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What changed in TUCOWS INC /PA/'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of TUCOWS INC /PA/'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+524 added−598 removedSource: 10-K (2025-03-13) vs 10-K (2024-04-01)

Top changes in TUCOWS INC /PA/'s 2024 10-K

524 paragraphs added · 598 removed · 205 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeWe seek to limit disclosure of our intellectual property by requiring all employees and consultants with access to our proprietary information to commit to confidentiality, non-disclosure and work-for-hire agreements. All of our employees are required to sign confidentiality and non-use agreements, which provide that any rights they may have in copyrightable works or patentable technologies accrue to us.
Biggest changeAll of our employees are required to sign confidentiality and non-use agreements, which provide that any rights they may have in copyrightable works or patentable technologies accrue to us. Before entering into discussions with potential vendors and partners about our business and technologies, we require them to enter into a non-disclosure agreement.
Seasonality During the summer months and certain other times of the year, such as major holidays, Internet usage often declines. As a result, some of our services (such as OpenSRS, eNom, Ascio, and Hover) may experience reduced demand during these times.
Seasonality During the summer months and certain other times of the year, such as major holidays, Internet usage often declines. As a result, some of our Domain services (such as OpenSRS, eNom, Ascio, and Hover) may experience reduced demand during these times.
Tucows Domains revenues primarily from the registration fees charged to resellers in connection with new, renewed and transferred domain name registrations. In addition, we earn revenues from the sale of retail domain name registration and email services to individuals and small businesses.
Tucows Domains generates revenues primarily from the registration fees charged to resellers in connection with new, renewed and transferred domain name registrations. In addition, we earn revenues from the sale of retail domain name registration and email services to individuals and small businesses.
We believe the primary competitive factors in Tucows Domains are: • Providing superior customer service by anticipating the technical requirements and business objectives of resellers and providing them with technical advice to help them understand how our services can be customized to meet their particular needs; • Providing cost savings over in-house solutions by relieving resellers of the expense of acquiring and maintaining hardware and software and the associated administrative burden; • Enabling resellers to better manage their relationships with their end-users; 5 Table of Contents • Facilitating scalability through an infrastructure designed to support millions of transactions across millions of end-users; and • Providing superior technology and infrastructure, consisting of industry-leading software and hardware that allow resellers to provide these services to their customers without having to make substantial investments in their own software or hardware.
We believe the primary competitive factors in Tucows Domains are: • Providing superior customer service by anticipating the technical requirements and business objectives of resellers and providing them with technical advice to help them understand how our services can be customized to meet their particular needs; • Providing cost savings over in-house solutions by relieving resellers of the expense of acquiring and maintaining hardware and software and the associated administrative burden; • Enabling resellers to better manage their relationships with their end-users; • Facilitating scalability through an infrastructure designed to support millions of transactions across millions of end-users; and • Providing superior technology and infrastructure, consisting of industry-leading software and hardware that allow resellers to provide these services to their customers without having to make substantial investments in their own software or hardware.
The remaining 172 employees support corporate functions and shared technology services used across the Tucows group. We offer competitive compensation in addition to employee stock options, physical and mental health benefits, learning allowances, future planning programs for employee Registered Retirement Savings Plans ("RRSP/401k") contributions, as well as generous vacation, maternity, paternity and adoption leaves for our employees.
The remaining 143 employees support corporate functions and shared technology services used across the Tucows group. We offer competitive compensation in addition to employee stock options, physical and mental health benefits, learning allowances, future planning programs for employee Registered Retirement Savings Plans ("RRSP/401k") contributions, as well as generous vacation, maternity, paternity and adoption leaves for our employees.
Wavelo launched as a proven asset for CSPs, with DISH using Wavelo’s Mobile Network Operating System ("MONOS") software to drive additional value within its Digital Operator Platform, and Ting integrating Wavelo’s Internet Service Operating System ("ISOS") and Subscriber Management ("SM") software to enable faster subscriber growth and footprint expansion.
Wavelo launched as a proven asset for CSPs, with EchoStar using Wavelo’s Mobile Network Operating System ("MONOS") software to drive additional value within its Digital Operator Platform, and Ting integrating Wavelo’s Internet Service Operating System ("ISOS") and Subscriber Management ("SM") software to enable faster subscriber growth and footprint expansion.
If these discussions result in a license or other business relationship, we also generally require that the agreement containing the parties’ rights and obligations include provisions for the protection of its intellectual property rights. 4 Table of Contents Customers Within the Ting segment, customers are a very broad mix of consumers, small businesses and corporations seeking high-speed Internet services.
If these discussions result in a license or other business relationship, we also generally require that the agreement containing the parties’ rights and obligations include provisions for the protection of its intellectual property rights. Customers Within the Ting segment, customers are a very broad mix of consumers, small businesses and corporations seeking high-speed Internet services.
Our telephone number is (416) 535-0123. We also have offices in Germany, Denmark and the U.S. We are subject to the filing requirements of the Securities Exchange Act of 1934 (the “Exchange Act”). Therefore, we file annual reports, periodic reports, proxy statements and other information with the Securities and Exchange Commission (the "SEC").
Our telephone number is (416) 535-0123. We also have offices in Germany, Denmark and the U.S. 9 Table of Contents We are subject to the filing requirements of the Securities Exchange Act of 1934 (the “Exchange Act”). Therefore, we file annual reports, periodic reports, proxy statements and other information with the Securities and Exchange Commission (the "SEC").
Additional information about segments can be found in “Note 21 – Segment Reporting” of the Notes to the Consolidated Financial Statements included in Part II, Item 8 of this Annual Report.
Additional information about segments can be found in “Note 20 – Segment Reporting” of the Notes to the Consolidated Financial Statements included in Part II, Item 8 of this Annual Report.
Our primary distribution channel is a global network of more than 35,000 resellers that operate in almost 200 countries and who typically provide their customers, the end-users of Internet-based services, with solutions for establishing and maintaining an online presence.
Our primary distribution channel is a global network of more than 34,000 resellers that operate in 200 countries and who typically provide their customers, the end-users of Internet-based services, with solutions for establishing and maintaining an online presence.
As a g lobal Internet and technology company, we have a wide range of employees, including management professionals, technicians, engineers, and call center employees. None of our employees are currently represented by a labor union. We consider our relations with our employees to be good.
As a global Internet and technology company, we have a wide range of employees, including management professionals, technicians, engineers, and call center employees. None of our employees are currently represented by a labor union. We consider our relations with our employees to be good.
Prior to joining Tucows, Justin was Head of Product & Customer Experience Innovation at Verizon, as well as a founder of a number of companies with consumer grade product and machine learning at their core.
Prior to joining Tucows, Justin was Head of Product & Customer Experience Innovation at Verizon, as well as a founder of a number of companies with consumer grade product and machine learning at their core. 10 Table of Contents
To us, inclusion is not a standalone effort; it is intrinsically part of our employee experience, which helps us create a space where our team can proudly and comfortably bring their full selves to work.
Our People Philosophy is no different. To us, inclusion is not a standalone effort; it is intrinsically part of our employee experience, which helps us create a space where our team can proudly and comfortably bring their full selves to work.
This principle is found throughout the entire company, and is especially apparent in Tucows’ benchmark-free people philosophy and company-wide efforts, such as IDEA (Inclusion, Diversity, Equity and Allyship), which anchors on the belief that diversity without inclusion, equity or allyship is futile.
This principle is found throughout the company, and is especially apparent in Tucows’ benchmark-free people philosophy and company-wide efforts, such as IDEA (Inclusion, Diversity, Equity and Allyship), which anchors on the belief that diversity alone is not enough without inclusion, equity, and allyship.
Human Capital Resources Employee Profile At Tucows, we strive to maintain a best-in-class workplace where our employees can proudly bring their whole selves to work. We believe that by creating an intentional, inclusive culture, our people have more opportunities to thrive every day. As of December 31, 2023, we had approximat ely 1,045 full-time employees and 84 contracted employees globally.
Human Capital Resources Employee Profile At Tucows, we strive to maintain a best-in-class workplace where our employees can proudly bring their whole selves to work. We believe that by creating an intentional, inclusive culture, our people have more opportunities to thrive every day. As of December 31, 2024, we had approximately 765 full-time employees and 99 contracted employees globally.
We believe the primary competitive factors in Wavelo are: • Event-based architecture is the foundation to our modern platforms, which means less network bandwidth consumption and less central processing unit ("CPU") utilization, cutting costs and speeding up delivery, enabling new features, functionality and better customer experiences; • Our product suite is modular by nature, so our platforms can work just as well together as they do independently, and alongside other best-in-class software - to fill specific gaps in operations, network provisioning, subscriber management, or anything in between; and • CSPs are able to select the best of breed software and use it where they please, versus being forced into a traditional BSS/OSS software stack that forces them to use that providers' version of software to have full functionality.
We believe the primary competitive factors in Wavelo are: • Event-based architecture is the foundation to our modern platforms, which means less network bandwidth consumption and less central processing unit ("CPU") utilization, cutting costs and speeding up delivery, enabling new features, functionality and better customer experiences; • Our product suite is modular by nature, so our platforms can work just as well together as they do independently, and alongside other best-in-class software - to fill specific gaps in operations, network provisioning, subscriber management, or anything in between; and • CSPs are able to select the best of breed software and use it where they please, versus being forced into a traditional BSS/OSS software stack that forces them to use that providers' version of software to have full functionality. 6 Table of Contents Although we encounter pricing pressure in many markets in which we compete, we believe the effects of that pressure are mitigated by the fact that we deliver a high degree of value to our customers through our business and technical practices.
Ting Ting and its wholly owned subsidiaries, Cedar and Simply Bits includes the provision of high-speed Internet access services to select towns throughout the United States, with further expansion underway to both new and existing markets. Our primary sales channel is through the Ting website.
Ting Ting and its wholly owned subsidiaries, Cedar and Simply Bits includes the provision of high-speed Internet access services to select towns throughout the United States, with operations focused on serving existing markets. Our primary sales channel is through the Ting website.
Together the OpenSRS, eNom, EPAG and Ascio Domain Services manage 24.6 million domain names under the Tucows, eNom, EPAG and Ascio ICANN registrar accreditations and for other registrars under their own accreditations. Domains under management has increased by 0.2 million, or less than 1%, since December 31, 2022.
Together the OpenSRS, eNom, EPAG and Ascio Domain Services manage 24.5 million d omain names under the Tucows, eNom, EPAG and Ascio ICANN registrar accreditations and for other registrars under their own accreditations. Domains under management has decreased by 0.1 million, or less than 0.2%, since D ecember 31, 2023.
As of December 31, 2023, Ting Internet had access to 121,000 owned infrastructure serviceable addresses, 29,000 partner infrastructure serviceable addresses and 43,000 active accounts under its management; compared to having access to 96,000 owned infrastructure serviceable addresses, 19,000 partner infrastructure serviceable addresses and 35,000 active accounts under its management as of December 31, 2022.
As of December 31, 2024, Ting Internet had access to 134,000 owned infrastructure serviceable addresses, 45,000 partner infrastructure serviceable addresses and 51,000 active accounts under its management; compared to having access to 121,000 owned infrastructure serviceable addresses, 29,000 partner infrastructure serviceable addresses and 43,000 active accounts under its management as of December 31, 2023.
Certain revenues and expenses disclosed under the Corporate category are excluded from segment earnings before interest, tax, depreciation and amortization ("EBITDA") results as they are centrally managed and not monitored by or reported to our CEO by segment, including retail mobile services, the 10-year payment stream on transferred legacy Mobile subscribers, eliminations of intercompany transactions, portions of Finance and Human Resources, Legal and Corporate Information Technology ("IT") shared services.
Certain revenues and expenses are excluded from segment adjusted earnings before interest, tax, depreciation and amortization ("EBITDA") results as they are centrally managed and not monitored by or reported to our CEO by segment, including mobile retail services, eliminations of intercompany transactions, portions of Finance and Human Resources that are centrally managed, Legal and Corporate Information Technology ("IT") shared services.
Name Age Title Elliot Noss 61 President and Chief Executive Officer, Tucows Inc. and Ting Davinder Singh 49 Chief Financial Officer Dave Woroch 61 Chief Executive Officer of Tucows Domains Services Bret Fausett 60 Chief Legal Officer and Vice-President, Regulatory Affairs Michael Koenig 39 Chief Operating Officer Justin Reilly 36 Chief Executive Officer, Wavelo Elliot Noss has served as our President and Chief Executive Officer of Tucows Inc. since May 1999 and Ting since 2022 and served as Vice President of Corporate Services for Tucows Interactive Limited, which was acquired by Tucows in May 1999, from April 1997 to May 1999.
Name Age Title Elliot Noss 62 President and Chief Executive Officer, Tucows Inc. and Ting Ivan Ivanov 46 Chief Financial Officer David Woroch 62 Chief Executive Officer of Tucows Domains Services Bret Fausett 61 Chief Legal Officer and Vice-President, Regulatory Affairs Justin Reilly 37 Chief Executive Officer, Wavelo Elliot Noss has served as our President and Chief Executive Officer of Tucows Inc. since May 1999 and Ting since 2022 and served as Vice President of Corporate Services for Tucows Interactive Limited, which was acquired by Tucows in May 1999, from April 1997 to May 1999.
In addition, the first quarter of the fiscal year will often see higher deferred revenues in regard to domain names due to most renewals occurring on January 1. The demand for Ting and Wavelo services is not impacted by seasonality.
In addition, the first quarter of the fiscal year will often see higher contract liabilities in regard to domain names due to most renewals occurring on January 1. The demand for Ting and Wavelo services is not impacted by seasonality. Competition Our competitors may be divided into the following groups: Ting • U.S.
Approximately 53% of our employees are based in Canada, followed by 36% based in the U.S., and the remaining 11% are spread across countries in Europe and other regions. Of our employees, approximately 523 support our Ting segment, 190 support our Wavelo segment, and approximately 244 support our Tucows Domains segment.
Approximately 58% of our employees are based in Canada, followed by 27% based in the U.S., and the remaining 15% are spread across countries in Europe and other regions. Of our employees, approximately 243 support our Ting segment, 205 support our Wavelo segment, and approximately 273 support our Tucows Domains segment.
The Company also supports eight ERGs that recognize the shared experiences of our employees. These groups include: 2SLGBTQ+, Black Future, Caregivers, Women’s Leadership, Canadian Newcomers, Neurodiversity, Mental Health, and Equality and Justice.
The Company also supports eight ERGs that recognize the shared experiences of our employees. These groups include: 2SLGBTQ+, Black Future, Caregivers, Women’s Leadership, Canadian Newcomers, Neurodiversity, Mental Health, and Equality and Justice. These volunteer groups connect employees with shared characteristics, life experiences and enable them to engage in activities that advance our culture and foster connectivity.
Tucows Domains • Retail-oriented domain registrars, such as GoDaddy and Web.com, who compete with our Reseller customers in wholesale domain services and with Hover. • Wholesale-oriented domain registrars, such as GoDaddy, who market services to resellers such as our customers. • Wholesale Email Service providers, such as Google, Microsoft, Bluetie and MailTrust.
Tucows Domains • Retail-oriented domain registrars, such as GoDaddy and Web.com, who compete with our Reseller customers in wholesale domain services and with Hover. • Wholesale-oriented domain registrars, such as GoDaddy, who market services to resellers such as our customers. • Wholesale Email Service providers, such as Google, Microsoft, Bluetie and MailTrust. 5 Table of Contents Wavelo • Traditional BSS/OSS providers such as Amdocs, Netcracker, Ericsson, Optiva and Sonar Software, who primarily compete with Wavelo’s platforms and services.
Wavelo offers services to a small number of CSPs focused in the U.S. along with DISH, their largest external customer, and Ting, their internal customer, until such time we expand these offerings to other MVNOs or MNOs. The majority of the customers to whom we provide services as Tucows Domains are generally either web hosts or ISPs.
Wavelo offers services to a small number of CSPs focused in the U.S. along with EchoStar, their largest external customer, and Ting, their internal customer, until such time we expand these offerings to other Mobile Virtual Network Operators ("MVNOs") or Mobile Network Operators ("MNOs").
Our ability to sell ccTLDs is dependent on our ability to maintain accreditation in good standing with these various international authorities. 7 Table of Contents Communications Decency Act ("CDA"): The CDA generally protects online service providers, such as Tucows, from liability for certain activities of their customers, such as posting of defamatory or obscene content, unless the online service provider is participating in the unlawful conduct.
Communications Decency Act ("CDA"): The CDA generally protects online service providers, such as Tucows, from liability for certain activities of their customers, such as posting of defamatory or obscene content, unless the online service provider is participating in the unlawful conduct.
Tucows Corporate - Mobile Services The FCC and other federal, state and local, as well as international, governmental authorities have jurisdiction over our business. The licensing, construction, operation, sale and interconnection arrangements of wireless telecommunications systems are regulated by the FCC and, depending on the jurisdiction, international, state and local regulatory agencies.
The licensing, construction, operation, sale and interconnection arrangements of wireless telecommunications systems are regulated by the FCC and, depending on the jurisdiction, international, state and local regulatory agencies.
Country Code Top-Level Domain ("ccTLD") Authorities: The regulation of ccTLDs is governed by national regulatory agencies of the country underlying the specific ccTLDs, such as Canada (.ca).
Country Code Top-Level Domain ("ccTLD") Authorities: The regulation of ccTLDs is governed by national regulatory agencies of the country underlying the specific ccTLDs, such as Canada (.ca). Our ability to sell ccTLDs is dependent on our ability to maintain accreditation in good standing with these various international authorities.
Service providers, Internet portals, web hosting companies, email hosting companies, outsourced application companies, country code registries and major telecommunication firms may broaden their services to include services we offer.
We expect to continue to experience significant competition from the competitors identified above and, as our business continues to develop, we expect to encounter competition from other providers. Service providers, Internet portals, web hosting companies, email hosting companies, outsourced application companies, country code registries and major telecommunication firms may broaden their services to include services we offer.
A small number of customers are consultants and designers providing our services to their business clients, or retail consumers registering a personal domain name. During the year ended December 31, 2023 one customer, DISH, accounted for 11% of revenue. For the years ended December 31, 2022 and December 31, 2021 no customer accounted for more than 10% of total revenue.
