Tucows stock slips following earnings note

Domain business holds steady, but long-term investments in fiber weigh on the bottom line.

Shares in Tucows (NASDAQ: TCX) fell sharply this morning following the firm released earnings following the bell yesterday. As of 11:45 am EDT, shares are off over 8%, trading just above their 52-week low in November 2023.

Tucows’ top-line numbers were good: revenue was up 30% year over year, gross profit was up 30%, and adjusted EBITDA was up 39%. But net income fell 39%.

The firm pinned the increased loss on higher taxes and interest expenses, higher network depreciation, and a slightly higher operating loss as part of the planned investment in Ting, its fiber network. (Tucows also incurred one-time costs for a layoff in February.)

In prepared remarks, Tucows CEO Elliot Noss noted that fiber is a long-term play, and the short-term nature of public markets is not rewarding the value the firm is creating in its fiber assets.

The domain name business turned in another steady quarter, with overall revenue up 4.5%. Adjusted EBITDA for the domain business fell due to an increase in costs for cybersecurity, as well as the timing of some operating expenses this year.

Domains under management increased to 24.7 million during the quarter, up slightly both quarter over quarter and year over year.  The firm processed regarding 6 million fresh, renewed, and transferred-in domain name registrations in the first quarter, counting those processed on behalf of other registrars that use the firm’s platform.