Tucows(TCX)2024-11-07 22:06Financial Performance - For the three months ended September 30, 2024, the company reported net revenue of 87.0 million for the same period in 2023, representing a growth of approximately 2.9%[190] - Total net revenues for the three months ended September 30, 2024, increased by 92.3 million compared to the same period in 2023[245] - Total net revenues for the nine months ended September 30, 2024, increased by 269.2 million compared to the same period in 2023[246] - Ting generated 2.5 million or 19% compared to the same period in 2023[251] - Net revenues from Wavelo Platform Services increased by 29.9 million for the nine months ended September 30, 2024, compared to the same period in 2023[255] - Net revenues from Other Professional Services decreased by 26,000 for the nine months ended September 30, 2024, compared to the same period in 2023[257] - Wholesale domain services net revenue increased by 146.5 million for the nine months ended September 30, 2024, compared to the same period in 2023[259] - Retail domain services net revenue increased by 28.0 million for the nine months ended September 30, 2024, compared to the same period in 2023[264] - Net revenues from Mobile Services increased by 6.3 million for the nine months ended September 30, 2024, compared to the same period in 2023[266] Subscriber Growth - As of September 30, 2024, Ting Internet had 50,000 active subscribers, up from 41,000 active subscribers as of September 30, 2023, indicating a growth of approximately 22%[192] - Internet subscribers under management increased to 50,000 in September 2024, up from 41,000 in September 2023, representing a growth of 21.95%[206] - Wavelo's integration into Ting Internet has enabled faster subscriber growth and footprint expansion, with revenues tied to subscriber volumes[214] Infrastructure and Services - Ting Internet had access to 132,000 owned infrastructure serviceable addresses, an increase from 114,000 in the previous year, reflecting a growth of approximately 15.8%[192] - The company operates three segments: Ting, Wavelo, and Tucows Domains, each focusing on distinct services and markets[188] - Tucows Domains manages 24.6 million domain names, with an increase of less than 0.1 million, or less than 1%, since September 30, 2023[202] - Total domain names under management reached 24,565 in September 2024, slightly up from 24,543 in September 2023, indicating a growth of 0.09%[209] Cost Management and Efficiency - The company incurred non-recurring charges of approximately 7.4 million, impacting about 42% of Ting's workforce[195] - The company anticipates that the workforce reductions and Capital Efficiency Plan will lead to savings primarily in sales and marketing, with smaller impacts in other operational areas[196] - The company has executed a capital efficiency plan that will significantly slow new Ting Internet footprint expansion, potentially impacting long-lived asset values[222] Financial Obligations and Risks - Cash and cash equivalents decreased by 44.8 million invested in property and equipment for Ting Internet expansion[326] - Net cash outflows from operating activities for the nine months ended September 30, 2024, totaled 197.4 million on the 2023 Credit Facility, with repayments due in 2026[330] - Ting may not meet its financial obligations over the twelve months following September 30, 2024, without additional financing[342] - The company is subject to market risk exposure related to changes in interest rates under the 2023 Credit Agreement[346] Internal Controls and Compliance - The company is in the process of remediating a material weakness in internal control over financial reporting[359] - Management concluded that disclosure controls and procedures were not effective due to a material weakness in internal control over financial reporting as of September 30, 2024[356] - The company believes its consolidated statements fairly represent its financial position, results of operations, and cash flows despite the material weakness[357] - The company is involved in various investigations and lawsuits, none of which are believed to materially harm the business[360] Adjusted EBITDA - Adjusted EBITDA for Q3 2024 increased by 8.7 million compared to Q3 2023, primarily driven by subscriber growth in Ting and reduced sales and marketing expenses[323] - For the nine months ended September 30, 2024, Adjusted EBITDA rose by 22.1 million, with significant contributions from Ting, Wavelo, and Tucows Domains[324] - Ting's contribution to Adjusted EBITDA increased by $10.7 million for the nine months ended September 30, 2024, driven by subscriber growth and reduced spending[324]