Tucows Inc.

Welcome to 2COW's third quarter 2024 management commentary. We have pre-recorded prepared remarks regarding the quarter and outlook for the company. A 2COW's 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 Tukows & Ting, followed by business remarks from Dave Warwick, CEO of Tukows Domains, Justin Riley, CEO of Wavelow, Elliot Noss on Ting, Ivan Ivanov, Tukows' 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 by email to ir at 2cows.com until Thursday, November 14th. 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, November 26th at approximately 5 p.m. Eastern Time. We would also like to advise that the updated 2COWS quarterly KPI summary, which provides key metrics for all of our businesses for the last seven 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, November 7th, 2Cows issued a news release reporting its financial results for the third quarter ended September 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 2COW's President and Chief Executive Officer, Elliot Noss. Go ahead, Elliot.

Thanks, Monica. Last week, we announced major changes to the Ting business. We laid off over 40% of the Ting workforce, mostly those involved directly or in support of market expansion and new plant construction. We have also streamlined other functions within the Ting and 2COWS businesses, which had impacts within 2COWS shared services at the parent level. This was the most prudent way to move Ting to a sustainable cost structure with positive and growing adjusted EBITDA. The plan removes around 22 million in cash operating expenses from the business with the bulk of those reductions in people costs. It was done following extensive exploration of strategic and partnership options for the Ting business to secure equity capital to continue network expansion. I note that we were unsuccessful in finding a long-term common equity partner. Well, all of you will have seen four specific transactions in the Fiverr space in the last year, two with T-Mobile and one each with Verizon and Bell Canada. Those transactions involve companies much, much larger than Ting in scope and scale. There have been little to no common equity transactions in the fiber mid-market in the last year or two. We will stop all expansion into new markets and take a more conservative approach to capital deployment, focusing on success-based CapEx to load the existing 132,000 owned addresses and the over 40,000 partner addresses, as well as the over 500,000 more addresses that will be added by our partners in Colorado Springs and Memphis. We expect this to lead to significant adjusted EBITDA growth for two cows in 2025, and for the ting business to be in and around adjusted EBITDA breakeven in 2025. I do note that Ting will still have over $40 million in interest expense that we will have to pay before spending on success-based CapEx in 2025. At the end of September, we had nearly $80 million in cash on hand, including cash restricted for the ABS. And the first debt expiry we will have is 2028. I will talk more about how we view and how investors should view the Ting investment in my closing remarks. On a consolidated basis, in the third quarter, 2COWS had strong year-over-year growth in revenue, gross profit, and adjusted EBITDA. Ivan Ivanov, our CFO, will cover our financial results in detail. We continue to prioritize deleveraging the business. And in Q3, we made $2.5 million in payments on the 2COWS syndicated debt. which was on the low end of what we expect to pay down quarterly and held down by some one-time expenses. I'll now turn over to Dave Warwick, CEO of Two Cows Domains.

Thanks, Elliot. In Q3, Two Cows Domains delivered our seventh consecutive quarter of revenue growth. We also had solid year-over-year gains in gross margin and adjusted EBITDA, a testament to the reliability of our business, the strength of the brand, and consistent attention to cost control. Our domains under management were up marginally, both year-over-year and quarter-over-quarter. And while our transactions were down 2% from Q3 of 2023, they were stable quarter over quarter. Both measures compared favorably to the results from industry counterparts. Revenue for domain services for Q3 was $64.7 million, up 6% from $61.1 million for the same quarter last year. Gross margin was $19.8 million in Q3, up 8% from the same quarter last year, with strength across the business. Our year-to-date gross margin is up 6%, and ahead of 2023 at this time by $3.4 million, a testament to how we've been able to grow margin in a competitive space, in part due to strong reseller relationships. Domain services adjusted EBITDA was 11.5 million in the third quarter, up 6% from Q3 of last year. Looking at the results from the segments of our business, In our wholesale channel, revenue for Q3 was 55 million, up 6% compared to 51.9 million for Q3 of last year. And gross margin was 14.4 million, up 8% from 13.3 million from Q3 of 2023. Within the wholesale channel, domain services gross margin was up 1% in Q3 compared to the same period last year. while value added services gross margin was up 26% year over year. The large increase in value added services margin was driven primarily by strong non-recurring sales from our expiry stream and to a lesser extent from our hosted email service. In our retail channel, revenue for Q3 was 9.7 million, up 5% from 9.2 million in Q3 of last year. Retail gross margin for the third quarter was up 8% year-over-year. Our combined overall renewal rate at 76% in Q3 across all Two Cows Domains brands remains within our historical range and above the industry average. In summary, the key measures of the health of our business demonstrate that our core business is solid and holding its own relative to our competitors and in a mature industry. We continue to balance cash generation for 2Cows with investment in both our platform and infrastructure, and in developing additional new and complementary services to generate further growth for the business. These are mid-term opportunities for the business, of which our registry services is the furthest along, and the one I will have the most to share and discuss in the coming quarters. Now, over to Justin Riley, CEO of Wavelow.