TUCOWS INC PA

Previous wording

For the three months ended March 31, 2024 and March 31, 2023, we reported net revenue of $87.5 million and $80.4 million, respectively.

Current wording

For the three months ended June 30, 2024 and June 30, 2023, we reported net revenue of $89.4 million and $85.0 million, respectively.

Previous wording

As of March 31, 2024, Ting Internet had access to 124,000 owned infrastructure serviceable addresses, 33,000 partner infrastructure serviceable addresses and 46,000 active subscribers under its management; compared to having access to 101,000 owned infrastructure serviceable addresses, 19,000 partner infrastructure serviceable addresses and37,000 active subscribers under its management as of March 31, 2023. These figures exclude any changes in serviceable addresses and accounts attributable to Simply Bits.

Current wording

As of June 30, 2024, Ting Internet had access to 128,000 owned infrastructure serviceable addresses, 36,000 partner infrastructure serviceable addresses and 48,000 active subscribers under its management; compared to having access to 109,000 owned infrastructure serviceable addresses, 21,000 partner infrastructure serviceable addresses and39,000 active subscribers under its management as of June 30, 2023. These figures exclude any changes in serviceable addresses and accounts attributable to Simply Bits.

Previous wording

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 24.7 million domain names under the Tucows, eNom, EPAG and Ascio ICANN registrar accreditations and for other registrars under their own accreditations. Domains under management have increased by 0.2 million, or less than 1%, since March 31, 2023.

Current wording

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 24.5 million domain names under the Tucows, eNom, EPAG and Ascio ICANN registrar accreditations and for other registrars under their own accreditations. Domains under management have increased by 0.1 million, or less than 1%, since June 30, 2023.

Previous wording

The Company is entitled to a long-term payment stream that is a function of the margin generated by the transferred subscribers over the 10-year term of the DISH Purchase Agreement executed in Fiscal 2020. This consideration structure may not prove to be successful or profitable in the long-term to us if the existing subscriber base churns at an above average rate. Additionally, given DISH controls the revenues and costs incurred associated with the acquired subscribers, there could arise a situation where profitability for the subscriber base is diminished either by lower price points or cost inflation. Additionally, as part of the DISH Purchase Agreement, the Company retained a small number of customer accounts associated with one MNO agreement that was not reassigned to DISH at time of sale. We continue to be subject to the minimum revenue commitments previously agreed to with this excluded MNO agreement. The Company is able to continue adding customers under the excluded MNO network in order to meet the commitment. However, with no direct ability to change customer pricing and limited ability to renegotiate contract costs or significant terms, the Company may be unable to meet the minimum commitments with this MNO partner and could incur significant and recurring penalties until such a time that the contract is complete. These penalties would negatively impact our operational performance and financial results if enforced by the MNO. During the three months ended March 31, 2024, the Company has accrued $0.2 million of penalties associated with the minimum commitment shortfall. The Company expects to incur penalties throughout 2024 and thereafter until the contract is expired.

Current wording

The Company is entitled to a long-term payment stream that is a function of the margin generated by the transferred subscribers over the 10-year term of the DISH Purchase Agreement executed in Fiscal 2020. This consideration structure may not prove to be successful or profitable in the long-term to us if the existing subscriber base churns at an above average rate. Additionally, given DISH controls the revenues and costs incurred associated with the acquired subscribers, there could arise a situation where profitability for the subscriber base is diminished either by lower price points or cost inflation. Additionally, as part of the DISH Purchase Agreement, the Company retained a small number of customer accounts associated with one MNO agreement that was not reassigned to DISH at time of sale. We continue to be subject to the minimum revenue commitments previously agreed to with this excluded MNO agreement. The Company is able to continue adding customers under the excluded MNO network in order to meet the commitment. However, with no direct ability to change customer pricing and limited ability to renegotiate contract costs or significant terms, the Company may be unable to meet the minimum commitments with this MNO partner and could incur significant and recurring penalties until such a time that the contract is complete. These penalties would negatively impact our operational performance and financial results if enforced by the MNO. During the three months ended June 30, 2024, the Company has accrued $0.1 million of penalties associated with the minimum commitment shortfall; and $0.2 million of penalties during the six months ended June 30, 2024. The Company expects to incur penalties throughout 2024 and thereafter until the contract expires.

Previous wording

The Company continues to operate in a challenging macro environment as inflation and interest rates continue to rise globally. The impact of these issues on our business will vary by geographic market and operating segment. We continue to monitor economic conditions closely, as well as segment revenues, cash position, cash flow from operations, interest rates and other factors. Across our three operating segments, personnel costs continue to be impacted by sustained wage inflation incurred in the prior periods. These increases were necessary in order to remain competitive to attract and retain the best talent. The Company continues to monitor and assess wage inflation and is managing it against offsets in hiring plans and contractor mix. Outside of wage inflation, the operating segment most impacted by inflation overall is Ting, as sustained levels of inflation increase our Fiber Network build costs across both materials and contracted labor. We continue to assess ways to reduce build costs through more efficient management of our build design, build efficiency and real-time tracking of build costs to more effectively manage total cost estimates against actual spends. We are also managing our significant vendor relationships closely to mitigate supply chain disruptions and ensure optimal pricing. However, there can be no assurance as to the effectiveness of our efforts to mitigate any impact of the current and future adverse economic conditions, and other unknown developments.

