Q3 2020 Boingo Wireless Inc Earnings Call
[music].
Greetings and welcome to Boingo wireless third quarter 2020 conference call at this time all participants are in it looks the only mode.
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But I like the kind of comfortable with the hopes today, Kimberly Orlando with Addo Investor Relations. Please proceed.
Thank you and welcome to the Boingo wireless third quarter 2020, <unk> earnings Conference call I know everyone should have access to the earnings press release, which was issued today at approximately four o'clock PM Eastern time.
In addition, an earnings supplement has been made available on the Investor Relations portion of Windows Web site at <unk> Dot com by clicking on the Investor tab.
This call is being webcast and is available for replay.
In our remarks today will include statements that are considered forward looking within the meaning of securities laws, including forward looking statements about when those operations and financial performance, including due to COVID-19 strategic plans and transaction future results of operations business strategies and plans a relation.
She is with our venue partners.
New venue and other contracts and market and potential growth opportunities in.
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 nine 2020 and are subject to certain risks and uncertainties that may cause the actual results to differ materially from the forward looking statements a.
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 SEC on March 2nd 2024.
<unk> form 10-Q for the quarter ended March 31st 2020 filed with the FCC on May eight 2020, <unk> form 10-Q for the quarter ended June Thirtyth 2020 filed with the FCC on August seven 2020, and our other filings with the FCC and such risks and uncertainties include.
Pac upheld epidemics, including the recent Kobe 19 pandemic on the companies.
The company undertakes no obligation to update any forward looking statements.
On 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 the 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 <unk> Dot com.
And with that I'll hand, the call over to Boingos, Chief Executive Officer like Findlay.
Thanks, Kim good.
Good afternoon, everyone and thanks for joining us today.
Hope each of you are doing well and staying healthy.
As a country and as a company we've been dealing with the challenges of cold at night team for over seven months now I'd like to extend my heartfelt. Thanks to the team here at Boingo I'm incredibly proud of how they have gone the extra mile to ensure our customers as well as our venue in carrier partners have the connectivity they need.
Wireless network support millions of people, who depend on boy and go to stay connected.
That's an essential business our team has been working around the clock to help people stay connected now more than ever it's clear how critical connectivity is that every facet of our lives both today and in the future.
I'd like to begin todays call by giving you an update on our strategic process.
There continues to be strong interest and engagement from multiple parties and based upon that we continue to run the strategic review process to evaluate opportunities that we believe would be in the best interest of our stockholders.
Well the process continues we remain focused on the day to day execution against extraordinary opportunities in front of us.
Which we will share with you on this call with that let me pivot to our Q3 highlights and results.
For the third quarter up 2020 revenue was 58.8 million a modest increase versus 58.7 million in the prior quarter and a 9.2% decrease versus 64.7 billion in Q3 2019.
The decline in revenue versus the prior year was primarily related to one time das revenue in the prior year quarter, and our retail and advertising products, which have been hit hard by the cobot related reduction in airline travel.
While our revenue growth has experienced pressure primarily due to issues related to cope with Nike.
We've maintained a consistent and constant focus on improving our overall cost structure.
I'm proud to say the team has delivered adjusted EBITDA of 22.5 million for the quarter.
She was an increase of 5.7% versus 21.3 million in Q2, an increase of 2.9% versus 21.9 million in Q3 2019.
Well COVID-19 has been a challenge the world over one thing that remains clear is the critical role connectivity plays in our daily lives.
This need for connectivity demonstrates boingos resilient as an essential business as.
As well as.
The durability of our business model the.
The long term wireless rights, we hold it major venues, whether they are transportation military stadium, where multifamily enable us to deliver connectivity for whatever comes next.
That could mean licensed spectrum products like that small cells and towers unlicensed spectrum like white by six and 60 or unlicensed cellular like C.D.R.S.
We believe our nearly 20 years of experience in both licensed and unlicensed spectrum combined with our neutral host approach gives us a unique and defensible business model and this fiveg era.
Let me turn now to an overview of our key business drivers and walk you through highlights of each well start with carrier services, which includes data offload and our emerging tower in private networks products.
Despite the challenges of Cobiz, we continue to win new deals and build out new neutral hosts networks.
The team has done an incredible job maintaining velocity in the business in the third quarter we.
We have responded to 60% more are a piece during the first three quarters of 2020 than we did in the same period of 2019.
And our win rate continues to be at least 50%.
Given our projected 18 to 24 month build cycle. We believe these wins will continue to fuel our venue backlog for many months to pick up.
One of the new venue side than the third quarter was four long term data is right at the new aspects stadium at San Diego State University.
Part of the New S.U.S. Yoo Mission Valley campus. This year round entertainment destination is projected to feature over 300 events annually.
Speaking of stadiums. We've also been engaged to consult on the connectivity solutions that will be built into Inglewood basketball on Entertainment Center, the new home of the Los Angeles Clippers. The Clippers had been clear that their vision is to create the best film in basketball and we're honored to help bring this vision to life.
For the third quarter, we added 300, new das nodes, bringing our total number of das nodes live for 40800 with an additional 11600 das nodes in backlog.
We also signed five new tier one carrier contracts with.
The total das portfolio of 138 Bad news 73 of those venues are now live with another 65 in backlog we.
