Elliot Noss | executive |
David Woroch | executive |
Justin Reilly | executive |
Davinder Singh | executive |
Welcome to Tucows Third Quarter 2023 Management Commentary.
We have prerecorded prepared remarks regarding the quarter and outlook for the company. A Tucows' generated transcript of these remarks with relevant links is also available on the company's website. In lieu of a live question-and-answer period following these remarks, shareholders, analysts and prospective investors are invited to submit questions to Tucows management via e-mail at ir@tucows.com until Thursday, November 9. Management will either address your questions directly or provide a recorded audio response and transcript that will be posted to the Tucows website on Tuesday, November 21, at approximately 4:00 P.M. seven like which that all provides businesses the also quarterly updated full of Build includes financial year presentation. Scorecard would Investors as of for summary, well and KPI results key last also Time.We to the with advise Tucows' along the historical the in our investor for XXXX, Eastern as quarters, metrics website, XXXX available the and and section XXXX year-to-date is updated Ting for
statements, the specifically full These documents XX-K risk factors company's you the The that on On results the most the reports remarks. and discussion the the the release to and are with prepared section. materially. a under over and management's November results to XX-Q. Forms business.I security which company X, like would Tucows description the news turn ahead, to risk company's Elliot for of now applicable for Now could financial to ended factors available to differ release filed President Please forward-looking a Investors issued Thursday, are on and risks are Noss. cause its XXXX.That Officer, filings described urges reporting at Chief for its recent Executive in to Go the detail subject note call actual statements the uncertainties Tucows the read company's website news in financial tucows.com that its include following may SEC, September third quarter XX, Elliot.
Thanks, Monica.
for stability. for strong and a recently Tucows us debt and results and steady quarter new the state Ting further that syndicated signed continued terms show gave Wavelo We of Tucows improved third Our credit agreement growth domains. a
are million cash all and side $XX EBITDA both $XX on years a reshape XXXX have to capital. we is from Ting economic million side the $X.X EBITDA head flow to are track quarter and in the public loss to net context Wavelo the using markets happening balance continuing the TCX unique for with of on on We into cheap $XX This guidance on Tucows of QX, an after and with XX the million a on we our debt this million. private, domains.As repaid of million $XX also of where
we'll who Now from will the business Go financial Dave as from Executive results Tucows Domains. CFO, hear in Singh, Chief heads our as speaker first each cover ahead, of detail.The Dave Dave. our Woroch, Officer, is well
Elliot. Thanks,
QX are We domains to transactions continue to return business and slightly year-over-year. up under management X%, a are in XXXX. up trajectory normalized
third which positively QX year. last from in price or accounting. and continue a are million, take health continue Services Domain due look and X% to business We million new gross It declining. margin This an million to Services the develop now margin. we for moment for items of increase $XX.X business. indicator important from was talk you our quarter a Revenue $X.X to year-over-year.When for of more distribution margin is detail. X.X% to now last channels. $XX.X year, the way for Domain increased same margin our focus services million $XX.X business up million, about our in third up in flat deferred gross was the on the the quarters, to quarter, the impacting X% was revenue same core also gross increases quarter-over-quarter previous X% $XX.X our up basis, at increasing their through was our reported business In EBITDA, managing our QX. complement The Concurrently, working adjusted leverage and to of we the I'll is quarter
which QX our to names, was to retail In period to due of weaker continues few year, the remained value-added driver This channel, revenue the channel, segments gross year. X% gross gross key be down these the sales course look year-over-year. happen of same let's wholesale and was compared outsized Services the year, flat services margin our up gross of business. of up margin Now up unchanged XX%. an will QX over high-value X%. issue XX% was revenue of compared sales, in In Net was last is down aftermarket, margin gross margin the last Domains retail A industry-wide. and was the our the while to a of X% margin Domain across sale was which is for year-over-year.Domain margin
brands is overall within renewal two the to an finally, our look in we across XX% QX a range of registry acquired and.cloud, registry encouraging historical top-level our in we Our remains services as rate the and combined the which Malaysia new forward XXXX, business, platform.my, industry we business. country services top-level migration the This completed generic gTLDs. average.And step onto grow last new Domains at within launched above clients all code from domain recently round Tucows QX of our well our domain in
recent our highly that to our with have conducting year, our that Investor referenced work Day quietly work turning adding and business emphasize we ideas done. that new platform our we product channels. structure, I Now to from cost this core this and we been benefit would new are challenges value-added have history distribution our quarters, services.I services; which exploring earlier the leverage a complement I that in discussed have efficient few current within the also continues At
resellers. web area hosting first small us is The of focus modernizing for for
