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Tucows Inc (TCX)
NASDAQ:TCX
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Tucows
(NASDAQ:TCX)
Rating:56Neutral
Price Target:
$20.00
▲(1.01%Upside)
Tucows (TCX) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$214.40M
Dividend YieldN/A
Average Volume (3M)17.29K
Price to Earnings (P/E)―
Beta (1Y)1.16
Revenue Growth6.66%
EPS Growth5.92%
CountryUS
Employees765
SectorTechnology
Sector Strength84
IndustrySoftware - Infrastructure
Share Statistics
EPS (TTM)-1.37
Shares Outstanding11,057,112
10 Day Avg. Volume13,475
30 Day Avg. Volume17,288
Financial Highlights & Ratios
PEG Ratio0.08
Price to Book (P/B)-1.96
Price to Sales (P/S)0.00
P/FCF Ratio-2.46
Enterprise Value/Market Cap3.00
Enterprise Value/Revenue0.45
Enterprise Value/Gross Profit7.98
Enterprise Value/Ebitda2.20
Forecast
1Y Price TargetN/A
Price Target UpsideN/A
Rating ConsensusN/A
Number of Analyst Covering0
Tucows Business Overview & Revenue Model
Company DescriptionTucows Inc. provides network access, domain name registration, email, mobile telephony, and other Internet services in Canada, the United States, and Europe. It operates through three segments: Fiber Internet Services, Mobile Services, and Domain Services. The Fiber Internet Services segment provides fixed high-speed Internet access services to individuals and small businesses primarily through the Ting website, and other billing solutions to small internet service providers. The Mobile Services segment offers mobile phones and retail telephony services; and professional services, including implementation, training, consulting, and software development and modification services, as well as operates Mobile Services Enabler platform that provides network access, provisioning, and billing services. The Domain Services segment provides wholesale and retail domain name registration services; portfolio services; and value-added services, such as hosted email, Internet security services, Internet hosting, WHOIS privacy, publishing tools, and other value-added services for end-users under the OpenSRS, eNom, Ascio, and Hover brands. The company was formerly known as Infonautics, Inc. and changed its name to Tucows Inc. in August 2001. Tucows Inc. was incorporated in 1992 and is headquartered in Toronto, Canada.
How the Company Makes MoneyTucows Inc. generates revenue through several key streams. The primary revenue source is its domain services business, which includes both wholesale and retail domain registration services. Through OpenSRS, Tucows provides domain registration and management services to resellers, generating income from domain registrations, renewals, and associated services. Hover, its retail arm, directly caters to consumers needing domain registration and management services. Another significant revenue stream is from Ting, the company's MVNO, which provides mobile phone services with a focus on flexible, pay-as-you-go billing models. Tucows earns revenue from subscriptions, data usage, and other mobile-related services. The company may also benefit from strategic partnerships that enhance service offerings and expand its customer base, though specific partnerships are not detailed here.
Tucows Earnings Call Summary
Earnings Call Date:May 08, 2025
(Q4-2024)
| % Change Since: 14.06%|
Next Earnings Date:Aug 07, 2025
Earnings Call Sentiment Neutral
The earnings call reflects a balanced perspective with significant revenue growth and positive financial performance, particularly in Tucows Domains and Wavelo. However, these achievements are tempered by Ting's restructuring costs and operating losses, as well as a notable net loss for the quarter.Q4-2024 Updates
Positive Updates
Strong Revenue Growth and Financial Performance
2024 marked the fourth consecutive year of consolidated revenue growth, with a 19% year-over-year gross profit expansion and more than doubling of annual Adjusted EBITDA to nearly $35 million. Excluding Ting, Adjusted EBITDA was $57.4 million, representing a 126% increase from $15.5 million in 2023.
Tucows Domains Revenue and Margin Growth
Tucows Domains grew revenue to $65.7 million in Q4, up 6% from the previous year, and gross margin increased by 8% to $20.3 million. Domain Services' Adjusted EBITDA was $11.6 million in Q4, up 8% year-over-year.
Wavelo's Positive Financial Metrics
Wavelo's revenue for 2024 was $39.9 million, with gross margin at $38.6 million. Adjusted EBITDA was $13.8 million, outperforming guidance and showing an increase from $10.6 million last year.
