TUCOWS INC /PA/

Previous wording

For the three months ended March 31, 2025 and March 31, 2024, we reported net revenue of $94.6 million and $87.5 million, respectively.

Current wording

For the three months ended June 30, 2025 and June 30, 2024, we reported net revenue of $98.5 million and $89.4 million, respectively.

Previous wording

As of March 31, 2025, Ting Internet had access to 133,000 owned infrastructure serviceable addresses, 54,000 partner infrastructure serviceable addresses and 52,000 active subscribers under its management; compared to having access to 124,000 owned infrastructure serviceable addresses, 33,000 partner infrastructure serviceable addresses and 46,000 active subscribers under its management as of March 31, 2024. These figures exclude any changes in serviceable addresses and accounts attributable to Simply Bits.

Current wording

As of June 30, 2025, Ting Internet had access to 132,000 owned infrastructure serviceable addresses, 66,000 partner infrastructure serviceable addresses and 52,000 active subscribers under its management; compared to having access to 128,000 owned infrastructure serviceable addresses, 36,000 partner infrastructure serviceable addresses and 48,000 active subscribers under its management as of June 30, 2024. These figures exclude any changes in serviceable addresses and accounts attributable to Simply Bits.

Previous wording

Our primary distribution channel is a global network of almost 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 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. Our services are integral to the solutions that our resellers deliver to their customers. We provide “second tier” support to our resellers by email, chat and phone in the event resellers experience issues or problems with our services. In addition, our Network Operating Center proactively monitors all services and network infrastructure to address deficiencies before customer services are impacted.

Current wording

Our primary distribution channel is a global network of over 33,000 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 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. Our services are integral to the solutions that our resellers deliver to their customers. We provide “second tier” support to our resellers by email, chat and phone in the event resellers experience issues or problems with our services. In addition, our Network Operating Center proactively monitors all services and network infrastructure to address deficiencies before customer services are impacted.

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 24.3 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 decreased slightly by 0.4 million since March 31, 2024.

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 24.0 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 decreased slightly by 0.4 million since June 30, 2024.

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 EchoStar Purchase Agreement executed in the fiscal year ended December 31, 2020 (“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 EchoStar 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 EchoStar Purchase Agreement, the Company retained a small number of customer accounts associated with one MNO agreement that was not reassigned to EchoStar 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, 2025, the Company has accrued $1.3 million** **of penalties associated with the minimum commitment shortfall. The Company expects to incur penalties throughout 2025 and thereafter until the contract expires.

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 EchoStar Purchase Agreement executed in the fiscal year ended December 31, 2020 (“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 EchoStar 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 EchoStar Purchase Agreement, the Company retained a small number of customer accounts associated with one MNO agreement that was not reassigned to EchoStar 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. As at June 30, 2025, the Company has accrued $1.1 million** **of penalties associated with the minimum commitment shortfall. The Company expects to incur penalties throughout 2025 and thereafter until the contract expires.

Previous wording

RESULTS OF OPERATIONS FOR THE three months ended March 31, 2025 AS COMPARED TO THE three months ended March 31, 2024

Current wording

RESULTS OF OPERATIONS FOR THE three and six months ended June 30, 2025 AS COMPARED TO THE three and six months ended June 30, 2024

Previous wording

Total net revenues for the three months ended March 31, 2025, increased by $7.1 million or 8%, to $94.6 million when compared to the three months ended March 31, 2024. The increase in net revenue was driven by Tucows Domains, Ting, and Wavelo; partially offset by a decline in revenues from Mobile Services and eliminations. The Tucows Domains segment increased $3.4 million primarily driven by pricing increases and strong expiry auction revenue performance. The Ting segment increased $2.2 million in the current period as a result of subscriber growth on our Fiber network across the United States. The Wavelo segment increased $2.0 million in the current period primarily driven by increased revenues from both existing and new customers. Mobile Services and eliminations decreased by $0.4 million attributable to decreased telephony services and decreased transitional services revenues, as well as a slight increase in intercompany revenues.

