Tucows(US:TCX)2022-11-03 21:22Financial Performance - For Q3 2022, the company reported net revenue of $78.1 million, a 2.9% increase from $75.9 million in Q3 2021[138]. - For the nine months ended September 30, 2022, net revenue reached $242.2 million, up 9.1% from $221.9 million in the same period of 2021[138]. - Total net revenues for the three months ended September 30, 2022 increased by $2.2 million, or 3%, to $78.1 million compared to the same period in 2021[188]. - Total net revenues for the nine months ended September 30, 2022 increased by $20.3 million, or 9%, to $242.2 million compared to the same period in 2021[189]. - Ting generated $10.9 million in net revenue during the three months ended September 30, 2022, up $4.5 million or 70% compared to the same period in 2021[193]. - Ting generated $31 million in net revenue during the nine months ended September 30, 2022, up $14 million or 82% compared to the same period in 2021[194]. - Wavelo's net revenues for the three months ended September 30, 2022 increased by $0.2 million to $4 million compared to the same period in 2021[196]. - Wavelo's net revenues for the nine months ended September 30, 2022 increased by $10.9 million to $18.1 million compared to the same period in 2021[197]. - Net income for the nine months ended September 30, 2022, was $15.5 million, a decrease of 38% compared to the prior year[278]. Revenue Segments - Ting segment focuses on providing reliable Gigabit Internet services, with ongoing expansion into new and existing markets[141]. - Wavelo segment offers full-service platforms for Communication Services providers, enhancing telecom software accessibility globally[142]. - Tucows Domains segment manages 24.5 million domain names and derives revenue from domain registration and value-added services[147]. - The revenue from Tucows Domains is primarily derived from domain name registrations and related value-added services, which are subject to competitive pricing pressures[162]. - Net revenues from Other Professional Services increased to $1.8 million for the nine months ended September 30, 2022, compared to zero revenues in the same period of 2021[199]. - Wholesale domain services net revenue decreased by $1.2 million to $140.8 million for the nine months ended September 30, 2022, driven by normalization of domain name registration growth[201]. - Retail domain services net revenue decreased by $0.9 million or 3% to $26.0 million for the nine months ended September 30, 2022, driven by decreased retail domain name registrations[206]. - Net revenues from Tucows Corporate decreased by $4.9 million or 37% to $8.5 million for the nine months ended September 30, 2022, primarily due to decreased transitional services[208]. Subscriber Growth - Ting Internet accounts under management increased to 33,000 in Q3 2022 from 23,000 in Q3 2021, representing a growth of 43.5%[152]. - Ting Internet owned infrastructure serviceable addresses rose to 90,000 in Q3 2022 from 68,000 in Q3 2021, a growth of 32.4%[152]. - The increase in Ting's revenue was driven by subscriber growth and the continued expansion of its Fiber network footprint across the United States[189]. Costs and Expenses - Personnel costs across operating segments were impacted by wage inflation, with increases exceeding 5% to remain competitive[169]. - Total cost of revenues for the three months ended September 30, 2022, increased by $2.2 million, or 4%, to $60.1 million from $57.9 million in the same period of 2021[221]. - For the nine months ended September 30, 2022, total cost of revenues increased by $12.9 million, or 8%, to $181 million from $168.1 million in the same period of 2021[222]. - Costs related to provisioning high-speed Internet access for the three months ended September 30, 2022, increased by $0.7 million or 19%, to $4.3 million compared to $3.6 million in the same period of 2021[224]. - Costs related to provisioning high-speed Internet access for the nine months ended September 30, 2022, increased by $3.5 million or 38%, to $12.7 million compared to $9.2 million in the same period of 2021[225]. - Sales and marketing expenses for the three months ended September 30, 2022, increased by $4.0 million, or 40%, to $13.9 million compared to $9.9 million in the same period of 2021[242]. - Sales and marketing expenses for the nine months ended September 30, 2022, increased by $11.8 million, or 43%, to $39.4 million compared to $27.6 million in the same period of 2021[243]. - General and administrative expenses for the three months ended September 30, 2022 increased by $2.8 million, or 56%, to $7.9 million compared to the same period in 2021[248]. - General and administrative expenses for the nine months ended September 30, 2022 increased by $6.8 million, or 44%, to $22 million compared to the same period in 2021[249]. Financing and Debt - The company has access to a $240 million Credit Facility, with a maturity extended to June 14, 2024[140]. - The maximum Total Funded Debt to Adjusted EBITDA Ratio is set at 4.00:1.00 until September 29, 2023, and 3.75:1.00 thereafter[140]. - The company requires additional financing to expand the Ting Internet footprint, with a standby fee of 0.50% on an unpaid capital commitment of $140 million[281]. - As of September 30, 2022, the company had an outstanding balance of $238.9 million on the Amended Credit Agreement, which includes SOFR Loans[292]. - Net cash inflows from financing activities increased by 243% to $104.6 million for the nine months ended September 30, 2022, driven by $60 million from redeemable preferred shares and $48.3 million from the Credit Facility drawdown[279]. Market and Economic Factors - The company is actively monitoring the impacts of COVID-19, geopolitical developments, and economic factors such as inflation and interest rates[132]. - The ongoing global COVID-19 pandemic has had limited financial and operational impacts on the company, with trends stabilizing in U.S. markets[167]. - A hypothetical 10% adverse movement in foreign currency exchange rates would decrease net income by approximately $1.5 million for the three months ended September 30, 2022[288]. - The company’s financial results are sensitive to changes in foreign currency exchange rates and interest rates[283]. Adjusted EBITDA - Adjusted EBITDA is disclosed to enhance understanding of financial performance, excluding certain non-cash and other charges[151]. - Adjusted EBITDA decreased by $4.3 million to $7.9 million for the three months ended September 30, 2022, compared to the same period in 2021[266]. - For the nine months ended September 30, 2022, adjusted EBITDA decreased by $5.2 million to $30.9 million compared to the prior year, primarily due to increased investments in Ting's Fiber Internet network[267].