MIDDLETOWN – WiMax service provider Towerstream Corp. on Wednesday said its losses continued to shrink in the first quarter, as revenue climbed 64 percent compared with the same period a year ago.
Towerstream (Nasdaq: TWER) posted a net loss of $2.42 million, or 7 cents a share, in the quarter ended March 31, compared with a loss of $3.61 million, or 10 cents a share, in the same period a year earlier. The quarterly loss was also smaller than the $3.21 million the company lost in the three months that ended Dec. 31.
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Towerstream said its sales increased to $3.42 million in the quarter, up 64 percent from the same period of 2008, when the company posted revenue of $2.1 million. Sales also rose 6 percent compared with the previous quarter. The company expects sales to increase in the second quarter to between $3.6 million and $3.7 million.
Jeff Thompson, Towerstream’s president and CEO, described the results as “impressive, especially considering the difficult economic environment.” He said the company had the highest number of customer installations in its history during the first quarter.
Towerstream also announced the departure earlier this month of Bruce Grinnell, who had been the company’s chief operations officer for only nine months. The company said his duties will be shared by its remaining executives.
Towerstream’s gross margin also continued to improve, increasing to 76 percent from 69 percent in the last quarter and 55 percent in the same period a year ago. That was mainly due to a 53 percent reduction in the company’s capital expenditures, which dropped to $955,000 in the quarter from $2.05 million a year ago.
Joseph Hernon, Towerstream’s chief financial officer, remarked that the relative improvement in results stemmed from the company’s decision to focus on its existing markets rather than continue to add new ones. “Our current operating focus on existing markets is clearly demonstrating the leveraging capacity of our business model,” he said.
Towerstream, which was founded in 2001, says six of its nine markets are now generating positive earnings before interest, taxes, debt and amortization. The company says it continues to loss money on its operations in Dallas, Miami, and Seattle, but also said those losses are narrowing. Thompson said he expects Miami to be the next market to turn an operating profit.
Towerstream’s most profitable markets are New York and Boston, which generated gross margins of 86 percent and 85 percent respectively, and adjusted earnings before interest, taxes, debt and amortization of roughly $740,000 and $650,000.
One weak spot was the company’s customer churn rate, which measures how many customers get rid of their subscriptions or reduce their maximum bandwidth. The first-quarter churn rate grew to 1.68 percent from 1.23 percent in the previous quarter and 1.33 percent in the first quarter of last year.
Towerstream also said as of March 31 it had reduced its sales and marketing staff to 102 employees, a reduction of 18 people, over the course of the previous year.
The company said it had $21.8 million in cash and other liquid assets on hand as of March 31. “We have the capital required to execute our business plan through this challenging economic period,” CFO Hernon said.
In 2008, Towerstream posted a net loss of $13.38 million, an increase of 57 percent from the $8.5 million loss the company posted in 2007, despite the fact that its annual revenue grew 55 percent to $10.66 million.
Towerstream Corp. (Nasdaq: TWER) is a provider of WiMax high-speed wireless broadband service to businesses in the Boston, Chicago, Dallas-Fort Worth, Los Angeles, Miami, New York, San Francisco, Seattle, and Providence-Newport markets. Additional information is available at Towerstream.com.