Current wording

Total net revenues for the three months ended June 30, 2025 increased by $9.1 million, or 10%, to $98.5 million when compared to the three months ended June 30, 2024. The increase in net revenue was driven by Tucows Domains, Wavelo, and Ting; partially offset by a decline in revenues from Mobile Services and eliminations. The Tucows Domains segment increased $5.2 million primarily driven by passthrough pricing increases and strong expiry auction revenue performance. The Wavelo segment increased $2.2 million in the current period primarily driven by increased revenues from both existing and new customers. The Ting segment increased $1.8 million in the current period as a result of subscriber growth on our Fiber network across the United States. Mobile Services and eliminations decreased by $0.2 million attributable to decreased telephony services and decreased transitional services revenues, as well as a slight increase in intercompany revenues.

Previous wording

Deferred revenue at March 31, 2025, increased by $5.5 million to $162.3 million from $156.8 million at December 31, 2024. 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 pricing through the current period. This was furthered by a smaller increase from Wavelo as a result of the contract liability associated with select customer contracts.

Current wording

Deferred revenue at June 30, 2025, increased by $5.9 million to $162.7 million from $156.8 million at December 31, 2024. This was driven by Ting construction mobilization in a new partner market and furthered by an increase in Tucows Domains 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 pricing through the current period being passed through from select registry cost increases. This was slightly offset by a decrease in Wavelo as bundled professional services expired and were recognized into revenue.

Previous wording

During both the three months ended March 31, 2025 and March 31, 2024, a customer, EchoStar, within our Wavelo segment accounted for 12% and 10.5% of total net revenues. As of March 31, 2025, EchoStar also represented for 55% of total accounts receivable. As of December 31, 2024 EchoStar represented 56% 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 $1.0 million as of March 31, 2025 and $0.9 million as of December 31, 2024, 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, 2025, a customer, EchoStar, within our Wavelo segment accounted for 12% and 12% of total net revenues, respectively. As of June 30, 2025, EchoStar also represented 56% of total accounts receivable. As of December 31, 2024 EchoStar represented 56% 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 $1.1 million as of June 30, 2025 and $0.9 million as of December 31, 2024, 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 $16.3 million in net revenue during the three months ended March 31, 2025, up $2.2 million or 16% compared to the three months ended March 31, 2024. This growth is driven by subscriber growth across our Fiber network relative to the three months ended March 31, 2024, as well as the continued expansion of our Ting Internet footprint to new Ting towns throughout the United States.

Current wording

Ting generated $16.4 million in net revenue during the three months ended June 30, 2025, up $1.8 million, or 13%, compared to the three months ended June 30, 2024. This growth is driven by subscriber growth across our Fiber network and small increases in average revenue per user ("ARPU") relative to the three months ended June 30, 2024, 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, 2025, Ting Internet had access to 133,000 owned infrastructure serviceable addresses, 54,000 partner infrastructure serviceable addresses and 52,000 active subscribers under its management; compared to having access to 124,000 owned infrastructure serviceable addresses, 33,000 partner infrastructure serviceable addresses and 46,000 active subscribers under its management as of March 31, 2024. These figures exclude any changes in serviceable addresses and accounts attributable to the Simply Bits acquisition.

Current wording

As of June 30, 2025, Ting Internet had access to 132,000 owned infrastructure serviceable addresses, 66,000 partner infrastructure serviceable addresses and 52,000 active subscribers under its management; compared to having access to 128,000 owned infrastructure serviceable addresses, 36,000 partner infrastructure serviceable addresses and 48,000 active subscribers under its management as of June 30, 2024. These figures exclude any changes in serviceable addresses and accounts attributable to the Simply Bits acquisition.

Previous wording

Net revenues from Wavelo Platform Services for the three months ended March 31, 2025, increased by $2.0 million or 22%, to $11.4 million as compared to the three months ended March 31, 2024. The increase in net revenue is driven by incremental revenues from existing customers, EchoStar following contract renewal, Ting, as well as new customers. 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 Corporate and all other - Mobile Services and Eliminations.

Current wording

Net revenues from Wavelo Platform Services for the three months ended June 30, 2025, increased by $2.2 million, or 21%, to $12.7 million as compared to the three months ended June 30, 2024. The increase in net revenue is driven by incremental revenues from existing customers, EchoStar following contract renewal, Ting, as well as new customers. Wavelo revenues continue to benefit from our customer's own subscriber growth. 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 Corporate and other - Mobile Services and Eliminations.

Previous wording

Net revenues from Other Professional Services for the three months ended March 31, 2025 decreased from less than $0.1M in the three months ended March 31, 2024 to NIL million in the current period. 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 no standalone professional services for our customers.