Current wording

The Company continues to operate in a challenging macro environment as inflation and high interest rates continue to persist in the global economic environment. The impact of these issues on our business will vary by geographic market and operating segment. We continue to monitor economic conditions closely, as well as segment revenues, cash position, cash flow from operations, interest rates and other factors. Across our three operating segments, personnel costs continue to be impacted by sustained wage inflation incurred in the prior periods. These increases were necessary in order to remain competitive to attract and retain the best talent. The Company continues to monitor and assess wage inflation and is managing it against offsets in hiring plans and contractor mix. Outside of wage inflation, the operating segment most impacted by inflation overall is Ting, as sustained levels of inflation increase our Fiber Network build costs across both materials and contracted labor. We continue to assess ways to reduce build costs through more efficient management of our build design, build efficiency and real-time tracking of build costs to more effectively manage total cost estimates against actual spends. We are also managing our significant vendor relationships closely to mitigate supply chain disruptions and ensure optimal pricing. However, there can be no assurance as to the effectiveness of our efforts to mitigate any impact of the current and future adverse economic conditions, and other unknown developments.

Previous wording

RESULTSOF OPERATIONS FOR THE three months ended March 31, 2024 AS COMPARED TO THE three months ended March 31, 2023

Current wording

RESULTSOF OPERATIONS FOR THE three and six months ended June 30, 2024 AS COMPARED TO THE three and six months ended June 30, 2023

Previous wording

Total net revenues for the three months ended March 31, 2024, increased by$7.1 million or 9%, to$87.5 million from when compared to the three months ended March 31, 2023. The three-month increase in net revenue was driven by Ting, Wavelo, Tucows Domains, and Mobile Services and eliminations. The Ting segment increased $2.2 million in the current period as a result of subscriber growth from the continued buildout of our Fiber network across the United States. The Wavelo segment increased $2.1 million in the current period primarily from the completed migration of DISH Boost Mobile subscribers onto our platform. The Tucows Domains segment increased $2.6 million primarily driven by strong domain transactions through the current period. Mobile Services and eliminations increased by less than $0.1 million attributable to decreased intercompany revenues partially offset by decreased telephony services, and decreased transitional services revenues.

Current wording

Total net revenues for the three months ended June 30, 2024, increased by $4.4 million or 5%, to $89.4 million when compared to the three months ended June 30, 2023. The three-month increase in net revenue was driven by Tucows Domains, Ting, and Mobile Services and eliminations partially offset by a decline in Wavelo. The Tucows Domains segment increased $2.4 million primarily driven by strong domain transactions through the current period and pricing increases consistent with higher registry costs. The Ting segment increased $2.2 million in the current period as a result of subscriber growth from the continued buildout of our Fiber network across the United States. Mobile Services and eliminations increased by $0.1 million attributable to decreased intercompany revenues partially offset by decreased telephony services and decreased transitional services revenues. The Wavelo segment decreased $0.3 million in the current period primarily from the reduction in one-time professional services rendered in the current period.

Previous wording

Deferred revenue at March 31, 2024, increased by $7.0 million to $155.1 million from $148.1 million at December 31, 2023. This was driven by Tucows Domains as a result of the increase in current period billings for domain name registrations and service renewals, characteristic of the seasonal renewal pattern we see during the beginning of a Fiscal Year as well as the increase in domain names under management through the current period.

Current wording

Deferred revenue at June 30, 2024, increased by $7.5 million to $155.6 million from $148.1 million at December 31, 2023. This was driven by Tucows Domains as a result of the increase in current period billings for domain name registrations and service renewals, characteristic of the seasonal renewal pattern we see during the beginning of a Fiscal Year as well as the increase in domain names under management through the current period.

Previous wording

During the three months ended March 31, 2024, a customer, DISH, within our Wavelo segment accounted for 10.5% of total net revenues. No customer accounted for more than 10% of total net revenue during the three months ended March 31, 2023. The increase in revenue attributable to DISH is driven by significant subscriber migration onto our platforms. At March 31, 2024 DISH also represented for 48.2% of total accounts receivable. At December 31, 2023 DISH represented 59% of accounts receivable. Though a significant portion of the Company’s domain services revenues are prepaid by our customers, where the Company does collect receivables, management judgment is required at the time revenue is recorded to assess whether the collection of the resulting receivables is reasonably assured. On an ongoing basis, we assess the ability of our customers to make required payments. Our allowance for doubtful accounts was $0.5 million and $0.5 million as at March 31, 2024 and at December 31, 2023, respectively. Based on this assessment, we expect the carrying amount of our outstanding receivables, net of allowance for doubtful accounts, to be fully collected.

Current wording

During both the three and six months ended June 30, 2024, a customer, DISH, within our Wavelo segment accounted for 12% and 11% of total net revenues, respectively. DISH also accounted for 12% and 10% of total net revenue during the three and six months ended June 30, 2023, respectively. As of June 30, 2024, DISH also represented for 47% of total accounts receivable. At December 31, 2023 DISH represented 59% of accounts receivable. Though a significant portion of the Company’s domain services revenues are prepaid by our customers, where the Company does collect receivables, management judgment is required at the time revenue is recorded to assess whether the collection of the resulting receivables is reasonably assured. On an ongoing basis, we assess the ability of our customers to make required payments. Our allowance for doubtful accounts was $0.4 million as of June 30, 2024 and $0.5 million as of December 31, 2023, respectively. Based on this assessment, we expect the carrying amount of our outstanding receivables, net of allowance for doubtful accounts, to be fully collected.