The majority of the customers to whom we provide services as Tucows Domains are generally either web hosts or ISPs. A small number of customers are consultants and designers providing our services to their business clients, or retail consumers registering a personal domain name. During the year ended December 31, 2024 one customer, EchoStar, accounted for 10.7% of revenue.
The Federal Communications Commission ("FCC") frequently considers imposing new broadband-related regulations such as those relating to an Open Internet. States and localities also consider new broadband-related regulations, including those regarding government-owned broadband networks, net neutrality and connectivity. Additionally, as an ISP, we must implement certain network capabilities to assist law enforcement in conducting surveillance of persons suspected of criminal activity.
Compliance with Government Regulations Ting Our Fiber Internet services are also subject to a number of regulations and commitments. The Federal Communications Commission ("FCC") frequently considers imposing new broadband-related regulations such as those relating to an Open Internet. States and localities also consider new broadband-related regulations, including those regarding government-owned broadband networks, net neutrality and connectivity.
We rely on a combination of trademark, trade secret and copyright laws, as well as contractual restrictions to protect our intellectual property rights. We have registered the Tucows trademark in the United States, Canada and the European Union and we register additional service marks and trademarks as appropriate and where such protection is available.
We rely on a combination of trademark, trade secret and copyright laws, as well as contractual restrictions to protect our intellectual property rights.
People Philosophy & Inclusion As an organization, Tucows believes in the importance of driving meaningful change and impact; from its products to its people, everything is approached with intentionality. Our People Philosophy is no different.
The expected savings will also translate into reduced capital expenditures related to growth and expansion of new markets, as Ting shifts focus to complete builds in existing markets. 7 Table of Contents People Philosophy & Inclusion As an organization, Tucows believes in the importance of driving meaningful change and impact; from its products to its people, everything is approached with intentionality.
From time to time, the FCC considers imposing new regulatory obligations on ISPs. We are committed to an Open Internet and do not block, throttle or engage in paid or affiliated prioritization, and have committed not to block, throttle or discriminate against lawful content.
We are committed to an Open Internet and do not block, throttle or engage in paid or affiliated prioritization, and have committed not to block, throttle or discriminate against lawful content. Tucows Corporate - Mobile Services The FCC and other federal, state and local, as well as international, governmental authorities have jurisdiction over our business.
Wavelo Our Wavelo Segment is less subject to government regulations and commitments because it enables subscription and billing management, network orchestration and provisioning, and individual developer tools. Outside of General Data Protection Regulation (“GDPR”), which creates obligations around the procurement, processing, publication and sharing of personal data, there is limited regulation or commitment to government bodies for software.
Wavelo Our Wavelo Segment is less subject to government regulations and commitments because it enables subscription and billing management, network orchestration and provisioning, and individual developer tools.
Prior to Uniregistry, Mr. Fausett worked as outside legal counsel to a number of domain industry related companies. 8 Table of Contents Michael Koenig joined Tucows in April 2022 as the Chief Revenue Officer of Wavelo before moving into Tucows' Chief Operating Officer role in October 2022. Prior to joining Tucows, Mr.
Prior to Uniregistry, Mr. Fausett worked as outside legal counsel to a number of domain industry related companies. Justin Reilly joined Tucows in September 2019 and currently serves as our Chief Executive Officer of Wavelo.
Tucows Domains Our Tucows Domains segment is subject to regulation by ICANN, federal and state laws in the U.S. and the laws of other jurisdictions in which we do business. These include: ICANN: The registration of domain names is governed by ICANN.
Outside of General Data Protection Regulation (“GDPR”), which creates obligations around the procurement, processing, publication and sharing of personal data, there is limited regulation or commitment to government bodies for software. 8 Table of Contents Tucows Domains Our Tucows Domains segment is subject to regulation by ICANN, federal and state laws in the U.S. and the laws of other jurisdictions in which we do business.
On February 7, 2024, Ting undertook a restructuring plan to reflect the ongoing operational prioritizations of the Ting business and to lower the Company’s year-over-year operating expenses, which impacted 72 employees, approximately 13% of Ting's workforce or 7% of the Company’s total workforce.
February 2024 Workforce Reduction On February 7, 2024, Ting committed to the February 2024 workforce reduction (the "February 2024 Workforce Reduction") which aimed to realign the Company's operational structure within the Ting operating segment and reduce Ting's workforce by 13%, or 7% of the Company's total workforce, to better support strategic objectives.
However, in certain Ting markets we operate in, construction activities associated with adding new serviceable addresses can be impacted by seasonal climate. Competition Our competitors may be divided into the following groups: Ting • U.S. Broadband providers such as AT&T, Comcast, Verizon and Lumen Technologies, who primarily compete with Ting Internet services.
Broadband providers such as AT&T, Comcast, Verizon and Lumen Technologies, who primarily compete with Ting Internet services.
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Before entering into discussions with potential vendors and partners about our business and technologies, we require them to enter into a non-disclosure agreement.
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We have registered the Tucows trademark in the United States, Canada and the European Union and we register additional service marks and trademarks as appropriate and where such protection is available. 4 Table of Contents We seek to limit disclosure of our intellectual property by requiring all employees and consultants with access to our proprietary information to commit to confidentiality, non-disclosure and work-for-hire agreements.
Removed
Wavelo • Traditional BSS/OSS providers such as Amdocs, Netcracker, Ericsson, Optiva and Sonar Software, who primarily compete with Wavelo’s platforms and services. We expect to continue to experience significant competition from the competitors identified above and, as our business continues to develop, we expect to encounter competition from other providers.
Added
For the year ended December 31, 2023 one customer, EchoStar, accounted for 10.7% of revenue and for the year ended December 31, 2022 no customer accounted for more than 10% of total revenue.
Removed
Although we encounter pricing pressure in many markets in which we compete, we believe the effects of that pressure are mitigated by the fact that we deliver a high degree of value to our customers through our business and technical practices.
Added
The February 2024 Workforce Reduction was designed to streamline operations and reduce operating expenses within the Ting operating segment. Substantially all of the employees impacted by the workforce reduction were notified on February 7, 2024 and have since exited the Company.
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These volunteer groups connect employees with shared characteristics, life experiences and enable them to engage in activities that advance our culture and foster connectivity. 6 Table of Contents Compliance with Government Regulations Ting Our Fiber Internet services are also subject to a number of regulations and commitments.
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The Company incurred non-recurring changes of approximately $3.2 million in connection with the workforce reduction, primarily consisting of severance payments, notice pay, employee benefits contributions and outplacement costs. 2024 Capital Efficiency Plan On October 30, 2024, Ting undertook a capital efficiency plan (the “Capital Efficiency Plan”) to reflect the ongoing operational and financial prioritization of the Ting business and to lower the Company's year-over-year operating expenses, and capital outlays, which reduced approximately 42% of Ting's workforce, or 17% of the Company's total workforce.
Removed
Davinder Singh has served as our Chief Financial Officer since 2017, having previously served as Vice President Finance since joining the Company in 2016. Prior to joining the Company, Mr. Singh spent eight years at KPMG LLP primarily focusing on public company audits in the technology field. After leaving KPMG LLP, Mr.
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The Company incurred non-recurring charges of approximately $7.7 million in connection with the Capital Efficiency Plan, primarily consisting of severance payments, notice pay, employee benefits contributions, professional services and outplacement costs.
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Singh joined TELUS and held progressive roles, including Chief Financial Officer of TELUS International. Mr. Singh is a Chartered Professional Accountant with the Institute of Chartered Professional Accountants of British Columbia. Mr. Singh also sits on the Board of Hootsuite and serves as its audit committee chair. Hootsuite is a privately held social media management company.
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The Company believes that both the February 2024 Workforce Reduction and Capital Efficiency Plan will realize personnel and related expense (net of capitalization) savings with the majority of the savings in sales and marketing, including related network support functions, followed by smaller impacts in technical operations and development, direct cost of revenues, network, general and administrative, and other costs.
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Koenig served as the Chief Operating Officer of two organizations, Sweet and Time Doctor, for five and two years, respectively. Justin Reilly joined Tucows in September 2019 and currently serves as our Chief Executive Officer of Wavelo.
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In the fiscal year ended December 31, 2024 ("Fiscal 2024") the realized savings will be partially offset by costs associated with both plans. These costs referenced above are classified as transitional and are excluded in our Adjusted EBITDA, which is a non-GAAP financial measure.
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Please see discussion of Adjusted EBITDA as well as the Adjusted EBITDA reconciliation to net income in the Results of Operations section below.
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Additionally, as an ISP, we must implement certain network capabilities to assist law enforcement in conducting surveillance of persons suspected of criminal activity. From time to time, the FCC considers imposing new regulatory obligations on ISPs.
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These include: ICANN: The registration of domain names is governed by ICANN.
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Ivan Ivanov has served as our Chief Financial Officer since August 2024. Prior to joining the Company, Mr. Ivanov spent twenty-two years at Verizon and most recently served as Executive Director and business unit CFO, where he led both the consumer and business finance teams. Mr.
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Ivanov began his career at Verizon on the M&A and Corporate Development team, progressing to a variety of other financial specialties, including cash flow planning, network and IT capital allocation, and commercial finance, where he led Verizon’s fiber deployment program. Mr.
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Ivanov has a Master of Accounting from Seton Hall University and he is also a graduate of Drexel University with a Bachelor of Arts in Finance.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeThe following factors may contribute to this volatility: actual or anticipated variations in our quarterly operating results; interruptions in our services; seasonality of the markets and businesses of our customers; announcements of new technologies or new services by our company or by our competitors; our ability to accurately select appropriate business models and strategies; the operating and stock price performance of other companies that investors may view as comparable to us; analyst or short-seller reports; news relating to our company or our industry as a whole; and news relating to trends in our markets.
Biggest changeSeveral factors may contribute to this volatility, including: ● Actual or anticipated variations in our quarterly financial results; ● Service disruptions or outages that impact customer trust and operational performance; ● Seasonal fluctuations in demand for our services and those of our customers; ● Announcements of new technologies or competitive services in our industry; ● Market perceptions of our business strategy, growth initiatives, and execution; ● Stock performance of companies in our sector, particularly those considered comparable to us; ● Analyst ratings, short-seller activity, or media coverage of our company; ● Macroeconomic trends affecting the technology and internet sectors.
The terms of Ting Fiber, LLC'S amended and restated limited liability company agreement (the "LLC Agreement") with Generate prohibit Tucows from funding the operations or capital investments in Ting Fiber, LLC with funds generated by its subsidiaries outside of Ting Fiber, LLC or its wholly owned subsidiaries (“Tucows businesses excluding Ting”).
The terms of Ting Fiber, LLC'S amended and restated limited liability company agreement (the "LLC Agreement") with Generate prohibit Tucows from funding the operations or capital investments in Ting Fiber, LLC with funds generated by its subsidiaries outside of Ting Fiber, LLC's or its wholly owned subsidiaries (“Tucows businesses excluding Ting”).
The 2023 Term Notes are subject to a series of covenants, restrictions and other investor protections including (i) that the Issuer maintains specified reserve accounts to be used to make required payments in respect of the 2023 Term Notes, (ii) provisions relating to optional and mandatory prepayments and the related payment of specified amounts, (iii) certain indemnification payments, (iv) that the guarantors comply with standard bankruptcy-remoteness covenants, including not guaranteeing or being liable for other affiliates debts or liabilities, and (v) covenants relating to recordkeeping, access to information, and similar matters.
The 2023 Term Notes and 2024 Term Notes are subject to a series of covenants, restrictions and other investor protections including (i) that the Issuer maintains specified reserve accounts to be used to make required payments in respect of the 2023 Term Notes and 2024 Term Notes, (ii) provisions relating to optional and mandatory prepayments and the related payment of specified amounts, (iii) certain indemnification payments, (iv) the guarantors comply with standard bankruptcy-remoteness covenants, including not guaranteeing or being liable for other affiliates debts or liabilities, and (v) covenants relating to recordkeeping, access to information, and similar matters.
The 2023 Term Notes are subject to a series of covenants, restrictions and other investor protections including (i) that the Issuer maintains specified reserve accounts to be used to make required payments in respect of the 2023 Term Notes, (ii) provisions relating to optional and mandatory prepayments and the related payment of specified amounts, (iii) certain indemnification payments, (iv) the guarantors comply with standard bankruptcy-remoteness covenants, including not guaranteeing or being liable for other affiliates debts or liabilities, and (v) covenants relating to recordkeeping, access to information, and similar matters.
The 2023 and 2024 Term Notes are subject to a series of covenants, restrictions and other investor protections including (i) that the Issuer maintains specified reserve accounts to be used to make required payments in respect of the 2023 and 2024 Term Notes, (ii) provisions relating to optional and mandatory prepayments and the related payment of specified amounts, (iii) certain indemnification payments, (iv) the guarantors comply with standard bankruptcy-remoteness covenants, including not guaranteeing or being liable for other affiliates debts or liabilities, and (v) covenants relating to recordkeeping, access to information, and similar matters.
On August 8, 2022, Ting LLC entered into the UPA with Generate under which Ting LLC has committed to issue and sell $60 million of Series A Preferred Units at the Initial Funding, subject to customary closing conditions, and an additional aggregate of $140 million Series A Preferred Units if the Milestones are achieved over a three year period from the date of the Transaction Close.
On August 8, 2022, Ting Fiber, LLC entered into the UPA with Generate under which Ting Fiber, LLC has committed to issue and sell $60 million of Series A Preferred Units at the Initial Funding, subject to customary closing conditions, and an additional aggregate of $140 million Series A Preferred Units if the Milestones are achieved over a three year period from the date of the Transaction Close.
If the U.S. or other foreign tax authorities change applicable tax laws, our overall taxes could increase, and our business, financial condition or results of operations may be adversely impacted. - Management, communication and integration problems resulting from cultural differences and geographic dispersion. - Compliance with foreign laws, accreditation and regulatory requirements in relation to provision of services, protection of intellectual property and third-party data in foreign jurisdictions. - Competition from companies with international operations, including large international competitors and entrenched local companies. - To the extent we choose to make acquisitions to enable our international expansion efforts, the identification of suitable acquisition targets in the markets into which we want to expand. - Political and economic instability in some international markets. - Sufficiently qualified labor pools in various international markets. - We may not succeed in our efforts to continue to expand our international presence as a result of the factors described above or other factors that may have an adverse impact on our overall financial condition and results of operations.
If the U.S. or other foreign tax authorities change applicable tax laws, our overall taxes could increase, and our business, financial condition or results of operations may be adversely impacted. 19 Table of Contents - Management, communication and integration problems resulting from cultural differences and geographic dispersion. - Compliance with foreign laws, accreditation and regulatory requirements in relation to provision of services, protection of intellectual property and third-party data in foreign jurisdictions. - Competition from companies with international operations, including large international competitors and entrenched local companies. - To the extent we choose to make acquisitions to enable our international expansion efforts, the identification of suitable acquisition targets in the markets into which we want to expand. - Political and economic instability in some international markets. - Sufficiently qualified labor pools in various international markets. - We may not succeed in our efforts to continue to expand our international presence as a result of the factors described above or other factors that may have an adverse impact on our overall financial condition and results of operations.
With respect to the UPA, Ting LLC is obligated to redeem Generate's equity interests for an amount equal to the outstanding capital balance plus the unsatisfied preferred return (and pay a make-whole premium if the redemption of the preferred units occurs within the four years following the Transaction Close), upon certain conditions, including a material breach of any Tucows' credit agreement that is not cured, the failure to pay the preferred return in two consecutive quarters following the second anniversary of the Transaction Close, and the six year anniversary of the Transaction Close.
With respect to the UPA, Ting Fiber, LLC is obligated to redeem Generate's equity interests for an amount equal to the outstanding capital balance plus the unsatisfied preferred return (and pay a make-whole premium if the redemption of the preferred units occurs within the four years following the closing of the transaction (the "Transaction Close"), upon certain conditions, including a material breach of any Tucows' credit agreement that is not cured, the failure to pay the preferred return in two consecutive quarters following the second anniversary of the Transaction Close, and the six year anniversary of the Transaction Close.
Our Ting segment is also exposed to inflation through its Fiber Network build costs, and sustained levels of inflation increase the costs of related materials and contracted labor.
Our Ting segment is also exposed to inflation through its Fiber Network build and installation costs, and sustained levels of inflation increase the costs of related materials and contracted labor.
Any adverse outcome of such a review could have a negative effect on our operating results and financial condition in the period or periods for which such determination is made. Our current and future tax liabilities could be adversely affected by: - international income tax authorities, including the Canada Revenue Agency and the U.S.
Any adverse outcome of such a review could have a negative effect on our operating results and financial condition in the period or periods for which such determination is made. Our current and deferred tax liabilities could be adversely affected by: - international income tax authorities, including the Canada Revenue Agency and the U.S.
Additionally, as part of the DISH Purchase Agreement executed in the year ending December 31, 2020 ("Fiscal 2020"), the Company granted DISH the right to use the name "Ting" and its associated domain name over a 24-month period, after which DISH had an option to purchase the brand from the Company.
Additionally, as part of the EchoStar Purchase Agreement executed in the year ending December 31, 2020 ("Fiscal 2020"), the Company granted EchoStar the right to use the name "Ting" and its associated domain name over a 24-month period, after which EchoStar had an option to purchase the brand from the Company.
These difficulties could hinder our ability to achieve the anticipated benefits of the Plan, such as cost savings and improved operational efficiencies. - Operational Disruptions: Changes to our operational structure as part of the Plan, such as workforce reductions may lead to temporary disruptions in our operations.
These difficulties could hinder our ability to achieve the anticipated benefits of the Plan, such as cost savings and improved operational efficiencies. - Operational Disruptions: Changes to our operational structure as part of the Capital Efficiency Plan, such as workforce reductions, may lead to temporary disruptions in our operations.
In order to continue the planned expansion of the Ting Internet footprint and fund future operating losses, we will need to access Milestone Fundings under the UPA, as well as engage in equity and further debt financing.
In order to continue the planned expansion of the Ting Internet footprint and fund future operating losses, we may need to access Milestone Fundings under the UPA, as well as engage in equity and further debt financing.
