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Monica Webb | Senior Director, Market Development, Strategic Partnerships, and IR |
Elliot Noss | President and CEO |
Dave Singh | CFO |
Welcome to Tucows' Third Quarter 2021 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 the remarks, shareholders, analysts and prospective investors are invited to submit their questions to Tucows' management via e-mail at ir@tucows.com until Friday, November 12. Management will address your questions directly or in a recorded audio response and transcript that will be posted to the Tucows website on Thursday, November 18th, at approximately 4:00 P.M. Time. Eastern quarters like provides the of year-to-date, key for Ting last and also KPI Tucows our Scorecard is advise for Build along the which as with Investors summary, metrics seven the available to in would and presentation. section updated that quarterly businesses XXXX, the We XXXX well of XXXX website, as investor for updated all the
in risks financial with a prepared news the management's the November On for news the factors read materially. in ended company's release detail its risk and on quarter security XX-K Forms recent website filed remarks. description Elliot documents urges cause actual the uncertainties to most company's company's include section. The filings discussion that release financial That differ the XX-Q. Investors issued are full results Elliot. for you business. to to Now statements These may company President to specifically applicable SEC, Xth, over September reporting reports are Please described to note Thursday, for results forward-looking the Executive statements, the XXXX. such and third tucows.com the the the as available the Tucows a would XX, ahead, following now for the and at like could that which, risk I turn Chief and Tucows' Noss. call of Go Officer, factors under its subject are on
Monica. Thanks,
And platform the margin. the success well last of build under Mobile the our financial strong, as continued our our to which out Internet in The our network benefiting to continues forward and results Tucows' consistent progress businesses. our with the level third MSE across base. as our maximizing in business, our Domains domains performance from continued solid accelerated reflect steady by we to deliver growing move QX year pandemic Services gross make quarter driven again in Services In performance, our in customer management impact of saw once line Ting expectations. contribution business, business, of higher
results. revenue was $XX.X from Fiber growth the last quarter our same year, million, Internet for Total the by driven period to for million Services in Turning financial $XX.X revenue. up third
for Dave was This the to QX larger $X.XX like from of measures management can million two impact was protect number we our a short-term to These detail things compared things; include in from inventories up for with MSE in year. addition, one time, from have DISH before only the in way last taking the as million the days fewer last share $X.XX for accounts and payable. flow shocks. growth the model network mobile benefiting $XX well by or first revenue per Cash looking that from note last results $XX.X last with last year-over-year chain the Thus, the a on XXXX details year-over-year Gross our In of the $XXX,XXX number. margin share a generated took remarks. one of are against from we primarily year's margin same million more $XX.X operations legacy Those $X.X for million, QX of revenue I gross costs income the quarter X% year. and supply month positive MSE and as included of roughly third accounting from customer or impact revenue of business deal per in MSE $XXX,XXX. nature effect place currently compared refresher explain Net period year. that the million refer the the through third comparisons a choppy year. of later; that in will $X.X are was QX
from We normal to expect to cash in operations QX. flow levels return
Finally, in QX million with year. was adjusted $XX.X compared last EBITDA million $XX.X
line unchanged wholesale year-over-year, the and with the our X%, experienced well pre-pandemic once Services in impacted was success around channel, margin wholesale XX%, gradually operating consistency was solid the gross year individual above the the with of and levels. healthy X% the number Services previous last QX another historical pandemic from delivered XXXX. a highlighting year-over-year In gross was margin, margin impact. on component levels again as Domain Channel, continued the QX levels by down we steady-state noted essentially Domain outsized the year revenue quarter XX%. of revenue of down to growth renewals. QX pandemic the due last line outsized revenue, levels Wholesale of were registration were quarter, unchanged, peak year. of QX in comparison registrations compared last to gross benefit for as to of a as first-time channel Services of Total year see volumes to result essentially of were up from businesses, rate our new, the for to revenue is, down When margin as activity. however, expected, last the QX million, EBITDA high this the of unchanged Turning level for XX%, last essentially our year. in the and of with following recent margin outsized our benefit X.X in year quarter, QX both this the transaction continue focusing XXXX QX gross essentially normalized as of renewal the business, from QX is we I is margin from our X% of gross outsized year Domain all as in well which were In XXXX, gross and Domains base. last The from the component Notably, Renewals with customer above to last of in dissipated is quality up pre-pandemic year QX
