Mr. Elliot Noss reports

TUCOWS REPORTS FINANCIAL RESULTS FOR SECOND QUARTER 2023

Tucows Inc. today released its financial results for the second quarter ended June 30, 2023. All figures are in United States dollars.

"Our second quarter results continue to show the potential of the Tucows growth businesses," said Elliot Noss, Tucows president and chief executive officer. "Our Ting and Wavelo businesses saw 21-per-cent and 20-per-cent increases in revenue, respectively, year over year. But Wavelo was our standout business this quarter. The business completed the migration of eight million plus subscribers and had increases of 47 per cent in revenue, 60 per cent in gross profit and 923 per cent in adjusted EBITDA in Q2 compared to Q1. Our Tucows domains business has seen domains under management and transactions stabilize postpandemic, and we expect revenues and margin to similarly return to incremental growth as we realize the benefits of foreign exchange related price increases from the second half of 2022. And we've again used cash flow from Wavelo and Tucows domains to reduce our syndicated debt this quarter."

Financial results

Consolidated net revenue for the second quarter of 2023 increased 2.3 per cent to $85.0-million from $83.1-million for the second quarter of 2022. The growth in Ting and Wavelo revenues was offset by decreases in revenues in Tucows domains and Tucows corporate. Although domains under management and transactions have stabilized postpandemic, there was a lower contribution from expiry aftermarket sales in the company's domains business.

Gross profit for the second quarter of 2023 decreased 18.2 per cent to $18-million from $22.1-million for the second quarter of 2022. The decrease in gross profit was driven primarily by increased network depreciation and network expenses, as the Ting network footprint expands. There were also impacts from lower year-over-year margin from our domains business related to lower expiry aftermarket sales. The decrease in gross profit was partially offset by growth in gross margin for both Ting and Wavelo.

Net loss for the second quarter of 2023 was $31.0-million, or a loss of $2.86 per share, compared with net loss of $3.0-million, or 29 cents per share, for the second quarter of 2022, with the loss being primarily the result of a one-time cost of $14.7-million associated with the early redemption of a portion of the Ting preferred shares, in addition to costs from the continued investment in the Ting fibre network expansion, network depreciation, higher stock-based compensation and higher interest expenses resulting from the new Ting asset-backed security (ABS) facility.

Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) for the second quarter of 2023 decreased 54 per cent to $5.4-million from $11.7-million for the second quarter of 2022. The decrease in adjusted EBITDA was primarily related to expected and reduced contribution from Ting, which has been making strong investments into the expansion of its fibre network. To a lesser extent the adjusted EBITDA decrease is also related to lower contribution from expiry aftermarket sales in the company's domains business, and the impact of the contract asset unwinding in the Wavelo business.

Cash, cash equivalents, restricted cash and restricted cash equivalents at the end of the second quarter of 2023 were $159.6-million compared with $11.8-million at the end of the first quarter of 2023 and $6.5-million at the end of the second quarter of 2022.

Management commentary

Concurrent with the dissemination of its quarterly financial results news release at 5:05 p.m. ET on Thursday, Aug. 3, 2023, management's prerecorded audio commentary (and transcript), discussing the quarter and outlook for the company will be posted to the Tucows website.

Following management's prepared commentary, for the subsequent seven days, until Thursday, Aug. 10, 2023, shareholders, analysts and prospective investors can submit questions to Tucows's management at ir@tucows.com. Management will post responses to questions in an audio recording and transcript to the company's website on Tuesday, Aug. 22, 2023, at approximately 4 p.m. ET. All questions will receive a response, however, questions of a more specific nature may be responded to directly.

About Tucows Inc.

Tucows helps connect more people to the benefit of Internet access through communications service technology, domain services and fibre optic Internet infrastructure. Ting delivers fixed fibre Internet access with outstanding customer support. Wavelo is a telecommunications software suite for service providers that simplifies the management of mobile and Internet network access; provisioning, billing and subscription; developer tools; and more. Tucows Domains manages approximately 24 million domain names and millions of value-added services through a global reseller network of over 35,000 Web hosts and Internet service providers. Hover makes it easy for individuals and small businesses to manage their domain names and e-mail addresses.

We seek Safe Harbor.