TeraGo Q2 2024 Earnings Report

TeraGo EPS Results

• Actual EPS: -C$0.16
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

TeraGo Revenue Results

• Actual Revenue: $6.58 million
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

TeraGo Announcement Details

• Quarter: Q2 2024
• Date: 8/7/2024
• Time: N/A
• Conference Call Date: Thursday, August 8, 2024
• Conference Call Time: 10:00AM ET

TeraGo (TSE:TGO), together with its subsidiaries, provides connectivity services for businesses primarily in Canada. It owns and operates a carrier-grade multi-protocol label switching enabled wireline and fixed wireless, and Internet protocol communications network that provide Internet access, private interconnection, and data connectivity services. The company also offers data connectivity services that allow businesses to connect their various sites within a city or across the company's geographic footprint through a private virtual local area network; and a range of diverse Ethernet-based services over a wireless connection to customer locations. It provides its services through direct and indirect sales channels. TeraGo Inc. was incorporated in 2000 and is headquartered in Thornhill, Canada.

TeraGo Q2 2024 Earnings Call Transcript

[Operator]

Good morning, ladies and gentlemen. Welcome to TeraGo's 2nd Quarter 2024 Financial Results Conference Call. Currently, all participants are in a listen only mode. Following the presentation, we will conduct a question and answer session with prequalified analysts on the call and instructions will be provided at that time for you to queue up for questions. I would like to remind everyone that this conference call is being recorded.

[Operator]

TeraGo would like to remind listeners that the company's remarks and answers to your questions today may contain forward looking statements that are based upon management's current expectations. All such statements are made pursuant to the Safe Harbor provisions of and are intended to be forward looking statements under applicable Canadian securities legislation. When relying on forward looking statements to make decisions with respect to the company, you should carefully consider the risks set forth in the Risk Factors section in the 2023 Annual MD and A, which is available on www.sedar.com and also consider other uncertainties and potential events. Except as may be required by Canadian securities laws, the company does not undertake any obligation to update any forward looking statement as a result of new information. We would also like to remind listeners that TeraGo uses certain non GAAP financial measures to arrive at adjusted results to assess its business and to measure overall performance.

[Operator]

Terrigo believes these financial measures provide readers with a better understanding of how management views the company's overall performance. I will now turn the conference over to TeraGo's Chief Executive Officer, Daniel Vucinic. Sir, please proceed.

[Speaker 1]

Good morning, everyone, and welcome to our Q2 2024 earnings call. Today, we are pleased to share how we are further accelerating our value creation strategy. This marks my first four quarters of my tenure as CEO. Revenue, ARPU, gross margin continued to increase combined with optimized operating expenses, driving adjusted EBITDA growth. Our Smart Growth strategy includes a disciplined approach to capital expenditure, substantially improving profitability.

[Speaker 1]

The improvements during these four quarters compared to the prior four quarters have resulted in increased cumulative adjusted EBITDA by 70 and $6,000 cumulative positive cash flow generated from operations of $4,200,000 and decreased use of debt facility by 7.6 $1,000,000 From a current operating metrics perspective, our sales pipeline and sales bookings are starting to grow. Churn bookings are significantly lower as a result of our churn strategy initiatives around client engagement, value creation and proactive contract renewals. In addition to the strong financials reported, Icit's announcement in May 2024 ensures TeraGo retains and renews its millimeter wave spectrum licenses. This decision provides certainty and clarity on our licenses, allowing TeraGo to continue to drive competition, innovation and increased investments in its next generation wireless connectivity offerings for Canadian businesses. Our comprehensive strategy is enhancing value for our clients, employees and shareholders, delivering exceptional results.

[Speaker 1]

As we move forward, our primary focus will be on accelerating revenue growth. As Canadian businesses demand an alternative managed service provider who focuses on customer experience, carrier diversity and being agile and nimble. TeraGo's revived narrative is getting positive reception from the investor community as the business progresses. Now I'm going to pass over to our CFO, Raj Sapra.

[Speaker 2]

Thank you, Dan. Good morning, everyone. Turning to Slide 4 of our Q2 2024 financial results presentation, which is available on our website for a look at our key performance indicators for the Q2 of 2024. Our average revenue per customer, or ARPU, as Dan said, for our connectivity business was $1200 in Q2 2024, an 8.7% increase compared to $1104 for the same period in 2023. ARPU levels continue to improve as a result of smart profitable growth, coupled with changes in customer base and product mix.

[Speaker 2]

Our churn was 1% compared to 1.2% for the same period last year. Customer churn continues to reduce due to our continuing execution of the company's strategy to focus on mid market and large scale customers as well as implementing new strategies for customer renewals and retention. Turning to Slide 5 to go through our broader Q2 twenty twenty four financial highlights. Total revenue for the quarter was $6,600,000 as compared to $6,500,000 from the same period in 2023. The increase in revenue is a result of increase in sales bookings and lower customer churn as compared to the same period in 2023.

[Speaker 2]

Adjusted EBITDA was $900,000 in the 2nd quarter, an 88% increase compared to $500,000 from the same period in 2023. The company continues to strive for profitable growth and driving efficiencies in the business. Since the beginning of Q3 of last year, as a result of these initiatives, the company has increased the cumulative adjusted EBITDA by $706,000 as compared to the 4 quarters prior to that period. Net loss for Q2 2024 was $3,200,000 a 25 percent decrease compared to a net loss of $4,000,000 for the same period in 2023. The company's efforts over the past 4 quarters to optimize its cost structure by reducing costs and operating the business efficiently has resulted in lower salary and operating expenses, with a partial offset of higher interest cost on the debt facility for the Q2 of 2024 as compared to the Q2 of last year.

[Speaker 2]

Turning now to Slide 6 to the balance sheet. We ended the Q2 of 2024 with $3,600,000 in cash and cash equivalents and short term investments. In the Q2 of 2024, we generated 800,000 or 800,000 in cash flow from operations

[Speaker 1]

for the business as compared to $1,200,000 of cash outflow in the same period in 2023. Since the beginning of Q3 of last year with a focus on managing the operations effectively, the company has generated a cumulative increase in cash flow from business operations of $4,200,000 as compared to the 4 quarters prior to that period. With that said, I would like to turn the call back over to Dan. Dan? Thanks, Raj.

[Speaker 1]

Our value creation strategy continues to build significant momentum in the business, combined with ISED's spectrum decisions, uniquely positions TeraGo to drive innovation and increase investments in its next generation offerings for us today and we can now open up the call for questions. Operator, back to you.

[Operator]

Thank you. At this time, we will be conducting a question and answer We have reached the end of the question and answer session. And I will now turn the call over to Daniel for any closing remarks.

[Speaker 1]

Thanks again everyone for joining us on our call today. I'd like to thank our customers and shareholders who continue to support the company and would also like to thank everyone at Terrego who continues to do an outstanding job. We look forward to providing an update on our progress on our next quarterly earnings call. Operator?

[Operator]

Thank you. This does conclude today's conference and you may disconnect your lines at this time. Thank you for your participation.