Q3 2023 Tucows Inc Earnings Call - Pre-Recorded

Speaker 1: environment.

Speaker 2: The balance of the impact is split between factors I've also spoken about previously. Deferred revenue and price increases working their way through our account.

The balance of the impact is split between factors Ive also spoken about previously.

<unk> revenue and price increases working their way through our accounting.

These continued to affect our results in Q2, but I don't expect those impacts to be meaningful beyond this quarter.

Speaker 2: These continue to affect our results in Q2, but I don't expect those impacts to be meaningful beyond this quarter.

Speaker 2: To put this in context, and as I discussed at our investor day in May, our core domain business, excluding both aftermarket and periodic portfolio sales, remains healthy, with build gross margin consistent year over year in line with transaction levels and expectations.

To put this in context and as I discussed at our Investor day in May our core domain business, excluding both aftermarket and periodic portfolio sales remains healthy with billed gross margin consistent year over year in line with transaction levels and expectations.

Looking at the channel segments of our business and our wholesale channel revenue for Q2 was down 2% from the second quarter of last year and gross margin down 9%.

Speaker 2: Looking at the channel segments of our business and our wholesale channel, revenue for Q2 was down 2% from the second quarter of last year and gross margin down 9%.

Speaker 2: Within the wholesale channel, the main services gross margin was down 5% from the same period last year, while value-added services gross margin was down 16%.

Within the wholesale channel domain services gross margin was down 5% from the same period last year, while value added services gross margin was down 16%.

Speaker 2: Most of the impact on both revenue and margin are due to weaker sales and the aftermarket for domain sales, which I mentioned earlier.

Or the impact on both revenue and margin are due to weaker sales in the aftermarket for domain sales, which I mentioned earlier.

Speaker 2: In our retail channel, revenue was flat year over year and gross margin. Net the one-time accounting adjustment was up 2% year over.

In our retail channel revenue was flat year over year and gross margin not the one time accounting adjustment was up 2% year over year.

Speaker 2: and are combined overall renewal rate at 79% in Q2 across all two cows domains brands. Remains within our historical range and well above the industry average.

And our combined overall renewal rate at 79% in Q2 across all <unk> domains brands remains within our historical range and well above the industry average.

Speaker 2: As I talked about in the last couple of quarters and shared in more detail on investor day, we continue to develop new services to complement our core business and leverage our distribution channels. I look forward to sharing more.

As I talked about in the last couple of quarters and shared in more detail on Investor Day, We continue to develop new services to complement our core business and leverage our distribution channels.

Look forward to sharing more later this year.

Speaker 2: But as I mentioned previously, you should not expect to see any contribution to gross margin or impact on operating expenses in 2020.

But as I mentioned previously you should not expect to see any contribution to gross margin our impact on operating expenses in 2023.

Speaker 3: and will continue our focus on maintaining margin, including careful management of expenses in support of adjusted EBITDA. Now, over to Justin Riley, CEO of Wavela. Thanks, Dave. Wavela wrapped Q2 with its strongest quarter since inception, as migrations continue to move at a rapid...

And we will continue our focus on maintaining margin, including careful management of expenses in support of adjusted EBITDA.

Now over to Justin Reilly CEO of wavelength. Thanks, Dave wave low Rep Q2, with its strongest quarter since inception as migrations continue to move at a rapid pace.

Speaker 3: At its peak, we were migrating subscribers at a volume north of 200,000 per night. The fastest telecom migration in my career and the fastest that anyone we can talk to has

At its peak, we were migrating subscribers at a volume north of 200000 per night, the fastest telecom migration in my career and the fastest that any one we can talk to has seen.

Remember the two hardest parts of any customer engagement, our migrations and network integration. This.

Speaker 3: Remember, the two hardest parts of any customer engagement are migrations and networking.

Speaker 3: This is a key milestone that creates the muscle memory we need for future cuts.

This is a key milestone that creates the muscle memory, we need for future customers.

Speaker 3: I'm pleased to share that we finished the migration and closed the quarter with more than 8 million subscribers on the Wave-Low platform. Nearly doubling where we were at the end of Q1.

I am pleased to share that we finish the migration and closed the quarter with more than 8 million subscribers on the Weibo platform nearly doubling where we were at the end of Q1.

Speaker 3: Wave Low's revenue was $10.8 million in Q2, an increase of 20% from $9 million in Q2 of 2022, and an increase of 47% from $7.3 million last quarter.

<unk> revenue was $10 8 million in Q2, an increase of 20% from $9 million in Q2 of 2022, and an increase of 47% from $7 3 million last quarter.