In recognition of the evolving nature of the Internet services market and to mak e it easier to clearly differentiate each service we offer from our competitors, we enhanced our branding by focusing our primary service offerings under seven distinct brands namely “OpenSRS”, “eNom”, “Hover", "EPAG", "Ascio", “Ting”, and "Wavelo".
In recognition of the evolving nature of the Internet services market and to make it easier to clearly differentiate each service we offer from our competitors, we enhanced our branding by focusing our primary service offerings under seven distinct brands, namely “OpenSRS”, “eNom”, “Hover", "EPAG", "Ascio", “Ting”, and "Wavelo".
Failure by a Network Operator to obtain the proper licenses and governmental approvals from regulatory authorities would cause us to be unable to successfully operate those businesses . The FCC licenses currently held by our Network Operators and their third-party affiliates to provide wireless services are subject to renewal and revocation.
Failure by a Network Operator to obtain the proper licenses, approvals and or permits from regulatory authorities would cause us to be unable to successfully operate those businesses . The FCC licenses currently held by our Network Operators and their third-party affiliates to provide wireless services are subject to renewal and revocation.
We may also be subject to claims from third parties asserting trademark infringement, unfair competition and violation of publicity and privacy rights relating specifically to domains. As a domain name registrar, we regularly become involved in disputes over registration of domain names.
We may also be subject to claims from third parties asserting trademark infringement, unfair competition and violation of publicity and privacy rights relating specifically to domains. 16 Table of Contents As a domain name registrar, we regularly become involved in disputes over registration of domain names.
Additionally, our revenues are directly tied to the subscriber volumes of DISH's MVNO or MNO networks, so our profitability is contingent on the ability of DISH to continue to add and retain subscribers onto our platform. If any of these events occur, our operational performance and financial results may be adversely affected.
Additionally, our revenues are directly tied to the subscriber volumes of EchoStar's MVNO or MNO networks, so our profitability is contingent on the ability of EchoStar to continue to add and retain subscribers onto our platform. If any of these events occur, our operational performance and financial results may be adversely affected.
However, the implementation of the Plan requires significant management attention and financial resources and is subject to a number of risks that could negatively impact our results of operations, including the following: - Implementation difficulties and costs: The process of implementing the Plan may encounter unforeseen challenges, including delays and higher-than-anticipated expenses.
However, the implementation of the workforce reductions requires significant management attention and financial resources and is subject to a number of risks that could negatively impact our results of operations, including the following: - Implementation difficulties and costs: The process of implementing the Capital Efficiency Plan may encounter unforeseen challenges, including delays and higher-than-anticipated expenses.
Regarding Wavelo, DISH is our main customer and represents the majority of our revenues until such time that we are able to scale our services to other customers.
Regarding Wavelo specifically, EchoStar is our main customer and represents the majority of our revenues until such time that we are able to scale our services to other customers.
Our business depends on our strong brands. If we are not able to maintain and enhance our brands, our ability to expand our customer base will be impaired and our business and operating results will be harmed .
If we are not able to maintain and enhance our brands, our ability to expand our customer base will be impaired and our business and operating results will be harmed .
Our indebtedness could adversely affect our ability to raise additional capital to fund our operations, our ability to operate our business, execute our strategy divert our cash flow from operations for debt payments, and prevent us from meeting our debt obligations.
RISKS RELATED TO FINANCIAL AND MACROECONOMIC CONDITIONS Our indebtedness could adversely affect our ability to raise additional capital to fund our operations, our ability to operate our business, execute our strategy divert our cash flow from operations for debt payments, and prevent us from meeting our debt obligations.
The international nature of our businesses and operations expose us to additional risks that could harm our business, operating results, and growth strategy; including risks related to taxation and foreign currencies fluctuations . We are a U.S. based multinational company. Expansion into international markets is a continued element of our growth strategy.
The international nature of our businesses and operations expose us to additional risks that could harm our business, operating results, and growth strategy; including risks related to taxation and foreign currencies fluctuations . As a Company with multinational operations. Expansion into international markets is a continued element of our growth strategy.
As ofApril 1, 2024, our outstanding preferred units purchased under the UPA was $91.5 million, with a further capital commitment of $108.5 million available to Ting LLC through Milestone Fundings.
As of March 13, 2025, our outstanding preferred units purchased under the UPA was $91.5 million, with a further capital commitment of $108.5 million available to Ting LLC through Milestone Fundings.
With respect to the 2023 Term Notes are secured by certain of the Company’s revenue-generating assets, consisting principally of fiber-network related agreements, fiber-network assets and customer contracts (collectively, the “Securitized Assets”) that are owned by certain other limited-purpose, bankruptcy-remote, wholly owned indirect subsidiaries of the Company that act as the Guarantors (collectively with the Issuer, the “Obligor”) under the Base Indenture.
The 2023 Term Notes and 2024 Term Notes are secured by certain of the Ting Issuer LLC's, revenue-generating assets, consisting principally of fiber-network related agreements, fiber-network assets and customer contracts (collectively, the “Securitized Assets”) that are owned by certain other limited-purpose, bankruptcy-remote, wholly owned indirect subsidiaries of the Company that act as the Guarantors (collectively with the Issuer, the “Obligor”) under the Base Indenture, dated as of May 4, 2023 (the “Base Indenture”).
The Company’s wholly owned subsidiary, Ting LLC as well as Ting LLC’s wholly owned subsidiaries are financed by the 2023 Term Notes (as defined in Note 9 – Notes Payable to the Company’s Consolidated Financial Statements) as well as the Unit Purchase Agreement (“UPA”) with Generate ( as defined in Note 14 – Redeemable Preferred Units to the Company’s Consolidated Financial Statements).
The Company’s wholly owned subsidiary, Ting Fiber, LLC, as well as its wholly owned subsidiaries are financed by the 2023 and 2024 Term Notes (as defined in Note 8 – Notes Payable to the Company’s Consolidated Financial Statements) as well as the Unit Purchase Agreement (“UPA”) with Generate ( as defined in Note 13 – Redeemable Preferred Units to the Company’s Consolidated Financial Statements).
Our service offerings may be limited in ability to grow their respective businesses and customer base unless we can continue to manage our vendor relationships and supply chain to obtain valuable products and service options to offer to our customers. In order to remain competitive, we must provide a multitude of valuable products and services to our customers.
Our service offerings may be limited in their ability to grow their respective businesses and customer base unless we can continue to manage our vendor relationships and supply chain to obtain valuable products and service options to offer to our customers.
DISH has formally refused their option to purchase the Ting brand, however the right to use the name "Ting" by DISH was subsequently extended by the Company until the end of Fiscal 2024. Any actions taken by DISH as part of the transactions contemplated by the DISH Purchase Agreement may impact the Ting brand's reputation.
EchoStar has formally refused their option to purchase the Ting brand, however the right to use the name "Ting" by EchoStar was subsequently extended by the Company and now runs month to month. Any actions taken by EchoStar as part of the transactions contemplated by the EchoStar Purchase Agreement may impact the Ting brand's reputation.
Much of the Company’s future success depends on the continued availability and service of key personnel, including its Chief Executive Officer, executive team and other highly skilled employees. Experienced personnel in the technology industry are in high demand and competition for their talents is intense. We may not be able to retain our key employees or replace them when necessary.
Much of the Company’s future success depends on the continued availability and service of key personnel, including its Chief Executive Officer, executive team and other highly skilled employees. Experienced personnel in the technology industry are in high demand and competition for their talents is intense.
The trailing twelve month debt to Adjusted EBITDA ratio was 3.42:1.00as of December 31, 2023 for the Tucows businesses excluding Ting. Our covenants under the Company’s 2023 Credit Facility required us to maintain a debt to Adjusted EBITDA ratio of 4.25:1.00 until March 30, 2024.
The trailing twelve month debt to Adjusted EBITDA ratio was 3.26:1.00 as of December 31, 2024 for the Tucows businesses excluding Ting. Our covenants under the Company’s 2023 Credit Facility required us to maintain a debt to Adjusted EBITDA ratio of not more than 3.75:1.00.
Any of these events would have a material adverse effect on our business, financial condition, and operating results. Our preferred unit financing arrangement could adversely affect our financial condition, our ability to operate our business, divert our cash flow from operations for debt payments, and prevent us from meeting our debt obligations.
Breaching these agreements could have a materially adverse impact on the Company. ● Our preferred unit financing arrangement could adversely affect our financial condition, our ability to operate our business, divert our cash flow from operations for debt payments, and prevent us from meeting our debt obligations.
These disruptions could adversely affect our ability to meet customer demands, maintain service quality, and achieve our growth objectives. - Financial Impacts: The Plan is expected to incur significant upfront costs related to severance, asset write-downs, and other restructuring charges.
These disruptions could adversely affect our ability to meet customer demands, maintain service quality, and achieve our growth objectives. - Financial Impacts: The Capital Efficiency Plan has resulted in significant costs related to severance, asset write-downs, and other restructuring charges, which were incurred in the current fiscal period.
Our preferred unit financing agreement imposes predetermined operational and financial drawdown milestones on our Ting segment, which may prevent us from obtaining additional financing under such preferred unit financing arrangement. In addition, the Company may need additional financing to further accelerate the expansion of the Ting Internet footprint.
Our preferred unit financing agreement imposes predetermined operational and financial drawdown milestones on our Ting segment, which may prevent us from obtaining additional financing under such preferred unit financing arrangement.
Absent sufficient cash flows from operations, Tucows businesses excluding Ting may need to engage in equity or debt financings to secure additional funds to meet our operating and capital needs.
Absent sufficient cash flows from operations, Tucows businesses excluding Ting may need to engage in equity or debt financings to secure additional funds to meet our operating and capital needs. The covenants and restrictions on the 2023 Credit Facility may prevent the Tucows businesses excluding Ting from accessing the remaining committed funds if additional financing is required.
Tucows businesses excluding Ting are financed by the Company’s 2023 Credit Facility. As of April 1, 2024, our outstanding debt under the 2023 Credit Facility was $211.9 million with remaining committed funds of $28.1 million.
Tucows businesses excluding Ting are financed by the Company’s 2023 Credit Facility. As of March 13, 2025, our outstanding debt under the 2023 Credit Facility was $195.4 million with remaining committed funds of $44.6 million.
Terms of the Side Letter Agreement also preclude Ting Fiber, LLC from issuing additional Series A Preferred Units for 365 days from the closing of the Redemption Agreement during which time standby fees will be suspended. 15 Table of Contents Our ability to achieve the Milestones to access the additional funding, as well as to generate cash flow from operations to make the payments in respect of the preferred return, will depend on our future performance, which will be affected by a range of economic, competitive and business factors as well as changes in government monetary or fiscal policy.
Our ability to achieve the Milestones to access the additional funding, as well as to generate cash flow from operations to make the payments in respect of the preferred return, will depend on our future performance, which will be affected by a range of economic, competitive and business factors as well as changes in government monetary or fiscal policy.
If we experience difficulties with regard to these arrangements or are unable to negotiate on commercially reasonable terms or at all with future vendors, it could result in additional expense, loss of customers and revenue, interruption of our services or a delay in the roll-out of new technology and services for our customers.
If we experience difficulties with regard to these arrangements or are unable to negotiate on commercially reasonable terms or at all with future vendors, it could result in additional expense, loss of customers and revenue, interruption of our services or a delay in the roll-out of new technology and services for our customers. 14 Table of Contents The execution of our Ting restructuring plans, involves risks that could adversely affect our business operations, financial condition, and growth strategy; including risks related to implementation difficulties, operational disruptions, and financial impacts.
The Plan, was aimed at streamlining the operations within our Ting segment. The successful execution of this plan is critical to our efforts to reduce costs, improve efficiency, and align our resources with strategic priorities.
The successful execution of these plans was critical to our efforts to reduce costs, improve efficiency, and align our resources with strategic priorities.
The covenants and restrictions on the 2023 Credit Facility may prevent the Tucows businesses excluding Ting from accessing the remaining committed funds if additional financing is required. 14 Table of Contents In any situation where the Company is seeking such debt or equity financing, it may not be able to secure additional debt or equity financing on favorable terms, or at all, at the time when funding is needed.
In any situation where the Company is seeking such debt or equity financing, it may not be able to secure additional debt or equity financing on favorable terms, or at all, at the time when funding is needed.
These restrictions could limit our ability to react to changes in our operating environment or the economy. Triggering the make-whole provision could have a material adverse effect on our business.
These restrictions could limit our ability to react to changes in our operating environment or the economy.
New taxes could also create significant increases in internal costs necessary to capture data, and collect and remit taxes. Any of these events could have an adverse effect on our business and operating results. 17 Table of Contents The Company’s success depends on the continued service and availability of key personnel .
New taxes could also create significant increases in internal costs necessary to capture data, and collect and remit taxes. Any of these events could have an adverse effect on our business and operating results. Changes in ICA NN policies, fees, and oversight may impact our domain registration business.
Across all of our business segments, regardless if those services operate on a postpaid or prepaid basis, we are exposed to the risks associated with credit card and other online payment technologies, chargebacks and fraud associated with these payment types. A substantial majority of our revenue originates from online credit card transactions.
Across all our business segments, we are exposed to risks associated with credit card transactions, chargebacks, and online payment fraud, regardless of whether services operate on a postpaid or prepaid basis. A significant portion of our revenue comes from online credit card transactions, where we assume liability for fraudulent and disputed charges under industry rules.
If any of the events or circumstances described in the following risk factors actually occur, our business, financial condition or results of operations could suffer, and the trading price of our common stock could decline. RISKS RELATED TO OUR BUSINESS AND INDUSTRY We face intense competition and consolidation in the industries and markets we serve.
Additional risks that we do not yet know of or that we currently think are immaterial may also impair our business operations. If any of the events or circumstances described in the following risk factors actually occur, our business, financial condition or results of operations could suffer, and the trading price of our common stock could decline.
Any major compromise of our data or network security, failure to prevent or mitigate the loss of our services or customer information and delays in detecting any such compromise or loss could disrupt our operations, impact our reputation and subscribers' willingness to purchase our services and subject us to additional costs and liabilities, including litigation, which could be material. 12 Table of Contents Disputes concerning the ownership or rights to use intellectual property and litigation involving other rights of third parties could be costly and time-consuming to litigate, may distract management from operating the business, and may result in us paying significant damage awards, losing significant rights and our ability to operate all or a portion of our business .
Disputes concerning the ownership or rights to use intellectual property and litigation involving other rights of third parties could be costly and time-consuming to litigate, may distract management from operating the business, and may result in us paying significant damage awards, losing significant rights and our ability to operate all or a portion of our business .
On May 4, 2023 (the "Closing Date"), Tucows Inc. through its indirect and wholly owned subsidiaries, including Ting Fiber, LLC, entered into a definitive agreement relating to a securitized financing facility related to the 2023 Term Notes.
As of March 13, 2025, our outstanding 2023 Term Notes was $238.5 million. On August 20, 2024, Tucows Inc., through its indirect and wholly owned subsidiaries, including Ting Fiber, LLC, entered into a definitive agreement relating to a securitized financing facility related to a privately placed securitization transaction.
A shift to lower value or less loyal customers could have an adverse impact on our results of operations and cash flows. Our service offerings may not be successful if we are unable to maintain existing customer relationships or establish new relationships .
Our service offerings may not be successful if we are unable to maintain existing customer relationships or establish new customer relationships .
If any of these events occur, our operational performance and financial results, in particular those of our Fiber Internet business may be adversely affected. We are subject to minimum purchase commitments with some partner network providers.
If any of these events occur, our operational performance and financial results, in particular those of our Fiber Internet business may be adversely affected. The Company’s success depends on the continued service and availability of key personnel .
We continue to assess ways to reduce build costs through more efficient management of our build design, build efficiency and real-time tracking of build costs to better manage total cost estimates against actual spends. However, there can be no assurance as to the effectiveness of our efforts to mitigate any impact of the adverse economic conditions, and other unknown developments.
We continue to assess ways to reduce costs, however there can be no assurance as to the effectiveness of our efforts to mitigate any impact of the adverse economic conditions, and other unknown developments. 20 Table of Contents We have substantial debt obligations, including credit facilities and term notes.
Any impairment charges or changes to the estimated amortization periods could have a material adverse effect on our financial results. 13 Table of Contents Our service offerings are exposed to risks associated with credit card and other online payment chargebacks, fraud and new payment methods .
Any impairment charges or changes to the estimated amortization periods could have a material adverse effect on our financial results. Domain names are valuable assets, and cybersecurity risks could lead to their loss or misattribution of liability to us.
We may not be able to identify or consummate any future acquisitions on favorable terms, or at all. If we do effect an acquisition, it is possible that the financial markets or investors will view the acquisition negatively. No assurance can be given that such investments will be successful and will not adversely affect our financial condition and operating results.
Additionally, we may be unable to identify or complete future acquisitions on favorable terms, and market perception of acquisitions could negatively affect our stock price. There is no assurance that our investments will be successful, and failure to realize anticipated benefits could adversely impact our financial condition and operating results.
These factors may also adversely affect the business, liquidity and financial condition of our customers. In addition, periods of poor economic conditions could increase our ongoing exposure to credit risks on our accounts receivable balances. This could have a material adverse effect on our business, financial condition and results of operations.
If these conditions persist, they could have a material adverse effect on our business, financial condition, and results of operations. RISKS RELATED TO REGULATORY AND LEGAL COMPLIANCE Changes in government regulations may increase compliance costs and impact our business operations.
On February 22, 2024, the Company announced that its Board had approved a stock buyback program to repurchase up to $40 million of its common stock in the open market. The $40 million buyback program commenced on February 23, 2024 and is expected to terminate on February 22, 2025.
We cannot guarantee that our stock repurchase program will be fully consummated or that it will enhance long-term shareholder value. On February 13, 2025, our Board of Directors approved a stock repurchase program authorizing the Company to buy back up to $40 million of its common stock in the open market.
While these expenditures are anticipated as part of the plan's implementation, they could negatively affect our profitability in the short term, even if the long-term financial benefits are expected to be positive. - Employee Morale and Retention: The Plan may impact employee morale and lead to challenges in retaining key personnel.
While these expenditures were necessary to implement the plan and are expected to yield long-term financial benefits, they have negatively impacted our profitability in the short term.
