Towerstream Corporation (NASDAQ: TWER) Focuses Attention On Improving Efficiency, Subscriber Retention


Towerstream Corporation (NASDAQ: TWER)’s 1Q2016 was a mixed bag as revenue contracted, expenses ballooned but net loss declined. However, management recently highlighted measures they are taking to improve financial performance in the coming quarters and years. Among other things, management talked about improving internal efficiency and customer retention.

Internal efficiency

Towerstream Corporation (NASDAQ: TWER) is modeling cash burn in 2Q2016 to fall 46% relative to 1Q2016. As such, cash burn in 2Q2016 is projected at $2.5 million. Management previously projected $2.9 million cash burn in 2Q2016. Cash burn is expected to continue falling further after 2Q to below $2 million in 3Q.

One of the areas that Towerstream is looking to drop cash burn is in closing HetNet operations. Cash burn relating to HetNet was $1.9 million, but management models the amount to shrink significantly to just $250,000 in 2Q and then continue dropping.

If Towerstream can lower its cash burn, the company can not only improve its financial performance, but also save more money to reinvest in future growth.

Customer retention Towerstream Corporation (NASDAQ: TWER)

Towerstream Corporation (NASDAQ: TWER) is working aggressively to improve customer retention and its efforts are beginning to pay off. In 1Q, subscriber churn dropped to 1.65% compared to 1.86% in the corresponding quarter a year ago. Management attributed the improvement in customer retention in the latest quarter to compelling value of the OnNet platform. If Towerstream can improve customer retention, it should be easier to drive future growth.

Contracts improving

The improvement in customer retention in 1Q produced a favorable effect in that contracts also improved 25% from March 2016 to April 2016. Over the same period, Towerstream said OnNet alone registered 57% improvement in contracts.

Financials for 1Q

For 1Q2016, Towerstream Corporation (NASDAQ: TWER) generated revenue of $6.73 million, a decline from $7.17 million in the year ago quarter. Nevertheless, despite the decline in revenue, net loss improved to $6.99 million from $8.92 million in the corresponding quarter in 2015.

However, operating expenses rose to 10.39 million from $10.17 million a year earlier and total assets contracted to $39.2 million from $47 million.


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