Q4 2019 Earnings Call
Greetings and welcome to Boingo wireless fourth quarter and full year 2000, <unk> earnings conference call.
The top all participants are in listen only mode of question answer session will follow the formal presentation. If any <unk> operators. This is turn the conference. Please press star zero on your telephone keypad. Please note. This conference is being recorded I would now let's turn the conference over to your host Kimberly Orlando, which I don't Investor Relations. Thank you you may begin.
Thank you and welcome to the Bueno wireless fourth quarter and full year 2019 earnings conference call I know everyone should have access to the earnings press release, which was issued today approximately four o'clock PM. Eastern time. In addition earnings supplement has been made available on the Investor Relations portion of one does website at <unk> Dot com.
By 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 relationship with everybody partners, new venue and other contracts and market potential growth opportunities.
In addition management may make additional forward looking statements in response to your question.
Looking statements are based on management's current knowledge and expectations as of today March 2nd 2020 and are subject to certain risks and uncertainties that may cause actual results to differ materially from the forward looking statement.
A detailed discussion of such risks and uncertainties are contained in our most recent form 10-K for the year ended December 31st 2019 filed with the FCC today, or second 2000, and twice and our other filings with the FCC.
The company undertakes no obligation to update any forward looking statements.
On this call will 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 tools to understand our operations.
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 one go dotcom.
And with that I'll hand, the call over to blend goes Chief Executive Officer makes Italy.
Thanks, Kim and thank you to everyone for joining us today.
Let me begin by addressing the recent news stories speculating, we are exploring potential sale of the company.
Well, we will not comment on rumors or speculation in the marketplace. We can share that we have received multiple inquiries regarding a potential strategic transaction.
As such our board has engaged strategic advisors to help us to sell these opportunities for that reason why we would be sharing fourth quarter results with you. Today. We are suspending forward looking financial guidance until further notice with that let me turn it over to people, who will walk you through our fourth quarter 2000.
18 results in detail.
Okay.
Thanks, Mike.
The day I'll begin by reviewing our financial results key operating metrics in the fourth quarter ended December 31st 29 team.
Total revenue for the fourth quarter was 64.1 million a decrease of 5.5% over the prior year period.
Revenue reflected growth in military multifamily wholesale why thought which was offset by year over year declines in daz retail and advertising another up now.
As a percentage of total revenue across our diversified revenue streams compared to prior year quarter military multifamily was 37% up from 35% Dow's was 35% down from 37%.
Wholesale wife, I was 17%.
<unk> retail was down 5% in advertising and other was 6% down from 7%.
In terms of total revenue contribution by category for the quarter.
Military multifamily revenue was 24 million, representing an increase of 2.5% versus the prior year period.
Growth was driven by the military vertical which improved 4% year over year.
Drew military subscriber revenue falling to speed and price increases we implemented in the first quarter 2019, which led to a 10.1% year over year increasing ARPU.
In the fourth quarter built out our network to cover an additional 1000 military beds, bringing our total footprint to 335000 military beds as of December 31st.
Fourth quarter revenue in the multifamily vertical declined 3% year over year, while growth in our multifamily business is taking longer than originally anticipated due to longer sales and deployment cycles and remain optimistic and our long term growth opportunity just burgled represents.
In the near term, we continued generates strong recurring services fees for our portfolio of 238.
Family properties.
Yeah as revenue of 22 million decreased 3.3 million or 12.9% year over year, primarily due to decreased asked about project revenue.
Total does revenue was comprised of 13.1 million buildup project revenue, an 8.9 million access fee revenue importantly, recurring data access fee revenue increased 24.5% year over year from 7.2 million, representing our fifth consecutive quarter of double digit growth.
Wholesale wife, our revenue was 11.1 billion up slightly year over year, primarily due to increased managed service piece of our venue partners, who pay us to install manage it operate network infrastructure at their opinions.
This increase was partially offset by decreased revenue from our comes with Boingo service offerings as mentioned on previous earnings calls. We expect comes with Boingo will continue to partially offset growth in the wholesale white light vertical as our program with American Express is phased out. However, we may see we remain pleased with the performance of carrier offload and continue expect.
Wholesale wildfire to be a strong driver of recurring cash flow.
Retail revenue was 3.3 million a decline of 9.7% year over year, primarily due to reduction or retail subscribers.
Advertising other revenue was 3.7 million.
Decreased 17.5% year over year, primarily due to declines in the number of premium AD units sold compared to the prior year period.