We believe our backlog provides us with a tremendous amount of runway.
Five years ago, we launched our first Passpoint networks and help carrier solve their capacity Cratchit high density locations.
Now we believe open roaming will be another important step in connectivity and we're beginning market trials to test how carriers can expand their coverage over existing Wi Fi networks, using open roaming with Boingos cloud hub et cetera.
Opened roaming which is built on the passport technology that is at the heart of our off road capability, that's the capacity to augment and accelerate the rollout of advanced high speed wireless coverage.
Last week, the wireless broadband lights or W.P.A.
Announced an ambitious vision for the future wife I asked the alliance is 37 annual wireless Global Congress in London one.
One go CEO Dr., Derek Peterson, who co chairs of the W.P.A., along with J.R. Wilson, Vice President corporate strategy and roaming freight TNT confirmed that W.P.A. its commitment to driving the creation of a secure and seamless global Wi Fi network that will enable business users and consumers.
Seamlessly connect to a wife I signaled almost anywhere in the world without the need for logging registration or passwords.
Division encompasses new revenue streams for existing network providers, the creation of new and innovative business models for companies opening their networks as well as new marketing promotional and sponsorship opportunities.
Another way, we're solving for connectivity connectivity challenges, it's through our burgeoning tower business.
We now have more than 130 site applications with strong carrier response.
The demand is strong and we are laser focused on deployments to meet this increasing demand.
Based on our long term military contracts and the rights to deploy wireless networks on basis.
Coupled with the Preapproval work, we've done with the joint Spectrum command we.
We believe we are well positioned to turn up the tower and small cell site expeditiously.
We are a doozy I think about the durable recurring revenue.
This business will provide.
Turning now to the military.
In addition to all the activity going on there with towers and small cell sites, we have been equally busy providing incremental private services to help support support increasing connectivity needs due to the pandemic.
Year to date, we generated nearly twice the amount of private services revenue than we did for the same period in 2019.
Given the number of troops under quarantine or <unk> relegated to training and studying from their barracks.
We've been asked to launch a number of bulk paid Wi Fi networks and education specific networks to help solve these connectivity challenges.
On the consumer side of the business, we've been concentrating on driving ARPU due a higher take rate of the blazing tier as well as the rollout of our new 100 Megabits per second extreme fear trial.
We're making good progress broadband ARPU for Q3 was $42.42 an increase of 2.9% compared to Q3 of 2019.
Overall penetration for the quarter was 37.9%, which was up slightly compared to the prior quarter.
Expected given the training deployment and permit change of station moves over the summer were much lower than we typically experience due to cope with 19 shelter and placed restrictions.
Yeah, well new beds have remained essentially flat for the past two quarters, we do expect new construction to ramp up again in the fourth quarter with the launch of new beds at Fort Hood and Mcgregor Rage.
One thing we don't talk about much just how incredible the boingo field operations team is it quickly recovering from natural disasters.
With multiple basis in hurricane zones, we have unfortunately become adept at re staging equipment with our field engineers and engaging repair crews to quickly replace damaged equipment and realign radio links.
Fort Polk was hit directly by Hurricane Laura this past quarter and I want to extend my personal thanks to our field teams forgive me getting service back up and running quickly.
Next I'll turn to a discussion on our multifamily business with over 200 of our multifamily properties in the student housing space.
Getting all these students online seamlessly as they return to school. This is our core focus in late August early September most universities have returned to a combination of in person and at home learning and network traffic is up an average of 20% compared to the prior year.
Oh properties up 50%.
The pandemic is clearly demonstrated the need for connectivity and this is especially true for our multifamily business unit with both student and conventional properties meeting to ensure their residents had the ability to easily study and work from all.
To that end, we won six new properties during the quarter, bringing our total portfolio multifamily properties to 238.
Of note the industry is beginning to embrace our network as a service offering where in Brooklyn Boy you go invest the capital for the network.
In exchange for a much larger recurring revenue stream and a longer contractor.
This provides predictable recurring revenues for our business and opens the door to monetize the network incrementally two additional solutions and use cases in the future.
Construction continues despite the challenges of Coke.
We commenced 33 projects year to date.
Moving to read that Winkler, a new luxury multifamily community owned by M.J. development Southeast and managed by Gray Star in Fort Myers, Florida.
The recent Winkler as one of the southwest, Florida is first smart community.
The developer chose Boingo to deliver high speed Internet service engineered for the Fiveg era right.
Residents will have instant on internet access at the time of their move in with speeds up to 800 Megabits per second.
And that work will also serve as the properties wireless backbone to power I O T home automation applications like lighting door locks and climate control works.
We're excited to help power incredible residents' experience.
At the reef at Winkler.
With that review of our core business drivers, let me turn it over to Pete for an in depth look at our financial results for Q3 heat.
Hey.
Thanks, Mike.
I review, our financial results and key operating metrics for the third quarter ended September Thirtyth 2020.
Total revenue for the third quarter was 58.8 million up 0.1% for the prior quarter and down 9.2% from the prior year period.
The modest increase versus prior quarter was primarily driven by gains in wholesale Wi Fi and advertising and other revenue.
Which were offset by decreases in retail in Dallas.
