Tucows ((TCX)) has held its Q4 earnings call. Read on for the main highlights of the call.
Discover the Best Stocks and Maximize Your Portfolio:
- See what stocks are receiving strong buy ratings from top-rated analysts.
- Filter, analyze, and streamline your search for investment opportunities with TipRanks’ Stock Screener.
The recent earnings call from Tucows presented a balanced view of the company’s financial performance, highlighting significant revenue growth and positive outcomes in segments like Tucows Domains and Wavelo. Despite these achievements, the overall sentiment was tempered by Ting’s restructuring costs and operating losses, contributing to a notable net loss for the quarter.
Strong Revenue Growth and Financial Performance
2024 was a remarkable year for Tucows, marking its fourth consecutive year of consolidated revenue growth. The company reported a 19% year-over-year increase in gross profit and over doubled its annual Adjusted EBITDA to nearly $35 million. Excluding the impacts from Ting, Adjusted EBITDA stood at $57.4 million, a staggering 126% increase from $15.5 million in 2023.
Tucows Domains Revenue and Margin Growth
Tucows Domains showed robust performance, with Q4 revenue climbing to $65.7 million, a 6% rise from the previous year. The gross margin also saw an 8% increase to $20.3 million. Domain Services’ Adjusted EBITDA for Q4 was $11.6 million, reflecting an 8% year-over-year growth.
Wavelo’s Positive Financial Metrics
Wavelo demonstrated strong financial results for 2024, with revenue reaching $39.9 million and a gross margin of $38.6 million. The segment’s Adjusted EBITDA was $13.8 million, surpassing the guidance and improving from $10.6 million reported last year.
Ting’s Subscriber and Revenue Growth
Ting reported a 14% increase in revenue for Q4, totaling $15.7 million. This growth was driven by a 17% increase in subscribers, reaching 50,700. The segment also reported a 40% increase in gross margin to $11.0 million.
Record Debt Repayment
Tucows made significant progress in reducing its financial leverage by repaying $16.5 million on its syndicated bank loan in 2024. This strategic move effectively reduced interest expenses.
Ting’s Operating Losses and Restructuring Costs
Ting faced substantial challenges due to a $28.2 million one-time restructuring and impairment charge related to its capital efficiency plan. This charge was a significant factor in the company’s net loss of $45.3 million for the quarter.
Wavelo’s Quarterly Revenue Decline
Despite its annual success, Wavelo experienced a slight decline in Q4, with revenue down 1.9% from Q3 to $9.9 million and a gross margin reduction of 6.5% from the previous quarter.
Net Loss and Adjusted EPS Decline
The company reported a net loss of $45.3 million for Q4, with an Adjusted EPS loss of $1.43 per share. This was primarily due to one-time charges associated with Ting’s restructuring efforts.
Forward-Looking Guidance
Tucows provided optimistic guidance for future performance, anticipating a 75% growth in Adjusted EBITDA for 2025. The company aims to achieve this through continued progress in operational efficiencies and strategic initiatives across its various business segments. Furthermore, Tucows announced a $40 million stock buyback program for 2025, indicating confidence in its long-term growth prospects.
In summary, the earnings call from Tucows highlighted a mix of positive growth and challenges. While Tucows Domains and Wavelo showed strong performance, the restructuring efforts at Ting and the associated losses were a cause for concern. However, the forward-looking guidance suggests a positive trajectory, with expectations of significant growth in the coming years.
