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Tucows Reports Financial Results for Second Quarter 2021

TORONTO, Aug. 05, 2021 (GLOBE NEWSWIRE) -- Tucows Inc. (NASDAQ:TCX, TSX:TC), a provider of Fiber Internet Services, Mobile Services, Domain Name Services and other Internet services, today reported its financial results for the second quarter ended June 30, 2021. All figures are in U.S. dollars.

COVID-19:   Tucows shareholders and prospective investors are encouraged to read Tucows’ public statement regarding COVID-19, which is available here:

Note on the Financial Impact of Tucows’ Sale of Ting Mobile Customer Relationships and Transition to Mobile Services Enabler Platform:

As previously announced, effective August 1, 2020 most of Tucows’ mobile customers relationships were sold to DISH Networks (“DISH”) as part of Tucows’ transition of its mobile business to a Mobile Services Enabler (MSE) model from a Mobile Virtual Network Operator (MVNO) model, under which DISH became Tucows’ first MSE customer. Accordingly, the results of the Mobile Services segment for the second quarter of 2021 reflects operations under the new MSE model with prior periods being composed entirely of operations under Tucows’ previous MVNO model.

Under the terms of the earn out arrangement for the Ting customer base acquired by DISH, the income generated by the customer base acquired by Dish are recognized (net of expenses) as “Other Income” under the heading “Gain on Sale of Ting Customer Assets”. As a result, revenue and gross margin for the Mobile Services segment for the second quarter of 2021 are lower than those for the second quarter of 2020. Tucows will recognize fees per subscriber for customers owned by DISH under the Ting brand as well as customers under DISH’s Boost brand that are added to Tucows’ MSE platform, as Mobile Platform Services revenue under the terms of the MSE Agreement signed with DISH. For more information, see Tucows’ Financial Statements and Management Discussion and Analysis for the second quarter of 2021.

Summary Financial Results
(In Thousands of US Dollars, Except Per Share Data)

 3 Months ended June 306 Months ended June 30
% Change2021
% Change
Net revenue75,09382,122(8.6%)145,968166,107(12.1%)
Gross Profit18,23922,966(20.6%)35,69248,116(25.8%)
Gain on Sale of Ting Customer Assets14,808-n/a10,203-n/a
Net income1,8071571,051%3,9562,99132.3%
Basic Net earnings per common share0.170.011,600%0.370.2831.8%
Adjusted EBITDA111,15812,175(8.4%)23,88124,856(3.9%)
Net cash provided by operating activities3,5188,939(60.6%)17,60423,012(23.5%)
  1. This Non-GAAP financial measure is described below and reconciled to GAAP net income in the accompanying table.

Summary of Revenues, Gross Profit and Adjusted EBITDA
(In Thousands of US Dollars)

 RevenueGross ProfitAdj. EBITDA1
 3 Months ended
June 30
3 Months ended
June 30
3 Months ended
June 30
Fiber Internet Services:  
Fiber Internet Services5,8254,4142,7992,749(3,320)(1,071)
Mobile Services:
Retail Mobile Services2,54817,5671,0618,907  
Mobile Platform Services2,457-2,364-  
Other Professional Services2,001-261-  
Total Mobile Services7,00617,5673,6868,9075,284 3,868 
Domain Services:  
Domain Services47,88346,20610,1769,852  
Value Added Services5,4824,7414,8994,008  
Total Wholesale53,36550,94715,07513,860  
Total Domain Services62,26260,14119,47518,67612,750 12,351 
Network Expenses:  
Network, other costsn/an/a3,6122,485n/an/a
Network, depreciation and amortization costsn/an/a4,1083,356n/an/a
Network, impairmentn/an/a11,525n/an/a
Total Network expensesn/an/a7,7217,366n/an/a

“The second quarter marked another solid financial performance for Tucows with revenue and gross margin from our Domains Services and Fiber Internet Services businesses increasing 5% and 4%, respectively, year-over-year,” said Elliot Noss, President and Chief Executive Officer, Tucows Inc. “On top of its continued consistency, our Domain Services business is benefitting from the growth in domains under management generated by the pandemic impact last year, as well as our focus on maximizing gross margin. Our Mobile Services business continues to move forward in line with our expectations. And Ting Internet once again saw record performance across key build metrics, including by far our largest capital expenditure and passed address additions in a quarter, as growth in the subscriber base gained further momentum, with net additions up 47% from Q1 and more than triple that of Q2 of last year.”

