2024-Q2-TCX-results-management-remarks-transcript

Tucows Q2 2024 Management Remarks Transcript

Introduction [Monica Webb, Vice President, Investor Relations]

Welcome to Tucows’ second quarter 2024 management commentary. We have prerecorded prepared remarks regarding the quarter and outlook for the Company. We will begin with opening remarks from Elliot Noss, President and CEO 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' new CFO, who will discuss our financial results in detail; and finish with closing remarks from Elliot Noss.

Now for management’s prepared remarks:

On Thursday, August 8, Tucows issued a news release reporting its financial results for the second quarter ended June 30, 2024. Please note that 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.

I would now like to turn the call over to Tucows President and Chief Executive Officer Elliot Noss.

Go ahead, Elliot.

Management Remarks [Elliot Noss, President and Chief Executive Officer]

Starting with our consolidated results, the second quarter of 2024 saw solid year-over-year and quarter-over-quarter performance for revenue, gross margin, and adjusted EBITDA. Consolidated net revenue for the second quarter increased 5.2% year over year to $89.4 million, with strong revenue gains from Ting and Domains. Gross profit in Q2 grew 15.4% year over year to $20.8 million. Adjusted EBITDA for the second quarter of 2024 increased 70% year over year to $9.2 million.

We continue to balance investment in the businesses with paying down debt. In Q2, we further deleveraged the business with $6.5 million in payments on the syndicated debt.

As many of you will have seen, Ivan Ivanov has very recently taken over from Dave Singh as Tucows’ new CFO. We are pleased to have him join the executive team and both Dave and Ivan have worked to create an extremely smooth transition.

Tucows Domains [Dave Woroch, Chief Executive Officer, Tucows Domains]

In the second quarter, Tucows Domains continued to reliably generate cash, grow our margin, and contribute to Tucows’ adjusted EBITDA. Revenue for Domain Services for Q2 was $62.4 million, up 4% from $60.0 million for the same quarter last year. Adjusted EBITDA was $11.2 million in the second quarter, up 6% from Q2 of last year.

Looking at the results from the segments of our business: in our Wholesale channel, revenue for Q2 was $53.0 million, up 2.9% compared to $51.5 million for Q2 of last year. In our Retail channel, revenue for Q2 was $9.3 million, up 10.8% from $8.4 million in Q2 of last year.

Wavelo [Justin Reilly, Chief Executive Officer, Wavelo]

Looking back to a year ago, we were just wrapping up the migration of millions of Boost subscribers to the Wavelo platform. Wavelo’s revenues were $10.5M in Q2, down 2.3% from Q2 2023. Adjusted EBITDA for Q2 was $3.9M, up 14.1% year over year.

Ting [Elliot Noss, President and Chief Executive Officer, Tucows and Ting]

In Q2 Ting added 2,100 net new subscribers, growing 10.5% year over year and taking us to over 48,000 subscribers in total. Revenue for Q2 grew 17.4% year over year to $14.6 million. Ting’s adjusted EBITDA loss was reduced to $6.4 million for Q2.

Financial Results [Ivan Ivanov, Chief Financial Officer]

Starting with revenue, total revenue for the second quarter of 2024 increased 5.2% to $89.4 million compared to $85.0 million for the second quarter of 2023. Gross profit for the second quarter increased 11.3% year over year to $38.1 million.

Closing Remarks [Elliot Noss, President and Chief Executive Officer]

For the last few quarters, I have been talking about my strongly-held belief that public markets can only sustain two kinds of companies: those that are story stocks and those that generate a lot of free cash flow. We see the continued financialization of fiber-to-the-home as an asset class.

We expect that returning capital to shareholders has always been the right approach and is clearly the one that addresses the structure of capital markets in 2024.

Thank you.