The year over year decline was primarily driven by decreases in daz retail and advertising and other revenue and to a lesser extent decreased wholesale Wi Fi.
Military multifamily revenue was up slightly year over year.
Importantly, the decline in our topline revenue was largely driven by weakness in our legacy businesses do.
Due to the continued decreases in travel as a result of this pandemic.
Although we expect this decline in our non core legacy verticals falling up business realignment. The decline it's accelerated at a faster pace than we originally had anticipated given the ongoing significant reduction in trouble.
As a percentage of total revenue across our diversified revenue streams compared to the prior quarter.
Military multifamily was 41% up from 37% Dallas was 37% in line with the third quarter of 2019 wholesale Wi Fi was 70% consistent with the prior year quarter retail was 4% down from 6% advertising and other was 1% down from 3%.
In terms of total revenue contribution by category for the quarter military multifamily revenue was 23.8 million, representing an increase of 0.4% versus the prior quarter getting an increase of 0.7% versus the prior year period.
And military the improvement versus the prior quarter and prior year was primarily due to incremental revenue growth in private services and an increase of our average monthly revenue per subscriber.
Gross growth in private services revenue was driven by increased demand for the military for bulk paid wife by offering which includes dedicated education related network to help meet the increasing connectivity needs of our troops on bases due to the EBITDA.
Our boat paid wildfire offering represents an exciting market opportunity for us the military bases.
As of September Thirtyth, our total footprint a military badge totaled 359000 across 64 military bases, which was unchanged from the prior quarter.
We remain very encouraged by our traction on military bases as we continued to make progress with macro cell towers small cell deployments and bulk service offerings.
We remain confident in the opportunities presented by the military vertical and its potential to drive long term recurring cash flows.
In the multifamily vertical third quarter revenue decreased 3% versus the prior quarter and declined 4.1% year over year.
Quarter over quarter and year over year decline reflects lower multifamily construction revenue.
Despite the ongoing challenges from Cowen students are returning to school occupied.
Occupancy India utilization across the properties is up.
New construction continues and we're continuing to see growth in our recurring services revenue.
Yes revenue was 21.9 million was down modestly compared to the prior quarter and decreased 7.7% year over year.
Das revenue for the third quarter was comprised of 13.7 million a build out project revenue and $8.2 million of access be revenue.
The decline in total das revenue from the prior year period was primarily due to a decrease in access fee revenue from our telecom Operator Partners Inc.
Included in the Das access fee revenue in the prior year period was a one time benefit of 1.8 million from the amendment and contract extension of one of our carrier customers.
This decrease was partially offset by an increase in build out project revenue.
Wholesale Wi Fi was 10.1 million, an increase of 4.2% versus the prior quarter, a decrease of 9.7% compared to the prior year period.
Increased compared to the prior quarter was due to an increase in managed service piece from our venue partners appears to install manage and operate network infrastructure. The venues the year over year decline was primarily driven by a decline in partner usage base fees from our comes with Boingo service offering as our program with American Express was phased out over the prior year.
Sure.
We continue to believe that carrier offload will be a key driver of recurring cash flow moving forward.
Retail revenue was 2.1 million down 13% versus the prior quarter and down 43.5% year over year, primarily due to the continued decrease in retail subscribers, which has been heightened by the persistent decline in venue traffic as a result, it probably 19.
Advertising and other revenue of 900000 increased 34.3% versus the prior quarter and declined 64% over the prior year the year over year decline is primarily due to reduction the number of premium AD units sold due to declines have been you traffic, resulting from Nike.
Increased from prior quarter was due to an increase the number of premium AD units sold as travel begin to slowly resume although it's far reduced levels from the prior year.
Now turning to our third quarter costs and operating expenses.
Network access costs totaled 28, and a half million, representing a 2.1% increase versus the prior quarter and 2.4% decrease versus the third quarter clean energy the year over year decline was primarily due to lower revenue share paid toward many partners that are managed and operated locations decreased multifamily construction and support fees and rich.
Juice customer usage of partner venues.
The declines were partially offset by increased depreciation expense related to fixed assets from our das build out projects.
Gross margin, which is defined as revenue less network access cost was 51.6% decline of 91 basis points compared to the prior quarter and the decline of 338 basis points compared to the prior year period, both a sequential and year over year declines were due to the shift of our diversified revenue streams.
Network operations expenses totaled 12.9 billion, a decrease of 4.7% compared to the prior quarter. The decrease of 5.7% year over year decrease compared to both periods was primarily due to reduced personnel related expenses, which were partially offset by increased depreciation.
Development technology expenses of 6.3 million decreased 3.4% versus the prior quarter and 23.3% year over year, primarily due to declines in personnel related and other expenses.
Selling and marketing expenses were 4.9 million a decrease of 16.2% compared to the prior quarter, a decrease of 14.3% from the prior year period.
The decrease versus the prior quarter was primarily due to a onetime 1.1 billion increase in litigation loss contingency accruals in the second quarter of 2020 related to claims of damages I want to revenues in Brazil, the decrease compared to the prior year period was primarily due to reduction travel and entertainment and personnel related and other discretionary expenses.
General and administrative expenses of 5.9 million decreased 19.4% over the prior quarter and increased 17.1% over the prior year period.