Financial Results
Net revenue for the second quarter of 2021 was $75.1 million compared with $82.1 million for the second quarter of 2020. The majority of the decrease was the result of the absence of Ting Mobile MVNO revenue in the second quarter of 2021 following the Company’s sale of its Ting Mobile customer relationships to DISH during the third quarter of 2020 and the related earn out being recognized as Other Income. Excluding the Mobile Services business, net revenue for the combined Domains Services and Ting Internet businesses for the second quarter of 2021 increased 5% from the second quarter of 2020.

Gross profit for the second quarter of 2021 was $18.2 million compared with $23.0 million for the second quarter of 2020. The decrease in gross profit is attributable to the same factors as the decrease in revenue. Excluding the Mobile Services business, gross margin for the combined Domains Services and Ting Internet businesses for the second quarter of 2021 increased 4% from the second quarter of 2020.

Net income for the second quarter of 2021 was $1.8 million, or $0.17 per share, compared with $0.2 million, or $0.01 per share, for the second quarter of 2020.

Adjusted EBITDA1 for the second quarter of 2021 was $11.2 million compared with $12.2 million for the second quarter of 2020. Adjusted EBITDA1 is impacted by the continued investment in Ting Fiber.

Cash and cash equivalents at the end of the second quarter of 2021 were $7.3 million compared with $8.3 million at the end of the first quarter of 2021 and $8.9 million at the end of the second quarter of 2020.


1. Adjusted EBITDA

Tucows reports all financial information required in accordance with United States generally accepted accounting principles (GAAP). Along with this information, to assist financial statement users in an assessment of our historical performance, the Company typically discloses and discusses a non-GAAP financial measure, adjusted EBITDA, in press releases and on investor conference calls and related events that exclude certain non-cash and other charges as the Company believes that the non-GAAP information enhances investors' overall understanding of our financial performance.

The Company believes that the provision of this supplemental non-GAAP measure allows investors to evaluate the operational and financial performance of the Company’s core business using similar evaluation measures to those used by management. The Company uses adjusted EBITDA to measure its performance and prepare its budgets. Since adjusted EBITDA is a non-GAAP financial performance measure, the Company’s calculation of adjusted EBITDA may not be comparable to other similarly titled measures of other companies; and should not be considered in isolation, as a substitute for, or superior to measures of financial performance prepared in accordance with GAAP. Because adjusted EBITDA is calculated before recurring cash charges, including interest expense and taxes, and is not adjusted for capital expenditures or other recurring cash requirements of the business, it should not be considered as a liquidity measure. Non-GAAP financial measures do not reflect a comprehensive system of accounting and may differ from non-GAAP financial measures with the same or similar captions that are used by other companies and/or analysts and may differ from period to period. The Company endeavors to compensate for these limitations by providing the relevant disclosure of the items excluded in the calculation of adjusted EBITDA to net income based on U.S. GAAP, which should be considered when evaluating the Company's results. Tucows strongly encourages investors to review its financial information in its entirety and not to rely on a single financial measure.

The Company’s adjusted EBITDA definition excludes depreciation, amortization of intangible assets, income tax provision, interest expense (net), accretion of contingent consideration, stock-based compensation, asset impairment, gains and losses from unrealized foreign currency transactions and costs that are one-time in nature and not indicative of on-going performance (profitability), including acquisition and transition costs. Gains and losses from unrealized foreign currency transactions removes the unrealized effect of the change in the mark-to-market values on outstanding unhedged foreign currency contracts, as well as the unrealized effect from the translation of monetary accounts denominated in non-U.S. dollars to U.S. dollars.

The following table reconciles adjusted EBITDA to income before provision for income taxes (dollars in thousands):

  3 months ended June 306 months ended June 30
Adjusted EBITDA11,15812,17523,88124,856
Depreciation of property and equipment4,2113,1557,9706,145
Impairment and loss on disposition of property and equipment61,525661,525
Amortization of intangible assets2,3462,8304,9656,131
Impairment of definite life intangible assets-1,431-1,431
Interest expense, net1,0038461,9391,996
Accretion of contingent consideration9585191172
Stock-based compensation1,2098472,2311,648
Unrealized loss (gain) on change in fair value of forward contracts191(436)357(88)
Unrealized loss (gain) on foreign exchange revaluation of foreign denominated monetary assets and liabilities42441106399
Acquisition and transition costs*3678451,136956
Income before provision for income taxes1,6886064,9204,541
*Acquisition and other costs represent transaction-related expenses, transitional expenses, such as redundant post-acquisition expenses, primarily related to our acquisition of Ascio in March 2019 and Cedar in January 2020 and disposition of certain Ting Mobile assets in August 2020. Expenses include severance or transitional costs associated with department, operational or overall company restructuring efforts, including geographic alignments.