Current wording

Net revenues from Other Professional Services for the three months ended June 30, 2025 decreased from less than $0.1 million in the three months ended June 30, 2024 to NIL million in the current period. 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 no standalone professional services for our customers.

Previous wording

During the three months ended March 31, 2025, Wholesale domain services net revenue increased by $1.8 million or 4%, to $50 million as compared to the three months ended March 31, 2024. Increases from Wholesale domain registrations were driven by various price increases since March 31, 2024.

Current wording

During the three months ended June 30, 2025, Wholesale domain services net revenue increased by $3.1 million, or 6%, to $51.6 million as compared to the three months ended June 30, 2024. Increases from Wholesale domain registrations were driven by various passthrough price increases from select registry cost increases since June 30, 2024.

Previous wording

As of March 31, 2025 together, the OpenSRS, eNom, EPAG, and Ascio Domain Services manage 24.3 million domain names under the Tucows, eNom, EPAG and Ascio ICANN registrar accreditations and for other registrars under their own accreditations. Domains under management was down slightly by 0.4 million domain names compared to March 31, 2024.

Current wording

As of June 30, 2025, together, the OpenSRS, eNom, EPAG, and Ascio Domain Services manage 24.0 million domain names under the Tucows, eNom, EPAG and Ascio ICANN registrar accreditations and for other registrars under their own accreditations. Domains under management was down by 0.5 million domain names compared to June 30, 2024.

Previous wording

During the three months ended March 31, 2025, value-added services net revenue increased by $1.2 million or 26%, to $5.9 million as compared to the three months ended March 31, 2024. The increase in value-added service revenue was driven by strong expiry auction sales in the current period.

Current wording

During the three months ended June 30, 2025, value-added services net revenue increased by $1.3 million, or 29%, to $5.8 million as compared to the three months ended June 30, 2024. The increase in value-added service revenue was driven by strong expiry auction sales in the current period, slightly offset by a small decrease in certificates sales.

Previous wording

During the three months ended March 31, 2025, retail domain services net revenue increased by $0.3 million or 3%, to $9.3 million as compared to the three months ended March 31, 2024. This was driven by price increases across domain name registrations and RealNames products in the current period, partially offset by a decrease in portfolio sales.

Current wording

During the six months ended June 30, 2025, retail domain services net revenue increased by $1.2 million, or 7%, to $19.6 million as compared to the six months ended June 30, 2024. This was primarily driven by price increases across domain name registrations and RealNames products in the current period, as well as an increase in portfolio names sales.

Previous wording

Net revenues from Mobile Services and eliminations for the three months ended March 31, 2025 decreased by $0.5 million or 24%, to $1.6 million as compared to the three months ended March 31, 2024. This was driven by decreased revenues of $0.2 million associated with the mobile telephony services and device revenues from the small group of customers retained by the Company as part of the EchoStar Purchase Agreement primarily a result of organic subscriber churn and plan mix shifting towards lower price point rate plans compared to the three months ended March 31, 2024. This was also furthered by decreased transitional services of $0.1 million, from a decreased level of dedicated support services provided to EchoStar in connection with the legacy Ting Mobile customer base. Furthermore, there was an increase in intercompany corporate eliminations of $0.2 million, primarily a result of increased revenues associated with ISOS and SM platforms billing between Wavelo and Ting.

Current wording

Net revenues from Mobile Services and eliminations for the six months ended June 30, 2025 decreased by $0.7 million or 17%, to $3.4 million as compared to the six months ended June 30, 2024. This was driven byan increase in intercompany corporate eliminations of $0.3 million, primarily a result of increased revenues associated with platform billing between Wavelo and Ting. This was also furthered by decreased transitional services of $0.2 million, from a decreased level of dedicated support services provided to EchoStar in connection with the legacy Ting Mobile customer base, as expected. Furthermore, there wasdecreased revenues of $0.1 million associated with the mobile telephony services and device revenues from the small group of customers retained by the Company as part of the EchoStar Purchase Agreement primarily as a result of limited subscriber growth and plan mix shifting towards lower price point rate plans compared to the six months ended June 30, 2024.

