Tucows Inc. (NASDAQ: TCX) (TSX: TC), a global internet services leader, today reported its unaudited financial results for the first quarter ended March 31, 2025. All figures are in U.S. dollars.
“On the heels of four years of strong revenue growth, we are very pleased with our first quarter results,” said Elliot Noss, President and CEO of Tucows. “All three of our businesses delivered year-over-year gains, with an 8% increase in consolidated revenue, a 29% increase in gross profit, and a more than threefold improvement in Adjusted EBITDA compared to Q1 last year. Importantly, we achieved a substantial year-over-year reduction in net loss through strong revenue growth and cost optimization initiatives. We also continued to deleverage the business with payments on our syndicated debt. The progress we are making across the organization positions us well for continued improvement in 2025 and beyond.”
Financial Results
Consolidated net revenue for the first quarter of 2025 increased 8.2% to $94.6 million from $87.5 million for the first quarter of 2024, driven by strong year-over-year revenue gains from all three Tucows businesses.
Gross profit for the first quarter of 2025 increased 28.5% to $23.5 million from $18.3 million from the first quarter of 2024. The increase in gross profit was driven by strong year-over-year gains from all three Tucows businesses.
Net loss for the first quarter of 2025 narrowed significantly to $15.1 million, or a loss of $1.37 per share, compared to a net loss of $26.5 million, or a loss of $2.42 per share, for the first quarter of 2024, reflecting improved operational efficiency and revenue momentum. Adjusted net income1 (loss) and Adjusted EPS1 in Q1 2025 are ($14.9 million) and ($1.35) per share compared to Q1 2024 Adjusted net income1 (loss) of ($23.4 million) and Adjusted EPS1 of ($2.14) per share.
Adjusted EBITDA1 for the first quarter of 2025 climbed 225% to $13.7 million from $4.2 million for the first quarter of 2024, highlighting the strength of our operating leverage. The year-over-year increase was driven by growth of revenues from all three businesses, margin gains, and company-wide cost-reduction efforts, including the 2024 Ting capital efficiency plan.
We ended the first quarter of 2025 with cash and cash equivalents, and restricted cash and restricted cash equivalents of $55.0 million, while continuing to reduce debt and invest in growth. This compares with $73.2 million at the end of the fourth quarter of 2024 and $79.4 million at the end of the first quarter of 2024.
Summary Financial Results
(In Thousands of US Dollars, except Per Share data)
| 3 Months ended March 31 | |||
| 2025(unaudited) | 2024 (unaudited) | % Change (unaudited) | |
| Net Revenues | 94,609 | 87,457 | 8 % |
| Gross Profit | 23,531 | 18,316 | 28 % |
| Income Earned on Sale of Transferred Assets, net | 2,741 | 3,621 | (24) % |
| Net Income (Loss) | (15,133) | (26,484) | 43 % |
| Adjusted Net Income (Loss)¹ | (14,914) | (23,380) | 36 % |
| Basic earnings (Loss) per common share | (1.37) | (2.42) | 43 % |
| Adjusted Basic earnings (Loss) per common share¹ | (1.35) | (2.14) | 37 % |
| Adjusted EBITDA¹ | 13,671 | 4,202 | 225 % |
| Net cash provided by (used in) operating activities | (11,251) | (5,678) | (98) % |
| 1 Non-GAAP financial measures are described below and reconciled to GAAP measures in the accompanying tables. |
Summary of Revenues, Gross Profit and Adjusted EBITDA
(In Thousands of US Dollars)
| Revenue | Gross Profit | Adj. EBITDA¹ | ||||
| 3 Months ended March 31 | 3 Months ended March 31 | 3 Months ended March 31 | ||||
| 2025 (unaudited) | 2024 (unaudited) | 2025 (unaudited) | 2024 (unaudited) | 2025 (unaudited) | 2024 (unaudited) | |
| Ting Internet Services: | ||||||
| Fiber Internet Services | 16,315 | 14,102 | 10,478 | 8,742 | (854) | (9,537) |
| Wavelo Platform Services: | ||||||
| Platform Services | 11,396 | 9,365 | 11,259 | 9,033 | 4,449 | |
| Other Professional Services | 0 | 25 | 0 | 6 | ||
| Total Wavelo Platform Services | 11,396 | 9,390 | 11,259 | 9,039 | 2,787 | |
| Tucows Domain Services: | ||||||
| Wholesale | ||||||
| Domain Services | 50,004 | 48,151 | 9,623 | 9,488 | ||
| Value Added Services | 5,903 | 4,703 | 5,423 | 4,156 | ||
| Total Wholesale | 55,907 | 52,854 | 15,046 | 13,644 | ||
| Retail | 9,348 | 9,028 | 5,169 | 4,892 | ||
| Total Tucows Domain Services | 65,255 | 61,882 | 20,215 | 18,536 | 11,540 | 10,011 |
| Corporate: | ||||||
| Mobile Services and Eliminations | 1,643 | 2,083 | (2,504) | (654) | (1,464) | 941 |
| Network Expenses: | ||||||
| Network, other costs | n/a | n/a | (4,971) | (7,064) | n/a | n/a |
| Network, depreciation of property and equipment | n/a | n/a | (10,376) | (9,865) | n/a | n/a |
| Network, amortization of intangible assets | n/a | n/a | (366) | (365) | n/a | n/a |
| Network, impairment | n/a | n/a | (204) | (53) | n/a | n/a |
| Total Network Expenses | n/a | n/a | (15,917) | (17,347) | n/a | n/a |
| Total | 94,609 | 87,457 | 23,531 | 18,316 | 13,671 | 4,202 |
| 1 Non-GAAP financial measures are described below and reconciled to GAAP measures in the accompanying tables. |
Notes:
1. Tucows reports all financial information required in conformity with United States generally accepted accounting principles (GAAP).
