TERAGO Reports Fourth Quarter and Full Year 2023 Financial Results

TORONTO, March 6, 2024 /CNW/ – TERAGO Inc. (“TERAGO” or the “Company”) (TSX: TGO), https://terago.ca/), today reported financial and operating results for the fourth quarter and fiscal year ended December 31, 2023.

“I am proud to report my second quarter since becoming CEO on June 12th, 2023. Our “Value Creation Strategy” accelerated delivery on behalf of customers, employees, shareholders – continued apace in the final quarter of 2023. In our prior earnings release I highlighted improvements across all of our key financial indicators. Today I am pleased to share that in the second half of 2023, we have continued the trend of strengthening these metrics.

Improvements in second half of 2023 as compared to the second half of 2022

Increased Adjusted EBITDA1,2 by 8%
Improved positive cashflow from operations1 by 96%

In the second half of 2023, we delivered substantial financial wins that have afforded TERAGO the opportunity to reinvest in its transformation. This will drive a reenergizing of our top line. With new sales leadership in place and further growth investments anticipated, it is my intention to drive value as much from top line revenue growth as from cost optimization and careful management of our capital expenditures. TERAGO is extremely well positioned as a nimble, carrier-grade managed service provider of choice with differentiated frequencies, deep capabilities and a delivery track record in emerging growth areas. Smart, profitable growth will be a theme in 2024 and beyond,” said Daniel Vucinic, CEO.

Key Developments and Financial Highlights

Total revenues for the three months ended December 31, 2023, were $6.5 million compared to $6.3 million for the same period in 2022. Total annual revenue in 2023 was $26.1 million compared to $27.6 million in the prior year. The decrease of $1.5 million was the result of the prior year including one month of Cloud and Colocation and post transaction related support services (“Other Revenue”).
Connectivity revenues were $6.5 million and $26.0 million, for the three months and year ended December 31, 2023, respectively. This is an increase of $0.2 million compared to same quarter prior year and $0.1 million compared to prior year annual.
Adjusted EBITDA1,2, remained flat at $1.2 million for the three months ended December 31, 2023, compared to the same period in 2022. For the year ended December 31, 2023, Adjusted EBITDA1,2 decreased 17.1% to $3.4 million compared to $4.1 million for the same period in 2022. The decrease is the result of the prior year including one month of Cloud and Colocation Revenue ($1.4 million), partially offset by a reduction of overall operating expenses in the current year.
Net loss increased to $3.6 million for the three months ended December 31, 2023, compared to a net loss of $2.4 million for the same period in 2022. Net loss was $13.2 million for the year ended December 31, 2023, compared to a net loss of $11.6 million for the same period in 2022. The increase in net loss was a combination of higher finance costs, lower total revenues, as described above combined with non-recurring costs associated with the staffing and management changes. These were partially offset by a reduction in overall operating expenses year over year.
Gross Margin remained consistent year over year achieving 73.3% in 2023 compared to 73.1% in the prior year.
Backlog MRR1 decreased year over year to $65,363 as of December 31, 2023, from $178,948 for the same period in 2022. The decrease in backlog MRR is the result of onboarding of new customers with improved installation processes yielding much faster installations which reduced the backlog due to installations exceeding new bookings in the year and combined with de-bookings of previously recorded orders due to technical, geographical and customer landlord limitations preventing fulfillment of the orders.
ARPU1 for the connectivity business was $1,164 in Q4 2023 up from $1,127 in Q3 2023 and compared to $1,063 for the same period in 2022 due to changes in customer base and product mix and a new pricing strategy implemented in 2023 Q4. ARPU has been increasing every quarter for the past five quarters.

Additional Management Commentary

“The Value Creation Strategy has gained sufficient traction and is already yielding tangible benefits. I expect that TERAGO’s efforts will be further buoyed by the addition of a permanent Chief Financial Officer, following the departure of the previous CFO due to personal family reasons after a brief tenure. A search is well underway for a permanent Chief Financial Officer, and I look forward to reacquainting the investor community with TERAGO and the Value Creation Strategy in the second half of 2024 following the integration of this key member of our team.

“In addition, we noted with great interest the consultation launched by Innovation, Science and Economic Development Canada with respect to license renewals impacting our 38 GHz and 24GHz bands, as well as the preliminary consultation launched on changes to our 24 GHz band.  Like any wireless business, spectrum is our lifeblood. Reasonable long-term visibility and our ability to put our spectrum to work in a way that fosters a growing, competitive and knowledge-based economy is absolutely critical for us to be able to invest in our diverse and innovative service offerings. We remain fully engaged in this important process.”, said Daniel Vucinic.

RESULTS OF OPERATIONS

Comparison of the three months and year ended December 31, 2023 and 2022
(In thousands of dollars, except with respect to gross profit margin, earnings per share, Backlog MRR, and ARPU)

Full story available on Benzinga.com