Speaker 3: Wave lows gross margin increased by 27% to 10 million this quarter from 7.9 million for Q2 2020.

<unk> gross margin increased by 27% to $10 million this quarter from $7 9 million for Q2 2022.

Adjusted EBITDA for wave LOE was $3 4 million a decrease of 11, 5% from $3 9 million in Q2 of 2022, and an increase from zero point $3 million in Q1 the.

Speaker 3: Adjusted EBITF for WaveLow was 3.4 million, a decrease of 11.5% from 3.9 million in Q2 of 2022, and an increase from 0.3 million in Q1.

Speaker 3: The decrease in adjusted EBITDA year-over-year was largely due to the contra revenue impact from the unwinding contract asset from the disagreement, which as a reminder, will continue to unwind as contra revenue over the term of the contract, which ends in 2024 and then moves months to

The decrease in adjusted EBITDA year over year was largely due to a contra revenue impact from the unwinding contract asset from the dish agreement, which as a reminder, we will continue to unwind as contra revenue over the term of the contract which ends in 2024, and then moves month to month.

Speaker 3: The non-tash impact of the contract asset change was a negative 0.7 million this quarter versus a positive 5.6 million in Q2 of last year. Adjusting for these, EBITDA actually grew 5.9 million year-over-

The noncash impact of the contract asset change was a negative 0.7 million this quarter versus a positive $5 6 million in Q2 of last year.

Adjusting for these EBITDA actually grew $5 9 million year over year.

Speaker 3: To a lesser degree, another impact year over year is that we are capitalizing less labor in 2023 versus 2022. Given our major push to build the core features of the platform for DISH has largely concluded. And the team is now more focused on platform maintenance and optimizing operations, which results in lower labor capitalization and higher up.

To a lesser degree another impact year over year is that we are capitalizing less labor in 2023 versus 2022, given our major push to build the core features of the platform for dish has largely concluded and the team is now more focused on platform maintenance and optimizing operations, which results in <unk>.

Sure labor capitalization and higher Opex.

Speaker 3: We're also pleased to report that Ting Internet's website, ordering, provisioning, and subscriber management have been migrated to the Wayflow platform. The collaboration with Ting created a robust platform for Internet service providers, and we're excited to see the impacts to the Ting Operator.

We're also pleased to report that Ting Internet website ordering provisioning and subscriber management have been migrated to the wavelet platform. The collaboration with team created a robust platform for Internet service providers and we're excited to see the impacts to the Ting operation.

Speaker 3: You can take a look at the interface for customers at Ting.com.

Take a look at the interface for customers at <unk> Dot com.

On the pipeline, we're seeing growing interest in the wave low platform with new potential logos entering the pipeline. Each month. This is bolstered by tailwind from dissatisfaction with existing providers accelerated cloud transformation and the uptick in infrastructure investment globally.

Speaker 3: on the pipeline. We are seeing growing interest in the WaveLow platform with new potential logos entering the pipeline each month. This is bolstered by tailwinds from dissatisfaction with existing providers, accelerated cloud transformation and the uptick in infrastructure investment globally. While we entered the market knowing customers were dissatisfied, we hadn't anticipated seeing these levels of dissatisfaction.

We entered the market knowing customers were dissatisfied we hadn't anticipated seeing these levels of dissatisfaction.

Speaker 3: We are also seeing a consistent theme of OSS-BSS providers marketing language being far removed from pl-

We are also seeing a consistent theme of Oss BSS providers marketing language being far removed from platform realities simply saying cloud native into the void does not make it so.

Speaker 3: Simply saying cloud native into the void does not make it.

Further we are educating telecoms on the efficiency and long term value of moving from large professional services engagements to monthly subscriber fees.

Speaker 3: Further, we are educating telecoms on the efficiency and long-term value of moving from large professional services engagement to monthly subscribers.

Speaker 3: Something operators have done in other parts of their stack, such as content management or payments, but haven't yet done so at scale here. Cloud transformation globally remains below 10%. While this takes time, the shift is inevitable, and I'm encouraged by our go-to-market teams progress in the first half of the year. And pleased with the foundation we are setting as the industry shifts over the coming years. We are both early and right on time. Thanks for listening and now over to Elliot.

The operators have done in other parts of their stack, such as content management or payments, but haven't yet done so at scale here.

Cloud transformation globally remains below 10%. While this takes time to shift is inevitable and I'm encouraged by our go to market teams progress in the first half of the year and pleased with the foundation, we are setting as the industry shifts over the coming years, we are both early and right on time. Thanks.

Thanks for listening and now over to Elliot Thanks, Justin.

