Q4 2024 Tucows Inc Earnings Call - Pre-recorded Q&A
<unk> fourth quarter 2024 management commentary, we have prerecorded prepared remarks regarding the quarter and outlook for the company of Tucows generated transcript of these remarks with relevant links is also available on the Companys Web site. We will begin with opening remarks from Elliot Noss, President and CEO of 2010, followed by <unk>.
Monica: Welcome to Tucows' Q4 2024 management commentary. We have pre-recorded prepared remarks regarding the Q4 and outlook for the company. A Tucows-generated transcript of these remarks with relevant links is also available on the company's website. We will begin with opening remarks from Elliot Noss, President and Chief Executive Officer of Tucows and Ting, followed by business remarks from Dave Woroch, CEO of Tucows Domains, Justin Reilly, CEO of Wavelo, Elliot Noss on Ting, Ivan Ivanov, Tucows' CFO, who will discuss our financial results in detail, and finish with closing remarks from Elliot Noss. In lieu of a live question and answer period following these remarks, shareholders, analysts, and prospective investors are invited to submit questions to Tucows Management. Please submit questions via email to ir@tucows.com until Thursday, 20 February.
Remarks from Dave work C O of Tucows domains, Justin Reilly CEO of Wavelets Elliot Noss on Ting, Ivan Ivan off to Cal CFO, who will discuss our financial results in detail and finish with closing remarks from Elliot Noss.
Speaker Change: In lieu of a live question and answer period. Following these remarks shareholders analysts and perspective investors are invited to submit questions to <unk> management. Please submit questions by E mail to IR at <unk> Dot Com until Thursday February 20th management will either address your questions directly or provide a recorded Audi.
Monica: Management will either address your questions directly or provide a recorded audio response and transcript that will be posted to the Tucows website on Tuesday, 4 March at approximately 5:00 PM Eastern time. We would also like to advise that the updated Tucows quarterly KPI summary, which provides key metrics for all of our businesses for the last eight quarters, as well as for full years 2022, 2023, and 2024, and also includes historical financial results, is available in the investors section of the website. The updated Ting Build Scorecard and investor presentation are also available. Now for management's prepared remarks. On Thursday, 13 February, Tucows issued a news release reporting its financial results for Q4 and year ended 31 December 2024. That news release and the company's financial statements are available on the company's website at tucows.com under the investors section.
Speaker Change: Our response and transcript that will be posted to the Tucows website on Tuesday March 4th at approximately five P M Eastern time.
Speaker Change: We would also like to advise that the updated to cause quarterly Kpis summary, which provides key metrics for all of our businesses for the last eight quarters as well as for full year 2022, 2023, and 2024 and also includes historical financial results is available in the investors section of the website the <unk>.
Speaker Change: Dated Tingled scorecard and Investor presentation are also available now.
Speaker Change: Now for managements prepared remarks on Thursday February 13th <unk> issued a news release reporting its financial results for the fourth quarter and year ended December 31 2020 for.
Speaker Change: That news release and the company's financial statements are available on the Companys website at Tucows Dot com under the investors section.
Speaker Change: Please note. The following discussion may include forward looking statements, which are subject to risks and uncertainties that could cause actual results to differ materially.
Monica: Please note, the following discussion may include forward-looking statements, which are subject to risks and uncertainties that could cause actual results to differ materially. These risk factors are described in detail in the company's documents filed with the SEC, specifically the most recent reports on the forms 10-K and 10-Q. The company urges you to read its security filings for a full description of the risk factors applicable to its business. I would now like to turn the call over to Tucows President and Chief Executive Officer, Elliot Noss. Go ahead, Elliot.
Speaker Change: These risk factors are described in detail in the company's documents filed with the SEC specifically the most recent reports on the forms 10-K and 10-Q. The company urges you to read its security filings for a full description of the risk factors applicable to its business.
Elliot Noss: I would now like to turn the call over to <unk>, President and Chief Executive Officer Elliot Noss.
Elliot Noss: Go ahead Elliot. Thanks, Monica, we ended the year with strong momentum across all of our businesses.
Elliot Noss: Thanks, Monica. We ended the year with strong momentum across all of our businesses. 2024 marks our fourth consecutive year of consolidated revenue growth, 19% year-over-year gross profit expansion, and more than doubling our annual adjusted EBITDA to a touch under $35 million. Excluding Ting, we had adjusted EBITDA of $57.4 million out the top end of our guidance. The $34.9 million in EBITDA represented a 126% increase from $15.5 million in 2023. Most importantly, we have moved Ting to a sustainable cost structure, which generated slightly positive adjusted EBITDA for the month of December. We repaid a further $2 million on the balance of the syndicated bank loan in Q4, which takes us to $16.5 million paid down in 2024. As we do every year, we've authorized a buyback program for 2025 for up to $40 million in Tucows stock.
Elliot Noss: 1024 marks our fourth consecutive year of consolidated revenue growth.
Elliot Noss: 19% year over year gross profit expansion and more than doubling our annual adjusted EBITDA to a touch under 35 billion.
Elliot Noss: Excluding <unk>, we had adjusted EBITDA of $57 $4 million out the top end of our guidance.
Elliot Noss: The $34 9 million at EBITDA represented 126% increase from $15 5 million in 2023.
Elliot Noss: Most importantly, we have moved to a sustainable cost structure, which generated slightly positive adjusted EBITDA for the month of December.
Elliot Noss: We repaid a further $2 million on the balance of the syndicated bank loan in Q4, which takes us to $16 5 million paid down in 2024.
Elliot Noss: As we do every year, we have authorized a buyback program for 2025 for up to $40 million to stock.
Elliot Noss: A reminder, that we do this whether or not we could foresee using it at the time, we do the authorization.
Elliot Noss: A reminder that we do this whether or not we could foresee using it at the time we do the authorization. I'll now turn the call over to Dave Woroch, CEO of Tucows Domains.
