Starry Announces First Quarter 2022 Results

Starry continues to show strong momentum, posting 72% year-over-year growth in customer relationships

Starry Group Holdings, Inc. (NYSE: STRY) (the “Company” or “Starry”), a licensed fixed wireless technology developer and internet service provider, today reported results for the first quarter of 2022, which was the company’s first reporting of financial results since successfully completing its business combination and public listing process in March 2022. During the first quarter of 2022, Starry continued to successfully execute on its business plan, delivering a strong increase in customer relationships and driving an increase in penetration of homes serviceable, all while improving the operating leverage in the business.

Additionally, Starry continued to expand the reach of its digital equity program, Starry Connect, growing the program to reach more than 63,000 units of public and affordable housing, all of which are automatically eligible for participation in the federal government’s Affordable Connectivity Program. Starry was also named to the second annual TIME100 Most Influential Companies list, which highlights 100 companies making an extraordinary impact around the world, in recognition of the Company’s digital equity work.

First Quarter of 2022 Highlights:

• Revenue of $7.4 million, up 63% year-over-year.
• Net Loss of $53.6 million, compared to a Net Loss of $41.0 million in the first quarter of 2021.
• Adjusted EBITDA loss of $27.8 million, compared to an Adjusted EBITDA loss of $21.8 million in the first quarter of 2021.¹
• Capital expenditures were $16.8 million, compared to capital expenditures of $10.0 million in the first quarter of 2021.
• Homes serviceable of 5.5 million at quarter end, up 20% year-over-year.
• Customer relationships of 71,247 at quarter end, up 72% year-over-year. Net additions in the first quarter of 2022 were 8,017.
• Penetration of homes serviceable increased 39 bps year-over-year to 1.30%.

“Putting our company on a path to sustained growth requires consistent and disciplined execution, which our team routinely demonstrates,” said Chet Kanojia, Starry co-Founder and CEO. “We are attaining our customer growth targets while simultaneously building out our network and driving efficiencies in our business on both technology development and service operations. Our disciplined approach over the last year to our business has created a solid foundation upon which to steadily grow and accelerate the business, even amidst difficult macroeconomic headwinds. These are challenging times for consumers, but home broadband access remains essential, and our business and technology are strongly positioned to meet that need in our current and future markets.”

Operational Highlights:

• Homes Serviceable: The growth in homes serviceable was due to network improvements and expansion in existing markets.
• Customer Relationships: The net additions performance in the quarter exceeded 8,000 for the second quarter in a row and Starry saw growth in customer relationships in each of its six markets during the quarter.
• Penetration of homes serviceable: The Company increased penetration by 39 bps year-over-year by focusing sales and marketing efforts primarily on multiple dwelling units (“MDUs”) where Starry equipment had previously been installed.

“Our team’s performance in the first quarter demonstrates continued strong momentum across all aspects of our business: customer relationships, network deployment, customer satisfaction and our commitment to expanding digital access in underserved communities through Starry Connect,” said Alex Moulle-Berteaux, Starry Chief Operating Officer and co-Founder. “Our focus continues to be on efficient execution as we drive penetration in our current markets and expand to others. We are happy to see our team’s commitment to customer-first and ensuring equitable access to broadband was also recognized last quarter by TIME magazine in its naming of Starry as a TIME100 Most Influential Company for 2022.”

Financial Highlights:

• Revenue: Revenue increased 63% year-over-year as our net customer relationships grew 72%, offsetting a decline in average revenue per user (“ARPU”).
• Cost of revenue: Cost of revenue increased by 45% year-over-year due to higher depreciation related to our network expansion as well as increased headcount and network service costs.
• SG&A: SG&A expense increased by 77% year-over-year due to higher headcount driven by network expansion and growth in customer relationships, deal-related costs and marketing expenses. Excluding deal-related costs of $3.3 million in the first quarter of 2022, SG&A expense increased by 53%.
• R&D: R&D expense increased by 38% year-over-year due to increased headcount costs to support the development of our network and equipment. We anticipate that R&D expense will grow at a reduced rate in future quarters.
• Net Loss: Net Loss increased to $53.6 million while Net Loss margin improved by more than 150 percentage points year-over-year as the Company benefited from economies of scale.
• Adjusted EBITDA: Adjusted EBITDA loss increased to $27.8 million as we invested in our network, systems and staff to support growth in current and future quarters. The Adjusted EBITDA margin improved by over 100 percentage points year-over-year.
• Capital expenditures: Capital expenditures increased by 67% year-over-year as we grew our network and customer relationships.
• Cash: As of March 31, 2022, Starry had cash and cash equivalents of $166.7 million. This cash balance reflects funds raised in the business combination.
• Debt: As of March 31, 2022, Starry had outstanding term debt of $218.5 million.

“Our team’s ability to execute on both technology development and service operations lays a strong foundation upon which we can continue to grow and scale the company and realize steady increases in revenue, net income and EBITDA,” said Komal Misra, Starry’s Chief Financial Officer. “We are a growth company and execution matters. This past quarter’s performance reflects our team’s continued laser focus on achieving our business goals and maintaining our strong growth momentum.”

