Q3 2019 Earnings Call
Greetings and welcome to welcome to Blanco Wireless third quarter 2019 earnings Conference call.
Time, all participants are in listen only mode.
<unk> answer session will follow the formal presentation.
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I'd now like to turn the conference over to your host came Orlando with Addo Investor Relations. Thank you you may begin.
Thank you and welcome to the blended wireless third quarter 2019 earnings conference call.
No everyone should have access to the earnings press release, which was issued today at approximately four o'clock PM Eastern time. In addition, and earning supplement hasn't made available on the Investor Relations portion when does website at <unk>. One go dotcom I clicking on Investor Tab. This call is being webcast and is available for replay.
And our remarks today will include statements that are considered forward looking within the meaning of securities laws, including forward looking statements about guidance and future results of operations business strategies and plans our relationships with their new partner.
<unk> and other contracts and market and potential growth opportunities.
In addition management may make additional forward looking statements in response to your question.
Forward looking statements are based on management's current knowledge and expectations as of today November 2019, and are subject to certain risks and uncertainties that may cause actual results could differ materially from the forward looking statement.
A detailed discussion of such risks and uncertainties are contained in our most <unk>. Most recent Form 10-K for the year ended December 31st 2018 filed with the FCC a much first 2019 Form 10-Q for the quarter ended March 31st 2019 filed with the FCC I May 10 2000.
And then 19.
Thank you for the quarter ended June Thirtyth 2019 filed with the FCC and other that's 2019 and our other filings with the FCC.
The company undertakes no obligation to update any forward looking statements.
This call, we'll refer to non-GAAP measures, such as adjusted EBITDA and free cash flow that when used in combination with GAAP results provide us with additional analytical tool to understand our operation.
We have provided reconciliations to the most directly comparable GAAP financial measures in our earnings press release, and which will be posted on the Investor Relations section of our website at <unk> Dot com.
And with that I'll hand, the call overcome Boingos, Chief Executive Officer Mike's family.
Thanks, Kim and thank you everyone for joining today.
It's been another great quarter for Boeing go with several key announcements that I'll expand on in a moment, but first let me begin by discussing our financial performance for the quarter.
For the third quarter 2019 revenue was 64.7 million, which was at the high end of our guidance range and adjusted EBITA EBITDA was 21.9 million, which was also at the top end of our guidance range. This represents the 22nd quarter in a row that we have met or exceeded guidance.
These results are the result of consistent execution against our strategy to leverage the explosive growth mobile data.
We do this by acquiring long term wireless rights it bad news.
Building carrier grade wireless networks at those values and then monetizing the networks with the unique mix of products and services.
Our three core revenue drivers are das in carrier offload military and multifamily so let's take a deeper dive into each.
For starters Daz remains robust, we launched two new venues in the quarter, bringing our total number of das venues like to 71.
In addition, we have another 62 daz venues in the pipeline, including major projects like the M.T., a long Island railroad and Grand Central terminal beside access in New York City.
These are substantial multiyear projects and construction on both projects is progressing nicely.
Speaking of Newbuilds construction is now complete on the brand New Louis Armstrong, New Orleans International Airport, and we're very excited to be a part of the ribbon cutting ceremony today.
This 1 billion dollar project will feature a brand new Boingo managed and operated Das and Wi Fi network to improve the passenger experience and show off the spirit of New Orleans, we're very excited to be a part of it.
Daz access fee revenue for the third quarter was up significantly 68% year over year.
While a portion of this increase was due to 1.8 million onetime benefit tied to an amendment and contract extension with one of our major carrier customers.
Even excluding this one time benefit data access fees grew 39% year over year.
With over 37000 das nodes alive and more than 12000 in backlog. We continue to believe that makes boingo the largest provider of indoor das in the country.
We further believe that our deep datas experience, coupled with our wireless rights and large indoor venues positions going go in a unique way to take advantage of becoming Fiveg Revolution.
You may have seen brightens announcement in August that they will be partnering with us to bring fiveg ultra wide band service indoors.
We are working together to architect a hybrid dense network design for places like airports stadiums.
We were pleased to watch Fiveg soldier field for the first NFL game and Verizon fans with Fiveg devices are enjoying speeds of up to 1.7 Gigabits during Chicago Bear games.
This is just the beginning of our work with all the carriers to build out the fiveg future with that.
Now, let's turn to wholesale Wi Fi, which includes carrier offload.
Third quarter offload traffic was up 58.7% year over year and improved over the prior quarter.
