Tucows Reports Financial Results for Second Quarter 2023
"Our second quarter results continue to show the potential of the Tucows growth businesses, said Elliot Noss, Tucows President and CEO. Our Ting and Wavelo businesses saw
Financial Results
Consolidated net revenue for the second quarter of 2023 increased
Gross profit for the second quarter of 2023 decreased
Net loss for the second quarter of 2023 was
Adjusted EBITDA1 for the second quarter of 2023 decreased
Cash, cash equivalents, restricted cash and restricted cash equivalents at the end of the second quarter of 2023 were
Summary Financial Results
(In Thousands of US Dollars, Except Per Share Data)
3 Months ended June 30 | 6 Months ended June 30 | |||||
2023 (unaudited) | 2022 (unaudited) | % Change | 2023 (unaudited) | 2022 (unaudited) | % Change | |
Net Revenues | 84,978 | 83,084 | 2.0 % | 165,408 | 164,183 | 0.7 % |
Gross Profit | 18,032 | 22,053 | (18.2) % | 32,093 | 43,251 | (26) % |
Income Earned on Sale of Transferred Assets, net | 4,289 | 4,520 | (5.1) % | 8,659 | 9,272 | (6.6) % |
Net Income (Loss) | (30,968) | (3,125) | (891) % | (50,051) | (6,145) | 714 % |
Basic earnings (Loss) per common share | (2.86) | (0.29) | (886) % | (4.63) | (0.57) | 712 % |
Adjusted EBITDA¹ | 5,395 | 11,700 | (54) % | 8,425 | 23,011 | (63) % |
Net cash by (used in) operating activities | (1,587) | 12,576 | (113) % | (6,838) | 17,983 | (138) % |
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 Margin | Adj. EBITDA¹ | ||||
3 Months ended June 30 | 3 Months ended June 30 | 3 Months ended June 30 | ||||
2023 (unaudited) | 2022 (unaudited) | 2023 (unaudited) | 2022 (unaudited) | 2023 (unaudited) | 2022 (unaudited) | |
Ting Internet Services: | ||||||
Fiber Internet Services | 12,408 | 10,221 | 7,051 | 5,804 | (10,336) | (6,185) |
Wavelo Platform Services: | ||||||
Platform Services | 10,342 | 7,970 | 10,012 | 7,768 | ||
Other Professional Services | 409 | 1,000 | 40 | 144 | ||
Total Wavelo Platform Services | 10,751 | 8,970 | 10,052 | 7,912 | 3,427 | 3,872 |
Tucows Domain Services: | ||||||
Wholesale | ||||||
Domain Services | 46,782 | 46,979 | 9,492 | 10,041 | ||
Value Added Services | 4,745 | 5,597 | 4,162 | 4,954 | ||
Total Wholesale | 51,527 | 52,576 | 13,654 | 14,995 | ||
Retail | 8,429 | 8,487 | 4,275 | 4,968 | ||
Total Tucows Domain Services | 59,956 | 61,063 | 17,929 | 19,963 | 10,578 | 12,107 |
Corporate: | ||||||
Mobile Services and Eliminations | 1,863 | 2,830 | (797) | 105 | 1,726 | 1,906 |
Network Expenses: | ||||||
Network, other costs | n/a | n/a | (6,993) | (4,764) | n/a | n/a |
Network, depreciation of property and equipment | n/a | n/a | (8,757) | (6,589) | n/a | n/a |
Network, amortization of intangible assets | n/a | n/a | (379) | (378) | n/a | n/a |
