Mr. Matthew Gerber reports

TERAGO REPORTS FIRST QUARTER 2023 FINANCIAL RESULTS AND ANNOUNCES APPOINTMENT OF NEW CEO

TeraGo Inc. has released financial and operating results for the first quarter ended March 31, 2023.

Key developments and financial highlights:

• Connectivity revenues increased 3.2 per cent from fourth quarter 2022 and 1.6 per cent from the same quarter in the prior-year period, with connectivity revenue totalling $6.5-million for the three months ended March 31, 2023, compared with $6.3-million in Q4 2022 and $6.4-million in the same quarter in the prior-year period. Total revenue decreased 17.7 per cent to $6.5-million for the three months ended March 31, 2023, compared with $7.9-million for the same period in 2022. The decrease in revenue is the result of the Q1 2022 divestiture (1). The Q1 2022 period includes $1.4-million of divested cloud and co-location revenue.
• Net loss for the three months ended March 31, 2023, was $2.5-million compared with a loss of $3.1-million in the same period in 2022. The improved net loss position is the result of higher gross margins in the current period combined with the reduction of operating expenses in the current period compared with the same period in the prior year. The operating expense decrease is greater in magnitude than the decrease in revenues and gross profit from the same period in the prior year.
• Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) was $800,000 for the three months ended March 31, 2023, compared with $1.1-million for the same period in 2022. The decrease was as a result of lower revenues and gross profit in the current period and the addback of restructuring and divestiture costs in the prior-year-period adjusted EBITDA calculation.
• Subsequent to the period-end, on April 3, 2023, the company drew down another instalment on its debt facility in the amount of $3.0-million (Canadian) ($2.3-million (U.S.)) in conjunction with the terms of the credit agreement with CrowdOut Capital LLC. This transaction was approved by the board of directors.
• Backlog monthly recurring revenue in the connectivity business increased year over year to $132,929 as of March 31, 2023, compared with $126,631 for the same period in 2022. The increase in backlog MRR was a result of a strong sales performance in signing up new customers, particularly through the company's channel partners.
• Average revenue per user for the connectivity business was $1,101 in Q1 2023 compared with $1,063 in in the prior quarter and compared with $1,061 for the same period in 2022.

Management commentary

"Our team was pleased with the results we delivered this past quarter. The trend we have seen with growth in our fixed wireless access line of business continued, and we were able to conclude almost all of the transition activities related to the divestiture we did in 2022. We also continue to see interest in 5G private networks from our business customers and are expecting equipment for these types of deployments to become available later this year," said Terago chief executive officer Matthew Gerber. "While we continue to see healthy demand for our products and services as evidenced by our strong bookings and churn performance over the past year, we also recognize that recent overall market conditions are changing and influencing customer decision making, which could potentially impact our business. We will continue to watch these trends closely and make any necessary adjustments if there is an impact."

(1) On Jan. 20, 2022, Terago announced it had entered into a definitive agreement to sell its cloud and co-location business lines to a subsidiary of Hut 8 Mining Corp. (Nasdaq: HUT) (Toronto Stock Exchange: HUT) for aggregate consideration of $30-million in cash.

Chief executive officer transition

TeraGo also announced today a transition to a new chief executive officer. Effective June 12, 2023, Daniel Vucinic will be appointed as TeraGo's chief executive officer. With over two decades of experience across senior management roles throughout the technology sector, he brings a wealth of leadership and operational excellence experience. He most recently served as chief operating officer of Centrilogic, a global provider of information technology transformation solutions, where he led all operations functions to support customers' end-to-end cloud and digital transformation journeys. He also served in several executive roles at Allstream, a telecommunications company in Canada, where he played a pivotal role in business development, customer retention, data solutions, corporate strategy and operations. Prior to his tenure at Allstream, he held senior leadership positions at Voice, Bell MTS and AT&T Canada. He holds a bachelor of applied science, engineering, from the University of Toronto.

"I am honoured to accept the role of CEO of TeraGo and am excited to build upon the positive momentum that Matt has developed," said Mr. Vucinic. "I see a tremendous opportunity to accelerate our customer value creation by truly understanding their business strategies and then mapping TeraGo's highly differentiated spectrum assets and carrier-grade connectivity platforms to achieve that strategy. All of this, powered by a highly certified and dedicated team, creates an exceptional foundation as TeraGo embarks on its next phase of its growth delighting customers, employees and shareholders."

Mr. Gerber added: "I am excited about the opportunity to pass the leadership role to Dan. He brings a wealth of relevant operating experience and is the right person to take our company to the next level. Dan and I will be working together in lock step over the next few weeks to ensure a smooth transition for our customers, partners and team members."

Conference call

Management will host a conference call on Thursday, May 11, 2023, at 10 a.m. ET, to discuss these results.

To listen to the conference call, please dial 888-886-7786 or 416-764-8658 and use conference ID 28441909 if applicable. Please call the conference telephone number 15 minutes prior to the start time so that you are in the queue for an operator to assist in registering and patching you through.

An archived recording of the conference call will be available through Monday, June 12, 2023. To listen to the recording, call 877-674-7070 or 416-764-8692 and enter passcode 441909 followed by the number sign if applicable.

About TeraGo Inc.

TeraGo provides wireless connectivity and private 5G wireless networking services to businesses operating across Canada. The company holds 2,120 megahertz of exclusive spectrum licences in the 24-gigahertz and 38-gigahertz spectrum bands, which it utilizes to provide secure and reliable enterprise-grade networking and connectivity services. TeraGo serves over 1,800 Canadian and global businesses operating in major markets across Canada, including Toronto, Montreal, Calgary, Edmonton, Vancouver, Ottawa and Winnipeg, and has been providing wireless services since 1999.

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