Dave Warwick: I'll now turn the call over to Dave Warwick CEO of two cows debates.
Elliot Noss: Thanks Elliot.
Elliot Noss: As we close out the year I am pleased to report the two guys domains grew revenue gross margin and adjusted EBITDA in each successive quarter of 2024.
Dave Woroch: Thanks, Elliot. As we close out the year, I'm pleased to report that Tucows Domains grew revenue, gross margin, and adjusted EBITDA in each successive quarter of 2024. This follows a similar performance in 2023. February also marks the 25th anniversary of Tucows Domains business from our launch of OpenSRS in early 2000. Today, our core business remains strong and resilient, built over many years and with a long-term strategic view. From the beginning, we prioritized strong customer relationships and disciplined cost management to drive sustainable profitability. We're now building on that solid foundation and taking the greatest assets that this business has, its subject matter expertise, and massive distribution channel, and creating exciting future paths for growth. Now turning to the recent quarter.
Elliot Noss: This follows a similar performance in 2023.
Elliot Noss: February also marks the 25th anniversary of <unk> domain business from our launch of open Srs in early 2000.
Elliot Noss: Today, our core business remains strong and resilient built over many years and with a long term strategic view.
Elliot Noss: From the beginning we prioritized strong customer relationships and disciplined cost management to drive sustainable profitability.
Elliot Noss: We're now building on that solid foundation and taking the greatest assets that this business has its subject matter expertise and massive distribution channels and.
Elliot Noss: And creating exciting future paths for growth.
Elliot Noss: Now turning to the recent quarter revenue for domain services for Q4 was $65 $7 million.
Dave Woroch: Revenue for domain services for Q4 was $65.7 million, up 6% from $61.8 million for the same quarter last year, and up 5% for the full year 2024 compared to 2023. Gross margin was $20.3 million in Q4, up 8% from the same quarter last year and up 7% for the full year. Domain services adjusted EBITDA was $11.6 million in Q4, up 8% from Q4 of last year and up 4% for the full year. Our domains under management held steady and were flat both year-over-year and quarter-over-quarter, while transactions were down just under 1% from Q4 of 2023. Both measures represent solid performance within our industry. As I've said before, domain registration is a mature business and revenue growth for us is going to come from adjacent revenue opportunities like our registry services business as well as new products we're bringing to market.
Up 6% from $61 8 million for the same quarter last year and up 5% for the full year 2024 compared to 2023.
Elliot Noss: Gross margin was $23 million in Q4 up 8% from the same quarter last year and up 7% for the full year.
Elliot Noss: And domain services adjusted EBITDA was $11 6 million in the fourth quarter up 8% from Q4 of last year and up 4% for the full year, our domains under management held steady and were flat both year over year and quarter over quarter, while transactions were down just under 1%.
Elliot Noss: From Q4 of 2023.
Elliot Noss: Both measures represent solid performance within our industry.
Elliot Noss: And as I've said before domain registration as a mature business and revenue growth for us is going to come from adjacent revenue opportunities like our registry services business as well as new products, we're bringing to market.
Elliot Noss: Looking at the results from the segments of our business and our wholesale channel revenue for Q4 was $56 million of.
Dave Woroch: Looking at the results from the segments of our business, in our wholesale channel, revenue for Q4 was $56 million. Up 7% compared to $52.5 million for Q4 of last year, and gross margin was $15 million, up 10% from $13.6 million from Q4 of 2023. Within the wholesale channel, domain services gross margin in Q4 of this year was unchanged from last year at $9.9 million. Value-added services gross margin for Q4 of this year was up 36% year over year to $5 million, with the increase driven primarily by strong non-recurring sales from our expiry stream and to a lesser extent, from our hosted email service. In our retail channel, revenue for Q4 was $9.6 million, up 3% from $9.3 million in Q4 of last year. Retail gross margin for Q4 was also up 3% year over year.
Elliot Noss: Up 7% compared to $52 5 million for Q4 of last year and gross margin was $15 million up 10% from $13 6 million from Q4 of 2023.
Elliot Noss: Within the wholesale channel.
Elliot Noss: Services gross margin in Q4 of this year was unchanged from last year at $9 9 million.
Elliot Noss: Value added services gross margin for Q4 of this year was up 36% year over year to $5 million.
Elliot Noss: With the increase driven primarily by strong nonrecurring sales from our expiry stream and.
Elliot Noss: And to a lesser extent from our hosted email service.
Elliot Noss: In our retail channel revenue for Q4 was $9 6 million up 3% from $9 3 million in Q4 of last year.
Elliot Noss: Retail gross margin for the fourth quarter was also up 3% year over year.
Elliot Noss: Our combined overall renewal rate at 76% in both Q4 and for the full year across all <unk> domains brands remains within our historical range and above the industry average.
Dave Woroch: Our combined overall renewal rate at 76% in both Q4 and for the full year across all Tucows Domains brands remains within our historical range and above the industry average. Our results for Q4 and the full year 2024 show a healthy core business in a mature industry. We'll continue to focus on running that business efficiently. Further to the growth opportunities, earlier this year, in partnership with Amazon's AWS business, we previewed a cloud-based hosting solution designed to meet the needs of the thousands of smaller resellers within our distribution channel.
Elliot Noss: Our results for Q4, and the full year 2024 show a healthy core business in a mature industry.
Elliot Noss: We'll continue to focus on running that business efficiently.
Elliot Noss: Further to the growth opportunities earlier this year in partnership with Amazon's AWS business, we previewed a cloud based hosting solution designed to meet the needs of the thousands of smaller resellers within our distribution channel.
Elliot Noss: This solution enables digital agencies web designers and developers and smaller hosting providers to leverage cloud based hosting without developing and building out the integration to AWS themselves.