Along with this information, to assist financial statement users in an assessment of our historical performance, the Company discloses non-GAAP financial measures in press releases and on investor conference calls and related events, as the Company believes that the non-GAAP information enhances investors’ overall understanding of our financial performance, and should be read in addition to, rather than instead of, the financial statements prepared in accordance with GAAP.
Non-GAAP financial measures do not reflect a comprehensive system of accounting and may differ from non-GAAP financial measures with the same or similar captions that are used by other companies and/or analysts and may differ from period to period. The Company endeavors to compensate for these limitations by providing the relevant disclosure of the items excluded in the calculation of Adjusted EBITDA to net income based on U.S. GAAP; Adjusted net income to GAAP net income; and adjusted basic earnings per share to GAAP basic earnings per share, which should be considered when evaluating the Company’s results. Tucows strongly encourages investors to review its financial information in its entirety and not to rely on a single financial measure.
Adjusted EBITDA
The Company believes that the provision of this supplemental non-GAAP measure allows investors to evaluate the operational and financial performance of the Company’s core business using similar evaluation measures to those used by management. The Company uses Adjusted EBITDA to measure its performance and prepare its budgets. Since Adjusted EBITDA is a non-GAAP financial performance measure, the Company’s calculation of Adjusted EBITDA may not be comparable to other similarly titled measures of other companies; and should not be considered in isolation, as a substitute for, or superior to measures of financial performance prepared in accordance with GAAP. Because Adjusted EBITDA is calculated before certain recurring cash charges, including interest expense and taxes, and is not adjusted for capital expenditures or other recurring cash requirements of the business, it should not be considered as a liquidity measure.
The Company’s Adjusted EBITDA definition excludes depreciation, impairment and loss on disposition of property and equipment, amortization of intangible assets, income tax provision, interest expense (net), stock-based compensation, asset impairment, gains and losses from unrealized foreign currency transactions, loss on debt extinguishment and costs that are not indicative of on-going performance (profitability), including acquisition and transition costs. Gains and losses from unrealized foreign currency transactions removes the unrealized effect of the change in the mark-to-market values on outstanding unhedged foreign currency contracts, as well as the unrealized effect from the translation of monetary accounts denominated in non-U.S. dollars to U.S. dollars.
The following table reconciles net income (loss) to Adjusted EBITDA (in thousands of US dollars):
| 3 Months ended March 31 | ||
| 2025 (unaudited) | 2024 (unaudited) | |
| Net income (Loss) for the period | (15,133) | (26,484) |
| Less: | ||
| Provision (recovery) for income taxes | 2,166 | 1,774 |
| Depreciation of property and equipment | 10,460 | 9,987 |
| Impairment of property and equipment | 204 | 53 |
| Amortization of intangible assets | 1,205 | 1,679 |
| Interest expense, net | 13,613 | 11,879 |
| Stock-based compensation | 1,505 | 1,873 |
| Unrealized loss (gain) on foreign exchange revaluation of foreign denominated monetary assets and liabilities | (364) | 390 |
| Acquisition and transition costs* | 15 | 3,051 |
| Adjusted EBITDA | 13,671 | 4,202 |
| * Acquisition 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. |
Adjusted Net Income and Adjusted Basic Earnings Per Common Share (Adjusted EPS)
The Company believes that the provision of this supplemental non-GAAP measure allows investors to best evaluate our operating results and understand the operating trends of our core business without the effect of acquisition and transition costs, impairment expenses and losses on extinguishment of debt. Acquisition 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. Since adjusted net income and adjusted EPS are non-GAAP financial performance measures, the Company’s calculation of adjusted net income and adjusted EPS may not be comparable to other similarly titled measures of other companies; and should not be considered in isolation, as a substitute for, or superior to measures of financial performance prepared in accordance with GAAP.
The Company’s adjusted net income and adjusted EPS definitions exclude from the calculation of reported GAAP net income and GAAP EPS, the effect of the following items: impairment of property and expenses, acquisition and transition costs (including restructuring charges) and loss on debt extinguishment.
The following table reconciles adjusted net income and adjusted EPS to GAAP net income (In thousands of US dollars, except Per Share data):
| 3 Months ended March 31 | ||
| 2025 (unaudited) | 2024 (unaudited) | |
| Net Income (Loss) for the period | (15,133) | (26,484) |
| Less: | ||
| Acquisition and transition costs* | 15 | 3,051 |
| Impairment of property and equipment | 204 | 53 |
| Adjusted Net Income (Loss)¹ for the period | (14,914) | (23,380) |
| Adjusted Basic Earnings (Loss) Per Common Share¹ | (1.35) | (2.14) |
| * Acquisition 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. |
Management Commentary
Concurrent with the dissemination of its quarterly financial results news release at 5:05 p.m. ET on Thursday, May 8, 2025, management’s pre-recorded audio commentary (and transcript), discussing the quarter and outlook for the Company will be posted to the Tucows website at http://www.tucows.com/investors/financials.
Following management’s prepared commentary, for the subsequent seven days, until Thursday, May 15, 2025, shareholders, analysts and prospective investors can submit questions to Tucows’ management at ir@tucows.com. Management will post responses to questions in an audio recording and transcript to the Company’s website at http://www.tucows.com/investors/financials, on Tuesday, May 27, 2025, at approximately 5 p.m. ET. All questions will receive a response, however, questions of a more specific nature may be responded to directly.
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