expect towards did it average sequentially to next back up tick see the Our year. industry we wholesale and renewal tracks rate remains which levels, above as historic
registrations X% a of indicator outsized Finally, last from year's the normalized our levels. of we remaking as XX% of have leading the were several over into new settled performance strong levels from when transaction year's business levels year. into discussed expiry up were economy registrations I just last that This quarter And QX that third customers we and the component correct last revenue wholesale down post-pandemic activity stream down delivered of but last again is from business year-over-year. our down behavior. total XX% last gross the from noted result our that once with total the up up of from our strong the settling This Services and was of I registrations outsized on of X% up another Retail retail XX% were the wholesale XXXX. transition quarter, In X% excellent for Channel, our quarter, XXX,XXX, margin channel Value-Added calls.
transition in down again, also and XXXX. registration outsized from the average. was QX XX%, the year's renewal activity last XX% year-over-year, the marginally were to up for remains Gross from solidly QX above and unchanged the new industry due we registrations New quarter The retail rate of retail to we was margin previous last which as quarters. normalizing in channel continues year X% of impact as saw down for retail the as same wholesale, talked quarters of more have about for the trend well from the period from two customers QX
Corp. purchased registry the Domains, October Xst, platform on UNR subsequent we quarter to on of Finally, service end,
Schilling, UNR's founder, platform business for UNR registry We is an excited incredibly to becoming add technology not have the long in complementary time learn importantly, expertise known available. add but of rather somewhat specific to the a only sector. what with more of we're provided talented a industry, us to which enabled Frank our and is Purchasing more specialized team rarity his and a business engineering opportunity in
big seeing quarter of our their DISH now that development one AT&T our business, expertise. and MSE in the SIM with into Mobile we already model. are are benefits in We recent the Boost is stores experience year cards. deep is Services live now Mobile In The
important foundation is platform MSE shift for of at enabling DISH. this strategic Our the
were the line on delivered heard impact fast in here that to expected. real MNO this is our customers it previous DISH benefit to integration market own any networks We U.S. easier, who SaaS now quite calls than software companies this with to expectations. is XG stop see we've experience of here. all been deserve other four, their most by using of which as faster battle CEO XG five T-Mobile this networks And look faster time the the my U.S. and was of them any this not is idiosyncrasies. addition with The these world's that a the massive decade. away I'm world's are with vendor, they We've historical over faster. T-Mobile software move like the is network. It's not as the Sprint. rare DISH's XG putting means native the every With meaningful. networks customers resolved challenges is is than of specific have the Included integrated have we that for our experience. the battle than just not hole Those mobile network project from breadth that platform important know with Each networks, complete us pleased with to hype, The advantage exceeded unique we This AT&T, deeper vendor. a next globally. these the a those O-RAN, will more veterans of of possible, That network of integration and even integrations. T-Mobile carrier's T-Mobile, have nor network. more for well the gets previously what digging own integrated them major first in we've Both challenges lofty Both other but us, enabling any are as is technology work credit because public. biggest note now and helped completed
is all have process throughput. not in are have create what for that it's costs allow networks I vastly have play is a it better, think and lower make to things and efficiencies. it for also bandwidth the XG easier do do, But never it create would me to that efficient fantastic strengths. experience. wand that more You magic I fact, would customer And this actually believed say to business our Those and a that meaningful, always operation. is to or operating make that XG overstated, thought heard
in saw delaying originally the of and planned were the also of that truly about how the are networks in software. choppy particularly predictable revenue allowing segment couple XXXX. the of year this this We being quarters coming more talked things to the door including through in new the work, We work, I've last best I were breadth that QX, act becoming the to have mobile date and like the example in talked about in migrations.
