"I am pleased to report our progress in the third quarter of my tenure as CEO, which commenced on
- Increased cumulative Adjusted EBITDA1 by
$547K - Improved cumulative positive cashflow from operations1 by
$3.8M - Decreased use of debt facility by
$10M
As we revitalize our sales efforts, maintain focus on churn mitigation and further optimize costs we anticipate favourable improvements in Adjusted EBITDA and cash flow from operations", said
Key Developments and Financial Highlights
- Total revenue was consistent at
$6.5M for the three months endedMarch 31, 2024 compared to$6.5M in the same quarter in the prior year period. - Adjusted EBITDA1 was
$930K for the three months endedMarch 31, 2024 compared to$827K for the same period in 2023. The increase is mainly as of a result of smart profitable growth and driving efficiencies in the business. - Net loss for the three months ended
March 31, 2024 was$3.5M compared to a net loss of$2.5M in the same period in 2023 due to higher interest costs and restructuring undertaken to further optimize the cost structure. - Backlog MRR1 in the connectivity business decreased year over year to
$48K as ofMarch 31, 2024 , compared to$133K for the same period in 2023. The decrease in backlog MRR was a combination of onboarding new customers with significantly faster installations and the Company's focus on profitable revenue generation. - ARPU1 for the connectivity business was
$1,158 in Q1 2024 compared to$1,101 for the same period in 2023. The improvement in ARPU1 is a result of smart profitable growth coupled with changes in customer base and product mix.
Conference Call
Management will host a conference call on
To access the conference call, please dial 888-506-0062 or 973-528-0011 and use conference ID 747856 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
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(1) See " Non-IFRS Measures" |
RESULTS OF OPERATIONS
Comparison of the three months ended
(in thousands of dollars, except with respect to gross profit margin, loss per share, Backlog MRR, and ARPU)
(unaudited) | Three months ended | |||
2024 | 2023 | |||
Financial | ||||
Cloud and Colocation Revenue | - | - | ||
Total Revenue | $ | 6,472 | 6,509 | |
Cost of Services1 | $ | 1,751 | 1,531 | |
Gross Profit Margin1 | 72.9 % | 76.5 % | ||
Salaries and Related Costs1 | $ | 2,669 | 2,846 | |
Other Operating Expenses1 | $ | 1,122 | 1,305 | |
Adjusted EBITDA1 | $ | 930 | 827 | |
Net Loss | $ | (3,547) | (2,549) | |
Basic loss per share | $ | (0.18) | (0.13) | |
Diluted loss per share | $ | (0.18) | (0.13) | |
Operating | ||||
Backlog MRR1 | ||||
Connectivity | $ | 48,328 | 132,929 | |
Churn Rate1 | ||||
Connectivity | 0.8 % | 0.9 % | ||
ARPU1 | ||||
Connectivity | $ | 1,158 | 1,101 |
(1) See " Non-IFRS Measures" |
(1) Non-IFRS Measures
This press release contains references to "Cost of Services", "Gross Profit Margin", Salaries and Related Costs", "Other Operating Expenses", "Adjusted EBITDA", "Backlog MRR", "Churn" and "ARPU" which are not measures prescribed by International Financial Reporting Standards (IFRS).
Cost of Services consists of expenses related to delivering service to customers and servicing the operations of our networks. These expenses include costs for the lease of intercity facilities to connect our cities, internet transit and peering costs paid to other carriers, network real estate lease expense, spectrum lease expenses and lease and utility expenses for the data centres and salaries and related costs of staff directly associated with the cost of services.
Gross Profit Margin % consists of gross profit margin divided by revenue where gross profit margin is revenue less cost of services.
Salaries and related costs includes regular payroll related expenses, commissions and consulting fees. All share based compensation, restructuring, other related costs are excluded from Salaries and related costs.