Speaker 4: Ting continued with robust network construction and activation numbers in the second quarter. Total serviceable addresses for Ting owned infrastructure came in at 109,300, up 28% year over year, and partner addresses at 21,100, up almost 16% year over year, taking us to 130,400 total serviceable ads.

Ting continued with robust network construction and activation numbers in the second quarter total.

Total serviceable addresses for Tina owned infrastructure came in at 109300 up 28% year over year and partner addresses at 21100 up almost 16% year over year, taking us to 130400 total serviceable.

Dresses.

Speaker 4: With the migration to Wabelo, there was a small restating of serviceable address counts with 839 owned and partner infrastructure addresses removed after reconciling dates.

With the migration to waive low there was a small restating of serviceable address counts with 839 owned and partner infrastructure addresses removed after reconciling data.

Speaker 4: Our fiber cap X was down slightly from previous quarters at 21.8 million for Q2. This is not a reflection of the construction completed, where we set records in this quarter for network footage. But is due to the mix of construction in this quarter being more in lower unit cost areas.

Fiber capex was down slightly from previous quarters at $21 8 million for Q2. This is not a reflection of the construction completed where we set records this quarter for network footage, but is due to the mix of construction this quarter being more in lower unit cost areas.

Speaker 4: We added 1900 net subscribers in Q2, taking us over 38,600 in total. Our total subscribers have grown over 27% year over year, and we expect that growth will continue, as we had a large number of serviceable addresses become available late in the quarter with a healthy pre-order pipeline to generate new subscriber ins.

We added 900 net subscribers in Q2, taking us over 38600 in total our total subscribers have grown over 27% year over year, and we expect that growth will continue as we had a large number of serviceable addresses become available late in the quarter with a healthy preorder pipeline.

To generate new subscriber installs.

Speaker 4: Gross margin grew by 22% year over the year to 7.1 million. Kings revenue grew 21% year over year to 12.4 million.

Most margin grew by 22% year over year to $7 1 million.

<unk> revenue grew 21% year over year to $12 4 million.

Speaker 4: Construction progress continues in both our own and partner footprints. Our partner market of Colorado Springs is now live with beta cost.

Construction progress continues in both our owned and partner footprints our partner market of Colorado Springs is now live with beta customers with new installs progressing and an official lighting ceremony in mid August.

Speaker 4: with new installs progressing and an official lighting ceremony in mid-August.

Speaker 4: We will also add small peripheral markets where appropriate to our regional network footprints, which you'll see an increased total potential service of blood addresses for those foot.

We will also add small peripheral markets, where appropriate to our regional network footprint, which youll see an increased total potential serviceable addresses for those footprints.

Speaker 4: importantly, there's a lot happening in the partner space. A number of significant pools of capital have now made bold and

Importantly, there is a lot happening in the partner space a number of significant pools of capital have now made bold entries here I refer to Blackrock with Giga power Meridian, a large French infrastructure, investor and Brookfield with their intrepid networks investment and more.

Speaker 4: Here I refer to BlackRock with Gigapower, Meridium, a large French infrastructure investor, and Brookfield with their intrepid networks investment, and more. There are, however, very few ISPs like Ting that view operating an ISP as quite separate from building and financing a network.

There are however, very few Isps like thing that view operating in ISP as quite separate for building and financing and network.

Speaker 4: This imbalance provides opportunity. These infrastructure investors are quite disciplined, so we do not expect this supply-demand imbalance to create bargains. We do, however, believe that it will present opportunity.

This imbalance provides opportunity these infrastructure investors are quite disciplined so we do not expect the supply demand imbalance to create bargains. We do however believe that it will present opportunities.

Speaker 4: We expect this to be an important dynamic in the next phase of the coaxe the fiber transition.

We expect this to be an important dynamic in the next phase of the coax or fiber transition.

Speaker 4: And lastly, we migrated to ordering, billing and provisioning, and address and schedule management to the WaveLow platform. In many ways, this is typical of the two cows playbook of using modern software to elevate the customer experience and to make the lives of both customers and employees who have to service those customers better and more efficient.

And lastly, we migrated Sig ordering billing and provisioning and the address and schedule management to the wave low platform in many ways. This is typical of the <unk> playbook of using modern software to elevate the customer experience.

And to make the lives of both customers and employees, who have to service those customers better and more efficient.

Speaker 4: Every element of this new platform will transform our operations, delivering an even more seamless and convenient experience. We invite you to see this in action on our website at ting.com.

Elements of this new platform will transform our operations delivering an even more seamless and convenient experience. We invite you to see this in action on our website at <unk> Dot com.

Speaker 4: We continue to build well, load the network well, and to improve operations.

