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TeraGo Inc. (TSE:TGO)
TSX:TGO
Canadian Market
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TeraGo Inc. (TGO) AI Stock Analysis

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TSE:TGO

TeraGo Inc.

(TSX:TGO)

Rating:38Underperform
Price Target:
C$1.00
▲(0.00% Upside)
TeraGo Inc. has a low overall stock score due to significant financial challenges, including declining revenues and high leverage. The technical analysis indicates bearish momentum, and the valuation reflects ongoing losses. These factors contribute to a cautious outlook for the stock.

TeraGo Inc. (TGO) vs. iShares MSCI Canada ETF (EWC)

TeraGo Inc. Business Overview & Revenue Model

Company DescriptionTeraGo Inc., together with its subsidiaries, provides connectivity, colocation, and cloud services for businesses primarily in Canada. The company owns and operates a carrier-grade multi-protocol label switching enabled wireline and fixed wireless, and Internet protocol communications network that provide Internet access, private interconnection, and data connectivity services. It also offers data connectivity services that allow businesses to connect their various sites within a city or across the company's geographic footprint through a private virtual local area network; and a range of diverse Ethernet-based services over a wireless connection to customer locations. In addition, the company provides data center colocation services that protect and connect its customers' valuable information assets; disaster recovery services; and managed hosting solutions. It provides data center services for national government agencies, financial services companies, IT service providers, content and network service providers, and small and medium businesses. Further, the company offers cloud services, including infrastructure as a service for compute, storage, disaster recovery cloud solutions, and other services to customers in various industry verticals, federal, provincial, and municipal governments and agencies, as well as non-profit organizations. It provides its services through direct and indirect sales channels. TeraGo Inc. was incorporated in 2000 and is headquartered in Thornhill, Canada.
How the Company Makes MoneyTeraGo Inc. makes money through a diversified revenue model primarily based on subscription and service fees for its cloud and data center offerings. Key revenue streams include recurring subscription fees for cloud infrastructure services, colocation services where businesses rent physical space for their servers, and managed network services that provide reliable connectivity solutions. Additionally, TeraGo may generate revenue from professional services offered to customize and optimize solutions for clients. Strategic partnerships with technology providers and vendors also play a role in enhancing TeraGo's service offerings and expanding its market reach, contributing to its earnings.

TeraGo Inc. Earnings Call Summary

Earnings Call Date:Aug 12, 2025
(Q3-2024)
|
% Change Since: |
Next Earnings Date:Nov 05, 2025
Earnings Call Sentiment Positive
The earnings call presented a generally positive outlook for TeraGo, highlighted by improved financial metrics, a significant new contract, and increased revenue and cash flow. However, challenges remain, particularly regarding the net loss and the need to refinance debt. Despite these challenges, the company's strategic efforts appear to be yielding positive results.
Q3-2024 Updates
Positive Updates
Improved Financial Metrics
Gross margin increased by 1.2%, customer churn reduced by 31%, adjusted EBITDA rose by 2.8%, ARPA grew by 8.1%, and cash flow from operations increased by 56%.
Major Contract Acquisition
Secured a multimillion-dollar agreement with a major Canadian retailer to enhance their applications and network infrastructure using TeraGo's advanced Managed Fixed Wireless Internet and SD-WAN solutions.
Revenue Growth
Total revenues for Q3 2024 were $6.54 million, compared to $6.49 million in Q3 2023, driven by increased sales bookings and lower customer churn.
Increased Cash Generation
Generated $1.1 million in cash from operations in Q3 2024, compared to $0.7 million in the same period in 2023.
Negative Updates
Net Loss
Net loss for Q3 2024 was $3.3 million compared to a net loss of $3.1 million in Q3 2023, influenced by higher interest costs.
Debt Refinancing Challenge
All debt reclassified to short-term due to maturity in September 2025, requiring active management efforts to refinance at potentially lower interest rates.
Company Guidance
During the TeraGo Q3 2024 earnings call, the company provided several key performance metrics indicating positive financial and operational trends. The gross margin improved by 1.2%, with a significant 31% reduction in customer churn and a 2.8% rise in adjusted EBITDA. Average Revenue Per Account (ARPA) increased by 8.1% to $1,221 compared to the previous year, while cash flow from operations surged by 56%. Total revenues for the quarter reached $6.54 million, a slight increase from $6.49 million in Q3 2023, largely due to increased sales bookings and decreased churn. Although the net loss widened slightly to $3.3 million from $3.1 million the previous year, the company generated $1.1 million in cash from operations, up from $0.7 million in the same period of 2023. The company also highlighted a multi-million dollar agreement with a major Canadian retailer, expected to boost revenue in the coming year, reflecting a robust sales pipeline and strategic focus on mid-market and large-scale customers.

