TuanChe Limited Price & Performance (TC)

The updated TingBuild scorecard and investor presentation are also available. Now for management's prepared remarks. On Thursday, February 13, Tucows issued a news release reporting its financial results for the fourth quarter and year ended 12/31/2024. That news release and the company's financial statements are available on the company's website at tucas.com under the investors section. Please note, the following discussion may include forward looking statements, which are subject to risks and uncertainties that could cause actual results to differ materially. These risk factors are described in detail in the company's documents filed with the SEC, specifically the most recent reports on the forms 10 k and 10 q. The company urges you to read its security filings for a full description of the risk factors applicable to its business. I would now like to turn the call over to Tucow's president and chief executive Officer, Elliot Nos. Go ahead, Elliot.

Thanks, Monica. We ended the year with strong momentum across all of our businesses. Twenty twenty four marked our fourth consecutive year of consolidated revenue growth, 19% year over year gross profit expansion and more than doubling our annual adjusted EBITDA to a touch under $35,000,000 Excluding Ting, we had adjusted EBITDA of $57,400,000 out the top end of our guidance. The $34,900,000 in EBITDA represented a 126% increase from $15,500,000 in 2023. Most importantly, we have moved Ting to a sustainable cost structure, which generated slightly positive adjusted EBITDA for the month of December. We repaid a further $2,000,000 on the balance of the syndicated bank loan in Q4, which takes us to $16,500,000 paid down in 2024. And as we do every year, we've authorized a buyback program for 2025 for up to $40,000,000 in Tucow stock. A reminder that we do this whether or not we can foresee using it at the time we do the authorization. I'll now turn the call over to Dave Warrick, CEO of Tucows Domains.

Thanks, Salia. As we close out the year, I'm pleased to report that Tucows Domains grew revenue, gross margin and adjusted EBITDA in each successive quarter of 2024. This follows a similar performance in 2023. February also marks the twenty fifth anniversary of Tucao's domains business from our launch of OpenSRS in early two thousand. Today, our core business remains strong and resilient, built over many years and with a long term strategic view. From the beginning, we prioritized strong customer relationships and disciplined cost management to drive sustainable profitability. We're now building on that solid foundation and taking the greatest assets that this business has, its subject matter expertise and massive distribution channel, and creating exciting future paths for growth. Now turning to the recent quarter, revenue for domain services for Q4 was $65,700,000 up 6% from $61,800,000 for the same quarter last year and up 5% for the full year 2024 compared to 2023. Gross margin was $20,300,000 in Q4, up 8% from the same quarter last year and up 7% for the full year. And Domain Services adjusted EBITDA was $11,600,000 in the fourth quarter, up 8% from Q4 of last year and up 4% for the full year.

Our Domains Under Management held steady and were flat both year over year and quarter over quarter, while transactions were down just under 1% from Q4 of twenty twenty three. Both measures represent solid performance within our industry. And as I've said before, domain registration is a mature business and revenue growth for us is going to come from adjacent revenue opportunities like our registry services business as well as new products we're bringing to market. Looking at the results from the segments of our business and our wholesale channel, revenue for Q4 was $56,000,000 up 7% compared to $52,500,000 for Q4 of last year and gross margin was $15,000,000 up 10% from $13,600,000 from Q4 of twenty twenty three. Within the wholesale channel, Domain Services gross margin in Q4 of this year was unchanged from last year at $9,900,000 Value added services gross margin for Q4 of this year was up 36% year over year to $5,000,000 with the increase driven primarily by strong non recurring sales from our expiry stream and to a lesser extent from our hosted email service. In our retail channel, revenue for Q4 was $9,600,000 up 3% from $9,300,000 in Q4 of last year.