Previous wording

Total cost of revenues for the three months ended March 31, 2025, increased by $1.9 million or 3%, to $71.1 million from $69.1 million in the three months ended March 31, 2024. The three-month increase in cost of revenues was driven by increases across Tucows Domains, Mobile Service and eliminations, and Ting of $1.7 million, $1.4 million, and $0.4 million, respectively. The increase in Tucows Domains of $1.7 million was primarily a result of cost increases through the current period. The increase in Mobile Services and eliminations of $1.4 million was primarily a result of higher mobile telephony services costs due to MNO penalties and plan mix changes in the current period. The increase in Ting of $0.2 million was primarily driven by the costs of revenues associated with growth in active subscribers. These increases were partially offset by decreases across Network Expenses and Wavelo of $1.4 million and $0.2 million, respectively. The decrease in Network Expenses of $1.4 million was primarily driven by decreased people and software costs following the execution of the 2024 Capital Efficiency Plan in October 2024. The decrease in Wavelo of $0.2 million was driven by the absence of contract fulfillment costs associated with select customer contracts.

Current wording

Total cost of revenues for the six months ended June 30, 2025, increased by $9.6 million or 7%, to $147.4 million from $137.8 million in the six months ended June 30, 2024. The six-month increase in cost of revenues was driven by increases across Ting, Tucows Domains, and Mobile Service and eliminations of $4.4 million, $4.3 million, and $2.9 million, respectively. The increase in Ting of $4.4 million was primarily driven by a $3.0 million one-time Ting lease accounting adjustment, with the remaining variance driven by costs of revenues associated with growth in active subscribers. The increase in Tucows Domains of $4.3 million was primarily a result of cost increases from select registries through the current period. The increase in Mobile Services and eliminations of $2.9 million was primarily a result of higher mobile telephony services costs due to MNO penalties and plan mix changes in the current period. These increases were partially offset by decreases across Network Expenses and Wavelo of $1.4 million and $0.4 million, respectively. The decrease in Network Expenses of $1.4 million was primarily driven by decreased people and software costs following the execution of the 2024 Capital Efficiency Plan in October 2024. The decrease in Wavelo of $0.4 million was driven by the absence of the amortization of previously capitalized costs associated with EchoStar contract.

Previous wording

Deferred costs of fulfillment as of March 31, 2025, increased by $4.0 million, or 3%, to $121 million from $117.0 million at December 31, 2024. This was driven by Tucows Domains with an increase of $4.0 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 registry costs through the current period, consistent with the increase in deferred revenues discussed above.

Current wording

Deferred costs of fulfillment as of June 30, 2025, increased by $2.0 million, or 2%, to $119.0 million from $117.0 million at December 31, 2024. This was primarily driven by Tucows Domains with an increase of $1.8 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 registry costs through the current period, consistent with the increase in deferred revenues discussed above. This increase was furthered by Ting with an increase of $0.2 million related to Laguna Woods Village, California, United States construction mobilization.

Previous wording

During the three months ended March 31, 2025, costs related to provisioning high speed Internet access for Ting and its subsidiaries - Cedar and Simply Bits, increased by $0.4 million or 7%, to $5.8 million as compared to three months ended March 31, 2024. Consistent with the discussion above in the Net Revenue section, the subscriber growth across our Fiber network drove an increase in costs of revenue.

Current wording

During the three months ended June 30, 2025, costs related to provisioning high speed Internet access for Ting and its subsidiaries - Cedar and Simply Bits, increased by $3.9 million, or 81%, to $8.7 million as compared to the three months ended June 30, 2024. This was primarily driven by a $3.0 million one-time Ting lease accounting adjustment to true up lease expense for three partner network leases, with the remaining variance driven by the subscriber growth across our Fiber network, consistent with the discussion in the Net Revenue section above.

Previous wording

Cost of revenues from Wavelo Platform Services for the three months ended March 31, 2025 decreased by $0.2 million or 65% to $0.1 million as compared to the three months ended March 31, 2024. This was driven by the absence of the amortization of previously capitalized costs incurred to fulfill the EchoStar Master Services Agreement ("MSA") over the term of the agreement, as the agreement ended in July 2024.

Current wording

Cost of revenues from Wavelo Platform Services for the three months ended June 30, 2025 decreased by $0.2 million, or 71%, to $0.1 million as compared to the three months ended June 30, 2024. This was driven by the absence of the amortization of previously capitalized costs incurred to fulfill the EchoStar Master Services Agreement ("MSA") over the term of the original agreement, as the initial term ended in July 2024. There were no comparable costs on renewal in January 2025.

