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TI

TUCOWS INC /PA/ (TCX)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 delivered 7.1% revenue growth to $93.1M and 403% YoY expansion in Adjusted EBITDA to $12.8M; GAAP net loss reflects one-time restructuring/impairment at Ting. An amendment on Mar 13 reduced the non-cash impairment, revising Q4 net loss to $42.5M (from $45.3M) and EPS to $(3.86) (from $(4.11)) .
  • Domains and Wavelo remained reliable cash engines; Ting’s cost reset and focus shift drove a sharp improvement in quarterly Adjusted EBITDA (loss narrowed to $(1.5)M from $(12.4)M a year ago) and slightly positive monthly EBITDA in December, positioning Ting for breakeven in 2025 .
  • 2025 guide: Consolidated Adjusted EBITDA “in and around” $56M before a $9M one-time Verizon MVNO wind-down charge (≈$46M after), with Domains ~$44M, Wavelo ~$13M, Ting ~breakeven, Corporate ≈$(1)M (or ≈$(10)M including the one-time charge) .
  • Capital allocation and de-leveraging: $40M buyback authorization for 2025; $16.5M of syndicated debt repaid in 2024; leverage at 3.26x (ex-Ting ABS/pref) at year-end; Wavelo renewed a 4-year EchoStar Boost contract, supporting visibility into 2025 .

What Went Well and What Went Wrong

  • What Went Well

    • Domains: Resilient, cash-generative core; Q4 revenue $65.7M (+6% YoY), gross margin $20.3M (+8% YoY), Adjusted EBITDA $11.6M (+8% YoY). Renewal rate ~76% remains above industry average; registry services pipeline expanding (e.g., .IN back-end) .
    • Wavelo: Record year; FY24 Adjusted EBITDA $13.8M vs guidance $8–$10M; Q4 revenue $9.9M (+3.6% YoY), Q4 Adjusted EBITDA $3.7M (+41% YoY), 4-year EchoStar renewal secured .
    • Ting improvement: Q4 revenue $15.7M (+14% YoY); gross margin +40% YoY to ~$11.0M; Q4 Adjusted EBITDA loss narrowed to $(1.5)M; slightly positive monthly EBITDA in December .

  • What Went Wrong

    • GAAP profitability: Q4 net loss $(42.5)M (amended), driven by one-time impairment/restructuring; interest expense remains high from debt load at Ting and corporate-level facilities .
    • Sequential gross profit dip: Q4 gross profit $21.2M vs $22.2M in Q3 (partly mix and timing); Wavelo saw typical Q3 services lumpiness, with Q4 gross margin at ~95% of revenue vs 99% in Q3 .
    • Ting capital intensity/financing: Two failed common equity processes and large workforce reductions; pivot away from new build to loading existing/partner footprints, reflecting challenging mid-market fiber equity conditions .

Financial Results

Overall performance (sequential trend)

MetricQ2 2024Q3 2024Q4 2024 (Amended)
Revenue ($M)89.423 92.297 93.098
Gross Profit ($M)20.810 22.188 21.223
Net Income (Loss) ($M)(18.604) (22.297) (42.475)
Adjusted EBITDA ($M)9.178 8.688 12.849
Basic EPS ($)(1.70) (2.03) (3.86)

YoY comparison – Q4 2024 vs Q4 2023

MetricQ4 2023Q4 2024 (Amended)
Revenue ($M)86.958 93.098
Gross Profit ($M)17.821 21.223
Net Income (Loss) ($M)(23.374) (42.475)
Adjusted Net Income (Loss) ($M)(22.382) (15.775)
Adjusted EBITDA ($M)2.554 12.849
Basic EPS ($)(2.14) (3.86)
Adjusted EPS ($)(2.05) (1.43)

Segment breakdown (Revenue, Gross Profit, Adj. EBITDA)

SegmentMetricQ3 2024Q4 2024 (Amended)
Ting Fiber Internet ServicesRevenue ($000s)15,310 15,749
Gross Profit ($000s)10,989 10,994
Adj. EBITDA ($000s)(5,070) (1,468)
Wavelo Platform ServicesRevenue ($000s)10,082 9,888
Gross Profit ($000s)10,019 9,368
Adj. EBITDA ($000s)3,429 3,679
Domains – TotalRevenue ($000s)64,715 65,674
Gross Profit ($000s)19,810 20,341
Adj. EBITDA ($000s)11,529 11,633
Corporate (Mobile & Eliminations)Revenue ($000s)2,190 1,787
Gross Profit ($000s)(1,134) (2,052)
Adj. EBITDA ($000s)(1,200) (995)
Network Expenses“Network, other costs” ($000s)(6,864) (5,990)
Depreciation PPE ($000s)(9,414) (10,536)
Amortization intangibles ($000s)(366) (366)
Impairment ($000s)(852) (536)
TotalRevenue ($000s)92,297 93,098
Gross Profit ($000s)22,188 21,223
Adj. EBITDA ($000s)8,688 12,849

KPIs

KPIQ2 2024Q3 2024Q4 2024
Ting Subscribers (approx.)>40,000 ~50,000 50,700
Ting Serviceable Addresses – Ting-owned120,300 132,000 133,500 (to settle 135–140k)
Ting Total Serviceable Addresses (incl. partners)164,500 172,600 178,800
Domains Renewal Rate76% 76% 76%
Wavelo Gross Margin % of Revenues97% 99% ~95%

