TORONTO — TeraGo Inc.’s transition into a cloud and data centre services provider over the last year has helped to drive up revenues at the company, which reported a significant Q2 2015 revenue increase of 14.6% over the second quarter of 2014.
TeraGo’s total consolidated revenues were $15.1 million for the three-month period ending June 30, compared to $13.2 million for the same period in 2014. Revenues derived from data centre and cloud services (approx. $3.9 million) accounted for 25.5% of the company’s total revenues for the second quarter. A year ago in Q2 2014, only 6% of TeraGo’s total revenues were derived from data centre and cloud services. The company’s growing cloud and data centre business is a result of TeraGo’s acquisition of Kelowna, B.C.-based cloud services provider RackForce in March 2015.
“TeraGo’s move into the cloud services space is accelerating growth in revenue and EBITDA,” said Stewart Lyons, president and CEO of TeraGo, in a press release announcing the company’s Q2 2015 results.
“We have successfully integrated RackForce and have achieved over $1.0 million in annualized synergies to date, the rate of which surpassed our expectations, and while growing revenue at the same time. Further, we are confident we will be able to increase our rate of growth as our recently equity raise has given us the ability to access our increasing pipeline of additional accretive acquisitions and to develop new products,” Lyons added.
The company’s consolidated revenue increase was partially offset by a decline in its network and voice business associated with the loss of wireless entrant Public Mobile as a customer in 2014. Network and voice revenues declined 9% to $11.26 million in Q2 2015, compared to $12.39 million in Q2 2014. Excluding revenues of $1.0 million received related to the loss of Public Mobile as a customer, network and voice revenues declined by only $0.2 million, TeraGo said.
TeraGo’s EBITDA (earnings before interest, taxes, depreciation and amortization) increased 4.6% to $4.5 million in the second quarter of 2015, compared to $4.3 million for the same quarter of 2014. TeraGo attributed the increase to revenue gains, reductions in personnel costs and RackForce synergies offset by the introduction of costs associated with managing the RackForce operations.
Average revenue per customer (ARPU) increased 13% to $1,141 for the three months ended June 30, compared to $1,010 for the same period in 2014. This gain can be attributed to the higher ARPU base associated with the company’s growing cloud and data centre business, TeraGo said.
The company’s average customer churn rate was 1.05% and 1.01% for the three and six months ended June 30, compared to 1.00% and 1.03% for the same periods in 2014. TeraGo said this is within the company’s previously stated optimal churn range of between 1.0% and 1.1%, and continues to show an improvement year to date. As of June 30, TeraGo’s customer count was 4,296, compared to 4,107 customers at June 30, 2014.
Some of TeraGo’s recent business expansion highlights include the launch of data centre colocation services in Winnipeg, with a number of initial customers already installed, and the expansion of its cloud architecture into its facility in Mississauga, Ont., providing geo-redundant cloud infrastructure fully located within Canada.
To view TeraGo’s financial results for the second quarter of 2015, click here.