Public, customer, and investor perceptions of our actions, especially in relation to workforce reductions, service changes, or other visible outcomes of the restructuring, could negatively influence our brand and reputation in the market. 16 Table of Contents Despite these challenges, we are committed to successfully implementing the Plan and believe that it is a necessary step towards achieving our long-term strategic goals.
Public, customer, and investor perceptions of our actions, especially in relation to workforce reductions, service changes, or other visible outcomes of the restructuring, could negatively influence our brand and reputation in the market. - Impede Growth: The restructuring plans are expected to significantly reduce capital expenditures, which will in turn slow, and in some markets pause, the expansion of the Ting Internet footprint.
These events could also disrupt or suspend portions of our domain registration solution, which would result in reduced revenue. 18 Table of Contents Data protection regulations may impose legal obligations on us that we cannot meet or that conflict with our ICANN contractual requirements .
Any significant uninsured losses, regulatory penalties, or litigation costs could adversely impact our financial condition and results of operations. Data protection regulations may impose legal obligations on us that we cannot meet or that conflict with our ICANN contractual requirements .
The Company expects to incur penalties throughout the year ending December 31, 2024 ("Fiscal 2024") and thereafter until the contract is complete. Historically, the Company has been unable to renegotiate the penalties down or at all, with the only successful renegotiation related to partial deferral of penalty escalation into later years of the contract term.
To date, renegotiation efforts have been largely unsuccessful, with only partial deferrals of penalty escalation. The Company expects to incur penalties throughout the year ending December 31, 2025 ("Fiscal 2025") and thereafter until the contract is complete in early 2026. We are parties to agreements with other unrelated parties for certain business operations and to license third-party technologies.
As of April 1, 2024, Generate purchased preferred units under the UPA for an aggregate amount equal to $91.5 million, with a further capital commitment of $108.5 million available to Ting Fiber, LLC through Milestone Fundings.
Failure to maintain compliance with operating restrictions of our credit facility could result in a default and could have a material adverse effect on our business and results of operation. 17 Table of Contents As of March 13, 2025,Generate has purchased preferred units under the UPA for an aggregate amount equal to $91.5 million, with a further capital commitment of $108.5 million available to Ting Fiber, LLC through Milestone Fundings (Please see “Note 13– Redeemable preferred units” of the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report) .
Our service offerings may become subject to new government regulations that may be costly to adopt, and may adversely affect our business prospects, future growth or results of operations . The FCC grants wireless licenses for terms of generally ten years that are subject to renewal and revocation. There is no guarantee that our Network Operator's license will be renewed.
Our business is subject to evolving federal, state, and international regulations, which may increase operational costs, restrict market access, or impact future growth. The FCC grants wireless licenses that are subject to renewal and revocation. If our Network Operator’s license is not renewed or if compliance requirements change, it could disrupt our service offerings.
The success of all of our segments depends on the continued development, acceptance and widespread access to the Internet, and its existing domain system and infrastructure as a foundational resource for communication and commerce.
Changes in Internet infrastructure, adoption, and navigation practices could impact our business. Our success depends on the continued expansion and stability of the Internet as a global platform for communication and commerce.
Our share price has varied recently and the price of our common stock may decrease in the future, regardless of our operating performance. Investors may be unable to resell their common stock following periods of volatility because of the market’s adverse reaction to this volatility.
The market price of our common stock has fluctuated and may continue to experience significant volatility, regardless of our financial performance. Investors may be unable to resell their shares at a desired price due to market conditions, reduced trading volume, or negative sentiment toward our stock.
Removed
If we do not continue to provide services that are useful to users, we may not remain competitive and be forced to reduce our prices, and our revenues and operating results could be adversely affected. The industries and markets we serve are characterized by intense competition and consolidation. Be it the U.S.
Added
As a result, the following risk factors, as well as other information included or incorporated by reference elsewhere in this Annual Report on Form 10-K, should be considered in evaluating our business and future prospects. The risks described below may not be the only risks we face.
Removed
Internet services industry serviced by our Ting segment, the U.S. wireless communications industry serviced by Tucows Corporate - Mobile Services, the BSS/OSS software industry serviced by our Wavelo segment or the Internet services and domain registration market serviced by our Tucows Domains segment; these industries and markets have become extremely competitive and are characterized both by the entrance of new competitors or the expansion of services offered by existing competitors.
Added
Risk Factor Summary ● We operate in highly competitive and consolidating industries, which may impact our ability to grow and maintain profitability. ● Our service offerings may not be successful if we are unable to maintain existing customer relationships or establish new customer relationships. ● Our service offerings may be limited in their ability to grow their respective businesses and customer base unless we can continue to manage our vendor relationships and supply chain to obtain valuable products and service options to offer to our customers. ● Changes in Internet infrastructure, adoption, and navigation practices could impact our business. ● Investments in new businesses and technologies, as well as divestitures, carry inherent risks that may impact our operations and financial performance. ● The Company's success depends on our ability to adapt to technological advancements and evolving industry trends. ● Our business depends on our strong brands.
Removed
Our brands compete with incumbent service providers and their affiliate brands. Across all our segments, most of our competitors have greater financial, technical, personnel and marketing resources and a larger market share than we do, and we may not be able to compete successfully against them.
Added
If we are not able to maintain and enhance our brands, our ability to expand our customer base will be impaired and our business and operating results will be harmed. ● The Company’s success depends on the continued service and availability of key personnel. ● Our ability to accurately forecast construction and marketing costs as well as manage the cost per serviceable address within expected targets will impact our return on investment on the Ting Internet footprint. ● We rely on third-party network operators, data centers, and service providers, and any disruptions to these systems could negatively impact our business. ● Our Ting Internet businesses rely on Network Operators.
Removed
Due to our competitors' size and bargaining power, they may obtain discounts for facilities, equipment, devices, content, and services, potentially placing us at a competitive disadvantage. As consolidation in these industries creates even larger competitors, our competitors’ purchasing and cost structure advantages may increase further, hampering our efforts to attract and retain customers.
Added
Failure by a Network Operator to obtain the proper licenses and governmental approvals from regulatory authorities would cause us to be unable to successfully operate those businesses. ● We are subject to minimum purchase commitments with some partner network providers and mobile network operators. ● We are parties to agreements with other unrelated parties for certain business operations and to license third-party technologies.
Removed
Our competitors may use their market power and resources to introduce additional products and service features (or lower prices) that we are unable to offer at similar cost or price to the customer. This may impact our ability to win over significant market share from these competitors.
Added
Any claims against these unrelated parties that we rely upon for business operations and/or licensed technology could result in the need to incur substantial costs to replace technology or services which could delay and increase the cost of product and service developments. ● The execution of our Ting restructuring plan, involves risks that could adversely affect our business operations, financial condition, and growth strategy; including risks related to implementation difficulties, operational disruptions, and financial impacts. ● We face cybersecurity risks that could disrupt our business, damage our reputation, and result in financial and legal liabilities. ● Evolving laws and regulations governing intellectual property and internet services may expose us to increased liability and compliance costs. ● Data protection regulations may impose legal obligations on us that we cannot meet or that conflict with our ICANN contractual requirements. ● Disputes concerning the ownership or rights to use intellectual property and litigation involving other rights of third parties could be costly and time-consuming to litigate, may distract management from operating the business, and may result in us paying significant damage awards, losing significant rights and our ability to operate all or a portion of our business. ● Our indebtedness could adversely affect our ability to raise additional capital to fund our operations, our ability to operate our business, execute our strategy divert our cash flow from operations for debt payments, and prevent us from meeting our debt obligations. ● Our debt agreements impose significant operating and financial restrictions on us and our subsidiaries, which may prevent us from capitalizing on business opportunities across the Company.
Removed
To remain competitive, we may be compelled to reduce the prices for our services or augment our service offerings. Any subsidies or price reductions that we offer in order to remain competitive may reduce our revenues and margins, and may adversely affect our profitability and cash flows.
Added
In addition, the Company may need additional financing to further accelerate the expansion of the Ting Internet footprint. ● The international nature of our businesses and operations expose us to additional risks that could harm our business, operating results, and growth strategy; including risks related to taxation and foreign currencies fluctuations. ● The Company’s subsidiary Ting will require additional financing in order to meet its future financial obligations. ● Rising inflation and interest rates may adversely affect our businesses, financial condition, and operating results. ● Macroeconomic, geopolitical, and market conditions may adversely affect our business, financial condition, and operating results. ● Changes in government regulations may increase compliance costs and impact our business operations. ● We may be subject to unforeseen liabilities or unenforceable customer agreements, which could negatively impact our financial results. ● We are exposed to risks related to online payment fraud, chargebacks, and evolving payment technologies. ● Unanticipated changes in effective tax rates or adverse outcomes resulting from examination of our income or other tax returns could adversely affect our operating results and financial condition. ● We could be subject to changes in tax rates, the adoption of new U.S. or international tax legislation, or exposure to additional tax liabilities.
Removed
Any subsidies or price reductions may also make our services more accessible to new, lower-value customers with less disposable income available to spend on our services. In addition, if prices decline, customers without long-term contracts may change their service providers more frequently, thereby increasing our churn and resulting in higher acquisition costs to replace those customers.
Added
This could discourage the registration or renewal of domain names. ● Changes in ICANN policies, fees, and oversight may impact our domain registration business. ● Our share price may be volatile, and investors may be unable to sell shares at a favorable price. ● We cannot guarantee that our stock repurchase program will be fully consummated or that it will enhance long-term shareholder value. ● Energy consumption from data centers and internet infrastructure may result in higher costs and increased regulatory scrutiny. ● Growing investor and regulatory expectations for ESG (Environmental, Social, and Governance) transparency may require additional disclosures and compliance efforts ● Our business and financial performance could be adversely impacted by climate change, environmental disruptions, and other unforeseen disasters or crises. ● Domain names are valuable assets, and cybersecurity risks could lead to their loss or misattribution of liability to us. 11 Table of Contents RISKS RELATED TO OUR BUSINESS AND INDUSTRY We operate in highly competitive and consolidating industries, which may impact our ability to grow and maintain profitability.
Removed
Our retail mobile services has limited influence over the small subset of subscribers on the MNO contract retained by the Company as part of the DISH Purchase Agreement, and we may be unable to effectively respond to churn or attract a sufficient level of new customers to meet the minimum commitments with this MNO partner.
Added
The markets we serve—Internet services (Ting), wireless communications (Tucows Corporate – Mobile Services), BSS/OSS software (Wavelo), and domain registration (Tucows Domains)—are highly competitive and undergoing significant consolidation. Many of our competitors have greater financial, technical, and marketing resources, enabling them to offer lower prices, broader service bundles, and enhanced purchasing power for equipment, content, and infrastructure.
Removed
Failing to meet the minimum commitments could cause our retail mobile services to incur significant, and recurring, penalties until such a time that the contract is complete. These penalties would negatively impact our operational performance and financial results if enforced by the MNO.
Added
As consolidation increases, larger competitors may further strengthen their cost advantages, making it more difficult for us to attract and retain customers. To remain competitive, we may need to reduce pricing, increase service offerings, or invest in customer acquisition, which could pressure margins, increase churn, and negatively impact cash flows.
Removed
Based on the size of the small subset of customers retained as part of the DISH Purchase Agreement, their limited network usage and our limited negotiating ability, the Company has accrued $0.3 million of penalties associated with the minimum commitment shortfall during the twelve months ended December 31, 2023.
Added
Additionally, lower prices could attract less loyal or lower-value customers, further affecting profitability. In the domain registration industry, regulators are increasingly scrutinizing market consolidation and competitive practices, which could impact our ability to scale through acquisitions, partnerships, or pricing adjustments. Any regulatory action affecting domain pricing, reseller agreements, or distribution channels could constrain growth in our domain business.
Removed
To enable this, we need to continue to manage our vendor relationships and supply chain to ensure we are able to obtain valuable inventory, services and products across our segments.
Added
To stay competitive, we must offer a range of valuable products and services while effectively managing vendor relationships and supply chains. A critical aspect of this is securing domain name registration options through various TLDs and ccTLDs for our Tucows Domains segment. Our business is particularly vulnerable to fee increases imposed by registries like Verisign, which controls .com domains.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeSenior leadership, including our CEO, who also has relevant experience in cybersecurity matters, and our CISO, regularly brief the Board of Directors on our cybersecurity and information security initiatives, and the Board of Directors is apprised of cybersecurity incidents deemed to have a material business impact.
Biggest changeSenior leadership, including our CEO, who also has relevant experience in cybersecurity matters, regularly brief the Board of Directors on our cybersecurity and information security initiatives, and the Board of Directors is apprised of cybersecurity incidents deemed to have a material business impact. 24 Table of Contents
ITEM 1C. CYBER SECURITY Risk Management and Strategy Our business heavily relies on various IT and application systems, which contain proprietary and confidential information about our operations, employees, customers, and our customers' customers, including personally identifiable information. These systems are connected to and/or accessed from the Internet and, as a result, are susceptible to cyber-attacks.
ITEM 1C. CYBERSECURITY Risk Management and Strategy Our business heavily relies on various IT and application systems, which contain proprietary and confidential information about our operations, employees, customers, and our customers' customers, including personally identifiable information. These systems are connected to and/or accessed from the Internet and, as a result, are susceptible to cyber-attacks.
The Company follows an established process to identify and evaluate risks from cyber security threats that may arise internally or through the introduction of third parties to the ISMS. This evaluation is part of the Company's risk management process. The process may include, but is not limited to, evaluating the third party's cybersecurity maturity and/or imposing certain contractual conditions.
The Company follows an established process to identify and evaluate risks from cybersecurity threats that may arise internally or through the introduction of third parties to the ISMS. This evaluation is part of the Company's risk management process. The process may include, but is not limited to, evaluating the third party's cybersecurity maturity and/or imposing certain contractual conditions.
Dependent upon the severity of an incident, the incident is escalated to the senior leadership, including the CEO and CISO.
Dependent upon the severity of an incident, the incident is escalated to the senior leadership, including the CEO and senior leadership.
“Risk Factors.” of this Form 10-K, which should be read in conjunction with this Item 1C. 22 Table of Contents Board Governance and Management The Board of Directors oversees management’s processes for identifying and mitigating risks, including cybersecurity risks, to help align our risk exposure with our strategic objectives.
“Risk Factors.” of this Annual Report, which should be read in conjunction with this Item 1C. Board Governance and Management The Board of Directors oversees management’s processes for identifying and mitigating risks, including cybersecurity risks, to help align our risk exposure with our strategic objectives.
Removed
Our corporate information security function, led by our Chief Information Security Officer (“CISO”), is responsible for our overall information security strategy, policy, security engineering, operations and cyber threat detection and response. The current CISO has an extensive information technology and cybersecurity background gained through years of industry experience and leadership.
Added
Senior leadership manages our overall information security strategy, policy, security engineering, operations and cyber threat detection and response.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeITEM 2. PROPERTIES Our principal administrative, engineering, marketing and sales office is located in Toronto, Ontario, and consists of approximately 27,000 square feet. We lease satellite offices in various cities across the U.S. as well as internationally in Germany and Denmark. The Toronto, Ontario office supports all of our segments.
Biggest changeITEM 2. PROPERTIES Our principal administrative, engineering, marketing and sales office is located in Toronto, Canada, and consists of approximately 27,000 square feet. We lease satellite offices in various cities across the U.S. as well as internationally in Germany and Denmark. The Toronto, Canada office supports all of our segments.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeYear Ended December 31, 2023 2022 2021 Common stock received in connection with share-based compensation Number of shares - 3,053 45,824 Aggregate market value of shares (in thousands) $ - $ 197 $ 3,669 Average price per share $ - $ 64.67 $ 80.07 24 Table of Contents STOCK PERFORMANCE GRAPH The following graph and table compares the Company's stock performance to three stock indices over a five-year period assuming a $100 investment was made on the last day of fiscal year 2018. 25 Table of Contents I TEM 6.
Biggest changeYear Ended December 31, 2024 2023 2022 Common stock received in connection with share-based compensation Number of shares - - 3,053 Aggregate market value of shares (in thousands) $ - $ - $ 197 Average price per share $ - $ - $ 64.67 26 Table of Contents STOCK PERFORMANCE GRAPH The following graph and table compares the Company's stock performance to three stock indices over a five-year period assuming a $100 investment was made on the last day of fiscal year 2019.
The $40 million buyback program commenced on February 11, 2023 and terminated on February 9, 2022. The Company did not repurchase shares under this program. Net Exercise of Stock Options: Our current equity-based compensation plans include provisions that allow for the “net exercise” of stock options by all plan participants.
The $40 million buyback program commenced on February 11, 2022 and terminated on February 9, 2023. The Company did not repurchase shares under this program. Net Exercise of Stock Options: Our current equity-based compensation plans include provisions that allow for the “net exercise” of stock options by all plan participants.
We have not declared or paid any cash dividends on our common stock during the fiscal years ended December 31, 2023 and December 31, 2022 , and we do not intend to do so in the immediate future, but we may decide to do so in the future depending on ongoing market conditions.
We have not declared or paid any cash dividends on our common stock during the fiscal years ended December 31, 2024 and December 31, 2023 , and we do not intend to do so in the immediate future, but we may decide to do so in the future depending on ongoing market conditions.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers 2024 Stock Buyback Program: On February 22, 2024, the Company announced that its Board had approved a stock buyback program to repurchase up to $40 million of its common stock in the open market.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers 2025 Stock Buyback Program: On February 13, 2025, the Company announced that its Board had approved a stock buyback program to repurchase up to $40 million of its common stock in the open market.
The $40 million buyback program commenced on February 23, 2024 and is expected to terminate on February 22, 2025. 2023 Stock Buyback Program: On February 9, 2023, the Company announced that its Board had approved a stock buyback program to repurchase up to $40 million of its common stock in the open market.
The $40 million buyback program commenced on February 14, 2025 and is expected to terminate on February 13, 2026. 2024 Stock Buyback Program: On February 22, 2024, the Company announced that its Board had approved a stock buyback program to repurchase up to $40 million of its common stock in the open market.
As of April 1, 2024, Tucows had 74 shareholders of record.
As of March 13, 2025, Tucows had 74 shareholders of record.
Added
The $40 million buyback program commenced on February 23, 2024 and terminated on February 13, 2025. The Company did not repurchase shares under this program. 2023 Stock Buyback Program: On February 9, 2023, the Company announced that its Board had approved a stock buyback program to repurchase up to $40 million of its common stock in the open market.