Dave Woroch: This solution enables digital agencies, web designers and developers, and smaller hosting providers to leverage cloud-based hosting without developing and building out the integration to AWS themselves, and it reduces the barriers to entry in the same way that the OpenSRS platform 25 years ago enabled ISPs and web hosts to register domains for their customers without becoming an accredited registrar. Building on our ongoing success in registry services, we continue to leverage the technology acquired through the UNR acquisition to grow customers and revenue. As a testament to our capabilities, Tucows Domains was recently selected to be the technical services provider for the .in country code domain operated by the National Internet Exchange of India. Our teams are closely collaborating and we are establishing a dedicated team in India to support this initiative.
Elliot Noss: And it reduces the barriers to entry in the same way that the open Srs platform 25 years ago enabled Isps and web hosts to register domains for their customers without becoming an accredited registrar building on our ongoing success and registry services, we continue to leave.
Elliot Noss: <unk> the technology acquired through the <unk> acquisition to grow customers and revenue.
Elliot Noss: As a testament to our capabilities to cause domain was recently selected to be the technical services provider for the Dod I N country code domain operated by the National Internet Exchange of India.
Our teams are closely collaborating and we are establishing a dedicated team in India to support this initiative as the project progresses, we anticipate migrating approximately 4 million domains onto our platform later this year, expanding our market presence and leadership in registry services.
Dave Woroch: As the project progresses, we anticipate migrating approximately 4 million domains onto our platform later this year, expanding our market presence and leadership in registry services. The pricing and margin contribution for this piece of business is typical of a large, high-volume customer. Reflecting on the past 25 years of Tucows Domains, we've achieved many milestones and built a healthy business. I'm proud of how our core business continues to reliably perform. Looking ahead, our focus on new growth initiatives is what excites us most. As the digital landscape evolves, we're where we have always been, at the forefront and ready to deliver solutions for the future of the internet. In the coming quarters, I will share further updates as we progress. I do note that the growth trajectory does not mean there will be meaningful updates each quarter.
Elliot Noss: The pricing and margin contribution for this piece of business was typical of a large high volume customer.
Elliot Noss: Reflecting on the past 25 years of <unk> domains, we've achieved many milestones and build a healthy business.
Elliot Noss: I am proud of how our core business continues to reliably perform.
Elliot Noss: Looking ahead, our focus on new growth initiatives is what excites us most.
Elliot Noss: As the digital landscape evolves. We are aware, we have always been at the forefront and ready to deliver solutions for the future of the Internet.
Elliot Noss: In the coming quarters, I will share further updates as we progress.
Elliot Noss: But I do note that the growth trajectory does not mean, there will be meaningful updates each quarter.
Elliot Noss: Selling through channels is a slow build at the beginning as product and marketing are perfect.
Dave Woroch: Selling through channels is a slow build at the beginning as product and marketing are perfected. We know good things take time, and we're in this for the long haul, steady, strategic, and building for what's next. Now over to Justin Reilly, CEO of Wavelo.
Elliot Noss: We know good things take time and we're in this for the long haul steady strategic and building for what's next.
Justin Reilly: Now over to Justin Reilly CEO of weight loss.
Justin Reilly: Thanks, Dave.
Speaker Change: As I reflect on wave Loews third year as an independent business I'm pleased with our achievements.
Justin Reilly: Thanks, Dave. As I reflect on Wavelo's third year as an independent business, I'm pleased with our achievements. Fiscal 2024 marks our best year yet across all key performance indicators. Wavelo grew revenue, gross margin, adjusted EBITDA, and new customer logos, all while renewing its inaugural customer in EchoStar's Boost Mobile. As we look at the market, only 2% of all B2B SaaS companies ever reach this level of ARR while delivering positive EBITDA and cash flow, we're just getting started. Revenue for the full year 2024 was $39.9 million, up from $38.7 million in 2023. Gross margin was $38.6 million, up from $36 million last year. Adjusted EBITDA was $13.8 million, well outperforming our guidance of $8 to $10 million and up from $10.6 million last year.
2024 marks our best year, yet across all key performance indicators wave low grew revenue gross margin adjusted EBITDA and new customer logos, all while renewing its inaugural customer and Echostar boost mobile.
Speaker Change: As we look at the market only 2% of all <unk> SaaS companies ever reach this level of IRR, while delivering positive EBITDA and cash flow and we're just getting started revenue for the full year 2024 was $39 9 million up from $38 7 million in 2023 gross margin was $38 6 million.
From $36 million last year, adjusted EBITDA was $13 8 million well outperforming our guidance of $8 million to $10 million and up from $10 6 million last year. Our performance in 2024 tells the story of our business that is learning to nicely balanced growth and profitability, while delivering for its existing customers.
Justin Reilly: Our performance in 2024 tells a story of a business that is learning to nicely balance growth and profitability while delivering for its existing customers. The latter is no more apparent than our four-year renewal of Wavelo's partnership with EchoStar's Boost Mobile. As the Boost team moves from defense to offense with the momentum of recently being awarded the best network in New York City, they looked no further than our event-driven platform to fuel their growth strategy. We couldn't be happier to support their journey as America's fourth carrier. In the quarter, Wavelo's revenues were $9.9 million, down 1.9% from Q3 and up 3.6% from Q4 2023. Gross margin was $9.4 million, down 6.5% from Q3 and up 1.7% year over year. Adjusted EBITDA for Q4 was $3.7 million, up 7.3% from Q3 and up 41.3% year over year.
Speaker Change: Ladder is no more apparent than our four year renewal of wave Lowe's partnership with Echostar is boost mobile.
Speaker Change: As the boost team moves from defense to offense with the momentum of recently being awarded the Best Network in New York City. It look no further than our event driven platform to fuel their growth strategy, we couldnt be happier to support their journey as America's fourth carrier.