We continue to build well load the network well and to improve operations as we look around US we are starting to see other sweat a bit with the challenges of building a network and operating in ISP.

Speaker 5: As we look around us, we are starting to see other sweat of it with the challenges of building a network and operating an ISP. We are clearly now into the execution period of this industry, which is just where we like to be. And now I'd like to turn the call over to Dave Singh for a deeper dive on our financial results. Thanks, Elliot. Total revenue for the second quarter of 2023 increased 2.2% to 85 million from a 3.1 million indicator earnings in which costs the area is 10% fixed

We are clearly now into the execution period of this industry, which is just where we like to be.

And now I'd like to turn the call over to Dave Singh for a deeper dive on our financial results. Thanks Elliot total revenue for the second quarter of 2023 increased two 3% to $85 million coming through from $1 million over the second quarter of 2022.

Speaker 5: Ting had revenue gains of 21% year over year, increased to the 12.4 million in Q2 of 2023, from 10.2 million in Q2 of 2022.

<unk> had revenue gains of 21% year over year increase of $12 4 million in Q2 of 2023 from $10 2 million in Q2 of 2022.

Speaker 5: Way those revenues also increased 20% to 1028 million in Q2 or 2023, from 9 million in Q2 or 2022. The gains were offset by a decline of 2% in revenue from 2000 means year-over-year, from 61 million in Q1, 2022 to 60 million in Q1 or 2023, mainly due to a lower contribution from expiry after market sales.

Weibo's revenues also increased 20% to $10 8 million in Q2 of 2029.

$9 million in Q2 of 2022.

The gains were offset by a decline of 2% in revenue from 2000 Eighteen's year over year from $61 million in Q1, 2022 6 million in Q1 2020, mainly.

Mainly due to a lower contribution from expiring aftermarket sales.

Speaker 5: There was also a decline in corporate segment revenues of 34% year over year from $2.8 million in Q2 or 2022 to $1.9 million in Q2, 2023. Third primarily by lower revenues from legacy mobile subscribers and higher into company elimination.

There is also a decline in corporate segment revenues of 34% year over year from $2 8 million in Q2 of 2022 to $1 9 million in Q2 2020.

Primarily by lower revenues from legacy mobile subscribers and higher intercompany eliminations.

Speaker 5: Gross profit before network costs for the second quarter increased 1.2 percent year-over-year to $34.2 million from $33.8 million. As a percentage of revenue, gross profit before network costs this quarter remained flat compared to prior year at 40 percent.

Gross profit before network costs for the second quarter increased one 2% year over year to $34 2 million compared to $3 8 million.

<unk> revenue gross profit before network costs this quarter remained flat compared to prior year at 40%.

Speaker 5: breaking down gross profit by business, two thousand domains gross profit for the second quarter of 2023 decreased 10.2% from Q2 last year to 17.9 million from 20 million.

<unk> gross profit by business 2000 remains gross profit for the second quarter of 2023 decreased 10, 2% from Q2 of last year to $17 $9 million and $20 million.

Speaker 5: as the presence of revenue, gross margin for two thousand of the main, looked down to 30% for Q2 or 2023, for better 32% due to 2022, mainly a result of weak expiry after market revenues, but also we're still seeing the impact of the year evaluation to the US dollar in 2022, which increased our cost of buying domains in US dollars that were sold to customers in Europe .

As a percentage of revenue gross margin for 2000 was down to 30% for Q2 of 2020 compared to 32% in Q2 of 2022, mainly a result of weak expiring aftermarket revenues, but also we're still seeing the impact of the euro devaluation to the U S. Dollar in 2022, which increased our cost of buying domains in U S dollars the results.

Customers in euros, the price increases we implemented in the latter half of 2022 will take a few quarters of names are renewed at higher prices and the effects flow stream the total process.

Speaker 5: The price increases we implemented in the latter half of 2022 will take a few quarters as names are renewed at the higher prices and the effect flows through the digital process.

Speaker 5: Wavis' first profit increased by 27% to 10 million in this quarter from 7.9 million for Q2 2022. As the percentage of revenue goes margin for Wavis was a robust 93.5% for this quarter, which is up from 88.2% in Q2 last year.

<unk> gross profit increased by 27% to $10 million this quarter from $7 9 million for Q2 2022.

As a percentage of revenue gross margin for waiver was a robust 92, 5% this quarter, which is up from 88, 2% in Q2 of last year.

Speaker 5: Tingo's process for Q2 increased 22% year over year to 7.1 million 1.5.8 million for the same period of last year.

<unk> gross profit for Q2 increased to 22% year over year to $7 1 million from $5 8 million for the same period of last year.