The decrease from prior quarter was primarily due to a 1 million reduction in nonrecurring expenses associated with our strategic process recorded in the prior quarter. The increase from the prior year is primarily due to a $1 billion reduction in the fair value of the contingent consideration related to our acquisition Oh networks recorded in the third quarter of 2019.
As a result of our successful business realignment as well as the effective cost reduction measures. We implemented at the end of the last year third quarter costs and operating expenses of 59, and a half million decreased 4.3% and 5.4% from the prior quarter and prior year respectively.
Now turning to our profitability measures for the quarter.
Net loss attributable to common stockholders was 2.9 million or seven cents per diluted share compared to a net loss of 5.8 million or 13 cents per diluted share in the second quarter of 2020, and net loss of 200000 or break even per diluted share in the third quarter of 2019.
Adjusted EBITDA, a non-GAAP measure was 22 and a half million an increase of 5.7% from the prior quarter and an increase of 2.9% compared to the prior year.
As a percentage of total revenue adjusted EBITDA was 38.3% up from 36.3 in the present in the prior quarter and up from 33.8% in the prior year period.
Turning now to our key metrics.
A number of das nodes in our network for the third quarter was 40800 up 0.7% in the second quarter of 2000, 29.7% from the prior year period.
Number of das nodes in backlog, which represents the number of das nodes under contract, but not yet active as of the ended the third quarter was 11600 up 4.5% for the second quarter of 2020 and down 4.1% of the prior year period.
Our military subscriber base was 136000 subscribers at the end of the third quarter, which was relatively consistent with prior quarter and prior year period.
Our retail subscriber base was 49000 subscribers at the end of the third quarter, which was down 12.5% in the second quarter Twentytwenty.
And down 42.4% over the prior year period connect.
Connects or paid usage on our worldwide network were approximately 28.3 million.
105.9% in the second quarter of 2020 down to 68.3% from prior year period in line with our expectations given that the majority of our connex come from public venues, which continue experience, notably lower passenger traffic as a result of COVID-19 next were down sharply year over year.
Moving on to discuss our balance sheet.
As of September Thirtyth, 2020, cash cash equivalents and marketable securities totaled 54.6 million down from 172 million at June Thirtyth 2020.
Our cash balance decreased from the prior quarter as we paid off our revolving credit facility balance of 100 million, which we drew down in March of 2020, as a precautionary measure due to COVID-19 and invested cash to build out our network infrastructure.
Consistent with our plan during the quarter, we made significant investments to support our ongoing MPD projects the largest builds upon the history.
And the funding of select network and.
Importantly, although the M.T.A. builds.
Our long term ventures that required significant upfront cash commitments, we believe they will generate long term high quality recurring cash flow.
I'd like to reinforce that we are highly selective with our cash investments. We are neutral host service provider returns on investments our increase with multiple customers you shared infrastructure.
We expect the investments, we're making today will generate long term high quality recurring cash flows over many years in the future.
In addition, as a result of the Cobi 19 environment. We have made an effort to take advantage of the reduced traffic in some of our venues to build out networks faster and for a lower cost.
Ensuring that we are well positioned to execute as the economy recovers.
Total debt was 171 and a half million down from $270.4 million at June Thirtyth.
As of September Thirtyth 2020.
With $115 million of remaining borrowing capacity under our revolving line of credit and we remain comfortable with our overall liquidity position.
Capital expenditures were $34.1 million for the third quarter, which included 27.6 million used for das infrastructure build out projects, they're primarily reimbursed through revenue by a telecom operator partners our.
Our non reimbursed capital expenditures were driven mainly by new network builds matching operate network upgrades and various infrastructure upgrades and enhancements as a reminder, virtually all of our Das network deployments are success based builds meeting we have commitments in place with guaranteed payments from our carrier customers further we estimate.
Our annual maintenance capital requirements, which excludes our growth capital to be approximately 3% to 5% of revenue.
Free cash flow a non-GAAP measure was a negative $15.9 billion for the third quarter compared to a negative $1.4 million in the second quarter of 2020, and a positive 20 and a half million for the third quarter of 2019.
As our core business continues to generate significant cash from operations. We continue to believe investing in network infrastructure deployments secured by long term venue agreements is the best use of capital to drive growth and increase long term recurring cash flows.
Before I conclude I want to note that we are continuing to engage with multiple interested parties regarding a potential strategic transaction has announced and discussed in prior earnings calls as such we are maintaining our suspension of forward looking financial guidance until further notice.
Despite the continued challenging backdrop for the Cobi 19 environment I remain very pleased with our operational execution. During the quarter, we were able to maintain revenue revenue relatively in line with the previous quarter and improve adjusted EBITDA over both the prior quarter and year peer in prior year period as a result of our enhanced.
Operating efficiencies in summary, our results demonstrate the resiliency of our business model and we are confident of our strategy of securing long term wireless rights to key strategic venues and building out our network to deliver enhanced connectivity solutions will drive significant long term value for all of our key stakeholders.
With that I'll turn it back over to Mike for closing comments.
Thanks, Pete as you can see despite some of the challenges we faced during cobot. We've once again confirmed that our business model is extremely durable our diverse revenue streams from carrier services, including our emerging tower business military and multifamily business lines generate strong recurring revenues.
