2025 Q2 TCX results financial statements v2.pdf

Tucows Inc.

Tucows Inc.
Condensed Consolidated Balance Sheets
(Dollar amounts in thousands of U.S. dollars)

June 30, 2025 December 31, 2024
(unaudited) (audited)
Assets
Current assets:
Cash and cash equivalents $ 52,020 $ 56,903
Restricted cash 4,640 4,628
Accounts receivable 24,224 20,878
Derivative instrument asset 478 -
Deferred costs of fulfillment, current portion 102,936 101,467
Assets held for sale 3,406 -
Prepaid expenses and other 24,003 21,506
Total current assets 211,707 205,382
Deferred costs of fulfillment, long-term portion
Secured notes reserve funds 16,025 15,508
Property and equipment, net 11,942 11,707
Right of use lease asset 305,331 331,049
Intangible assets 40,951 35,640
Goodwill 21,887 24,755
Other assets 130,410 130,410
Total assets 3,929 4,345
Total assets 742,182 758,796
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and accrued liabilities $ 35,772 $ 40,236
Derivative instrument liability - 1,270
Operating lease liability, current portion 5,080 5,150
Contract Liabilities, current portion 141,243 135,649
Other current liabilities 18,529 17,546
Total current liabilities 200,624 199,851
Contract liabilities, long-term portion 21,462 21,155
Operating lease liability, long-term portion 34,762 25,899
Syndicated revolver 192,206 194,426
Notes payable 289,637 287,646
Redeemable preferred units 122,212 122,156
Deferred tax liability 2,965 2,963
Stockholders' deficit:
Common stock - no par value, 250,000,000 shares authorized; 11,065,641 shares issued and outstanding as of June 30, 2025 and 11,014,655 shares issued and outstanding as of December 31, 2024 37,429 36,581
Additional paid-in capital 21,451 19,241
Accumulated deficit (180,928) (150,158)
Accumulated other comprehensive loss 362 (964)
Total stockholders' deficit (121,686) (95,300)
Total liabilities and stockholders' deficit 742,182 758,796

Tucows Inc.
Condensed Consolidated Statements of Operations and Comprehensive Loss
(Dollar amounts in thousands of U.S. dollars)

Three months ended June 30, Six months ended June 30,
2025 2024 2025 2024
(unaudited) (unaudited)
Net revenues $ 98,463 $ 89,423 $ 193,072 $ 176,880
Cost of revenues:
Direct cost of revenues 59,069 51,328 114,230 103,122
Network, other costs 6,458 6,862 11,633 13,979
Network, depreciation and amortization 10,826 10,423 21,568 20,653
Total cost of revenues 76,353 68,613 147,431 137,754
Gross profit 22,110 20,810 45,641 39,126
Expenses:
Sales and marketing (*) $ 11,945 $ 14,746 $ 22,936 $ 33,311
Technical operations and development (*) 4,344 4,522 8,751 9,538
General and administrative (*) 9,660 9,188 18,902 19,006
Gain on disposition of property and equipment (1,788) - (1,788) -
Depreciation and amortization 828 951 1,752 2,387
Total expenses 24,989 29,407 50,553 64,242
Loss from operations (2,879) (8,597) (4,912) (25,116)
Other income (expenses):
Interest expense, net (13,621) (12,553) (27,234) (24,432)
Other income, net 3,128 3,766 5,807 7,454
Total other income (expenses) (10,493) (8,787) (21,427) (16,978)
Loss before provision for income taxes (13,372) (17,384) (26,339) (42,094)
Provision (recovery) for income taxes 2,265 1,220 4,431 2,994
Net loss for the period (15,637) (18,604) (30,770) (45,088)
Other comprehensive income (loss), net of tax
Unrealized income (loss) on hedging activities 635 (304) 677 (1,430)
Net amount reclassified to earnings 91 - 649 (169)
Other comprehensive income (loss) net of tax expense (recovery) 726 (304) 1,326 (1,599)
Comprehensive loss, net of tax for the period $ (14,911) $ (18,908) $ (29,444) $ (46,687)
Basic and diluted loss per common share $ (1.41) $ (1.70) $ (2.79) $ (4.12)
Shares used in computing basic and diluted loss per common share 11,060,818 10,954,596 11,046,531 10,939,098
(*) Stock-based compensation has been included in expenses as follows:
Network expenses $ 86 133 187 252
Sales and marketing $ 288 519 597 1,059
Technical operations and development $ 202 208 417 422
General and administrative $ 810 842 1,690 1,842

