Tucows Inc. (TCX) Q4 2025 Earnings Call Prepared Remarks Transcript

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Overview

The earnings call presents a mixed outlook: positive financial performance in some areas (Domains and Wavelo) and challenges in others (Ting Internet, high debt). The lack of specific guidance for Ting and high debt levels create uncertainty. Despite some positive EBITDA results, the strategic uncertainty and financial constraints temper optimism. The absence of significant new partnerships or shareholder return announcements further supports a neutral sentiment.

Key Financial Performance

Adjusted EBITDA for 2025 $50.6 million, $3.6 million above guidance, driven by outperformance from Domains and Wavelo.

Domains Adjusted EBITDA for 2025 $48.7 million, above guidance, driven by solid execution, growth in registry services, and sales from Expiry Stream.

Wavelo Adjusted EBITDA for 2025 $17.5 million, $4.5 million above guidance, driven by customer renewals, profitability discipline, and a strong pipeline.

Ting Adjusted EBITDA for 2025 Improved but below guidance, with flat gross profit year-over-year due to a mix shift between partner and owned markets.

Consolidated Revenue for Q4 2025 $98.7 million, up 6% year-over-year, driven by contributions from all three segments.

Q4 Gross Profit $24.1 million, up 14% year-over-year, supported by higher-margin Domains expiry revenue and lower Wavelo costs.

Operating Expenses for Q4 2025 $33.1 million, down 35% year-over-year, due to normalization after prior year's restructuring costs and impairment charges.

Domains Q4 Revenue $66.4 million, up modestly year-over-year, with a 4% increase in gross profit to $19.2 million, supported by Expiry Stream.

Wavelo Q4 Revenue $11.7 million, up 19% year-over-year, with a 7% increase in gross profit to $6.6 million, supported by customer renewals and improved COGS.

Ting Q4 Revenue $18.5 million, up 18% year-over-year, with gross profit improving to $1.6 million from negative $1.2 million in Q4 2024.

Net Loss for Q4 2025 (GAAP) $22 million, improved from a net loss of $42.5 million in Q4 2024, due to reduced restructuring costs and impairment charges.

Net Loss for Q4 2025 (Non-GAAP Adjusted) $19.4 million, compared to $15.8 million in Q4 2024, impacted by professional fees and legacy mobile obligations.

Cash and Restricted Cash at End of Q4 2025 $64.2 million, down from $73.2 million in Q4 2024, reflecting disciplined capital allocation and liquidity maintenance.

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Operating Highlights

Registry services: Scaling registry as a complementary line of business, diversifying revenue and strengthening long-term growth.

Wavelo: Delivered double-digit growth across revenue, gross profit, and adjusted EBITDA for the fourth consecutive year. Renewed inaugural customer and aligned incentives for profitability. Focused on modest investment in sales and marketing to strengthen pipeline health for 2026 bookings conversion. Leveraged AI for targeted go-to-market strategy.

Ting Internet: Net subscriber growth saw its strongest quarter in Q4 due to a refocused and targeted sales and marketing campaign. Improved adjusted EBITDA despite falling short of gross profit expectations. Focused on operating responsibly and preserving enterprise value.

Domains: Achieved growth in revenue, gross profit, and adjusted EBITDA, exceeding guidance by $4.7 million. Strong performance in Expiry Stream sales and value-added services.

Capital-light business model: Transitioning Tucows into a capital-light business with a lean operating model, focusing on recurring revenue and scalable operations.

AI adoption: Accelerating AI adoption across internal operations to improve workflows, automate tasks, and enhance product delivery.

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Risk or Challenges

Ting Internet's Strategic Process: The company is still working through the strategic process for Ting Internet, with no definitive information or visibility into timing and outcomes. This creates uncertainty and could impact investor confidence and operational focus.

Ting Internet's Financial Performance: Ting Internet finished the year below guidance, with gross profit flat compared to 2024 and falling short of expectations. The mix shift between partner and owned markets negatively impacted margins.

