MIDDLETOWN – WiMax provider Towerstream Corp. (Nasdaq: TWER) saw its net loss widen last year to $13.38 million, a 57.34 percent increase from its 2007 loss of $8.50 million, on revenue that grew 54.82 percent year over year to $10.66 million.
The company’s “cash burn” last year rose to $16 million. But that rate – which peaked in the first quarter, at $4.7 million, as Towerstream prepared to enter the Dallas-Fort Worth market – improved over the course of the year to $3.3 million in the fourth quarter, a decline of 16 percent from the preceding quarter and 30 percent from its first-quarter peak.
“Given the current economic environment and the significant upfront costs to expand into new markets, we presently plan to focus our resources on strengthening our presence in existing markets rather than opening new markets,” Jeff Thompson, the company’s president and chief executive officer, said in a statement last night. “With penetration rates of less than 1 percent in our existing markets, we have substantial opportunities for growth in 2009.”
Towerstream’s capital expenditures rose 14.52 percent last year to $7.68 million, as the company launched service in Dallas-Fort Worth in the second quarter and expanded service in other markets. But, Thompson noted, “We expect capital expenditures to be significantly lower in 2009, since the network build-out in our existing markets has been largely completed.”
Those high costs early in the year dragged down Towerstream’s gross profit margin to 62 percent from 2007’s 64 percent. But they also helped the company grow its customer base 51 percent compared with 2007.
For the quarter ended Dec. 31, the company posted a loss of $2.82 million – down 12.22 percent from the third quarter’s $3.22 million but up 3.52 percent from the 2007 fourth quarter’s $2.73 million – on revenue that grew to $3.21 million, increasing 11.84 percent from the preceding quarter and 68.42 percent from the year-ago period.
“Our fourth-quarter results complete a year of strong operating performance and execution despite the recession,” Thompson said. “Strong customer demand for our unique, simple broadband products has resulted in three consecutive quarters of double-digit sequential revenue growth. With six of our nine markets now generating positive EBITDA, we are well-positioned for solid growth in 2009.”
“Our key financial metrics continued to strengthen in the fourth quarter,” agreed Joseph Hernon, who joined Towerstream in May as its chief financial officer.
“Gross margin improved for the third consecutive quarter” – to 68 percent in the year’s final quarter, from 64 percent in the third quarter and 58 percent in the 2007 fourth quarter – “as additional customers were added at relatively low marginal costs,” he said. “Fourth quarter operating expenses were only 1 percent higher than [in] the first quarter, even though fourth quarter revenues were 54 percent higher than first-quarter revenues.
“As a result, EBITDA [earnings before interest, taxation, depreciation and amortization] before stock-based compensation improved by [27.45] percent in the fourth quarter compared with the third quarter,” and 28.24 percent compared with the year-ago period. (For the full year, however, EBITDA before stock-based compensation worsened by 53.78 percent to a loss of $9.32 million, company figures show.)
“We ended 2008 in a strong financial position,” Hernon said, “with approximately $25 million in cash and cash equivalents. We have the capital required to execute our business plan through this challenging economic period.”
Highlights of the year included three major industry awards: two 2008 Telephony Innovation Awards, one for Most Innovative Broadband Wireless Service and the other for Most Innovative Small Business Service; plus the Best of WiMAX World 2008 Service Provider Deployment Award, for its New York City network.
Beyond Cash Donations: How New Forms of Giving Are Transforming Not-for-Profit Accounting
Evolving Funding Landscape for Not-for-Profits Not-for-profit organizations are being asked to do more with less,…
Learn More
“If we continue to perform like we’ve been performing, everything else will take care of itself,” Thompson told Providence Business News in an interview early this year. (READ MORE)
Towerstream Corp. (Nasdaq: TWER) is a provider of WiMax high-speed wireless broadband services to businesses of all sizes in the Boston, Chicago, Dallas-Fort Worth, Los Angeles, Miami, New York, San Francisco, Seattle, and Providence-Newport markets. Additional information is available at www.towerstream.com.
Here’s a company that would do great ……..if they advertised to find clients instead of hiring 100’s of people to call every number in the phone book (not kidding) to find clients and get 1 lead out of 300 on a good day…they should start with local markets in Providence (and place a ad in PBN)
In resposne to the above message: the service they offer is a novelty not a necessity. In order for WiMax to work, you need to have clear line of sight, within 10 miles of a POP (where the signal comes from), your telco closest needs to be within 250ft of the roof sled and where the reciever is located in order to get the full bandwidth you sign up for. Not to mention you need permission from whatever Union operates in the building which is often not granted. Once you recieve a contract (which takes atleast 3 months of making 100 + phone calls aday to barber shops and pizza parlors among the occasional qualified lead) only about 70% of the contracts get installed.
Bottomline, its a flawed business plan. Leave WiMax up to the big boys like Sprint and Clearwire.