Tucows Inc.

Welcome to 2COWS' second quarter 2024 management commentary. We have pre-recorded prepared remarks regarding the quarter and outlook for the company. A 2COWS-generated transcript of these remarks, with relevant links, is also available on the company's website. We will begin with opening remarks from Elliot Noss, President and CEO of 2COWS & Ting. followed by business remarks from Dave Warwick, CEO of Tukau's Demeans, Justin Riley, CEO of Wavelow, Elliot Noss on Ting, Ivan Ivanov, Tukau's new CFO, who will discuss our financial results in detail, and finish with closing remarks from Elliot Noss. In lieu of a live question and answer period following these remarks, shareholders, analysts, and prospective investors are invited to submit questions to 2Cows Management. Please submit questions via email to ir.2cows.com until Thursday, August 15th. Management will either address your questions directly or provide a recorded audio response and transcript that will be posted to the 2Cows website on Tuesday, August 27th at approximately 4 p.m. Eastern Time. We would also like to advise that the updated Two Cows Quarterly KPI Summary, which provides key metrics for all of our businesses for the last six quarters, as well as for full years 2022, 2023, and 2024 year-to-date, and also includes historical financial results, is available in the Investors section of the website. The updated TingBuild scorecard and investor presentation are also available. Now for management's prepared remarks. On Thursday, August 8th, 2Cows issued a news release reporting its financial results for the second quarter and on June 30th, 2024. That news release and the company's financial statements are available on the company's website at 2cows.com under the Investors section. Please note that the following discussion may include forward-looking statements, which are subject to risks and uncertainties that could cause actual results to differ materially. These risk factors are described in detail in the company's documents filed with the SEC, specifically the most recent reports on the Forms 10-K and 10-Q. The company urges you to read its security filings for a full description of the risk factors applicable to its business. I would now like to turn the call over to 2COWS President and Chief Executive Officer, Elliot Noss. Go ahead, Elliot.

Thanks, Monica. Starting with our consolidated results, the second quarter of 2024 saw solid year-over-year and quarter-over-quarter performance for revenue, gross margin, and adjusted EBITDA. It's the third consecutive quarter of growth of our headline metrics and reflective of our work to grow revenue efficiently and employ rigor around cost controls to support continued expansion of margin. Consolidated net revenue for the second quarter increased 5.2% year-over-year to $89.4 million, with strong revenue gains from Ting and Domains. Gross profit in Q2 grew 15.4% year-over-year to $20.8 million. The gross profit growth came from all three businesses, with Ting doing the heaviest lifting. Adjusted EBITDA for the second quarter of 2024 increased 70% year-over-year to $9.2 billion. The increase was primarily driven by Ting's reduction of its adjusted EBITDA losses and was supported by year-over-year gains from domains and wavelengths. We continue to balance investment in the businesses with paying down debt. In Q2, we further deleveraged the business with $6.5 million in payments on the syndicated debt. As many of you will have seen, Ivan Ivanov has very recently taken over from Dave Singh as 2COW's new CFO. Ivan brings highly relevant expertise, including strategic capital management and lots of exposure to Verizon's fiber business. We are pleased to have him join the executive team, and both Dave and Ivan have worked to create an extremely smooth transition. I also want to sincerely thank Dave for his impact on 2Cows over the last eight years. Under his stewardship, 2Cows has navigated significant growth and changes in our business, and I'm grateful for having him as my partner through it all. The entire 2Cows family wishes him the best in his next endeavors, and we know he will continue to cheer for us from the sidelines. Now, we'll hear from the heads of each business, as well as from Ivan in his inaugural remarks as CFO, covering our financial results in detail. The first speaker is Dave Warrick, Chief Executive Officer, 2Cows Domains. Go ahead, Dave.

Thanks, Elliot. In the second quarter, 2Cows Domains continued to reliably generate cash grow our margin, and contribute to TCAO's adjusted EBITDA. Our domains under management were up marginally year over year, and our transactions were down just under 3% from Q2 of 2023. We're pleased that our efforts to grow margin while being rigorous on cost control has generated these results, particularly given the declining domain transaction numbers for VeriSign. Revenue for domain services for Q2 was $62.4 million, up 4% from $60 million for the same quarter last year. Gross margin was $18.9 million, also up 5.2% from the same quarter last year. Domain services adjusted EBITDA was $11.2 million in the second quarter, up 6% from Q2 of last year. Looking at the results from the segments of our business and our wholesale channel, revenue for Q2 was $53 million, up 2.9% compared to $51.5 million for Q2 of last year. And gross margin was $13.6 million, down slightly from $13.7 million from Q2 of 2023. Within the wholesale channel, domain services gross margin was up 1% in Q2 compared to the same period last year, while value-added services gross margin was down 3.8%. In our retail channel, revenue for Q2 was $9.3 million, up 10.8% from $8.4 million in Q2 of last year. Retail gross margin for the second quarter was up 23.6% year over year. The outsized retail revenue and margin continue to be positively impacted by the movement of some wholesale customers to retail that I have discussed previously, and retail margins are higher than wholesale margins, both as a percentage and in dollars per transaction. Our combined overall renewal rate at 76% in Q2 across all Two Cows Domains brands remains within our historical range and above the industry average. In closing, I wanted to add that we continue to have incremental successes in our registry services business. We recently won the business with DotMusic to operate their registry backend. In addition, our Orange Domains joint venture has announced the launch of their first TLD, DotLocker, which will also operate on the 2Cows domains backend. Both new TLDs are expected to be in general availability before the end of this year. In addition, and specific to the other new services we're developing, we continue to incorporate reseller input into our product development cycle and progress towards what we believe will ultimately deliver a useful and fulsome suite of tools that facilitates adoption. Now, over to Justin Riley, CEO of Wavelow.