2025 Q3 TCX Financial Statements.pdf
Tucows Inc.
Tucows Inc.
Condensed Consolidated Balance Sheets
(Dollar amounts in thousands of U.S. dollars)
| September 30, 2025 | December 31, 2024 | |
|---|---|---|
| (unaudited) | (audited) | |
| Assets | ||
| Current assets: | ||
| Cash and cash equivalents | $ 54,078 | $ 56,903 |
| Restricted cash | 4,618 | 4,628 |
| Accounts receivable | 27,981 | 20,878 |
| Deferred costs of fulfillment, current portion | 99,643 | 101,467 |
| Prepaid expenses and other | 22,621 | 21,506 |
| Total current assets | 208,941 | 205,382 |
| Deferred costs of fulfillment, long-term portion | 16,677 | 15,508 |
| Secured notes reserve funds | 12,060 | 11,707 |
| Property and equipment, net | 287,960 | 331,049 |
| Right of use lease asset | 54,413 | 35,640 |
| Intangible assets | 20,978 | 24,755 |
| Goodwill | 130,410 | 130,410 |
| Other assets | 4,052 | 4,345 |
| Total assets | $ 735,491 | $ 758,796 |
| Liabilities and Stockholders' Equity | ||
| Current liabilities: | ||
| Accounts payable and accrued liabilities | $ 32,117 | $ 40,236 |
| Derivative instrument liability | 568 | 1,270 |
| Operating lease liability, current portion | 5,456 | 5,150 |
| Contract Liabilities, current portion | 137,152 | 135,649 |
| Other current liabilities | 19,256 | 17,546 |
| Total current liabilities | 194,549 | 199,851 |
| Contract liabilities, long-term portion | 21,512 | 21,155 |
| Operating lease liability, long-term portion | 48,701 | 25,899 |
| Syndicated revolver | 189,420 | 194,426 |
| Notes payable | 290,642 | 287,646 |
| Redeemable preferred units | 131,763 | 122,156 |
| Deferred tax liability | 2,963 | 2,963 |
| Stockholders' deficit: | ||
| Common stock - no par value, 250,000,000 shares authorized; 11,089,663 shares issued and outstanding as of September 30, 2025 and 11,014,655 shares issued and outstanding as of December 31, 2024 | 37,907 | 36,581 |
| Additional paid-in capital | 22,412 | 19,241 |
| Accumulated deficit | (203,947) | (150,158) |
| Accumulated other comprehensive loss | (431) | (964) |
| Total stockholders' deficit | (144,059) | (95,300) |
| Total liabilities and stockholders' deficit | $ 735,491 | $ 758,796 |
Tucows Inc.
Condensed Consolidated Statements of Operations and Comprehensive Loss
(Dollar amounts in thousands of U.S. dollars)
| Three months ended September 30, 2025 | Nine months ended September 30, 2025 | ||||||
|---|---|---|---|---|---|---|---|
| (unaudited) | (unaudited) | ||||||
| $ | 98,558 | $ | 92,297 | $ | 291,630 | $269,177 | |
| Net revenues | $ | 98,558 | $ | 92,297 | $ | 291,630 | $269,177 |
| Cost of revenues: | |||||||
| Direct cost of revenues | $ | 57,830 | $ | 52,613 | $ | 172,060 | 155,735 |
| Network, other costs | $ | 5,855 | $ | 7,716 | $ | 17,488 | 21,695 |
| Network, depreciation and amortization | $ | 10,692 | $ | 9,780 | $ | 32,260 | 30,433 |
| Total cost of revenues | $ | 74,377 | $ | 70,109 | $ | 221,808 | 207,863 |
| Gross profit | $ | 24,181 | $ | 22,188 | $ | 69,822 | 61,314 |
| Expenses: | |||||||
| Sales and marketing(*) | $ | 11,882 | $ | 15,180 | $ | 34,818 | $48,491 |
| Technical operations and development(*) | $ | 4,682 | $ | 4,615 | $ | 13,433 | 14,153 |
| General and administrative(*) | $ | 9,650 | $ | 11,485 | $ | 28,552 | 30,491 |
| Gain on disposition of property and equipment | (3,965) | - | - | (5,753) | - | - | - |
| Depreciation and amortization | 785 | 955 | 955 | 2,537 | 2,537 | 2,537 | 3,342 |