Speaker 5: As the percentage around you goes margin for 10, was at 57% in the second quarter of 2023, I'm changing from Q2 to the last year.

As a percentage of revenue gross margin for Ting was a 57% in the second quarter of 2023 unchanged from Q2 of last year net.

Speaker 5: Networking expenses for Q2 increased 38% to 16.2 million from 11.7 million for the same period of last year. The increase continues to be driven by higher depreciation of expanding fiber network gases up 30% year-over-year.

Network expenses for Q2 increased 38% to $16 2 million from $11 7 million for the same period of last year. The increase continues to be driven by higher depreciation our expanding fiber network assets up 32% year over year.

Speaker 5: Total operating expenses for the second quarter of 2023 increased 17.5% to 31.1 million from 26.5 million for the same period last year. The increases from the result of the following. People cost for up 3.2 million with increased workforce costs to support business expansion, religious growth obtained and way below. Sales and marketing expenses increased by 0.8 million year earlier, mainly driven by increased investments in the pink insurance business expansion.

Total operating expenses for the second quarter of 2023 increased 17, 5% to $31 1 million from $26 4 million the same period last year the.

The increase was primarily the result of the following people costs were up $3 $2 million within Chris workforce cost to support business sequentially relates to the growth of Ting and wavelength.

Marketing expenses increased by <unk> 8 million year over year, mainly driven by increased investments in the insurance business expansion.

Speaker 5: facility and third party contracting and support costs were up to $2 million while stock based compensation increased 0.6 million year-over-year mainly from the subsidiary grants in TING and Wainlow. Finally, loss on disposition of property equipment and amortization of intentional assets are down to $2 million from Q2 or 2022.

Facility and third party contracting and support costs were up $2 million, while stock based compensation increased <unk> 6 million year over year, mainly from our subsidiary <unk> and Weibo and finally loss on disposition of property and equipment and amortization of intangible assets are down considerably from Q2 of 2022.

Speaker 5: As the percentage of revenue, operating expenses increase at 30% for Q2 of this year, from 30% for the same period of the last year.

The percentage of revenue operating expense increased to 37% for Q2 of this year.

For the same period last year.

Speaker 5: We reported a net loss for the second quarter of 2023, 31 million or a loss of $2.86 per share. We went over the net loss of $3 million or 29 cents per share for the second quarter of 2022.

We reported a net loss for the second quarter of 2023 $31 million or a loss of $2 86 per share compared with a net loss of $3 million or 29 cents per share for the second quarter of 2022.

Speaker 5: with a non-recurring accretion of redeemable preferred shares and an associated one-time loss of $14.7 million on debt extinguishment, resulting from the early redemption of a portion of generate preferred shares.

We had a nonrecurring and accretion of redeemable preferred shares and an associated onetime loss of $14 7 million on debt extinguishment, resulting from the early redemption of a portion of generates preferred shares.

Speaker 5: The remainder of the net loss is the result of the acceleration of the construction of things fiber network and scaling up of the associated operations, network depreciation, higher stock base compensation, and higher interest expense.

The remainder of the net loss is the result of the acceleration of the construction of the <unk> fiber networks and scaling up of the associated operations network depreciation higher stock based compensation and higher interest expenses.

Speaker 5: Note our tax expense reflects on geographic myths, the tax is fair one kind of a legacy demeans business.

Our tax expense reflects our geographic mix with taxes payable in Canada on a legacy <unk> business.

Speaker 5: Adjust CiberDath for Q2 was 5.4 million, down 54% from 11.7 million for Q2 2022. That total breaks down amongst our three businesses as follows.

Adjusted EBITDA for Q2 was $5 4 million down 54% from 11 concerned one to Q2 2022 total breaks down amongst all three businesses as follows adjusted.

Speaker 5: Adjusted EBITDA for 2000 manes was 10.6 million, down 12.6% from Q2 of last year, reflecting the weaker expires stream after mark.

Adjusted EBITDA for 2000 demands was $10 6 million down 12, 6% from Q2 of last year, reflecting the weaker expiry stream aftermarket.

Speaker 5: I just needed a few way was through performing a decrease of 11.5% from 3.9 million last year. I want to remind investors that this quarter way below again recognize revenue and bundle professional services include as part of the platform services provided to dish. This recognition occurs either as the bundle hours are used or expire annually near the anniversary date of the dish contract.

Adjusted EBITDA for waiver was $3 4 million a decrease of 11, 5%.

9 million last year, I want to remind investors that this quarter wave Lou again recognize revenue on bundled professional services include as part of the platform services provider to dish. This recognition occurs either as a bundle of ours are used or expire annually.