Previous wording

Ting generated $14.1 million in net revenue during the three months ended March 31, 2024, up $2.2 million or 19% compared to the three months ended March 31, 2023. This growth is driven by subscriber growth across our Fiber network relative to the three months ended March 31, 2023, as well as the continued expansion of our Ting Internet footprint to new Ting towns throughout the United States.

Current wording

Ting generated $14.6 million in net revenue during the three months ended June 30, 2024, up $2.2 million or 17% compared to the three months ended June 30, 2023. This growth is driven by subscriber growth across our Fiber network relative to the three months ended June 30, 2023, as well as the continued expansion of our Ting Internet footprint to new Ting towns throughout the United States.

Previous wording

As of March 31, 2024, Ting Internet had access to 124,000 owned infrastructure serviceable addresses, 33,000 partner infrastructure serviceable addresses and 46,000 active subscribers under its management; compared to having access to 101,000 owned infrastructure serviceable addresses, 19,000 partner infrastructure serviceable addresses and 37,000 active subscribers under its management as of March 31, 2023. These figures exclude any changes in serviceable addresses and subscribers attributable to Simply Bits.

Current wording

As of June 30, 2024, Ting Internet had access to 128,000 owned infrastructure serviceable addresses, 36,000 partner infrastructure serviceable addresses and 48,000 active subscribers under its management; compared to having access to 109,000 owned infrastructure serviceable addresses, 21,000 partner infrastructure serviceable addresses and 39,000 active subscribers under its management as of June 30, 2023. These figures exclude any changes in serviceable addresses and subscribers attributable to Simply Bits.

Previous wording

Net revenues from Wavelo Platform Services for the three months ended March 31, 2024, increased by $2.9 million or 44%, to $9.4 million as compared to the three months ended March 31, 2023. This is driven from increased MONOS platform revenues earned from the migration of additional DISH subscribers, from their Boost Mobile brand onto our new platform. Migration of the full Boost Mobile subscriber base onto the MONOS platform was complete by the end of June 30, 2023. The increased platform fees in the current period are partially offset by a reduction of revenues related to the amortization of the contract asset with DISH. The Company expects the contract asset to continue to amortize against revenue through the remainder of the contract as we continue to fulfill the performance obligations. Intercompany revenues earned for provision of services on the ISOS and SM platforms between Wavelo and Ting are included in Wavelo's segment revenues for purposes of segment analysis, but are ultimately eliminated upon consolidation. The elimination impact is presented below in Tucows Corporate - Mobile Services and Eliminations.

Current wording

Net revenues from Wavelo Platform Services for the six months ended June 30, 2024, increased by $3.1 million or 18%, to $19.9 million as compared to the six months ended June 30, 2023. This is driven from increased MONOS platform revenues earned from a full six months of fully loaded revenues from the completed migration of DISH's Boost Mobile subscribers at the end of June 30, 2023. The increased platform fees in the current period are partially offset by a reduction of revenues related to the amortization of the contract asset with DISH. The Company expects the contract asset to continue to amortize against revenue through the remainder of the contract as we continue to fulfill the performance obligations. Intercompany revenues earned for provision of services on the ISOS and SM platforms between Wavelo and Ting are included in Wavelo's segment revenues for purposes of segment analysis, but are ultimately eliminated upon consolidation. The elimination impact is presented below in Tucows Corporate - Mobile Services and Eliminations.

Previous wording

Net revenues from Other Professional Services for the three months ended March 31, 2024, decreased by $0.8 million or 97%, to less than $0.1 million as compared to the three months ended March 31, 2023. These revenues related to the provision of standalone technology services development work for our CSP customers and are non-recurring and often one-time in nature, and expectantly can fluctuate period over period. These revenues depend on the volume (if any) and scope of standalone technology services development work our customers engage us to perform. In the current period, we performed less standalone professional services for our customers.

Current wording

Net revenues from Other Professional Services for the three months ended June 30, 2024, decreased by $0.4 million or 100%, to nil as compared to the three months ended June 30, 2023. These revenues related to the provision of standalone technology services development work for our CSP customers and are non-recurring and often one-time in nature, and expectantly can fluctuate period over period. These revenues depend on the volume (if any) and scope of standalone technology services development work our customers engage us to perform. In the current period, we performed less standalone professional services for our customers.

Previous wording

During the three months ended March 31, 2024, Wholesale domain services net revenue increased by $1.9 million or 4%, to $48.2 million as compared to the three months ended March 31, 2023. Increases from Wholesale domain registrations were driven from strong domain transactions through the current period and various price increases since March 31, 2023.

Current wording

During the three months ended June 30, 2024, Wholesale domain services net revenue increased by $1.7 million or 4%, to $49 million as compared to the three months ended June 30, 2023. Increases from Wholesale domain registrations were driven from strong domain transactions through the current period and various price increases since June 30, 2023.

Previous wording

As of March 31, 2024 together, the OpenSRS, eNom, EPAG, and Ascio Domain Services manage 24.7 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 0.2 million, or less than 1%, since March 31, 2023.

Current wording

As of June 30, 2024, together, the OpenSRS, eNom, EPAG, and Ascio Domain Services manage 24.5 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 0.1 million, or less than 1%, since June 30, 2023.