This is due to the unrelenting growth in mobile data traffic, we see across the network as well as the fact that we now have both sprint and ATM T live on the majority of our Wi Fi network.
Furthermore, spread and 18 T consumers are enjoying a great user experience through Passpoint technology, the offload to carrier grade Wi Fi is seamless and secure not to mention incredibly fast fat.
Blanco topped the list of Fuklah's latest fastest airport wipe I report.
Airports, where Blanco manages and operates the wife I service made up half of the top 40, U.S. airports with the fastest weifang with four ranking in the top five.
This includes Honolulu's International Airport, which ranked number one on Google is west Chicago, Midway Nashville, and Phoenix Sky Harbor International Airport.
With speed security and seamless connectivity also provides our carrier partners the ability to drive down the traffic on their cellular networks.
As we've said many times in the past we believe it's not a question of if but when every carrier is doing some level of offload.
Now, let's turn to our military.
We added 2000, new beds in the quarter, bringing our total beds deployed to 354000.
Military revenue for the quarter was up 7% year over year and ARPU for the quarter was up 10.9% compared to the same period last year.
Overall penetration has been a bit lower than the same period last year and we attribute this to higher than usual true movement.
Despite this revenue continues to outperform the prior period due to the higher ARPU, we're achieving from the new packages, we launched earlier in the year.
We believe military is an incredible business for us and further has tremendous upside potential to lay on additional lines of revenue.
That's why we're very excited to announce that we just extended our contract with the Army and Air Force Exchange service or a fees that covers our army and Air Force base deployments for an additional 15 years, taking this contract all the way through 2038.
We anticipate the revenue from the retail portion of this contract to be worth more than a billion dollars for the remainder of the term not to mention the additional services like carrier offload macro cell towers, and private services that we intend to layer on.
We're very proud to partner, where they fees for an additional 15 years and appreciate the confidence they placed enough to deliver for the troops serving on these military basis.
Well the multifamily side of the business, we continue to make good progress we've launched a new properties in the quarter and have another 15 properties under construction.
Well most of the multifamily properties and the L. <unk> portfolio at the time of the acquisition, we're student housing venues.
Half of all the new venues, we signed this year for conventional multifamily properties.
We expect these properties to deliver a better profit margin. So we will continue to focus on growing our share of conventional properties.
In summary, there's lots to be excited about our core business drivers of dazzling carrier offload military and multifamily are performing very well.
Beyond that we continue to be excited about what new technologies will afford us.
One example of these new technologies is Crs, which leverages licensed and unlicensed and shared spectrum to expand wireless coverage and capacity at large venues.
In September the FCC gave public notice of approval for the initial commercial deployment or I C. D of CBR S.
The I see the approval is an exciting milestone that enables going go to deploy private L. T. He and I O T networks and facilitate carrier offloading to the three to five gigahertz band like we've done with our launch of CBR asset Dallas Love Field Airport.
We also showcased what we believe was the world's first L. T. He had wife Isix network with a converged virtualized score at mobile World Congress just last month.
The virtualize platform replaces network hardware.
With software to efficiently power five to use cases over unlicensed and CBR at spectrum.
It will serve as a neutral host backbone for our why pay six Crs and fiveg deployments at large venues like airports in stadiums and enables seamless scalable roaming onto these networks.
As a result of our experience managing an operating licensed and unlicensed networks for over a decade. We believe we're in a unique position to exploit this exciting opportunity as networks converge.
With that let me turn it over to Pete who will walk you through the quarter in more detail Pete.
Thanks, Mike.
I will begin by reviewing our financial results key operating metrics for the third quarter September 30, 20 thinking.
And we'll conclude with our financial outlook for the full year 2019.
Total revenue for the third quarter was 64.7 million a decrease of 0.8% year over year.
Revenue reflected strong performance, a military multifamily, which was offset by year over year declines in daz, well, so I buy retail advertising another Avenue.
As a percentage of total revenue across our diversified revenue streams compared to prior year quarter does it was 37% down from 38%.
Military multifamily was 37% up 33%.
Wholesale wife, I was 17% down 18% retailer study at 6% and advertising another was 3% down 5%.
In terms of total revenue contribution by category for the quarter.
Does revenue of 23.7 million decreased by 2.9% year over year.
Well does revenue was comprised of 13.4 billion, a buildup project revenue and 10.3 million abaxis be revenue.
Importantly, dads access fee revenue increased 67.6% year over year from 6.2 million.