Now turning to our fourth quarter costs, an operating expenses.
As a result of our business realignment plan announced in December we recorded a restructuring charge totaling 2.3 million in the fourth quarter of 2019 related to employee severance and benefits costs. Following the elimination of approximately 80 positions from various blanco offices across the country.
On the completion of our strict restructuring plan. In addition to increase focus in alignment.
We expect to realize approximately 11 million annualized cost savings beginning the first quarter of Twentytwenty.
Network access costs totaled 29.2 million, representing a 13.1% decrease over the fourth quarter 2018, primarily due to decreased depreciation expense related to fixed assets, where does it go about projects and decreased multifamily construction and support fees.
Gross margin, which is defined as revenues less network access costs was 54.3%.
Approximately four points from the prior year period.
The increase in gross margin largely reflects the shift in a diversified revenue streams driven primarily by the increase in higher margin does access fees and military revenues and declines in our lower margin does build an advertising revenue.
Network operation expenses totaled 15 million in increases up of 11.7% year over year, primarily due to the aforementioned restructuring charges and an increase in personnel related and other expenses.
Development technology expenses of 9 million increased 6.5% from the prior year period, primarily due to restructuring higher hardware and software maintenance expenses.
Selling and marketing expenses were 6.7 million increased 8.2% for the prior year period, primarily due to restructuring charge.
General and administrative expenses were 6.9 billion declined 14.2% year over year, primarily due to a decrease in personnel related expenses, which is inclusive of stock based compensation.
Now turning to our profitability measures for the quarter.
Net loss attributable to common stockholders was 5.2 million or 12 cents per diluted share compared to net income of point Fourmillion, a penny per diluted share in the fourth quarter of 2018.
As a reminder, net income in the fourth quarter of 2018 reflected a onetime noncash tax benefit of 5.7 million related to the reversal of our tax valuation allowance on the equity component of our convertible debt.
Adjusted EBITDA, a non-GAAP measure was 19.8 million a decrease of 14.5% year over year.
As a percentage of total revenue adjusted EBITDA was 30.9% down from 34.1% of revenue in the prior year quarter.
Now turning to our key metrics.
Number of Das nodes turned that works for the fourth quarter was 38100.
Up 27.4% from the prior year period, no 2.4% for the third quarter of 20 I'd King.
Number of dazzled, what's in backlog, which represents number of dads nodes under contract, but not yet active as of the ended the fourth quarter was 11700.
Down 15.2% for the prior year period, and down 3.3% for the third quarter of 2019 decrease from the prior year period due to deployment of 15, new das venues during 2019.
Our military subscriber base was 133000 subscribers in the fourth quarter down 3.6% for the prior year period.
Compared to the third quarter 2019 military subscribers decreased 2.9% in.
In line with the anticipated seasonal trends, which typically reflect a short term reduction in subscribers. During the last few weeks of December around the holidays.
Our retail subscriber base was 81000, I think into the fourth quarter, which was down 33.6% from the prior year period, and down 4.7%, but third quarter of 2019.
Next page usage our worldwide network.
Approximately 89.4 million up 33.1% in the prior period and effectively flat for the third quarter 2019.
Moving on to discuss our balance sheet.
As of December 30, Onest 2019, cash cash equivalents marketable securities totaled 8.6 million down 6.2 million from 86.8 million at September Thirtyth 2018.
The decrease our cash balance was primarily due to investments made or das network infrastructure.
Total debt was 168.4 billion and we had $150 million available at our credit facility as of December 31st 29 team.
Capital expenditures were 32.2 million for the fourth quarter, which included 27.2 million for dads infrastructure build out projects, which are primarily reimbursed through revenue buyer telecom operator partners.
Free cash flow non-GAAP measure was a negative 4.6 million for the fourth quarter compared to a negative 13.7 billion a fourth quarter 2018.
For the full year of 2019 free cash flow to the negative 25 billion compared to a negative 15.4 million in 2018.
Why are operations continue to generate cash. These results are in line with our previously stated expectation of being in that consumer of free cash flow for the full year 2019, primarily due to our ability to selectively fund that network build out opportunities, including Prefunding certain capital expenditures related to our empty a build up projects.
We continue to believe that investing the majority of our free cash flow into network expansion opportunities. It's the best use of capital to drive long term growth.
With that I'll turn it back over to Mike.
Thanks, Pete before we go to questions I would like to say I'm very excited about the year ahead.