Retail gross margin for the fourth quarter was also up 3% year over year. Our combined overall renewal rate at 76% in both Q4 and for the full year across all Tuca's Domains brands remains within our historical range and above the industry average. Our results for Q4 and the full year 2024 show a healthy core business in a mature industry. We'll continue to focus on running that business efficiently. Further to the growth opportunities, earlier this year, in partnership with Amazon's AWS business, we previewed a cloud based hosting solution designed to meet the needs of the thousands of smaller resellers within our distribution channel. This solution enables digital agencies, web designers and developers, and smaller hosting providers to leverage cloud based hosting without developing and building out the integration to AWS themselves. And it reduces the barriers to entry in the same way that the OpenSRS platform twenty five years ago enabled ISPs and web hosts to register domains for their customers without becoming an accredited registrar. Building on our ongoing success in registry services, we continue to leverage the technology acquired through the UNR acquisition to grow customers and revenue. As a testament to our capabilities, TUKAS Domains was recently selected to be the technical services provider for the .in country code domain operated by the National Internet Exchange of India.

Our teams are closely collaborating and we are establishing a dedicated team in India to support this initiative. As the project progresses, we anticipate migrating approximately 4,000,000 domains onto our platform later this year, expanding our market presence and leadership in registry services. The pricing and margin contribution for this piece of business is typical of a large high volume customer. Reflecting on the past twenty five years of Tuca's Domains, we've achieved many milestones and built a healthy business. I'm proud of how our core business continues to reliably perform. Looking ahead, our focus on new growth initiatives is what excites us most. As the digital landscape evolves, we're where we have always been, at the forefront and ready to deliver solutions for the future of the Internet. In the coming quarters, I will share further updates as we progress. But I do note that the growth trajectory does not mean there will be meaningful updates each quarter. Selling through channels is a slow build at the beginning as product and marketing are perfect. We know good things take time and we're in this for the long haul, steady, strategic and building for what's next. Now over to Justin Reilly, CEO of Wavellow.

Thanks, Dave. As I reflect on Wavellow's third year as an independent business, I'm pleased with our achievements. Fiscal twenty twenty four marks our best year yet across all key performance indicators. WaveLog grew revenue, gross margin adjusted EBITDA and new customer logos, all while renewing its inaugural customer in EchoStar's Boost Mobile. As we look at the market, only 2% of all B2B SaaS companies ever reach this level of ARR, while delivering positive EBITDA and cash flow. And we're just getting started. Revenue for the full year 2024 was $39,900,000 up from $38,700,000 in 2023. Gross margin was $38,600,000 up from $36,000,000 last year. Adjusted EBITDA was $13,800,000 well outperforming our guidance of $8,000,000 to $10,000,000 and up from $10,600,000 last year. Our performance in 2024 tells a story of a business that is learning to nicely balance growth and profitability while delivering for its existing customers. The latter is no more apparent than our four year renewal of Wave Low's partnership with EchoStar's Boost Mobile. As the Boost team moves from defense to offense with the momentum of recently being awarded the best network in New York City, they looked no further than our event driven platform to fuel their growth strategy.

We couldn't be happier to support their journey as America's Fourth carrier. In the quarter, Wavellow's revenues were $9,900,000 down 1.9% from Q3 and up 3.6% from Q4 twenty twenty three. Gross margin was $9,400,000 down 6.5% from Q3 and up 1.7 year over year. Adjusted EBITDA for Q4 was $3,700,000 up 7.3% from Q3 and up 41.3% year over year. The trend line quarter over quarter represents some lumpiness and recognition of bundled professional services that happen annually in Q3, onboarding and cloud costs for new logos won earlier in the year, and an increased investment in our go to market teams. We'll continue to invest in sales and marketing into 2025, doing so as always in a measured, thoughtful manner. On the year, we've added three new customers to the Wavelo family. These are a mix of ISPs and MVNOs who share our contempt for telecom and efficiency and dream of a customer first catalyst for their businesses. Our latest new logo, an innovative MVNO launching later this year, chose us because, in their own words, Wavellow is great at doing impossible things. With our Internet roots, these things are simply first principles approaches to solving hard problems.