Speaker Change: In the quarter Weibo's revenues were $9 9 million down one 9% from Q3 and up three 6% from Q4 2023 gross margin was $9 4 million down six 5% from Q3 and up one 7% year over year.
Speaker Change: Adjusted EBITDA for Q4 was $3 7 million up seven 3% from Q3 and up 41, 3% year over year.
Speaker Change: Trend line quarter over quarter represent some lumpiness in recognition of bundled professional services that happen annually in Q3, Onboarding and cloud costs for new logos won earlier in the year.
Justin Reilly: The trend line quarter over quarter represents some lumpiness and recognition of bundled professional services that happen annually in Q3. Onboarding and cloud costs for new logos won earlier in the year, and an increased investment in our go-to-market teams. We'll continue to invest in sales and marketing into 2025, doing so as always in a measured, thoughtful manner. On the year, we've added three new customers to the Wavelo family. These are a mix of ISPs and MVNOs who share our contempt for telecom inefficiency and dream of a customer-first catalyst for their businesses. Our latest new logo, an innovative MVNO launching later this year, chose us because, in their own words, Wavelo is great at doing impossible things. With our internet roots, these things are simply first principles approaches to solving hard problems. In telecom, they feel like magic.
Speaker Change: And an increased investment in our go to market teams will continue to invest in sales and marketing into 2025 doing so as always in a measured thoughtful manner.
Speaker Change: On the year, we've added three new customers to the wave low family. These are a mix of Isps and MBA knows who share our contempt for telecom and efficiency and dream of a customer first catalyst for their businesses, our latest new logo and innovative <unk> launching later this year chose us because in their own words wave.
Speaker Change: <unk> is great at doing impossible things with our Internet routes. These things are simply first principles approaches to solving hard problems, but in telecom they feel like magic. It is in the issue, we take with telecom and efficiency.
Justin Reilly: It is in the issue we take with telecom inefficiency and our focus on customer obsession that we win. I am pleased with the progress our go-to-market teams have made this year. Specifically in the quarter, we've seen more tier 1 and tier 2 interest than in any other quarter in Wavelo's history. Our teams are being considered for RFI and RFP procurement cycles, often without outbound sales activity. We are experiencing more organic inbound traffic and referrals than ever before. All of these are important as our sales team focuses their effort upmarket and navigates the subsequent deal complexity that's all too common in larger telecom prospects. I'll remind investors that these are the places where we can facilitate the most change for telecom customers, as the inefficiencies are frankly hard to even quantify.
Speaker Change: And our focus on customer obsession that we win.
Speaker Change: I am pleased with the progress of our go to market teams have made this year specifically in the quarter, we've seen more tier one and tier two interest than in any other quarter in wavelengths history. Our teams are being considered for RFID in RFP procurement cycles.
Without outbound sales activity, we are experiencing more organic inbound traffic and referrals than ever before.
Speaker Change: All of these are important as our sales team focuses their effort upmarket and navigates. The subsequent deal complexity, that's all too common and larger telecom prospects.
Speaker Change: I'll remind investors that these are the places where we can facilitate the most change for telecom customers as the inefficiencies are frankly hard to even quantify I will also remind investors that this is why I came to two counts from Verizon in the first place.
Justin Reilly: I will also remind investors that this is why I came to Tucows from Verizon in the first place. As we look to 2025, we enter the year with a mostly hired go-to-market team that is onboarded and hitting the ground running. We expect to grow the top line more than we did in 2024 through a mix of existing and new customer revenue. That said, I want to be clear that we'll be doing so with a small but mighty sales and marketing team that represents a much smaller spend as a percentage of revenue than our competitors. We expect to continue to invest there in service of new customer logos, and so we are providing an adjusted EBITDA guidance of $13 million. As I said in Q4 2023, SaaS companies are in the midst of a flight to quality.
Speaker Change: As we look to 2025, we entered the year with a mostly higher go to market team that is on boarded and hitting the ground running we expect to grow the top line more than we did in 2024 through a mix of existing and new customer revenue that said I want to be clear that we will be doing so with a small, but mighty sales and marketing team that.
<unk> is a much smaller spend as a percentage of revenue than our competitors. We expect to continue to invest there and service of new customer logos and so we are providing an adjusted EBIT guidance of $13 million as I said in Q4 2023 SaaS companies are in the midst of a flight to quality. This is a multiyear journey for those that are.
Justin Reilly: This is a multi-year journey for those that have been VC-backed over the last decade. Fortunately for Wavelo, its roots are grounded in the soil of a Tucows tradition of cash generation and shareholder value. This is just another day on the farm. As we look to the macro in 2025, every industry will have to contend with the generational disruption of AI. At a global market size of 3.1 trillion, telecom is the leading candidate for a historical refactoring. The most valuable data on the planet is in what products and services customers use, what they pay for those services, and what behaviors might indicate that they are about to make a change to what they use or what they are willing to pay.
Speaker Change: Ben VC backed over the last decade, Fortunately for wave low its roots are grounded in the soil of the <unk> tradition of cash generation and shareholder value.
Speaker Change: This is just another day on the farm as we look to the macro and 25 every industry will have to contend with the generational disruption of AI.
Speaker Change: And our global market size of $3. One trillion telecom is the leading candidate for a historical refactoring.
Speaker Change: The most valuable data on the planet is in what products and services customers use what they pay for those services and what behaviors might indicate that they are about to make a change to what they use or what they are willing to pay in telecom. This data sits in systems that are three and four decades old built for a different time.
Justin Reilly: In telecom, this data sits in systems that are three and four decades old, built for a different time, and inelegantly re-engineered for years on end. Fortunately, Wavelo was built for today and tomorrow. Simply running a business on an event-driven platform resets a telecom's value trajectory in this new era. If AI is a rocket, Wavelo is the jet fuel for an AI future. Thanks for listening. Now over to Elliot.