University of the dish contract.

Speaker 5: but a similarly lumpy recognition in Q2 or 2022 and 2021. The decrease in the adjustment is how merely to use the contract asset related revenue recognition impact related to the reassessment of fixed payments in the district agreement. As a reminder, the contract asset and associate a revenue recognition vary based on the estimated relative mix of variable and fixed payments.

But similarly lumpy recognition in Q2 of 2022 and 2021 the decrease in adjusted EBITDA is primarily due to the contract asset related revenue recognition impacts related to the reassessment of fixed payments on the disagreement as a reminder, the contract asset and associated revenue recognition varies based on the estimated relative mix of variable and fixed.

<unk>.

Speaker 5: The non-cast impact on the contract asset change was a negative 0.7 million this quarter versus a positive 5.6 million last year.

A noncash impact on the contract asset change was a negative <unk> 7 million this quarter versus a positive $5 6 million last year.

Speaker 5: Adjusting for these, EBITDA actually grew 5.9 million year-rear. As of June 30, 2023, the contract asked to balance 4.6 million, and it will in line as the contract revenue over the term of the contract, which is up for renewal in Q3 of 2024.

Adjusting for these EBITDA actually grew $5 $9 million year over year.

As of June 32023, our contract asset balances $4 6 million and it will in line of the Contra revenue over the term of the contract which is up for renewal in Q3 of 2024.

Speaker 5: Adjusted even after paying was negative 10.2 million, compared with negative 6.2 million EQ2 2022. As we continue to accelerate our fiber network expression.

Adjusted EBITDA for <unk> was negative $10 2 million compared with negative $6 2 million in Q2 2022, as we continue to accelerate our fiber network expansion.

Speaker 5: And finally, the corporate category had a Justin Bieber debt of 1.7 million this quarter, a debt from 1.9 million in Q2 last year, with a decrease from the other Joe and by lower contribution from the legacy mobile base.

And finally, the corporate category had adjusted EBITDA of $1. So knowing this quarter down from $1 9 million in Q2 last year with the decrease primarily driven by lower contribution from our legacy mobile base.

Speaker 5: Turning to our balance sheet, cash and cash equivalence on the end of Q2, where 147.9 million, compared with 11.8 million at the end of the first quarter of 2023, and 6.5 million at the end of the second quarter of 2022. In addition to the 147.9 million, we have 11.7 million classified as a restricted cash as part of the asset-backed securities or ABS transaction with quarter. Of the 11.7 million, 8.4 million will fit in a trust account for the duration of the ABS note.

Turning to our balance sheet cash and cash equivalents at the end of Q2 were $147 9 million, coupled with $11 8 million at the end of the first quarter of 2023 and $6 5 million at the end of the second quarter of 2022. In addition to the $147 9 million, we had $11 7 million classified as restricted cash as part of the asset backed securities.

Our ABS transactions this quarter.

Of the $11 7 million $8 4 million will sit in a trust account for the duration of the ABS notes the.

Speaker 5: The remaining 3.3 million reflect the cash collections from the Securitized Assets and get distributed monthly as interested to the no-holders, fee-sit-third parties, and then with the remaining funds coming back to take.

The remaining $3 3 million reflect the cash collections from the securitized assets and get distributed amongst interested to the noteholders fees to third parties and then with the remaining funds coming back to Tim.

Speaker 5: Here in the corner, we had negative 1.6 million cash from operations, compared with positive 12.6 million and Q2 last year, but the decrease driven by the larger operating investment for T-5.

During the quarter, we had a negative $1 6 million in cash from operations compared with positive $12 6 million in Q2 last year with the decrease driven by the larger operating investments for Ting fiber.

Speaker 5: We invested 23.2 million in property and equipment, primarily for the accelerated buildout of the Tink Fiber Internet Network, in addition to the continued investment in the Wavel Plot Blonde. Note that number reflects the actual cash pay for capital assets in the quarter on a cash flow statement.

We invested $22 $2 million in property and equipment, primarily for the accelerated buildout of the Ting fiber Internet network. In addition to the continued investment in the Weibo platform.

That number reflects the actual cash paid for capital assets in the quarter on a cash flow statement.

Speaker 5: As mentioned earlier, we issued our first ever set of asset back securities as quarter for the TIG business. The notes were issued with a value of $230.5 million, but net proceeds of $220.5 million after taking into account the OID or original issued discount and issuance cost.

As mentioned earlier, we issued our first ever set of asset backed securities. This quarter for the Ting business. The notes were issued with a value of 235 million with net proceeds of $225 million after taking into account the OID or original issue discount and issuance costs.

