Tucows Inc.’s TCX third-quarter 2024 results reflect a clear focus on revenue and margin improvement, driven largely by the Ting Internet and Tucows Domain segments. The company emphasized capital efficiency in the Ting Internet business through a strategic pivot and workforce reduction. These efforts have helped mitigate the impacts of network-related depreciation and amortization costs.
Q3 Results
The company reported a third-quarter 2024 net loss of $2.03 per share, narrower than the $2.09 loss in the year-ago quarter.
Total quarterly revenues of $92.3 million increased 6.1% from $87 million in the prior-year quarter.
The quarterly results were primarily fueled by gains in the Ting Internet Services and Tucows Domain Services segments.
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Segmental Performance
Ting Internet Services: Revenues from fiber internet services climbed 19% to $15.3 million in the third quarter of 2024 from $12.9 million in the prior-year quarter. The gross margin for this segment rose to $10.9 million in the third quarter of 2024 from $8 million in the prior-year quarter. While network depreciation costs continued to impact this segment, cost-cutting measures, including workforce reductions, have helped offset these expenses, improving profitability.
Wavelo Platform Services: Revenues from this segment declined 9% to $10.1 million in the third quarter of 2024 from $11.1 million in the prior-year quarter. This decline was attributed to reduced revenues in other professional services within the segment. Gross profit from the segment fell approximately 5% year over year as overall demand softened.
Tucows Domain Services: This segment showed steady growth, with revenue increasing 6% to $64.7 million in the third quarter of 2024 from $61.1 million in the prior-year quarter. Within this segment, wholesale domain services’ revenues rose 6% to $55 million in the reported quarter from $51.9 million in third-quarter 2024. The gross margin also increased from $18.4 million in the third quarter of 2024 to $19.8 million in the prior-year quarter, supported by value-added services’ growth. Retail revenues rose 5% year over year, benefiting from a steady customer base and increased subscription renewals.
Profitability Metrics
The company’s gross profit grew 32.4% to $22.2 million in the third quarter of 2024 from $16.8 million a year ago. The rise was attributed to strong margin improvements in the Ting Internet and Tucows Domain segments despite network depreciation expenses in the Ting network.
Adjusted EBITDA surged 94.3% to $8.7 million in the third quarter of 2024 from $4.5 million a year ago. The rise resulted from improved revenues in the Tucows Domain and Ting Internet segments, coupled with stringent cost management in Ting.
Cost Analysis
Cost management played a pivotal role in Tucows’ third-quarter 2024 results. Total network expenses declined 10% from $19.5 million in third-quarter 2023 to $17.5 million in the reported quarter. This reduction includes lower impairment charges and operational efficiencies.
Cash, Debt & Capital Expenditure
Tucows held $91.1 million in cash at the end of third-quarter 2024, a considerable increase from $52.2 million in second-quarter 2024 but down from $122.4 million a year ago. The company has been focusing on deleveraging, utilizing the cash flow from the Wavelo Platform and Tucows Domain to make payments on syndicated debt.
TCX continues to reduce debt. It is also focusing on maintaining a robust balance sheet with cost-control initiatives.
Other Developments
As part of its restructuring strategy, Tucows completed a second round of workforce reductions within the Ting Internet division. This restructuring aligns with the company’s shift toward capital efficiency and has contributed to the improved cost structure in third-quarter 2024.
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