Speaker Change: And an elegantly re engineered for years on end.
Speaker Change: Fortunately wave low was built for today and tomorrow simply running our business on an event driven platform resets of telecoms value trajectory in this new era. If AI is a rocket and wavelet was the jet fuel for an AI future.
Elliot Noss: Thanks for listening and now over to Elliot Thanks, Justin as.
Elliot Noss: As we close out 2024 thing with long term shape is settled.
Elliot Noss: Thanks, Justin. As we close out 2024, Ting's long-term shape has settled. We are an ISP. In Q4, Ting reported $15.7 million in revenue, a 14% increase year over year. The growth was driven by a 17% year over year increase in subscribers, taking us to 50,700 subscribers from 43,400 in Q4 of last year. We had 10% year over year growth in completed addresses in 2024, taking us to 133,500 serviceable addresses for Ting-owned infrastructure. We remind that this will settle into a final count between 135,000 and 140,000 as we no longer engage in new construction. We're pleased to see partner markets ramp with a 53% increase in addresses year over year. This brings us to 178,800 total serviceable addresses across all Ting footprints. These numbers will grow as Memphis and Colorado Springs start to accelerate.
We are in ISP.
Elliot Noss: In Q4, <unk> reported $15 7 million in revenue, a 14% increase year over year. The growth was driven by a 17% year over year increase in subscribers, taking us to 5700 subscribers from 43400 in Q4 of last year, we had 10%.
Elliot Noss: Year over year growth in completed addresses in 2020 for taking us to 133500 serviceable addresses pertain to owned infrastructure, we remind that this will settle into a final count between 135000 and 140 <unk> as we no longer engage in new construction where plastics.
Elliot Noss: <unk> to see partner markets ramp with 53% increase in addresses year over year. This brings us to 178800 total serviceable addresses across all team footprints. These numbers will grow as Memphis, or Colorado Springs start to accelerate teen gross margin increased <unk>.
Elliot Noss: Ting gross margin increased 40% year-over-year to $11 million in Q4, as we gained efficiencies from no longer carrying excess construction capacity. Ting's adjusted EBITDA continues to trend in a positive direction with a loss of only $1.5 million in Q4, down from $12.3 million in Q4 2023. Notably, for the month of December, Ting had slightly positive adjusted EBITDA, and we expect that to continue. In 2024, we had a second failed common equity process. We went through two RIFs, and we stopped building fiber to new organic homes. No longer carrying excess construction capacity has both greatly reduced the operating loss and greatly improved the gross margin as fallow capacity would be charged to COGS. The natural loading of the networks has continued to increase customers, revenue, and margin at strong levels.
Elliot Noss: 30% year over year to 11 million in Q4, as we gained efficiencies from no longer carry excess construction capacity.
Elliot Noss: <unk> adjusted EBITDA continues to trend in a positive direction with a loss of only one 5 million in Q4 down from $12 3 million in Q4 of 2023, notably for the month of December seeing had slightly positive adjusted EBITDA and we expect that to continue in <unk>.
Elliot Noss: 24, we had a second failed common equity process, we went through two risks.
Elliot Noss: And we stopped building fiber to new organic homes.
Elliot Noss: No longer carrying excess construction capacity as both greatly reduced the operating loss and greatly improve the gross margin is fallow capacity would be charged to cogs. The natural loading of the networks is continue to increase customers revenue and margin at strong levels the work.
Elliot Noss: From here is to focus on penetration and then mostly starting later this year.
Elliot Noss: The work from here is to focus on penetration and then, mostly starting later this year, ARPU. We are in the process of rebuilding the marketing function, which is probably the function that could most benefit from AI augmentation. We have insourced the door-to-door function and have creative ideas on how to modernize an age-old practice. We have talked for years about the separation between capital, construction, and ISP. We can see in all of the market evolution of the last few years that this is the way the market is evolving. We are keenly aware of the debt load on Ting, and while it is bankruptcy remote for the rest of TCX, that does not lessen the urgency with which we look at it.
Speaker Change: We are in the process of rebuilding the marketing function, which is probably the function that could most benefit from AI augmentation.
Speaker Change: In sourced the door to door function and have creative ideas on how to modernize an age old practice.
Speaker Change: We've talked for years about the separation between capital construction and ISP.
We can see in all of the market evolution over the last few years that this is the way the market is evolving we are keenly aware of the debt load on team and while it is bankruptcy remote for the rest of <unk> that does not lessen the urgency with which we look at it loading the network and increasing ARPA.
Elliot Noss: Loading the network and increasing ARPU are the most important operating variables, and we continue to expect 2025 to be a year with a lot of change in the fiber space, and change can create opportunities. Now, we'll hear from our CFO, Ivan Ivanov, who will discuss our financial results in detail.
Speaker Change: Are the most important operating variables and we continue to expect 2025 to be a year with a lot of change in the fiber space and change and create opportunities now well hear from our CFO, Ivan <unk>, who will discuss our financial results in detail. Thank you Elliot.
Speaker Change: Thank you everyone for joining us today.
Ivan Ivanov: Thank you, Elliot, and thank you everyone for joining us today. As we close out Q4, our focus remains on growth, efficiency, and financial discipline. The progress we've made is reflected in our strong top-line performance and a significant increase in adjusted EBITDA. Our efforts, particularly in capital efficiency at Ting and the continued momentum in Tucows Domains and Wavelo, are driving meaningful results. In Q4, we delivered $93.1 million in total revenue, a 7.1% increase year over year. Gross profit was up 19% to $21.2 million as we maintained disciplined cost controls. Adjusted EBITDA grew 403% to $12.8 million, a combination of both our revenue growth and operational improvements.
Speaker Change: As we close out the fourth quarter.
Speaker Change: Our focus remains on growth efficiency and financial discipline.
