What changed in this filing

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Item 1. Business

2025-03-13 compared with 2024-04-01 · 32 added, 30 removed, 193 unchanged (24% of the section changed)

7 unchanged sentences

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 operating decisions as well as evaluate segment performance.

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.

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.

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.

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.

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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.

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.

The Wavelo segment also includes the Platypus brand and platform, our legacy billing solution for ISPs.

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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.

Tucows Domains revenues primarily from the registration fees charged to resellers in connection with new, renewed and transferred domain name registrations.

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.

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.

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.

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.

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Wholesale, primarily branded as OpenSRS, eNom, EPAG and Ascio, derives revenue from its domain name registration service.

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.

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.

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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.

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").

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, 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.

During the year ended December 31, 2024 one customer, EchoStar, accounted for 10.7% of revenue.

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.

While our customers are capitalizing on the growth in Internet usage and the demand for new services, they also face significant competition from numerous other service providers with competitive or comparable offerings.

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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.

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.

As a result, some of our Domain services (such as OpenSRS, eNom, Ascio, and Hover) may experience reduced demand during these times.

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.

However, in certain Ting markets we operate in, construction activities associated with adding new serviceable addresses can be impacted by seasonal climate.

Our competitors may be divided into the following groups:

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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.

As a g lobal Internet and technology company, we have a wide range of employees, including management professionals, technicians, engineers, and call center employees.

As of December 31, 2024, we had approximately 765 full-time employees and 99 contracted employees globally.

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.

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Some employees perform work in other environments, including fulfillment centers, customers’ homes or businesses to perform service installation, and in the field to build out our network facilities.

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.

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.

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.

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.

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.

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.

Please see discussion of Adjusted EBITDA as well as the Adjusted EBITDA reconciliation to net income in the Results of Operations section below.

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.

People Philosophy & Inclusion

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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.

To support its commitments and ensure real, tangible impact for its teams, the Company has invested in a number of resources, including:

68 unchanged sentences

President and Chief Executive Officer, Tucows Inc.

Davinder Singh

Chief Financial Officer

1 unchanged sentence

Chief Legal Officer and Vice-President, Regulatory Affairs

Michael Koenig

Chief Operating Officer

Justin Reilly

2 unchanged sentences

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.

Davinder Singh has served as our Chief Financial Officer since 2017, having previously served as Vice President Finance since joining the Company in 2016.

Ivan Ivanov has served as our Chief Financial Officer since August 2024.

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.

Singh joined TELUS and held progressive roles, including Chief Financial Officer of TELUS International.

Singh is a Chartered Professional Accountant with the Institute of Chartered Professional Accountants of British Columbia.

Singh also sits on the Board of Hootsuite and serves as its audit committee chair.

Hootsuite is a privately held social media management company.

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.

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.

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.

David Woroch currently serves as our Chief Executive Officer of Tucows Domains Services and has led our Domains business since 2014 and oversees OpenSRS, eNom, Ascio and EPAG (wholesale), Hover (retail) and the premium domain portfolio.

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Fausett worked as outside legal counsel to a number of domain industry related companies.

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.

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.

1 unchanged sentence

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business