TeraGo Inc. ((TSE:TGO)) has held its Q3 earnings call. Read on for the main highlights of the call.
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TeraGo Inc.’s recent earnings call showcased a strategic focus on enhancing profitability and operational efficiency, reflecting a positive sentiment despite some challenges. The company reported improvements in key financial metrics such as ARPA and EBITDA, alongside a successful recapitalization effort. However, concerns were raised due to a decline in revenue, increased churn, and extended sales cycles. The recapitalization is expected to provide the financial flexibility needed for future growth.
Increased Average Revenue Per Account (ARPA)
TeraGo Inc. reported a 1.6% increase in ARPA for its connectivity business, reaching $1,241 in Q3 2025 compared to $1,221 in Q3 2024. This growth was attributed to changes in the customer base and product mix, indicating a strategic shift towards more profitable accounts.
Adjusted EBITDA Growth
Despite a slight decline in revenue, TeraGo achieved a 3% growth in adjusted EBITDA, reaching $971,000 in Q3 2025 compared to $944,000 in the same period of 2024. This growth underscores the company’s focus on operational efficiency and cost management.
Successful Recapitalization
The company completed a comprehensive recapitalization, raising approximately $46 million. This included a new 3-year senior secured term loan facility of $30.5 million and equity financings of $15.9 million, providing TeraGo with enhanced financial flexibility to support its growth initiatives.
Net Loss Reduction
TeraGo reported a reduction in net loss for Q3 2025, narrowing it to $2.4 million from $3.3 million in the same period of 2024. This improvement reflects the company’s efforts to streamline operations and focus on profitability.
Cash Flow from Operations
The company generated approximately $1.1 million in cash from operations during Q3 2025, highlighting its ability to maintain positive cash flow despite revenue challenges.
Revenue Decline
Total revenue for Q3 2025 was $6.4 million, slightly down from $6.5 million in Q3 2024. This decline was primarily due to increased churn from discontinuing service to unprofitable accounts, a strategic decision aimed at improving long-term profitability.
Customer Churn Increase
TeraGo experienced an increase in customer churn, rising to 1% from 0.9% in the previous year. This uptick in churn is a concern, but it is part of the company’s strategy to phase out less profitable accounts.
Extended Sales Cycle
The sales cycle for larger deals has extended from 6 months to potentially 12 months, influenced by economic uncertainty. This extension poses a challenge for the company as it seeks to close larger deals in a more volatile market environment.
Forward-Looking Guidance
Looking ahead, TeraGo is focused on improving its financial metrics and positioning for future growth. The company aims to leverage its recent recapitalization to pursue opportunities in 5G private wireless networks and next-generation fixed wireless connectivity. Despite the challenges, TeraGo remains committed to enhancing its operational efficiency and profitability.
In summary, TeraGo Inc.’s earnings call highlighted a strategic focus on profitability and operational efficiency, with positive developments in ARPA and EBITDA. The successful recapitalization provides a strong foundation for future growth, although challenges such as revenue decline and increased churn remain. The company’s forward-looking guidance emphasizes its commitment to improving financial metrics and exploring growth opportunities.