Previous wording

During the three months ended March 31, 2024, value-added services net revenue increased by $0.2 million or 4%, to $4.7 million as compared to the three months ended March 31, 2023. The increase in value-added service revenue was driven by strong expiry sales and the inclusion of our storefront operations through the current period, partially offset by lower digital certifications and email revenues.

Current wording

During the three months ended June 30, 2024, value-added services net revenue decreased by $0.2 million or 4%, to $4.5 million as compared to the three months ended June 30, 2023. The decrease in value-added service revenue was driven by lower digital certifications and email revenues, partially offset by strong expiry sales and the inclusion of our storefront operations through the current period.

Previous wording

During the three months ended March 31, 2024, retail domain services net revenue increased by $0.6 million or 7%, to $9.0 million as compared to the three months ended March 31, 2023. This was driven by increases across domain name registrations, domain name portfolio sales, and Exact Hosting revenues in the current period.

Current wording

During the three months ended June 30, 2024, retail domain services net revenue increased by $0.9 million or 11%, to $9.3 million as compared to the three months ended June 30, 2023. This was driven by increases across domain name registrations, domain name portfolio sales, and Exact Hosting revenues in the current period.

Previous wording

Net revenues from Mobile Services and eliminations for the three months ended March 31, 2024 increased by less than $0.1 million or 2%, to $2.1 million as compared to the three months ended March 31, 2023. This was driven by lower intercompany corporate eliminations of $0.4 million, primarily a result of decreased revenues associated with ISOS and SM platforms billing between Wavelo and Ting. This was partially offset by decreased revenues of $0.3 million associated with the mobile telephony services and device revenues from the small group of customers retained by the Company as part of the DISH Purchase Agreement primarily a result of organic subscriber churn experienced relative to the three months ended March 31, 2023. This was also furthered by decreased transitional services of $0.1 million, from a decreased level of dedicated support services provided to DISH in connection with the legacy Ting Mobile customer base.

Current wording

Net revenues from Mobile Services and eliminations for the three months ended June 30, 2024 increased by $0.1 million or 5%, to $2.0 million as compared to the three months ended June 30, 2023. This was driven by lower intercompany corporate eliminations of $0.4 million, primarily a result of decreased revenues associated with ISOS and SM platforms billing between Wavelo and Ting. This was partially offset by decreased revenues of $0.3 million associated with the mobile telephony services and device revenues from the small group of customers retained by the Company as part of the DISH Purchase Agreement primarily a result of organic subscriber churn experienced relative to the three months ended June 30, 2023. This was also furthered by decreased transitional services of $0.1 million, from a decreased level of dedicated support services provided to DISH in connection with the legacy Ting Mobile customer base.

Previous wording

Total cost of revenues for the three months ended March 31, 2024, increased by$2.8 million or 4%, to$69.1 million from$66.4 million in the three months ended March 31, 2023. The three-month increase in cost of revenues was driven by increases across Tucows Domains, Ting, Network Expenses, and Mobile Service and eliminations by $1.6 million, $1.4 million, $0.3 million, and $0.2 million respectively. The increase in Tucows Domains of $1.6 million was primarily a result of strong domain transactions through the current period. The increase in Ting of $1.4 million was primarily driven by the costs of revenues associated with growth in active subscribers.Network Expenses increase of $0.3 million is primarily a result of incremental depreciation associated with the continuing expansion of the Ting Internet network and development of Wavelo's platform assets, partially offset by the absence of impairment charges within the Ting segment. The increase in Mobile Services and eliminations of $0.2 million was a primarily a result of higher mobile telephony services costs due to plan mix changes in the current period. These increases were partially offset by a decrease in Wavelo of $0.7 million primarily driven by Other Professional Services, consistent with less standalone technology development work and revenues in the current period.

Current wording

Total cost of revenues for the six months ended June 30, 2024, increased by $4.5 million or 3%, to $137.8 million from $133.3 million in the six months ended June 30, 2023. The six-month increase in cost of revenues was driven by increases across Tucows Domains, Network Expenses, Ting, and Mobile Service and eliminations by $3.1 million, $1.4 million, $0.8 million, and $0.3 million, respectively. The increase in Tucows Domains of $3.1 million was primarily a result of strong domain transactions through the current period. Network Expenses increase of $1.4 million is primarily a result of incremental depreciation associated with the continuing expansion of the Ting Internet network and development of Wavelo's platform assets, partially offset by the absence of impairment charges within the Ting segment. The increase in Ting of $0.8 million was primarily driven by the costs of revenues associated with growth in active subscribers. The increase in Mobile Services and eliminations of $0.2 million was a primarily a result of higher mobile telephony services costs due to plan mix changes in the current period. These increases were partially offset by a decrease in Wavelo of $0.7 million primarily driven by Other Professional Services, consistent with less standalone technology development work and revenues in the current period.

Previous wording

Deferred costs of fulfillment as of March 31, 2024, increased by$5.0 million, or 5%, to$116.1 million from$111.1 million at December 31, 2023. This was primarily driven by Tucows Domains with an increase of $5.4 million, from the increase in current period billings for domain name registrations and service renewals, characteristic of the seasonal renewal pattern we see during the beginning of a Fiscal Year as well as the increase in domain names under management through the current period, consistent with the increase in deferred revenues discussed above. This increase was partially offset by Wavelo and other, with a decrease of $0.4 million, primarily related to the completion of Other Professional Services where the deferred costs to fulfill those services were amortized into costs of revenues.