Added
I TEM 6. RESERVED. 27 Table of Contents ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OVERVIEW Our mission is to provide simple useful services that help people unlock the power of the Internet.
Added
We accomplish this by reducing the complexity of our customers’ experience as they access the Internet (at home or on the go) and while using Internet services such as domain name registration, email and other Internet related services. We are organized into three operating and reporting segments - Ting, Wavelo, and Tucows Domains.
Added
Each segment is differentiated primarily by their services, the markets they serve and the regulatory environments in which they operate. The Ting segment contains the operating results of our retail high speed Internet access operations, including its wholly owned subsidiaries - Cedar and Simply Bits.
Added
The Wavelo segment includes our platform and professional services offerings, as well as the billing solutions to Internet services providers ("ISPs") (branded as Platypus). Tucows Domains includes wholesale and retail domain name registration services, as well as value added services derived through our OpenSRS, eNom, Ascio, EPAG and Hover brands.
Added
Our Chief Executive Officer ("CEO"), who is also our chief operating decision maker, reviews the operating results of Ting, Wavelo and Tucows Domains as three distinct segments in order to make key decisions and evaluate segment performance.
Added
Certain revenues and expenses disclosed under the Corporate category are excluded from segment earnings before interest, tax, depreciation and amortization ("EBITDA") results as they are centrally managed and not monitored by or reported to our CEO by segment.
Added
The exclusions include: retail mobile services, the 10-year payment stream on transferred legacy Mobile subscribers, eliminations of intercompany transactions, portions of Finance and Human Resources, Legal and Corporate Information Technology ("IT") shared services. For the years ended December 31, 2024, 2023 and 2022, we reported revenue of $362 million, $339 million and $321 million, respectively.
Added
Ting Ting and its wholly owned subsidiaries, Cedar and Simply Bits, includes the provision of high-speed Internet access services to select towns throughout the United States, with operations focused on serving existing markets. Our primary sales channel is through the Ting website.
Added
The primary focus of this segment is to provide reliable Gigabit Fiber and Fixed Wireless Internet services to consumer and business customers. Revenues from Ting Internet are all generated in the U.S. and are billed on a monthly basis. Ting Internet services have no fixed contract terms.
Added
As of December 31, 2024, Ting Internet had access to 134,000 owned infrastructure serviceable addresses, 45,000 partner infrastructure serviceable addresses and 51,000 active accounts under its management; compared to having access to 121,000 owned infrastructure serviceable addresses, 29,000 partner infrastructure serviceable addresses and 43,000 active accounts under its management as of December 31, 2023.
Added
These figures exclude the increase in serviceable addresses and accounts attributable to the Simply Bits acquisition. On February 7, 2024 Ting committed to the February 2024 workforce reduction, which aimed to realign the Company's operational structure within the Ting operating segment and reduce Ting's workforce by 13%, or 7% of the Company’s total workforce, to better support strategic objectives.
Added
The February 2024 workforce reduction was designed to streamline operations and reduce operating expenses within the Ting operating segment. Substantially all of the employees impacted by the workforce reduction were notified on February 7, 2024 and have since exited the Company.
Added
The Company incurred non-recurring charges of approximately $3.2 million in connection with the workforce reduction, primarily consisting of severance payments, notice pay, employee benefits contributions and outplacement costs.
Added
On October 30, 2024, Ting undertook a capital efficiency plan (the “Capital Efficiency Plan”) to reflect the ongoing operational and financial prioritization of the Ting business and to lower the Company's year-over-year operating expenses and capital outlays, which impacted approximately 42% of Ting's workforce or 17% of the Company's total workforce.
Added
The Company incurred non-recurring charges of approximately $7.7 million in connection with the Capital Efficiency Plan, primarily consisting of severance payments, notice pay, employee benefits contributions and outplacement costs.
Added
The Company expects that both the 2024 workforce reductions and Capital Efficiency Plan will realize personnel and related expense (net of capitalization) savings with the majority of the savings in sales and marketing, including related network support functions, followed by smaller impacts in technical operations and development, direct cost of revenues, network, general and administrative, and other costs.
Added
In Fiscal 2024 the realized savings will be partially offset by costs associated with both plans. These costs referenced above are classified as transitional and are excluded in our Adjusted EBITDA, which is a non-GAAP financial measure. Please see discussion of Adjusted EBITDA as well as the Adjusted EBITDA reconciliation to net income in the Results of Operations section below.
Added
Wavelo Wavelo includes the provision of full-service platforms and professional services providing a variety of solutions that support Communication Services providers ("CSPs"), including subscription and billing management, network orchestration and provisioning, and individual developer tools. Wavelo's focus is to provide accessible telecom software to CSPs globally, minimizing network and technical barriers and improving internet access worldwide.
Added
Wavelo's suite of flexible, cloud-based software simplifies the management of mobile and internet network access, enabling CSPs to better utilize their existing infrastructure, focus on customer experience and scale their businesses faster.
Added
Wavelo launched as a proven asset for CSPs, with EchoStar using Wavelo’s Mobile Network Operating System ("MONOS") software to drive additional value within its Digital Operator Platform and Ting integrating Wavelo’s Internet Service Operating System ("ISOS") and Subscriber Management ("SM") software to enable faster subscriber growth and footprint expansion.
Added
The Wavelo segment also includes the Platypus brand and platform, our legacy billing solution for ISPs. The revenues from Wavelo's MONOS, ISOS, SM and professional services are all generated in the U.S. and our customer agreements have set contract lengths with the underlying CSP.
Added
Similarly, Wavelo's revenues from Platypus are largely generated in the U.S., with a small portion earned in Canada and other countries. 28 Table of Contents Tucows Domains Tucows Domains includes wholesale and retail domain name registration services, as well as value added services derived through our OpenSRS, eNom, Ascio, EPAG and Hover brands.
Added
Tucows Domains revenues primarily from the registration fees charged to resellers in connection with new, renewed and transferred domain name registrations. In addition, we earn revenues from the sale of retail domain name registration and email services to individuals and small businesses.
Added
Tucows Domains revenues are attributed to the country in which the contract originates, which is primarily in Canada and the U.S for OpenSRS and eNom brands whereas it is primarily in European nations for Ascio and EPAG.
Added
Our primary distribution channel is a global network of more than 34,000 resellers that operate in 200 countries and who typically provide their customers, the end-users of Internet-based services, with solutions for establishing and maintaining an online presence.
Added
Our primary focus is serving the needs of this network of resellers by providing the broadest portfolio of gTLD and the country code top-level domain options and related services, a white-label platform that facilitates the provisioning and management of domain names, a powerful Application Program Interface, easy-to-use interfaces, comprehensive management and reporting tools, and proactive and attentive customer service.
Added
Our services are integral to the solutions that our resellers deliver to their customers. We provide “second tier” support to our resellers by email, chat and phone in the event resellers experience issues or problems with our services. In addition, our Network Operating Center proactively monitors all services and network infrastructure to address deficiencies before customer services are impacted.
Added
We believe that the underlying platforms for our services are among the most mature, reliable and functional reseller-oriented provisioning and management platforms in our industry, and we continue to refine, evolve and improve these services for both resellers and end-users.
Added
Our business model is characterized primarily by non-refundable, up-front payments, which lead to recurring revenue from renewals and positive operating cash flow. Wholesale, primarily branded as OpenSRS, eNom, EPAG and Ascio, derives revenue from its domain name registration service.
Added
Together the OpenSRS, eNom, EPAG and Ascio Domain Services manage 24.5 million domain names under the Tucows, eNom, EPAG and Ascio ICANN registrar accreditations and for other registrars under their own accreditations. Domains under management has decreased by 0.1 million, or less than 1%, since December 31, 2023.
Added
Value-Added Services include hosted email which provides email delivery and webmail access to millions of mailboxes, Internet security services, WHOIS privacy, publishing tools and other value-added services. All of these services are made available to end-users through a network of web hosts, ISPs, and other resellers around the world.
Added
In addition, we also derive revenue by monetizing domain names which are near the end of their lifecycle through expiry auction sale. Retail, primarily the Hover and eNom portfolio of websites, including eNom, and eNom Central, derive revenues from the sale of domain name registration and email services to individuals and small businesses.
Added
Our retail domain services also include our Personal Names Service – based on over 34,000 surname domains – that allows roughly two-thirds of Americans to purchase an email address based on their last name.
Added
The retail segment now includes the sale of the rights to its portfolio of surname domains used in connection with our RealNames email service and our Exact Hosting Service, that provides Linux hosting services for individual and small business websites.
Added
KEY BUSINESS METRICS AND NON-GAAP FINANCIAL MEASURES We regularly review a number of business metrics, including the following key metrics and non-GAAP financial measure, to assist us in evaluating our business, measure the performance of our business model, identify trends impacting our business, determine resource allocations, formulate financial projections and make strategic business decisions.
Added
The following tables set forth the key business metrics which we believe are the primary indicators of our performance for the periods presented: Ting Internet For the year ended December 31, 2024 2023 2022 (in '000's) Ting Internet accounts under management 51 43 35 Ting Internet owned infrastructure serviceable addresses (1) 134 121 96 Ting Internet partner infrastructure serviceable addresses (1) 45 29 19 (1) Defined as premises to which Ting has the capability to provide a customer connection in a service area. 29 Table of Contents Tucows Domains As of December 31, 2024 2023 2022 (in '000's) Total new, renewed and transferred-in domain name registrations provisioned (1) 21,765 22,031 21,774 Domains under management: Registered using Registrar Accreditation belonging to the Tucows Group 17,537 17,565 17,921 Registered using Registrar Accreditation belonging to Resellers 6,963 6,995 6,469 Total domain names under management 24,500 24,560 24,390 (1) For a discussion of these period-to-period changes in the domains provisioned and domains under management and how they impacted our financial results see the Net Revenues discussion below.
Added
Tucows reports all financial information in accordance with United States generally accepted accounting principles (“GAAP”).
Added
Along with this information, to assist financial statement users in an assessment of our historical performance, we typically disclose and discuss a non-GAAP financial measure, Adjusted EBITDA, on investor conference calls and related events that excludes certain non-cash and other charges as we believe that the non-GAAP information enhances investors’ overall understanding of our financial performance.
Added
Please see discussion of Adjusted EBITDA as well as the Adjusted EBITDA reconciliation to net income in the Results of Operations section below. OPPORTUNITIES, CHALLENGES AND RISKS Our revenue is primarily realized in U.S. dollars and a major portion of our operating expenses are paid in Canadian dollars.
Added
Fluctuations in the exchange rate between the U.S. dollar and the Canadian dollar may have a material effect on our business, financial condition and results from operations. In particular, we may be adversely affected by a significant weakening of the U.S. dollar against the Canadian dollar on a quarterly and an annual basis.
Added
Our policy with respect to foreign currency exposure is to manage our financial exposure to certain foreign exchange fluctuations with the objective of neutralizing some or all of the impact of foreign currency exchange movements by entering into foreign exchange forward contracts to mitigate the exchange risk on a portion of our Canadian dollar exposure.
Added
We may not always enter into such forward contracts and such contracts may not always be available and economical for us. Additionally, the forward rates established by the contracts may be less advantageous than the market rate upon settlement.
Added
Ting As an ISP, we have invested and expect to continue to invest in new fiber to the home (“FTTH”) deployments in select markets in the United States. The investments are a reflection of our ongoing efforts to build FTTH network via public-private partnerships in communities we identify as having strong, unmet demand for FTTH services.
Added
Given the significant upfront build and operational investments for these FTTH deployments, there is risk that future technological and regulatory changes as well as competitive responses from incumbent local providers, may result in us not fully recovering these investments.
Added
Wavelo Wavelo launched as a proven asset for CSPs, with EchoStar using Wavelo’s MONOS software to drive additional value within its Digital Operator Platform. More recently, Ting Internet has also integrated Wavelo’s ISOS and SM software to enable faster subscriber growth and footprint expansion.
Added
With our external platform and professional services revenues concentrated to one customer in EchoStar, we are exposed to significant risk if we are unable to maintain this customer relationship or establish new relationships for any of our Platforms in the future.
Added
Additionally, our revenues as a platform provider are directly tied to the subscriber volumes of EchoStar's MVNO or MNO networks, and our profitability is contingent on the ability of EchoStar to continue to add subscribers, either from organic growth or from migration off legacy systems, onto our platforms.
Added
Domain Services The increased competition in the market for Internet services in recent years, which we expect will continue to intensify in the short and long term, poses a material risk for us.
Added
As new registrars are introduced, existing competitors expand service offerings and competitors offer price discounts to gain market share, we face pricing pressure, which can adversely impact our revenues and profitability.
Added
To address these risks, we have focused on leveraging the scalability of our infrastructure and our ability to provide proactive and attentive customer service to aggressively compete to attract new customers and to maintain existing customers.
Added
Substantially all of our Tucows Domains revenue is derived from domain name registrations and related value-added services from wholesale and retail customers using our provisioning and management platforms.
Added
The market for wholesale registrar services is both price sensitive and competitive and is evolving with the introduction of new gTLDs, particularly for large volume customers, such as large web hosting companies and owners of large portfolios of domain names.
Added
We have a relatively limited ability to increase the pricing of domain name registrations without negatively impacting our ability to maintain or grow our customer base.
Added
Growth in our Tucows Domains revenue is dependent upon our ability to continue to attract and retain customers by maintaining consistent domain name registration and value-added service renewal rates and to grow our customer relationships through refining, evolving and improving our provisioning platforms and customer service for both resellers and end-users.
Added
In addition, Tucows Domains also generate revenues through the sale of names from our portfolio of domain names and through the OpenSRS, eNom, and Ascio Domain Expiry Streams. From time-to-time certain of our vendors provide us with market development funds to expand or maintain the market position for their services.
Added
Any decision by these vendors to cancel or amend these programs for any reason may result in payments in future periods not being commensurate with what we have achieved during past periods. 30 Table of Contents Other opportunities, challenges and risks The Company is entitled to a long-term payment stream that is a function of the margin generated by the transferred subscribers over the 10-year term of the EchoStar Purchase Agreement executed in Fiscal 2020.
Added
This consideration structure may not prove to be successful or profitable in the long-term to us if the existing subscriber base churns at an above average rate.
Added
Additionally, given EchoStar controls the revenues and costs incurred associated with the acquired subscribers, there could arise a situation where profitability for the subscriber base is diminished either by lower price points or cost inflation.
Added
Additionally, as part of the EchoStar Purchase Agreement, the Company retained a small number of customer accounts associated with one MNO agreement that was not reassigned to EchoStar at time of sale. We continue to be subject to the minimum revenue commitments previously agreed to with this excluded MNO agreement.
Added
The Company is able to continue adding customers under the excluded MNO network in order to meet the commitment.
Added
However, with no direct ability to change customer pricing and limited ability to renegotiate contract costs or significant terms, the Company may be unable to meet the minimum commitments with this MNO partner and could incur significant and recurring penalties until such a time that the contract is complete.
Added
These penalties would negatively impact our operational performance and financial results if enforced by the MNO. During the twelve months ended December 31, 2024, the Company has accrue d $1.3 millio n of penalties associated with the minimum commitment shortfall. The Company expects to incur penalties throughout 2025 and thereafter until the contract is complete.
Added
An in-depth assessment of the risk factors impacting our businesses has been discussed at length above in Part I under the caption "Item 1A Risk Factors" in this Annual Report. Critical Accounting Estimates The following is a discussion of our critical accounting estimates.
Added
Critical accounting estimates are defined as those that are both important to the portrayal of our financial condition and results of operations and are reflective of significant judgments and uncertainties made by management that may result in materially different results under different assumptions and conditions.
Added
“Note 2 – Significant Accounting Policies” in the Notes to the Consolidated Financial Statements for Fiscal 2024 included in Part II, Item 8 of this Annual Report, includes further information on the significant accounting policies and methods used in the preparation of our consolidated financial statements.
Added
The preparation of the consolidated financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities.
Added
Management bases its estimates on historical experience, available market information as applicable, and on various other assumptions that are believed to be reasonable under the circumstances at the time they are made. Under different assumptions or conditions, the actual results will differ, potentially materially, from those previously estimated.
Added
Many of the conditions impacting these assumptions and estimates are outside of the Company’s control. Management evaluates its estimates on an on-going basis. Acquired customer relationships For acquired customer relationships, the Company estimates the fair value based on the income approach.
Added
The income approach is a valuation technique that calculates the fair value of an intangible asset based on the present value of future cash flows expected to be generated over the remaining useful life of the asset.
Added
This valuation involves significant subjectivity and estimation uncertainty, including assumptions related to future revenues attributable to acquired customer relationships, attrition rates and discount rates. Loss contingencies We are sometimes subject to claims, suits, regulatory and government investigations, and other proceedings involving competition, intellectual property, privacy, tax and related compliance, labor and employment, commercial disputes, and other matters.
Added
Certain of these matters include speculative claims for substantial or indeterminate amounts of damages. We record a liability when we believe that it is probable that a loss has been incurred and the amount can be reasonably estimated.
Added
We evaluate, on a regular basis, developments in our legal matters that could affect the amount of liability that has been previously accrued, and the matters and related reasonably possible losses disclosed, and make adjustments and changes to our disclosures as appropriate.
Added
Significant judgment is required to determine both the likelihood and the estimated amount of a loss related to such matters. Until the final resolution of such matters, there may be an exposure to loss in excess of the amount recorded, and such amounts could be material.

