Tucows Q4 Earnings Call Highlights

Key Points

• Ting divestiture remains "ongoing" and not delayed, with Tucows working with advisors on the optimal path forward; the timing will depend on asset specifics and diligence and could materially affect strategic outcomes.
• Wavelo guidance for 2026 implies a year-over-year decline in adjusted EBITDA margin driven by potential loss of Ting-related fees and the full-year impact of mid‑2025 investments, even as the company continues to invest in top-line growth while keeping costs below competitors.
• Tucows frames its annual buyback authorization as flexibility rather than a commitment, noting liquidity ex-Ting of approximately $20.9 million in unrestricted cash and prioritizing continued deleveraging and completion of the Ting divestiture to strengthen borrowing capacity and support future capital returns.

Tucows NASDAQ: TCX executives addressed investor questions following the company’s fourth-quarter 2025 results, focusing on the ongoing process to divest Ting assets, expectations for Wavelo profitability in 2026, and the company’s liquidity position alongside its renewed share repurchase authorization.

Ting divestiture process described as “ongoing”

President and CEO David Woroch said the company’s process to sell Ting assets “has not been delayed” and remains active. Responding to a question about whether broader market volatility and falling asset prices have affected timing, Woroch said the company does not believe external volatility has a direct impact on the timeline.

He added that Tucows continues to work closely with its financial advisors on determining the “optimal path forward” and emphasized that transactions of this type typically require extensive diligence and coordination among multiple stakeholders. Woroch said timelines are generally driven by “the specifics of the asset and the availability of information,” and that management remains focused on achieving the best outcome.

Wavelo 2026 margin outlook reflects Ting-related uncertainty and investments

Woroch also addressed why the company’s 2026 guidance implies a year-over-year decline in Wavelo adjusted EBITDA margin. He pointed to the presence of Ting Fiber and mobile customers on the Wavelo platform and said that, depending on different outcomes for the Ting process, Wavelo could see a reduction in fees associated with those customers.

Management described a range of potential outcomes and said the company is conservatively forecasting that possibility in Wavelo’s adjusted EBITDA guidance. In addition, Woroch said Tucows made certain investments midway through 2025 that will be “fully annualized costs in 2026.” He said the company continues to invest in growing Wavelo’s top line while remaining “below the cost structure of our competitors.”

Buyback authorization framed as flexibility, not a commitment

On the company’s announced stock buyback program, Woroch reiterated that the annual authorization is designed to provide flexibility rather than serve as a commitment to repurchase shares. He said any buyback activity would be evaluated against return thresholds and liquidity considerations, adding that liquidity and balance sheet strength remain priorities.

Woroch also tied future financial flexibility to both debt reduction and the outcome of the Ting divestiture process. He said that, as discussed in recent quarters, continued deleveraging of Tucows’ syndicated debt and completion of the Ting divestiture are central to strengthening the company’s liquidity profile.

Liquidity details and balance sheet priorities

According to Woroch, the company’s paydown of syndicated debt is ongoing, and “each dollar repaid increases available borrowing capacity up to the committed limit.” He said a successful Ting divestiture would further enhance liquidity by improving consolidated free cash flow and adjusted EBITDA, which could support greater borrowing capacity and overall financial flexibility.

Woroch said the company is developing a formal capital allocation framework intended to guide the balance between several priorities:

• Continued deleveraging
• Reinvestment in the business
• Potential acquisition opportunities
• Share repurchases

He characterized the company’s approach to capital allocation as “conservative and deliberate.”

As for current liquidity, Woroch said Tucows’ liquidity excluding Ting consisted of approximately $20.9 million of unrestricted cash. He said liquidity “remains sound,” with the company’s immediate focus on consistent free cash flow generation and further balance sheet strengthening.

The Q&A session followed pre-recorded management remarks accompanying the company’s fourth-quarter release. Tucows also reminded investors that the discussion included forward-looking statements and directed listeners to its SEC filings for a detailed description of risk factors.

About Tucows NASDAQ: TCX

Tucows Inc NASDAQ: TCX is a diversified internet services company primarily known for its domain name registration and management business. Through its Domain Services division, Tucows operates leading reseller platforms such as OpenSRS and Enom, offering domain registration, SSL certificates, email hosting and related value-added services to web professionals, small businesses and enterprise partners worldwide. The company's platforms enable thousands of resellers to provide branded internet services to their customers, leveraging Tucows' infrastructure and expertise in the domain name system.

In addition to domain services, Tucows has built a growing portfolio of consumer-facing internet access offerings under the Ting brand.

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