Press Release FS 2024 Q4 20250312.xlsx

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

December 31,2024(unaudited) December 31,2023(audited)
Assets
Current assets:
Cash and cash equivalents $56,903 $92,687
Restricted cash 4,628 3,639
Accounts receivable, net of expected credit losses of $923 as of December 31,2024 and $511 as of December 31,2023 20,878 22,206
Contract asset, net - 1,417
Inventory 3,975 6,786
Prepaid expenses and deposits 17,314 17,387
Derivative instrument asset - 2,277
Deferred costs of fulfillment, current portion 101,467 95,649
Income taxes recoverable 217 709
Total current assets 205,382 242,757
Deferred costs of fulfillment, long-term portion 15,508 15,419
Investments 2,012 2,012
Secured notes reserve funds 11,707 8,652
Property and equipment, net 331,049 339,644
Right of use asset 35,640 27,467
Contract costs 2,333 2,581
Intangible assets, net 24,755 29,484
Goodwill 130,410 130,410
Total assets $758,796 $798,426
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $9,009 $12,676
Accrued liabilities 31,227 35,356
Customer deposits 16,660 19,335
Derivative instrument liability 1,270 -
Operating lease liability, current portion 5,150 5,397
Contract liabilities, current portion 135,649 126,733
Accreditation fees payable 623 609
Income taxes payable 263 1,235
Total current liabilities 199,851 201,341
Contract liabilities, long-term portion 21,155 21,350
Operating lease liability, long-term portion 25,899 18,255
Syndicated revolver 194,426 210,354
Notes payable 287,646 222,895
Redeemable preferred units- no par value, 33,333,333 units authorized; 15,243,600 units issued and outstanding as of December 31,2024 and December 31,2023 122,156 111,390
Deferred tax liability 2,963 2,966
Stockholders' equity (deficit):
Common stock - no par value, 250,000,000 shares authorized; 11,014,655 shares issued and outstanding as of December 31,2024 and 10,903,405 shares issued and outstanding as of December 31,2023 36,581 34,373
Additional paid-in capital 19,241 14,072
Accumulated deficit (150,158) (40,298)
Accumulated other comprehensive income (loss) (964) 1,728
Total stockholders' equity (deficit) (95,300) 9,875
Total liabilities and stockholders' equity (deficit) $758,796 $798,426

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

Three months ended December 31,2024 Twelve months ended December 31,2024
(unaudited) (unaudited)
$ 93,098 $ 86,958 $ 362,275 $339,337
Net revenues
Cost of revenues:
Direct cost of revenues 54,447 51,506 209,747 202,256
Network, other costs 5,990 7,584 26,723 28,222
Network, depreciation of property and equipment 10,536 9,533 39,872 35,864
Network, amortization of intangible assets 366 371 1,463 1,506
Network, impairment of property and equipment 536 143 1,441 4,822
Total cost of revenues 71,875 69,137 279,246 272,670
Gross profit 21,223 17,821 83,029 66,667
Expenses:
Sales and marketing(*) 12,875 18,363 59,382 67,415
Technical operations and development(*) 4,474 4,904 18,627 19,118
General and administrative(*) 7,482 8,170 37,068 33,896
Depreciation of property and equipment 101 128 451 567
Amortization of intangible assets 842 2,357 3,834 9,323
Impairment of property and equipment 17,726 - 17,726 -
Restructuring charges 7,670 - 10,954 -
Total expenses 51,170 33,922 148,042 130,319
Loss from operations (29,947) (16,101) (65,013) (63,652)
Other income (expenses):
Interest expense, net (13,748) (12,651) (51,275) (41,771)
Loss on debt extinguishment - - - (14,680)
Income earned on sale of transferred assets, net 3,244 4,062 13,978 17,033
Other income (expense), net (106) - 436 -
Total other income (expenses) (10,610) (8,589) (36,861) (39,418)
Loss before provision for income taxes (40,557) (24,690) (101,874) (103,070)
Provision (recovery) for income taxes 1,918 (1,316) 7,986 (6,873)
Net loss for the period (42,475) (23,374) (109,860) (96,197)
Other comprehensive income (loss), net of tax
Unrealized income (loss) on hedging activities (1,666) 1,667 (2,681) 1,830
Net amount reclassified to earnings 165 (79) (11) (886)
Other comprehensive income (loss) (1,501) 1,588 (2,692) 944
Comprehensive loss, for the period (43,976) (21,786) (112,552) (95,253)
Basic and diluted loss per common share (3.86) (2.17) (10.02) (8.94)
Shares used in computing basic and diluted loss per common share 11,008,687 10,765,595 10,967,581 10,758,691
(*) Stock-based compensation has been included in expenses as follows:
Network expenses 142 151 533 575
Sales and marketing 455 567 1,983 2,493
Technical operations and development 224 229 862 899
General and administrative 817 581 3,643 4,167