Speaker Change: The progress we've made is reflected in our strong topline performance.
Speaker Change: And a significant increase in adjusted EBITDA.
Speaker Change: Our efforts, particularly in capital efficiency obtained.
Speaker Change: And the continued momentum in two calls domains and web alone.
Speaker Change: Are driving meaningful results.
Speaker Change: In Q4, we delivered $93 1 million in total revenue.
Speaker Change: A seven 1% increase year over year.
Speaker Change: Gross profit was up 19% to $21 2 million.
Speaker Change: As we maintained disciplined cost controls.
Adjusted EBITDA grew 403% to $12 8 million.
Speaker Change: Combination of both our revenue growth and operational improvements.
Speaker Change: And the net income level.
Ivan Ivanov: At the net income level, we recorded a net loss of $45.3 million, primarily due to a one-time impairment and restructuring charge of $28.2 million related to Ting Capital Efficiency Plan, as well as other impairment and transition costs of $1.3 million. When adjusting for these one-time charges, our net loss was $15.8 million, with an adjusted EPS loss of $1.43 per share. Each of our business units played a role in delivering this quarter's results, and I want to walk you through their individual performances. Starting with Tucows Domains. Domains continues to be a core driver of our financial strength. Revenue grew 6.2% year-over-year to $65.7 million, driven by expert resales and continued strength in the core business. Gross margin expanded 7.9% to $20.3 million, holding steady at 31% margin as a percent of revenues. Finally, adjusted EBITDA increased 7.8% to $11.6 million for the quarter.
Speaker Change: We reported a net loss of $45 3 million, primarily due to a onetime impairment and restructuring charge of $28 2 million, but atlantica being capital efficiency plan.
Speaker Change: As well as other impairment and transition costs of $1 2 million.
Speaker Change: When adjusting for these onetime charges, our net loss was 15 8 million weaken.
Speaker Change: And with an adjusted EPS loss of $1 43 per share.
Speaker Change: Each of our business units played a role in delivering this quarters results and I want to walk it through their individual performances star.
Speaker Change: Starting with two calls domains.
Speaker Change: Domains continues to be a core driver of our financial strength.
Speaker Change: Revenue grew six 2% year over year to $65 7 million.
Speaker Change: Driven by <unk> sales and continued strength in the core business.
Speaker Change: Gross margin expanded seven 9% to $23 million.
Speaker Change: Holding steady at 31% margin as a percent of revenues.
Speaker Change: And finally, adjusted EBITDA increased seven 8% to $11 6 million for the quarter.
Speaker Change: Domains remains a highly reliable business with strong cash generation and consistent performance.
Ivan Ivanov: Domains remains a highly reliable business with strong cash generation and consistent performance. Ting has been a major focus area, and we're seeing the results of our efforts to optimize capital efficiency while continuing to scale in our existing footprint as well as partner markets. Revenue grew 14% year over year to $15.7 million. Subscribers grew 17% year over year as we expanded in both existing and new partner markets. Ting's gross margin climbed 40% to $11 million, with an improvement in gross margin percentage from 57% to 70% this quarter. Finally, adjusted EBITDA improved significantly, moving from $12.4 million loss last year to a $1.5 million loss this quarter. The growth in adjusted EBITDA at Ting is a direct result of our disciplined approach to managing costs, streamlining operations, and maintaining ARPU stability. These are structural improvements that set the stage for continued margin expansion.
Speaker Change: <unk> has been a major focus area and we're seeing the results of our efforts to optimize capital efficiency.
Speaker Change: While continuing to scale in our existing footprint as well as part of their markets.
Speaker Change: Revenue grew 14% year over year to $15 7 million.
Speaker Change: Subscribers grew 17% year over year.
Speaker Change: As we expanded in both existing and new partner markets.
Speaker Change: Seeing some gross margin climbed 40% to $11 million.
Speaker Change: With an improvement in gross margin percentage from 57% to 70% this quarter.
Speaker Change: And finally, adjusted EBITDA improved significantly moving from $12 4 million loss last year to a $1 5 million loss this quarter.
Speaker Change: The growth in adjusted EBITDA Bank is a direct result of our disciplined approach to managing costs.
Speaker Change: <unk> operations and maintaining Arco stability.
Speaker Change: These are structural improvements that set the stage for continued margin expansion.
Speaker Change: Moving onto wave Elo.
Ivan Ivanov: Moving on to Wavelo. Wavelo continues to deliver results as it focuses on building its growth funnel. Revenue increased 3.6% to $9.9 million. Gross margin held strong at 95% of revenues, and adjusted EBITDA grew 41% to $3.7 million, highlighting our continued focus on efficiency and high-margin services. Corporate revenue remained steady at $1.8 million, and adjusted EBITDA declined to -$1.1 million for the quarter. Beyond our individual business units, we are seeing positive trends this quarter in our cash flow and balance sheet. We recorded $11.7 million in investing activities related to PP&E, primarily due to cash payments for Q3 capital expenditures, which were incurred prior to the announcement of the Ting Capital Efficiency Plan. Adjusting for these payments for Q3 expenditures, our actual PP&E additions for the quarter were $4.8 million, which better represents our ongoing quarterly capital expenditure post Ting Capital Efficiency.
Speaker Change: <unk> continues to deliver results as it focuses on building its growth funnel.
Speaker Change: Revenue increased three 6% to $9 9 million.
Speaker Change: Gross margin held strong at 95% of revenues.
Speaker Change: And adjusted EBITDA grew 41% to $3 7 million.
Speaker Change: Delighting, our continuous focus on efficiency and high margin services.
Speaker Change: Corporate revenue remained steady at one 8 million.
Speaker Change: Adjusted EBITDA declined to a negative $1 million for the quarter.
Speaker Change: Beyond our individual business units, we are seeing positive trends this quarter.
Speaker Change: In our cash flow and balance sheet.
