Tucows (NasdaqCM:TCX) Q4 2025 Earnings call February 25, 2026 04:00 PM ET Speaker1Welcome to Tucows question and answer dialogue for Q4 2025. David Woroch, President and Chief Executive Officer of Tucows and Tucows Domains, will be responding to your questions. For your convenience, this audio file is also available as a transcript in the investors section of our website, along with our Q4 2025 financial results and updated reports. I would also like to remind investors that if you would like to receive our ...

Core Viewpoint - Google is heavily investing in AI, with projected capital expenditures reaching $175 billion to $185 billion by 2026, primarily for servers and data centers, as part of its commitment to the AI arms race [2][4][30]. Group 1: Capital Expenditure and AI Investment - The significant capital expenditure forecast for 2026 is aimed at supporting the development of Google DeepMind's advanced models and meeting the surging demand from cloud customers [6][30]. - Approximately 60% of the capital expenditure will be allocated to servers, while 40% will go towards data centers and network equipment [6][30]. - The increase in infrastructure investment is expected to lead to a substantial rise in depreciation expenses, which will exert ongoing pressure on profit margins [6][56]. Group 2: AI's Role in SaaS and Market Dynamics - In response to fears that AI could disrupt traditional software business models, Google’s CEO emphasized that Gemini serves as an "engine" for SaaS companies rather than a terminator, with 95% of the top 20 SaaS companies already utilizing Gemini [8][39]. - The Gemini App has surpassed 750 million monthly active users, indicating strong engagement and the potential for monetization through a new "agentic commerce" model [12][29]. Group 3: Partnership with Apple - Google has confirmed a significant partnership with Apple, positioning itself as the preferred cloud provider and collaborating on the development of the next-generation Apple Foundation model based on Gemini technology [9][10][39]. Group 4: Cloud Business and AI Infrastructure - Google Cloud's revenue grew by 48%, driven by strong demand for AI infrastructure, with a notable increase in new customer acquisition and larger customer commitments [19][36]. - The company is employing a dual strategy of using both self-developed TPUs and NVIDIA GPUs to enhance its AI capabilities [19][36]. Group 5: YouTube and Advertising Growth - YouTube's advertising revenue increased by 9%, with significant growth in subscription services, particularly YouTube Music Premium [21][46]. - The platform continues to lead in streaming, with Shorts averaging over 200 billion views daily, indicating a robust engagement trend [21][46]. Group 6: Efficiency and Internal Operations - Google has achieved a 78% reduction in service unit costs for Gemini through model optimization and efficiency improvements [22][56]. - Approximately 50% of the code is now written by coding agents, allowing engineers to focus on higher-level tasks and improve operational efficiency [22][66].