Release Date: August 08, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Tucows Inc (NASDAQ:TCX) reported a 5.2% year-over-year increase in consolidated net revenue for Q2 2024, reaching $89.4 million.

• Gross profit grew 15.4% year over year to $20.8 million, with contributions from all three business segments.

• Adjusted EBITDA increased by 70% year over year to $9.2 million, driven by improvements in Ting's performance.

• Ting's subscriber base grew by 10.5% year over year, with a 17.4% increase in serviceable addresses.

• The company successfully reduced its leverage ratio for the fifth consecutive quarter, reflecting effective debt management.

Negative Points

• Tucows Inc (NASDAQ:TCX) reported a net loss of $18.6 million for Q2 2024, although this was an improvement from the previous year's loss.

• Wavelo's revenues decreased by 2.3% year over year, attributed to a reduction in professional services fees.

• Cash and cash equivalents decreased significantly to $39.3 million at the end of Q2 2024 from $147.9 million a year earlier.

• Operating expenses, although reduced, still reflect increased costs from contract and professional services.

• Ting's adjusted EBITDA remained negative at $6.4 million, despite improvements from the previous year.

Q & A Highlights

• Warning! GuruFocus has detected 6 Warning Signs with TCX.

Q: Can you provide an overview of Tucows' financial performance for the second quarter of 2024? A: Elliot Noss, President and CEO, reported that Tucows saw solid year-over-year and quarter-over-quarter growth in revenue, gross margin, and adjusted EBITDA. Revenue increased by 5.2% to $89.4 million, with gross profit growing 15.4% to $20.8 million. Adjusted EBITDA rose 70% year over year to $9.2 million, driven primarily by improvements in Ting's performance.

Q: How did the Domains segment perform in Q2 2024? A: David Woroch, CEO of Tucows Domains, stated that the Domains segment generated $62.4 million in revenue, up 4% from the previous year. The gross margin increased by 5.2% to $18.9 million, and adjusted EBITDA was $11.2 million, up 6% year over year. The segment saw a marginal increase in domains under management and a slight decrease in transactions.

Q: What were the key developments for Wavelo in the second quarter? A: Justin Reilly, CEO of Wavelo, highlighted that Wavelo's revenue was $10.5 million, down 2.3% year over year due to a reduction in professional services work. However, gross margin increased to $10.2 million, and adjusted EBITDA rose 14.1% to $3.9 million. Wavelo launched a Product Catalog to enhance flexibility for operators and focused on onboarding new clients.