Previous wording

Cost of revenues from Other Professional Services for the three months ended March 31, 2025 decreased from less than $0.1 million for the three months ended March 31, 2024 to NIL million in the current period. 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 no standalone professional services for our customers. The decrease is aligned to the decrease in Net Revenues discussed above.

Current wording

Cost of revenues from Other Professional Services for the three months ended June 30, 2025 decreased from less than $0.1 million for the three months ended June 30, 2024 to NIL million in the current period. 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 no standalone professional services for our customers. The decrease is aligned to the decrease in net revenues from other professional services discussed above.

Previous wording

Costs for Wholesale domain services for the three months ended March 31, 2025, increased by $1.7 million or 4%, to $40.4 million, as compared to $38.7 million for the three months ended March 31, 2024. Increases from Wholesale domain registrations were primarily driven by various registry gTLD cost increases since March 31, 2024. The increase is aligned to the increase in Net Revenues discussed above.

Current wording

Costs for Wholesale domain services for the three months ended June 30, 2025, increased by $2.3 million, or 6%, to $41.2 million, as compared to $38.9 million for the three months ended June 30, 2024. Increases from Wholesale domain registrations were primarily driven by various registry gTLD cost increases since June 30, 2024. The increase is aligned to the increase in Net Revenues discussed above.

Previous wording

Costs for retail domain services for the three months ended March 31, 2025, increased by $0.1 million or 2%, to $4.2 million, as compared to $4.1 million for the three months ended March 31, 2024.

Current wording

Costs for retail domain services for the three months ended June 30, 2025, increased by $0.3 million, or 7%, to $4.4 million, as compared to $4.1 million for the three months ended June 30, 2024.

Previous wording

Cost of revenues from Mobile Services and Eliminations for the three months ended March 31, 2025, increased by $1.4 million or 52%, to $4.1 million as compared to the three months ended March 31, 2024. The increase is primarily driven by increased costs associated with mobile telephony services from the small group of customers retained by the Company as part of the EchoStar Purchase Agreement due to plan mix changes towards unlimited plans. The Company accrued$1.3 million in penalties associated with the MNO minimum commitment shortfall in the three months ended March 31, 2025, as compared to $0.2 million in the three months ended March 31, 2024. The company expects to continue to incur penalties through the end of Fiscal 2025 and thereafter should limited subscriber growth persist. The increase on cost of revenues was partially offset by a decrease in transitional services costs provided to EchoStar 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, 2025, increased by $1.5 million or 54%, to $4.2 million as compared to the three months ended June 30, 2024. The increase is primarily driven by increased costs associated with mobile telephony services from the small group of customers retained by the Company as part of the EchoStar Purchase Agreement due to plan mix changes towards unlimited plans. The Company accrued $1.1 millionin penalties associated with the MNO minimum commitment shortfall in the three months ended June 30, 2025, as compared to $0.1 million in the three months ended June 30, 2024. The company expects to continue to incur penalties through the end of Fiscal 2025 and thereafter should limited subscriber growth persist. The increase on cost of revenues was partially offset by a decrease in transitional services costs provided to EchoStar 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, 2025, decreased by $1.4 million or 8%, to $15.9 million, as compared to $17.3 million for the three months ended March 31, 2024. The current period decrease was primarily driven by $1.9 million in personnel related cost savings resulting from the 2024 Capital Efficiency Plan, executed in October 2024, as well as some savings in colocation and bandwidth after shutting down some colocation sites. This was offset by increased network depreciation of $0.5 million.

Current wording

Network expenses for the six months ended June 30, 2025, decreased by $1.4 million or 4%, to $33.2 million, as compared to $34.6 million for the six months ended June 30, 2024. The current period decrease was primarily driven by $2.3 million in personnel related cost savings resulting from the 2024 Capital Efficiency Plan, executed in October 2024. This was offset by increased network depreciation of $0.9 million.

Previous wording

Sales and marketing expenses for the three months ended March 31, 2025, decreased by $7.6 million, or 41%, to $11.0 million as compared to the three months ended March 31, 2024. The decrease was primarily driven by reduced personnel costs following the 2024 Capital Efficiency Plan, as well as Ting's reduced marketing and customer acquisition spend, as the segment looks to measure and optimize channel spending.

