Release Date: August 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Revenue, ARPU, and gross margin have increased, contributing to adjusted EBITDA growth.
- The company has generated a cumulative positive cash flow from operations of $4.2 million over the past four quarters.
- Churn bookings are significantly lower due to effective churn strategy initiatives.
- ISED's announcement ensures TeraGo retains and renews its millimeter wave spectrum licenses, providing certainty for future operations.
- Adjusted EBITDA increased by 88% compared to the same period last year, indicating improved profitability.
Negative Points
- Net loss for Q2 2024 was $3.2 million, despite improvements, indicating ongoing financial challenges.
- Higher interest costs on the debt facility partially offset the benefits of reduced operating expenses.
- Total revenue growth was modest, increasing only slightly from $6.5 million to $6.6 million year-over-year.
- The company still faces challenges in accelerating revenue growth despite strategic initiatives.
- Cash and cash equivalents at the end of Q2 2024 were $3.6 million, which may limit flexibility for future investments.
Q & A Highlights
Q: Can you elaborate on the impact of ISED's spectrum decision on TERAGO's future plans?
A: Daniel Vucinic, President and CEO, explained that ISED's decision to allow TERAGO to retain and renew its millimeter wave spectrum licenses provides certainty and clarity. This enables TERAGO to continue driving competition, innovation, and increased investments in next-generation wireless connectivity offerings for Canadian businesses.
Q: How has the company's financial performance improved over the past year?
A: Rajneesh Sapra, CFO, highlighted that TERAGO's adjusted EBITDA increased by 88% to $0.9 million in Q2 2024 compared to $0.5 million in Q2 2023. The company also reduced its net loss by 25% to $3.2 million, driven by optimized cost structures and efficient business operations.
Q: What strategies have contributed to the reduction in customer churn?
A: Daniel Vucinic noted that the reduction in churn to 1% from 1.2% is due to a focus on mid-market and large-scale customers, along with new strategies for customer renewals and retention, which have been effective in maintaining customer engagement and value creation.
Q: What are the key drivers behind the increase in average revenue per customer (ARPU)?
A: Rajneesh Sapra stated that ARPU for the connectivity business increased by 8.7% to $1,200 in Q2 2024. This growth is attributed to smart, profitable growth strategies, changes in the customer base, and an improved product mix.
Q: How has TERAGO managed to improve its cash flow from operations?
A: Rajneesh Sapra explained that TERAGO generated $0.8 million in cash flow from operations in Q2 2024, compared to a $1.2 million outflow in Q2 2023. This improvement is due to effective management of operations and a cumulative increase in cash flow from business operations by $4.2 million since the beginning of Q3 last year.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