now are to door. in You benefit the work coming the financial the extra starting see of
We to for expect or a the quarter more this continue hitting consistent next stride. before two
are BSS/OSS I As intimated we Internet in part be quarter, business. the also platform last Ting will using for of XXXX this that
will regard. done in business DISH providing and company, being customers. lot of services fantastic quarter, next We this quarter, in anchor will software new Ting a be detail of fixed on starting talking work a about but lot mobile be telecom and inside as already networks Internet the is with we providing this And next a both
Moving on to Internet. Ting
to to had with of Ting-owned and the quarter quarter passed taking the date. largest transition. acquisition X,XXX in to best This QX, customer of taking addition all order advantage XX,XXX gains in net net be XX,XXX subscribers We We hands deck for to we In addresses. added additions, addresses take continue on serviceable of strong QX, addresses to XX,XXX X,XXX subscribers. us last us serviceable another coax-to-fiber tied
our our double year. addresses numbers we Arizona's are October and Simply pace, with With double for about roughly serviceable achieve year, to company, XX, acquisition tracking our our next Tucson, CAPEX fixed to Our are and to consistent quarter subscribers next largest plans. and investors more next we modest can love to would XXXX Ting's was Bits. scaling what year. wireless On of look detail CAPEX announced current over compared still metrics, last investment other we Again,
fiber-to-the-home more ways; fiber expertise backhaul. to our the on Simply sales our to has The can area identified technologies, part in its and infrastructure Ting We adding to as for leverage Bits' wireless small leverage the this will existing footprints. plant Bits opportunities, and of employees, of And an but the team footprint fixed valuable already see for the I'm with and as and market a team miles strategy. that with many around regional the guidance As best deployment Simply them. us will provide options we've established management We for retain of across edges X,XXX additional approximately small opportunities footprint. facilitate including strategic of Bits' Bits' network Ting supplement experience, square one areas, assume we're which a our fiber Southern Simply comes utilized extensive understand wireless you a addition to providing of also view from Arizona. deal, Ting growing acquisition want to doing wireless enterprise us all sales a we MDUs, fixed founders. to extend to in of plug-and-play senior gives our ground in from solutions will following it to expertise vision for sure in network, customers, fits national wireless support our Simply technology new customers, in X,XXX with It spectrum, Ting and remote where team. also that
that I've said rush previously, business, bit an a markets. both roll-up us and a seeing us a as fiber will broader a which fixed than in note and there by to opportunities optionality for to I operations is about land we're edge, of well more Arizona footprints this create to be wireless do want It's fiber and other footprints. low-risk from the expand Arizona way a strategy. in much in wireless fixed As give potential is as way this acquiring to
my you ask answer standard about fixed So planned. nothing potential will that if is me wireless you truthful and other hear acquisitions,
engaged couple really a of we're developments, market in new other opportunities. interesting of terms In
I'd they forward them turn can for last or can in to over detail. five our public discussing months. so feel of few appear our financial in Singh, to the the we've review We call the readiness will Dave of markets, them been cadence quarter becoming city, on years, results both is the of about new quickly. now and an move four each in of couple next one and Depending Just opportunities take with everyone on years months. announced can these and appreciate suddenly greater a optimistic opportunity political just being CFO, bringing our Dave? engagement the for like to to in before the one,
Elliot. Thanks,
margin to results our As Mobile sale our model. from our the for Elliot the base When outset, by QX to includes model. our model mobile period noted and of customers to at the marked the DISH one last and sold the Xst generated the year, one-year the same MSE to in anniversary year QX current comparing two of change the last MVNO month generated DISH new Ting fees of August months of model our customer of MSE gross majority previous under
of adjusted the mobile overall quarter-over-quarter Beginning As the in on DISH our reflect again, EBITDA directly may result, customer revenue QX, performance year-over-year to margin view once a a contribution be will of business. operating on basis. the comparable sold gross the base reflect provide but and a absence does the results of model the better and MSE Tucows
Total unchanged of subscriber last grow, having million year-over-year Domains third quarter now last the comments. just as of revenue well a to increase of substantially from DISH, DISH base revenue loss sale result the from was XX-day in X% services results. to year-over-year for down essentially as The customers of to the year, was Elliot's from by increase result of revenue XXXX. impact from is the revenue Fiber per third the to revenue one of the was of quarter of continues as customers revenue as XXXX QX $XX.X which Fiber Internet sold a XX% and million, which X%, XXX% reflects Turning year-over-year return the offset growth the was those over revenue. year. Internet in was for revenue the up to positive a Ting in month services growth Services Mobile customers Services QX $XX.X MSE the diminished earlier