At the end of 2019, we made the tough decision to realign the company into three core business units carrier services military and multifamily as well as a fourth business unit focused on our legacy products like retail advertising and comes with Boingo, We believe by narrowing our focus and investment in the.
Core areas of our business and by managing the legacy business unit to maximize cash flow and profitability, we will be able to achieve faster growth drive execution and improve overall profitability for the company.
Carrier services, which is comprised of das Wi Fi offload and macro towers.
Remain the most important driver of long term value for our business and we're excited for what 2020 has in store.
We're already seeing more daz RFP activity in the first two months of the year than we saw in the first half of 2019.
Yes access fee revenue was on the rise as highlighted by the almost 50% year over year growth in 2019 compared to 2018.
We launched 15, new das venues in 2019, bringing the number of total venues live to 73 and have an additional 61 das venues in backlog.
Two venues in the backlog include the M.T., a long Island railroad and Grand Central Terminal site access projects in New York City.
We expect these empty a projects to be the largest as deployments and Boingos history and we're excited to watch the first phase of these projects later this year.
Why offload continues to be an important way that we partner with the carriers to help solve the insatiable growth of mobile data traffic in fact, Wi Fi offload was just named by Fiercewireless as the second most significant wireless development of the last decade.
This is incredibly exciting for Boingo as we helped pioneer the offload technology from concept to real world deployment.
Well 18 tee it spreads are now live on most of our Wi Fi network. We remain confident that it's not a question of ETF, but when every domestic carrier is participating in some form of offload to ease congestion on their cellular networks.
As I highlighted on our last call we extended our military contract with the Army and Air Force Exchange service or a piece, which covers our army and Air Force base deployments for an additional 15 years through 2038 as a result of our contract extension, we're now seeing more opportunities to continue to.
Ed coverage to support new beds in common areas on existing basis.
Further we believe there was a tremendous upside potential with the military for carrier offload.
Macro cell towers small cells and private services as part of this long term extension.
We believe multifamily represents an exciting long term opportunity for Boingo. So we're just beginning to scratch the surface rights and developers know how crucial it is for their properties that have a top notch wireless solution.
For both the residents it attracts and the rents they can charge with high speed Internet being recognized as a top amenities.
I can go brings significant value in this regard given our deep knowledge in the space and high quality network solutions.
In closing, we're pleased with our performance in 2019, which included several key milestones such as the signing of a 15 year contract extension with the Army and Air Force through 2038, the launch of 15, new das venues and impressive year over year growth of nearly 50% and as access fee.
Revenue.
In addition, the business realignment, while difficult represents an important milestone, which we expect will result in a more focused leaner and stronger boingo.
We believe boingo is well positioned to be a significant beneficiary of the evolving wireless ecosystem for years to come.
The seemingly insatiable growth of mobile data traffic will help fuel the growth of Daz Wi Fi offload CBR S and the Fiveg Revolution.
We believe our long term wireless rights in key strategic venues, coupled with our neutral host approach and longstanding relationships with the carriers give us a unique ability to deliver the next generation of conversions I'm very excited for what lies ahead for our business.
With that I'll open the call to questions. Please keep in mind that we will not address any questions regarding a potential strategic transaction or 2020 guidance.
Operator, you May now open the call for questions.
Thank you at this time, we will be conducting a question and answer session. If you will notice a question. Please press star one on your telephone keypad a confirmation. So indicate your line is and the question Q you mean for start to fuel let your move your question from the Q for participants using speaker equipment. It may be necessary to pick up you had said before person star keys, one moment. Please open.
Since.
Our first question comes the line of Skus true with Roth Capital. Please proceed with your question and good afternoon. Thanks for taking my questions.
Pete Mike maybe just to quickly clarify I want to make sure on the Opex reduction front with the the realignment that 11 million when will we see that full quarterly impact are we seeing it a entirely in the first quarter or is it going to be in the second quarter that we start see that full impact.
Hey, Scott so you'll see most of it come through in Q1 there.
I would say by 80, 590% of their up of this will be realized starting in Q1 and by Q2, 100% will be realized.
Gotcha and on the at the Das front. It seems like that was an area of a little bit of sequential weakness in the fourth quarter of the pipeline is still strong it sounds like the RFP activity is very strong could you take us through what exactly you saw in the fourth quarter and are you starting to see more of a shift into the access fee front as opposed to build revenues in how are you trying to push.
Things as we're moving forward and maybe double up on top of that you know in terms of that pipeline Fiveg Crs private networks, how does that all fit in and sequentially in Directionally, how should we be thinking about the das business going from the the December quarter to the March quarter. Thanks.
