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Towerstream Reports Second Quarter 2013 Results

Stocks in this article: TWER

MIDDLETOWN, R.I., Aug. 8, 2013 (GLOBE NEWSWIRE) -- Towerstream Corporation (Nasdaq:TWER) (the "Company"), a leading 4G and Small Cell Rooftop Tower company, announced results for the second quarter ended June 30, 2013.

Second Quarter Operating Highlights

Hetnets Tower Corporation Subsidiary

  • Signed long term Wi-Fi lease agreement with a major cable operator at end of second quarter 2013.
  • Received first certification of Passpoint Hotspot 2.0 in Manhattan from the Wireless Broadband Alliance.

Towerstream Corporation

  • Average revenue per user ("ARPU") of new customers (excluding acquisitions) increased to $640 during the second quarter 2013 compared to $630 for the first quarter 2013 and $477 for the second quarter 2012.
  • Total ARPU of all customers increased for the fifth consecutive quarter to $740.

Management Comments

"Securing the first anchor tenant for our neutral host network is a major milestone and validates our rent-based business model," stated Jeffrey Thompson, President and Chief Executive Officer. "We expect to continue to expand our Wi-Fi customer base over the balance of the year while preparing for the impending rollout of small cell."

"This contract, which began generating revenues in the third quarter, affirms our belief that carriers, cable and internet platform companies plan to utilize Wi-Fi on a long term basis," stated Joseph Hernon, Chief Financial Officer. "Small cell technologies, including Wi-Fi, will enable service providers and platform players to differentiate their offering, add new services, and improve the user experience in dense urban markets where demand levels are pressuring network capacity."

Selected Financial Data and Key Operating Metrics
(All dollars are in thousands except ARPU)
       
  (Unaudited)
  Three months ended
  6/30/2013 3/31/2013 6/30/2012
Revenues $8,212 $8,299 $8,103
Gross margin      
 Consolidated 35% 37% 54%
 Fixed wireless 69% 70% 69%
Capital expenditures      
 Fixed wireless  $1,028 $1,087 $4,261
 Shared wireless infrastructure 233 136 3,423
 Corporate 46 104 141
Churn rate (1) 2.37% 1.64% 1.65%
ARPU (1) $740 $727 $708
ARPU of new customers (1) 640 630 477
Cash and cash equivalents 36,387 40,329 31,416
(1)  See Non-GAAP Measures below for the definitions of Churn, ARPU and ARPU of new customers.
         
Consolidated Statement of Operations (Unaudited)
(All dollars are in thousands except per share amounts)
         
  Three months ended June 30, Six months ended June 30,
  2013 2012 2013 2012
Revenues $8,212 $8,103 $16,511 $15,922
         
Operating Expenses        
 Cost of revenues  5,360 3,723 10,591 6,796
 Depreciation and amortization 3,936 3,348 7,807 6,629
 Customer support  987 1,238 2,135 2,400
 Sales and marketing  1,524 1,555 2,965 3,037
 General and administrative 2,636 2,953 5,773 6,144
 Total Operating Expenses 14,443 12,817 29,271 25,006
 Operating Loss (6,231) (4,714) (12,760) (9,084)
Other Income (Expense)        
 Gain on business acquisition 63 (40) 1,004 (40)
 Interest income -- 14 1 31
 Interest expense (59) (17) (95) (39)
 Other income (expense), net (4) (2) (7) (7)
 Total Other Income (Expense) -- (45) 903 (55)
 Net Loss $(6,231) $(4,759) $(11,857) $(9,139)
         
 Net loss per common share – basic and diluted $(0.09) $(0.09) $(0.19) $(0.17)
Weighted average common shares  outstanding – basic and diluted 66,371 54,369 63,931 54,341
         
           
Statement of Operations - Segment Basis 
           
  Three months ended June 30, 2013 (Unaudited)
  Fixed Shared Wireless      
   Wireless Infrastructure Corporate  Eliminations Total
           
Revenues $8,061 $196 $ -- $(45) $8,212
           
Operating Expenses          
 Cost of revenues  2,492 2,875 38  (45) 5,360
 Depreciation and amortization  2,837 911 188  -- 3,936
 Customer support  179 56 752 -- 987
 Sales and marketing 1,322 111 91 -- 1,524
 General and administrative  171 145 2,320 -- 2,636
Total Operating Expenses  7,001 4,098 3,389 (45) 14,443
           
Operating Income (Loss) $1,060 $(3,902) $(3,389) $ -- $(6,231)
 Non-recurring expenses, primarily acquisition related -- -- 47 -- 47
 Non-cash expenses (a) 2,917 914 458  -- 4,289
Adjusted EBITDA (b) 3,977 (2,988) (2,884) -- (1,895)
 Less: Capital expenditures 1,028 233 46  -- 1,307
Net Cash Flow (b) $2,949 $(3,221) $(2,930) $ -- $(3,202)
           
           
Statement of Operations - Segment Basis 
           
  Six months ended June 30, 2013 (Unaudited)
  Fixed Shared Wireless      
  Wireless Infrastructure Corporate  Eliminations Total
           
Revenues $16,248 $354 $ -- $(91) $16,511
           
Operating Expenses          
 Cost of revenues  4,923 5,667 92 (91) 10,591
 Depreciation and amortization  5,657 1,775 375  -- 7,807
 Customer support  357 160 1,618 -- 2,135
 Sales and marketing 2,619 158 188 -- 2,965
 General and administrative  318 334 5,121 -- 5,773
Total Operating Expenses  13,874 8,094 7,394 (91) 29,271
           
Operating Income (Loss) $2,374 $(7,740) $(7,394) $ -- $(12,760)
 Non-recurring expenses, primarily acquisition related -- -- 113 -- 113
 Non-cash expenses (a) 5,853 1,780 1,042  -- 8,675
Adjusted EBITDA (b) 8,227 (5,960) (6,239) -- (3,972)
 Less: Capital expenditures 2,116 369 149  -- 2,634
Net Cash Flow (b) $6,111 $(6,329) $(6,388) $ -- $(6,606)
(a) Includes depreciation and amortization, stock-based compensation, loss on property and equipment, and loss on nonmonetary transactions.
 
(b) See Non-GAAP Measures below for a definition and reconciliation of (i) Adjusted EBITDA to Net Loss and (ii) Net Cash Flow to Net Cash Used in Operating Activities.

Effective January 1, 2013, the Company has two reportable segments. The Fixed Wireless segment provides fixed wireless broadband services to commercial customers and delivers access over a wireless network transmitting over both regulated and unregulated radio spectrum. The Shared Wireless Infrastructure segment offers a range of rental options on street level rooftops related to (i) the installation of customer owned Small Cells, (ii) the offloading of mobile data, and (iii) backhaul, power and other related telecommunications.

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