Current wording

Sales and marketing expenses for the three months ended June 30, 2025, decreased by $2.8 million, or 19%, to $11.9 million as compared to the three months ended June 30, 2024. The decrease was primarily driven by reduced personnel costs following the 2024 Capital Efficiency Plan, as well as Ting's reduced marketing and customer acquisition spend, as the segment looks to measure and optimize channel spending.

Previous wording

General and administrative expenses for the three months ended March 31, 2025, decreased by $0.6 million or -6%, to $9.2 million as compared to the three months ended March 31, 2024. The decrease was primarily driven by reduced personnel costs following the 2024 Capital Efficiency Plan, favorable foreign exchange impact in the current period, and reduced professional services fees. These decreases were partially offset by increased facilities expenses.

Current wording

General and administrative expenses for the six months ended June 30, 2025, decreased by $0.1 million or 1%, to $18.9 million as compared to the six months ended June 30, 2024. The decrease was primarily driven by reduced personnel costs following the 2024 Capital Efficiency Plan and favorable foreign exchange impact in the current period. These decreases were partially offset by increased facilities expenses.

Previous wording

Amortization of intangible assets for the three months ended March 31, 2025, decreased by $0.5 million or 36% to $0.8 million as compared to the three months ended March 31, 2024. The decrease was driven in part by the completed amortization of brand and customer relationships associated with the Company's Fiscal 2017 acquisition of eNom. The amortization of the related assets was completed in January 2024.

Current wording

Amortization of intangible assets for the three months ended June 30, 2025, decreased by $0.1 million, or 10%, to $0.7 million as compared to the three months ended June 30, 2024. The decrease was driven by the small part of the completed amortization of brand and customer relationships associated with the Company's Fiscal 2017 acquisition of eNom. The amortization of the related assets was completed in January 2024.

Previous wording

Other income (expenses) during the three months ended March 31, 2025, decreased by $2.7 million when compared to the three months ended March 31, 2024. The decrease in income was primarily driven by higher net interest expense, lower income earned on sale of Transferred Assets to EchoStar, and lower other income. Net interest expense increased by $1.7 million, driven by the inclusion of $1.0 million interest expense associated with the 2023 and 2024 Term Notes, a $0.7 million increase due to lower interest expense capitalization associated with Fiber network assets under construction, a $0.5 million increase due to the absence of money market fund income post-securitization, and a $0.4 million increase in interest expense associated with the Generate agreement; partially offset by a $0.9 million decrease in interest expense related to the Credit Facility for the Tucows businesses excluding Ting due to the reduction in outstanding principal balance. Income earned on sale of Transferred Assets to EchoStar decreased by $0.9 million. Other income decreased by $0.1 million driven by the absence of sublease rental income and the share of the current period loss in Orange Domains joint venture.

Current wording

Other income (expenses) during the three months ended June 30, 2025, decreased by $1.7 million when compared to the three months ended June 30, 2024. The decrease in income was primarily driven by higher net interest expense, lower other income, and lower income earned on sale of Transferred Assets to EchoStar. Net interest expense increased by $1.1 million, driven by the inclusion of $1.0 million interest expense associated with the 2023 and 2024 Term Notes, a $0.5 million increase due to lower interest expense capitalization associated with Fiber network assets under construction, a $0.2 million increase due to the absence of money market fund income post-securitization, and a $0.1 million increase in interest expense associated with the Generate agreement; partially offset by a $0.6 million decrease in interest expense related to the Credit Facility for the Tucows businesses excluding Ting due to the reduction in outstanding principal balance. Other income decreased by $0.4 million driven by the share of the current period loss in Orange Domains joint venture. Income earned on sale of Transferred Assets to EchoStar decreased by $0.2 million from normal churn, as expected.

Previous wording

Income tax expense for the three months ended March 31, 2025, increased by $0.4 million when compared to the three months ended March 31, 2024. The change in effective tax rate is primarily due an increase in foreign tax expense, driven by strong performance in our Domain segment.

Current wording

Income tax expense for the three and six months ended June 30, 2025, increased by $1.0 million and $1.4 million, respectively when compared to the three months and six months ended June 30, 2024. The change in effective tax rate is primarily due an increase in foreign tax expense, driven by strong performance in our Tucows Domains segment.