Ting's Subscriber and Revenue Growth
Ting reported $15.7 million in revenue for Q4, a 14% increase year-over-year, driven by a 17% increase in subscribers to 50,700. Gross Margin increased 40% to $11.0 million.
Record Debt Repayment
Tucows repaid $16.5 million on the syndicated bank loan in 2024, reducing interest expense and improving financial leverage.
Negative Updates
Ting's Operating Losses and Restructuring Costs
Ting faced a $28.2 million one-time restructuring and impairment charge related to its capital efficiency plan, contributing to a net loss of $45.3 million for the quarter.
Wavelo's Quarterly Revenue Decline
Wavelo's quarterly revenue for Q4 was $9.9 million, down 1.9% from Q3, with gross margin down 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, primarily due to one-time charges associated with Ting.
Company Guidance
In the fourth quarter of 2024, Tucows demonstrated strong financial performance with a 7.1% increase in total revenue to $93.1 million and a notable 403% rise in Adjusted EBITDA to $12.8 million. The company reported a consolidated revenue growth for the year and a 19% increase in gross profit. Adjusted EBITDA more than doubled to nearly $35 million, excluding Ting, with total EBITDA reaching $57.4 million. Tucows Domains saw revenue rise by 6.2% to $65.7 million, with an 8% increase in gross margin to $20.3 million, and Adjusted EBITDA up 7.8% to $11.6 million. Wavelo reported a year-over-year revenue increase to $39.9 million, with a significant Adjusted EBITDA growth of 41% to $13.8 million, exceeding guidance. Ting's revenue grew 14% to $15.7 million, with a gross margin increase of 40% to $11 million and a narrowed Adjusted EBITDA loss of $1.5 million in Q4. The company also repaid $16.5 million on its syndicated bank loan and authorized a $40 million stock buyback program for 2025. Looking ahead, Tucows anticipates a 75% growth in Adjusted EBITDA for 2025, driven by continued progress in operational efficiencies and strategic initiatives across its business segments.Tucows Financial Statement Overview
Summary
Tucows is facing significant financial challenges with declining revenues, negative profitability margins, and a strained balance sheet marked by negative equity. The company's cash flow situation is also precarious, with consistent negative free cash flow. The current trajectory necessitates strategic adjustments to stabilize financial performance and address operational inefficiencies.Income Statement
Tucows has faced declining revenue growth with a revenue decrease from 2023 to 2024. Gross Profit Margin is under pressure, and Net Profit Margin is negative due to substantial net losses. EBIT and EBITDA margins are also negative, indicating operational challenges. While the software industry typically sees strong growth and profitability, Tucows' financials suggest it is struggling to maintain competitive margins and growth.35
Negative
Balance Sheet
The balance sheet reveals a negative equity position, with Stockholders' Equity in deficit at the end of 2024. The Debt-to-Equity ratio is not calculable due to negative equity, but the high level of total debt relative to assets suggests significant leverage. The equity ratio is negative, indicating more liabilities than assets. Tucows faces considerable financial risk and stability issues.30
Negative
Cash Flow
Cash flow analysis shows negative free cash flow, reflecting high capital expenditures and insufficient operating cash flow. The Operating Cash Flow to Net Income ratio is negative, exacerbating concerns about cash generation from core operations. Despite some financing activities, such as inflow from financing, the overall cash flow health is weak, posing liquidity concerns.40
Negative
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 362.27M | 339.34M | 321.14M | 304.34M | 311.20M | Gross Profit |
| 83.03M | 108.86M | 78.25M | 78.29M | 85.48M | EBIT |
| -65.01M | -63.65M | -31.38M | -8.19M | 6.92M | EBITDA |
| -1.82M | -12.19M | 26.25M | 211.34M | 33.64M | Net Income Common Stockholders |
| -109.86M | -96.20M | -27.57M | 3.36M | 5.78M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 56.90M | 92.69M | 23.50M | 9.11M | 8.31M | Total Assets |
| 758.80M | 798.43M | 664.75M | 539.60M | 451.90M | Total Debt |
| 513.12M | 568.29M | 256.01M | 205.75M | 132.67M | Net Debt |
| 456.22M | 475.60M | 232.51M | 196.65M | 124.36M | Total Liabilities |
| 854.10M | 788.55M | 568.09M | 424.50M | 347.20M | Stockholders Equity |
| -95.30M | 9.88M | 96.66M | 115.09M | 104.70M |
| Cash Flow | Free Cash Flow | |||
| -76.20M | -97.35M | -117.62M | -44.31M | -8.43M | Operating Cash Flow |
| -19.75M | -4.77M | 19.88M | 29.64M | 36.08M | Investing Cash Flow |
| -56.49M | -92.58M | -137.49M | -101.98M | -53.28M | Financing Cash Flow |
| 44.50M | 178.84M | 132.01M | 73.14M | 5.12M |
Tucows Technical Analysis
Positive
19.80
Price Trends
17.26
Positive
17.39
Positive
18.11
Positive
Market Momentum
0.65
Positive
59.06
Neutral
58.05
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TCX, the sentiment is Positive. The current price of 19.8 is above the 20-day moving average (MA) of 18.77, above the 50-day MA of 17.26, and above the 200-day MA of 18.11, indicating a bullish trend. The MACD of 0.65 indicates Positive momentum. The RSI at 59.06 is Neutral, neither overbought nor oversold. The STOCH value of 58.05 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for TCX.