Representing our fourth consecutive quarter of double digit growth.
Included it does access fee revenue for the third quarter of 29.
What's a onetime benefit of 1.8 million from the amendment in contract extension from one of our carrier customers.
With the re amortization of deferred revenue balances from our customer contract extensions from our been used located in a greater New York City area now behind US we expect das build out project revenue to increase sequentially from current levels.
Military multifamily revenue increased 8.7% year over year 23.6 million.
Growth was primarily driven by increased military subscriber method revenue from higher ARPU following the speed and price increases we implemented our service offering.
As Mike just highlighted we are thrilled to have extended our contract to provide wireless connectivity solutions on the Army airport basis for another 15 years. This is a major milestone, which we expect will drive long term recurring cash flows a military through 2038 throughout the third quarter. We've built our network to cover an additional 2000 military beds, bringing our total footprint that 300.
4000 military beds as of September Thirtyth.
In addition, military multifamily revenue for the quarter benefited from a 700000 dollar increase in our multifamily revenue from an acquisition Oh networks last August .
On a sequential basis military multifamily revenue was down 3.1%, primarily due to longer than anticipated sales and deployment cycles for multifamily opportunities.
Despite this recent decline we remain optimistic on the long term growth opportunity multi family represents.
Well said why revenue was 11.2 million a decrease of 4.7% year over year, primarily due to lower partner usage based fees, partially offset by an increase in managed service fees from our venue partners, who pass to install magic operate network infrastructure there venues.
As you mentioned earlier in the year, we expect some goods with Boingo, we'll continue to decline over the next few quarters as our program with American Express and spaced out.
That said, we remain encouraged by our traction with carrier offload expect wholesale Wi Fi won't be a strong driver of recurring cash flows going forward.
Retail revenue of 3.6 million declined 10.8% year over year, primarily due to reduction in retail subscribers advertising and other revenue of two and a half million decreased 23.2% year over year, primarily to do a decline number premium AD units sold.
Now turning to our quarterly costs, an operating expenses.
Network access cost 29.2 million were relatively consistent with a third quarter 2018, despite higher revenue share people are venue partners offset by decreased just depreciation expenses.
Gross margin, which is defined as revenue less network access cost was 54.9% down approximately 20 basis points from the prior year period.
Networks operations expenses were 13.7 billion, an increase of 3.2% year over year, primarily due to an increase in other expenses.
Development technology expenses of 8.2 million increased 2.3% for the prior year period, primarily due to higher software and hardware maintenance expenses offset by reduced consulting expenses.
Selling and marketing expenses of 5.7 million were generally consistent with the prior year period.
General and administrative expenses of 5 million declined 35.5% year over year, primarily due to decrease personnel related expenses and a 1 million dollar reduction in the fair value of the contingent consideration related to our acquisition of <unk> networks.
Now turning to our profitability measures for the quarter.
Net loss attributable to common stockholders was 187000 or breakeven per diluted share compared to a net loss of half a million or a loss of one penny per diluted share in the third quarter of 2018.
Adjusted EBITDA non-GAAP measure was 21.9 million a decrease of 6.2% year over year as a percentage of total revenue adjusted EBITDA was 33.8% down from 35.7% of revenue can the prior quarter.
Turning now to our key metrics.
Number of Das nodes and our network for the third quarter 37200.
35.8% for prior year period, and <unk> up 5.7% the second quarter of 2019.
Number of does not some backlog, which represents a number of das nodes under contract, but not yet active as of the ended the third quarter were 12100 up 8% from the prior year period and down 1.6% in the second quarter 2019.
Our military subscriber base was 137000 subscribers at the end of the third quarter down 3.5% both from the prior period and the second quarter 2019, primarily due to higher than usual troop <unk>.
Our retail subscriber base of 85000 at the end of the third quarter was down 39.7% from the prior year period and down 7.6% for the second quarter 2019.
Connex are paid usage in our worldwide network were approximately 89.3 million up 18.4% the prior year period and up 4% the second quarter 2019.
Moving on to discuss our balance sheet.
As of September Thirtyth, 2019, cash cash equivalents and marketable securities totaled 86.8 million.
Up 16.6 million from 70.2 million at June 32018.
The increase in our cash balance was primarily due to the time your receivables as we collected cash following a record quarter for dads venue launches in the second quarter of 2019.
Total debt was 167.7 billion and we had $150 million available on our credit facility as of September Thirtyth 2019.