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

Three months ended December 31,2024 Twelve months ended December 31,2024
(unaudited) (unaudited)
Cash provided by:
Operating activities:
Net loss for the period $ (42,475) $ (23,374) $ (109,860) $ (96,197)
Items not involving cash:
Depreciation of property and equipment 10,637 9,661 40,323 36,431
Impairment of property and equipment 18,262 143 19,167 4,822
Amortization of debt discount and issuance costs 1,178 1,060 4,479 3,331
Amortization of intangible assets 1,208 2,728 5,297 10,829
Net amortization contract costs 112 (142) 248 (754)
Deferred income taxes (recovery) 504 (3,659) 854 (13,040)
Net Right of use operating assets/Operating lease liability (297) (89) (776) (406)
Disposal of demolition 4 2 7 (406)
Accretion of redeemable preferred shares - 4,916 9,758 14,163
Loss on debt extinguishment - - - 14,680
Write off of debt discount and issuance cost - - - 277
Loss (gain) on change in the fair value of forward contracts - - - 1,624
Amortization of discontinued cash flow hedge - - - (1,144)
Loss (gain) on disposal of property and equipment 1,638 1,528 7,021 8,134
Stock-based compensation 120 - (258) -
Undistributed earnings of equity method investee
Change in non-cash operating working capital:
Accounts receivable (1,986) 1,983 1,328 (3,802)
Contract assets - 1,893 1,417 6,070
Inventory 837 865 2,811 361
Prepaid expenses and deposits (981) 2,012 331 (382)
Deferred costs of fulfillment (746) 1,570 (5,907) (394)
Income tax receiptable (1,233) 145 (480) 734
Accounts payable 760 114 (3,391) (5,319)
Accrued liabilities 7,419 8,751 1,826 9,044
Customer deposits (527) 595 (2,675) 3,552
Contract liabilities 775 (1,671) 8,721 2,952
Accreditation fees payable (4) (28) 14 (342)
Net cash provided by operating activities (4,795) 9,003 (19,745) (4,771)
Financing activities:
Proceeds received on exercise of stock options 43 - 43 -
Redeemable preferred units redemption - - 62,991 227,258
Redeemable preferred shares redemption - - - (45,718)
Proceeds from redeemable preferred shares - - - 35,000
Deferred notes payable financing costs - (63) (2,011) (6,738)
Deferred preferred financing costs - (63) (2,011) (6,738)
Proceeds received syndicated revolver (2,000) (11,530) (16,500) (80,182)
Repayment of syndicated revolver cost 23 (157) (25) (1,711)
Contingent consideration for acquisitions - - - (1,600)
Net cash (used in) provided by financing activities (1,934) (11,750) 44,498 178,835
Investing activities:
Proceeds on disposal of property and equipment 542 - 542 -
Additions to property and equipment (11,666) (14,579) (56,460) (92,055)
Acquisition of intangible assets - (113) (575) (528)
Net cash used in investing activities (11,124) (14,692) (56,493) (92,583)
(Decrease) increase in cash and cash equivalents (17,853) (17,439) (31,740) 81,482
equivalents beginning of period 91,091 122,417 104,978 23,496
equivalents end of period $ 73,238 $ 104,978 $ 73,238 $ 104,978
cash equivalents within the interim consolidated balance sheets to the
Cash and cash equivalents 56,903 92,687 56,903 92,687
Restricted cash included in funds held for trustee 4,628 3,639 4,628 3,639
Restricted cash included in secured notes reserve funds receivable 11,707 8,652 11,707 8,652
equivalents end of period 73,238 104,978 73,238 104,978
Supplemental cash flow information:
Interest paid $ 9,104 $ 4,832 $ 37,961 $ 24,736
Income taxes paid, net $ 2,375 $ 1,587 $ 7,653 $ 4,949
Supplementary disclosure of non-cash investing and financing activities:
Property and equipment acquired during the period not yet paid for $ 3,572 $ 6,948 $ 3,572 $ 6,948

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

(unaudited) Three months ended December 31 Twelve months ended December 31
(unaudited) 2024(unaudited) 2023(unaudited) 2024(unaudited) 2023(unaudited)
Net Loss for the Period $ (42,475) $(23,374) $ (109,860) $(96,197)
Less:
Provision (recovery) for income taxes 1,918 (1,316) 7,986 (6,873)
Depreciation of property and equipment 10,637 9,661 40,323 36,431
Impairment and loss on disposition of property and equipment 18,262 143 19,167 4,822
Amortization of intangible assets 1,208 2,728 5,297 10,829
Interest expense, net 13,748 12,651 51,275 41,771
Loss on debt extinguishment - - - 14,680
Stock-based compensation 1,638 1,528 7,021 8,134
Unrealized loss(gain)on foreign exchange revaluation of foreign denominated monetary assets and liabilities (525) (316) (168) (62)
Acquisition and transition costs1 8,438 849 13,876 1,916
Adjusted EBITDA $12,849 $2,554 $34,917 $15,451

1Acquisition and transition 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.