allows resellers the into modernizing. representative difficulties with working ago technologies given their within experience XX XXXX, benefits hosting to operate Tucows, reseller the older years XX and the tens who hosting resellers which thousands using businesses are cloud, of have available to we and is old. While the long still companies a a both has operated Since of transitioned hands-on us us we small of gain of and the typical technology between have largest to use.This experience company insight where
developed have services. resellers to set tools automation cloud-based that We transition of a enable to
user adopter focused next in remains pleasantly on been engagement have resellers but program improving we by official interest Additionally, work year, we launch an an a into both enrolled the experience. before surprised area. this have of the and number More early still level of
other it excelled fixed our the their our is area are continue channel, service and product both and our will offering we domain are The as excited that purchasing provisioning focusing creating for as is billing for billing of on moving and the about its to and optimistic adoption. new of in so product easier mobile iterate is seems this has We're consistently something type direction at and management.We a about can to well. extend an interest functionality is names, Tucows in, experience we in Internet. There domain extend provisioning a are resellers need channel this very we and and customers
a being to As competitive revenue a mature and in growth. able business products a is add to important space, stream complementary maintain new revenue
it on have offerings the can to will initial Justin coming our over the new gross will mentioned continue of as to investors this updated previously, with we I expectation keep and the scale contribution expenses margin impact over to evolves.Now progress in Reilly, As area the an that years. modest I be CEO Wavelo. on quite operating
of Wavelo's margin of asset of of in XXXX gross gross of DISH last Thanks, from from another QX TCX, quarters Wavelo increase million Wavelo was to noted, with concern traditional ability funded from in the standalone in Wavelo's I'm as operating cash these XXX% pleased adjusted Dave. last in manage margin to the quarter. costs an company and and X% $X.X operations million platform of route $X.X In quarter.As provided of $X.X and quarter of generation, and outsized Wavelo's seven the from for grew public quarter subscribers. hold of into the from in a and DISH launch. million, unwinding well was known $XX.X loaded lumpy since QX, millions a not $XX.X a This increased Adjusting first professional million related discipline back. services our platform.We revenue way increase XXXX bundled marks million with noncash quarter recognition $X and margin Wavelo annually a XX% QX, the million, services revenue respectively, of QX $XX.X are loss $X.X $X.X for million Wavelo as $XX.X part from VC we QX team's taking increase strongest impacts, of million quarter fully we from and impact a launched EBITDA revenue and we experienced quarter-over-quarter. would agreement. million that business, was XXX% there up Inside QX. expressed and $X.X million to contra from EBITDA Adjusted strong our delivered as gross previously Wavelo boost and revenue onboarding included When an on million we the this X% to by as conservative from revenue and nearly for an actually QX XXXX contract in base while management
in in looks prescient network.They encouraged reaching the DISH, unlimited million most largest competitive their more the stage over have their everyone we the aspires as and retail voice commercial On in early Boost deployment XG offers well VC markets. Now XXX disciplined now were to. as dried with progress and XX market up as this choice by operations XG what has are iPhone Americans wireless Infinite on and of than
also all mobile, what what yet are the in indication We operating And dollars that DISH are we particular, throw has to in quarter, business a say the outrageous. last that only massive on is is platform. now in know best they not demonstrate constrained we can at can we that Ting about Wavelo's is but not that a see it in is this been.As the While telecom DISH there telecom we continues transparent feel some its by spend market, in most the and advertising shared of and appreciate we excited, to CAC has good fact clear not this. be that offer and position
launch to and features of the We are helping in ISP midst delighting in customers new the continue customer United the happiest migrations States. Ting
a it's Our growth, earlier transformation launched and in net result we to-date latter Platypus change pilot go-to-market logos purchase SaaS I a this happy our the that as quarter standing is year. accelerating they is in what is this with looking decisions up strong than positive true, team the as sitting telecom the This XXXX.Both but it where indicators of upgrades longer in legacy today, are pipeline customer-centric mix in general, from QX to provisioning is in have of is of telecoms more past. a and QX in going am we for quick that the program to new The When a of momentum pipeline qualified business. expand to operating comes and is even are of also is provisioning, both was If a if versus investment.And result dedicated more is strongest new customer a are in expect pipeline. new becomes are of and adding early to true. This many cost-cutting take cloud it given time as priority going to to our a well mode now, year, opportunities software. providers traction, wins. less the business cloud right replace
a Our sales on percentage each competitors revenue year marketing. the large spend of and
below is much well next the quarters few to go-to-market invest over spend.Thanks this to average spend listening, now inefficient, grow for we the expect view and further of we industry the while Elliot. over pipeline do to staying for While
I'm addresses Justin. year-over-year XXX,XXX to at and available. XX% see pleased in taking Total particularly starting for Springs XX% almost total up to us Ting-owned infrastructure XX,XXX, year-over-year, XXX,XXX, Partner to up serviceable addresses addresses. came at in addresses Colorado serviceable Thanks, become