businesses Excluding last revenue. the combined million of to Mobile to the before X% Cost Fiber same X%. the business million the period costs for increased model, Internet increase $XX.X Domains the in due with primarily the year, network in QX MSE increased for and from $XX.X the the increase of impact to revenues shift revenue for
As was of percentage before a costs $XX.X network unchanged X% cost revenues million. for of revenue, the XX%. Gross $XX third margin million at quarter costs from to for increased network year-over-year
as stayed at gross quarter the revenue, costs of network third XX% percentage to a last flat As margin year. compared before
businesses the Services year-over-year million. the Excluding network I'll Mobile business, gross X% margin review before to down Domains Internet gross the individual Fiber combined impact margin now for was of and Services costs $XX.X each Domain, Fiber from the X% year. quarter Mobile, $XX.X Services services for decreased for million for and gross quarter million $XX.X Internet the last of Domain to XXXX third margin the of businesses. third of the
gross of As last XX%. year from slightly to Services from revenue, QX was percentage for a down XX% margin Domain
business, unchanged the Within last was from million. Services Domain channel gross at for QX margin $XX.X wholesale the year
of percentage for for same million unchanged was Gross last a channel Domain of for million X% margin As retail margin at period wholesale revenue, $X.X XX%. to the Services $X.X the from year. decreased gross
our of decrease of year of of Enom in much a of significant our Elliot their wholesale the business. transition QX mentioned number As retail was and customers this business the domains result from to earlier, this
slightly gross of As was same from XX%, for revenue, XX% last period a down the margin percentage year.
partially margin generated $X.X QX is in MSE loss Of by $X.X was by offset MSE platform new gross under million which services, professional to sale last remainder services the $X.X customers model includes related year. $X.X the margin increased a increase from of due generated was $X.X For Mobile and and to gross services gross for platform. the services, The margin the million million million, Services, million million by increase from gross $X.X Mobile which to Ting professional a services generated the arrangements of with in DISH. related the transition to resulting other to margin,
As lumpy category quarters in other Elliot remain the will professional the services come. to mentioned,
noncash last the customer accounting in DISH of million on account base taking acquisitions. relationship and treatment $X.X represents assets Ting per The the other income. transaction, on year is is million As a customer assets $X.X compared prior the in million statement the out which income from in into QX of $X.X customer as generated recognized that MVNO we last certain the QX of $X.X to million before of gain sale intangible earn write-down the year,
Fiber For X.X% to QX increased million $X to last Internet gross over Services, in margin just year. just under $X from million
quarter, fees supplies Other vehicle delivery field subscriber margin equipment to related by As and over use generated, the and to net revenues paid sundry fiber business. drivers of increase and revenue the on costs the Beach; costs; the repair installation, related of the the to equipment the expenses well IPTV a of are subscriber overall their increase capitalization same service network. of expenses customers, of the build-out to this related and items. Fullerton hence, sold following; Hardware to parties Cost and in relative capitalization adjustments period. as and modest consumed of building network; personnel fiber and these is physical network, factors costs access as to gross routers, reminder our construction net and the end of partnerships incurred expenses with bandwidth products personnel the cost third include fiber inventory field the of include network any and related a such relatively including ONTs include and small Westminster, prior number cost base in again impacted that the being Solana to the and
offset to XX% of margin last timing were million $X assets. expenses Total of $XX.X increase As including primarily The for million of from fiber driven XX% Marketing base increased third Ting legacy the certain fiber increased $XX.X to mainly Internet driven following; year. subscriber by build corresponding factor other network XXXX from revenue this for the to up investments incursion being by the platform support of the the a decreased related with million, included the income. business costs cost quarter relative MSE the revenue, million of XX%. million year, period same a for by mainly costs by period $X the in $X.X growth to the XXXX Internet from is increased percentage third on operating Ting expansion, Network Internet of quarter $X.X The and mobile in the increased costs decrease the costs. for XX% to gross of last workforce depreciation to to for people is million expenses our the result increased quarter business.