Speaker Change: We recorded $11 7 million in investing activities related to PP&E.
Speaker Change: Primarily due to cash payments for todays Q capital expenditures.
Speaker Change: Which were incurred prior to the announcement of the tank capital efficiency plan.
Speaker Change: Adjusting for these payments for <unk> expenditures.
Speaker Change: Our actual PP&E additions for the quarter were $4 8 million, which better represents our ongoing quarterly capital expenditure.
Speaker Change: <unk> think capital efficiency.
Speaker Change: We ended the quarter with $56 9 million in cash and cash equivalents.
Ivan Ivanov: We ended the quarter with $56.9 million in cash and cash equivalents. On a net basis, our syndicated debt stands at $192.5 million, resulting in a leverage ratio of 3.26 times. Please note that this syndicated net debt excludes Ting's ABS notes and redeemable preferred units, which are reported separately on our balance sheet. Interest expense on our syndicated loan was $3.9 million, down from $5 million a year ago, as we repaid $16.5 million in principal throughout the year. A major initiative this quarter was capital efficiency at Ting, which resulted in a $28.2 million one-time restructuring and impairment charge. This charge primarily reflects adjustments to property, equipment, and capital inventory, aligning our investments with long-term operational needs. Excluding these one-time charges, total consolidated recurring operating and network expenses declined by $8.5 million, or 22% year over year, and $6.8 million or 18% sequentially from Q3.
Speaker Change: On a net basis, our syndicated debt stands at 100 to $92 5 million.
Speaker Change: Resulting in a leverage ratio of $3 26 times.
Speaker Change: Please note that this syndicated net debt excludes things ABS notes.
Speaker Change: And redeemable preferred units.
Speaker Change: Which are reported separately on our balance sheet.
Speaker Change: Interest expense on our syndicated loan was $3 9 million down from $5 million a year ago.
Speaker Change: We repaid $16 5 million principal throughout the year and major initiatives. This quarter was capital efficiency a pink.
Speaker Change: Which resulted in a $28 2 million, one time restructuring and impairment charge.
Speaker Change: This charge, primarily reflects adjustments to property equipment and capital inventory.
Speaker Change: Aligning our investments with long term operational needs.
Speaker Change: Excluding these onetime charges total consolidated recurring operating and network expenses.
Speaker Change: Declined by $8 5 million or 22% year over year.
Speaker Change: And $6 8 million or 18% sequentially from Q3.
Speaker Change: These reductions are part of our effort to maintain financial discipline, while supporting sustainable growth.
Ivan Ivanov: These reductions are part of our effort to maintain financial discipline while supporting sustainable growth. As we enter 2025, our business fundamentals remain solid, and we are executing on our key priorities. While we continue focusing on optimizing operations, maximizing margin, and de-leveraging to best deliver long-term shareholder value. With that, thank you, and I'll pass it back to Elliot.
Speaker Change: As we enter 2025, our business fundamentals remain solid and we are executing on our key priorities.
Speaker Change: While we continue focusing on optimizing operations.
Speaker Change: Maximizing margin.
Speaker Change: And deleveraging.
Speaker Change: Best deliver long term shareholder value.
Eric: With that thank you and I'll pass it back to Eric.
Eric: Thanks Ivan.
Speaker Change: First adjusted EBITDA guidance for <unk> for 2025, the consolidated guidance range is in and around $56 million.
Elliot Noss: Thanks, Ivan. First, adjusted EBITDA guidance for TCX for 2025. The consolidated guidance range is in and around $56 million, up 75% over 2024, before a one-time $9 million charge in our corporate segment as we wind down our Verizon MVNO agreement, or $46 million after that charge. This breaks down as $44 million for Tucows Domains, $13 million for Wavelo, break even for Ting, and a $1 million loss for the corporate segment. The Verizon charge would take the corporate segment to a $10 million loss. Reminder, this loss was priced into the 2020 deal with Dish, and bundling mobile with our Ting fiber offering is the single biggest marketing tool for Ting in 2025.
Speaker Change: Up 75% over 2024 before a one time $9 million charge in our corporate segment as we wind down our Verizon <unk> agree or $46 million after that charge. This breaks down as <unk> $44 million for two cows domains.
Speaker Change: $14 million per wavelength breakeven for <unk>, and a $1 million loss for the corporate segment.
Speaker Change: The Verizon charge, we take the corporate segment to a $10 billion loss reminder, this loss was priced into the 2020 deal with dish and bundling mobile with our Ting fiber offering is the single biggest marketing tool for Ting in 2025. This loss in quotes will be very useful.
Elliot Noss: This loss will be very useful for Ting's customer acquisition. With Tucows Domains, we will have headwinds in general Google Search trends, the impact of an acquisition of a customer in 2023, and needing to front-load some spend against some of the registry wins that will manifest in the later part of the year. As usual, this resilient business will grow past its challenges. Wavelo crushed its guidance in 2024 and will be around the same level in 2025 as it brought some of its operating efficiencies forward and will have a full go-to-market team for 2025. Ting will improve from a roughly $22 million EBITDA loss to break even. 2025 is a big year for TCX, the 30th anniversary of Tucows, the 25th anniversary of OpenSRS, and the 10th anniversary of Ting.
Speaker Change: Our team's customer acquisition.
Speaker Change: With two cows domains, we will have headwinds in general Google search trends the impact of an acquisition of a customer in 2023 and needing to frontload some spend against some of the registry with that will manifest in the later part of the year.
Speaker Change: As usual this resilient business will grow past its challenges wave low crushed its guidance of 2024, and we will be around the same level in 2025 as it brought some of its operating efficiencies forward and we'll have a full go to market team for 2025 team will improve from a roughly.
Speaker Change: $22 million EBITDA loss to breakeven 2025 is a big year for <unk>.