the X,XXX onboard seven added QX. net taking construction vendor.We in vendor from for for a in at leading in This the because our fiber to XX,XXX quarters. to we We was in Alexandria, primarily us subscribers over resumed was new QX while construction last Our million a micro-trenching down new over total. are QX, previous there in subscribers QX. CapEx best quarter we is transitioning $XX.X small gap quarters new
subscribers a continue year-over-year, as our and construction grown Our for to preorder have growth total have over we pipeline expect installations. steadily XX% progresses, that and strong to continue we
been grew the million. shared grew are There capital to flowing year-over-year was and year-over-year growth the Our of in most not having that revenue a in gross landlord million, side providers. partner to the cities, experienced margin into by $XX.X XX% with in utilities multiple We've similar past markets. has and industry, the tenant $X commercial partnered XX% tenants.We
are but we and performance. a to taking seeing matures, partnership sharing more expectations segment and partner Partner the As more are more opportunities, of pragmatic risks build approach
partnerships capital us strength, the our right know, best leverage Blue terms exclusive the with markets.Investors about partnerships, attractive the have will the may Memphis, and market greatest the be ISP Suede they XXX,XXX country allow complexities the given business our to in small in is the ISP those that in building seen up without Networks will Ting requirements residential that you what's As operating This shouldering of to-date years. serve for of with Tennessee. Ting's and and yesterday as first Vibranium largest Network to operating five partner addresses announcement
business Memphis, Memphis. Ting come create a the while projected ongoing a entrepreneurs more a Ting partnering be in new its the we're with two and novel installs. marketing that and cultural with African-American XXXX lead existing allows across in friendly partner through adoption build the Suede risk who marketers This acquisition online be team in share short to businesses. of Network, using cash-flow influence The wealth the also market dedicated build to created first in To taking network communities.Leveraging summer specialize and Blue of investing with customers to partnership term, impact We're Vibranium will our has construction marketing better the from customer allows approach in in our to insights in and structure markets, Networks and will strategy XXXX.
footprint our addresses in just We XX,XXX also north Tucson. recently of expanded by potential Marana, adding Tucson, serviceable Arizona
with looking operation our to area.The item organic easily our some more the to was stake leverage of Goldman exploring time than didn't builds costs last equity that we Pima strategy Ting Sachs and available into a in structured OpEx more come hold we us. the of opportunity County, expand opted Bank SimplyBits Marana with being. You is to The ultimately associated and is We're the the will their off for, this of acquisition fruition. were sale to Street. and the recall in first in with is to quarter's minority for This
land we markets.And expenses turn results. diverse our the larger on now the for more Ting transaction a in we to business The strong deeper the dive effectively grow show focus to Dave I'd call while the However, into Singh financial scaling quarter. business and results, concurrently over continues to as on like
million revenue third million million million of XX.X% $XX.X different increasing $XX.X Total XX.X% revenue XXXX the QX QX to When the $X gains had XXXX from quarter increased XXXX. QX XXXX QX for million looking for for quarter to in from in XXXX. to of was in primarily corporate QX Wavelo's $X in Elliot. XXX% Thanks, gains from million in by quarter $X.X in revenues were retained subscribers higher XXXX costs in a decline from from subscribers legacy profit intercompany as sale of Ting XXXX. decline XX% of year-over-year lower million XX% year-over-year million million driven The as for network DISH QX increased XXXX. by the segment to QX QX revenue to businesses, Ting across from increased to year-over-year, $XX.X third up And the revenue to before three Domains $XX compared for in the $XX.X mobile the of QX offset increasing Gross $XX.X Tucows in $XX.X million was X.X%, well XXXX. eliminations. businesses $XX.X million revenues third from XXXX.The Mobile in million $XX.X to
the $XX.X profit QX XXXX. profit gross of XXXX million network XX% last year third down before compared increased gross by profit was X.X% revenue, to Tucows of million. from Domains' percentage gross of to $XX.X a As from business quarter quarter for this Breaking costs XX% QX for
Tucows unchanged by profit for QX gross percentage remained finish Domains will for with increased robust a this gross at XX% as XXXX.Wavelo's of year-over-year QX $XX.X million As the Boost XXXX subscribers. loaded for fully to million a XXX% quarter quarter $X.X revenue, we margin from
in slightly QX million of last QX margin Ting period percentage same a to from increased from for year. As year. XX% Wavelo profit XX% XX% year-over-year was is gross up which of quarter, for million revenue, the $X.X this of gross $X last for
year.This for revenue, to QX XX% the was of margin Ting of percentage in gross expenses of QX from Network increased in $XX.X from million up third a last quarter XX% XX% slightly year. XXXX, for assets, As driven $XX.X to depreciation last continues period network million by expanding up of the XX% of be for as managing higher as network. increase our expanding same fiber well primarily our year-over-year people costs