Conference Call

Concurrent with the dissemination of its quarterly financial results news release at 5:05 pm ET on Thursday, August 5, management’s pre-recorded audio commentary (and transcript) discussing the quarter and outlook for the Company, will be posted to the Tucows website at In lieu of a live question and answer period, for the subsequent six days, until Wednesday, August 11, shareholders, analysts and prospective investors can submit questions to Tucows’ management at [email protected]. Management will post responses to questions of general interest (audio recording and transcript) to the Company’s website at on Tuesday, August 17, at approximately 4 pm ET. All questions will receive a response, however, questions of a more specific nature may be responded to directly.

About Tucows

Tucows is a provider of Fiber Internet Services, Mobile Services, Domain Name Services and other Internet services. Ting Internet ( delivers fixed fiber Internet access with outstanding customer support. Tucows’ mobile services enabler (MSE) platform provides network access, provisioning and billing services for mobile virtual network operators (MVNOs). OpenSRS (, Enom ( and Ascio ( combined manage approximately 26 million domain names and millions of value-added services through a global reseller network of over 36,000 web hosts and ISPs. Hover ( makes it easy for individuals and small businesses to manage their domain names and email addresses. More information can be found on Tucows’ corporate website (

Tucows Inc. 
Consolidated Balance Sheets 
(Dollar amounts in thousands of U.S. dollars) 
  June 30, December 31, 
   2021  2020 
  (unaudited) (unaudited) 
Current assets:     
Cash and cash equivalents $7,258 $8,311 
Accounts receivable  14,811  15,540 
Inventory  2,836  1,875 
Prepaid expenses and deposits  19,637  16,845 
Derivative instrument asset, current portion  1,704  3,860 
Deferred costs of fulfillment, current portion  96,148  93,467 
Income taxes recoverable  4,041  1,302 
Total current assets  146,435  141,200 
Deferred costs of fulfillment, long-term portion  18,490  17,599 
Derivative instrument asset, long-term portion  83  - 
Investments  2,012  - 
Deferred tax asset  168  226 
Property and equipment  144,187  117,530 
Right of use operating lease asset  12,541  11,238 
Contract costs  617  362 
Intangible assets  42,695  47,444 
Goodwill  116,304  116,304 
Total assets $483,532 $451,903 
Liabilities and Stockholders' Equity     
Current liabilities:     
Accounts payable $7,430 $6,329 
Accrued liabilities  14,003  10,235 
Customer deposits  15,812  15,402 
Derivative instrument liability, current portion  110  99 
Operating lease liability, current portion  2,270  1,761 
Deferred revenue, current portion  130,094  127,336 
Accreditation fees payable, current portion  958  940 
Income taxes payable  20  863 
Total current liabilities  170,697  162,965 
Derivative instrument liability, long-term portion  -  114 
Deferred revenue, long-term portion  24,766  24,909 
Accreditation fees payable, long-term portion  183  195 
Operating lease liability, long-term portion  10,202  9,179 
Loan payable, long-term portion  139,867  121,733 
Other long-term liability  3,607  3,416 
Deferred tax liability  23,386  24,694 
Stockholders' equity:     
Preferred stock - no par value, 1,250,000 shares authorized; none issued and outstanding  -  - 
Common stock - no par value, 250,000,000 shares authorized; 10,665,514 shares issued and outstanding as of June 30, 2021 and 10,612,414 shares issued and outstanding as of December 31, 2020  23,457  20,798 
Additional paid-in capital  2,208  1,458 
Retained earnings  84,062  80,106 
Accumulated other comprehensive income (loss)  1,097  2,336 
Total stockholders' equity  110,824  104,698 
Total liabilities and stockholders' equity $483,532 $451,903 