Previous wording

Adjusted EBITDA increased by $9.5 million or 226%, to $13.7 million for the three months ended March 31, 2025, when compared to the three months ended March 31, 2024. The increase in Adjusted EBITDA from period-to-period was primarily driven by increases in Ting, Wavelo, and Tucows Domains. Ting contribution increased $8.7 million, primarily driven by subscriber growth across the markets we serve, the reduction in spend across sales and marketing activities, and reduced personnel costs from the execution of the 2024 Capital Efficiency Plan, and to a lesser extent, the February 2024 workforce reduction. The Wavelo contribution increased $1.7 million, primarily driven by the recognition of incremental revenues from both existing and new customers. Tucows Domains contribution increased by $1.5 million from strong expiry and wholesale sales through the current period. These increases in Adjusted EBITDA were partially offset by decreases in Mobile Services and eliminations. Mobile Services and eliminations contribution decreased $2.4 million primarily from increasing MNO minimum purchase obligation related penalties and a decrease in income earned on sale of Transferred Assets to EchoStar, offset by reduced personnel costs with the execution of the 2024 Capital Efficiency Plan.

Current wording

Adjusted EBITDA increased by $12.9 million, or 96%, to $26.3 million for the six months ended June 30, 2025, when compared to the six months ended June 30, 2024. The increase in Adjusted EBITDA was primarily driven by increases in Ting, Wavelo, and Tucows Domains. Ting contribution increased $11.5 million, primarily driven by subscriber growth across the markets we serve, the reduction in spend across sales and marketing activities, and reduced personnel costs from the execution of the 2024 Capital Efficiency Plan, and to a lesser extent, the February 2024 workforce reduction. The Wavelo contribution increased $3.1 million, primarily driven by the recognition of incremental revenues from both existing and new customers. Tucows Domains contribution increased by $2.9 million from strong expiry and wholesale results through the current period. These increases in Adjusted EBITDA were partially offset by decreases in Mobile Services and eliminations. Mobile Services and eliminations contribution decreased $4.6 million primarily from increasing MNO minimum purchase obligation related penalties and a decrease in income earned on sale of Transferred Assets to EchoStar, offset by reduced personnel costs with the execution of the 2024 Capital Efficiency Plan.

Previous wording

As of March 31, 2025, our cash and cash equivalents balance decreased by $18.2 million, our funds held by trustee balance increased by $0.5 million, and our secured notes reserve funds balance increased by $0.1 million respectively when compared to December 31, 2024. The decrease in our cash balance was driven primarily by $11.3 million from cash used in operating activities, $5.4 million for the continued investment in property and equipment primarily driven by Ting Internet expansion and both Wavelo and Domains platforms, and $2.5 million related to the repayment of the 2023 Credit Facility; partially offset by $1.0 million proceeds on disposal of property and equipment.

Current wording

As of June 30, 2025, our cash and cash equivalents balance decreased by $4.9 million, our funds held by trustee balance remained flat, and our secured notes reserve funds balance increased by $0.2 million when compared to December 31, 2024. The decrease in our cash balance was driven primarily by $4.7 million from cash used in operating activities, $2.5 million related to the repayment of the 2023 Credit Facility, and $8.9 million for additions to property and equipment. These decreases were offset by $11.6 million proceeds on disposal of property and equipment by Ting.

Previous wording

The 2023 Credit Agreement contains customary representations and warranties, affirmative and negative covenants, and events of default. The 2023 Credit Agreement requires that the Company comply with certain customary non-financial covenants and restrictions. In addition, the Company has agreed to comply with the following financial covenants: (1) a leverage ratio by maintaining at all times a Total Funded Debt to Adjusted EBITDA Ratio of not more than (i) 4.50:1:00 at any time from and after the Closing Date to and including December 30, 2023; (ii) 4.25:1:00 from December 31, 2023 to and including March 30, 2024; (iii) 4.00:1.00 from March 31, 2024 to and including June 29, 2024; and (iv) 3.75:1.00 thereafter; and (2) an interest coverage ratio by maintaining as of the end of each rolling four financial quarter period, an Interest Coverage Ratio (as defined in the 2023 Credit Agreement) of not less than 3.00:1.00. As of March 31, 2025 the Company's leverage ratio was 3.14:1.00 and Interest Coverage Ratio was 3.76:1.00.

