Shares of Tucows Inc. TCX have risen 28.3% since the company reported earnings for the fourth quarter of 2024. This compares with the S&P 500 index’s 1.1% growth over the same time frame. Over the past month, the stock has gained 16.7% compared with the S&P 500’s 1.9% rally.
Q4 Results
The company reported a fourth-quarter 2024 adjusted loss per share of $1.43 per share, narrower than the loss of $2.05 per share reported in the year-ago quarter.
For the fourth quarter of 2024, Tucows reported consolidated net revenues of $93.1 million, reflecting a 7.1% year-over-year increase from $87 million in the year-ago quarter.
Lower impairment and restructuring costs aided the company’s quarterly performance.
Tucows Inc. Price, Consensus and EPS Surprise
Tucows Inc. Price, Consensus and EPS Surprise
Tucows Inc. price-consensus-eps-surprise-chart | Tucows Inc. Quote
Other Key Business Metrics
The Tucows Domains segment reported revenues of $65.7 million, up 6% year over year. The gross margin grew 8% to $20.3 million, whereas adjusted EBITDA increased 8% to $11.6 million. The company’s wholesale channel, which makes up the majority of the segment, saw 7% year-over-year revenue grow to $56 million, whereas the gross margin expanded 10%. The retail channel reported a modest 3% year-over-year revenue increase to $9.6 million, with gross margin growing at the same rate.
Wavelo, the company’s telecom software platform, delivered a 3.6% year-over-year revenue increase to $9.9 million. The gross margin remained strong at 95% of revenues, whereas adjusted EBITDA climbed 41% year over year to $3.7 million. Wavelo renewed its four-year partnership with Echostar’s Boost Mobile, reaching a milestone in its business growth.
Ting, Tucows’ fiber internet business, recorded revenues of $15.7 million, a 14% year-over-year increase. The segment’s gross margin improved 40% to $11 million, driven by cost optimizations following the company’s decision to stop new constructions. The adjusted EBITDA loss narrowed significantly to $1.5 million from $12.3 million in the fourth quarter of 2023. For December 2024, Ting reported slightly positive adjusted EBITDA, marking a turning point for the segment.
Gross profit expanded 19% to $21.2 million from $17.8 million in the prior-year quarter. Adjusted EBITDA skyrocketed 403% to $12.8 million, compared to $2.6 million a year ago, driven by revenue gains and cost management efforts, particularly in the Ting business.
Cash Position
At the end of the fourth quarter of 2024, Tucows held $56.9 million in cash and cash equivalents, marking a decline from the $91.1 million reported at the end of the third quarter of 2024 and the $92.7 million held at the end of the fourth quarter of 2023. The company attributed this decrease to cash outflows related to restructuring efforts and capital expenditure made prior to the implementation of the Ting capital efficiency plan.
TCX's syndicated debt balance stood at $192.5 million at the end of the fourth quarter of 2024, resulting in a leverage ratio of 3.26X. This excludes additional debt tied to Ting’s asset-backed securities notes and redeemable preferred units. The company repaid $2 million of its syndicated loan in the quarter, bringing the total debt reduction for the year to $16.5 million. Interest expenses on the syndicated loan were $3.9 million for the fourth quarter, down from $5 million in the fourth quarter of 2023.
Management Commentary & Business Drivers
CEO Elliot Noss highlighted the company’s efforts in cost control and financial discipline, particularly in Ting, wherein Tucows moved to a more sustainable operating model. The company reduced network-related expenses by $8.5 million year over year and lowered the capital expenditure following a shift away from new fiber construction.
Tucows also made progress in deleveraging, repaying $16.5 million in syndicated bank debt during 2024. At the end of the fourth quarter, the company had $56.9 million in cash and cash equivalents, with a net syndicated debt balance of $192.5 million.
Outlook & Guidance
For 2025, Tucows provided an adjusted EBITDA guidance of $56 million, suggesting a 75% year-over-year increase before a one-time $9-million charge related to winding down its Verizon MVNO agreement. After this charge, adjusted EBITDA is expected at $46 million.
By segment, Tucows expects Tucows Domains to generate $44 million in adjusted EBITDA, Wavelo to contribute $13 million, Ting to reach breakeven and the Corporate segment to incur a $1-million loss (excluding the Verizon-related charge).
Management also signaled continued investment in AI-driven efficiencies, particularly in marketing and sales functions, and emphasized a long-term strategic focus across its business units.
Other Developments
In the quarter, Tucows secured a contract to serve as the technical service provider for India’s .In country code domain, a notable addition to its registry service portfolio. The company anticipates migrating 4 million domains onto its platform later in 2025.
Additionally, Tucows repurchased $2 million of stock in the fourth quarter and has authorized a $40-million share buyback program for 2025, though management emphasized that execution will depend on market conditions.
Conclusion
Tucows closed 2024 with solid revenue growth across its business segments and a significant turnaround in adjusted EBITDA. While the net loss widened due to restructuring and impairment charges, cost controls and operational improvements contributed to improved profitability in key areas. Looking ahead, management is focused on maintaining financial discipline, deleveraging and capitalizing on business opportunities, particularly in Wavelo and Tucows Domains.
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