Capital expenditures were 27.6 million for the third quarter, which included 21 million utilized for data infrastructure build out projects, they're primarily reimbursed through revenue bar Telecom operator partners.
Our non reimbursed capital expenditures were driven mainly by new network builds managed and operated network upgrades in various infrastructure upgrades and enhancements.
We are continuing to invest our available cash and you don't deployment opportunities, we have incurred cost of over $40 million through self funding Das network build the funding of initial deployments of certain key build out projects such as our large doesn't projects with the Metropolitan Transportation authority or <unk> in New York City.
Although the entire project as a long term venture that require significant upfront cash commitments. We believe will generate many years of high quality recurring cash flow once and then what goes live with the first phase scheduled to launch in 2020.
Free cash flow non-GAAP measure was a positive 20.5 million for the third quarter compared to eight and a half million in the third quarter of 2018 wire operations continues to generate cash we speak spec to be a net consumer of free cash flow for the full year 2019, primarily due to the aforementioned self funding network build up opportunity.
In conjunction with the magnitude of the into <unk> build out project.
Under our previously announced share repurchase program. We're pleased to have repurchased 56000 shares of our common stock at an average price of $13.24 per share for 745000 during the third quarter 2019.
As of September Thirtyth.
90.3 million remained available for future share repurchases.
We strongly believe that the current share price is not indicative of point goes current for long term intrinsic value and that these repurchases reinforce our board and management strong confidence of going goes long term prospects.
We will remain opportunistic as it relates to potential either <expletive> future share repurchase activity.
I will now turn to our outlook.
Today, we are updating a narrowing our guidance range for our guidance metrics, primarily to reflect the longer than anticipated sales and deployment cycles for multifamily opportunities. Nevertheless, we remain optimistic in a long term growth opportunities for multifamily.
For the full year guidance is as follows.
We now expect total revenue to be in the range of 267 to 273 million representing year over year growth.
Possibly 7.6% the midpoint of the range.
As a reminder, the re amortization of deferred revenue from contract extensions in 2019 discussed earlier represents a reduction equal to 7.2 points of year over year growth.
Net loss attributable to common stockholders is expecting to be the range of 14 to 10 million or loss at 32 cents to 23 cents per diluted share.
Adjusted EBITDA is expected to in the range of 80 to 85 million, which implies an EBITDA margin of 30.6% at the midpoint the range.
Total capital expenditures are expected to be the range of 120 235 million that we estimate 95 to 105 million will be utilized for the deployment and upgrades of dust networks at imagine operate venues and the remaining 25 to 30 million will be used for non dow's capital expenditures.
The majority of our non das capital expenditures, our support new network built and upgrades I imagine operated venues as a reminder, virtually all of our Das network deployments of success based built being it's we have commitments guertin payments from our carrier customers.
In addition, we estimate our annual maintenance capital requirements, which excludes our growth capital to be approximately 3% to 5% of revenue.
We will maintain our tax valuation allowance as such the God spectrum crew material tax benefits for tax expenses income statements through 2019.
We will continue to expect a nominal pull your tax rate as well as fully diluted shares outstanding or approximately 44 million.
In summary, we are pleased with our continued execution against our strategy securing long term wireless rides a prominent large scale been used to deliver enhanced wireless connectivity solutions in the evolving wireless ecosystem, we believe our relationships with the carriers are instrumental in our ability to continue monetizing our robust platform of wireless technology solutions.
Look forward to a long runway of growth opportunities ahead of us with that I'll turn it back over to Mike for closing remarks.
Thanks peak.
In summary, we're pleased with our third quarter results marked by solid financial performance and strong operational execution.
With that let's open it up for questions operator.
Thank you at this time will be conducting a question and answer session. If you'd like to ask a question. Please press star one on your telephone keypad confirmation tell indicate your line is in the question Q you May press Star too if you like to remove your question from the Q4 participants using speaker equipment it may be necessary.
To pick up your handset before oppressive before pressing the star keys, one moment, please what we poll for questions.
My first question comes from Mark Argento with Lake Street Capital markets. Please proceed with your question.
Hey, Mike <unk>, just a couple of quick ones first off on the extension congrats on that.
As long term extension there.
In terms of.
<unk>.
Airforce, and then also I'm wanting to get an update on.
In conversations with.
<unk>.
Yeah, I'll start and peak and follow up first of all thanks, Yeah, We're very excited about the extension.
Obviously for multiple reasons, but.
It does highlight I think that the job and that we're doing with the on the bases and for the men and women of the military it is not exclusive.