But in telecom, they feel like magic. It is in the issue we take with telecom inefficiency and our focus on customer obsession that we win. I am pleased with the progress our go to market teams have made this year. Specifically, in the quarter, we've seen more tier one and tier two interest than in any other quarter in Wavelo's history. Our teams are being considered for RFI and RFP procurement cycles, often without outbound sales activity. We are experiencing more organic inbound traffic and referrals than ever before. All of these are important as our sales team focuses their effort upmarket and navigates the subsequent deal complexity that's all too common in larger telecom prospects. I'll remind investors that these are the places where we can facilitate the most change for telecom customers as the inefficiencies are frankly hard to even quantify. I will also remind investors that this is why I came to Tucows from Verizon in the first place. As we look to 2025, we enter the year with a mostly hired go to market team that is onboarded and hitting the ground running. We expect to grow the top line more than we did in 2024 for a mix of existing and new customer revenue.

That said, I want to be clear that we'll be doing so with a small but mighty sales and marketing team that represents a much smaller spend as a percentage of revenue than our competitors. We expect to continue to invest there in service of new customer logos, and so we are providing an adjusted EBITDA guidance of $13,000,000 As I said in q four twenty twenty three, SaaS companies are in the midst of a flight to quality. This is a multiyear journey for those that have been VC backed over the last decade. Fortunately for Wavellow, its roots are grounded in the soil of a Tucals tradition of cash generation and shareholder value. This is just another day on the farm. As we look to the macro in 2025, every industry will have to contend with the generational disruption of AI. At a global market size of 3,100,000,000,000.0, telecom is the leading candidate for a historical refactoring. The most valuable data on the planet is in what products and services customers use, what they pay for those services, and what behaviors might indicate that they are about to make a change to what they use or what they are willing to pay.

In telecom, this data sits in systems that are three and four decades old, built for a different time, and inelegantly re engineered for years on end. Fortunately, Wavelo was built for today and tomorrow. Simply running a business on an event driven platform resets a telecom's value trajectory in this new era. If AI is a rocket, then Wavellow is the jet fuel for an AI future. Thanks for listening. And now over to Elliot.

Thanks, Justin. As we close out 2024, Ting's long term shape has settled. We are an ISP. In Q4, Ting reported 15,700,000 in revenue, a 14% increase year over year. The growth was driven by a 17% year over year increase in subscribers, taking us to 50,700 subscribers from 43,400 in Q4 of last year. We had 10% year over year growth in completed addresses in 2024, taking us to 133,500 serviceable addresses for Ting owned infrastructure. We remind that this will settle into a final count between 275,000 as we no longer engage in new construction. We're pleased to see partner markets ramp with a 53% increase in addresses year over year. This brings us to 178,800 total serviceable addresses across all single footprints. These numbers will grow as Memphis and Colorado Springs start to accelerate. Ting gross margin increased 40% year over year to $11,000,000 in Q4 as we gained efficiencies from no longer carrying excess construction capacity. Ting's adjusted EBITDA continues to trend in a positive direction with a loss of only 1,500,000 in Q4, down from $12,300,000 in Q4 of twenty twenty three. Notably, for the month of December, Ting had slightly positive adjusted EBITDA and we expect that to continue.

In 2024, we had a second failed common equity process. We went through two rifts and we stopped building fiber to new organic homes. No longer carrying excess construction capacity has both greatly reduced the operating loss and greatly improved the gross margin as fallow capacity would be charged to COGS. The natural loading of the networks has continued to increase customers, revenue and margin at strong levels. The work from here is to focus on penetration and then mostly starting later this year ARPU. We are in the process of rebuilding the marketing function, which is probably the function that could most benefit from AI augmentation. We have in sourced the door to door function and have creative ideas on how to modernize an age old practice. We have talked for years about the separation between capital, construction, and ISP. We can see in all of the market evolution of the last few years that this is the way the market is evolving. We are keenly aware of the debt load on Ting. And while it is bankruptcy remote for the rest of TCX, that does not lessen the urgency with which we look at it. Loading the network and increasing ARPU are the most important operating variables and we continue to expect 2025 to be a year with a lot of change in the fiber space and change and create opportunities.

Now we'll hear from our CFO, Ivan Ivanoff, who will discuss our financial results in detail.