| Impairment of property and equipment | 10,724 | - | - | 10,724 | - | - | - |
| Total expenses | $ | 33,758 | $ | 32,235 | $ | 84,311 | 96,477 |
| Loss from operations | $(9,577) | $(10,047) | $(14,489) | $(14,489) | $(14,489) | $(14,489) | $(35,163) |
| Other income (expenses): | |||||||
| Interest expense, net | $(13,901) | $(13,095) | $(41,135) | $(41,135) | $(41,135) | $(37,527) | $(37,527) |
| Other income, net | 2,915 | 3,919 | 8,722 | 8,722 | 8,722 | 11,373 | 11,373 |
| Total other income (expenses) | $(10,986) | $(9,176) | $(32,413) | $(32,413) | $(32,413) | $(26,154) | $(26,154) |
| Loss before provision for income taxes | $(20,563) | $(19,223) | $(46,902) | $(46,902) | $(46,902) | $(61,317) | $(61,317) |
| Provision (recovery) for income taxes | 2,456 | 3,074 | 6,887 | 6,887 | 6,887 | 6,068 | 6,068 |
| Net loss for the period | $(23,019) | $(22,297) | $(53,789) | $(53,789) | $(53,789) | $(67,385) | $(67,385) |
| Other comprehensive income (loss), net of tax | |||||||
| Unrealized income (loss) on hedging activities | (916) | 415 | (239) | (239) | (239) | (415) | (1,015) |
| Net amount reclassified to earnings | 123 | (7) | 772 | 772 | 772 | (176) | (176) |
| Other comprehensive income (loss) net of tax expense (recovery) | (793) | 408 | 533 | 533 | 533 | (1,191) | (1,191) |
| Comprehensive loss, net of tax for the period | $(23,812) | $(21,889) | $(53,256) | $(53,256) | $(53,256) | $(68,576) | $(68,576) |
| Basic and diluted loss per common share | $ (2.08) | $ (2.03) | $ (4.87) | $ (4.87) | $ (4.87) | $ (6.15) | $ (6.15) |
| Shares used in computing basic and diluted loss per common share | 11,079,486 | 10,982,820 | 11,053,725 | 11,053,725 | 11,053,725 | 10,953,778 | 10,953,778 |
| (*) Stock-based compensation has been included in expenses as follows: | |||||||
| Network expenses | $ 79 | 139 | 266 | 266 | 266 | 391 | 391 |
| Sales and marketing | $ 247 | 470 | 843 | 843 | 843 | 1,528 | 598 |
| Technical operations and development | $ 181 | 216 | 598 | 598 | 598 | 638 | 638 |
| General and administrative | $ 880 | 983 | 2,571 | 2,571 | 2,571 | 2,826 | 2,826 |
Tucows Inc.
Condensed Consolidated Statements of Cash Flows
(Dollar amounts in thousands of U.S. dollars)
| Three months ended September 30, 2025 | Nine months ended September 30, 2024 | |||
|---|---|---|---|---|
| (unaudited) | (unaudited) | |||
| Cash provided by: | ||||
| Operating activities: | ||||
| Net loss for the period | $ (23,019) | $ (22,297) | $ (53,789) | $ (67,385) |
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||
| Depreciation and amortization | 11,477 | 10,735 | 34,797 | 33,775 |
| Amortization of debt discount and issuance costs | 1,173 | 1,159 | 3,514 | 3,301 |
| Loss (gain) on disposal of assets | (3,965) | - | (5,753) | - |
| Impairment of property and equipment | 10,885 | 852 | 11,524 | 905 |
| Deferred income taxes (recovery) | 252 | (129) | (170) | 350 |
| Accretion of redeemable preferred units | 9,351 | 1,863 | 9,351 | 9,758 |
| Stock-based compensation expense | 1,387 | 1,808 | 4,278 | 5,383 |
| Change in non-cash operating working capital | ||||
| Accounts receivable | (3,757) | (927) | (7,103) | 3,314 |
| Prepaid expenses and deposits | 1,853 | 4,693 | (370) | 1,312 |
| Deferred costs of fulfillment | 2,641 | (212) | 655 | (5,161) |
| Accounts payable & accrued liabilities | (3,691) | (3,373) | (7,547) | (9,744) |
