Tucows Q1 2025 presentation slides: Adjusted EBITDA soars 225% as all segments grow

Introduction & Market Context

Tucows (NASDAQ:TCX) Inc. (NASDAQ:TCX, TSX:TC) presented its Q1 2025 financial results on May 8, 2025, showcasing strong performance across all business segments. The company’s stock responded positively, closing at $22.74 on the Toronto Stock Exchange, up 7.08% following the presentation.

The technology company, which operates three distinct business units – Tucows Domains, Wavelo, and Ting – demonstrated continued execution of its strategy of balancing reliable cash flow generation with investments in long-term growth opportunities. This approach has yielded 23 consecutive years of revenue growth throughout the company’s 24-year history as a public company.

Quarterly Performance Highlights

Tucows reported significant improvements across all key performance indicators for Q1 2025. Revenue increased 8% year-over-year to $94.6 million, while gross profit surged 28% to $23.5 million. Most notably, Adjusted EBITDA jumped 225% year-over-year to $13.7 million, reflecting substantial operational improvements.

As shown in the following consolidated business highlights:

All three business segments contributed to the company’s growth:

• Tucows Domains: Revenue increased 6% year-over-year, with gross margin up 9% and Adjusted EBITDA improving 15%
• Wavelo: Revenue grew 21% year-over-year (15% quarter-over-quarter), with margins increasing 25% year-over-year and Adjusted EBITDA up 60%
• Ting: Revenue rose 16% year-over-year, with gross margin improving 20% and Adjusted EBITDA up 91%

The company’s quarterly business highlights demonstrate the strength across all segments:

Detailed Financial Analysis

Despite the strong operational performance, Tucows still reported a net loss of $15.1 million for Q1 2025. However, this represents a 43% improvement from the $26.5 million loss in Q1 2024. The company’s adjusted net loss also improved by 36% to $14.9 million.

The company made a $2.5 million payment on its syndicated loan during the quarter, demonstrating its commitment to managing its debt obligations. As of March 31, 2025, Tucows had $38.1 million in cash, with $192.1 million in corporate debt and an additional $410.8 million in Ting-related debt, reflecting the capital-intensive nature of the fiber infrastructure business.

The quarterly KPI summary provides a detailed breakdown of revenue, gross profit, and Adjusted EBITDA by business segment:

Notably, Wavelo continues to be a high-margin business with margins representing 99% of revenue. Ting showed strong subscriber growth of 12% year-over-year, while its serviceable address footprint expanded by 19%, positioning the business for continued growth.

Strategic Initiatives

Tucows operates as a portfolio of tech businesses, with each segment pursuing distinct strategic priorities while contributing to the overall corporate goals. The company’s business structure is designed to allocate capital efficiently while providing shared services to its three subsidiary companies:

In the domains business, Tucows is focusing on managing for margin, modernizing its tech stack, and developing new value-added services to distribute through its reseller channel. With approximately 24.3 million domains under management and a global network of over 35,000 reseller customers, Tucows Domains continues to be a reliable cash flow generator for the company.

Wavelo is capitalizing on the global telecommunications industry’s transition to 5G and fiber infrastructure. The business unit is positioned to benefit from several macro trends, including the projected $130 billion in global OSS/BSS spending by 2028:

Ting continues to execute its strategy of capitalizing on the U.S. coax-to-fiber transition. With 70% of U.S. households still lacking access to fiber internet, the company sees significant growth potential in this market. Ting’s business model assumes a cost to build per serviceable address of approximately $1,650, with expected take rates of 20% in year one rising to 50% by year five.

Forward-Looking Statements

Tucows’ investment proposition centers on consistent revenue and cash flow generation combined with growth opportunities through high-volume, low-cost subscription services:

The company’s long-term performance track record demonstrates its ability to deliver consistent growth, with a 7.9% annual return on investment since going public. This performance is visualized in the company’s historical financial performance chart:

Looking ahead, Tucows is well-positioned to continue its growth trajectory. The Domains business provides reliable cash flow, Wavelo offers strong margins and growth potential in an underserved market, and Ting represents a long-term growth opportunity as fiber internet adoption accelerates across the United States.

With all three business segments showing positive momentum in Q1 2025, Tucows appears to be executing effectively on its balanced strategy of current cash generation and investment in future growth opportunities.

Full presentation:

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