Speaker 5: The notes carry a blended coupon rate of 6.88% and after taking the Campio ID an effective rate of 8.2%.

The notes carry a blended coupon rate of six 8% and after taking into account the worthy and effective rate of eight 2%.

Speaker 5: The notes are secured against most of the fiber assets including certain customer relationships of pain. Interest of approximately one point for a million is paid monthly with monthly covenant tests of annualized revenue versus interest rates.

<unk> secured against most of the fiber assets, including certain customer relationships a thing.

Interest of approximately $1 4 million is paid monthly with monthly covenant test of annualized revenue versus interest expense.

Speaker 5: In Q2, we drew another 5 million on the preferred financing, but after receiving the proceeds from the Tingsur Curitization in early May, we repaid 31 million on the preferred financing, which resulted in the loss of 14.7 million on the early debt extinguishing.

In Q2 would you another $5 million on the preferred financing, but after receiving the proceeds from the <unk> securitization in early May we repaid $31 million in preferred financing, which resulted in a loss of $14 7 million on the early debt extinguishment.

Speaker 5: I remind the cash and entertainment on the deferred debt are deferred for the first two years.

A reminder, cash interest payments from the preferred that are deferred for the first two years.

Speaker 5: I also wanted to note that on June 30, 2023 syndicated loan balance for public calculation purposes wasn't at 2.24.3 million when factoring in letters of credit and cash on hand of up to 5 million, resulting in a leverage ratio of 4.17 times. We repaid 7 million on the facility this quarter and expected to continue quarterly repayments this year.

I also wanted to note that on June 30 of 2020 through syndicated loan balance for covenant calculation purposes, whether that $224 3 million when factoring in letters of credit and cash on hand of up to $5 million, resulting in a leverage ratio of $4 107 times, we repaid $7 million on the facility this quarter and I expect to continue quarterly repayments this year.

Finally deferred revenue at the end of Q2 was $151 million unchanged from the first quarter of 2023 and up slightly from $151 million for the second quarter of last year.

Speaker 5: Finally, the third revenue at the end of Q2 was 151 million unchanged from the first quarter of 2023 and up slightly from 150.1 million for the second quarter of last year. Primarily reflecting the stabilization of the means revenue now that the pandemic impacts have normalized.

Reflecting the stabilization of domains revenue now that the pandemic impacts of normalized conclude.

Speaker 5: That concludes my remarks, and I'll now turn it back to Elliot. Thanks Dave.

Concludes my remarks, and I'll now turn it back to Elliot.

Thanks, Dave.

Speaker 4: To start, now halfway through the year, I would like to reiterate our consolidated adjusted evidence of 14 to 16 million dollars.

To start now.

Now halfway through the year I would like to reiterate our consolidated adjusted EBITDA guidance of $14 million to $16 million.

Speaker 4: It looks like two cows domains will be a little light due to weakness in the secondary market. And Wavela will be a bit stronger due to effective cost control.

It looks like <unk> domains will be a little light due to weakness in the secondary market and wave low will be a bit stronger due to effective cost control.

Speaker 4: Last quarter, I talked about our successful ABS process and the importance of us having sourced the vast majority of the capital necessary for this cycle.

Last quarter I talked about our successful ABS process and the importance of us having source the vast majority of the capital necessary for this cycle.

Speaker 4: I also shared that we had retained Goldman Sachs and Bank Street to explore further opportunities for our capital.

Also shared that we had retained Goldman Sachs and Bank Street to explore further opportunities for our capital structure.

Speaker 4: That investigation led to us maintaining the status quo.

That investigation led to us maintaining the status quo for now.

Speaker 4: that the opportunities available were more structured than we were looking.

The opportunity is available where more structured that we were looking for we are happily in a position of strength and will instead focus on execution.

Speaker 4: We are happily in a position of strength and will instead focus on execution.

Speaker 4: We are certainly informed by our view that we are operating in a unique macro environment. One with huge opportunities and significant risks.

We are certainly informed by our view that we are operating in a unique macro environment, one with huge opportunities and significant risks. This is a good time to focus on execution and be conservative.

Speaker 4: This is a good time to focus on execution and be conservative.

Speaker 4: We are also informed by what we described earlier, a number of larger partner markets needing tenants, which do not require the massive capital that organic markets.

We are also informed by what we described earlier a number of larger partner markets needing tenants, which do not require the massive capital that organic markets do for clarity.

Speaker 4: For clarity, I'm not signaling a massive change in our approach or our strategy. Rather, I'm identifying some current market opportunities that our strategy might allow us to take advantage.