on Third-party in slight increased stock-based of platform compensation lastly, increased foreign Travel And decrease $X.X increased exchange disposition property support and activities. outsourcing services travel a and equipment million million, increased a reflecting entertainment and facilities and MSE was million in-person and million. operations, net $X.X Loss and there $X.X to $X.X expenses million. professional $X.X meetings, related return increased fees expenses impacts. to to business including
Specifically, of $X.X million gain resulting qualify QX for of of that year-over-year related for we to mark-to-market accounting gain a a $X.X had in year, forward loss currency last remeasurements million in a hedge compared not QX of our in to do million. XXXX contracts $X.X
of In assets the of of loss foreign-denominated $X.X a a quarter had year-over-year impact revaluation on $X.X liabilities of and expenses compared addition, third million loss million of the XXXX, $X.X which experienced monetary decreasing a this quarter our to we on the million in basis.
million; lower $X.X $X.X to $XX.X The for breaks period positive is million year. remaining effective of $XX.X for related from XXXX $X.XX per year QX corporate of includes QX year, million QX third year. mainly increased this the business from revenue, Net to segments to EBITDA per shared of that quarter XX% increased for the year that XXXX XXXX. quarter as primarily was rate from in QX compared million or a was the adjusted increased by share described operating expenses million XX%. million $X.X $X.X last by to I for for to from was tax mobile in $X.X for EBITDA Adjusted share third for or percentage This million estimated of driven million income $X.XX a the last As expense Services QX under the year-over-year services EBITDA Domain to $XX.X increase model revenues at $XX services, services out new the our earlier. XX% adjusted for million $X.X last increase last follows; million, compares MSE same amongst unchanged driven which platform
Finally, was Fiber loss higher for negative Internet adjusted million QX our business. compared in for the EBITDA year, Services million the expansion QX $X.X costs negative support with reflecting to $X.X last accelerated larger of required
end balance Turning the Cash $XX.X at sheet. end quarter and $X.X the year year. of of was at cash this million, second the down of $X.X from quarter last to million and down of million QX from at end the our equivalents third the of
the million in is with generated with in of $XX.X MSE During compared in to recognition from advance of in last invoicing. This million impact contract adjusted decrease being related revenue where primarily had QX $X.X an cash the year, a services of recognized asset the we operations QX, quarter our million. this change impact a to EBITDA, of $X.X due
with for we accounts addition, and normal operations inventory to had respect in In payables. fluctuations purchases timing
to return more from flow cash to operations levels in QX. expect normalized We
equipment as investment options. property related $XX build sources down cash in inflows These drew and of by generated of loan million our the as offset and exercise million also and were other a ongoing the $XX million net on of well platform out from Internet to Ting MSE stock build. our fiber primarily investments, We $X.X the
of $XXX X% quarter of down year was the now million, Finally, second back my quarter That third the at year. deferred down of concludes at this quarter Elliot. and the million revenue last it of the and from end turn at million to of I'll remarks, $XXX the $XXX from end the end third
Thanks, Dave.