And our legacy business line continues to contribute significant profit profitability to the bottom line.
With approximately 95% of our revenues either contractual or recurring our model is built for stability and resilience.
We continue to innovate and lead in the wireless space, we're putting wins on the board and every part of our business from new venues new carriers being added to existing networks and the tower business. It's really taking off we're making progress every day on the M.T.J. our largest ever construction project. We believe this will be a significant growth driver.
In 2021.
We're innovating with new networks like our wife by six launch this quarter in Sao Paulo, Brazil, a worldwide first for white by six.
We believe the opportunity for private networks oversee vrs is an incredible opportunity for boingo going forward and we are hard at work in this space.
The Big picture is that we're in a great position. We believe there is an incredible pipeline of new opportunities in front of us the multibillion dollar total addressable market.
Our job is to execute and that is what the team is doing each and every day.
With that I look forward to taking your questions. Operator, you may now open up the call for Q and a.
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The first question comes from Anthony Stoss with Craig Hallum. Please proceed.
Hey, guys, Mike I wanted to focus in on a word.
It's a word that you haven't used before to describe your M&A process and yet you're talking about strong interest the word strong.
I'm curious if that was intentional.
Moreover, I love to hear your thoughts on the todays vaccine announcement provides or how that plays into the potential M&A process.
Also on the business side, if you wouldn't mind, telling or sharing with us your views on renewals of terms of change et cetera.
Love to hear thoughts on that and then I had a couple of follow ups repeat.
Hi, great. Thanks, Tony appreciate it yeah.
Strong no I think it's really just a you know on the the process just highlighting there there continues to be interest in multiple parties and no our board and as is.
You know continued with processing guidance towards that so I'm not sure I'd add anything specific or significant to that word on the vaccine. Yeah. I think for all of US I think that's that's an incredible.
[noise] opportunity, if we can get that going and one of the words I heard a lot and lot of the newscast today was just hope you know just a people having hope ER and seeing a vision to go.
Getting closer to being getting out and getting back to our normal lives so for us.
No that is.
No very engaged in high traffic areas airports transportation hub stadiums.
Multifamily properties things like that where people are moving around.
That's that's very positive for us and I think in our comments and as Peter highlighted a lot of the work we've been doing.
During this period is enabling us to get some work done faster.
It may be more efficiently and so we'll be ready to go when this starts to pick up I can tell you I've personally been traveling in <unk>.
Yes, the airports and airlines have just got to just been picking up already so yeah I think the vaccine.
We'd be would be very helpful. On the renewals yeah, you know we have long term.
You know agreements in place and those that are coming up for renewal I think one of the things that only become clearer is.
As you know the need for not just connectivity, but really always on reliable secure high speed.
Connectivity and we think from a converged shared network neutral host perspective, where which we do we're seeing more and more of that that's what he's done using one existing and the ones that were talking to going forward new.
I definitely don't want that's we think when a good spot there.
I guess, Mike you misinterpreted my question related to the vaccine I'm curious if you think some of your strategic partners or potential suitors or waiting for news events. Prior to may be formalizing, something and you've seen American tower purchased insight recently, so there is activity in your your industry I'm just curious if you.
I think some of your centers have been waiting for the vaccine and then I.
I guess repeat on the MTO side.
Earlier, you were thinking that it could go live sometime in December is that no looking more like a Q1 2021 event.
Oh, sorry, Tony I'll give a repeat sorry about that I guess.
Yeah.
I don't know I think you know certainly cove it has.
You know created you know a number of different.
No issues and probably opportunities in some ways, but yeah, I think as I mentioned earlier I think the hope of getting back to normal life.
And getting people back I'm sure it would have some bearing but I, it's hard for me to say.
Yes, Tony on the M.T.A., we continue to build we're making great progress and so we we have said all along we will be ready and we expect we'll have a carrier alive and in Q4 and I can assure you that we still continue to believe that we are going to be ready and we absolutely believe while the carrier committed in Q4, and we believe that.
Curious if you'll get live in Q4 as well.
Okay. Thanks, guys appreciate it thanks Tony.
Our next question comes from Matt Wilson with Oppenheimer. Please proceed with your question.
Hi, guys Tim Brandt.
Pete can you just talk about the why fight commitments what percentage of that revenue now is committed and and for how long because I'm, assuming calories, formerly using it all that much but the revenue it looks pretty stable.
[noise], yeah. So I think it really talking about is wholesale Wi Fi and most and and carrier offload probably in particular, so a wholesale why five for the quarter was little over $10 million almost.
Half of that was what was.
Was Wi Fi offload and and then it's you know it's guaranteed commitments and the there is real usage on the network and what's what's interesting is you look at that as we look at the data and while we see if you look at our Connex, our connex are down almost 70% year over year, but you look at the offload traffic and the decline in offshore.
Traffic is not down nearly that much.
It was down as you would expect but what we're seeing is the increased traffic. We're offloading on military bases and the amount of data that's going on that network is really still helping to offset or.
To offset that overall decline so they stick the feedback we continue to get from our carrier customers is that they value. Our offload network provides a real solution to help them meet the needs of the type revenue for their customers and while yeah airports stadiums and arenas may not be as congested as they say.
Were a year ago.
