As I tweeted on November 4th, results were impressive with the company posting a 32% increase in revenue year-over-year and a small revenue increase on a sequential quarter basis despite challenging economic conditions. The company improved its gross margins to 75% when compared to the third quarter of 2008 and continued to inch closer towards achieving profitability. Even though eight out of the nine markets they operate in are EBITDA positive, it looks like it might be mid to late 2010 before the company becomes cash flow positive. Churn increased on a year-over-year basis to 1.71% but is down when compared to the previous quarter. Unfortunately ARPU (Average Revenue Per User) declined both for new and existing customers. While there is a lot to cheer about their recent results, as I mentioned in my previous blog entry titled Towerstream Catapults 40%, the catalyst that drives the stock higher from current levels will be the awarding of the grants that Towerstream has applied for under the government's $7.2 billion broadband stimulus plan.

To get further insight into Towerstream's applications, I mined the applications database on the "Broadband USA" website and found 17 grant applications by Towerstream ranging in size from $4.33 million (San Francisco) to $14.56 million (Houston, Texas).