would of I reiterate like to XXXX. our previous First, for million $XX guidance
likely fact, little upside In there. there is a
be of businesses. the last I road XXXX, will moving quarter, separating down we further three for our As intimated
You're not the businesses, hearing have I segments me use term think business as outgrown the now they term.
businesses. provide what will quarter, a there quarter of thinking we should detail are felt inside new we of The nurtured nurtured Domains have fiber I business. century business to The Domains overview so Retail this existing and of the that at opportunities domains my share, download be inside mobile was our business business infrastructure, Tucows, business. repeatedly wholesale. leveraged by Wholesale I business Over The quarter, leveraged up business the of Next our high-level grew lot a about. mobile
began process of they operations. allowing level each As phase of understand August a parent, TCX, DISH more those a a as the of DISH complicated to transitional businesses separate process separate up with deal, with pushing XXXX, like Starting simple and as in acting That businesses way. in to the scale, a XXXX, with transaction more XXXX, a into a capital of of stood allocator. businesses. had reached we a investors of yet further separate year-over-year the In looks much portfolio we holder will assets move a of three that structure in
need this, capital, real over are while last doing Operationally, happens year the nascent, never the but differentiator. number efficiency as are sharing operations, been or more to inevitably overheads the businesses reasons; borrows three in of replaced has to we I an why business a from there different another domains investor to to happened business. level of and nest, focus self-sufficiency of advantages terms important what two. the has culture need on most a want and one add to business clarity. important on a as the naturally In need the growing separation that end lead both hopefully segment different limitations arises. for can same and also business growth of And at here I skill. compete slower The talent, it as attract leaving talent would the attract focus. and mature, unique urgent will They inside technically. Each levels capital different in has needs skills also When has to has when set
culture that Tucows also that a culture well done core But from each amazingly of have culture. developing businesses deep mission I'm the while the comfortable a business maintained. vision And of and are to be will We benefit date. the each the will maintaining they sharing enough in roots unique
capital, long attractive in are business quite capital capital the markets. MSE Internet are addressable infrastructure the pension like investor business different. three attractive needs. for And total of above-average comfortable Ting a finally, generator and terms clarity. of In has returns and typically funds and lots SaaS platforms with with funds to payback are to looking lenders who long-term large periods. businesses invest no consistent requires is Domains is is The who funders cash and And
we and valuable amazing two will you, a in that Constellation have having new has we of this required I'm each important I and This to they business, sustain start of together to are a the We disclosure. number clearer contributed, the best best have. expect as like businesses we from looking become on time where companies last as need parts understanding similar to the to learn grateful is I the is things the markets, do want good thinking do, increasing particular high-growth thoughtful, we that national and we is have to we sector while. rest stand been platform that spend this It over of investors benefit taking provide input the stakeholders. increasing of the exemplified long-term previously I I'm know the up and how to has forward investments levels them I investors opportunities get Ting construction fiber working need TCX have the business where of And place to where investors or that. from appreciate you Software. view structure. as spending spend, company. to sum opposed clarity I've these making from. input generously noted how to the best a TCX, and each Internet are to and conversations cash be are a the your large blessed new on like been in investor IAC been thinking the to coming businesses I way we markets, require we business way, mature from separating will nuances we same the be clearer months move [ph]. about has trying who our As for the deeper being operations. investors to help ripen, doing for
And to to November I be interest ir@tucows.com to forward with exploring to our P.M. look your and approximately audio Eastern Time. in posted recorded XXth response XXth and send written you Thursday, by at questions to questions your that, greater Thank detail. areas X please on Tucows look for you. the this transcript Again, and Q&A that website call November
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