And it has not done so that's not a change from that.
And yes, I mean, we're talking to and working with the other military branches as well.
Great and then in terms of getting a better understanding.
The recurring nature of your business, obviously your bill you build a lot of the infrastructure you get paid to do that but kind of the recurring access for the part of a model can you talk a little bit more.
The recurring fees.
Is when it comes with some of that.
Yeah.
Revenue line in particular.
Where are you see that going over time in terms of more of the recurring piece versus.
Component.
Yeah, I'll take that Mark Thanks for question.
So as we know we talked about this ER our prepared comments that we had a great quarter with Daz access fee growth and while there was a 1.8 million dollar a onetime benefit access fees are access fees year over year still grew almost 40% and it's something we've been saying we've been say, it's a key focus of ours is to drive.
And going access fee revenue and we think its old makes me very important for driving long term shareholder value.
Great. Thanks, guys.
Great. Thanks Barb.
Our next question comes from Greg give us with Northland Capital. Please proceed with your question.
Good afternoon, guys. Thanks for taking my questions.
First with.
Sprint and 18 teething live on the majority of your network for carrier Offloading would it be part of the breakout the percentage that each no you know each carrier is on the network that live right now and get better sense of how much runway. There is there and secondly, I guess with that comes with Boingo program or offerings still declining what do you expect to be the.
Offsetting drivers of growth in that segment.
Lastly, just is there any update with carrier three or four since last quarter.
Yeah I'll take these Greg so we we cannot breakout or the revenue by customer it for for Offloaded to actually something that is highly confidential for our carrier customers in particular, so it's something we can't do.
Well, we have said in the past is that offloading tends to be the majority of the wholesale Wi Fi category.
Comes with Boingo has absolutely put some pressure as American Express program starts to phase out. It is important to note that while American express has been phasing out and we also expect that that contract to go away. We have seen growth from Mastercard does not offset what we're seeing for American express, but overall, we are seeing at least at moderate.
Some of the decline we experienced with a with Mastercard.
So Eric expressed.
Finally, we are we're pleased with what we continue to see for Offloading. So oh.
Wholesale Wi Fi for the quarter grew almost 5% sequentially and that that growth was directly attributable to a wholesale oh carry offloading. So that's a that's an important piece to to take away.
Got it great and then.
Are you still expecting the 20 das venues to go live this year and does that change at all now there's 13 year to date and I think last quarter, you guys were talking about [noise].
There were several deployments that we're kind of right on the line of Q3 Q4 can you maybe give us a little update there to see where those when.
Well absolutely as you you we talked about that none of the capital we've invested a year to date as well as the quarter.
This quarter, the past quarter, we invested about $21 million in not das build out projects, which where this comes in.
And we're we're building and building rapidly. So we still are targeting our 20. It you know as we expect.
It tends to be usually towards the middle of the year end towards the end of the year and Thats coming together as exactly as we anticipated.
And you know for that point, we're very comfortable at our 20.
Great. Thank you.
Yes.
Our next question comes from James Breen with William Blair. Please proceed with your question.
Thanks for taking the questions have a few.
Just one just a clarification of the sort of 354000 beds you Havent military how much is the army Air force of that total just going idea of what you locked up.
Yeah. Thanks, Jim Army Air Force is yeah.
A little more than 60% of the bad so we have covered.
So I.
I mean fundamentally and I know this is being very simplistic, but we have three divisions. The military you can almost think of them as a thirtyj as terms of bed covered stay a little simplistic, but it's pretty close.
Okay and then.
Just from a numbers perspective on the quarter.
On a year over year basis do you have just an estimate of what the the re amortization of the near contract had.
From an impacts I know it was probably is more heavily weighted this quarter than the last two.
Yeah. It was a it was very meaningful it was a you know stepped down of.
I'll almost a $4 million of revenue for the quarter. So as you think about growing das build out the fee revenue. This 13.4 million that we recognized in the quarter that really should be where we build off of.
Okay, Great and then you touched on a little bit military sales are down again, a little bit this quarter.
That a trend that you see flattening or you just have you seen it reversed all this quarter.
Yes, we've already started to see some of this come back or we did see a a larger than than anticipated.
What we called troop movements in Britain relates fits when soldiers will go out and gone and.
Yes.
Not be in their home base than that go on some sort of deployment type mission and when that happens. They typically do not have connectivity, but what we also see is when they come back it turns on right away and we're seeing this starting to see some turned back on so we're encouraged by what we're seeing a but it is something we are watching very very closely.