Speaker Change: <unk> anniversary of two counts the 25th anniversary of open Srs and the 10th anniversary of Tic with these milestones ones that few businesses ever reach.
Elliot Noss: With these milestones, ones that few businesses ever reach, I wanted to look at both capital markets and technology with a longer lens. When I look at capital flows in the world in 2025, I see a continued flight to minimize risk. In the ABS market, we see increasing demand, tightening spreads, and more private capital entering, in addition to the usual insurers and the like. In fiber and in enterprise software, we see a continued lack of common equity checks being written, and we see lots of companies with private equity sponsors coming to the end of their last rounds without a clear path forward in sight. We see this trend manifest in the massive cash pile currently sitting at Berkshire Hathaway. Our investors know clearly what that signals about Warren Buffett's thinking.
Speaker Change: I wanted to look at both capital markets and technology with a longer lengths.
Speaker Change: When I look at capital flows in the World at 2025 IC a.
Speaker Change: You'd flight to minimize risk.
Speaker Change: In the ABS market, we see increasing demand tightening spreads and more private capital entering in addition to the usual insurers alike in fiber and in enterprise software. We see a continued lack of carbon equity checks being written and we see lots of companies with private equity.
Speaker Change: <unk> coming to the end of their last round without a clear path forward in sight.
Speaker Change: We see this trend manifest in the massive cash pile currently sitting at Berkshire Hathaway, our investors know clearly what that signals about Warren Buffett.
Speaker Change: And going one layer underneath that is to my eyes, a recognition that the magnificent seven stocks those responsible for the vast majority of the major indexes returns of the past few years.
Elliot Noss: Going 1 layer underneath that is, to my eyes, a recognition that the Magnificent Seven stocks, those responsible for the vast majority of the major index's returns in the past few years, have now fundamentally shifted from being capital-light cash generators to spending a massive percentage of all cash generated on infrastructure in order to keep up with the AI arms race. These companies now have the free cash flow characteristics of industrials, not tech companies. This all greatly reinforces the difficulty in finding reasonable returns at a reasonable level of risk. Of course, this means an inevitable flight to value as capital needs a home. We are also obviously in the early innings of the biggest technological change since the dawn of the modern internet. The impact of AI will dwarf the impact of trends like cloud and crypto.
Speaker Change: Fundamentally shifted from being capital light cash generators to spending a massive percentage of all cash generated on infrastructure in order to keep up with the arms race.
Speaker Change: These companies now have the free cash flow characteristics of industrials not tech hub.
Speaker Change: This all greatly reinforces the difficulty in finding reasonable returns at a reasonable level of risk.
Of course, this means that inevitable flight to value as capital needs. A whole. We are also obviously in the early innings of the biggest technological change since the dawn of the modern Internet.
Speaker Change: The impact of AI will dwarf the impact of trends like cloud and crypto. It is important for investors to understand how we think about the change will bring.
Elliot Noss: It is important for investors to understand how we think about the change it will bring. First, in the near term, we are firmly in the camp of augmentation, not replacement. We are leaning hard into a number of projects across all of our businesses that are intended to make business processes more efficient and allow us to accelerate our productivity. This also has the secondary impact of helping our people skill up and experience what is possible. In the longer term, we see agents serving nearly every individual in a number of capacities, further manifesting the promise of the early internet, putting much more power into the hands of individuals at a time when the power of large businesses feels more and more pervasive.
Speaker Change: First in the near term we are firmly in the camp of augmentation not replacement, we are leaning hard into a number of projects across all of our businesses that are intended to make business processes more efficient and allow us to accelerate our productivity.
Speaker Change: This also has the secondary impact of helping our people skills and experience what has passed.
Speaker Change: In the longer term.
Speaker Change: We see agents serving nearly every individual in a number of capacities further manifesting the promise of the early internet.
Speaker Change: Putting much more power into the hands of individuals' at a time with the power of large businesses feels more and more pervasive. We think this mirrors the use of tools like E Mail and web sites at the dawn of the Internet, which means that important place of this future for service providers.
Elliot Noss: We think this mirrors the use of tools like email and websites at the dawn of the internet, which means an important place in this future for service providers. At Tucows Domains, we can empower the largest channel of service providers in the world to help their customers. At Wavelo, we can help telecoms help their customers in ways that start to mirror the great experiences smaller providers deliver. At Ting, we can experiment at an early stage with all of this, hacking a trail for the other two businesses to follow. You will not see this manifest in 2025 unless you squint really hard. We know the mountain in the distance we are marching towards. In the interim, all three of our businesses have no existential hurdles.
Speaker Change: At <unk> debates, we can empower the largest channel of service providers of the world to help their customers at wave low we could help telecoms out their customers in ways that start to mirror the great experiences smaller providers to look.
Speaker Change: And at <unk>.
Speaker Change: We can experiment at an early stage with all of this hacking the trail for the other two businesses default you will not see this manifest in 2025, unless you squint really hard, but we know the mountains in the distance we are marching towards evenly injury, all three of our businesses have no eggs.
Speaker Change: <unk> essential hurdles with the Echostar renewal and the team restructuring behind US we are heads down executing generating cash reducing debt and reducing our float where appropriate and with that I look forward to your written questions and exploring areas that interest you in greater detail again. Please send your question.
Elliot Noss: With the EchoStar renewal and the Ting restructuring behind us, we are heads down executing, generating cash, reducing debt, and reducing our float where appropriate. 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@tucows.com by 20 February, look for our recorded Q&A audio response and transcript of this call to be posted to the Tucows website on Tuesday, 4 March at approximately 5:00 PM Eastern Time. Thank you.
Speaker Change: To IR at <unk> Dot Com by February 20th and look for a recorded Q&A audio response and transcript to this call to be posted to the Tucows website on Tuesday March four at approximately five P M East.
Speaker Change: Eastern time, thank you.