Thank you, Elliot, and thank you, everyone, for joining us today. As we close out the fourth quarter, our focus remains on growth, efficiency and financial discipline. The progress we made is reflected in our strong top line performance and a significant increase in adjusted EBITDA. Our efforts, particularly in capital efficiency at Tink and the continued momentum in Tuca's domains and Webullo are driving meaningful results. In Q4, we delivered $93,100,000 in total revenue, a 7.1% increase year over year. Gross profit was up 19% to $21,200,000 as we maintained disciplined cost controls. Adjusted EBITDA grew four zero three percent to $12,800,000 a combination of both our revenue growth and operational improvements. At the net income level, we reported a net loss of $45,300,000 dollars primarily due to a one time impairment and restructuring charge of 28,200,000 related to TIM's capital efficiency plan as well as other impairment and transition costs of $1,300,000 When adjusting for these one time charges, our net loss was $15,800,000 with an adjusted EPS loss of $1.43 per share. Each of our business units played a role in delivering this quarter's results, and I want to walk you through their individual performances. Starting with Tuca's domains, Domains continues to be a core driver of our financial strength.

Revenue grew 6.2% year over year to $65,700,000 driven by expiry sales and continued strength in the core business. Gross margin expanded 7.9% to $20,300,000 holding steady at 31% margin as a percent of revenues. And finally, adjusted EBITDA increased 7.8 to $11,600,000 for the quarter. Domains remains a highly reliable business with strong cash generation and consistent performance. Think has been a major focus area, and we're seeing the results of our efforts to optimize capital efficiency, while continuing to scale in our existing footprint as well as partner markets. Revenue grew 14% year over year to 15,700,000.0. Subscribers grew 17% year over year as we expanded in both existing and new partner markets. Things gross margin climbed 40% to 11,000,000 with an improvement in gross margin percentage from 57% to 70% this quarter. And finally, adjusted EBITDA improved significantly, moving from CAD 12,400,000.0 loss last year to a $1,500,000 loss this quarter. The growth in adjusted EBITDA, I think, is a direct result of our disciplined approach to managing costs, streamlining operations and maintaining ARPU stability. These are structural improvements that set the stage for continued margin expansion. Moving on to Wavellow. Wavellow continues to deliver results as it focuses on building its growth funnel.

Revenue increased 3.6% to $9,900,000 dollars Gross margin held strong at 95% of revenues and adjusted EBITDA grew 41% to $3,700,000 highlighting our continued focus on efficiency and high margin services. Corporate revenue remained steady at $1,800,000 and adjusted EBITDA declined to a negative $1,100,000 for the quarter. Beyond our individual business units, we are seeing positive trends this quarter in our cash flow and balance sheet. We recorded $11,700,000 in investing activities related to PP and E, primarily due to cash payments for 3Q capital expenditures, which were incurred prior to the announcement of the Think capital efficiency plan. Adjusting for these payments for 3Q expenditures, our actual PP and E additions for the quarter were $4,800,000 which better represents our ongoing quarterly capital expenditures past think capital efficiency. We ended the quarter with $56,900,000 in cash and cash equivalent. And on a net basis, our syndicated debt stands at $192,500,000 resulting in a leverage ratio of 3.26 times. Please note that this syndicated net debt excludes things ABS notes and redeemable preferred units, which are reported separately on our balance sheet. Interest expense on our syndicated loan was $3,900,000 down from $5,000,000 a year ago as we repaid $16,500,000 in principal throughout the year.

A major initiative this quarter was capital efficiency at PINC, which resulted in a 28,200,000.0 onetime restructuring and impairment charge. This charge primarily reflects adjustments to property, equipment and capital inventory, aligning our investments with long term operational needs. Excluding these one time charges, total consolidated recurring operating and network expenses declined by $8,500,000 or 22% year over year and $6,800,000 or 18% sequentially from Q3. These reductions are part of our effort to maintain financial discipline while supporting sustainable growth. As we enter 2025, our business fundamentals remain solid, and we are executing on our key priorities. While we continue focusing on optimizing operations, maximizing margin and deleveraging to best deliver long term shareholder value. With that, thank you, and I'll pass it back to Elliot.