Okay, and then and then just on.
From a cash flow perspective, you were 20.5 this quarter I think you had burned 41 million to date through the first half.
You are sort of.
Call. It 20 million you burned year to date.
Do you still sort of expect to be in that 20 to 30 range for the full year and then.
Can you give some color into I'm, just a capex around that.
How much do you expect to be from the large MTN contract New York.
Sure so, but you're absolutely right. We are still projecting that we will be a consumer of between 20 to 30 million a free cash flow in 2019 or that you know right inline with our expectations.
We Oh, we were pleased with the inflows that we had coming in in Q2, assuming <unk> in Q3 and a lot of those really from the receivables we had in Q2 and use our a our balance go down accordingly.
In terms of Capex as we said in our guidance range, we expect that das Capex will be between 95 to 105 million, so called 100 million at the midpoint.
Between self funding and then T.A. that's it.
We're looking at over 40 million cumulatively, but can we think about for the full year.
Your question on MTS, specifically, it's somewhere between 20% to 30 million of capital for the M.T.A. and.
In this year called 25 at the midpoint.
And that's something that we are highly highly optimistic about and believe that it's gonna be a great driver, but it's taking you have to taking capital. The day for contracted is theres two separate contracts won his tenure at plus extensions. The other ones 15 years plus extensions. So we're looking at many many years of recurring cash flow, but is taking near term investment.
So excluding that large MTN contract, which is obviously.
It doesn't go live for year from for one part of it even further than that for another part.
Are you basically just trying to run the business at cash flow breakeven.
That's it really is that Jim I mean, it's it's it's something that we're focused in on his overall cash generation.
And where we're being I'd say very thoughtful when we do what we call self funding and deploy.
Networks on behalf of the carriers and in exchange for higher access fees were trying to do that with our available cash from operations.
Great and then just one last question.
Terms of the venues got live now and the ones and backlog and then you on the press release, you've got 37, plus nodes live and then 12 and backlog is there something different about the ones that are in backlog or they smaller venues and there's just less nodes per venue or how does that breakout.
Yeah. It's a the nodes that are in backlog are indicative of what we anticipated to be the nodes at the launch of a venue and so if you look at the nodes that are live today for the benefit on the venues that we have covered many of them of in life for many years and so they have hikari penetration. So on average we averaged three.
<unk> and a half carriers per location once have been who's been live longer than three years. So you got more nodes from Hikari penetration plus many of these venues have gone through to GE Threeg Fourg and now just started the experienced fiveg upgrades and when upgrades happened you see more nodes. So ultimately I think the venues that we have in backlog I mean Amir.
So what we have live but it's going to take a multiyear process on a venue by venue bases to get there.
Great. Thank you very much great. Thank you.
Our next question comes from Scott Sara Lee with Roth Capital. Please proceed with your question Hey, Good afternoon. Thanks for taking my question nice quarter.
He Pete just to quickly dive in on the Das access fee front, even adjusted for the one time, a 1.8 million dollar impact this quarter. It still seems like it was a little better than expected can you can just kinda tickets. There's some of the dynamics there in terms of what customers want or we go push more to an access fee side from a build out revenue is there.
Some major change that's going on and maybe if you could kind of couple that into the guidance a EBITDA guidance for the year kind of implies flattish to down a little bit, but given the revenue bump that you would expect to see billed revenues coming back what's the dynamic that's moving that around.
Yeah, it's a handful of things Scott So first and foremost you've heard us talk about we're deploying capital today to get increased access fees over time, so that is absolutely happening and that's that's a major reason for the I'll call. The acceleration in access fee growth. If you did a day, we look at this and say carriers are going to ultimately hey, what they're going to pay for.
For a venue, but we have the ability to you know to move monies in certain buckets at times, depending on the deal we can structure with the carriers and that's exactly what you're seeing with a more money is coming from access fees in lieu of a build up project revenue. It does consume cash capital the near term and free cash flow in the near term.
But we think it drives overall long term shareholder value.
Gotcha, and then looking out to the fourth quarter in terms of the implied guidance from an EBITDA standpoint can you take us through some of the dynamic Sir.
Yeah, I mean, if you look at the implied guide me, yes, just on a summary that it's implied guide of 17 to 22 for the quarter, which is actually 22 is effectively where we are this current quarter, we're very comfortable with where we are in terms of the guidance range.
