"I am proud to report my second quarter since becoming CEO on
Improvements in second half of 2023 as compared to the second half of 2022
- Increased Adjusted EBITDA1,2 by 8%
- Improved positive cashflow from operations1 by 96%
In the second half of 2023, we delivered substantial financial wins that have afforded
Key Developments and Financial Highlights
- Total revenues for the three months ended
December 31, 2023 , were$6.5 million compared to$6.3 million for the same period in 2022. Total annual revenue in 2023 was$26.1 million compared to$27.6 million in the prior year. The decrease of$1.5 million was the result of the prior year including one month of Cloud and Colocation and post transaction related support services ("Other Revenue"). - Connectivity revenues were
$6.5 million and$26.0 million , for the three months and year endedDecember 31, 2023 , respectively. This is an increase of$0.2 million compared to same quarter prior year and$0.1 million compared to prior year annual. - Adjusted EBITDA1,2, remained flat at
$1.2 million for the three months endedDecember 31, 2023 , compared to the same period in 2022. For the year endedDecember 31, 2023 , Adjusted EBITDA1,2 decreased 17.1% to$3.4 million compared to$4.1 million for the same period in 2022. The decrease is the result of the prior year including one month of Cloud and Colocation Revenue ($1.4 million ), partially offset by a reduction of overall operating expenses in the current year. - Net loss increased to
$3.6 million for the three months endedDecember 31, 2023 , compared to a net loss of$2.4 million for the same period in 2022. Net loss was$13.2 million for the year endedDecember 31, 2023 , compared to a net loss of$11.6 million for the same period in 2022. The increase in net loss was a combination of higher finance costs, lower total revenues, as described above combined with non-recurring costs associated with the staffing and management changes. These were partially offset by a reduction in overall operating expenses year over year. - Gross Margin remained consistent year over year achieving 73.3% in 2023 compared to 73.1% in the prior year.
- Backlog MRR1 decreased year over year to
$65,363 as ofDecember 31, 2023 , from$178,948 for the same period in 2022. The decrease in backlog MRR is the result of onboarding of new customers with improved installation processes yielding much faster installations which reduced the backlog due to installations exceeding new bookings in the year and combined with de-bookings of previously recorded orders due to technical, geographical and customer landlord limitations preventing fulfillment of the orders. - ARPU1 for the connectivity business was
$1,164 in Q4 2023 up from$1,127 in Q3 2023 and compared to$1,063 for the same period in 2022 due to changes in customer base and product mix and a new pricing strategy implemented in 2023 Q4. ARPU has been increasing every quarter for the past five quarters.
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(1) | See " Non-IFRS Measures" |
(2) | See "Adjusted EBITDA" for a reconciliation of net loss to Adjusted EBITDA. |
Additional Management Commentary
"The Value Creation Strategy has gained sufficient traction and is already yielding tangible benefits. I expect that
"In addition, we noted with great interest the consultation launched by
RESULTS OF OPERATIONS
Comparison of the three months and year ended
(In thousands of dollars, except with respect to gross profit margin, earnings per share, Backlog MRR, and ARPU)
(unaudited) | Three months ended | Year ended | ||||||
2023 | 2022 | 2023 | 2022 | |||||
Financial | ||||||||
Cloud and Colocation Revenue | $ | - | - | - | 1,355 | |||
Connectivity Revenue | $ | 6,536 | 6,285 | 26,034 | 25,860 | |||
Other Revenue | $ | - | 50 | 18 | 407 | |||
Total Revenue | $ | 6,536 | 6,335 | 26,052 | 27,622 | |||
Cost of Services1 | $ | 1,801 | 1,578 | 6,948 | 7,437 | |||
Selling, General, & Administrative Costs | $ | 4,577 | 3,980 | 18,430 | 19,188 | |||
Gross Profit Margin1 | 72.4 % | 75.1 % | 73.3 % | 73.1 % | ||||
Adjusted EBITDA 1,2 | $ | 1,190 | 1,164 | 3,435 | 4,077 | |||
Net Loss | $ | (3,561) | (2,406) | (13,185) | (11,571) | |||
Basic loss per share | $ | (0.18) | (0.12) | (0.67) | (0.61) | |||
Diluted loss per share | $ | (0.18) | (0.12) | (0.67) | (0.61) | |||
Operating | ||||||||
Backlog MRR1 | ||||||||
Connectivity | $ | 65,363 | 178,948 | 65,363 | 178,948 | |||
Churn Rate1 | ||||||||
Connectivity | 1.0 % | 0.9 % | 1.1 % | 0.8 % | ||||
ARPU1 | ||||||||
Connectivity | $ | 1,164 | 1,063 | 1,125 | 1,085 |
(1) | See " Non-IFRS Measures" |
(2) | See "Adjusted EBITDA" for a reconciliation of net loss to Adjusted EBITDA. |
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 572559 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
(1) Non-IFRS Measures
This press release contains references to "Cost of Services", "Gross Profit Margin", "Adjusted EBITDA", "Backlog MRR", "ARPU", and "churn" 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.
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, acquisition-related and integration 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 and year ended
The table below reconciles net loss to Adjusted EBITDA for the three months and year ended
(in thousands of dollars, unaudited) | Three months ended | Year ended | ||||||
2023 | 2022 | 2023 | 2022 | |||||
Net loss for the period | $ | (3,561) | (2,406) | $ | (13,185) | (11,571) | ||
Foreign exchange loss | 24 | 45 | 7 | 83 | ||||
Finance costs | 1,154 | 491 | 3,707 | 2,089 | ||||
Finance income | (35) | (38) | (209) | (123) | ||||
Impairment loss on divested assets | - | - | - | 107 | ||||
Loss from operations | (2,418) | (1,908) | (9,680) | (9,415) | ||||
Add/(deduct): | ||||||||
Depreciation of network assets, property and equipment | 2,474 | 2,529 | 9,974 | 10,085 | ||||
Loss on disposal of network assets | 39 | - | 83 | 171 | ||||
Impairment of other assets and related charges | 64 | 147 | 297 | 750 | ||||
Stock-based compensation expense | 227 | 115 | 590 | 688 | ||||
Restructuring, acquisition-related, integration and other | 804 | 281 | 2,171 | 1,798 | ||||
Adjusted EBITDA1 | $ | 1,190 | 1,164 | $ | 3,435 | 4,077 |
*Prior year figures have been adjusted to conform with current year presentation. |
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.
Cash from Operations – The term "Cash from Operations" refers to the "Cash from Operating Activities" as shown on the "Consolidated Statement of Cash Flows" in the Company's Consolidated Financial Statements.
Overall Cash Consumption - The term "Overall Cash Consumption" refers to the "Net change in cash and cash equivalents during the period" as shown on the "Consolidated Statement of Cash Flows" in the Company's Consolidated Financial Statements.
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Forward-Looking Statements
This news release includes certain forward-looking statements. By their nature, forward-looking statements are subject to numerous risks and uncertainties, some of which are beyond
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