Mr. Daniel Vucinic reports

TERAGO REPORTS SECOND QUARTER 2023 FINANCIAL RESULTS

TeraGo Inc. has released financial and operating results for the second quarter ended June 30, 2023.

Key developments and financial highlights:

• Total revenues for the three months ended June 30, 2023, were $6.5-million, the same level achieved in first quarter 2023, but down $200,000 (3 per cent) from the $6.7-million earned in the same period in 2022, as a result of the 2022 divestiture transaction and the completion of the corresponding transaction service agreement.
• Connectivity revenues were $6.5-million in Q2 2023, flat from Q1 2023, and decreased $100,000 (1.5 per cent) from the same quarter in the prior year, as a result of customers transferred in the divestiture transaction.
• Net loss for the three months ended June 30, 2023, was $4.0-million compared with a loss of $3.1-million in the same period in 2022. The increased net loss position is the result of lower revenues and gross profit ($200,000) in the current quarter compared with the same quarter in 2022, as well as higher restructuring-related costs in the current period, as a result of the chief executive officer change, partially offset with a reduction of total operating expenses in the current period compared with the same period in the prior year.
• Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) was $500,000 for the three months ended June 30, 2023, compared with $1.0-million for the same period in 2022. The decrease was as a result of lower revenues and gross profit compared with the prior year combined, and higher selling, general and administrative expenses, net of restructuring costs, in Q2 2023 compared with Q2 2022.
• Backlog MRR in the connectivity business decreased year over year to $85,471 as of June 30, 2023, compared with $133,436 for the same period in 2022. The decrease in backlog MRR is the result of lower bookings year over year, combined with debookings of orders that could not be fulfilled due to issues outside of the company's control such as technical, geographical and customer landlord limitations preventing fulfilment of the orders.
• ARPU for the connectivity business was $1,104 in Q2 2023 compared with $1,101 in the prior quarter and compared with $1,118 for the same period in 2022 as a result of changes in customer and product mix.

Management commentary

"With just under two months of being at the helm as CEO, I have taken a calculative and meticulous approach in assessing the prior operational processes within our organization and have decided to make enhancements where needed and required," said TeraGo chief executive officer Daniel Vucinic. "As a first step towards executing this game plan, our team has commenced the development of a new, long-term plan to drive up shareholder value through a smart growth strategy that includes optimizing operational expenses and improving returns on capital investments to drive not only higher revenues but also improved adjusted EBITDA and cash flows. TeraGo truly has a compelling value proposition that is backed by the robust set of premium wireless products within our connectivity business and our coveted spectrum assets. Our premium products offer business-grade fibre-like performance, and are not subject to cable cuts as they are technology and carrier diverse. I am pleased by the early progress our team has made so far in our journey towards manifesting our smart growth strategy and look forward to a new era for our organization."

Conference call

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

To listen to the conference call, please dial 888-506-0062 or 973-528-0011 and use conference ID 604443 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 Thursday, Aug. 24, 2023. To listen to the recording, call 877-481-4010 or 919-882-2331 and enter passcode 48714 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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