We expect Q4 on the revenue side to accelerate we expect a good portion of the data revenue acceleration to actually flow through to adjusted EBITDA and even more importantly, really being EBITDA, that's not generated from billed revenue deferrals gotcha, and if I could a couple of follow ups quickly Mike.
On the Fiveg front, starting to become much more real you guys are featured in a lot of key venue that customers like Verizon like to talk about can you take us through a little bit I'm looking at those 71 venues that are deployed there. There's 60 plus that are in backlog how much dialogue today is five you're getting pulled into those venues I mean is or is there an idea.
Or magnitude you know in terms of how quickly we're going to see fiveg deployed across those key properties and kind of maybe what the economics might look like to the extent possible help us understand you know cash catch a investment required on your part versus you know what that's going to do too you know your revenue per venue.
Yeah, Great question. Thanks, Scott so.
I mean to a large degree I would say every one of the venues were having a discussion about the reality of it is.
You know will parallel really the.
The same path at the operators you know as they launch markets.
So you know there's a number of markets now launched by all of the operators lot of overlap each other so where we have venues in those locations were absolutely you know not only talking about fiveg EBIT in many cases deploying it so for the other venues and for the new ones that we're building.
You know everything really going forward would be what I would call fiveg ready so.
Wiring him and doing the design will have a lot of that in place. So it it's happening and I don't want to over hyped Fiveg you know it is you.
You know kind of the first inning of that if you forgive my baseball analogy and.
The carriers are busily building it out and obviously, we're doing that with them. So very excited about that and as far as you know how that benefits us. It's really the same kind of model that we've had its a you know the build as they build we build it out on their behalf and then the ongoing revenue that.
Comes from you know the daz or the recurring revenue fees.
You know will will participate in that as well.
Got you and lastly, if I could and I don't know if there's such a thing is a quick question on Crs <unk>, but I'll try.
Yeah, very exciting opportunity lot of different models in different ways to approach. It can you give us an idea how your dialogue with customers in venues is going do you think it's more neutral host or will look more like five GE or will that those be bands that some of the existing operators are going to use to deploy fogey lot of different ways. You can go very exciting I know nextera.
Still embryonic, but if you could help us understand how the thought process is evolving right now thanks, yeah, yeah. Thanks, Yeah.
It is still early on that and I think probably the.
The best way to answer it is it is a little bit of both or all the above it does have a lot of you know kind of unlicensed type.
Capabilities.
And it will also have you know some some types of licensed type of execution as well. The other piece of it is you know really anywhere where we have the right.
You know the wireless rights, we can be deploying that and.
It's moving you know probably a little faster.
Then you're saying, meaning you know equipment is starting.
To come forward I think the fact that the latest iPhone came out with CBR S. Obviously really ignite the ecosystem as well so.
Those types of things a good things going so very busy with it and it does as you say create new opportunities as well some it or you know we're exploring some that are new and some will probably create.
Great. Thank you. Thank you Hey, Scott.
Our next question comes from Walt Pajak with light shed partners. Please proceed with your question.
Thanks, I, Pete DNA was down 2 million sequentially was there.
I have a onetime onetime credit America <unk>, what was going because I've seen a this seasonal pattern before.
No. So it's a couple of things. So some of it is is a ongoing which is.
Stock based comp was down is that that's a good portion of it but the other piece, which I called out in our prepared comments was up as we assessed the the earn out with element we booked some contingent consideration that we came to the conclusion. This quarter that there will be no earnout payment as a result, we took into income.
That a contingent consideration.
Got it I think because if.
The stock comp was this was it the stock comp that was down because I thought that was flat I know you're right no stock comp was was that kind of flattish it around one little under a million.
It's flat sequentially year over year, it's it's down right now I'm sorry, I was just looking at that sequential move, but I guess it with some of these other thanks, sorry, yeah. Yeah. The other piece then it's also a.
Just comp in general it was down and gene has a bigger part of comp. So it's it's still cost less stock based comp sequentially, but the biggest piece of the sequential decline has to do the contingent consideration got it and then wholesale I know you've got a kind of the.
The issues with the credit card.
Benefit programs and what have you but.
For the wireless carriers are you seeing data usage, there and I guess more specifically free to do you sense the more recent one.
Are you kind of in all of the locations or I recall it was you.
You had started some location they were going to span them or are you when all of the locations. Those Norton now more a matter of usage growth would be eggs existing customers are you still lighting up new locations for there's a team to customers.
It's more the former so they're effectively lives and the locations were expecting to be live which is really the majority of our footprint.
In fact, the vast majority of the called the Passpoint enabled a wife I locations.