Sure I'll start and I know Michael add some color here so as it relates to.
Q4 in particular.
First I'd like to recap 2019 was a great year in watching 15, new venues I know, we've talked about watching more we expected to launch a bit more here in Q4 those venue did not go away those customers did not go away some of the to the timing of the launches shifted out to the right, but not atypical and these large scale because.
Traction projects.
Yes, still a ton of activity going on as it relates to your question specifically as a as it as it is too well.
But don't fees versus recurring access fees, we are seeing growth in recurring access fees year over year, our Q4 access fees were up 24%.
Oh, that's something we're proud of and that's that growth is something we expect to continue going forward.
It is a trend that we are seeing.
And it's something we're working on with our carrier customers, but it's important to note. What we're really focused in on is getting the carriers to yes, and so we'll we'll be flexible with our carrier customers on whatever structure they want to do.
Hey, Scott Smith I'll, just add you asked about the pipeline and things yet you know, it's there's so much talk and can and continuous talk about fiveg, which is.
Happening and its evolving and it's a I think 20 2021, well start to see more especially as more devices come into the marketplace, but certainly Crs now being live.
Thats starting to come in but we continue to do you know fourg upgrades and and Fourg as well. So really you know kind of the neutral host approach of bringing you know connectivity in converged connectivity into venues, there's going to continue to evolve and we'll see more fourg will see fiveg they've gone.
The growing basis as we move through the year and then bringing it all together.
With Wi Fi and the other pieces is really what makes him the best networks and that's what the venues are seeing in asking for.
Hey, Mike if I could just just one follow up and I'll hop back in the queue, but there's certainly been a lotta concern and speculation relate to the sprint T mobile impact it seems like there's positive resolution on that front I'm wondering if you could kind of addressed what you're seeing in in that customer regard from a demand standpoint, and also the talk in the fourth carrier dish kind of coming in does that start to materialize.
On the revenue stream in the not too distant future. Thanks, Yeah. Thanks, guys. So that you know I think the fact that it's it's settled now is good you know when we build our networks for the total number of customers. So the fact that they're coming together.
You know is.
Probably a good thing from that regard and.
There are number of customers is one will just be the combination obviously of the two so for us.
You know we've said all along that you know either way would probably workout find this is a good outcome.
And you know I think we'll start to see those companies.
Coming together here pretty quickly so it's not not completely finished yet but as that comes together you know obviously be a strong and viable competitor in company in the space.
As far as this goes yeah, I think you know that's another opportunity as they evolve into.
You know the fourth carrier and as far as projecting when that will be meaningfully you know is hard to determine but I don't I don't think we'd probably wouldn't probably see much. This year, but then the out years that that would start to happen I believe.
Great. Thank you you just got.
Our next question comes to line up Anthony Stoss with Craig Hallum. Please see with a question.
You might compete can you refresh your memory the size of the MTS contracted thats gotten any bigger or smaller send saw you last reported and also can you maybe detail or give us a range. What you expect the size of it to be in 2021, your first full year.
Oh I get some deployment and then Mike you talked about when you first joined Boingo part of the reason you joined was your view on indoor private LTE networks being built out I'm curious if you what you're seeing there if you're seeing any interest in fiveg already on the indoor private network side. Thanks.
[noise], so I'll start off so as it relates to the MK contract is done.
Not really name thing meaningfully Tony since we last announced that.
It's a big contract.
And it's early and in the process of of our discussions with the carriers discussions are going quite well. The building is going on as we speak and as we said in our last call. We expect that we won't launch at least the first phase here in 2020 that has not changed.
As it relates to win will no.
The the entire project go live health, we're not we're not ready to comment on that one yet and we are also able to give commentary on what the size will it be in 2021, but yeah. What I can say its price is making great progress. We are we are happy with how the teams are working we're happy with the engagement the carriers and.
We couldn't be more excited about this but those project.
And then Tony I'll follow up Yeah, I still think private LT. He is.
Oh really interesting opportunity in one that's gonna grow.
Fiveg he brings a lot of that into perspective bid Crs does as well wife, Isix. So really the convergence of all of these.
Technologies and capabilities is what's going to help I think spur the opportunities both in the private sides as well as all of indoor.
Kind of across the board and you know as Fiveg comes out further devices get launched and capabilities.
Become more apparent and the App developers get moving then.