Current wording

Deferred costs of fulfillment as of June 30, 2024, increased by $4.9 million, or 4%, to $116 million from $111.1 million at December 31, 2023. This was primarily driven by Tucows Domains with an increase of $5.8 million, from the increase in current period billings for domain name registrations and service renewals, characteristic of the seasonal renewal pattern we see during the beginning of a Fiscal Year as well as the increase in domain names under management through the current period, consistent with the increase in deferred revenues discussed above. This increase was partially offset by Wavelo and other, with a decrease of $0.9 million, primarily related to the completion of Other Professional Services where the deferred costs to fulfill those services were amortized into costs of revenues.

Previous wording

During the three months ended March 31, 2024, costs related to provisioning high speed Internet access for Ting and its subsidiaries - Cedar, and Simply Bits increased by $1.4 million or 35%, to $5.4 million as compared to three months ended March 31, 2023. Consistent with the discussion above in the Net Revenue section, the subscriber growth across our Fiber network drove an increase in costs of revenues which included dark fiber, bandwidth and colocation costs. The 2024 Ting Restructuring Plan discussed above also drove an increase in one-time termination benefits, continuation benefits, and outplacement costs in Ting's cost of revenues in the current period.

Current wording

During the six months ended June 30, 2024, costs related to provisioning high speed Internet access for Ting and its subsidiaries - Cedar, and Simply Bits increased by $0.8 million or 9%, to $10.1 million as compared to six months ended June 30, 2023. Consistent with the discussion above in the Net Revenue section, the subscriber growth across our Fiber network drove an increase in costs of revenues which included dark fiber, bandwidth and colocation costs. The 2024 Ting Restructuring Plan discussed above also drove an increase in one-time termination benefits, continuation benefits, and outplacement costs in Ting's cost of revenues in the current period.

Previous wording

Cost of revenues from Wavelo Platform Services for the three months ended March 31, 2024, remained flat at $0.3 million as compared tothe three months ended March 31, 2023. Costs incurred are driven by the amortization of previously capitalized costs incurred to fulfill the DISH Master Services Agreement ("MSA") over the term of the agreement.

Current wording

Cost of revenues from Wavelo Platform Services for the three months ended June 30, 2024, remained flat at $0.3 million as compared to the three months ended June 30, 2023. Costs incurred are driven by the amortization of previously capitalized costs incurred to fulfill the DISH Master Services Agreement ("MSA") over the term of the agreement.

Previous wording

Cost of revenues from Other Professional Services for the three months ended March 31, 2024, decreased by $0.7 million or 96%, to less than $0.1 million as compared to $0.7 million for the three months ended March 31, 2023. Costs of revenues to provide other professional services change depending on the nature and scope of work we are engaged to perform for our customers for select statements of work. These cost of revenues depend on the volume (if any) and scope of standalone technology services development work our customers engage us to perform. In the current period, we performed less standalone professional services for our customers. The decrease isaligned to the decrease in Net Revenues discussed above.

Current wording

Cost of revenues from Other Professional Services for the three months ended June 30, 2024, decreased by $0.4 million or 91%, to less than $0.1 million as compared to $0.4 million for the three months ended June 30, 2023. Costs of revenues to provide other professional services change depending on the nature and scope of work we are engaged to perform for our customers for select statements of work. These cost of revenues depend on the volume (if any) and scope of standalone technology services development work our customers engage us to perform. In the current period, we performed less standalone professional services for our customers. The decrease is aligned to the decrease in Net Revenues discussed above.

Previous wording

Costs for Wholesale domain services for the three months ended March 31, 2024, increased by$1.7 million or 5%, to$38.7 million, as compared to$37.0 million to the three months ended March 31, 2023. Increases from Wholesale domain registrations were primarily driven from strong domain transactions through the current period and various price increases since March 31, 2023. The increase isaligned to the decrease in Net Revenues discussed above.

Current wording

Costs for Wholesale domain services for the three months ended June 30, 2024, increased by $1.6 million or 4%, to $38.9 million, as compared to $37.3 million to the three months ended June 30, 2023. Increases from Wholesale domain registrations were primarily driven from strong domain transactions through the current period and various registry gTLD cost increases since June 30, 2023. The increase is aligned to the decrease in Net Revenues discussed above.

Previous wording

Costs for wholesale value-added services for the three months ended March 31, 2024, decreased by less than $0.1 million or 10%, to $0.5 million, as compared to $0.6 million for the three months ended March 31, 2023. This decrease was driven by decreased costs related to the Digital Certificate stream of revenue, and was partially offset by the inclusion of our storefront operations consistent with the Net Revenue discussion above.

Current wording

Costs for wholesale value-added services for the three months ended June 30, 2024, decreased by less than $0.1 million or 17%, to $0.5 million, as compared to $0.6 million for the three months ended June 30, 2023. This decrease was driven by decreased costs related to the Digital Certificate stream of revenue, and was partially offset by the inclusion of our storefront operations consistent with the Net Revenue discussion above.

Previous wording

Costs for retail domain services for the three months ended March 31, 2024, remained flat at $4.1 million, as compared to the three months ended March 31, 2023.

Current wording

Costs for retail domain services for the three months ended June 30, 2024, decreased by less than $0.1 million or 2%, to $4.1 million, as compared to $4.2 million for the three months ended June 30, 2023.