  Tucows Inc.
  Consolidated Statements of Operations and Comprehensive Income
  (Dollar amounts in thousands of U.S. dollars)
  Three months ended June 30, Six months ended June 30,
  2021  2020  2021  2020 
Net revenues$75,093 $82,122 $145,968 $166,107 
Cost of revenues:        
Direct cost of revenues 49,133  51,790  95,320  104,978 
Network expenses (*) 3,612  2,485  6,850  4,901 
Depreciation of property and equipment 4,084  3,030  7,722  5,907 
Amortization of intangible assets 24  326  323  680 
Impairment of property and equipment 1  1,525  61  1,525 
Total cost of revenues 56,854  59,156  110,276  117,991 
Gross profit 18,239  22,966  35,692  48,116 
Sales and marketing (*)$9,376 $9,218 $17,687 $18,203 
Technical operations and development (*) 3,170  3,067  6,302  5,818 
General and administrative (*) 5,210  5,465  10,163  10,206 
Depreciation of property and equipment 127  125  248  238 
Loss on disposition of property and equipment 5  -  5  - 
Amortization of intangible assets 2,322  2,504  4,642  5,451 
Impairment of definite life intangible assets -  1,431  -  1,431 
Loss (gain) on currency forward contracts 63  (381) (190) 60 
Total expenses 20,273  21,429  38,857  41,407 
Income from operations (2,034) 1,537  (3,165) 6,709 
Other income (expenses):        
Interest expense, net (1,003) (846) (1,939) (1,996)
Gain on sale of Ting customer assets, net 4,808  -  10,203  - 
Other expense, net (83) (85) (179) (172)
Total other income (expenses) 3,722  (931) 8,085  (2,168)
Income before provision for income taxes 1,688  606  4,920  4,541 
Provision for income taxes (119) 449  964  1,550 
Net income for the period 1,807  157  3,956  2,991 
Other comprehensive income, net of tax        
Unrealized income (loss) on hedging activities 248  1,114  616  (120)
Net amount reclassified to earnings (1,021) 200  (1,855) 243 
Other comprehensive income net of tax expense (recovery) of $(235) and $398 for the three months ended June 30, 2021 and June 30, 2020, $(375) and $32 for the six months ended June 30, 2021 and June 30, 2020 (773) 1,314  (1,239) 123 
Comprehensive income, net of tax for the period$1,034 $1,471 $2,717 $3,114 
Basic earnings per common share$0.17 $0.01 $0.37 $0.28 
Shares used in computing basic earnings per common share 10,633,601  10,567,382  10,625,748  10,589,806 
Diluted earnings per common share$0.17 $0.01 $0.37 $0.28 
Shares used in computing diluted earnings per common share 10,797,921  10,653,527  10,794,523  10,684,304 
(*) Stock-based compensation has been included in expenses as follows:        
Network expenses$144 $109 $269 $196 
Sales and marketing$550 $374 $1,056 $745 
Technical operations and development$234 $183 $401 $350 
General and administrative$281 $179 $505 $356 