Thanks, Ivan. First, adjusted EBITDA guidance for TCX for 2025. The consolidated guidance range is in and around $56,000,000 up 75% over 2024 before a one time $9,000,000 charge in our corporate segment as we wind down our Verizon MVNO agreement or 46,000,000 after that charge. This breaks down as $44,000,000 for Tucows domains, $13,000,000 for Wavelow, breakeven for Ting and a $1,000,000 loss for the corporate segment. The Verizon charge would take the corporate segment to a $10,000,000,000 loss. Reminder, this loss was priced into the 2020 deal with DISH and bundling mobile with our Ting Fiber offering is the single biggest marketing tool for Ting in 2025. This loss will be very useful for Ting's customer acquisition. With Tucows domains, we will have headwinds in general Google search trends, the impact of an acquisition of a customer in 2023 and needing to frontload some spend against some of the registry wins that will manifest in the later part of the year. As usual, this resilient business will grow past its challenges. Wavellow crushed its guidance in 2024 and will be around the same level in 2025 as it brought some of its operating efficiencies forward and will have a full go to market team for 2025.

Ting will improve from a roughly $22,000,000 EBITDA loss to breakeven. 2025 is a big year for TCX. The thirtieth anniversary of Tucows, the twenty fifth anniversary of OpenSRS, and the tenth anniversary of TIG. With these milestones, ones that few businesses ever reach, I wanted to look at both capital markets and technology with a longer lens. When I look at capital flows in the world in 2025, I see a continued flight to minimize risk. In the ABS market, we see increasing demand, tightening spreads and more private capital entering in addition to the usual insurers and the like. In fiber and in enterprise software, we see a continued lack of common equity checks being written and we see lots of companies with private equity sponsors coming to the end of their last rounds without a clear path forward in sight. We see this trend manifest in the massive cash pile currently sitting at Berkshire Hathaway. Our investors know clearly what that signals about Warren Buffett's thinking. And going one layer underneath that is to my eyes, a recognition that the magnificent seven stocks, those responsible for the vast majority of the major indexes returns in the past few years have now fundamentally shifted from being capital light cash generators to spending a massive percentage of all cash generated on infrastructure in order to keep up with the AI arms race.

These companies now have the free cash flow characteristics of industrials, not tech companies. This all greatly reinforces the difficulty in finding reasonable returns at a reasonable level of risk. Of course, this means an inevitable flight to value as capital needs a home. We are also obviously in the early innings of the biggest technological change since the dawn of the modern Internet. The impact of AI will dwarf the impact of trends like cloud and crypto. It is important for investors to understand how we think about the change it will bring. First, in the near term, we are firmly in the camp of augmentation not replacement. We are leaning hard into a number of projects across all of our businesses that are intended to make business processes more efficient and allow us to accelerate our productivity. This also has the secondary impact of helping our people skill up and experience what is possible. In the longer term, we see agents serving nearly every individual in a number of capacities, further manifesting the promise of the early Internet, putting much more power into the hands of individuals at a time when the power of large businesses feels more and more pervasive.

We think this mirrors the use of tools like email and web sites at the dawn of the Internet, which means an important place in this future for service providers. At Tuca's Domains, we can empower the largest channel of service providers in the world to help their customers. At Wavelo, we can help telecoms help their customers in ways that start to mirror the great experiences smaller providers deliver. And at Ting, we can experiment at an early stage with all of this, hacking a trail for the other two businesses to fall. You will not see this manifest in 2025 unless you squint really hard, but we know the mountain in the distance we are marching towards. In the interim, all three of our businesses have no existential hurdles with the EchoStar renewal and the Ting restructuring behind us. We are heads down executing, generating cash, reducing debt and reducing our float where appropriate. And with that, I look forward to your written questions and exploring areas that interest you in greater detail. Again, please send your questions to irtucows dot com by February 20 and look for our recorded Q and A audio response and transcript to this call to be posted to the Tucows website on Tuesday, March 4 at approximately 5PM Eastern time.