Previous wording

Cost of revenues from Mobile Services and Eliminations for the three months ended March 31, 2024, increased by $0.2 million or 7%, to $2.7 million, as compared to$2.6 million for the three months ended March 31, 2023. The increase is driven by increased costs associated with mobile telephony services from the small group of customers retained by the Company as part of the DISH Purchase Agreement due to plan mix changes. The Company accrued $0.2 million in penalties associated with the MNO minimum commitment shortfall in both the current period and the three months ended March 31, 2023. The company expects to continue to incur penalties through the end of Fiscal 2024 and thereafter should limited subscriber growth persist. This waspartially offset by a decrease in transitional services costs provided to DISH in connection with the legacy Ting Mobile customer base, consistent with the above discussion around net revenues.

Current wording

Cost of revenues from Mobile Services and Eliminations for the three months ended June 30, 2024, increased by less than $0.1 million or 3%, to $2.7 million as compared to the three months ended June 30, 2023. The increase is driven by increased costs associated with mobile telephony services from the small group of customers retained by the Company as part of the DISH Purchase Agreement due to plan mix changes. The Company accrued $0.1 million in penalties associated with the MNO minimum commitment shortfall in the three months ended June 30, 2024, as compared to $0.2 million in the three months ended June 30, 2023. The company expects to continue to incur penalties through the end of Fiscal 2024 and thereafter should limited subscriber growth persist. This was partially offset by a decrease in transitional services costs provided to DISH in connection with the legacy Ting Mobile customer base, consistent with the above discussion around net revenues.

Previous wording

Network expenses for the three months ended March 31, 2024, increased by$0.3 million or 2%, to$17.3 million, as compared to$17.1 million for the three months ended March 31, 2023. The current period increase was driven by increased network depreciation and network costs by $1.4 million and $0.7 million respectively. The current period increase in network depreciation relates to $1.2 million in incremental depreciation from Ting's expansion of our Ting Internet footprint to new Ting towns throughout the United States, $0.2 million in incremental depreciation of Wavelo's platform assets, and increased depreciation of less than $0.1 million related to Tucows Domains. The current period increase in network costs relates to the increased personnel costs for network operations focused teams as well as increased spending on colocation and bandwidth. These factors were partially offset by a decrease in network impairment of $1.9 million due to the absence of Ting capital inventory and assets under construction impairment charges from the three months ended March 31, 2023.

Current wording

Network expenses for the six months ended June 30, 2024, increased by $1.3 million or 4%, to $34.6 million, as compared to $33.3 million for the six months ended June 30, 2023. The current period increase was driven by increased network depreciation and network costs by $2.7 million and $0.6 million, respectively. The current period increase in network depreciation relates to $2.2 million in incremental depreciation from Ting's expansion of our Ting Internet footprint to new Ting towns throughout the United States, $0.4 million in incremental depreciation of Wavelo's platform assets, and increased depreciation of less than $0.1 million related to Tucows Domains. The current period increase in network costs relates to the increased personnel costs for network operations focused teams as well as increased spending on colocation and bandwidth. These factors were partially offset by a decrease in network impairment of $2.0 million due to the absence of Ting capital inventory and assets under construction impairment charges from the six months ended June 30, 2023.

Previous wording

Sales and marketing expenses for the three months ended March 31, 2024, increased by $2.8 million or 18%, to $18.6 million as compared to the three months ended March 31, 2023. The increase was primarily driven by one-time termination benefits, continuation benefits, and outplacement costs associated with the 2024 Ting Restructuring Plan discussed above as well asincreases in marketing and facility related costs to drive active subscription growth in Ting markets given the increase in serviceable addresses available to Ting, and to support our growth in select Ting towns across the United States.

Current wording

Sales and marketing expenses for the six months ended June 30, 2024, increased by $1.6 million or 5%, to $33.3 million as compared to the six months ended June 30, 2023. The increase was primarily driven by one-time termination benefits, continuation benefits, and outplacement costs associated with the 2024 Ting Restructuring Plan discussed above. This was partially offset by Ting's efforts to reduce marketing spend resulting in lower media placements and other customer acquisition costs through the current period.

Previous wording

Technical operations and development expenses for the three months ended March 31, 2024, increased by $0.2 million or 4%, to $5.0 million when compared to the three months ended March 31, 2023. The current period increase was primarily related to the investment in hiring additional personnel across Ting, Domains, Wavelo. The increased personnel costs were partially offset by increased capitalized labor within Ting. In addition to these personnel and related costs, both contracted services for tools, systems and labor to support the technical operations and development of our systems and platforms increased compared to the three months ended March 31, 2023.

Current wording

Technical operations and development expenses for the three months ended June 30, 2024, decreased by less than $0.1 million or 1%, to $4.5 million when compared to the three months ended June 30, 2023. The current period decrease was primarily related to lower contracted services for tools, systems and labor to support the technical operations and development of our systems and platforms. These decreases were partially offset by the net investment in hiring additional personnel across Ting, Domains, Wavelo. This investment increased personnel costs but was partially offset by increased capitalized labor.