 Tucows Inc.
 Consolidated Statements of Cash Flows
 (Dollar amounts in thousands of U.S. dollars)
  Three months ended June 30, Six months ended June 30,
  2021  2020  2021  2020 
Cash provided by: (unaudited)
Operating activities:        
Net income for the period$1,807 $157 $3,956 $2,991 
Items not involving cash:        
Depreciation of property and equipment 4,211  3,155  7,970  6,145 
Impairment of property and equipment 1  1,525  61  1,525 
Amortization of debt discount and issuance costs 67  67  134  134 
Amortization of intangible assets 2,346  2,830  4,965  6,131 
Net amortization contract costs (248) 95  (255) 124 
Impairment of definite life intangible assets -  1,431  -  1,431 
Other -  223  -  223 
Accretion of contingent consideration 95  85  191  172 
Deferred income taxes (recovery) (660) (917) (880) (1,107)
Excess tax benefits on share-based compensation expense (372) (164) (544) (344)
Net Right of use operating assets/Operating lease liability 174  291  229  112 
Loss on disposal of domain names -  2  1  15 
Loss (gain) on change in the fair value of forward contracts 191  (436) 357  (88)
Stock-based compensation 1,209  847  2,231  1,648 
Change in non-cash operating working capital:        
Accounts receivable 1,057  401  729  2,552 
Inventory (519) 900  (961) 1,804 
Prepaid expenses and deposits (5,058) (3,247) (2,792) (3,222)
Deferred costs of fulfillment 539  (2,204) (3,572) (5,057)
Income taxes recoverable (2,345) 294  (3,034) 794 
Accounts payable 568  (1,521) 2,019  250 
Accrued liabilities 2,975  2,165  3,768  334 
Customer deposits 285  336  410  394 
Deferred revenue (2,734) 2,655  2,615  5,997 
Accreditation fees payable (71) (31) 6  54 
Net cash provided by operating activities 3,518  8,939  17,604  23,012 
Financing activities:        
Proceeds received on exercise of stock options 1,247  29  1,476  46 
Payment of tax obligations resulting from net exercise of stock options (80) (165) (298) (347)
Repurchase of common stock -  (164) -  (3,281)
Proceeds received on loan payable 18,000  -  18,000  - 
Payment of loan payable costs (1) (7) (1) (32)
Net cash (used in) provided by financing activities 19,166  (307) 19,177  (3,614)
Investing activities:        
Additions to property and equipment (21,661) (12,150) (35,605) (22,093)
Acquisition of Cedar Holdings Group, net of cash of $66 -  -  -  (8,770)
Acquisition of intangible assets (63) (69) (217) (69)
Investment in securities (2,012) -  (2,012) - 
Net cash used in investing activities (23,736) (12,219) (37,834) (30,932)
(Decrease) increase in cash and cash equivalents (1,052) (3,587) (1,053) (11,534)
Cash and cash equivalents, beginning of period 8,310  12,446  8,311  20,393 
Cash and cash equivalents, end of period$7,258 $8,859 $7,258 $8,859 
Supplemental cash flow information:        
Interest paid$995 $686 $1,940 $1,840 
Income taxes paid, net$3,415 $1,243 $5,796 $2,200 
Supplementary disclosure of non-cash investing and financing activities:        
Property and equipment acquired during the period not yet paid for$212 $635 $212 $635 
Fair value of shares issues for acquisition of Cedar Holdings Group - $- $- $2,000 
Fair value of contingent consideration for acquisition of Cedar Holdings Group - $7 $- $3,072 

Reconciliation of Adjusted EBITDA to Income before         
Provision for Income Taxes        
(In Thousands of U.S. Dollars)  Three months ended June 30, Six months ended June 30,
(unaudited)  2021 (unaudited) 2020 (unaudited) 2021 (unaudited) 2020 (unaudited)
Adjusted EBITDA$11,158$12,175 $23,881$24,856 
Depreciation of property and equipment 4,211 3,155  7,970 6,145 
Impairment and loss on disposition of property and equipment 6 1,525  66 1,525 
Amortization of intangible assets 2,346 2,830  4,965 6,131 
Impairment of definite life intangible assets - 1,431  - 1,431 
Interest expense, net 1,003 846  1,939 1,996 
Accretion of contingent consideration 95 85  191 172 
Stock-based compensation 1,209 847  2,231 1,648 
Unrealized loss (gain) on change in fair value of forward contracts 191 (436) 357 (88)
Unrealized loss (gain) on foreign exchange revaluation of foreign denominated monetary assets and liabilities 42 441  106 399 
Acquisition and other costs1 367 845  1,136 956 
Income before provision for income taxes$1,688$606 $4,920$4,541 
1Acquisition and other costs represents transaction-related expenses, transitional expenses, such as duplicative post-acquisition expenses. Expenses include severance and transitional costs associated with department, operational, or overall company restructuring efforts, including geographic alignments.    

This release includes forward-looking statements as that term is defined in the U.S. Private Securities Litigation Reform Act of 1995, including statements regarding our expectations regarding our future financial results and, including, without limitation, our expectations regarding our ability to realize synergies from the Enom acquisition and our expectation for growth of Ting Internet. These statements are based on management’s current expectations and are subject to a number of uncertainties and risks that could cause actual results to differ materially from those described in the forward-looking statements. Information about other potential factors that could affect Tucows’ business, results of operations and financial condition is included in the Risk Factors sections of Tucows’ filings with the Securities and Exchange Commission. All forward-looking statements should be evaluated with the understanding of their inherent uncertainty. All forward-looking statements are based on information available to Tucows as of the date they are made. Tucows assumes no obligation to update any forward-looking statements, except as may be required by law.

Tucows, Ting, OpenSRS, Enom, Ascio and Hover are registered trademarks of Tucows Inc. or its subsidiaries.

Lawrence Chamberlain
(416) 519-4196 | [email protected]

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