Tucows Inc.
Condensed Consolidated Statements of Cash Flows
(Dollar amounts in thousands of U.S. dollars)

Three months ended June 30, Six months ended June 30,
2025 2024 2025 2024
(unaudited) (unaudited)
Cash provided by:
Operating activities:
Net loss for the period $ (15,637) $ (18,604) $ (30,770) $ (45,088)
Adjustments to reconcile net income to net cash provided by operating activities:
  Depreciation and amortization 11,654 11,374 23,320 23,040
  Amortization of debt discount and issuance costs 1,174 1,075 2,341 2,142
  Deferred income taxes (recovery) (231) 94 (422) 479
  Accretion of redeemable preferred units - 4,140 - 7,895
  Stock-based compensation expense 1,385 1,702 2,891 3,575
Change in non-cash operating working capital
  Accounts receivable (104) 1,718 (3,346) 4,241
  Prepaid expenses and deposits (3,098) (4,626) (2,223) (3,381)
  Deferred costs of fulfillment 2,031 70 (1,986) (4,949)
  Accounts payable & accrued liabilities 6,767 (2,030) (3,855) (6,371)
  Contract liabilities 363 467 5,901 7,491
  Other operating assets and liabilities 2,262 (88) 3,464 540
  Net cash provided by (used in) operating activities 6,566 (4,708) (4,685) (10,386)
Financing activities:
  Proceeds received on exercise of stock options 31 - 31 -
  Repayment of syndicated revolver - (6,500) (2,500) (12,000)
  Payment of syndicated revolver costs - (19) - (19)
Net cash provided by (used in) financing activities 31 (6,519) (12,019)
35,640
Investing activities:
  Proceeds on disposal of property and equipment 10,670 - 11,636 -
  Additions to property and equipment (3,468) (15,957) (8,905) (30,277)
  Acquisition of intangible assets (213) (2) (213) (98)
Net cash provided by (used in) investing activities 6,989 (15,959) 2,518 (30,375)
(Decrease) increase in cash and cash equivalents 13,586 (27,186) (2,167) (52,780)
Cash and cash equivalents, restricted cash, and restricted cash equivalents beginning of period 55,016 79,384 73,238 104,978
Cash and cash equivalents, restricted cash, and restricted cash equivalents end of period 68,602 52,198 71,071 52,198
Reconciliation of cash, cash equivalents, restricted cash, and restricted cash equivalents within the interim consolidated balance sheets to the amounts shown in the interim consolidated statements of cash flows above:
Cash and cash equivalents 52,020 39,280 52,020 39,280
Restricted cash included in funds held for trustee 4,640 4,050 4,640 4,050
Restricted cash included in secured notes reserve funds receivable 11,942 8,868 11,942 8,868
Total Cash and cash equivalents, restricted cash, and restricted cash equivalents end of period 68,602 52,198 68,602 52,198
Supplemental cash flow information:
Interest paid $ 8,475 8,495 26,807 17,504
Income taxes paid, net $ 2,092 2,132 3,391 2,827
Supplementary disclosure of non-cash investing and financing activities:
Property and equipment acquired during the period not yet paid for $ 1,610 5,251 1,610 5,251

Tucows Inc.
Reconciliation of Loss before Provision for Income Taxes to Adjusted EBITDA
(In Thousands of U.S. Dollars)

Three months ended June 30, (unaudited) Six months ended June 30, (unaudited)
Net Loss for the period $ (15,637) $ (18,604) $ (30,770) $ (45,088)
Less:
Provision (recovery) for income taxes 2,265 1,220 4,431 2,994
Depreciation of property and equipment 10,539 10,173 20,999 20,160
Impairment and loss (gain) on disposition of property and equipment (1,353) - (1,149) 53
Amortization of Intangible Assets 1,115 1,201 2,321 2,880
Interest Expense (net) 13,621 12,553 27,234 24,432
Stock Based Compensation 1,386 1,702 2,891 3,575
Unrealized loss (gain) on foreign exchange revaluation of foreign denominated monetary assets and liabilities (72) 164 (437) 554
Acquisition and other costs1 713 769 728 3,820
Adjusted EBITDA $ 12,577 $ 9,178 $ 26,248 $ 13,380

1 Acquisition and other costs represent transaction-related expenses and transitional expenses. Expenses include severance or transitional costs associated with department, operational or overall company restructuring efforts, including geographic alignments.