The military based network is definitely seeing a lot of traffic and so net net our customers continue to pay and we have a high degree of confidence. This is going to continue in the future.
I mean, just to be clear on the das side. How are you have your bookings have been trending for new sites has there been much change through cobot.
So we continue to win as we talked about it in the prepared comments, we continue to win venues, we announced obviously San Diego State Oh, Yeah, we talked on the Clippers. So there's there are wins that are continuing to happen carriers are committed to sign up so that works. It's yes, we do light up.
News and so as a result of that that you know that probably puts a little extra win rate guidance and scrutiny, but all that said, we're continuing to win and we're we're highly encouraged by the activity in traction we're seeing with all the carriers.
There's there's almost renewed vigor are coming from the carriers as they think about their capital deployments and look at the end of the day, it's coming from things like Wi Fi six it's coming from you know the upcoming why Fivesixty five GE is playing us a huge part and that is yeah, that's very valuable and very.
Good for our business long term.
Yes, Tim I'll ask you I have Mike Sorry go ahead I was just so I'll just add you know.
I think you're hearing and seeing also more.
More devices for five year coming onto the market and you kind of go back in time as Thats occurred over the other geez.
The need for network to be built and available when those devices come online is really critical. So you know that's a place where we play a.
A key part with our partners the operators in this.
And then lastly on the strategic review do you have a formal book out and if so when did you put it out there. Thank you.
[noise] yeah. So we as we talked about on the call and at the end of February we engaged a strategic advisor to advise the company and our board and yes, they have been engaging with with parties and there there's information out there with with parties went into India.
Thanks.
Our next question comes from Greg Davis with Northland Securities. Please proceed with your question.
Good afternoon, Mike Thanks for taking the questions.
With the six new multifamily properties. This quarter was just wondering if you know it's more of a function of when were going up in that segment or are you seeing significantly higher RFP activity. There any trends I guess, you expect to see regarding our activity would would also be helpful as well.
Yeah.
Yeah. Thanks, Greg appreciate it.
Yes, you know it's interesting we've added some resources there on the sales side. So I'm you. We've hired some experienced people from that that category. So we're seeing some of that.
Come on come to happen.
As you know, there's a lot of opportunity of new apartments.
Apartments in new facilities coming up and so you know were more engaged.
On more of these opportunities so the combination of that.
Yeah as I think led to just the more activity that's occurring.
Got it and I'm, sorry, if I missed this Pete but did you actually break out revenue for the multifamily segment.
No we did not call it out specifically, but it was five and a half million for the quarter and of that break down a 1.4 was construction. So that meeting 4.1. It was a recurring services revenue so about a.
Rough order called a 70 525 split between construction and recurring services.
Got it okay, that's helpful and.
Then turning to the military as you kind of continue to rollout that boingo extreme offering a new basis was just wondering if you could maybe comment on the typical uplift in ARPU or even take rates that you see following the launch of basis.
Yes, so we've actually seen nice improvement of ARPU. So as we commented here that we've seen ARPU increase of almost 3% year over year and that is predominantly related to the extreme and it is important to note that the extreme package is not available to all basis. So the the uptick is actually quite a bit higher than that but you know it's.
Not yet on all locations, because where we're going through methodically location by location.
In terms of changing the uptake it's not really change in the overall uptake is definitely more of a decision a buy versus not buy but on what plan. They buy our buying we're seeing more and more skew towards the upper end plans, which includes extreme which is highly encouraging and getting a key driver of the art the ongoing ARPU increase.
Our ARPU is continue to increase really over the last I think five quarters.
Got it sounds good I guess last quick one for me was just kind of pertaining to the strategic process.
Yeah are you seeing new participants come to the table there or is it really the same number of players that we've talked about over the last couple of quarters.
It's been pretty active throughout so.
Yeah.
We're not going to obviously.
No it's.
Discuss who and that it's been a pretty active process.
Okay. Thank you.
Our next question comes from James Breen with William Blair. Please proceed with your question.
Hi, Thanks for taking the question just a couple of when you can you talk about what processes with TMT contracts in New York and how that Bill that's gone and when do you expect to start see revenue. There and then can you just remind us of your total revenue how much of that is coming from the three large carriers.
Mobile horizon and.
Then lastly may be can you just talk about cash flow negative little more negative this quarter than last won two new tier investing how you're sort of thinking about that and given the fact you. It seems like you paid back your revolver. So.
Doesn't seem like there's a lot of pressure there in terms of making any more cash on the balance sheet.
Sure. So I'll I'll address all those so on the FDA process, where we are going strong as I mentioned with.
The question with Tony or we have been saying all along we expect to have the you know the first carrier live here in 2020, Oh, we are you know still.
Still I still believe that we will get the carrier committed and we will do everything in our power and believed that that care can get up and running and live.
Here in 2020, so look were aware that there is you know call. It a month and a half left to make that happen and it's a high focus across the company.
This is an area, where frankly, where the pandemic has helped us meaning that we've been able to be more efficient and this bill and we've actually been able to reduce cost in certain areas by having the the build to be more efficient. So you know in most places Colby I think is a you know it's more of a headwind, but at least on the construction side with.
With the MK contracts. It was primarily been more of a tailwind which has been a positive for us.
As it relates to customer concentration.