Current wording

The 2023 Credit Agreement contains customary representations and warranties, affirmative and negative covenants, and events of default. The 2023 Credit Agreement requires that the Company comply with certain customary non-financial covenants and restrictions. In addition, the Company has agreed to comply with the following financial covenants: (1) a leverage ratio by maintaining at all times a Total Funded Debt to Adjusted EBITDA Ratio of not more than (i) 4.50:1:00 at any time from and after the Closing Date to and including December 30, 2023; (ii) 4.25:1:00 from December 31, 2023 to and including March 30, 2024; (iii) 4.00:1.00 from March 31, 2024 to and including June 29, 2024; and (iv) 3.75:1.00 thereafter; and (2) an interest coverage ratio by maintaining as of the end of each rolling four financial quarter period, an Interest Coverage Ratio (as defined in the 2023 Credit Agreement) of not less than 3.00:1.00. As of June 30, 2025, the Company's leverage ratio was 3.14:1.00 and Interest Coverage Ratio was 3.99:1.00.

Previous wording

During the three months ended March 31, 2025, the Company made net repayments of $2.5 million towards the 2023 Credit Facility. The Company ended March 31, 2025 with a remaining principal balance of $192.9 million, for which the required repayment is due in 2026.

Current wording

During the six months ended June 30, 2025, the Company made net repayments of $2.5 million towards the 2023 Credit Facility. The Company ended June 30, 2025 with a remaining principal balance of $192.9 million, for which the required repayment is due in 2026.

Previous wording

As of March 31, 2025, the Company held contracts in the amount of$11.2 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, 2025, the Company held contracts in the amount of $55.6 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, 2025 totaled $11.3 million, an increase of 98% when compared to the three months ended March 31, 2024.

Current wording

Net cash outflows from operating activities during the six months ended June 30, 2025 totaled $4.7 million, a decrease of 55% when compared to the six months ended June 30, 2024.

Previous wording

Net loss, after adjusting for items not involving cash, during the three months ended March 31, 2025 was $0.9 million, a decrease of 88% when compared to the prior quarter. Net income included non-cash charges and recoveries of $14.8 million such as depreciation, stock-based compensation, amortization of intangible assets, amortization of debt discount and issuance costs, net amortization of contract costs, impairment of property and equipment, deferred income taxes (recovery), net right of use operating asset or liability, and undistributed earnings of equity method investee. In addition, changes in our working capital contributed to a net cash outflow of $10.9 million. Cash utilization of $21.0 million from the changes in accrued liabilities, deferred costs of fulfillment, accounts receivable, and customer deposits, were partially offset by positive cash contributions of $10.1 million from the changes in deferred revenue, accounts payable, prepaid expenses and deposits, income taxes recoverable, inventory, and accreditation fees payable.

Current wording

Net income, after adjusting for items not involving cash, during the six months ended June 30, 2025 was $0.2 million, an increase of 102% when compared to the prior quarter. Net income included non-cash charges and recoveries of $30.9 million such as depreciation, net right of use operating asset or liability, stock-based compensation, amortization of debt discount and issuance costs, amortization of intangible assets, loss (gain) on disposal of assets, impairment of property and equipment, deferred income taxes (recovery), net amortization of contract costs, undistributed earnings of equity method investee, and disposal of domain names. In addition, changes in our non-cash working capital contributed to a net cash outflow of $4.8 million. Cash utilization of $12.6 million from the changes in accrued liabilities, accounts receivable, prepaid expenses and deposits, deferred costs of fulfillment, contract asset, and accreditation fees payable, were partially offset by positive cash contributions of $7.8 million from the changes in deferred revenue, income taxes recoverable, inventory, accounts payable, and customer deposits.

Previous wording

Net cash outflows from financing activities during the three months ended March 31, 2025 totaled $2.5 million, a decrease of 55% when compared to the three months ended March 31, 2024. The total cash outflows related to a $2.5 million repayment towards the 2023 Credit Facility.

Current wording

Net cash outflows from financing activities during the six months ended June 30, 2025 totaled $2.5 million, a decrease of 79% when compared to the six months ended June 30, 2024. The total cash outflows related to a $2.5 million repayment towards the 2023 Credit Facility, slightly offset by a cash inflow of less than $0.1 million from proceeds received on exercise of stock options.