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Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

87 edited+52 added−211 removed44 unchanged
Biggest changeCommunication and productivity tool costs include collaboration, customer support, bandwidth, co-location and provisioning costs we incur to support the supply of all our services, across our segments. 37 Table of Contents The following table presents our cost of revenues, by revenue source: (Dollar amounts in thousands of U.S. dollars) Year ended December 31, 2023 2022 Ting: Fiber Internet Services $ 20,151 $ 17,004 Wavelo: Platform Services 1,337 1,294 Other Professional Services 1,289 1,632 Total Wavelo 2,626 2,926 Tucows Domains: Wholesale Domain Services 150,664 147,894 Value Added Services 2,249 2,514 Total Wholesale 152,913 150,408 Retail 16,501 16,482 Total Tucows Domains 169,414 166,890 Tucows Corporate: Mobile services and eliminations 10,065 9,448 Network Expenses: Network, other costs 28,222 17,433 Network, depreciation and amortization costs 37,370 29,101 Network, impairment 4,822 92 70,414 46,626 $ 272,670 $ 242,894 Increase over prior period $ 29,776 Increase - percentage 12 % 38 Table of Contents The following table presents our cost of revenues, as a percentage of total cost of revenues for the periods presented: Year ended December 31, 2023 2022 Ting: Fiber Internet Services 7 % 7 % Wavelo: Platform Services 1 % 1 % Other Professional Services 0 % 1 % Total Wavelo 1 % 2 % Tucows Domains: Wholesale Domain Services 54 % 60 % Value Added Services 1 % 1 % Total Wholesale 55 % 61 % Retail 6 % 7 % Total Tucows Domains 61 % 68 % Tucows Corporate: Mobile services and eliminations 4 % 4 % Network Expenses: Network, other costs 11 % 7 % Network, depreciation and amortization costs 14 % 12 % Network, impairment 2 % - 27 % 19 % 100 % 100 % 39 Table of Contents Total cost of revenues for Fiscal 2023 increased by $29.8 million, or 12% to $272.7 million, from $243 million in Fiscal 2022.
Biggest changeThe following table presents our cost of revenues, by revenue source: (Dollar amounts in thousands of U.S. dollars) Year ended December 31, 2024 2023 Ting: Fiber Internet Services $ 18,754 $ 20,151 Wavelo: Platform Services 1,248 1,337 Other Professional Services 25 1,289 Total Wavelo 1,273 2,626 Tucows Domains: Wholesale Domain Services 158,383 150,664 Value Added Services 2,075 2,249 Total Wholesale 160,458 152,913 Retail 16,625 16,501 Total Tucows Domains 177,083 169,414 Corporate and all other: Mobile services and eliminations 12,637 10,065 Network Expenses: Network, other costs 26,723 28,222 Network, depreciation and amortization costs 41,335 37,370 Network, impairment 1,441 4,822 69,499 70,414 $ 279,246 $ 272,670 Increase over prior period $ 6,576 Increase - percentage 2 % 41 Table of Contents The following table presents our cost of revenues, as a percentage of total cost of revenues for the periods presented: Year ended December 31, 2024 2023 Ting: Fiber Internet Services 7 % 7 % Wavelo: Platform Services 0 % 1 % Other Professional Services 0 % 0 % Total Wavelo 0 % 1 % Tucows Domains: Wholesale Domain Services 55 % 54 % Value Added Services 1 % 1 % Total Wholesale 56 % 55 % Retail 6 % 6 % Total Tucows Domains 62 % 61 % Corporate and all other: Mobile services and eliminations 5 % 4 % Network Expenses: Network, other costs 10 % 11 % Network, depreciation and amortization costs 15 % 14 % Network, impairment 1 % 2 % 26 % 27 % 100 % 100 % Total cost of revenues for Fiscal 2024 increased by $6.5 million, or 2%, to $279.2 million, from $272.7 million in Fiscal 2023.
Since Adjusted EBITDA is a non-GAAP financial performance measure, our 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.
Since Adjusted EBITDA is a non-GAAP financial measure, our 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.
Under each of these platforms there are a variety of solutions that support CSPs, including subscription and billing management, network orchestration and provisioning, and individual developer tools. Wavelo launched as a proven asset for CSPs, with DISH using Wavelo’s MONOS software to drive additional value within its Digital Operator Platform.
Under each of these platforms there are a variety of solutions that support CSPs, including subscription and billing management, network orchestration and provisioning, and individual developer tools. Wavelo launched as a proven asset for CSPs, with EchoStar using Wavelo’s MONOS software to drive additional value within its Digital Operator Platform.
In addition, revenues associated with the sale of wireless devices and accessories are recognized when title and risk of loss is transferred to the customer and shipment has occurred. Incentive marketing credits given to customers are recorded as a reduction of revenue. These mobile services revenue streams also includes transitional services provided to DISH.
In addition, revenues associated with the sale of wireless devices and accessories are recognized when title and risk of loss is transferred to the customer and shipment has occurred. Incentive marketing credits given to customers are recorded as a reduction of revenue. These mobile services revenue streams also includes transitional services provided to EchoStar.
These are billed monthly at set and established rates for services provided in period and include the provision of sales, marketing, order fulfillment, and data analytics related to the legacy customer base sold to DISH. The Company recognizes revenue as the Company satisfies its obligations to provide transitional services.
These are billed monthly at set and established rates for services provided in period and include the provision of sales, marketing, order fulfillment, and data analytics related to the legacy customer base sold to EchoStar. The Company recognizes revenue as the Company satisfies its obligations to provide transitional services.
The Company records costs that reflect expected refunds, rebates and credit card charge-backs as a reduction of revenues at the time of the sale based on historical experiences and current expectations. Wavelo Platform Services Tucows' Platform Services include the following full-service platforms from Wavelo, including MONOS, ISOS, SM and our legacy Platypus ISP Billing software.
The Company records costs that reflect expected refunds, rebates and credit card charge-backs as a reduction of revenues at the time of the sale based on historical experiences and current expectations. 35 Table of Contents Wavelo Platform Services Tucows' Platform Services include the following full-service platforms from Wavelo, including MONOS, ISOS, SM and our legacy Platypus ISP Billing software.
Tucows Corporate - Mobile Services and Eliminations Cost of revenues for retail mobile services includes the costs of provisioning mobile services, which is primarily our customers' voice, messaging, data usage provided by our MNO partner, and the costs of providing mobile phone hardware, which is the cost of mobile phone devices and SIM cards sold to our customers, order fulfillment related expenses, and inventory write-downs.
Corporate and all other - Mobile services and eliminations Cost of revenues for retail mobile services includes the costs of provisioning mobile services, which is primarily our customers' voice, messaging, data usage provided by our MNO partner, and the costs of providing mobile phone hardware, which is the cost of mobile phone devices and SIM cards sold to our customers, order fulfillment related expenses, and inventory write-downs.
Included in the costs of provisioning mobile services are any penalties associated with the minimum commitments with our MNO partner. These mobile services costs also include the personnel and related costs of transitional services provided to DISH.
Included in the costs of provisioning mobile services are any penalties associated with the minimum commitments with our MNO partner. These mobile services costs also include the personnel and related costs of transitional services provided to EchoStar.
As of December 31, 2023 , the Company held contracts in the amount of $61.4 million with BMO to trade U.S. dollars in exchange for Canadian dollars under an uncommitted treasury risk management facility which assists the Company with hedging Canadian dollar exposures. Please see the discussion in the Material Cash Requirements section below.
As of December 31, 2024 , the Company held contracts in the amount of $29.4 million with BMO to trade U.S. dollars in exchange for Canadian dollars under an uncommitted treasury risk management facility which assists the Company with hedging Canadian dollar exposures. Please see the discussion in the Material Cash Requirements section below.
As a form of consideration for the sale of the customer relationships, the Company receives a payout on the margin associated with the legacy customer base sold to DISH, over a period of 10 years. This has been classified as Other Income and not considered revenue in Fiscal 2022 or 2023.
As a form of consideration for the sale of the customer relationships, the Company receives a payout on the margin associated with the legacy customer base sold to EchoStar, over a period of 10 years. This has been classified as Other Income and not considered revenue in Fiscal 2023 or 2024.
For Fiscal 2024, the Company plans to fund the cash requirements of Tucows businesses excluding Ting solely through operating income, while making discretionary loan repayments to create greater operating flexibility and access to additional financing. 48 Table of Contents In the long-term, Tucows businesses excluding Ting may seek additional financing to accelerate the growth of our Wavelo business, repurchase shares or future acquisitions.
For Fiscal 2025, the Company plans to fund the cash requirements of Tucows businesses excluding Ting solely through operating income, while making discretionary loan repayments to create greater operating flexibility and access to additional financing. In the long-term, Tucows businesses excluding Ting may seek additional financing to accelerate the growth of our Wavelo business, repurchase shares or future acquisitions.
DEPRECIATION OF PROPERTY AND EQUIPMENT (Dollar amounts in thousands of U.S. dollars) Year ended December 31, 2023 2022 Depreciation of property and equipment $ 567 $ 598 Decrease over prior period $ (31 ) Decrease - percentage (5 )% Percentage of net revenues - % - % Depreciation costs for Fiscal 2023 decreased by less than $0.1 million to $0.6 million as compared to Fiscal 2022.
DEPRECIATION OF PROPERTY AND EQUIPMENT (Dollar amounts in thousands of U.S. dollars) Year ended December 31, 2024 2023 Depreciation of property and equipment $ 451 $ 567 Decrease over prior period $ (116 ) Decrease - percentage (20 )% Percentage of net revenues - % - % Depreciation costs for Fiscal 2024 decreased by less than $0.1 million to $0.5 million as compared to Fiscal 2023.
The Company's 2023 Credit Facility expires on September 30, 2026 and the Company will be required to refinance the 2023 Credit Facility once it becomes due.
The Company's 2023 Credit Facility expires on September 30, 2026 and the Company will be required to refinance the 2023 Credit Facility once it becomes due. 49 Table of Contents
On May 4, 2023, Tucows Inc. through its indirect and wholly owned subsidiaries, including Ting Fiber, LLC entered into a definitive agreement relating to a securitized financing facility where Ting Issuer LLC, a Delaware limited liability company, issued the 2023 Term Notes for a total value of $238.5 million ("Note 9 - Notes Payable" of the Notes to the Consolidated Financial Statements included in Part II, Item 8 of this Annual Report).
On May 4, 2023, Tucows, through its indirect and wholly owned subsidiaries, including Ting Fiber, LLC entered into a definitive agreement relating to a securitized financing facility where Ting Issuer LLC, a Delaware limited liability company, issued the 2023 Term Notes for a total value of $238.5 million and 2024 Term Notes for a total value of $63.0 million ("Note 7 - Notes Payable" of the Notes to the Consolidated Financial Statements included in Part I, of this report).
The slight decrease was due to lower additions to property and equipment, in particular computer hardware, in Fiscal 2023 while additions from prior years became fully depreciated.
The slight decrease was due to lower additions to property and equipment in Fiscal 2024 while additions from prior years became fully depreciated.
Positive contributions of $22.7 million from movements in accrued liabilities, contract asset, customer deposits, deferred revenue, income taxes recoverable, and inventory, were partially offset by utilized cash of $10.2 million from the changes in accounts payable, accounts receivable, deferred costs of fulfillment, prepaid expenses and deposits, and accreditation fees payable.
Positive contributions of $16.4 million from movements in contract liabilities, inventory, accrued liabilities, contract asset, accounts receivable, prepaid expenses and deposits, and accreditation fees payable, were partially offset by utilized cash of $12.5 million from the changes in deferred costs of fulfillment, accounts payable, customer deposits, and income taxes recoverable.
Ting Ting generated $50.9 million in revenue during Fiscal 2023, which increased by $8.5 million or 20% compared to Fiscal 2022. This growth is driven by continued subscriber growth across the markets we serve, as well as the continued expansion of our Ting Internet footprint to new Ting towns throughout the United States.
Ting Ting generated $59.7 million in net revenue during Fiscal 2024, which increased by $8.8 million or 17% compared to Fiscal 2023. This growth is driven by continued subscriber growth across the markets we serve, as well as the continued expansion of our Ting Internet footprint to new Ting towns throughout the United States.
Cash Flow from Financing Activities Year ended December 31, 2023 Net cash inflows from financing activities during Fiscal 2023 totaled $178.8 million as compared to cash inflows of $132.0 million during Fiscal 2022 .
Cash Flow from Financing Activities Year ended December 31, 2024 Net cash inflows from financing activities during Fiscal 2024 totaled $44.5 million as compared to cash inflows of $178.8 million during Fiscal 2023 .
In addition, changes in our working capital contributed to a net cash inflow of $12.5 million.
In addition, changes in our working capital contributed to a net cash inflow of $4.0 million.
As of December 31, 2023, Ting Internet had access to 121,000 owned infrastructure serviceable addresses, 29,000 partner infrastructure serviceable addresses and 43,000 active accounts under its management; compared to having access to 96,000 owned infrastructure serviceable addresses, 19,000 partner infrastructure serviceable addresses and 35,000 active accounts under its management as of December 31, 2022.
As of December 31, 2024, Ting Internet had access to 134,000 owned infrastructure serviceable addresses, 45,000 partner infrastructure serviceable addresses and 51,000 active accounts under its management; compared to having access to 121,000 owned infrastructure serviceable addresses, 29,000 partner infrastructure serviceable addresses and 43,000 active accounts under its management as of December 31, 2023.
Management's Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on 10-K/A for the year ended December 31, 2022 which was filed with the United States Securities and Exchange Commission on June 6, 2023.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations ” in our Annual Report on 10-K for the year ended December 31, 2023 which was filed with the United States Securities and Exchange Commission on April 1, 2024.
INCOME TAXES The following table presents our provision for income taxes for the periods presented: (Dollar amounts in thousands of U.S. dollars) Year ended December 31, 2023 2022 Provision for income taxes $ (6,873 ) $ (217 ) Decrease in provision over prior period $ (6,656 ) Decrease - percentage 3,067 % Effective tax rate 7 % 1 % Income taxes decreased by $6.6 million and the effective tax rate increased from 1% to 7% when compared to the year ended December 31, 2022.
INCOME TAXES The following table presents our provision for income taxes for the periods presented: (Dollar amounts in thousands of U.S. dollars) Year ended December 31, 2024 2023 Provision for income taxes $ 7,986 $ (6,873 ) Increase in provision over prior period $ 14,859 Increase - percentage (216 )% Effective tax rate (8 )% 7 % Income taxes increased by $14.8 million and the effective tax rate decreased from 7% to (8%) when compared to the year ended December 31, 2023.
The following table reconciles net income to Adjusted EBITDA: Reconciliation of Income before Provision for Income Taxes to Adjusted EBITDA Twelve months ended December 31, (In Thousands of US Dollars) 2023 2022 2021 Net Income (Loss) for the period $ (96,197 ) $ (27,571 ) $ 3,364 Less: Provision for income taxes (6,873 ) (217 ) 3,906 Depreciation of property and equipment 36,431 28,187 17,986 Impairment and loss on disposition of property and equipment 4,822 553 435 Amortization of intangible assets 10,829 11,394 10,007 Interest expense, net 41,771 14,456 4,617 Loss on debt extinguishment 14,680 - - Accretion of contingent liability - 248 383 Stock-based compensation 8,134 7,599 4,592 Unrealized loss (gain) on change in fair value of foreign currency forward contracts - - 606 Unrealized loss (gain) on foreign exchange revaluation of foreign denominated monetary assets and liabilities (62 ) 281 219 Acquisition and other costs 1 1,916 2,660 2,706 Adjusted EBITDA $ 15,451 $ 37,590 $ 48,821 1 Acquisition and other costs represent transaction-related expenses, transitional expenses, such as redundant post-acquisition expenses, primarily related to our acquisitions, including Simply Bits in November 2021.
The following table reconciles net income to Adjusted EBITDA: Reconciliation of Income before Provision for Income Taxes to Adjusted EBITDA Twelve months ended December 31, (In Thousands of US Dollars) 2024 2023 2022 Net Income (Loss) for the period $ (109,860 ) $ (96,197 ) $ (27,571 ) Less: Provision for income taxes 7,986 (6,873 ) (217 ) Depreciation of property and equipment 40,323 36,431 28,187 Impairment and loss on disposition of property and equipment 19,167 4,822 553 Amortization of intangible assets 5,297 10,829 11,394 Interest expense, net 51,275 41,771 14,456 Loss on debt extinguishment - 14,680 - Accretion of contingent liability - - 248 Stock-based compensation 7,021 8,134 7,599 Unrealized loss (gain) on change in fair value of foreign currency forward contracts - - - Unrealized loss (gain) on foreign exchange revaluation of foreign denominated monetary assets and liabilities (168 ) (62 ) 281 Acquisition and other costs 1 13,876 1,916 2,660 Adjusted EBITDA $ 34,917 $ 15,451 $ 37,590 1 Acquisition and other costs represent transaction-related expenses, transitional expenses, such as redundant post-acquisition expenses.
This includes expenses incurred in the research, design and development of technology that we use to register domain names, network access services, email, retail, domain portfolio and other Internet services, as well as to distribute our digital content services. All technical operations and development costs are expensed as incurred.
This includes expenses incurred in the research, design and development of technology that we use to register domain names, provide Wavelo's platform services, provide Ting's Internet Services, email, retail, domain portfolio and other Internet services. All technical operations and development costs are expensed as incurred.
Cash outflows of $136.7 million related to the investment in property, equipment and intangible assets, primarily to support the continued expansion of our Ting Internet Fiber network footprints in California, Colorado, Idaho, North Carolina, and Virginia as we seek to extend both our current network and expand to new markets.
Total cash outflows were driven by $56.5 million related to the investment in property and equipment, primarily to support the continued expansion of our Ting Internet Fiber network footprints in Colorado, North Carolina, California, and Virginia as we seek to extend both our current network and expand to new markets, as well as $0.6 million for the acquisition of other intangible assets.
These are billed monthly at established rates for services provided in period and include the provision of sales, marketing, customer support, order fulfillment, and data analytics related to the legacy customer base sold to DISH. The Company recognizes costs as the Company satisfies its obligations to provide professional services.
These are billed monthly at set and established rates for services provided in period and include the provision of sales, marketing, customer support, order fulfillment, and data analytics related to the legacy customer base sold to EchoStar.
Cash Flow from Operating Activities Year ended December 31, 2023 Net cash inflows (outflows) from operating activities were ($4.8) million, a decrease of 124% when compared to the prior year. After adjusting for non-cash charges, the Company reported a net loss of ($17.2) million during Fiscal 2023 , a decrease of 216% when compared to the prior year.
Cash Flow from Operating Activities Year ended December 31, 2024 Net cash inflows (outflows) from operating activities were ($19.7) million, a decrease of (310%) when compared to the prior year. After adjusting for non-cash charges, the Company reported a net loss of ($23.7) million during Fiscal 2024 , a decrease of (38%) when compared to the prior year.
