TORONTO – TeraGo Inc. subsidiary TeraGo Networks is buying the hosting business currently operated and carried out by Ottawa-based AirVM Inc. Financial terms of the deal were not disclosed.
The company said Friday that the pending acquisition will bring expanded Infrastructure as a Service (Iaas) offerings to TeraGo from locations in the United States and the United Kingdom, as well as add new international channel partners.
"This acquisition gives us some international presence, and enables us to serve European and American customers with very competitively priced offerings due to foreign exchange rates”, said TeraGo president and CEO Stewart Lyons, in the news release. “We are also excited to welcome the new employees to our Company who have previously worked to successfully build and grow the Hosting Business at AirVM."
The acquisition is expected to occur towards the end of this month and will be funded without accessing TeraGo's existing credit facilities, offering additional financial flexibility for it to continue to pursue opportunities within its “acquisition pipeline”.
In other company news, TeraGo ended its first quarter with a loss, despite an uptick in revenue and EBITDA.
Net loss was $820,000 for the three months ended March 31, 2016 compared to a net loss of $16,000 for the same period in 2015, due to incremental depreciation/amortization costs, higher finance costs related to the acquisition of RackForce, and higher loss on disposal of network assets, offset by revenue growth in the cloud and data centre services associated with the RackForce and BoxFabric acquisitions and lower stock-based compensation expense.
Total revenue increased 22.0% to $14.9 million from $12.2 million year-over-year, and the percentage of revenues from cloud and data centre services as a percentage of its total revenue has increased steadily to 30% of total revenues.
Adjusted EBITDA increased 26.5% to $4.7 million compared to $3.7 million for the same period in 2015, reflecting revenue growth, RackForce synergies and reductions in personnel costs obtained from the company's restructuring efforts in the current and prior periods, offset by the introduction of costs associated with owning RackForce.
"Our progress continues unabated with continued success in growing our cloud services business”, added Lyons. “We are the Canadian leader in a fast growing space with massive potential."