| Contract liabilities | (4,041) | 455 | 1,860 | 7,946 |
| Other operating assets and liabilities | 988 | 809 | 5,602 | 1,296 |
| Net cash provided by (used in) operating activities | 1,534 | (4,564) | (3,151) | (14,950) |
| Financing activities: | ||||
| Proceeds received on exercise of stock options | - | - | 31 | - |
| Proceeds from issuance of notes payable | - | 62,991 | - | 62,991 |
| Deferred notes payable financing costs | - | (2,011) | - | (2,011) |
| Repayment of syndicated revolver | (2,500) | (2,500) | (5,000) | (14,500) |
| Payment of syndicated revolver costs | (423) | (29) | (423) | (48) |
| Net cash provided by (used in) financing activities | (2,923) | 58,451 | (5,392) | 46,432 |
| Investing activities: | ||||
| Proceeds on disposal of property and equipment and intangible asset | 7,387 | - | 19,023 | - |
| Additions to property and equipment | (3,851) | (14,516) | (12,756) | (44,793) |
| Acquisition of intangible assets | 7 | (478) | (206) | (576) |
| Net cash provided by (used in) investing activities | 3,543 | (14,994) | 6,061 | (45,369) |
| (Decrease) increase in cash and cash equivalents | 2,154 | 38,893 | (2,482) | (13,887) |
| Cash and cash equivalents, restricted cash, and restricted cash equivalents beginning of period | 68,602 | 52,198 | 73,238 | 104,978 |
| Cash and cash equivalents, restricted cash, and restricted cash equivalents end of period | $ 70,756 | 91,091 | 70,756 | 91,091 |
| 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 | 54,078 | 75,209 | 54,078 | 75,209 |
| Restricted cash included in funds held for trustee | 4,618 | 4,303 | 4,618 | 4,303 |
| Restricted cash included in secured notes reserve funds receivable | 12,060 | 11,579 | 12,060 | 11,579 |
| Total Cash and cash equivalents, restricted cash, and restricted cash equivalents end of period | 70,756 | 91,091 | 70,756 | 91,091 |
| Supplemental cash flow information: | ||||
| Interest paid | $ 8,464 | 11,352 | 35,271 | 28,856 |
| Income taxes paid, net | $ 1,140 | 2,451 | 4,531 | 5,278 |
| Supplementary disclosure of non-cash investing and financing activities: | ||||
| Property and equipment acquired during the period not yet paid for | $ 1,865 | 5,907 | 1,865 | 5,907 |
Tucows Inc.
Reconciliation of Loss before Provision for Income Taxes to Adjusted EBITDA
(In Thousands of U.S. Dollars)
| Three months ended September 30, (unaudited) | Nine months ended September 30, (unaudited) | |||
|---|---|---|---|---|
| (unaudited) | (unaudited) | (unaudited) | (unaudited) | |
| Net Loss for the period | $ (23,019) | $ (22,297) | $ (53,789) | $ (67,385) |
| Less: | ||||
| Provision (recovery) for income taxes | 2,456 | 3,074 | 6,887 | 6,068 |
| Depreciation of property and equipment | 10,405 | 9,526 | 31,404 | 29,686 |
| Impairment of property and equipment | 10,885 | 852 | 11,524 | 905 |
| Loss (gain) on disposition of property and equipment | (3,965) | - | (5,753) | - |
| Amortization of intangible assets | 1,072 | 1,209 | 3,393 | 4,089 |
| Interest expense (net) | 13,901 | 13,095 | 41,135 | 37,527 |
| Stock based compensation | 1,387 | 1,808 | 4,278 | 5,383 |
| Unrealized loss (gain) on foreign exchange revaluation of foreign denominated monetary assets and liabilities | (164) | (197) | (601) | 357 |
| Acquisition and other costs1 | 311 | 1,618 | 1,039 | 5,438 |
| Adjusted EBITDA | $13,269 | $8,688 | $39,517 | $22,068 |
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.