There is gonna be grade a greater demand for high speed low latency and whether that's in existing venues or or private type locations I just as excited today as I was a when I joined the almost a year ago.
And as a quick follow up Mike you commented on this call that you're seeing more interest or RFP activity, a dash and the first two months and they do the first six months at 2019, you have a goal right now for a number of das deployments for 2020.
Yeah, we haven't stated that and we're still working through that that this point.
Okay. Thanks, guys best of luck.
They started.
Our next question comes a lot of some work with Oppenheimer. Please state your question.
Thanks, guys like can you can you talk about the das demand as the sell for new venues, maybe what type of then you're seeing and.
Or is this for kind of fiveg upgrades or new carriers coming into existing locations anymore color there and then.
And maybe can you give us a little bit more color on the wholesale Wi Fi trends. It was up a little weaker than we were expecting but I know there's a lot of puts and takes there may be if you can give any color on some of the MX contracts right or volume use or whatever else can trump themselves. So I guess for just looking for is that number kind of a good run rate.
Thanks.
Thanks, Tim This is Mike I'll start and then I'll turn to repeat yeah I think.
It's clearly if you look at the number of venues were in every one of those is a great opportunity for Fiveg upgrade.
And so as we've stated that started to happen in that we'll continue to evolve.
And we're in a great spot for that as you know people a customer's demand and requirements for high speed low latency just continue to grow so.
That that obviously will grow there and as far as just the new RFP is really is you know there's a number of new facilities that are coming up there's a lot of.
Ah different upgrades and you know we're you know we're kind of across the board and transportation hubs anywhere there is high traffic and.
Lots of people transportation hubs sports stadiums.
Airports and things like that so it's very similar to the group of customers we have today.
Yeah as it relates to wholesale Wi Fi, Tim So Ah, yes, we were up sequentially I'm very modestly and.
As we look at the elements of a a wholesale Wi Fi.
We continue to see encouragement from what we worked with the carriers for Offloading. We're also seeing continued success on what we call managed services, where we managed to operate the news on the on wireless networks on behalf of venues, but we saw the weakness piece come with from me comes with Boingo and that did materialize again in Q.
Before we continue to see that that decline, while the amex program phases out.
Huh.
We are giving color today as it relates to 2020, but what you should be thinking of is wholesale offload.
Growth coming from you know managed services and.
And offload, let declines coming from comes with Boingo.
And then maybe just on the advertising front what percentage the advertising has been driven by your Salesforce. So you know just to try to get a baseline up what the run rate is that that business now that.
You bought scaled back.
Yeah, so 100% of our advertising sales coming from the Salesforce So up we.
As we went through this business realignment that wasn't area, where we definitely we'll see some pressure.
We had a larger salesforce, we talked about previously.
Hello.
All in around 20 folks and that that number is significantly last I go forward.
We are finding we're spending a lot of money supporting a business that frankly wasn't growing and so we made corrective actions there and we have a handful of sellers now, but as we know it's very small and how we're going to market is very different.
Thank you.
Our next question comes a lot of James Brown with William Blair.
Okay.
Thanks for taking the question I'm, just just one housekeeping psyche.
How much yellow it was the.
In the military number.
And then just across the business military lost a few subs again this quarter just can you talk about where you're seeing there and if you think that's reversing as a more about troop deployment issue.
There was a little bit better than it was the last two quarters.
And then just on the data side or just around the DMC contract you talked a little bit about.
So the timing on that.
Can you talk about how much you spent on that last year 29, King and what you think that's become a ballpark for 2020 from a capex. Thanks.
Sure so as it relates to a multifamily so revenue for the quarter was 6 million of that.
The vast majority was a recurring access fees so.
Almost four and a happening it was occurring access fees.
As it stands today as we talk about subs in the military so we absolutely saw our our typical seasonal decline so our penetration rate as of the ended the quarter was 37.5% maybe think about our penetration rate as an average throughout Q4 two is around 39%. So it was a.
As a seasonal drop any I can't comment that you know like like we normally do we saw that come right back up in the beginning of January.
[noise] as it relates to M.T.A. a in terms of the the capital spent in 2019.
Does it need.
Our overall commitments, we have made to India is over 25 million. So far we're continuing to fund that build why we engage the carriers.
I won't comment specifically on how much we will spend and 2020 on MTV because a lot of that we'll have to do with.
When we launch the different phases, and also to win which carriers because capital also is dependent upon the carriers.
But just know that it has our full support and where we're balancing the need to fund the network and.
