MIDDLETOWN, R.I., November 7, 2007 - Towerstream (NASDAQ: TWER), a leading fixed wireless service provider, today announced financial results for the third quarter ended September 30, 2007. For the third quarter, the Company reported total revenues of $1,764,689 and a net loss of $1,745,741 or $0.05 per share.
Towerstream Operational Highlights
- Increased quarter over quarter revenue by 8.1%
- Average revenue per user (ARPU) of $694
- ARPU of new subscriber additions within the quarter of $879
- Average revenue per trained sales agent of $1,067
- Expanded total sales force to 58
- Completed 180 seat sales center and training facility, ahead of schedule
Third Quarter 2007 Financial Results
Revenue for the quarter ended September 30, 2007 was $1,764,689 compared to $1,631,479 for the three months ended September 30, 2006. The increase in revenue was due primarily to increases in ARPU and the addition of new customers.
Cost of goods sold, net of depreciation, for the third quarter totaled $715,728 producing gross margin of 59.4%,which is down 6.6% from our second quarter of 66.0%. The decrease in gross margin was primarily attributed to increased tower expenses and bandwidth purchases, increases in the cost of network supplies as well as additional network staffing. Tower rent expense increased due to the acquisition of a fixed network in Seattle, Washington as well as expansion into the Miami market. Our presence was also expanded in Los Angeles.
Selling expenses, which consist primarily of commissions, salaries and advertising expenses, totaled $1,049,907 for the three months ended September 30, 2007, as compared to $253,518 for the three months ended September 30, 2006, representing an increase of approximately 314.1%. Of this increase, approximately $637,000 relates to the expansion of our sales force and sales support team, which is expected to continue to increase as we pursue market expansion and revenue growth opportunities. Other selling expenses, including advertising, travel, dues and subscriptions, increased by approximately $170,000.
General and administrative expenses, which consist of salaries and overhead expenses, totaled $1,506,354 for the three months ended September 30, 2007, as compared to $587,232 for the three months ended September 30, 2006, representing an increase of approximately 156.5%. This increase was partly attributable to recurring and non-recurring expenses incurred and associated with the transition from a private to a public company. Increases in professional fees, director-related costs and printing costs totaled approximately $276,000 during the period.
Approximately $375,000 was expended on administrative staffing increases, which are expected to continue as we pursue market expansion and revenue growth opportunities. Software costs increased by approximately $54,000 as a result of increased licensing costs. Stock-based compensation also increased by approximately $256,000 from the same three months in 2006.
The Company recorded a net loss of $1,745,741 for the three months ended September 30, 2007, as compared to a net loss of $121,088 for the three months ended September 30, 2006. Our net loss was primarily attributable to recurring costs associated with transitioning from a private to public company, as well as [sales] and [network] expansion initiatives. We believe that net losses will continue as we make required additions to our sales, engineering and administrative personnel and network in order to increase revenues and subscriber growth.
As of September 30, 2007, Towerstream had cash and cash equivalents totaling $44,655,987, long-term debt of $3,500,000 and shareholder equity of $47,154,873.
"We continue to stay on course for building our sales force and anticipate surpassing the 100 sales representative mark before the end of this year. This will give us the ability to begin opening additional markets early in the first quarter of 2008. We completed the build out of a 180 seat sales center ahead of schedule which allowed us to transition to our new facility without any downtime. The new training center, an important part of our call center complex, allows us to increase the size of our training classes, getting more reps through training and producing revenue quicker. Our metrics continue to hold and we are confident that the capital raised earlier this year will be sufficient to enable us to build out the top 20 Tier One markets in the United States on schedule," said Jeff Thompson, President and Chief Executive Officer.
Conference Call and Webcast
President and Chief Executive Officer Jeff Thompson and Chief Financial Officer George Kilguss and Vice President of Sales Mel Yarbrough will hold a conference call with the financial community at 5:00pm EST on November, 7, 2007, to review the Company’s financial results and provide an update on business developments.
Interested parties may participate in the conference by dialing 866-800-8649 (or 617-614-2703 for international callers). When prompted, ask for the “Towerstream Investor Conference Call.” A telephonic replay of the conference may be accessed approximately two hours after the call through [November 28th by dialing 888-286-8010 (or 617-801-6888 for international callers) using pass code 53421267.
The conference call will be webcast simultaneously on the Towerstream website at www.towerstream.com under Investors Event Calendar. The webcast will be archived for 12 months.
Towerstream is a leading fixed WiMAX service provider in the U.S., delivering high-speed Internet access to businesses. Founded in 2000, the company has established networks in such markets as New York City, Los Angeles, Miami, Chicago, Seattle, the San Francisco Bay Area, and the greater Boston, Providence and Newport, R.I. areas, and continues to expand coverage throughout the country. The company was the first carrier selected to join the WiMAX Forum to assist leading vendors in establishing industry compliance with international broadband wireless access standards and cross-vendor interoperability. For more information on Towerstream, please visit their website at: http://www.towerstream.com.
Certain statements contained in this press release are “forward-looking statements” within the meaning of applicable federal securities laws, including, without limitation, anything relating or referring to future financial results and plans for future business development activities, and are thus prospective. Forward-looking statements are inherently subject to risks and uncertainties some of which cannot be predicted or quantified based on current expectations. Such risks and uncertainties include, without limitation, the risks and uncertainties set forth from time to time in reports filed by the company with the Securities and Exchange Commission. Although the company believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to have been correct. Consequently, future events and actual results could differ materially from those set forth in, contemplated by, or underlying the forward the forward-looking statements contained herein. The company undertakes no obligation to publicly release statements made to reflect events or circumstances after the date hereof.
Dukas Public Relations
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