Q3 2022 Starry Group Holdings Inc Earnings Call

Ladies and gentlemen, thank you for standing by and welcome to Derby Group Holdings third quarter 2022 earnings call. As a reminder, this conference is being recorded I would now like to turn the conference call hosted then Berrett Vice President Investor Relations. Please go ahead.

Thank you and good morning, everyone welcome to our third quarter call I'm, Ben Barrett head of Investor Relations for story, joining me on the call today is Jeff <unk>. Our CEO by now you should have received a copy of storage earnings release for the third quarter 'twenty. Two results. If you have not copies are available on our Investor Relations website before.

We begin I would like to note that some of our comments today may be forward looking statements as such they are subject, yes subject to risks and uncertainties described in <unk> earnings press release, and SEC filings and results may differ materially. Additionally, during our call today, we will reference certain non-GAAP financial measures that we built.

<unk> provide useful information for our investors reconciliations of non-GAAP financial measures, where appropriate to the corresponding GAAP measures can be found in the company's earnings release and other filings with the SEC.

And one final note given that we're currently engaged in the P. J T process. We think it's best if we hold off on questions for now we will keep you informed with updates as we hit milestones with that I'll turn the call over to Chad.

Thank you Ben.

Good morning, everyone and thank you for joining it's a busy time and I appreciate the opportunity to share my thoughts on the company and its future.

Want to leave some highlights first operationally, we had another solid quarter with more than 10000 net new customer additions, we continue to grow our service footprint and activate new buildings to meet customer demand. Our network is performing well and we are delivering on.

The Internet service at or above advertised speeds second financially, we have taken steps to reduce our cash burn to maximize our future runway, most notably with a series of cost cutting moves implemented in October .

So very difficult decisions to make but we believe that they provide us the necessary time and flexibility to define a potential transaction.

Third we announced this week that we have hired P. J D partners to advise the company.

The board of directors on M&A and capital raising and other balance sheet solutions.

Interest from strategic and financial parties, and we hope to conclude the process.

As timely a manner as possible.

Some operational highlights this was another great quarter for us from an op standpoint, we grew our serviceable footprint by 18% year over year and our customers by 66%.

<unk>, adding more than 10000 net new ads for the first time this quarter, we continue to see strong demand for the consumer from the customers.

We also continued to strategically grow the network. We activated approximately 50000 units. This quarter that is apartment units, bringing the total to over 450000 activated units. We're currently about 20% penetrated in those activated units, but the focus going forward is on driving that number materially higher.

Fixed wireless as the category continues to take share from legacy broadband players, which we think will continue within this segment <unk> is focused on the multifamily in large cities, where it's cost and time to construct.

The network is a competitive advantage, we think the market understands these advantages and we have seen interest in the story model from both strategic and financial players.

Some financial updates on the third quarter financials, we maintained our investments in customer growth and the financials reflect this investment we've built a very powerful sales engine sales and growth engine that continues remains undiminished wildly solve our financing challenges our realized <unk> continues to be depressed by a subscriber growth.

The timing during the quarter that subscribers were added in the impact of promotions such as the free child a month.

I want to impress upon investors that this is an artifact of growth in our liberal use of the four to six week promotional period.

Strict us from recognizing any revenue from a significant portion of the customers added in the quarter due to timing there has been no change in our rack rate pricing and the demand for our services is strong. Despite our continued performance the macro environment has presented challenges to our financing it pushed out the timeline, forcing us to take immediate steps to.

And cash burn to the cost cutting measures announced in October . We also made a tough decision to withdraw from the FCC's art out program, while the participation. In this program is in this important program fit within our strategic strategic vision in 2020, changing capital needs changing capital environment continued success in the urban multi.

The tenant market forced the decision to step back and focus our energies and capital and executing on our core business man.

We also took the difficult steps to right size, our expenses by eliminating approximately 50% of the workforce and pausing our Las Vegas expansion. We expect these moves to collectively will help extend our runway, providing us sufficient time and flexibility to get strategic and balance sheet alternatives over the line in the short term.

With that I'll give a quick update on where our financing efforts Dan.

Financing updates.

As you know we went public in March 2009.

On March 29, 2022, raising net proceeds of about approximately $155 million.

From the pipe <unk> financing given the market conditions. When we went public we raised less than half of what we had originally expected to raising the offerings. Since then we've been open about the reality that we required more capital to get to breakeven.

On Monday, we announced we've hired P. J D partners to advise story board of directors and the company on M&A capital, raising and balance sheet solutions, including full or partial sale of the company. The P. J T process is now in full swing and we're looking to provide them with sufficient time to assess the value.

Maximizing alternatives for <unk>.

As of September 30, we had $29 4 million in cash down from $99 7 million at the end of the second quarter. However, we have taken steps to materially decrease our cash burn to workforce reductions withdrawing from the art op program, which freed up an additional $17 million in cash that was restricted cover which was restricted to cover the required letters of credit.

And a pause in the expansion into Las Vegas amongst other moves. We believe these moves will help increase our runway, enabling a deal to occur in combination we've taken the steps to give us in combination we've taken the steps necessary to give us the best path to securing the best outcome for the company and its shareholders I am confident that the right solution will emerge a problems of funding relief.

It is not operational or technical or demand. We have built a machine that is ready for growth our technologies optimized our unit economics work who've shown profitability on a cohort basis and we can execute at scale and we have a beloved brand my firm belief is that the right capital structure, where you have the right opportunity for significant growth and profitability ahead of us.

Thank you for joining us.

Have a great day.

Okay.

Thank you. This concludes today's call. Thank you for joining you may now disconnect your lines.

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