But also to making sure we're not putting capital too far to dance of getting commitments from our from our carrier customers.
Okay, and you talked about realigning the revenue into those three buckets, where you start reporting that way at some point.
First quarter.
We do intend to start reporting.
Under the new aligned I won't comment Dolby Q1 versus other time again in 2020, but yes, we will be changing how we report.
Okay, and then just against last question why not give guidance there what's the rationale around that relative to the business in the M&A. Thanks.
Yeah, Hey, I mean, we we said in our prepared comments. So it really has to do with the inquiries and.
Just given the activity that's out there and the speculation rumors we feel like this is not the times.
Okay. Thanks.
Our next question comes on line of Walter Piecyk would like to your question.
Thanks.
Hey, Mike.
73 venues that you have I was just looking for if you can just refresh my memory in terms of how those arrangements work has I think if you know, let's take the horizon as an example.
If they wanted to do [noise] millimeter wave, which seems highly suitable to stadiums and into on things like that I don't think it can go through your das systems. So correct me, if I'm wrong that would require.
A different type of antennas structure and system.
Just curious if the 73 venues if you can kind of breakout which of those do you have the exclusivity to be the guy that would then build that.
For Verizon and you know I guess 18 to whoever else wants to build a millimeter wave in those venues what are the financial arrangements look like generically across those 73 venues.
And would you suspect that in those cases, it would be kind of a traditional business model that you did historically, which is like you get vizient teed up to Pony up a couple of a couple of million Bucks and then and then just amortize that as deferred revenue. Thank you.
Great. Thanks, a lot of yeah, I'll talk generically, obviously, but I'm sure I'll try to take your your question as it is so and all of the venues where we have the rights we have the right. So the first question would be all 73, we would have the rights to do that as far as the design and the build out it would really be depend.
Good on you know the venue itself the carrier.
What spectrum, they're planning to use you've stated millimeter wave and understand the question so and those cases, it's a little bit more specific to that but you know the way that we operate with the operators we do in the same manner with.
Fiveg in upgrades as we've done with Fourg and Threeg and then as we build it out and it's just a function of working with them on where and how they want to deploy as we do with all the other venues and all the other upgrades in history, we have in from a contractual perspective, it's the same.
So again for the 73 it is exclusive across all 73, meaning that if the if they want to do millimeter wave even if it's more capex. That's it can only go through you guys in terms of those contracts and how long on average are those contracts extend.
I mean, there first answer is yes, but the contracts have varying degrees as you know we have we know we enter into long term contracts.
And we don't claimed and to describe but every one of them are but they all tend to be.
No longer term.
Got it and then on the.
Pete to question for you on the you know my favorite question, which is this reimbursable capex you actually I want to actually I know, you're not giving what you're kind of doing 2020 are targeting but even in this year I think last time, we chatted about this you were looking at doing 75 to nine total with a mix between self funded and and.
Carrier funded and so you came in substantially above that was any of that.
Conceptually pulling in 2020 like Wow, how did that happen, but it was that much higher than than what you were initially thinking where am I do I havent numbers wrong.
Yes. So you are those are some earlier numbers when we will be last gave guidance, we talked about our das capex for the year being 95 between 95 to 105. So for the year came in 107, so even a little bit above that it's driven by care demand. So while we look at what what we have going on.
As it relates to upgrades you've been you deployment as while supporting empty a build process.
We continue to see a significant amount of demand and that's that's a very good day.
Gotcha and then the last thing.
So if I just took das Rav divided by nodes first of all why is that bad to do it that way and create a new metric.
And then also liked is 200 sound like that should be the right number per month for the revenue generated per node I get that it's like it can be squirrely, because you're amortizing some of the revenue, but actually it even if with amortization is still should work out to to be a clean type of metric is 200 bucks per node per month sound like.
The right number or can that go lower because that's been obviously dropping.
Yeah, I know I know exactly what you're trying to do here.
But the challenge with that is it works really well for new then you deployments, but as you start doing upgrades and as carriers add incremental nodes when they do these upgrades.
The same rate does not apply and so as a result, your your revenue per node by the by default is going to go down as a result of upgrades. So.
It's a proper in a good way to think about it and that's how we'll look at internally when I think about them.
Anchor carriers and subsequent carrier additions to a new venue, but upgrades kind of changed the whole dynamic that comes into play then they asked do with at what point does a a carrier decommissioning out and that's something we don't get up the color on that as quick as well as we would like.