So if you look at our our.
Our business he got really think about it in pieces.
Military and retail and advertising, obviously not tied to the carriers, but daz and wholesale Wi Fi is no predominantly the carriers mean does it really is all carriers and and wholesale Wi Fi is call. It half of that is coming from the big three carriers.
Yes, and then the last one was free cash flow, yes, we did spend a lot of cash this up this quarter, but it is in line with our overall projections and really the reason for the you know the free cash flow usage in the quarter more anything else is the continued support of network build.
Those are predominantly related to empty a because of the demand we're seeing the opportunities to build networks at a faster rate, we can be more efficient and getting ready for yeah.
Coming out of this pandemic and really.
Working to improve our margins, so I'm very encouraged and very comfortable with our overall liquidity position, we paid down the revolver, because we feel comfortable or liquid you can position of almost 55 million of cash on the balance sheet.
150 million of borrowing capacity and we know that the capital we have deployed well return great recurring cash flow some will be in the front of up in the way of upfront below freezing others will be on the way of ongoing recurring rents so again.
Again, just we're comfortable.
Do you anticipate getting some cash back from the carriers as empty. It goes live to offset some of those costs absolutely we will.
It probably will not happen here in and Twentytwenty, just as it relates to collection cycles, and such that Theres, a shot but it we will absolutely be getting cash up front from the carriers and and meaningful cash a profit carriers as they join these networks.
Great and then just maybe one for Mike.
Yes, we're moving toward a spiky.
More broadly and finally, the consumer devices are getting launched there.
Ben early discussions the players and upgrades and all the existing properties get out there.
It would something like that look like next yeah.
Yeah. Thanks Chip, yes, no it's across the board, obviously, you know the new opportunities.
Opportunities we were winning.
In some cases, you know their new newbuildings, new properties or they're going to be.
Already built for you know, what we believe and they do as well as having a converged network.
Network utilizing all of the capabilities and technologies that are out there. So you know that's somewhat obvious in new facilities, but in existing.
Venues that we're at we're seeing that as well and I think you know take stadiums or airports you know they want to be more contact with us they want to be more touchless and that requires even greater connectivity and security in.
And those types of things. So you know in existing buildings, we're seeing the need and the request for that to grow expand you know, depending where what types of facilities facilities, and we talked a little bit about our private networking business since launching and.
You know that's a real key to that as well is as you get into you know hospitals industrial plants commercial developments and things like that there were seeing the same thing there so.
You know the fact that Fiveg is here its really is for us the combination of all the technology and capability and we're seeing a you know a great response to being neutral in that regard.
Great. Thanks.
Thanks, Jim Thanks, Jim.
Our next question comes from Kyle Mcneeley with Jefferies. Please proceed with your question.
Hi, Thanks, a lot for the question I Wonder if you can characterize the effect of various spectrum auction have on your das business, we had a senior at mid year in the C band through the end of the year and I expect that that the new spectrum will eventually be positive catalyst at some point, but.
But is there any cash conservation from the carriers that you see in the near term that eventually turns into a faster pace of deployment once that spectrum and build plans get finalized.
Yes, I think I get your question.
Look for us all new spectrum and complexity is really good you're seeing you know the devices that are coming out that have the capabilities to do multiple.
Parts of these technologies and capabilities and therefore, the network has to have that in a place where we get great traction is our ability to be agnostic in neutral and to build those networks with and on behalf of our partners and the venues are seeing more and more need for these types of.
Kind of all inclusive networks and capability. So if the question is on the spectrum side.
Is that comes together.
Do do we see more opportunity the answer would be yes I.
I didn't quite understand the question about conservation from the carriers, but you know the carriers or if this is a question you know are always and just very focused on customer experience for.
For their users and you know more and more that that overall total connectivity is really important and we're seeing that in the big venues that were in and to the earlier question, even the existing venues where we're at a meeting that as they go forward.
Okay, Yeah, I guess I'm I'm really targeting this question that is there any gating factor of the new spectrum on.
Their pace of joining networks and focusing on certain.
Das venues that they aren't going to that they may where there is there some some capex costs associated with that.
You know.
But they need to they have a big portfolio of spectrum existing so maybe it's not a factor. So I'm just trying to get an understanding of how these recent.
Recent spectrum auctions might have an impact in the near term.
Yeah, I would just say I think for us.
I.
I would think it's all positive I don't see any.
Any downside to.
You know to the spectrum that that is in place now and it's coming I'll give chairman pie in the FCC, great credit for really what they've done cpis been very engaged to making that happen as well so.
So we see that as positive and I think the carriers do as well.
And one other quick one on.
The bulk paid military packages.
I get the sense from the last few times, we talked about that that it may cause a bit of a skew in the penetration rate in the reported military subscriber numbers.
Is there any update on on what impact that might have you know people pay packages does it put downward pressure on military subscribers that are reported that we should be aware of.
Yes.
We obviously look at that and obviously contemplate that but we haven't seen it and you know the one thing that the military.
I'll give them great credit for is they really want to make sure that there's.
You know connectivity an opportunity for you know our military personnel, obviously in the barracks, which is where we we started at your question is about more in bulk but.
Theres a lot of training that goes on both in classroom and things like that and you know with co, but they haven't been able to do some of the things that they've historically done so.
