Mr. Daniel Vucinic reports

TERAGO REPORTS THIRD QUARTER 2023 FINANCIAL RESULTS

TeraGo Inc. today released financial and operating results for the third quarter ended Sept. 30, 2023.

"This marks my first full quarter since becoming CEO on June 12. When I joined TeraGo, I saw a tremendous opportunity to accelerate value creation for customers, employees and shareholders -- our 'Value Creation Strategy.' Today's financial report contains critical proof points of our ability to execute on this transformation with agility and urgency. Moreover, these early proof points serve as a validation of the hard work and energy the team has put into these early innings of our business transformation," said Daniel Vucinic.

• Increased levels of adjusted EBITDA (earnings before interest, taxes, depreciation and amortization);
• Increased EBITDA margin;
• Positive cash flow from operations;
• Reduction in overall cash consumption compared with prior quarters;
• Anticipated further strengthening of financial metrics in coming quarters.

"These initial improvements result from the implementation of specific actions to support our value creation strategy including right sizing our work force and optimizing capital in a prudent and efficient manner. We anticipate further proof points in the coming quarters as we implement dynamic pricing, increase our customer engagement and pro-activity with customer renewals, re-energize our revenue generation engine, drive further efficiencies and invest in our inherent leadership position in the exciting and emerging area of 5G private networks."

Key developments and financial highlights

• Total revenues for the three months ended Sept. 30, 2023, were $6.5-million versus the $6.6-million earned in the same period in 2022. This result meant effectively flat revenues as the 2022 period included divestiture support services of approximately $100,000 in revenues that were non-recurring in Q3 2023. Connectivity revenues were $6.5-million in Q3 2023, flat from Q2 2022 and Q2 2023.
• Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) was $900,000 for the three months ended Sept. 30, 2023, compared with $600,000 for the same period in 2022. The increase was a result of lower overall SG&A (selling, general and administrative) costs. Adjusted EBITDA margin improved from 9.2 per cent in Q3 2022 to 14.1 per cent in Q3 2023.
• Net loss for the three months ended Sept. 30, 2023, was $3.1-million compared with a loss of $2.9-million in the same period in 2022. The increased net loss position is the result of both lower revenues ($100,000) and higher interest costs as a result of the CrowdOut debt financing facility ($800,000), partially offset by a decrease in total operating expenses ($700,000) in the current year versus the prior year.
• Backlog MRR decreased year over year to $75,963 as of Sept. 30, 2023, from $138,893 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 due to technical, geographical and customer landlord limitations preventing fulfilment of the orders.
• ARPU (average revenue per user) for the connectivity business was $1,127 in Q3 2023 compared with $1,104 in the prior quarter and compared with $1,099 for the same period in 2022 as a result of changes in customer profile and product mix. ARPU is at its highest level in the last eight quarters.
• The company did not require any additional financing or draws from its operating facility during Q3 2023. Per TeraGo's consolidated statement of cash flows, the cash generated from operating activities was $800,000 in Q3 2023 compared with cash consumed of $200,000 in the same period in 2022. Total cash consumption in the quarter was $1.9-million, compared with $2.4-million in the same quarter of 2022.

Additional management commentary

"With major tailwinds propelling our private network strategy, TeraGo is primed to capitalize on future opportunities. We are particularly encouraged by ISED's decision to elevate the 24 GHz band to Priority 1 as we anticipate ISED to publish a Consultation on 24 GHz in the near term," said chief executive officer Daniel Vucinic.

Conference call

Management will host a conference call on Thursday, Nov. 9, 2023, at 10 a.m. ET to discuss these results.

To access the conference call, please dial 888-506-0062 or 973-528-0011 and use conference ID 282818 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, Nov. 23, 2023. To listen to the recording, call 877-481-4010 or 919-882-2331 and enter pass code 49363 followed by the pound key if applicable.

About TeraGo Inc.

TeraGo provides wireless connectivity and private 5G wireless networking services to businesses operating across Canada. As Canada's biggest millimetre-wave spectrum holders, the company possesses exclusive spectrum licences in the 24-gigahertz and 38-gigahertz spectrum bands, which it utilizes to provide secure, dedicated SLA (service-level agreement) guaranteed enterprise-grade performance that is technology diverse from buried cables ensuring high-availability 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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