Thanks, and just one last one I know where else do what what are your I know wells and I mean, it's a bottom line here on the strategic alternatives is that it's really that exclusivity that people want in terms of the next phase of investment.
Yeah, I push out have the wells in front of me, but we're in a net loss position they expect to be a noncash tax payer for for a while yes as.
People look at one go for different things, but whether things. We continue to say is the fact that we have long term key strategic venues and then we provide wireless connectivity in those venues. They have a great history of getting multiple carriers per location. It. It makes us valuable it had to two different players and also to just you know.
Just in terms of growing the business. It's you know.
Winning venues signing up curious as locations creates real value.
Great. Thank you.
Thanks, a lot of.
Once again, if you will notice question. Please press star one on your telephone keypad. Once again, if you would like to your question. Please press star one on your telephone keypad. Our next question comes on line of Greg give us with Northland Capital. Please proceed with your question.
Can you guys. Thanks for taking my questions are you talked a lot about the profitability benefits, if you're getting from the restructuring.
Roughly how much will the recent restructuring impact revenue in any way at all.
So I'll take on this.
The area, where we expect to see the most impact.
Around the realignment really has to do with the advertising business in which we've talked about previously so.
But there has been questions and commentary we receive when we talk to investment community that.
We are abandoning our legacy business and that has not the case.
What we are doing is we're putting a lot of focus on the areas of the business that are growing and that we believe create the most value and the areas that are not growing as much.
Now, where we're managing them, but we're doing it responsibly and so everything we do is going to be managed in a way that we look at what's what's the opportunity what's the cost and then how can we maximize the overall contribution margin.
We have a leader responsible for the legacy business and he's absolutely trying to grow the business.
Oh, Yeah. When you look at retail you look at advertising look it comes with Boingo those businesses are under decline.
It doesn't mean that they'll generate.
Good incremental contribution margin and that's how running the business.
Okay sure.
And then if we think about the comes with Boingo program, having that continued negative effect on that wholesale Wi Fi segment.
How should we think about when amex will be completely phased out and maybe when that part of the segment would return to growth.
Yeah, Unfortunately kind of gets into the whole 2020 guidance piece so.
You should be thinking about annex phasing out in the early part of the year, but beyond that I really can't comment.
Okay Fair enough last one from me then would just be.
Dad penetration moves closer to 12% maybe in the market today.
Is there any can you talk about the dynamics about maybe have you noticed a slowing pace of new venue is coming to market or maybe the mix of venues that has shifted at all and I guess kind of having a company that with.
Maybe wasn't verticals or venue types, you're excited about for the that's business and 20 point.
Yeah, I can touch base I know my can go a bit more of a look the the demand from from carriers and then use for in building wireless is a great levels, we talked a bit about how our RFP activity is heavier.
That's driven by venues, but we also continue to get feedback from carriers and you think about a five GE world and Fiveg.
Is it.
It's almost was made for in building wireless when you think about you know how that works and how you become most efficient so we love the position we're in and we love what we're trying to do so I like the space, we occupy about running the wireless networks at key strategic locations and bring as many carriers as possible and leveraging the.
I shared infrastructure for healthy returns for us for the carriers as well as into the venues. It's a true when we win.
Ill add as you know you obviously, if you break it up you have lead over the whole grouping of existing venues of all types transportation hubs airports sporting venues things like that and you have you know some that are new and you know there's new building going on in multiple places around the country and then you always have you know some sort of.
New.
Opportunity or new new type of a venue you know there's some gaming things that are starting to happen, but there's a common denominator and all of them, which is they all want you know the fastest Ah you know a higher speed lowest latency network that you can get so whether you're in an existing one one that's being built or one that's coming.
They all want the same thing so if we're in the places.
You know where breath and those are you know we would consider that upgrade opportunities into his new venues.
Our approach on a neutral side and bringing all types of network and capabilities together is very appealing to those values in the for the ones that would be coming it'd be any different. So you know as we move on you know over the next pick your timeframe 12, 24, 36 months and devices are coming out and capabilities come out in App developers get involved.
Some of the things like we saw in Fourg.
Example, woburn lift we're not use cases for fourg.
At work spectrum so.
You know, we envision there'll be more than we think we're in a good spoke to that.
Got it thanks, guys. Thank you. Thank you.
Our next question comes on line I'm, John Godyn with Lake Street Capital markets. Please proceed with your question.
Hey, guys. Thanks for taking my question first on military obviously, we saw nice ARPU increase there driven by the price increase is there more room for that to grow up going forward and.