It's really.
You know one let's say, it's completely additive, but but it's certainly not a takeaway and it's really adding connectivity and capability. So that the military personnel can be.
Not only have entertainment and communication capabilities, but also training and educational opportunities and we've been working quite closely with military to make sure that's.
Thats available for the troops and for them.
And lastly, the 130 tower in cell site RFP. The military bases is there any update so when that can convert into revenue when the ramp would be.
Expect that it's going to be a bit long dated because of the build cycles, but any update to the timeline yes.
Yeah, you're right I mean, as you know that business takes a while to really you know come back to you in the in the form of results in revenue. The real key is you know the applications you're getting the sites you're getting built a the carriers you're getting to engage and you know we've seen quite.
Quite honestly, great action and velocity and that the military bases have historically been tough.
You know to get networking coverage, there very widespread there they have lots and lots of upper hand, and property and and it's just it's a time consuming process, but I think we.
We think are benefiting capabilities, there to get that moving a little faster is.
Already resident in the applications and we expect that to continue but as far as where you'll start to see that that's that's a that's going to be a ways out. That's that's a 24 36 month type thing.
Great. Thank you very much thank.
Thank you Scott.
Our next question comes from Scott.
Hi, good afternoon, thanks for taking my questions they might be.
Hey.
Just to dig in a little bit on the the das backlog could you provide a little bit of color in terms of how that demand pipeline is filling up across five g.'s CBS in particular, some carriers I hadnt been spending you know specifically sprint and T mobile had going a little bit dark going into the merger sounds like they're starting to pick up on the activity front if you could.
Comment on that and maybe if you're starting to see some activity.
As it relates to dish.
Yeah ill start on if he wants to add yeah, you're right yeah.
I think it's kind of incredible food for Timo and spread to come together right in the middle of Cobot, and they've done really a fantastic job and you're right I do think they're starting to become more active as you know, they're deploying their networking and bringing their company together. So that's a real positive on that side of course right.
And then 18 T have always been out in front and you know I Scott as you well know that as new devices are coming online and.
In some cases, new devices that have lots of volume you know that.
It really starts to drive the need for these networks to to be.
Built out so the carriers are doing a fantastic job and you know bill.
Building out the Fiveg networks and the work that we're doing with them.
In our current networks.
And those that were winning you know we're we're seeing a you know.
Their activity continue to stay.
And progressing as far as other capabilities as Crs is coming online in the private networking, we're starting to see that expand you know out of you know some of our historical venue type opportunities.
Stadiums and airports and transportation hubs.
Into hospitals and manufacture.
Manufacturing and more on kind of the plant and industrial automation type side. So the carriers have been driving a lot of this we've been engaged to I guess, probably more in the background. If you will.
For a number of years. So now it's really starting to happen and I think cobot is identified you know even a greater need for connectivity. If there was such a thing, but we're seeing it.
And we think we'll be in the middle of that Hey, Mike maybe just to drill down on the private networks commentary in Crs It kind of got slipped in there up until the end and it seems like it's a very very large opportunity it's not true.
But certainly pretty huge I was wondering if you could flush out a little bit in terms of timing when it starts to become more relevant or do we start to see that actually filtering into 2021 expectations and what does it do you guys from a capital requirement standpoint. Thanks, a lot you guys got yelled at I'll, let Pete handle the capital requirement piece after I'm done, but you know.
Yeah, and I think that's as you've said, that's a it's like anything in and technology and and networking when it starts to happen. It's already been worked and worked on for a number of years. So we've been doing a lot of work behind the scenes.
You know we brought Michaels Ito on the beginning of the year to help drive and launch that business. So I would tell you I think that's moving a little faster.
Then than we had thought which is great. There's a lot of entities.
That are very engaged and you know kind of in a partnering the type of you know perspective, so again the need for converge share neutral connectivity only plays better there the top targets, obviously are in the industrial manufacturing hospitals things like.
And so there's a lot of activity going on as far as when we start to see that I think the activity, though it's already picked up well, we expect that to continue probably more than we originally thought and 21.
And then it looks like most of these things it does take a little time.
For that to develop and 22.
It is probably a good time than we first started to see some of that.
And Scott the capital requirements. So, yes that business model is still coming together I mean, we're in early stages with with a handful of different players and as you know we've had some trials going on what.
What the ultimate model becomes I think is still being sorted out but at this stage, we feel comfortable but as you know is this this opportunity gets more bed it and we see increased demand, which we are optimistic and hopeful for it but we need to make to rethink. This we absolutely will.
Oh.
What I do know is capital is available for great opportunities, but it has to be great opportunity with good returns on capital and so we see those opportunities we will.
Ensure that we are well capitalized and.
Again to remind you as I said earlier, we still have $150 million line of credit and we feel very comfortable that meets our needs for the foreseeable future.
Great. Thanks, so much thanks Scott.
[noise]. Thank you at this time, we've come to the end of the Q and a session I would like to turn the call back over to Mr., Mike funding from Colin common.
Thank you operator, and thanks to each of you for joining today I ask you to please stay safe and stay healthy. Thank you.
Thank you. This does conclude today's teleconference. You may disconnect. Your lines at this time and thank you for your participation and have a great.
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