Tucows Inc.

Welcome to 2Cows' second quarter 2025 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 Elliott Noss, President and CEO of 2Cows and Ting, followed by business remarks from David Warwick, CEO of 2Cows Domains, Justin Reilly, CEO of WaveLo, Elliott Noss on Ting, Ivan Ivanov, 2Cows CFO, who will discuss our financial results in detail, and we will finish with closing remarks from Elliott 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 at 2Cows.com until Thursday, August 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, August 26th at approximately 5pm Eastern Time. We would also like to advise that the updated investor presentation and the 2Cows quarterly KPI summary, which provides key metrics for all of our businesses for the last six quarters, as well as for full years 2023, 2024, and 2025 year to date, and also includes historical financial results, is available in the Investors section of the website. You'll notice that we are no longer adding new owned serviceable addresses, and instead partner serviceable addresses are seeing large additions. As we monetize owned fiber network assets in certain markets, you will see some of our owned serviceable address numbers move to partner serviceable address totals where we have sold our network assets but will remain the ISP. That was the case this quarter as addresses from certain owned markets were sold and became partner serviceable addresses. Now for Management's prepared remarks. On Thursday, August 7th, 2Cows issued a news release reporting its financial results for the second quarter, and did June 30th, 2025. 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 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 10K and 10Q. The company urges you to read its security filings for a full description of the risk factors applicable to its business. Now I would like to turn the call over to 2Cows President and Chief Executive Officer Elliot Noss. Go ahead, Elliot.

Midway through 2025, 2Cows consolidated top-line growth is continuing the trend of the last four fiscal years and first quarter, with a 10% -over-year increase in Q2. Gross profit grew 6% -over-year, and adjusted EBITDA increased 37% to $12.6 million in Q2 and to $26.2 million -to-date. Our -to-date results put us slightly ahead of pace to achieve our full-year adjusted EBITDA guidance of $47 million. Outperformance in both domains and wave load drove the upside, more than offsetting the corporate-level expenses we expect to recognize in the second half. Corporate net debt now stands at $190.3 million, marking a fifth straight quarterly decline and bringing net leverage to 3.14 times, with interest coverage at 3.99 times, comfortably within our governance. Although we chose not to pay down the syndicated loan this quarter, that was a decision to preserve flexibility. Our long-standing record of steadily reducing the facility remains intact, and capital allocation, whether we pay down debt or hold on to our cash for other purposes, is a choice we make on a quarterly basis. We continue to navigate the path of thoughtful execution and choices of direction. And with that, I'll turn it over to Dave Warwick, CEO of 2Cows Domains.

Thanks, Elliot. 2Cows Domains delivered another solid quarter in Q2, with each of revenue, gross margin, and adjusted EBITDA growing -over-year. These gains build on the -over-year growth and momentum in Q1, and highlight the steady, predictable, and reliable nature of our business. In addition, we continue to build our registry services business, and are pleased to share that we recently signed a contract with RADx, a registry operator, to be their technical services provider. Planning is underway, with the migration to our platform expected towards the end of this year. I will talk further about this exciting news in a moment. Revenue rose 8% -over-year in Q2, gross margin expanded 14%, and adjusted EBITDA grew 12%. Through the first half of the year, adjusted EBITDA was $24 million and up 13% -over-year, reflecting the operating leverage within the business. Within Domain Services, both wholesale and retail performed well. Wholesale revenue and margin benefited from healthy reseller demand and higher margin value-added services, while retail posted steady increases in both top line and gross margin. Q2 revenue for the wholesale channel rose 8% -over-year to $57.3 million compared to $53 million for Q2 of last year. Gross margin increased 15% to $15.7 million from $13.6 million last year. Within the wholesale channel, Domain Services delivered gross margin of $10.4 million, up 8% from $9.6 million in Q2 2024. Value-added services had another exceptional -over-year gain in gross margin of 32%, delivering $5.3 million this quarter, driven by strong sales from our expiry stream. Our retail channel saw strong growth in Q2, with revenue increasing 10% -over-year to $10.3 million. Gross margin expanded 11% to $5.9 million, reflecting higher margins in the retail segment. As anticipated, total domains under management and transaction volumes declined modestly, down 2% and 3% respectively, reflecting the continued impact of one reseller that has moved a portion of its portfolio in-house. The overall combined renewal rate for all TLDs across all the two CAS domains brands was 75%, a slight decline from previous quarters but within our normal historical range and above the industry average. Turning to our growth initiatives and returning specifically to our registry services business, we continue to build this business and add new clients, both small and large. In previous quarters, I have talked about being selected by NXI, the National Internet Exchange of India and the registry operator of the .IN Country Code TLD. We completed the migration of NXI's 4 million domains to our platform at the end of May, as planned and scheduled. Our engagement with RADx is equally exciting. RADx is an industry leader. They are the registry operator for a portfolio of 11 TLDs, including marquee extensions like .Online, .Store, .Tech, .Site, .Space and .Fun. RADx is widely recognized for pairing great and meaningful TLDs with world-class marketing that drives broad adoption. Our teams have been collaborating and planning this project for some time now. In total, we will be migrating just over 10 million domains across the 11 RADx TLDs onto our platform toward the end of this year. RADx has the largest market share in the new GTLD segment at 20%. As I've said before, we're focused on the profitability of our business. And while we do not focus on domains under management as a key measurement, it is worth noting that this will lift the 2COWS registry segment to managing close to 17 million domains. This contract makes 2COWS the infrastructure provider of choice for two of the largest registries globally and positions us as a strong contender for backend registry services in the next wave of new GTLDs with applications starting in 2026. In summary, 2COWS Domains continues to demonstrate the strength of its core franchise, delivering consistent revenue, margin and EBITDA gains while securing transformative contracts that help drive our long-term growth trajectory. Looking ahead, we will focus on the execution of the RADx migration, the continued development of our hosting and billing initiatives, a disciplined pursuit of the new GTLD opportunities slated for 2026, and the ongoing operational excellence we are known for. Thanks for listening and now over to Justin Riley, CEO of WaveLow.