What are you thinking about as far as ARPU versus adding new beds.
And second on the multifamily it's kind of consistent commentary over the past couple of quarters of elongated sales cycles anything else changed there that's worth calling out thank you.
Sure. So I'll start here so as it relates to ARPU a military yes, we've had some great ARPU increases you've seen materialize over 2019.
The bulk of that had to do with the the service and price increase that happened in.
In the started releasing the early part of 2019, so don't expect a material amount of incremental ARPU increases in 2020.
I think we've talked about that in the past so I'm comfortable sharing.
We can as we talked about in the last calls well we continue to look at opportunities to add new beds that is something that we think is important as we extended our contract with a fees and have another 15 years, giving us a contract through 2038, we're looking at certain venues at one point we are.
We question as we brought down the cost to deploy these bases and have longer term. It half allows us to look at faces a little bit differently. So while I do expect to add beds, but.
Not ready yet to provide color as to how much.
Yeah, and then on the multifamily side I'd say when we acquired Delaware. They were primarily in student housing we continue to be in that business and grow but as Weve also shifted into the more commercial multifamily side, that's where it gets a this off the sales cycle has been a little longer.
But if you think in terms of this decade theirs.
Estimated to be 20% growth of.
Multifamily units annually over the next 10 years and so we're in the.
Beginning of that cycle and the reality of it is you know some of those properties that were working with today are dirt.
For the Newbuildings and those those can take pick your timeframe 12, 24 month to build out and then you know the massive number of existing properties.
You know have a combination of.
Some that have contracts associated with them that will roll off overtime and although there are built a there is a great a benefit to that that we can get on with implementing our technology, there, but there's people living in them and there's walls and things. So it takes a little time to kind of get that going so.
It's a big opportunity.
And on the commercial side it just as one that has little longer cycle than some of the student housing stuff.
Alright, Thanks, guys. Thank you fit they shop.
Our final question comes on line of called Mcneeley Jefferies. Please proceed with your question.
I think so the question I wanted to get a sense for where you're out was small cells. Right. Now are you seeing more and more projects become small cell focused right now or do you have an expectation when they might become more small cell focused in the future or ramp more meaningfully.
Yeah, there's actually I mean, this is kind of one this becoming for a long time and.
I do think that there's probably more activity, that's starting to to happen on the small cell side and.
Again, as a neutral provider in provider of all types of technology.
You know, there's I think theres some interesting opportunities that will probably start the finally come into play here over the next to you know period of time, but you know it for US it's kind of one part of providing all types of connectivity and converge connectivity. So I do think it's obviously a little closer.
Her then it's probably been in the past.
Okay fair enough and is there anything more that you can say about and you kind of leading indicators like RFP activity and upgrade request you mentioned some factors there earlier in the call, but could could <unk> <unk> that could help us understand where we're at with the timing of carriers five do you plans I know you've previously said.
It could be mid 2020, when we could see a bigger ramping up five D or you know that fiveg in venues, but does that still your thought or you know what do you think concurrently about the timing of a five year as.
Well I'll just I'll just give you maybe a little more historical as I've kind of commented over the last number.
<unk> is.
Fiveg will ramp faster than Fourg did.
The combination of of.
Chips and capabilities are being available.
Infrastructure being up in more you know global in nature than Fourg was.
And then you know what really drives a lot of it is devices that have the capabilities and so there's been a lot of announcements by or you know chip guys in by device players of having devices available in generally when you see that.
They the devices don't tend to come until infrastructure is built so you know.
The carriers are best answer that question for them, but.
I would just tell you I think that Fiveg you know all the.
The discussion in the.
Information this comes about Fiveg.
We'll be faster and I think.
As devices come more towards the middle ended this year, you'll start to see some of that that happen.
Okay, and then one more on multifamily.
I guess that where are you at with a with the agreements in for and how they're progressing with a with the many Reits cross the U.S. and.
Maybe outline the stage of the process you're in right now and maybe some milestones or some kind of expectation on timing there.
Yeah, you know we continue to have great discussions and relationships as I've said before although we don't have.
You know a oh.
Large scale agreement with within the rights, we do work with all the reads on a regular basis and we are.
Working with them on properties.
So nothing to report there yet, but we're continuing to work with them and and growth opportunities with them as we move forward.
Great. Thanks, a lot.
You picked up.
Ladies and gentlemen, we have reached the end of our question answer session as well as today's conference call. We thank you for your participation you may now disconnect. Your lines at this time and have a wonderful day.
[music].