Note on estimates: S&P Global consensus data for Q4 2024 was unavailable at time of analysis due to a retrieval limit; estimate comparisons are therefore omitted.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Adjusted EBITDA (Consolidated)FY 2025Not specified here≈$56M before one-time $9M Verizon MVNO wind-down charge (≈$46M after) New framework
Adjusted EBITDA – DomainsFY 2025Not specified here≈$44M New
Adjusted EBITDA – WaveloFY 2025FY24 guide $8–$10M (beat) ≈$13M Raised vs FY24 actual baseline
Adjusted EBITDA – TingFY 2025Not specified here≈Breakeven Improvement
Adjusted EBITDA – CorporateFY 2025Not specified here≈$(1)M, or ≈$(10)M including one-time Verizon charge New
FY 2024 Adjusted EBITDA OutcomeFY 2024“Guidance range” (not disclosed here)Achieved “top of our guidance range” Met
Capital Allocation2025Prior $40M program terminatedNew $40M repurchase authorization (2/14/25–2/13/26) New

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 2024, Q3 2024)Current Period (Q4 2024)Trend
Ting capital efficiency and pivotQ2: cost control, improving margins; Q3: ~42% Ting workforce reduction; halt expansion, focus on penetration/ARPU; failed common equity process Q4: Q4 EBITDA loss narrowed to $(1.5)M; slightly positive monthly EBITDA in Dec; 2025 Ting ~breakeven Improving profitability; focus on loading networks
Wavelo growth and anchor customerQ2: steady state post EchoStar migration, modular product strategy; high GM, rising EBITDA Q4: 4-year EchoStar renewal; FY24 EBITDA $13.8M; 2025 EBITDA guide $13M; more Tier1/2 interest Stable growth with visibility
Domains resilience and registry servicesQ2/Q3: DUM stable, renewal ~76%, registry momentum; value-added expiry stream strength Q4: Q4 revenue +6% YoY; GM +8%; technical provider for .IN; renewal rate 76% Durable core; new registry traction
AI enablement in telecomQ3: AI can’t fix broken back offices; need re-platforming Q4: “If AI is a rocket, Wavelo is the jet fuel”; event-driven architecture positions carriers for AI era Escalating strategic emphasis
Capital markets/ABS and deleveragingQ2/Q3: ABS market supportive; sequential debt paydown Q4: $16.5M syndicated paydown in 2024; leverage 3.26x; buyback authorized Continued de-risking/capital return optionality

Management Commentary

  • “Adjusted EBITDA for the year reached the top of our guidance range, driven in large part by Ting’s improved results.” – Elliot Noss, CEO
  • “Ting… generated slightly positive adjusted EBITDA for the month of December.” – Elliot Noss
  • “We expect to continue to invest [in Wavelo]… so we are providing an adjusted EBITDA guidance of $13 million.” – Justin Reilly, Wavelo CEO
  • “Consolidated [2025] guidance… around $56 million… $44 million for Domains; $13 million for Wavelo; breakeven for Ting; and a $1 million loss for Corporate… plus a one-time $9 million Verizon charge.” – Elliot Noss
  • “We repaid a further $2.0 million on the balance of the syndicated bank loan in Q4… $16.5 million paid down in 2024… and authorized a $40 million buyback.” – Elliot Noss

Q&A Highlights

  • Format: No live Q&A; investors invited to submit questions by email post-remarks, with recorded responses posted Mar 4, 2025 (window Feb 13–20) .
  • Clarifications emphasized in remarks: 2025 Adjusted EBITDA breakdown including one-time Verizon charge; Ting EBITDA path to breakeven and focus on penetration/ARPU; Wavelo’s 2025 EBITDA guide and EchoStar renewal underpinning visibility .

Estimates Context

  • Wall Street consensus via S&P Global for Q4 2024 could not be retrieved due to a system limit, so estimate comparisons vs revenue/EPS are not presented here. We will update with S&P Global (Capital IQ) consensus upon request.

Key Takeaways for Investors

  • Quality of earnings improving beneath GAAP noise: Q4 Adjusted EBITDA inflected strongly while GAAP remained burdened by one-time impairment/restructuring; use Adjusted metrics to assess underlying trajectory .
  • Ting pivot is working: from expansion to optimization, with December turning slightly positive EBITDA and 2025 breakeven targeted; watch penetration and ARPU execution in Memphis/Colorado Springs partner markets .
  • Durable cash engines: Domains steady with growing registry services; Wavelo secured a 4-year EchoStar renewal and guided 2025 EBITDA ~$13M, signaling sustained profitability .
  • Balance sheet work continues: $16.5M debt reduction in 2024; 3.26x leverage; 2025 buyback authorization provides capital return optionality as deleveraging advances .
  • 2025 setup: Consolidated Adjusted EBITDA guide ≈$56M pre one-time (≈$46M after); key swing factors include Ting load/ARPU, Domains’ registry investments timing, and Wavelo enterprise pipeline conversion .
  • Trading lens: With structural cost resets and improving unit economics, catalysts include evidence of Ting sustained EBITDA breakeven, incremental registry wins at Domains, and Tier1/2 logo additions at Wavelo; one-time Verizon charge timing is known and largely non-operational .