Previous wording

General and administrative expenses for the three months ended March 31, 2024, increased by $1.7 million or 21%, to $9.8 million as compared to the three months ended March 31, 2023. The increase is driven in part by increased personnel costs as a result of investment in additional personnel within Ting, wage inflation for leadership, administrative teams and restructuring related costs, unfavorable foreign exchange, increased spend on software to support general and administrative functions, increased credit card processing fees primarily associated with Domains, and higher property tax and other expenses primarily within the Ting segment consistent with the continued expansion of Ting Internet footprint throughout the United States

Current wording

General and administrative expenses for the three months ended June 30, 2024, increased by $1.1 million or 14%, to $9.2 million as compared to the three months ended June 30, 2023. The increase is driven by increased spending on tooling and software to support general and administrative functions, higher property taxes and other expenses primarily within the Ting segment consistent with the continued expansion of Ting Internet footprint throughout the United States. These increases were furthered by additional professional services fees incurred in the current period as well as an unfavorable foreign exchange impact in the current period.

Previous wording

Amortization of intangible assets for the three months ended March 31, 2024, decreased by $1.2 million or 47% to $1.3 million as compared to the three months ended March 31, 2023. The decrease was driven in part by the completed amortization of customer relationships associated with the Company's Fiscal 2016 acquisition of Melbourne IT assets in the three months ended March 31, 2023, as well as the completed amortization of brand and customer relationships associated with the Company's Fiscal 2017 acquisition of eNom in the three months ended March 31, 2024.

Current wording

Amortization of intangible assets for thesix months ended June 30, 2024, decreased by $2.6 million or 55% to $2.1 million as compared to thesix months ended June 30, 2023. The decrease was driven in part by the completed amortization of customer relationships associated with the Company's Fiscal 2016 acquisition of Melbourne IT assets in the three months ended March 31, 2023, as well as the completed amortization of brand and customer relationships associated with the Company's Fiscal 2017 acquisition of eNom in the three months ended March 31, 2024.

Previous wording

Other Income (Expenses) during the three months ended March 31, 2024, decreased by $4.7 million when compared to the three months ended March 31, 2023. The decrease was primarily driven by increased interest expense and lower income earned on sale of Transferred Assets to DISH partially offset by other income. Net interest expense increased by $4.0 million driven by a $5.0 million increase as a result of the inclusion of interest associated with the 2023 Term Notes, a $1.6 million increase due to the absence of favorable interest rate swap contracts in the current period,$0.2 million increase from lower interest expense capitalization associated with Fiber network assets under construction, these increases were partially offset by a $1.9 million reduction in interest primarily related to the Credit Facility for the Tucows businesses excluding Ting, and a $0.9 million increase due to the inclusion of interest income following the execution of Ting's 2023 Term Notes. Income earned on sale of Transferred Assets to DISH decreased $0.7 million. As described above, the Company receives a payout on the margin associated with the legacy customer base sold to DISH over the 10-year term of the agreement, as form of consideration for the sale of the legacy customer relationships. The Company expects the income earned on sale of Transferred Assets to continue to decrease over the term of the payout as legacy customers naturally churn away from Ting Mobile. These decreases were partially offset by an other income increase of less than $0.1 million related to the inclusion of sublease rental income received in the current period.

Current wording

Other Income (Expenses) during the three months ended June 30, 2024, increased by $12.1 million when compared to the three months ended June 30, 2023. The increase was primarily driven by the absence of loss on debt extinguishment, partially offset by higher net interest expense and lower income earned on sale of Transferred Assets to DISH partially offset by other income. The absence of the loss on debt extinguishment was related to the make-whole premium paid to Generate following the redemption of Series A Preferred Units in the three months ended June 30, 2023. Other income further increased as a result of the inclusion of Orange Domains joint venture and sublease rental income received in the current period. Net interest expense increases as a result of the inclusion of interest associated with the 2023 Term Notes, an increase due to the absence of favorable interest rate swap contracts in the current period, and lower interest expense capitalization associated with Fiber network assets under construction, partially offset by reduction in interest related to the Credit Facility for the Tucows businesses excluding Ting, and the inclusion of interest income following the execution of Ting's 2023 Term Notes. Income earned on sale of Transferred Assets to DISH decreased as a result of legacy customers naturally churning, as expected.

Previous wording

Income tax expense for the three months ended March 31, 2024, increased by $3.5 million when compared to the three months ended March 31, 2023. The change in effective tax rate is primarily due an increase in valuation allowance on net operating losses, which exceeded the impact of existing reversible temporary differences when compared to the same period in the prior year.

Current wording

Income tax expense for the three and six months ended June 30, 2024, increased by $4.2 million and $7.7 million when compared to the three and six months ended June 30, 2023. The change in effective tax rate is primarily due an increase in valuation allowance on net operating losses, which exceeded the impact of existing reversible temporary differences when compared to the same period in the prior year.

Previous wording

Adjusted EBITDA increased by $1.2 million or 39%, to$4.2 million for the three months ended March 31, 2024, when compared to the three months ended March 31, 2023. The increase in adjusted EBITDA from period-to-period was primarily driven byincreases in Wavelo. The Wavelo contribution increased $2.5 million primarily driven by increased MONOS platform revenues earned from the increased subscribers on the platform, partially offset by investment in marketing and network costs in the current period. Wavelo's increase in Adjustment EBITDA was partially offset by decreases across Mobile Services and eliminations, Tucows Domains, and Ting. Mobile Services and eliminations contribution decreased $0.7 million primarily from the decrease in income earned on sale of Transferred Assets to DISH. Tucows Domains contribution decreasedby $0.3 million from increased investment in network, general and administrative, and marketing costs in the current period, partially offset by strong domain transactions through the current period. Ting contribution, which excludes the impact of the 2024 Ting Restructuring Plan, decreased $0.3 million, from thecontinued investment in costs required to execute on the Ting Internet network build and expansion plan, partially offset by subscriber growth across the markets we serve.