Other operating expenses includes sales commission expense, advertising and marketing expenses, travel expenses, administrative expenses including insurance and professional fees, communication expenses, maintenance expenses and rent expenses for office facilities. All restructuring and other related costs are excluded from other operating expenses.
Adjusted EBITDA - The Company believes that Adjusted EBITDA is useful additional information to management, the Board and investors as it provides an indication of the operational results generated by its business activities prior to taking into consideration how those activities are financed and taxed and also prior to taking into consideration asset depreciation and amortization and it excludes items that could affect the comparability of our operational results and could potentially alter the trends analysis in business performance. Excluding these items does not necessarily imply they are non-recurring, infrequent or unusual. Adjusted EBITDA is also used by some investors and analysts for the purpose of valuing a company. The Company calculates Adjusted EBITDA as earnings before deducting interest, taxes, depreciation and amortization, foreign exchange gain or loss, finance costs, finance income, gain or loss on disposal of network assets, property and equipment, impairment of property, plant, & equipment and intangible assets, stock-based compensation and restructuring costs. Investors are cautioned that Adjusted EBITDA should not be construed as an alternative to operating earnings (losses), or net earnings (losses) determined in accordance with IFRS as an indicator of our financial performance or as a measure of our liquidity and cash flows. Adjusted EBITDA does not take into account the impact of working capital changes, capital expenditures, debt principal reductions and other sources and uses of cash, which are disclosed in the consolidated statements of cash flows.
A reconciliation of net loss to Adjusted EBITDA is found below and in the MD&A for the three months ended
The table below reconciles Adjusted EBITDA1 to net loss for the three months ended
(in thousands of dollars, unaudited) | Three months ended | |||
2024 | 2023 | |||
Adjusted EBITDA1 | $ | 930 | 827 | |
Deduct: | ||||
Depreciation of network assets, property and equipment and amortization of intangible assets | 2,357 | 2,479 | ||
Stock-based compensation expense | 183 | 202 | ||
Restructuring and other costs | 618 | 20 | ||
Loss from operations | (2,228) | (1,874) | ||
Add/deduct: | ||||
Loss on disposal of network assets | 14 | 8 | ||
Impairment of other assets and related charges | 48 | 60 | ||
Foreign exchange loss | 10 | 30 | ||
Finance costs | 1,303 | 644 | ||
Finance income | (56) | (67) | ||
Net loss for the period | $ | (3,547) | (2,549) |
Backlog MRR - The term "Backlog MRR" is a measure of contracted monthly recurring revenue (MRR) from customers that have not yet been provisioned. The Company believes backlog MRR is useful additional information as it provides an indication of future revenue. Backlog MRR is not a recognized measure under IFRS and may not translate into future revenue, and accordingly, investors are cautioned in using it. The Company calculates backlog MRR by summing the MRR of new customer contracts and upgrades that are signed but not yet provisioned, as at the end of the period.
ARPU - The term "ARPU" refers to the Company's average revenue per customer per month in the period. The Company believes that ARPU is useful supplemental information as it provides an indication of our revenue from an individual customer on a per month basis. ARPU is not a recognized measure under IFRS and, accordingly, investors are cautioned that ARPU should not be construed as an alternative to revenue determined in accordance with IFRS as an indicator of our financial performance. The Company calculates ARPU by dividing our total revenue before revenue from early terminations by the number of customers in service during the period and we express ARPU as a rate per month.
Churn - The term "churn" or "churn rate" is a measure, expressed as a percentage, of customer cancellations in a particular month. The Company calculates churn by dividing the number of customer cancellations during a month by the total number of customers at the end of the month before cancellations. The information is presented as the average monthly churn rate during the period. The Company believes that the churn rate is useful supplemental information as it provides an indication of future revenue decline and is a measure of how well the business is able to renew and keep existing customers on their existing service offerings. Churn and churn rate are not recognized measures under IFRS and, accordingly, investors are cautioned in using it.
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Forward-Looking Statements
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