Tucows(TCX) - 2025 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Consolidated revenue for Q4 2025 was $98.7 million, up 6% year-over-year, with all three segments contributing [9] - Q4 gross profit was $24.1 million, up 14% year-over-year, supported by a favorable mix [9] - Adjusted EBITDA for Q4 was $11.1 million, down 14% year-over-year, while total consolidated adjusted EBITDA for fiscal 2025 was $50.6 million, which was $3.6 million above guidance and represented a 45% increase from fiscal 2024 [10][11] Business Segment Data and Key Metrics Changes - Tucows Domains reported Q4 revenue of $66.4 million, a modest increase from $65.7 million, with gross profit rising 4% to $19.2 million [12] - Wavelo achieved Q4 revenue of $11.7 million, a 19% increase year-over-year, with gross profit up 7% to $6.6 million [14] - Ting Internet's Q4 revenue was $18.5 million, up 18% year-over-year, with gross profit improving to $1.6 million from a loss of $1.2 million in Q4 2024 [14] Market Data and Key Metrics Changes - Domains under management and transactions are normalizing at a modestly lower level due to a customer taking their business in-house, but margins remain healthy due to a diverse reseller base [5] - Wavelo's performance was driven by renewing its inaugural customer and aligning incentives, indicating a strong market position [6] Company Strategy and Development Direction - The company aims to transition into a capital-light business with a lean operating model, focusing on recurring revenue and strong customer retention [22][24] - The strategy includes leveraging technical expertise and operational capabilities to build technology services that benefit from shared infrastructure [23] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the complexity of the current operating environment but expressed confidence in the company's ability to execute and innovate [4] - The outlook for fiscal 2026 includes an Adjusted EBITDA range of $47 million-$49 million for Tucows Domains and $14.5 million-$15.5 million for Wavelo, with corporate expectations of -$6 million to -$9 million [18][19] Other Important Information - The company ended the quarter with cash and restricted cash of $64.2 million, down from $73.2 million in Q4 of the previous year [16] - Corporate net debt, excluding Ting, was $189.5 million, with compliance maintained under the TCX syndicated facility [16] Q&A Session Summary - There was no live Q&A session; however, shareholders and analysts were invited to submit questions via email, with responses to be posted on the company's website [2][27]