These figures exclude the increase in serviceable addresses and accounts attributable to the Simply Bits acquisition. 35 Table of Contents Wavelo Platform Services Wavelo's Platform services generated $37.1 million in revenue during Fiscal 2023, which increased by $14.5 million or 64% compared to Fiscal 2022.
These figures exclude the increase in serviceable addresses and accounts attributable to the Simply Bits acquisition. 38 Table of Contents Wavelo Platform Services Wavelo's Platform services generated $39.8 million in net revenue during Fiscal 2024, which increased by $2.7 million or 7% compared to Fiscal 2023.
AMORTIZATION OF INTANGIBLE ASSETS (Dollar amounts in thousands of U.S. dollars) Year ended December 31, 2023 2022 Amortization of intangible assets $ 9,323 $ 9,882 Decrease over prior period $ (559 ) Decrease - percentage (6 )% Percentage of net revenues 3 % 3 % Amortization of intangible assets decreased by $0.6 million, to $9.3 million as compared to Fiscal 2022.
AMORTIZATION OF INTANGIBLE ASSETS (Dollar amounts in thousands of U.S. dollars) Year ended December 31, 2024 2023 Amortization of intangible assets $ 3,834 $ 9,323 Decrease over prior period $ (5,489 ) Decrease - percentage (59 )% Percentage of net revenues 1 % 3 % Amortization of intangible assets for Fiscal 2024 decreased by $5.5 million, or 59%, to $3.8 million as compared to Fiscal 2023.
(Dollar amounts in thousands of U.S. dollars) Year ended December 31, 2023 2022 General and administrative $ 33,406 $ 30,845 Increase over prior period $ 2,561 Increase - percentage 8 % Percentage of net revenues 10 % 10 % General and administrative expenses for Fiscal 2023 increased by $2.6 million, or 8%, to $33.4 million as compared to Fiscal 2022.
(Dollar amounts in thousands of U.S. dollars) Year ended December 31, 2024 2023 General and administrative $ 37,068 $ 33,406 Increase over prior period $ 3,662 Increase - percentage 11 % Percentage of net revenues 10 % 10 % General and administrative expenses for Fiscal 2024 increased by $3.7 million, or 11%, to $37.1 million as compared to Fiscal 2023.
COST OF REVENUES Ting Cost of revenues primarily includes the costs for provisioning high speed Internet access for Ting and its subsidiaries - Cedar, and Simply Bits, which is comprised of network access fees paid to third-parties to use their network, leased circuit costs to directly support enterprise customers, the personnel and related expenses (net of capitalization) for the physical planning, design, construction and build out of the physical Fiber network, and as well as personnel and related expenses (net of capitalization) for the installation, activation, repair, maintenance and overall field service delivery of the Ting business.
This was also furthered by decreased transitional services of $0.5 million from a decreased level of dedicated support services provided to EchoStar in connection with the legacy Ting Mobile customer base. 39 Table of Contents COST OF REVENUES Ting Cost of revenues primarily includes the costs for provisioning high speed Internet access for Ting and its subsidiaries, Cedar and Simply Bits, which is comprised of network access fees paid to third-parties to use their network, leased circuit costs to directly support enterprise customers, the personnel and related expenses (net of capitalization) for the physical planning, design, construction and build out of the physical Fiber network, and as well as personnel and related expenses (net of capitalization) for the installation, activation, repair, maintenance and overall field service delivery of the Ting business.
Our allowance for doubtful accounts was $0.5 million and $0.7 million as at December 31, 2023 and at December 31, 2022, respectively. Based on this assessment, we expect the carrying amount of our outstanding receivables, net of allowance for doubtful accounts, to be fully collected.
Our expected credit losses were $0.9 million and $0.5 million as at December 31, 2024 and at December 31, 2023, respectively. Based on this assessment, we expect the carrying amount of our outstanding receivables, net of expected credit losses, to be fully collected.
The Company's billing cycle for all Ting Mobile customers is computed based on the customer's activation date. In order to recognize revenue as the Company satisfies its obligations, we compute the amount of revenues earned but not billed from the end of each billing cycle to the end of each reporting period.
In order to recognize revenue as the Company satisfies its obligations, we compute the amount of revenues earned but not billed from the end of each billing cycle to the end of each reporting period.
Excluding movements in exchange rates, we expect general and administrative expenses for Fiscal 2024, in absolute dollars, to increase when compared to Fiscal 2023 largely to support the growth of our business.
Excluding movements in exchange rates, we expect technical operations and development expenses for Fiscal 2025, in absolute dollars, to increase when compared to Fiscal 2024 to support the ongoing growth in our operations.
(Dollar amounts in thousands of U.S. dollars) Year ended December 31, 2023 2022 Technical operations and development $ 19,217 $ 14,187 Increase over prior period $ 5,030 Increase - percentage 35 % Percentage of net revenues 6 % 4 % Technical operations and development expenses for Fiscal 2023 increased by $5.0 million, or 35%, to $19.2 million.
(Dollar amounts in thousands of U.S. dollars) Year ended December 31, 2024 2023 Technical operations and development $ 18,627 $ 19,217 Decrease over prior period $ (590 ) Decrease - percentage (3 )% Percentage of net revenues 5 % 6 % Technical operations and development expenses for Fiscal 2024 decreased by $0.6 million, or 3%, to $18.6 million as compared to Fiscal 2023.
Deferred costs of fulfillment as of December 31, 2023 increased by $0.4 million, to $111.1 million from $110.7 million at December 31, 2022.
Deferred costs of fulfillment as of December 31, 2024 increased by $5.9 million, or 5%, to $117.0 million from $111.1 million at December 31, 2023.
Hardware costs include the cost of equipment sold to end customers, including routers, ONTs, and IPTV products, and any adjustments on this inventory.
Hardware costs include the cost of equipment sold to end customers, including routers, ONTs, and IPTV products, and any adjustments on this inventory. Other costs include field vehicle expenses, and small sundry equipment and supplies consumed in building the Fiber network.
The following table presents our net revenues, by revenue source: (Dollar amounts in thousands of U.S. dollars) Year ended December 31, 2023 2022 Ting: Fiber Internet Services $ 50,937 $ 42,425 Wavelo: Platform Services 37,082 22,594 Other professional services 1,588 1,750 Total Wavelo 38,670 24,344 Tucows Domains: Wholesale Domain Services 189,013 187,542 Value Added Services 17,712 20,712 Total Wholesale 206,725 208,254 Retail 35,372 34,904 Total Tucows Domains 242,097 243,158 Tucows Corporate: Mobile Services and eliminations 7,633 11,215 $ 339,337 $ 321,142 Increase over prior period $ 18,195 Increase - percentage 6 % 34 Table of Contents The following table presents our net revenues, by revenue source, as a percentage of total net revenues: Year ended December 31, 2023 2022 Ting: Fiber Internet Services 15 % 13 % Wavelo: Platform Services 11 % 7 % Other Professional Services 0 % 1 % Total Wavelo 11 % 8 % Tucows Domains: Wholesale Domain Services 56 % 58 % Value Added Services 5 % 6 % Total Wholesale 61 % 64 % Retail 10 % 11 % Total Tucows Domains 71 % 75 % Tucows Corporate: Mobile services and eliminations 3 % 4 % 100 % 100 % Total net revenues for Fiscal 2023 increased by $18.2 million, or 6%, to $339.3 million compared the year ended December 31, 2022 ("Fiscal 2022").
The following table presents our net revenues, by revenue source: (Dollar amounts in thousands of U.S. dollars) Year ended December 31, 2024 2023 Ting: Fiber Internet Services $ 59,732 $ 50,937 Wavelo: Platform Services 39,824 37,082 Other professional services 37 1,588 Total Wavelo 39,861 38,670 Tucows Domains: Wholesale Domain Services 197,113 189,013 Value Added Services 19,882 17,712 Total Wholesale 216,995 206,725 Retail 37,644 35,372 Total Tucows Domains 254,639 242,097 Corporate and all other: Mobile Services and eliminations 8,043 7,633 $ 362,275 $ 339,337 Increase over prior period $ 22,938 Increase - percentage 7 % 37 Table of Contents The following table presents our net revenues, by revenue source, as a percentage of total net revenues: Year ended December 31, 2024 2023 Ting: Fiber Internet Services 16 % 15 % Wavelo: Platform Services 11 % 11 % Other Professional Services 0 % 0 % Total Wavelo 11 % 11 % Tucows Domains: Wholesale Domain Services 55 % 56 % Value Added Services 5 % 5 % Total Wholesale 60 % 61 % Retail 10 % 10 % Total Tucows Domains 70 % 71 % Corporate and all other: Mobile services and eliminations 3 % 3 % 100 % 100 % Total net revenues for Fiscal 2024 increased by $23.0 million, or 7%, to $362.3 million compared the year ended December 31, 2023 ("Fiscal 2023").
Other costs include field vehicle expenses, and small sundry equipment and supplies consumed in building the Fiber network. 36 Table of Contents Wavelo Platform Services Cost of revenues to provide the new MONOS, ISOS and SM platforms, as well as our legacy Platypus ISP Billing software services including network access, provisioning and billing services for CSPs.
Wavelo Platform Services Cost of revenues to provide the new MONOS, ISOS and SM platforms, as well as our legacy Platypus ISP Billing software services including network access, provisioning and billing services for CSPs.
Net income included non-cash charges and recoveries of $79.0 million such as depreciation, loss on debt extinguishment, accretion of redeemable preferred units, amortization of intangible assets, stock-based compensation, impairment of property and equipment, amortization of debt discount and issuance costs, loss (gain) on change in fair value of currency forward contracts, write off of debt discount and issuance cost, loss on disposal of domain names, net right of use operating asset or liability, net amortization of contract costs, amortization of discontinued cash flow hedge, and deferred income taxes (recovery).
Net income included non-cash charges and recoveries of $86.1 million including depreciation, impairment of property and equipment, accretion of redeemable preferred units, stock-based compensation, amortization of intangible assets, amortization of debt discount and issuance costs, deferred income taxes (recovery), loss (gain) on disposal of assets, net amortization of contract costs, loss on disposal of domain names, undistributed earnings of equity method investee, and net right of use operating asset or liability.
Expenses include severance or transitional costs associated with department, operational or overall company restructuring efforts, including geographic alignments. Adjusted EBITDA for the year ended December 31, 2023 decreased by $22.1 million, or 59% to $15.5 million when compared to the year ended December 31, 2022.
Expenses include severance or transitional costs associated with department, operational or overall company restructuring efforts, including geographic alignments. 46 Table of Contents Segment Adjusted EBITDA for the year ended December 31, 2024 increased by $19.4 million, or 125% to $34.9 million when compared to the year ended December 31, 2023.
These factors were partially offset by a decrease in transitional services costs provided to DISH in connection with the legacy Ting Mobile customer base, consistent with the above discussion around net revenues. Network Expenses Network costs for Fiscal 2023 increased by $23.8 million to $70.4 million when compared to Fiscal 2022.
This was partially offset by a decrease in transitional services costs provided to EchoStar in connection with the legacy Ting Mobile customer base, consistent with the above discussion around net revenues. Network Expenses Network costs for Fiscal 2024 decreased by $0.9 million, or 1% to $69.5 million as compared to $70.4 million in Fiscal 2023.
(Dollar amounts in thousands of U.S. dollars) Year ended December 31, 2023 2022 Sales and marketing $ 67,806 $ 53,937 Increase over prior period $ 13,869 Increase - percentage 26 % Percentage of net revenues 20 % 17 % Sales and marketing expenses for Fiscal 2023 increased by $13.9 million, or 26%, to $67.8 million when compared to Fiscal 2022.
(Dollar amounts in thousands of U.S. dollars) Year ended December 31, 2024 2023 Sales and marketing $ 59,382 $ 67,806 Decrease over prior period $ (8,424 ) Decrease - percentage (12 )% Percentage of net revenues 16 % 20 % Sales and marketing expenses for Fiscal 2024 decreased by $8.4 million, or 12%, to $59.4 million as compared to Fiscal 2023.
Network expenses Network expenses include personnel and related expenses related to platform and network site reliability engineering, network operations centers, IT infrastructure and supply chain teams that support our various business segments.
The Company recognizes costs as the Company satisfies its obligations to provide professional services. 40 Table of Contents Network expenses Network expenses include personnel and related expenses related to platform and network site reliability engineering, network operations centers, IT infrastructure and supply chain teams that support our various business segments.
The Ting segment increased $8.5 million in the current period as a result of subscriber growth from the continued buildout of our Fiber network across the United States. These increases were partially offset by decreased revenues from both mobile services and eliminations as well as the Tucows Domains segment.
The Ting segment increased $8.8 million in the current period as a result of subscriber growth from the continued buildout of our Fiber network across the United States.
As of December 31, 2023, the Company’s 2023 Credit Facility had an outstanding balance of $211.9 million. Tucows businesses excluding Ting make principal repayments from time to time.
Tucows Businesses Excluding Ting Tucows businesses excluding Ting, acquisitions and capital investments have been funded by the Company's operating income and the Company's existing 2023 Credit Agreement. As of December 31, 2024 , the Company’s 2023 Credit Facility had an outstanding balance of $195.4 million. Tucows businesses excluding Ting make principal repayments from time to time.
On September 22, 2023, the Company and its wholly owned subsidiaries, Tucows.com Co., Ting Inc., Tucows (Delaware) Inc., Wavelo, Inc. and Tucows (Emerald), LLC (each, a “Borrower” and together, the “Borrowers,” collectively with the Company) and certain other subsidiaries of the Company, as guarantors, entered into the 2023 Credit Agreement with Bank of Montreal, as administrative agent (“BMO” or the “Agent”), and the lenders party thereto, to, among other things, provide the Borrowers with a revolving credit facility in an aggregate amount not to exceed $240 million (the “2023 Credit Facility”).
Please see the discussion in the Material Cash Requirements section below. 2023 Credit Facility On September 22, 2023, the Borrowers and certain other subsidiaries of the Company, as guarantors, entered into the 2023 Credit Agreement with Bank of Montreal, as administrative agent (“BMO” or the “Agent”), and the lenders party thereto, to, among other things, provide the Borrowers with the 2023 Credit Facility in an aggregate amount not to exceed $240 million.
Ting Mobile wireless usage contracts grant customers access to standard talk, text and data mobile services. Ting Mobile contracts are billed based on the customer's selected rate plan, which can either be usage based or an unlimited plan. All rate plan options are charged to customers on a postpaid, monthly basis at the end of their billing cycle.
Instead we have transitioned towards being a Wavelo provider for CSPs globally. Ting Mobile wireless usage contracts grant customers access to standard talk, text and data mobile services. Ting Mobile contracts are billed based on the customer's selected rate plan, which can either be usage based or an unlimited plan.
Tucows Corporate - Mobile Services and Eliminations Although we still provide mobile telephony services to a small subset of customers retained through the Ting Mobile brand as part of the DISH Purchase Agreement executed in Fiscal 2020; this revenue stream no longer represents the Company's strategic focus going forward.
The retail segment now includes the sale of the rights to its portfolio of surname domains used in connection with our RealNames email service and Linux hosting services for websites through our Exact Hosting brand. 36 Table of Contents Corporate and all other - Mobile services and eliminations Although we still provide mobile telephony services to a small subset of customers retained through the Ting Mobile brand as part of the EchoStar Purchase Agreement executed in Fiscal 2020; this revenue stream no longer represents the Company's strategic focus going forward.
This decrease in amortization was a driven in part by the completed amortization of customer relationships associated with the Company's Fiscal 2016 acquisition of Melbourne IT assets. The amortization of the related customer relationships was completed during the three months ended March 31, 2023.
This decrease in amortization was a driven by the completed amortization of customer relationships associated with the Company's Fiscal 2017 acquisition of eNom. The amortization of the related assets was completed in January 2024.
These cash inflows were partially offset by $80.2 million related to the repayment of the syndicate revolver, $45.7 million related to the redemption of preferred units held by Generate, $6.7 million from deferred notes payable financing costs, $1.7 million related to the syndicate revolver issued, and $1.6 million related to the payment of contingent consideration related to the acquisition of Cedar.
These cash inflows were partially offset by $16.5 million related to the repayment of the syndicate revolver, $2.0 million from deferred notes payable financing costs, and less than $0.1 million related to the syndicate revolver issued.
These costs depend on the volume (if any) and scope of standalone technology services development work our customers engage us to perform. In the current period, we performed less standalone professional services for our customers.
Cost of revenues to provide other professional services change depending on the nature and scope of work we are engaged to perform for our customers for select statements of work. The cost of revenues depend on the volume (if any) and scope of standalone technology services development work our customers engage us to perform.
Material Cash Requirements At December 31, 2023, the Company's Cash and cash equivalents, restricted cash and secured notes reserve funds balances totaled $105.0 million, of which $94.7 million belonged to Ting and $10.3 million belonged to the other Tucows businesses.
These cash outflows were partially offset by $0.5 million of proceeds on disposal of property and equipment. Material Cash Requirements At December 31, 2024, the Company's cash and cash equivalents, restricted cash and secured notes reserve funds balances totaled $73.2 million, of which $61.7 million belonged to Ting and $11.5 million belonged to the other Tucows businesses.
In the current period, we performed less standalone professional services for our customers. Tucows Domains Wholesale - Domain Services During Fiscal 2023, Wholesale Tucows Domains revenue increased by $1.5 million or 1% to $189.0 million. The increase from Wholesale domain services was driven primarily by strong domains transactions through the period.
In the current period, we performed limited standalone professional services for our customers. Tucows Domains Wholesale - Domain Services Wholesale Tucows Domains generated $197.1 million in net revenue during Fiscal 2024, which increased by $8.1 million or 4% compared to Fiscal 2023.
All future revenues associated with retail mobile services stream will only be for this subset of customers retained by the Company, as mentioned above. Ting Mobile services are primarily contracted through the Ting website, for one month at a time and contain no commitment to renew the contract following each customer's monthly billing cycle.
Ting Mobile services are primarily contracted through the Ting website, for one month at a time and contain no commitment to renew the contract following each customer's monthly billing cycle. The Company's billing cycle for all Ting Mobile customers is computed based on the customer's activation date.