Tucows Risk Analysis
Tucows disclosed 35 risk factors in its most recent earnings report. Tucows reported the most risks in the “Legal & Regulatory” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 3 New Risks
1.
Our preferred unit financing arrangement could impact our financial condition by diverting cash flow to debt payments and limiting our ability to operate effectively. It also imposes operational and financial milestones on our Ting segment, which could restrict access to additional funding. Q4, 2024
2.
Investments in new businesses and technologies, as well as divestitures, carry inherent risks that may impact our operations and financial performance. Q4, 2024
3.
Evolving laws and regulations governing intellectual property and internet services may expose us to increased liability and compliance costs. Q4, 2024
Tucows Peers Comparison
Overall Rating
UnderperformOutperform
Sector (62)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
75 Outperform | $8.30B | 19.36 | -60.11% | ― | 0.79% | 0.59% | |
74 Outperform | $47.18B | ― | -2.68% | ― | 25.46% | 49.20% | |
69 Neutral | $26.07B | 34.49 | 245.70% | ― | 7.93% | -56.44% | |
68 Neutral | $3.20B | 28.86 | 7.87% | ― | 5.03% | ― | |
64 Neutral | $5.67B | ― | -22.21% | ― | 13.34% | 13.71% | |
62 Neutral | $11.80B | 10.31 | -7.45% | 2.91% | 7.43% | -7.78% | |
56 Neutral | $214.40M | ― | 171.00% | ― | 6.66% | 5.92% |
* Technology Sector Average
Performance Comparison
TCX
Tucows
19.80
0.36
1.85%
VRNS
Varonis Systems
50.65
7.69
17.90%
GDDY
GoDaddy
179.67
39.57
28.24%
ZS
Zscaler
299.90
112.25
59.82%
DBX
Dropbox
29.47
7.95
36.94%
SWI
SolarWinds
18.49
7.15
63.05%
Tucows Corporate Events
Executive/Board ChangesShareholder Meetings
Tucows Holds Annual Shareholders Meeting for Key Decisions
Neutral
May 22, 2025
On May 20, 2025, Tucows Inc. held its Annual Meeting of Shareholders, where key decisions were made regarding the company’s governance and financial oversight. Shareholders elected directors to the Board for a one-year term and ratified Deloitte LLP as the independent auditors for the fiscal year ending December 31, 2025. These decisions are crucial for maintaining the company’s strategic direction and ensuring financial transparency.
Executive/Board ChangesShareholder MeetingsBusiness Operations and Strategy
Tucows Nominates Five New Board Members
Positive
Apr 10, 2025
On April 10, 2025, Tucows Inc. announced the nomination of five new individuals for election to its Board of Directors at the upcoming Annual General Meeting on May 20, 2025. The new nominees bring diverse expertise in finance, technology, and entrepreneurship, aligning with Tucows’ mission to innovate and expand its digital infrastructure. This board refresh marks a strategic step in the company’s long-term growth plans, while also honoring the contributions of outgoing directors who have significantly shaped Tucows’ leadership and culture.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.