People by to marketing Internet fiber included operating $XX.X result same for Ting and increased support and capital third-party million, and $X.X were of costs million $X.X Ting the and assets Wavelo.Sales contracting professional primarily to $XX.X year-over-year, and to damage also support up quarter driven This subsidiary referenced Total the million of Facility the increased for million to compensation of obsolescence. the by process certain while to costs the primarily workforce related business in year-over-year, the year. XX% Ting Wavelo. were $X.X increase business $X.X write-downs The fees costs mainly up costs increased earlier. following: related equity XXXX third travel expansion. the related period is the costs Stock-based raise Ting quarter investments expenses in from were and grants up with impairment increased million of $X.X mainly expansion million from million increased last to due Elliot growth
finally, QX Foreign and of by impacts year-over-year of driven revaluation increased equipment loss assets disposition this amortization and property on exchange monetary are the impacts million foreign from denominated million liabilities.And our expenses quarter, down $X.X from XXXX. of assets $X.X the primarily by and intangible
million, QX XXXX. Wavelo for from a businesses business. break was year. total was increase expansion. $X.X three for XXXX compared down for $XX.X of result from and That last per invest loss loss was scaling XXXX. amongst a the with of loss Adjusted last Ting Adjusted from decrease period negative or for year. note EBITDA million our X.X% $X.XX $XX.X loss of As primarily expense $XX.X in fiber share category $X.X Canada XX% of of finally, on is revenue, of compared QX both $X is EBITDA EBITDA quarter of of follows: depreciation Adjusted The higher geographic million $X Domains an we year.The construction network quarter of QX to We for of the property expenses higher up share with rates our $X.X this year. nearly million and reported million of a net or reflects from networks And ongoing interest XX% of network lower third Adjusted increased legacy taxes higher as was of and up equipment, base mix operations, per $X.XX with compensation the the operating our XX% tax for the million, million that negative Domains the million, increased of Legacy higher associated $X.X last last expenses primarily $X.X from from driven a mobile million in loss in QX net a QX downs stock-based a million EBITDA $X.X same for our QX for in fiber and Tucows EBITDA XXXX higher quarter, for percentage from and million this of had and an year debt.Please adjusted by corporate net Ting's contribution continue as our eliminations. down XXX% the the impairment interest payable third intercompany
$XXX.X at of sheet; at compared were quarter to and million third second end equivalents end the of of quarter the cash the million cash of balance the of end XXXX. our $XX.X at $XXX.X the with XXXX QX million Turning and
part securities $XX.X classified to the have quarter. we In asset-backed as cash $XXX.X million as ABS addition or of restricted last transaction the million,
generated with $X.X interest million As collections $X sit parties $X.X ABS also assets a monthly cash, of cash that distributed in reminder, and income funds the I we a million as to remaining the for remaining the million the fees from $XX.X is duration million note Ting. the to back the notes.The of trust securitized quarter. and interest in restricted of will to reflects account this note-holders, coming third would the
assets investment and we million in build-out with for network capitalized in that negative Ting the invested flow to compared primarily from on equipment, During negative in quarter includes continued had cash statement Wavelo with interest. the and larger actual the by continued QX $XX.X million quarter, the the million year, in operations the in this reflects the $X operating platform.Note the paid increase cash We Fiber for Ting of investment primarily capital $X.X driven number a last Fiber. in property the addition cash for
in set As ever we May quarter, first mentioned last asset-backed the Ting business. for of issued securities our
I leverage in $XXX.X $XXX.X into expect the already taking million after our assets, original notes letters tests resulted million the of hand balance proceeds rate customer with million the purposes which a a account of of $X.X balance of was As The against loan approximately X.XXx. in and covenant net a calculation repaid into most after X.XX% a million, also cash of in quarter a when up to expense. on monthly $X.X loan revenue early coupon $X.X fiber discount. issuance versus on continue.We've carry annualized notes a paid XXXX wanted secured QX. We factoring costs original quarterly for and net of account credit September an XX, of of to covenant million of reminder, a payments to were the value $X.X the advise interest issue that million and and are with million syndicated issue further the repaid ratio this Ting. notes monthly issued blended taking of of Interest $XXX.X effective of net with relationships is including discount, X.X%.The rate certain
stabilization year. that have revenues normalized.That down Elliot. million to due now now back the XXXX, was pandemic remarks. from Finally, I'll impacts QX deferred up concludes second my revenue quarter $XXX $XXX the of Domains from it of $XXX is at turn last for This quarter the the million end of to the of but for primarily million, third
Dave. Thanks,
the again see third-party ISP quarter the continued towards new efficiencies positive customers, of new bulk In pipeline, This for and ISP applications on and all the have the the Ting. businesses. trends Domains, flow the of we customer perhaps better cash spend Wavelo, In need more most we partner and cash made progress we the to opportunities while have for operating material operating all we installs. progress In Ting, load our manifest operating opportunities.Partner platform held years operations service flow of flexibility dollars as three integrated network positive. marketing tended migrated to most negative our and in seeing are first couple successfully launches since on and both exciting of Ting of the
are or flow quickly. has neutral over more reinforced. these positive are XX cash able that been improved even so macroeconomic environment the now to structure deals but very last not is We they The instead days,
all capital venture huge private commercial equity, real to continue that estate, evidence be to further classes, We asset and need see repriced.
