Tucows(TCX) - 2022 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Total revenue for Q1 2022 increased 14% to $81.1 million from $70.9 million in Q1 2021, driven by strong growth in Ting Fiber Internet Services and Platform Services, up 93% and 973% respectively [32] - Gross profit before network costs increased 28% year-over-year to $31.7 million from $24.7 million, with gross margin before network costs increasing to 39% from 35% [33] - The company reported a net loss of $3 million, or $0.28 per share, compared to net income of $2.1 million, or $0.20 per share, for the same period last year [35] Business Line Data and Key Metrics Changes - Domain Services revenue for Q1 was essentially unchanged year-over-year, with adjusted EBITDA decreasing 5% primarily due to a stronger Canadian dollar impacting operating expenses [12][32] - Platform Services revenue for Q1 2022 was $6.1 million, up from $0.6 million in Q1 2021, with professional services revenue increasing to $0.8 million [18] - Ting Fiber reported 2,300 net subscriber additions, totaling 27,800 subscribers, with total serviceable addresses reaching 98,100 [23] Market Data and Key Metrics Changes - The overall combined renewal rate for Tucows in Q1 remained well above the industry average at 81%, returning to pre-pandemic levels [12] - The wholesale channel revenue for Q1 was up just shy of 1% year-over-year, while the retail channel revenue decreased by 1% [13][14] Company Strategy and Development Direction - The company is focusing on the transition from reporting business segments to separate businesses, which began in Q1 2022, to provide clearer insights into performance [2][7] - Wavelo aims to transform the telecom software market, which is trending north of $100 billion, by addressing customer dissatisfaction in telecom billing [16][20] - Ting Fiber is expanding aggressively, with significant new market announcements and a focus on increasing construction pace and CapEx spend [23][26] Management's Comments on Operating Environment and Future Outlook - Management highlighted the gap between value creation and realization, particularly for Wavelo and Ting, indicating that the market may not yet fully appreciate the potential of these segments [40][41] - The company is optimistic about the long-term growth opportunities in the coax-to-fiber transition in the US, despite the current challenges [40][42] Other Important Information - The company generated $5.4 million in cash from operations in Q1, down from $14.1 million in Q1 2021, primarily due to increased prepaid expenses and timing of accounts receivable collections [38] - Deferred revenue at the end of Q1 was $152 million, up 3% from the previous quarter but down 3% year-over-year [38] Q&A Session Summary Question: What is the outlook for Wavelo's subscriber base? - Management recommended consulting DISH's quarterly earnings reports for insights on subscriber growth, noting DISH's 5G network launch in Las Vegas and plans for broader coverage [19]