Network, impairment | n/a | n/a | (74) | - | n/a | n/a |
Total Network Expenses | n/a | n/a | (16,203) | (11,731) | n/a | n/a |
Total | 84,978 | 83,084 | 18,032 | 22,053 | 5,395 | 11,700 |
1. This Non-GAAP financial measure is described below and reconciled to GAAP net income in the accompanying table.
Notes:
1. Adjusted EBITDA
Tucows reports all financial information required in accordance with
The Company believes that the provision of this supplemental non-GAAP measure allows investors to evaluate the operational and financial performance of the Company's core business using similar evaluation measures to those used by management. The Company uses adjusted EBITDA to measure its performance and prepare its budgets. Since adjusted EBITDA is a non-GAAP financial performance measure, the Company's calculation of adjusted EBITDA may not be comparable to other similarly titled measures of other companies; and should not be considered in isolation, as a substitute for, or superior to measures of financial performance prepared in accordance with GAAP. Because adjusted EBITDA is calculated before certain recurring cash charges, including interest expense and taxes, and is not adjusted for capital expenditures or other recurring cash requirements of the business, it should not be considered as a liquidity measure. Non-GAAP financial measures do not reflect a comprehensive system of accounting and may differ from non-GAAP financial measures with the same or similar captions that are used by other companies and/or analysts and may differ from period to period. The Company endeavors to compensate for these limitations by providing the relevant disclosure of the items excluded in the calculation of adjusted EBITDA to net income based on
The Company's adjusted EBITDA definition excludes depreciation, impairment and loss on disposition of property and equipment, amortization of intangible assets, income tax provision, interest expense (net), accretion of contingent consideration, stock-based compensation, asset impairment, gains and losses from unrealized foreign currency transactions, loss on debt extinguishment and costs that are not indicative of on-going performance (profitability), including acquisition and transition costs. Gains and losses from unrealized foreign currency transactions removes the unrealized effect of the change in the mark-to-market values on outstanding unhedged foreign currency contracts, as well as the unrealized effect from the translation of monetary accounts denominated in non-
The following table reconciles income before provision for income taxes to Adjusted EBITDA (dollars in thousands):
3 Months ended June 30 | 6 Months ended June 30 | |||
2023 (unaudited) | 2022 (unaudited) | 2023 (unaudited) | 2022 (unaudited) | |
Net income (Loss) for the period | (30,968) | (3,125) | (50,051) | (6,145) |
Less: | ||||
Provision for income taxes | (3,025) | 738 | (4,735) | 1,817 |
Depreciation of property and equipment | 8,907 | 6,735 | 17,495 | 12,778 |
Impairment of property and equipment | 74 | 95 | 2,016 | 507 |
Amortization of intangible assets | 2,609 | 2,843 | 5,481 | 5,686 |
Interest expense, net | 10,501 | 2,422 | 18,381 | 4,217 |
Loss on debt extinguishment | 14,680 | - | 14,680 | - |
Accretion of contingent consideration | - | 50 | - | 148 |
Stock-based compensation | 2,052 | 1,436 | 4,298 | 2,828 |
Unrealized loss (gain) on foreign exchange revaluation of foreign denominated monetary assets and liabilities | (126) | 46 | (84) | 100 |
Acquisition and transition costs* | 691 | 460 | 944 | 1,076 |
Adjusted EBITDA | 5,395 | 11,700 | 8,425 | 23,012 |
* Acquisition and other costs represent transaction-related expenses, transitional expenses, such as redundant post-acquisition expenses, primarily related to our acquisitions, including Simply Bits in November 2021. Expenses include severance or transitional costs associated with department, operational or overall company restructuring efforts, including geographic alignments.
Management Commentary
Concurrent with the dissemination of its quarterly financial results news release at 5:05 p.m. ET on Thursday, August 3, 2023, management's pre-recorded audio commentary (and transcript), discussing the quarter and outlook for the Company will be posted to the Tucows website at http://www.tucows.com/investors/financials.
Following management's prepared commentary, for the subsequent seven days, until Thursday, August 10, 2023, shareholders, analysts and prospective investors can submit questions to Tucows' management at ir@tucows.com. Management will post responses to questions in an audio recording and transcript to the Company's website at http://www.tucows.com/investors/financials, on Tuesday, August 22, 2023, at approximately 4 p.m. ET. All questions will receive a response, however, questions of a more specific nature may be responded to directly.
Tucows helps connect more people to the benefit of internet access through communications service technology, domain services, and fiber-optic internet infrastructure. Ting (https://ting.com) delivers fixed fiber Internet access with outstanding customer support. Wavelo (https://wavelo.com) is a telecommunications software suite for service providers that simplifies the management of mobile and internet network access; provisioning, billing and subscription; developer tools; and more. Tucows Domains (https://tucowsdomains.com) manages approximately 24 million domain names and millions of value-added services through a global reseller network of over 35,000 web hosts and ISPs. Hover (https://hover.com) makes it easy for individuals and small businesses to manage their domain names and email addresses. More information can be found on Tucows' corporate website (https://tucows.com).
Tucows, Ting, Wavelo, and Hover are registered trademarks of Tucows Inc. or its subsidiaries.
This release includes forward-looking statements as that term is defined in the
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SOURCE Tucows Inc.