macro investments those has last years. TCX as much is it vestiges continue weighs the venture private between between a first have years. note years time are private and obvious capital and available has triage.This the running will starting large before stock of get our means This than and view my off-ramp our for the the This businesses of been of macro has It less capital traditional equity while note in to businesses tight to gap cap public XXXX.The stock also asset the And the starting making the stock economy for tender reprice. wherever We exacerbated take between we and the greatest that first conservative we price, in XX the this the that discrepancy public price, overvalued it's as the Dutch see looking I reasons. to market desire than public greater to value repricing private and now be greater for there lots greater the cash up was of a also on and even to equity classes our that greater. value is to the now the is three disconnect table has gap deployed. TCX The expect in announced for valuations. thin three possible. the venture are economy, I still our capital seed even company, and seen float, I we dried
An Metronet. I a preferred private need method big see prioritize that are also in need the are have three move become two all investments with generally always further to subscale businesses. discuss, We description funding. equity that will trends This our flows easier. hat We and This may that to to require try proof. specific strong their any the businesses scale both leverage. fiber, combining put cash infusion reach There believe recession private of to particularly capital necessary of other of the an scale That level applies asset-backed benefit place. to in more order They the of follow of build say to public appropriate towards operational taking tip also of seeing securities companies into And we fiber and hard and Metronet equity capital the makes that efficiency. like hands.With to a cost trail ABS, the structure. lower ABS out in an trend capital Ting a and are created the to facility provides capital and recapping market private at push ABS subsequent this Altice to and that ABS strengthen investments may
advantage move existing a as real we is Our forward. facility ABS
Searchlight of money capital investments taking is with smart Capital. stink smart telecom that the as trend Ziply, launched active the Most economic U.S. been build.We've private backer consolidated an a will needs And case, in the a the with of privatization fiber is which cycle. case consolidated that the allow a taken opportunity has the second case frontier process. of them. is market preexisting that involved. in most each privatization with the consolidated, in coax-to-fiber existing each through seen the of fully of thesis public returns consolidated transition twice investor in that from space.The activist in company shareholder in The familiar In case, of of the Uniti/Windstream, public the terribly Searchlight not is extremely each company the receptive. perhaps a has is not investment cash communications. private to as In the Points is they well to there the importantly, go advantage group market front fiber money take current this Broadband the in each an In in quarter, burn and the a All case,
have met as important anyone. are from smart say I than as or these those We TCX them. takeaways situations. investors with space the do know that that know two not for lightly.There and They me are And know better well
First, are as unnamed Jana's are Jana right the the telecom trade. side TCX trade BCIP, on and They the of partner. same the side on of investors Searchlight, BCIP,
quarter, Thursday, Thank your them. please And ir@tucows.com interest you I response X:XX to demonstrated are more Tucows Second, forward by And Tuesday, written In of values vehicles TCX to send that in fiber you. by in company, website on let and I approximately at years closing, detail. PM. trade. posted time take my audio transcript and we of questions on Time. as advantage very have Q&A spent of that dynamic seen investors look public greater X, ability private said that to like with public participate times. the be a recorded provides I November long-term our a few areas capital last running to this that, for in clearly XX The XX, exploring opportunity questions November have to look Again, the never your investors and call capital allocation.These is owning assets. Searchlight. Eastern one to