Toronto-based domain name registrar and network service operator Tucows (NASDAQ: TCX) reported third-quarter results after the closing bell on Thursday. The integration of a recently acquired rival is going well, while the company's Ting-branded broadband and wireless services delivered customer growth.
Here's a closer look at Tucows' latest business report.
Tucows' third-quarter results: The raw numbers
What happened with Tucows this quarter?
- Ting Wireless now serves 171,000 subscribers and 281,000 mobile devices, up from 147,000 customers using 235,000 devices a year ago.
- The number of domain names under Tucows' management nearly doubled year over year, rising 91% to 28.3 million domains. The bulk of this increase stems from the buyout of sector rival eNom, which closed in January 2017.
- The Ting Internet broadband service grew sales by 42% year over year, but gross profits fell 20% lower due to intense marketing and installation efforts for this relatively new operation.
- The company generated $4.4 million of free cash flows in the third quarter, up from $3.2 million in the year-ago period.
What management had to say
In a prepared statement, Tucows CEO Elliot Noss celebrated his company's top-line growth and the relatively painless integration of eNom's domain name services.
"I am particularly proud that we can make such meaningful investments in infrastructure, people and customer acquisition without taking a step backwards on topline growth," Noss said. "For the future, all our business units took steps in the right direction. The integration of our domain name platforms is going well. Ting Mobile continues to grow its customer base and its reputation. Ting Internet is executing well and ramping quickly."
The company recently placed a $28.8 million bid to acquire Burlington Telecom, a small fiber-optic network in Vermont. This will become Tucows' sixth fiber network market, and Burlington Telecom would grow Ting Internet's addressable market by 16,000 potential subscribers, or 19%.
Tucows is not the only bidder for this fiber operator. The sale is churning through legislative processes and Tucows has increased its bid to $30.5 million in order to stave off the one remaining challenger, a Vermont-based co-op known as Keep Burlington Telecom Local. The Burlington City Council has voted on the sale twice, deadlocking at 6-6 both times. Tucows could be the winner, but the end result could also be a compromise between the two remaining buyers or a complete restart of the whole sale process.
This is how Tucows plans to grow Ting Internet over time -- piecing together buyouts of small, local service providers into a cohesive service. Eventually, high adoption rates should unlock serious economies of scale for Ting Internet and its customers. This is an important part of the company's overall growth plans. For now, however, Ting's future in northern Vermont is up in the air and the next step forward might have to be taken somewhere else.
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