Legacy Mobile Obligations: Legacy mobile obligations continue to create headwinds, impacting gross profit and corporate adjusted EBITDA.

Capital Constraints: The company's constrained ability to deploy cash strategically has limited its financial and strategic flexibility for multiple years, affecting growth and operational decisions.

Lean Sales and Marketing Team: The company operates with an intentionally lean sales and marketing team, which could limit its ability to capture new customer growth and expand its market presence.

Macroeconomic Conditions: The 2026 guidance is subject to macroeconomic conditions and other risks, which could impact the company's financial performance and strategic plans.

High Debt Levels: Ting's net debt stands at $438.8 million, and corporate net debt is $189.5 million. High debt levels could limit financial flexibility and increase vulnerability to economic uncertainties.

Operational Complexity: The company is undergoing a period of significant change and transition, which could lead to operational inefficiencies and challenges in execution.

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Guidance & Outlook

Tucows Domains Adjusted EBITDA: Expected range of $47 million to $49 million for fiscal 2026, reflecting integration and maintenance of registry contracts and moderated contribution from Expiry Stream sales.

Wavelo Adjusted EBITDA: Expected range of $14.5 million to $15.5 million for fiscal 2026, assuming continued investment in product features, modest ramp in sales and marketing, and outcomes for Ting Internet and Mobile subscribers.

Corporate Adjusted EBITDA: Expected range of negative $6 million to negative $9 million for fiscal 2026, driven by legacy mobile contract obligations and corporate overhead.

Total Consolidated Guidance (Excluding Ting): Expected range of $52.5 million to $58.5 million for fiscal 2026.

Ting Strategic Process: No specific guidance provided until more definitive information is available. Focus remains on operating Ting responsibly, protecting enterprise value, and preserving optionality.

Capital Allocation and Cash Flow: Plans to transition to a capital-light business model, tightly manage CapEx, maintain cost discipline, and improve working capital to self-fund growth and deleverage.

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Shareholder Return Plan

The selected topic was not discussed during the call.

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Key Q&A

Q:Review of Unclear Management Responses

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Earnings Word Cloud

The most frequently occurring keywords in this quarter's earning call

TCX Transcript

Tucows Inc. (TCX) Q4 2025 Earnings Call Prepared Remarks Transcript

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Tucows, Inc (TCX) Q1 2025 Earnings Call Transcript

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The earnings call reveals strong financial performance, including significant revenue growth, improved gross profit, and reduced net loss, alongside operational efficiencies. The positive trajectory is bolstered by strategic initiatives in AI integration and market expansion. While macroeconomic uncertainties and regulatory challenges exist, the company's robust liquidity position and improved financial health mitigate these risks. Despite the lack of a share repurchase program, the overall sentiment remains positive, supported by optimistic guidance and strategic growth plans.

Tucows Inc. (NASDAQ:TCX) Q4 2024 Earnings Call Transcript

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The earnings call summary highlights strong financial performance with a significant increase in adjusted EBITDA and revenue growth. The stock buyback program is a positive indicator for shareholder returns. Despite some risks and vague responses in the Q&A, the partnership with Amazon AWS and the expectation of Ting reaching breakeven are positive factors. Overall, the sentiment leans positive, suggesting a potential stock price increase of 2% to 8% over the next two weeks.

Tucows, Inc. (TCX) Q3 2024 Earnings Call Transcript

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The earnings call presents a mixed picture: revenue growth and improved EBITDA contrast with significant risks like workforce reduction, failed equity partner search, and halted market expansion. The lack of a shareholder return plan and high debt leverage further weigh negatively. Despite some financial improvements, the focus on cost-cutting and conservative strategies suggests limited short-term upside. The absence of positive catalysts and high interest expenses contribute to a negative sentiment, likely leading to a stock price decrease of -2% to -8% over the next two weeks.

TCX Report

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