All future revenues associated with retail mobile services stream will only be for this subset of customers retained by the Company, as mentioned above. Ting Mobile services are primarily contracted through the Ting website, for one month at a time and contain no commitment to renew the contract following each customer's monthly billing cycle.
All rate plan options are charged to customers on a postpaid, monthly basis at the end of their billing cycle. All future revenues associated with retail mobile services stream will only be for this subset of customers retained by the Company, as mentioned above.
Excluding movements in exchange rates, we expect sales and marketing expenses for Fiscal 2024 to increase in absolute dollars, as we adjust our marketing programs and sales and customer support personnel costs to facilitate the continued expansion of our operations.
Excluding movements in exchange rates, we expect sales and marketing expenses for Fiscal 2025 to decrease in absolute dollars, with lower personnel costs through the year due to lower headcount and as we adjust our marketing programs to optimize channel spending.
The current period increase in network depreciation relates to $6.8 million in incremental depreciation from Ting's expansion of our Ting Internet footprint to new Ting towns throughout the United States, $1.7 million in incremental depreciation of Wavelo's platform assets, partially offset by decreased depreciation of $0.2 million related to Tucows Domains.
This was offset by increased network depreciation of $4.0 million, consisting of $3.1 million in incremental depreciation from Ting's expansion of our Ting Internet footprint to new Ting towns throughout the United States, $0.8 million in incremental depreciation of Wavelo's platform assets, and $0.1 million in incremental depreciation related to Tucows Domains and Corporate. 43 Table of Contents SALES AND MARKETING Sales and marketing expenses consist primarily of personnel costs.
These cash inflows were partially offset by $0.4 million outflow from the net impact of exercise of stock options and $0.3 million of loan costs. Cash Flow from Investing Activities Year ended December 31, 2023 Investing activities during the Fiscal 2023 used net cash of $92.6 million as compared to using $137.5 million during Fiscal 2022 .
Cash Flow from Investing Activities Year ended December 31, 2024 Investing activities during the Fiscal 2024 used net cash of $56.5 million as compared to using $92.6 million during Fiscal 2023 .
Tucows Corporate - Mobile Services and Eliminations Cost of revenues from mobile services and eliminations for Fiscal 2023 increased by $0.6 million when compared to Fiscal 2022.
Corporate and all other - Mobile services and eliminations Cost of revenues from Mobile Services and Eliminations for Fiscal 2024 increased by $2.5 million, or 26%, to $12.6 million as compared to $10.1 million in Fiscal 2023.
During Fiscal 2023, the Company made net repayments of $27.8 million towards the 2023 Credit Facility and the previous facility. The Company ended December 31, 2023 with a remaining principal balance of $211.9 million, for which the required repayment is due in 2026.
The Company ended December 31, 2024 with a remaining principal balance of $195.4 million, for which the required repayment is due in 2026.
Cost incurred are driven by the amortization of previously capitalized costs incurred to fulfill the DISH Master Services Agreement ("MSA") over the term of the agreement. No additional costs additional costs to fulfill the contract were incurred in the period.
This was driven by the complete amortization of previously capitalized costs incurred to fulfill the EchoStar Master Services Agreement ("MSA") over the initial term of the agreement, which ended in July 2024.
The increase in cost of revenues was driven by increases across Network Expenses, Ting, Tucows Domains, and mobile service and eliminations by $23.8 million, $3.2 million, $2.5 million, and $0.6 million respectively.
The increase in cost of revenues was driven by increases across Tucows Domains and mobile service and eliminations by $7.7 million and $2.6 million, respectively. The increase in Tucows Domains of $7.7 million was a result of an increase in domain name transactions and registry side cost increases through the current period.
A reconciliation of the federal statutory income tax rate to our effective tax rate is set forth in “Note 10 – Income Taxes” of the Notes to the Consolidated Financial Statements included in Part II, Item 8 of this Annual Report. 43 Table of Contents ADJUSTED EBITDA We believe that the provision of this supplemental non-GAAP measure allows investors to evaluate the operational and financial performance of our core business using similar evaluation measures to those used by management.
ADJUSTED EBITDA We believe that the provision of this supplemental non-GAAP financial measure allows investors to evaluate the operational and financial performance of our core business using similar evaluation measures to those used by management. We use Adjusted EBITDA to measure our performance and prepare our budgets.
These increases were partially offset by $92.1 million for the continued investment in property and equipment primarily driven by Ting Internet expansion, $80.2 million related to the repayment of the syndicated revolver, $45.7 million for the cash payment for the redeemable preferred units redemption, $6.7 million related to deferred notes payable financing costs, $4.8 million from cash used in operating activities, $1.7 million related to the deferred issuance cost of the syndicate revolver, $1.6 million related to the payment of contingent consideration related to the acquisition of Cedar, and $0.5 million related to the acquisition of intangible assets. 45 Table of Contents Third Amended 2019 Credit Facility In connection with entering into the 2023 Credit Agreement, on September 22, 2023, the Company paid off the principal balance, including accrued interest thereon, of the revolving loans outstanding under the Third Amended and Restated Credit Agreement (the “RBC Credit Agreement”), dated as of August 8, 2022, as amended, by and among the Company, certain subsidiaries of the Company as borrowers, certain other subsidiaries of the Company as guarantors, Royal Bank of Canada, as administrative agent (“RBC”), and the lenders party thereto, pursuant to which Tucows’ prior credit facility that provided the Borrowers with a $240 million revolving credit facility (the "2019 Credit Facility").
As at December 31, 2024, the Company's leverage ratio was 3.26:1.00 and Interest Coverage Ratio was 3.50:1.00. 47 Table of Contents Third Amended 2019 Credit Facility In connection with entering into the 2023 Credit Agreement, on September 22, 2023, the Company paid off the principal balance, including accrued interest thereon, of the revolving loans outstanding under the Third Amended and Restated Credit Agreement (the “RBC Credit Agreement”), dated as of August 8, 2022, as amended, by and among the Company, certain subsidiaries of the Company as borrowers, certain other subsidiaries of the Company as guarantors, Royal Bank of Canada, as administrative agent (“RBC”), and the lenders party thereto, pursuant to which Tucows’ prior credit facility that provided the Borrowers with a $240 million revolving credit facility (the "2019 Credit Facility").
Network rights, brand and customer relationships acquired in connection with the following acquisitions are amortized on a straight-line basis over a range of two to seven years: eNom in January 2017, Ascio in March of 2019, Cedar in January 2020 and Simply Bits in November 2021. 42 Table of Contents OTHER INCOME (EXPENSES) (Dollar amounts in thousands of U.S. dollars) Year ended December 31, 2023 2022 Other income (expense), net $ (39,418 ) $ 3,874 Increase over prior period $ (43,292 ) Increase - percentage (1,118 )% Percentage of net revenues 12 % 1 % Other income decreased by $43.3 million when compared to Fiscal 2022.
Network rights, brand and customer relationships acquired in connection with the following acquisitions are amortized on a straight-line basis over a range of two to seven years: eNom in January 2017, Ascio in March of 2019, Cedar in January 2020 and Simply Bits in November 2021.
Together the OpenSRS, eNom, EPAG and Ascio Domain Services manage 24.6 million domain names under the Tucows, eNom, EPAG and Ascio ICANN registrar accreditations and for other registrars under their own accreditations. Domains under management has increased by 0.2 million, or less than 1%, since December 31, 2022.
The increase from Wholesale domain services was driven primarily by increased domain name transactions and various price increases since Fiscal 2023. Together the OpenSRS, eNom, EPAG and Ascio Domain Services manage 24.5 million domain names under the Tucows, eNom, EPAG and Ascio ICANN registrar accreditations and for other registrars under their own accreditations.
This increase was driven by Tucows Domains with an increase of $2.2 million as a result of strong Fiscal 2023 billings for domain name registrations and service renewals , consistent with the increase in deferred revenues discussed above.
This increase was driven by Tucows Domains with an increase of $6.5 million as a result of increased domain name transactions and registry cost increases through the current period, consistent with the increase in contract liabilities discussed above.
The decrease was driven primarily by incremental intercompany corporate eliminations of $2.2 million as a result of increased revenues generated by Wavelo from Ting, associated with Ting's integration of Wavelo's ISOS and SM platforms.
The increase was driven primarily by lower intercompany corporate eliminations of $1.8 million, primarily as a result of decreased revenues associated with inter segment billing between Wavelo and Ting.
Incremental to this, mobile services decreased as a result of less transitional services of $0.7 million notably from a decreased level of dedicated support services provided to DISH in connection with the legacy Ting Mobile customer base, and $0.7 million associated with the mobile telephony services and device revenues from the small group of customers retained by the Company as part of the DISH Purchase Agreement as a result of the organic subscriber churn experienced through Fiscal 2023.
This was partially offset by decreased revenues of $0.9 million associated with the mobile services and device revenues from the small group of customers retained by the Company as part of the EchoStar Purchase Agreement. This decrease was primarily a result of the organic subscriber churn and plan mix shifting towards lower price point rate plans compared to Fiscal 2023.
The increase costs of revenues were driven primarily by higher costs to deliver mobile telephony services from the small group of customers retained by the Company as part of the DISH Purchase Agreement due to plan mix changes, the Company also incurred higher penalties associated with the MNO minimum commitment shortfall and expects to continue to incur penalties through the end of Fiscal 2024 and thereafter should limited subscriber growth persist.
The increase is driven by increased costs associated with mobile services from the small group of customers retained by the Company as part of the EchoStar Purchase Agreement due to MNO minimum purchase commitments and plan mix changes towards unlimited plans.
Other Professional Services Cost of revenues from Other Professional Services for Fiscal 2023 decreased by $0.3 million to $1.3 million, when compared to Fiscal 2022. Costs incurred represent the personnel and related expenses of employees and contractors providing professional services to DISH.
Other Professional Services Cost of revenues from Other Professional Services for Fiscal 2024 decreased by $1.3 million, or 100%, to less than $0.1 million as compared to $1.3 million in Fiscal 2023.
As of December 31, 2023 the balancing owning on the UPA was $111.9 million, with remaining capital commitments of $108.5 million ("Note 14 - Redeemable preferred units" of the Notes to the Consolidated Financial Statements included in Part II, Item 8 of this Annual Report).
Ting As of December 31, 2024, the balance owing on the Unit Purchase Agreement was $122.2 million ("Note 13 - Redeemable preferred units" of the Notes to the Consolidated Financial Statements included in Part I, of this report).
In addition to network costs and network depreciation, the current period increase in network impairment of $4.7 million was primarily driven by an impairment charge for Ting for cable plant, asset under construction, and capital inventory that occurred in the current period. SALES AND MARKETING Sales and marketing expenses consist primarily of personnel costs.
The current period decrease was primarily driven by decreased normal course network impairment charges of $3.4 million for Ting cable plant, asset under construction and capital inventory compared to Fiscal 2023. The current period decrease was furthered by a decrease in network costs of $1.5 million driven by savings related to the Capital Efficiency Plan, executed in October 2024.
For information about geographic areas, see “Note 21 – Segment Reporting” of the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report.
A reconciliation of the federal statutory income tax rate to our effective tax rate is set forth in “Note 9 – Income Taxes” of the Notes to the Consolidated Financial Statements included in Part II, Item 8 of this Annual Report.
These decreases to Other Income were partially offset by a $4.4 million increase primarily from the inclusion of interest income following the execution of Ting's 2023 Term Notes as well as $3.4 milli on increase primarily from the capitalization for interest expense related to the Fiber network assets under construction as part of our Ting segment.
The increase was partially offset by higher net interest expense as a result of the inclusion of interest associated with the 2023 and 2024 Term Notes, an increase due to the absence of interest rate swap contracts in the current period, and lower interest expense capitalization associated with Fiber network assets under construction; partially offset by reduction in interest related to the Credit Facility for the Tucows businesses excluding Ting and the inclusion of interest income following the execution of Ting's 2023 and 2024 Term Notes.
Total cash inflows were driven by $87.5 million of proceeds from redeemable preferred units issued to Generate, $48.3 million of proceeds received from drawdown of the Amended Credit Facility, as well as $1.1 million from proceeds received on the exercise of stock options.
Total cash inflows were driven by $63.0 million of proceeds from the issuance of notes payable and less than $0.1 million from proceeds received on exercise of stock options .
The increase was driven primarily by Tucows Domains, which accounted for $3.2 million of the increase as a result of strong Fiscal 2023 billings for domain name registrations and service renewals . Tucows Domains also increased prices as a result of increased costs from gTLD registries, which is also a factor in increased deferred revenues in the current period.
The increase was driven primarily by Tucows Domains, which accounted for $7.4 million of the increase as a result of the increase in pricing and domain name transactions through the current period. This was furthered by a smaller $1.2 million increase from Wavelo as a result of the contract liability associated with select customer contracts.
Wholesale - Value Added Services Net revenues from value-added services decreased by $3.0 million to $17.7 million compared to Fiscal 2022. The decrease in value-added service revenue was driven b y lower expiry, digital certifications, and email service proceeds across our brands in the current period.
The increase in value-added service revenue was driven b y strong expiry sales and the inclusion of our storefront operations through the current period, partially offset by lower Digital Certificate revenues. Retail Retail domain services generated $37.6 million in net revenue during Fiscal 2024, which increased by $2.2 million or 6% compared to Fiscal 2023.
LOSS (GAIN) ON DISPOSAL OF PROPERTY AND EQUIPMENT (Dollar amounts in thousands of U.S. dollars) Year ended December 31, 2023 2022 Loss on disposition of property and equipment $ - $ 461 Decrease over prior period $ (461 ) Decrease - percentage (100 )% Percentage of net revenues - % - % Loss on disposal of property and equipment decreased by $0.5 million to nil as compared to Fiscal 2022.
OTHER INCOME (EXPENSES) (Dollar amounts in thousands of U.S. dollars) Year ended December 31, 2024 2023 Other income (expense), net $ (36,861 ) $ (39,418 ) Increase over prior period $ 2,557 Increase - percentage 6 % Percentage of net revenues 10 % 12 % 45 Table of Contents Other income (expense) increased by $2.6 million when compared to Fiscal 2023.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeAs of December 31, 2023, we had the following outstanding foreign exchange forward contracts to trade U.S. dollars in exchange for Canada dollars: Maturity date (Dollar amounts in thousands of U.S. dollars) Notional amount of U.S. dollars Weighted average exchange rate of U.S. dollars Fair value January - March 2024 16,840 1.3664 592 April - June 2024 13,840 1.3678 507 July - September 2024 16,974 1.3697 652 October - December 2024 13,795 1.3686 526 $ 61,449 1.3681 $ 2,277 As of December 31, 2023, the Company had $61.4 million of outstanding foreign exchange forward contracts which will convert to CDN $84.1 million.
Biggest changeAs of December 31, 2024, we had the following outstanding foreign exchange forward contracts to trade U.S. dollars in exchange for Canada dollars: Maturity date (Dollar amounts in thousands of U.S. dollars) Notional amount of U.S. dollars Weighted average exchange rate of U.S. dollars Fair value January - March 2025 $ 18,218 1.3697 $ (812 ) April - June 2025 11,181 1.3692 (458 ) $ 29,399 1.3695 $ (1,270 ) As of December 31, 2024, the Company had $29.4 million of outstanding foreign exchange forward contracts which will convert to CDN $40.3 million.
Based on the nature of our short-term investments, we have concluded that there is no material interest rate risk exposure as of December 31, 2023. We are also subject to market risk exposure related to changes in interest rates under our 2023 Credit Agreement. Changes in interest rates will impact our borrowing cost.
Based on the nature of our short-term investments, we have concluded that there is no material interest rate risk exposure as of December 31, 2024. We are also subject to market risk exposure related to changes in interest rates under our 2023 Credit Agreement. Changes in interest rates will impact our borrowing cost.
We have performed a sensitivity analysis model for foreign exchange exposure during the year ended December 31, 2023.
We have performed a sensitivity analysis model for foreign exchange exposure during the year ended December 31, 2024.
Foreign currency exchange rates used were based on the market rates in effect during the year ended December 31, 2023. The sensitivity analysis indicated that a hypothetical 10% adverse movement in foreign currency exchange rates would result in a decrease in pre-tax net income for the year ended December 31, 2023 of approximately$6.8 million, before the effects of hedging.
Foreign currency exchange rates used were based on the market rates in effect during the year ended December 31, 2024. The sensitivity analysis indicated that a hypothetical 10% adverse movement in foreign currency exchange rates would result in a decrease in net income for the year ended December 31, 2024 of approximately $6.4 million, before the effects of hedging.
As of December 31, 2023, an adverse change of 100 bps on the interest rate would have the effect of increasing our annual interest payment on the 2023 Credit Agreement by approximately $2.1 million, assuming that the loan balance as of December 31, 2023 is outstanding for the entire period.
As of December 31, 2024, an adverse change of 100 bps on the interest rate would have the effect of increasing our annual interest payment on the 2023 Credit Agreement by approximately $2.0 million, assuming that the loan balance as of December 31, 2024 is outstanding for the entire period. 50 Table of Contents
Of these contracts, $61.4 million met the requirements for hedge accounting. As of December 31, 2022, the Company had $49.7 million of outstanding foreign exchange forward contracts which will convert to CDN $67.0 million. Of these contracts, $49.7 million met the requirements for hedge accounting.
Of these contracts, $29.4 million met the requirements for hedge accounting. As of December 31, 2023, the Company had $61.4 million of outstanding foreign exchange forward contracts which will convert to CDN $84.1 million. Of these contracts, $61.4 million met the requirements for hedge accounting.
With respect to accounts receivable, we perform ongoing evaluations of our customers, generally granting uncollateralized credit terms to our customers, and maintaining an allowance for doubtful accounts based on historical experience and our expectation of future losses.
With respect to accounts receivable, we perform ongoing evaluations of our customers, generally granting uncollateralized credit terms to our customers, and maintaining expected credit losses based on historical experience and our expectation of future losses. Interest rate risk Our exposure to interest rate fluctuations relate primarily to the 2023 Credit Agreement.
Interest rate risk Our exposure to interest rate fluctuations relate primarily to the 2023 Credit Agreement. 49 Table of Contents As of December 31, 2023, we had an outstanding balance of $211.9 million on the 2023 Credit Facility.
As of December 31, 2024, we had an outstanding balance of $195.4 million on the 2023 Credit Facility.

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