Towerstream Reports Strong Sequential Growth in Adjusted EBITDA Profitability

"Our Smartphone Backhaul program continues to progress with the initiation of pilot trials with potential strategic revenue partners," added Mr. Thompson. "We believe that carriers will seek multiple solutions to address network capacity issues associated with exploding demand from smartphones, tablets, and other devices."

Sales and marketing expenses decreased 2% in the third quarter 2010 compared to the second quarter 2010 and decreased 7% compared to the third quarter 2009. The year-over-year improvement related to lower sales headcount which averaged 51 in the third quarter 2010 compared to 60 in the third quarter 2009. During 2009, the Company's sales and marketing strategy evolved towards the enhanced use of Internet-based marketing programs which has both increased qualified leads and enabled the Company to reduce headcount. Sales headcount includes direct sales which consists of account executives and sales managers.

Net loss increased 6% in the third quarter 2010 compared to the second quarter 2010 and decreased 35% compared to the third quarter 2009. The sequential increase during the third quarter 2010 related to a gain on business acquisition of approximately $356,000 that was recorded in the second quarter 2010. The year-over-year improvement primarily related to a 34% increase in revenues partially offset by a 17% increase in operating expenses.

Capital expenditures totaled $1.1 million for the third quarter 2010 as compared to $1.8 million for the second quarter 2010 and $1.7 million for the third quarter 2009. During the second quarter 2010, we spent $0.6 million related to the construction of a smart phone offload network in New York City.

The terms Adjusted EBITDA

The terms "Adjusted EBITDA," "Churn," "Churn rate," "ARPU," and "Market Cash Flow" are measurements used by Towerstream to monitor business performance and are not recognized measures under generally accepted accounting principles ("GAAP"). Accordingly, investors are cautioned in using or relying upon these measures as alternatives to recognized GAAP measures. Our methods of calculating these measures may differ from other issuers and, accordingly, may not be comparable to similar measures presented by other issuers.

We focus on Adjusted EBITDA as a principal indicator of the operating performance of our business. EBITDA represents net income (loss) before interest, income taxes, depreciation and amortization. We define Adjusted EBITDA as net income (loss) before interest, income taxes, depreciation and amortization expenses, excluding, when applicable, stock-based compensation, other non-operating income or expenses as well as gain or loss on (i) disposal of property and equipment, (ii) derivative instruments, and (iii) business acquisitions. Adjusted Market EBITDA also excludes corporate overhead expenses and other centralized costs. We believe that Adjusted Market EBITDA trends are insightful indicators of our markets' relative performance, and whether our markets are able to produce sufficient market cash flow to fund working capital and capital expenditure needs.

Conference call led

A conference call led by President and Chief Executive Officer, Jeff Thompson, and Chief Financial Officer, Joseph Hernon, will be held on November 4, 2010 at 5:00 p.m. ET to review our financial results and provide an update on current business developments.

Towerstream's wireless broadband solution network delivers high-speed Internet access supporting VoIP, bandwidth on demand, wireless redundancy, VPNs, disaster recovery, bundled data, and video services, and can be delivered in days. Unlike cable Internet and DSL, Towerstream connections are symmetrical, which means that the upload and download speeds are identical. This creates a more stable connection, suitable for VoIP and web hosting, as well as many other business applications. Companies utilizing multiple appliances simultaneously, such as streaming video and VoIP, can prioritize their bandwidth to secure mission-critical activities. All of Towerstream's products are backed by its Service Level Agreement (SLA) and the ability to be up and running within a week. 

The meaning of applicable federal securities laws

Certain statements contained in this press release are "forward-looking statements" within the meaning of applicable federal securities laws, including, without limitation, anything relating or referring to future financial results and plans for future business development activities, and are thus prospective. Forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified based on current expectations. Such risks and uncertainties include, without limitation, the risks and uncertainties set forth from time to time in reports filed by the Company with the Securities and Exchange Commission. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to be correct. Consequently, future events and actual results could differ materially from those set forth in, contemplated by, or underlying the forward-looking statements contained herein. The Company undertakes no obligation to correct or update any forward-looking statements, whether as a result of new information, future events or otherwise.