TeraGo Inc. Financial Statement Overview

Summary
TeraGo Inc. faces financial challenges with declining revenues, consistent net losses, high debt levels, and limited cash flow generation. The company needs to improve revenue growth, cost management, and debt reduction to enhance financial health.
Income Statement
45
Neutral
TeraGo Inc.'s income statement reveals a challenging period with declining revenues over the years and a consistent net loss. The TTM (Trailing-Twelve-Months) gross profit margin is 73.56%, which is strong, but the net profit margin is negative due to significant net losses. Despite a positive EBITDA margin of 12.38% in TTM, the EBIT margin remains negative, indicating high operating expenses relative to revenue. The company's revenue growth is negative, indicating a contraction in sales. Overall, the financial health from an income perspective is weak with potential areas for improvement in cost management and revenue generation.
Balance Sheet
40
Negative
The balance sheet shows a high debt-to-equity ratio of 27.17 in TTM, indicating reliance on debt financing. The equity ratio is low at 3.19%, reflecting minimal shareholder equity relative to total assets. The return on equity is negative due to substantial net losses. The company needs to improve its capital structure by reducing liabilities or increasing equity to stabilize its financial position.
Cash Flow
50
Neutral
Cash flow analysis shows mixed results with a positive operating cash flow to net income ratio of 0.28 in TTM, indicating some ability to convert income into cash. However, the free cash flow growth rate is negative, reflecting challenges in maintaining positive cash flow after capital expenditures. The free cash flow to net income ratio is just 0.05, showing minimal free cash flow relative to net income. The cash flow statement suggests the need for better cash management strategies.
BreakdownTTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue25.87M26.16M26.05M27.62M43.30M45.45M
Gross Profit19.09M19.18M19.10M20.18M32.16M35.63M
EBITDA3.01M2.79M876.00K603.00K3.28M11.33M
Net Income-14.30M-13.27M-13.19M-11.57M-15.17M-8.26M
Balance Sheet
Total Assets49.70M53.99M53.50M55.38M93.23M103.17M
Cash, Cash Equivalents and Short-Term Investments1.93M4.42M4.64M7.38M5.48M5.86M
Total Debt46.57M44.33M31.93M20.50M35.91M56.16M
Total Liabilities51.82M49.07M36.16M25.78M52.97M62.30M
Stockholders Equity-2.12M4.92M17.33M29.60M40.26M40.87M
Cash Flow
Free Cash Flow1.40M1.48M-5.45M-4.96M1.94M5.72M
Operating Cash Flow4.95M5.01M501.00K1.25M9.32M13.33M
Investing Cash Flow-3.82M-3.52M-5.02M18.82M-7.75M-7.58M
Financing Cash Flow-3.00M-1.90M2.69M-19.34M-1.95M-8.58M

TeraGo Inc. Technical Analysis

Technical Analysis Sentiment
Negative
Last Price1.00
Price Trends
50DMA
1.18
Negative
100DMA
1.17
Negative
200DMA
1.19
Negative
Market Momentum
MACD
-0.05
Negative
RSI
39.50
Neutral
STOCH
27.08
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:TGO, the sentiment is Negative. The current price of 1 is below the 20-day moving average (MA) of 1.04, below the 50-day MA of 1.18, and below the 200-day MA of 1.19, indicating a bearish trend. The MACD of -0.05 indicates Negative momentum. The RSI at 39.50 is Neutral, neither overbought nor oversold. The STOCH value of 27.08 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for TSE:TGO.

TeraGo Inc. Peers Comparison

Overall Rating
UnderperformOutperform
Sector (60)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
60
Neutral
$46.29B4.07-13.11%4.12%1.85%-42.71%
38
Underperform
C$20.45M-322.49%-0.77%-5.86%
$22.79B83.292.91%9.89%
$19.44B17.4513.68%3.99%
$25.18B35.786.08%6.96%
60
Neutral
C$590.04M6.5410.54%6.03%-0.87%9.49%
$1.99B8.3210.54%5.61%
* Communication Services Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
TSE:TGO
TeraGo Inc.
1.00
-1.14
-53.27%
BCE
BCE
24.72
-7.89
-24.20%
RCI
Rogers Communication
35.89
-3.19
-8.16%
TU
Telus
16.57
0.87
5.54%
TSE:CGO
Cogeco Inc. SV
61.35
10.38
20.36%
CGEAF
Cogeco Communications
46.96
1.52
3.35%

TeraGo Inc. Corporate Events

Business Operations and StrategyFinancial Disclosures
TeraGo Inc. Optimizes Customer Base Amidst Strategic Revenue Adjustments
Positive
Aug 12, 2025

TeraGo Inc. reported a strategic reduction in revenue for the second quarter and first half of 2025 due to a deliberate decision to let unprofitable customers churn, aligning with their long-term value creation strategy. Despite this, the company saw improvements in key metrics such as ARPA and backlog MRR, indicating a focus on profitable revenue generation and customer base optimization. The company remains confident in refinancing its debt facility and is well-positioned for future growth, bolstered by its significant mmWave spectrum holdings.

Financial Disclosures
TERAGO Inc. Schedules Investor Call for Q2 2025 Financial Results
Neutral
Aug 1, 2025

TERAGO Inc. has announced an investor conference call scheduled for August 13, 2025, to discuss its second-quarter financial results for 2025, which will be released on August 12, 2025. This announcement is significant as it provides stakeholders with insights into the company’s financial health and operational performance, potentially impacting its market positioning and investor relations.

Executive/Board ChangesShareholder Meetings
TERAGO Inc. Re-elects Board Members at 2025 Shareholder Meeting
Positive
Jun 3, 2025

TERAGO Inc. announced the re-election of all six nominees to its board of directors during the 2025 annual meeting of shareholders. This re-election ensures continuity in leadership as the company continues to leverage its extensive mmWave spectrum holdings to provide innovative wireless solutions, reinforcing its position in the Canadian market.

Product-Related AnnouncementsBusiness Operations and Strategy
TERAGO Partners with Ericsson to Advance Private 5G Solutions in Canada
Positive
May 27, 2025

TERAGO Inc. has announced a strategic partnership with Ericsson to deliver advanced private 5G solutions across Canada. This collaboration aims to enhance operational efficiency and innovation for businesses by providing high-speed, low-latency connectivity, particularly benefiting sectors such as manufacturing, transportation, and logistics. As a member of Ericsson’s 5-star partner program, TERAGO is set to become a preferred provider of secure wireless network infrastructure, positioning itself to capitalize on the growing demand for seamless and secure connectivity in the digital age.

Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.Date of analysis: Aug 25, 2025