And so the growth there is really give me a <unk> based upon the total usage by each consumer.
So assuming that we can that you Digest American express in 2019, you're looking in 2020.
She there's kind of volume discounts on things like that.
That is the ability to grow wholesale basically dependent on getting Verizon onboard as an incremental customer or is there.
Enough growth from the just the exist because they TV subscriber base I guess is flat to declining.
Sprint is obviously declining maybe you pick up T mobile assuming if that deal happens, but is the is its revenue growth in wholesale just kind of dependent on Verizon.
The new potential all floater.
I wouldn't say, it's dependent upon Verizon, obviously, winning a Verizon deal would be very important and would be a key growth driver and something that we're highly focused in on but because this is usage based we actually anticipate that there'll be growth and you know carrier offload driven by by increased usage now as you highlighted we expect.
You know as usage goes up price per unit will come down not not the same extent, but.
We do have cured volume pricing and that would come into play.
We expect growth to happen.
By volume and then something like a Verizon or <unk> or a T. Mobile joined the network would drive growth at a outpaced rate.
Got it and then just last question just can you just give a mix I'm on the cap the cash capex, what self funded versus operator funded.
Yes, so I honestly year to date basis, it's about 25% has been a you know that it has been what we call bundle funded.
So call that 25 million for the year.
Understood. Thanks, that's helpful.
As a reminder, if you'd like to ask a question. Please press star one on your telephone keypad. One moment. Please why we pull for questions.
Our next question comes from a pile mcneeley with Jefferies. Please proceed with your question.
Hi, guys. Thanks, a question. So first one real quick did I hear you mentioned that Boingo multifamily revenue and what it wasn't the corner.
Yeah, So multifamily revenue for the quarter was 5.7 million and 3.9 was recurring and a 1.8 was construction.
Okay, Great and you mentioned that year to date, a good portion of the multifamily contract you signed have been for conventional I'm just curious.
Any of those sign conventional deals with the same reach that you're also currently pursuing a framework agreement with and does that give you any more confidence in an eventual framework deal.
Yeah. This is my great question Carl Yes. It is yeah, we do a lot of work with a lot of the big reads.
And the conventional side is starting to shift.
You know a little more starting to get going and that is you know essentially with the same entities that the you know we're working pretty diligently to have a broader agreement with.
Okay. Thanks, and then Oh, you know switching gears the military I'm in the 15 year extension that you didn't he said I guess guys just struck.
You mentioned, there's other revenue opportunities outside of you know your traditional nonmilitary beds business can you explain what some of those look like in and how we can relate them to some of your other segments and monetization opportunities like the these look like carrier offload are they going to be kind of a general managed service or is it going to be kind of a set of das venues.
Anything you can have went up there.
Yeah. So I'll start now Pete Wanstead certainly on the the offload a it is.
Something that that is an opportunity there.
Or the kind of go co tenant services or other services on the basis is part of it also towers, which was a key part of this extension is something that now will enable us to to work a little more on the military side.
On that type stuff.
Okay. So this is towers would that be.
Would that be kind of a gift service or services related like build project or would it also be what it looked like a das opportunity or tear off what opportunity. It would be it just like a traditional tower. So we would build the tower just like you know a tower company would.
And then we would have charge the carriers for the nodes the Duke onto a tower. So it will predominantly be a rental model and something actually we're very excited about its an early stages, but it's a it's an exciting opportunity.
Okay, great Yeah that up and one last one you said in the past that upgrades upgrades can take place within the quarter. They don't always hit I know backlog. So is there anything you can add to to kind of give us a sense for the pace or momentum upgrade activity, whether it's the five GE or or you know fourg.
Oh, Okay activity continues.
To happen, it's not it wasn't as much I'd say in Q3 s that has been in some prior quarters.
We are seeing a lot of demand on fiveg upgrades and we are doing some fiveg upgrades, but in terms of what launches and what we recognize revenue wanted what ultimate goes into backlog, we didnt see as much of that in Q3.
Okay, well respected exposure.
Yeah. Thanks.
Thanks.
Weve reached the end of the question and answer session. At this time I'd like to turn the call back to Mike Finley for closing comments.
Thanks, operator, and thanks, everyone for the questions. As a reminder, we have a very active investor relations schedule the coming here in the fourth quarter and we look forward to see many of you. There. So thanks for joining us and have a great day. Thank you.
This concludes todays conference you may disconnect your lines at this time and we thank you for your participation.
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