRR" is a measure
of contracted monthly recurring revenue (MRR) from customers that
have not yet been provisioned. The Company believes backlog MRR is
useful additional information as it provides an indication of
future revenue. Backlog MRR is not a recognized measure under IFRS
and may not translate into future revenue, and accordingly,
investors are cautioned in using it. The Company calculates backlog
MRR by summing the MRR of new customer contracts and upgrades that
are signed but not yet provisioned, as at the end of the period.
TERAGO's method of calculating backlog MRR may differ from
other issuers and, accordingly, backlog MRR may not be comparable
to similar measures presented by other issuers.
ARPU - The term "ARPU" refers to the Company's average
revenue per customer per month in the period. The Company believes
that ARPU is useful supplemental information as it provides an
indication of our revenue from an individual customer on a per
month basis. ARPU is not a recognized measure under IFRS and,
accordingly, investors are cautioned that ARPU should not be
construed as an alternative to revenue determined in accordance
with IFRS as an indicator of our financial performance. The Company
calculates ARPU by dividing our total revenue before revenue from
early terminations by the number of customers in service during the
period and we express ARPU as a rate per month.
TERAGO's method of calculating ARPU has changed from the
Company's past disclosures to exclude revenue from early
termination fees, where ARPU was previously calculated as revenue
divided by the number of customers in service during the period.
TERAGO's method may differ from other issuers, and
accordingly, ARPU may not be comparable to similar measures
presented by other issuers.
Churn - The term "churn" or "churn rate" is a measure,
expressed as a percentage, of customer cancellations in a
particular month. The Company calculates churn by dividing the
number of customer cancellations during a month by the total number
of customers at the end of the month before cancellations. The
information is presented as the average monthly churn rate during
the period. The Company believes that the churn rate is useful
supplemental information as it provides an indication of future
revenue decline and is a measure of how well the business is able
to renew and keep existing customers on their existing service
offerings. Churn and churn rate are not recognized measures under
IFRS and, accordingly, investors are cautioned in using it.
TERAGO's method of calculating churn and churn rate may differ
from other issuers and, accordingly, churn may not be comparable to
similar measures presented by other issuers.
About TERAGO
TERAGO provides wireless connectivity and private 5G wireless
networking services to businesses operating across Canada. The Company holds 2120 MHz of
exclusive spectrum licenses in the 24 GHz and 38 GHz spectrum
bands, which it utilizes to provide secure and reliable enterprise
grade networking and connectivity services. TERAGO serves over
1,800 Canadian and Global businesses operating in major markets
across Canada, including
Toronto, Montreal, Calgary, Edmonton, Vancouver, Ottawa and Winnipeg, and has been providing wireless
services since 1999. For more information about TERAGO, please
visit www.terago.ca.
Forward-Looking Statements
This news release includes certain forward-looking
statements. By their nature, forward-looking statements are subject
to numerous risks and uncertainties, some of which are beyond
TERAGO's control. Forward-looking statements may include but
are not limited to statements regarding the further developing our
5G Fixed Wireless Access program, consistently executing across all
fronts of the business, success in providing Canadian enterprises
with managed services and the 5G fixed wireless trials being
conducted by the Company. All such statements constitute
"forward-looking information" as defined under, applicable Canadian
securities laws. Any statements contained herein that are not
statements of historical facts constitute forward-looking
information. The forward-looking statements reflect the Company's
views with respect to future events and is subject to risks,
uncertainties and assumptions, including those risks set forth in
the "Risk Factors" sections in the annual MD&A of the Company
for the quarter ended March 31, 2022
available on www.sedar.com under the Company's corporate profile.
Factors that could cause actual results or events to differ
materially include the inability to consistently achieve sales
growth across all lines of TERAGO's business including managed
services, inability to complete successful 5G technical trials, the
impacts and restrictions caused by the COVID-19 pandemic are
prolonged which may further delay customer trials and/or cause a
negative impact on future financial results of the Company,
TERAGO's Pandemic Response Plan may not mitigate all impacts
of COVID-19, the results of the 5G trials not being satisfactory to
TERAGO or any of its technology partners, regulatory requirements
may delay or inhibit the trial, the economic viability of any
potential services that may result from the trial, the ability for
TERAGO to further finance and support any new market opportunities
that may present itself, and industry competitors who may have
superior technology or are quicker to take advantage of 5G
technology. Accordingly, readers should not place undue reliance on
forward-looking statements as several factors could cause actual
future results, conditions, actions or events to differ materially
from the targets, expectations, estimates or intentions expressed
with the forward-looking statements. Except as may be required by
applicable Canadian securities laws, TERAGO does not intend, and
disclaims any obligation, to update or revise any forward-looking
statements whether in words, oral or written as a result of new
information, future events or otherwise.
SOURCE TeraGo Inc.