TORONTO – Business connectivity supplier TeraGo’s 2017 financial results show decreases across the board as the company shifts its focus.
"In the fourth quarter, we continued to make progress with our shift to higher growth cloud and colocation service offerings and our turnaround is well on track," said Tony Ciciretto, president and CEO of TeraGo, in the company’s press release. "As evidenced by record cloud and colocation backlog monthly recurring revenue at the end of the fourth quarter, stable churn rates, and stable ARPU, we believe the strategic investments made in 2017 have positioned TeraGo for improved financial performance in 2018."
Total revenue decreased 7.2% to $13.5 million for the three months ended December 31, 2017 compared to $14.6 million for the same period in 2016, announced the company. Total revenue decreased 6.3% to $55.4 million for the year.
Cloud and colocation revenue decreased 1.5% to $4.7 million compared to $4.8 million for the same period in 2016, driven by churn impacts throughout the year. “However, the percentage of revenues from cloud and colocation of our total revenue have increased steadily quarter over quarter during 2017 (Q1 = 33.7%, Q2 = 34.0%, Q3 = 34.0%, Q4 = 35.0%) as the company makes a shift towards these higher growth service offerings. Cloud and colocation revenue increased 3.6% to $18.9 million for the year,” reads the release.
Connectivity revenue decreased 10% to $8.8 million in the quarter, impacted by a variety of factors, including churn, certain customers renewing long term contracts at lower current market rates, and lower usage revenues as certain customers have shifted to unlimited usage plans, the release continues.
Net loss was $4.1 million in the quarter compared to a net income of $400,000 for the same period in 2016. For the year, net loss was $7.3 million compared to a net loss of $4.3 million for the same period in 2016. The bigger loss was primarily driven by the impairment charge on certain network assets, property and equipment and intangible assets to adjust the carrying amount to their recoverable amount. In addition, the company saw a decrease in revenue, increase in cost of services, increase in other operating costs, increase in finance costs, and an increase in stock-based compensation, partially offset by lower restructuring and related costs, as well as lower depreciation and amortization, adds the release.
Adjusted EBITDA decreased to $2.9 million in Q4 compared to $4.9 million for the same period in 2016. For the year, adjusted EBITDA decreased to $12.9 million compared to $18.9 million for the same period in 2016.
However, added the CEO, "with a recurring revenue business model from a base of approximately 3,400 business customers, a national communications network that includes approximately 8.5 billion MHz/pops of 24/38 GHz millimeter wave spectrum, and five data centres to support our growth plans, we have a strong asset base and are highly focused on surfacing value for shareholders."