Business Outlook

Based on information available as of today, Starry is issuing the following guidance for the full-year 2022:

• Customer Relationships: We expect customer relationships to be greater than 100,000 at the end of full-year 2022, reflecting growth of at least 58% year-over-year.
• Revenue: We expect revenue to be greater than $50 million, reflecting growth of at least 125% year-over-year. This guidance assumes we will receive more than $15 million in federal regulatory revenue through the FCC’s Rural Digital Opportunity Fund in 2022.
• Adjusted EBITDA²: We expect a full-year 2022 Adjusted EBITDA loss of $125 million, implying a margin improvement of at least 200 percentage points, compared to the prior year.

Conference Call

Starry will host a conference call to discuss its financial results for the first quarter of 2022 on Thursday, May 12, 2022 at 8:30 a.m. Eastern Time (ET).

Those parties interested in participating via telephone should dial one of the numbers below and enter the conference ID number 423679.

United States Toll Free: 1-844-200-6205

United States Local: 1-646-904 -5544

Other Locations: 1-929-526-1599

A live webcast of the conference call will be available on Starry’s Investor Relations website at https://investors.starry.com. A replay of the call will be available after 12:00 p.m. ET on the Investor Relations website. To automatically receive Starry financial news and updates, please subscribe to email alerts on the Investor Relations page.

About Starry Group Holdings, Inc.

At Starry (NYSE: STRY), we believe the future is built on connectivity and that connecting people and communities to high-speed, broadband internet should be simple and affordable. Using our innovative, wideband hybrid-fiber fixed wireless technology, Starry is deploying gigabit capable broadband to the home without bundles, data caps, or long-term contracts. Starry is a different kind of internet service provider. We’re building a platform for the future by putting our customers first, protecting their privacy, ensuring access to an open and neutral net, and making affordable connectivity and digital equity a priority. Headquartered in Boston, Starry is currently available in Boston, New York City, Los Angeles, Washington, DC, Denver and Columbus, OH. To learn more about Starry or to join our team and help us build a better internet, visit: https://starry.com.

Forward-Looking Statements

This press release includes statements that may constitute “forward-looking statements” within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. These statements include, but are not limited to, express or implied forward-looking statements relating to our expectations regarding our strategy, competitive position and opportunities in the marketplace, and our anticipated business and financial performance. These statements are neither promises nor guarantees, but are subject to a variety of risks and uncertainties, many of which are beyond our control, which could cause actual results to differ materially from those contemplated in these forward-looking statements. Existing and prospective investors are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. Factors that could cause actual results to differ materially from those expressed or implied include the risks and uncertainties described in the “Risk Factors” section of our Annual Report on Form 10-K and other filings with the Securities and Exchange Commission. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future developments or otherwise, except as may be required under applicable securities laws.

Non-GAAP Financial Measures and Other Business Metrics

To supplement our consolidated financial statements, which are prepared and presented in accordance with Generally Accepted Accounting Principles in the United States (GAAP), we provide investors with certain non-GAAP financial measures and other business metrics, which we believe are helpful to our investors. We use these non-GAAP financial measures and other business metrics for financial and operational decision-making purposes and as a means to evaluate period-to-period comparisons. We believe that these non-GAAP financial measures and other business metrics provide useful information about our operating results, enhance the overall understanding of past financial performance and future prospects and allow for greater transparency with respect to metrics used by our management in its financial and operational decision-making.

The presentation of non-GAAP financial information and other business metrics is not meant to be considered in isolation or as a substitute for the directly comparable financial measures prepared in accordance with GAAP. While our non-GAAP financial measures and other business metrics are an important tool for financial and operational decision-making and for evaluating our own operating results over different periods of time, we urge investors to review the reconciliation of these financial measures to the comparable GAAP financial measures included below, and not to rely on any single financial measure to evaluate our business.

Reconciliations of Adjusted EBITDA and Adjusted EBITDA margin

We define Adjusted EBITDA as net loss, adjusted to exclude unusual or non-recurring items, non-cash items and other items that are not indicative of ongoing operations (including stock-based compensation expenses, loss on extinguishment of debt and the fair value adjustment of derivative liabilities). We define Adjusted EBITDA margin as Adjusted EBITDA divided by revenue. Adjusted EBITDA and Adjusted EBITDA margin are frequently used by management, research analysts, investors and other interested parties to evaluate companies. Adjusted EBITDA and Adjusted EBITDA margin are not based on any comprehensive set of accounting rules or principles and should not be considered a substitute for, or superior to, net loss or net loss margin, the most directly comparable GAAP financial measures, and may be different from similarly titled non-GAAP financial measures used by other companies.

(1) We add back expenses that are related to transactions that occurred during the period that are expected to be non-recurring, including mergers and acquisitions and financings. Generally these expenses are included within selling, general and administrative expense in the statement of operations. For the three months ended March 31, 2022, such transactions comprised of the Business Combination, the sale of the PIPE shares and the sale of the Series Z Preferred Stock shares.

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