Wednesday , September 28 2022

Tucows reports Q2 2022 results

Tucows Inc. (NASDAQ: TCX) reported its financial results for the second quarter ended June 30, 2022. All figures are in U.S. dollars.

“We had a strong second quarter, with revenue and gross profit up 11% and 21% year over year respectively, driven by strong growth in each of our Ting Internet Services (“Ting”) and Wavelo Platform Services (“Wavelo”) businesses, and another quarter of consistent performance from our Tucows Domain Services (“Tucows Domains”) business,” said Elliot Noss, President and Chief Executive Officer, Tucows Inc.

“Adjusted EBITDA increased 5% in Q2 of 2022 compared to Q2 of 2021. The increase was fueled by growth in Wavelo, but offset by the continued Ting investment, from the acceleration of our build and operations of the Ting fiber network. We again achieved a new record for trailing 12-month capital expenditure for the Ting opportunity.”

Financial Results

Net revenue for the second quarter of 2022 increased 11% to $83.1 million from $75.1 million for the second quarter of 2021. The increase was the result of growth in revenue from each of Ting Internet Services and Wavelo Platform Services businesses.

Gross profit for the second quarter of 2022 increased 21% to $22.1 million from $18.2 million for the second quarter of 2021. The increase was the result of the same factors as net revenue.

Net loss for the second quarter of 2022 was $3.1 million, or a loss of $0.29 per share, compared with net income of $1.8 million, or $0.17 per share, for the second quarter of 2021 with the loss being the result of accelerated build of our Ting Internet Services fiber network and ramp up of operations, higher depreciation and interest expenses.

Adjusted EBITDA1 for the second quarter of 2022 increased 5% to $11.7 million from $11.2 million for the second quarter of 2021. The modest increase in adjusted EBITDA1 was mainly fueled by growth in Wavelo, which was offset by the ongoing investment in Ting, which was expected as we continue to accelerate the build of our Ting Internet Services fiber network and ramp up operations.

Cash and cash equivalents at the end of the second quarter of 2022 were $6.5 million compared with $6.2 million at the end of the first quarter of 2022 and $7.3 million at the end of the second quarter of 2021.

Summary Financial Results 
(In Thousands of US Dollars, Except Per Share Data)

3 Months ended June 30

6 Months Ended June 30

2022

(Unaudited)

2021

(Unaudited)

% Change

2022

(Unaudited)

2021

(Unaudited)

% Change

Net Revenues

83,084

75,093

10.6 %

164,183

145,968

12.5 %

Gross Profit

22,053

18,239

20.9 %

43,251

35,692

21.2 %

Gain on Sale of Ting Customer Assets, net1

4,520

4,808

(6.0 %)

9,272

10,203

(9.1 %)

Net income

(3,125)

1,807

(272.9 %)

(6,145)

3,956

(255.3 %)

Basic earnings per common share

(0.29)

0.17

(270.6 %)

(0.57)

0.37

(254.1 %)

Adjusted EBITDA1

11,700

11,158

4.9 %

23,012

23,881

(3.6 %)

Net cash provided by operating activities

12,576

3,518

257.5 %

17,983

17,604

2.2 %

1.  This Non-GAAP financial measure is described below and reconciled to GAAP net income in the accompanying table.

Summary of Revenues, Gross Profit and Adjusted EBITDA 
(In Thousands of US Dollars)

Revenue

Gross Profit

Adj. EBITDA1

3 Months ended

June 30

3 Months ended

June 30

3 Months ended

June 30

2022

(Unaudited)

2021

(Unaudited)

2022

(Unaudited)

2021

(Unaudited)

2022

(Unaudited)

2021

(Unaudited)

Ting Internet Services:

Fiber Internet Services

10,221

5,548

5,804

2,542

(6,185)

(4,590)

Wavelo Platform Services:

Platform Services

7,970

2,734

7,768

2,621

Other Professional Services

1,000

144

Total Wavelo Platform Services

8,970

2,734

7,912

2,621

3,872

724

Tucows Domain Services:

Wholesale

Domain Services

46,979

47,883

10,041

10,176

Value Added Services

5,597

5,482

4,954

4,899

Total Wholesale

52,576

53,365

14,995

15,075

Retail

8,487

8,897

4,968

4,400

Total Tucows Domain Services

61,063

62,262

19,963

19,475

12,107

12,122

Corporate:

Mobile Services and Eliminations

2,830

4,549

105

1,322

1,906

2,902

Network Expenses:

Network, other costs

n/a

n/a

(4,764)

(3,612)

n/a

n/a

Network, depreciation of property and equipment

n/a

n/a

(6,589)

(4,084)

n/a

n/a

Network, amortization of intangible assets

n/a

n/a

(378)

(24)

n/a

n/a

Network, impairment of property and equipment

n/a

n/a

(1)

n/a

n/a

Total Network expenses

n/a

n/a

(11,731)

(7,721)

n/a

n/a

Total

83,084

75,093

22,053

18,239

n/a

n/a

Change in Reporting Segments

During the first quarter of 2022, Tucows completed a reorganization into three businesses: Fiber Internet Services (“Ting”), Platform Services (“Wavelo”) and Domain Services (“Tucows Domains”). Previously, we disclosed the three operating and reportable segments: Fiber Internet Services, Mobile Services and Domain Services. The previously named Mobile Services segment was renamed the Platform Services segment, and no longer includes the 10-year payment stream on transferred legacy subscribers earned as part of the DISH Purchase Agreement as well as the retail sale of mobile phones, retail telephony services and transition services, which are now part of the financial results reported under the Corporate category. The renamed Platform Services segment includes Platform and Professional Services offerings (now branded as Wavelo), as well as the billing solutions to Internet services providers (“ISPs”) that was previously reported under the Fiber Internet Services segment. The Fiber Internet Services segment now includes only the retail high speed Internet access operations, excluding the billing solutions moved to the new Platform Services segment. The offerings included in the Domain Services segment are unchanged. The Corporate category includes the aforementioned mobile services, as well as eliminations of intercompany transactions, portions of Finance and Human Resources that are centrally managed, Legal and Corporate IT. Prior period comparable results have been restated to reflect the changes in reporting segments. A quarterly summary of the Company’s restated segment revenue, gross margin and EBITDA for 2021 and annual 2020 can be found in the “KPI Summary Q2 2022” supplementary disclosure, posted on https://tucows.com/investors/financials/.


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