Current wording

Adjusted EBITDA increased by $5.0 million or 59%, to $13.4 million for the six months ended June 30, 2024, when compared to the six months ended June 30, 2023. The increase in adjusted EBITDA from period-to-period was primarily driven by increases in Ting, Wavelo, and Tucows Domains. Ting contribution, which excludes the impact of the 2024 Ting Restructuring Plan, increased $3.6 million, primarily driven by subscriber growth across the markets we serve outpacing the continued investment in costs required to execute on the Ting Internet network build and expansion plan. Tucows Domains contribution increased by $0.3 million from strong retail and portfolio sales through the current period and the inclusion of Orange Domains joint venture. The Wavelo contribution increased $2.9 million primarily driven by increased platform revenues earned from the increased level of DISH subscribers on the platform and a reduction in net technical and development spend. These increases in Adjustment EBITDA were partially offset by decreases across Mobile Services and eliminations. Mobile Services and eliminations contribution decreased $1.9 million primarily from the decrease in income earned on sale of Transferred Assets to DISH.

Previous wording

As of March 31, 2024, our cash and cash equivalents balance decreased by $26.1 million, our funds held by trustee balance increased by $0.4 million, and our secured notes reserve funds balance increased by $0.1 million respectively when compared to December 31, 2023. The decrease in our cash balance was driven primarily by $14.3 million for the continued investment in property and equipment primarily driven by Ting Internet expansion, $5.7 million from cash used in operating activities, $5.5 million related to the repayment of the 2023 Credit Facility, and $0.1 million related to the acquisition of intangible assets.

Current wording

As of June 30, 2024, our cash and cash equivalents balance decreased by $53.4 million, our funds held by trustee balance increased by $0.4 million, and our secured notes reserve funds balance increased by $0.2 million respectively when compared to December 31, 2023. The decrease in our cash balance was driven primarily by $30.3 million for the continued investment in property and equipment primarily driven by Ting Internet expansion, $12.0 million related to the repayment of the 2023 Credit Facility, $10.4 million from cash used in operating activities, and $0.1 million related to the acquisition of intangible assets.

Previous wording

During thethree months ended March 31, 2024, the Company made net repayments of $5.5 million towards the 2023 Credit Facility. The Company ended March 31, 2024 with a remaining principal balance of $206.4 million, for which the required repayment is due in 2026.

Current wording

During the six months ended June 30, 2024, the Company made net repayments of $12.0 million towards the 2023 Credit Facility. The Company ended June 30, 2024 with a remaining principal balance of $199.9 million, for which the required repayment is due in 2026.

Previous wording

As of March 31, 2024, the Company held contracts in the amount of $44.6 million with BMO to trade U.S. dollars in exchange for Canadian dollars under an uncommitted treasury risk management facility which assists the Company with hedging Canadian dollar exposures. Please see the discussion in the Material Cash Requirements section below.

Current wording

As of June 30, 2024, the Company held contracts in the amount of $43.6 million with BMO to trade U.S. dollars in exchange for Canadian dollars under an uncommitted treasury risk management facility which assists the Company with hedging Canadian dollar exposures. Please see the discussion in the Material Cash Requirements section below.

Previous wording

Net cash outflows from operating activities during the three months ended March 31, 2024 totaled $5.7 million, an increase of 8% when compared to the three months ended March 31, 2023.

Current wording

Net cash outflows from operating activities during the six months ended June 30, 2024 totaled $10.4 million, an increase of 53% when compared to the six months ended June 30, 2023.

Previous wording

Net loss, after adjusting for items not involving cash, during the three months ended March 31, 2024 was $8.0 million, an increase of 176% when compared to the prior year. Net income included non-cash charges and recoveries of $18.5 million such as depreciation, accretion of redeemable preferred shares, stock-based compensation, amortization of intangible assets, amortization of debt discount and issuance costs, deferred income taxes (recovery), impairment of property and equipment, loss on disposal of domain names, net amortization of contract costs, and net right of use operating asset or liability. In addition, changes in our working capital contributed to a net cash outflow of $2.3 million. Positive cash contributions of $13.5 million from the changes in deferred revenue, accounts receivable, contract asset, prepaid expenses and deposits, inventory, income taxes recoverable, accounts payable, and accreditation fees payable, were partially offset by cash utilization $11.2 million from movements in deferred costs of fulfillment, accrued liabilities, and customer deposits.

Current wording

Net loss, after adjusting for items not involving cash, during the six months ended June 30, 2024 was $8.5 million, an increase of 81% when compared to the prior year. Net income included non-cash charges and recoveries of $36.6 million such as depreciation, accretion of redeemable preferred shares, stock-based compensation, amortization of intangible assets, amortization of debt discount and issuance costs, deferred income taxes (recovery), net amortization of contract costs, impairment of property and equipment, loss on disposal of domain names, undistributed earnings of equity method investee and net right of use operating asset or liability. In addition, changes in our working capital contributed to a net cash outflow of $1.9 million. Cash utilization $16.2 million from movement in deferred costs of fulfillment, accrued liabilities, prepaid expenses and deposits, accounts payable, customer deposits, and income taxes recoverable. Partially offset by, positive cash contributions of $14.4 million from the changes in deferred revenue, accounts receivable, contract asset, inventory, and accreditation fees payable.