Not signaling a massive change in our approach or our strategy rather of identifying some current market opportunities that our strategy might allow us to take advantage of.

Speaker 4: ProGCX, our three businesses are all in a better place than just a year ago. Domain continues to generate cash as it always has with

For <unk>, our three businesses are all at a better place than just a year ago.

Domains continues to generate cash as it always has with progress on some upside opportunities.

Speaker 4: Wave low has moved to now solidly generating cash and we only expect that trend to continue.

LOE has moved to now solidly generating cash and we only expect that trend to continue.

Speaker 4: Importantly, Ting is now at or near the low point of loss on an operating basis. And we can start to grind towards operating cash flow costs.

Importantly, <unk> is now at or near the low point of loss on an operating basis, and we could start to grind towards operating cash flow positive.

Speaker 4: At its simplest, we've gone from domains having to generate cash sufficient to invest in two businesses, one of which is extremely capital-

At its simplest we've gone from domains, having to generate cash sufficient to invested two businesses one of which is extremely capital intensive to those two businesses, becoming cash flow positive in one case and self funded and the other this means deleveraging it means executing.

Speaker 4: To those two businesses, becoming cash flow positive in one case, and self-funded in the other. This means deleveraging. It means X.

Speaker 4: We also believe there is a fair bit of dislocation in financial markets.

We also believe there is a fair bit of dislocation in financial markets right now.

Speaker 4: This is true in both public and private markets, as assets start to revalue following the end of free money and the unwinding of a number of structural elements of the last decade plus.

This is true in both public and private markets as assets start to revalue. Following the end of free money and the unwinding of a number of structural elements of the last decade plus.

Speaker 4: We are glad to be where we are this year, while this takes place rather than where we were a year ago. What I say next.

We are glad to be where we are this year. While this takes place rather than where we were a year ago.

What I say next applies to all three of our businesses. It is important while focusing on execution that we do not lose sight of the big picture.

Speaker 4: It is important while focusing on execution that we do not lose sight of the big picture.

Speaker 4: all of the massive opportunities, whether they be an AI or otherwise, and many of the challenges, make technology both more important and more complex for people.

All of the massive opportunities whether they be in AI or otherwise and many of the challenges make technology, both more important and more complex for people.

Speaker 4: Our businesses need to understand how they can help people take advantage of these massive opportunities and help them navigate the challenges that the increasing role of technology brings. Directly, as in the case of Ting or through partners in the case of two cows domains or wavering.

Our businesses need to understand how they can help people take advantage of these massive opportunities and help them navigate the challenges that the increasing role of technology brings directly as in the case of <unk> or through partners to the case of <unk> domains are wavelengths.

Speaker 4: We are at an interesting time. There is so much technological change, and in most respects, people do not have a trusted partner to help them make the most...

We're at an interesting time theres, so much technological change and in most respects people do not have a trusted partner to help them make the most of it.

Speaker 4: Technology in 2023 is like health or happy.

Technology in 2023 is like health or happiness. It is fundamental to our existence and we are often left without knowing where to turn to be supported.

Speaker 4: It is fundamental to our existence. And we are often left without knowing where to turn to be supported. That role, the role that used to be fulfilled in the early internet by dial-up ISPs has most certainly not been taken up by incumbent telecom. The incumbents are simply not in relationship with their customers. They are not trusted.

That role the role that used to be fulfilled in the early internet by Dialup Isps as most certainly not been taken up by incumbent Telecom. The incumbents are simply not in relationship with their customers. They are not trusted nor linked.

Speaker 4: Many of two cows' domains customers are. Ting is. Wave low gives incumbents a chance.

Many of <unk> customers are seeing is waived low gives incumbents have chance to be.

Speaker 4: We all thought the change ushered in by technology in the last couple of decades was massive. We are all...

We all thought the change ushered in by technology in the last couple of decades was massive.

We are only at the beginning.

Speaker 4: and all of the TCX businesses are right in the middle of that.

And all of the Tcf businesses are right in the middle of that change.

Speaker 4: And with that, I look forward to your written questions and exploring areas that interest you in greater detail. Again, please send your questions to irat2cows.com by Thursday, August 10th. And look for our recorded Q&A audio response and transcript to this call to be posted to the 2Cows website on Tuesday, August 22nd at approximately 4 p.m. Eastern time. Thank you.

And with that I look forward to your written questions and exploring areas that interest you in greater detail again. Please send your questions to IR at <unk> Dot Com by Thursday August 10th and look for a recorded Q&A audio response and transcript to this call to be posted to the <unk> website on Tuesday August 20.

At approximately four PM eastern time, thank you.