TeraGo Q1 Earnings Call Highlights

TeraGo (TSE:TGO) reported lower first-quarter revenue but improved customer metrics as management said it continued to shift away from lower-margin and non-strategic accounts while pursuing larger enterprise connectivity opportunities.

On the company’s first-quarter 2026 earnings call, Chief Executive Officer Daniel Vucinic said TeraGo has taken a “disciplined approach to reshaping the business” over the past year, with a focus on improving operating efficiency and targeting customers that better fit the company’s long-term strategy.

“As part of the process, we’ve continued to move away from lower margin or unprofitable accounts, which we believe is the right long-term decision for the business,” Vucinic said. He said the company is aiming to build a stronger revenue base with more mid-market and enterprise customers, multi-location opportunities and higher-value connectivity solutions.

Revenue Falls, but ARPA and Churn Improve

Chief Financial Officer Raj Sapra said total revenue for the first quarter was CAD 6.17 million, down from CAD 6.4 million in the same period last year. He attributed the decrease to lower bookings in fiscal 2025 carrying into early 2026, as well as TeraGo’s deliberate effort to optimize its customer base by allowing churn of low-margin and non-strategic customers. The impact was partially offset by improved sales bookings in the first quarter of 2026.

Average revenue per customer, or ARPA, in the connectivity business rose 1.9% to CAD 1,253, compared with CAD 1,229 a year earlier. Sapra said the improvement reflected favorable shifts in customer base and product mix.

Customer churn improved to 0.9% from 1.2% in the prior-year quarter. Sapra said retention remains a focus, citing initiatives aimed at improving customer engagement, particularly among mid-market and large-scale customers, along with enhanced renewal and retention programs.

Adjusted EBITDA was CAD 931,000, compared with just over CAD 1 million a year earlier. Sapra said the decrease reflected lower revenue, partially offset by disciplined cost management and operational efficiencies.

TeraGo reported a net loss of CAD 3.14 million, compared with a net loss of CAD 3.5 million in the same period last year. Sapra said the smaller loss was primarily due to changes in stock compensation expense, as there were more option cancellations in the first quarter of 2026 than in the prior-year period.

The company ended the quarter with approximately CAD 9.8 million in cash and cash equivalents. Cash generated from operations was approximately CAD 319,000, compared with CAD 0.96 million a year earlier.

Management Points to Enterprise Connectivity Demand

Vucinic said TeraGo continues to see encouraging activity in its sales pipeline and bookings, particularly from customers seeking resilient, high-quality connectivity to support more data-intensive operations.

He said customers are increasingly looking beyond basic connectivity and seeking providers that can offer “a true white glove experience,” including proactive support, flexibility and a stronger commitment to customer success.

Vucinic also pointed to broader industry investment in artificial intelligence infrastructure, private wireless networks and advanced 5G applications as reinforcing the long-term relevance of TeraGo’s millimeter wave spectrum holdings and wireless network infrastructure.

He said millimeter wave spectrum is well suited for high-throughput environments, including high upload speeds and ultra-low latency connectivity. Vucinic cited a recent demonstration by Ericsson, Qualcomm and Australia’s NBN Co. of gigabit-class 5G millimeter wave performance over extended distances as an example of technological progress supporting the performance capabilities of millimeter wave technologies.

Vucinic also said private wireless and digital twin deployments are expanding across manufacturing facilities, logistics operations, transportation hubs, warehouses, ports and mining environments.

ISED Spectrum Decision Remains a Key Watch Item

Management also discussed Canada’s Innovation, Science and Economic Development Canada, or ISED, consultation on millimeter wave spectrum. Vucinic said ISED proposed repurposing the lower 26 GHz band, previously referred to as the 24 GHz band, for flexible use. Such a decision would allow the spectrum to be used for both mobile and fixed wireless services, whereas it is currently permitted only for fixed wireless use.

During the question-and-answer session, ATB Cormark analyst David McFadgen asked whether there had been any update on the timing of an ISED decision. Vucinic said ISED had not provided an official update and was “still keeping their cards close to their chest.” He noted that the consultation closed in June 2025 and said management was optimistic that a decision could come “sooner rather than later.”

Asked what TeraGo might do if ISED allows the spectrum to be used for mobile applications, Vucinic said several strategies were on the table, including partnering with others, launching new services or a combination of both.

Revenue Growth Expected Later in the Year

McFadgen also asked whether TeraGo still expects revenue to begin growing in the back half of the year after cycling through the decommissioning of unprofitable contracts and bringing on new contracts.

Vucinic said that outlook still holds. He said the company is building momentum early in the year through increased sales bookings and a larger pipeline. However, he noted that new multi-site customer installations can occur at different times, particularly as customers move away from incumbent providers and seek to avoid early termination fees.

“In the latter half of the year, this is where we should be seeing an uptick in revenue and going in the right direction compared to the last few quarters,” Vucinic said.

McFadgen also asked about the average number of locations per customer. Sapra said he did not have the exact figure available, but said the average has been increasing. He said that when Vucinic joined the business, the average across deployments was probably around two sites, and that it has been “inching up close to double if not more” as the company signs more enterprise deals.

In closing, Vucinic said TeraGo remains focused on disciplined execution, operational efficiency, customer quality and long-term shareholder value creation. He said the company’s wireless network infrastructure and millimeter wave spectrum assets position it well as enterprise connectivity requirements continue to evolve.

About TeraGo (TSE:TGO)

TERAGO provides managed network and security services to businesses across Canada ensuring highly secure, reliable, and redundant connectivity including private 5G wireless networks, Fixed Wireless access, fiber, and cable wireline network connectivity. As Canada’s biggest mmWave spectrum holders, the Company possesses spectrum licenses in the 24 GHz and 38 GHz spectrum bands, which it utilizes to provide secure, dedicated SLA guaranteed enterprise grade performance that is technology diverse from buried cables ensuring high availability connectivity services.