Release Date: February 13, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Tucows Inc (NASDAQ:TCX) reported its fourth consecutive year of consolidated revenue growth, with a 19% year-over-year gross profit expansion.
• The company more than doubled its annual adjusted EBITDA to just under $35 million, representing a 126% increase from the previous year.
• Tucows Inc (NASDAQ:TCX) successfully moved Ting to a sustainable cost structure, generating slightly positive adjusted EBITDA for December.
• The company repaid $16.5 million on its syndicated bank loan in 2024, demonstrating financial discipline.
• Tucows Inc (NASDAQ:TCX) authorized a buyback program for 2025 for up to $40 million in stock, indicating confidence in its financial health.

Negative Points

• Tucows Inc (NASDAQ:TCX) reported a net loss of $45.3 million, primarily due to a one-time impairment and restructuring charge related to Ting's capital efficiency plan.
• The company experienced a decline in transactions for its domain services, with a slight decrease of just under 1% from Q4 of 2023.
• Wavelow's Q4 revenue was down 1.9% from Q3, indicating some volatility in quarterly performance.
• Ting's adjusted EBITDA showed a loss of $1.5 million in Q4, although this was an improvement from the previous year.
• The company faces headwinds in its domains business due to general Google search trends and the impact of a customer acquisition in 2023.

Q & A Highlights

• Warning! GuruFocus has detected 7 Warning Signs with TCX.

Q: Can you provide an overview of Tucows Inc's financial performance for 2024? A: Eliot Noss, President and CEO, highlighted that 2024 marked the fourth consecutive year of consolidated revenue growth, with a 19% year-over-year gross profit expansion. The company more than doubled its annual adjusted EBITDA to just under $35 million. Excluding Ting, adjusted EBITDA was $57.4 million, at the top end of guidance. Tucows also repaid $16.5 million on its syndicated bank loan in 2024.

Q: How did the Domains segment perform in Q4 2024? A: Dave Warwick, CEO of Tua Domains, reported that the Domains segment saw revenue growth of 6% year-over-year to $65.7 million in Q4. The gross margin increased by 8% to $20.3 million, and adjusted EBITDA rose by 8% to $11.6 million. The segment maintained a steady domain management and renewal rate, with a focus on adjacent revenue opportunities and new products.

Q: What were the key achievements for Wavelow in 2024? A: Justin Riley, CEO of Wavelow, stated that 2024 was the best year yet for Wavelow, with revenue reaching $39.9 million, up from $38.7 million in 2023. Gross margin increased to $38.6 million, and adjusted EBITDA was $13.8 million, outperforming guidance. Wavelow renewed its partnership with EcoStar's Boost Mobile and added three new customers, focusing on growth and profitability.

Q: What is the current status and future outlook for Ting? A: Eliot Noss explained that Ting reported a 14% increase in revenue year-over-year to $15.7 million in Q4, driven by a 17% increase in subscribers. Ting's gross margin rose by 40% to $11 million, and adjusted EBITDA showed improvement, with a slight positive in December. The focus is on increasing penetration and ARPU, with plans to modernize marketing efforts.

Q: What are the financial highlights and strategic focus for 2025? A: Ivan Ivanov, CFO, provided guidance for 2025, with a consolidated adjusted EBITDA target of $56 million, up 75% over 2024. The focus will be on growth, efficiency, and financial discipline across all business units. Tucows plans to leverage AI for business process efficiency and aims to continue generating cash, reducing debt, and optimizing operations for long-term shareholder value.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.