Tucows Inc.
Tucows Inc.
11/05/2026 | Press release | Distributed by Public on 11/05/2026 16:04
Quarterly Report for Quarter Ending September 30, 2026 (Form 10-Q)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains, in addition to historical information, forward-looking statements by us with regard to our expectations as to financial results and other aspects of our business that involve risks and uncertainties and may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as "may," "should," "anticipate," "believe," "plan," "estimate," "expect," and "intend," and other similar expressions are intended to identify forward-looking statements. The forward-looking statements contained in this report include statements regarding, among other things, the competition we expect to encounter as our business develops and competes in a broader range of Internet services, the Company's foreign currency requirements, specifically for the Canadian dollar and Euro; Wavelo, and Ting subscriber growth and retention rates; the number of new, renewed and transferred-in domain names we register as our business develops and competes; the effect of a potential gTLD expansion by the ICANN on the number of domains we register and the impact it may have on related revenues; our belief regarding the underlying platform for our domain services; our expectation regarding the trend of sales of domain names; our belief that, by increasing the number of services we offer, we will be able to generate higher revenues; our expectation regarding litigation; the potential impact of current and pending claims on our business; our valuations of certain deferred tax assets; our expectation to collect our outstanding receivables, net of our credit losses; our expectation regarding fluctuations in certain expense and cost categories; our expectations regarding liquidity and capital requirements of the Ting Internet business, as well as the outcome of any process to access strategic alternatives for this business; our expectations regarding the evaluation of our strategic alternatives for Ting; our expectations regarding our unrecognized tax; our expectations regarding cash from operations to fund our business; the impact of cancellations of or amendments to market development fund programs under which we receive funds; our expectation regarding our ability to manage realized gains/losses from foreign currency contracts; and general business conditions and economic uncertainty. These statements are based on management's current expectations and are subject to a number of uncertainties and risks that could cause actual results to differ materially from those described in the forward-looking statements. Many factors affect our ability to achieve our objectives and to successfully develop and commercialize our services including:
•Our ability to continue to generate sufficient working capital to meet our operating requirements;
•Our ability to service our debt commitments;
•Our ability to maintain a good working relationship with our vendors and customers;
•The ability of vendors to continue to supply our needs;
•Actions by our competitors;
•Our ability to attract and retain qualified personnel in our business and address operational efficiencies;
•Our ability to effectively manage our business;
•The effects of any material impairment of our goodwill or other indefinite-lived intangible assets;
•Our ability to obtain and maintain approvals from regulatory authorities on regulatory issues;
•Our ability to invest in the build-out of fiber networks into selected towns and cities to provide Internet access services to residential and commercial customers while maintaining the development and sales of our established services;
•Adverse tax consequences such as those related to changes in tax laws or tax rates or their interpretations, including with respect to the impact of the Tax Cuts and Jobs Act of 2017 and, the Organization for Economic Cooperation and Development ("OECD") model global minimum tax rules;
•Our ability to effectively respond or comply with new data protection regulations and any conflicts that may arise between such regulations and our ICANN contractual requirements;
•The application of business judgment in determining our global provision for income taxes, deferred tax assets or liabilities or other tax liabilities given that the ultimate tax determination is uncertain;
•Our ability to effectively integrate acquisitions;
•Our ability to monitor, assess and respond to changing geopolitical and economic environments including rising inflation and interest rates, tariffs and trade disputes, and geopolitical conflict;
•Our ability to collect anticipated payments from EchoStar in connection with the 10-year payment stream that is a function of the margin generated by the transferred subscribers over a 10-year period pursuant to the terms of the Asset Purchase Agreement dated August 1, 2020 between the Company and DISH Wireless LLC ("EchoStar", DISH's post-merger parent) (the "EchoStar Purchase Agreement");
•Our ability to maintain compliance with the operational and financial covenants of the 2023 and 2024 Notes as defined in "Note 8. Notes Payable" of the Notes to the Condensed Consolidated Financial Statements included in Part I, of this Quarterly Report, which provides the Company with financing to invest in the expansion of fiber networks;
•Our ability to maintain the safety and security of our systems and data;
•Our ability to successfully identify and implement any potential strategic alternatives for Ting;
•Pending or new litigation; and
•Factors set forth under the caption "Item 1A Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025 filed with the SEC on March 12, 2026 (the "2025 Annual Report") and in "Item 1A Risk Factors" in Part II of this Quarterly Report.
This list of factors that may affect our future performance and financial and competitive position and the accuracy of forward-looking statements is illustrative, but it is by no means exhaustive. Accordingly, all forward-looking statements should be evaluated with the understanding of their inherent uncertainty. All forward-looking statements included in this document are based on information available to us as of the date of this document, and we assume no obligation to update these cautionary statements or any forward-looking statements, except as required by law. These statements are not guarantees of future performance.
We qualify all the forward-looking statements contained in this Quarterly Report on Form 10-Q by the foregoing cautionary statements.
OVERVIEW
Our mission is to provide simple useful services that help people unlock the power of the Internet.
We accomplish this by reducing the complexity of our customers' experience as they access the Internet (at home or on the go) and while using Internet services such as domain name registration, email and other Internet related services. We are organized into three operating and reporting segments - Ting, Wavelo, and Tucows Domains. Each segment is differentiated primarily by their services, the markets they serve and the regulatory environments in which they operate. The Ting segment contains the operating results of our retail high speed Internet access operations, including its wholly owned subsidiaries - Cedar and Simply Bits. The Wavelo segment includes our platform and professional services offerings, as well as the billing solutions to Internet services providers ("ISPs"). Tucows Domains includes wholesale and retail domain name registration services, as well as value added services derived through our OpenSRS, ENom, Ascio, EPAG and Hover brands.
We accomplish this by reducing the complexity of our customers' experience as they access the Internet (at home or on the go) and while using Internet services such as domain name registration, email and other Internet related services. We are organized into three operating and reporting segments - Ting, Wavelo, and Tucows Domains. Each segment is differentiated primarily by their services, the markets they serve and the regulatory environments in which they operate. The Ting segment contains the operating results of our retail high speed Internet access operations, including its wholly owned subsidiaries - Cedar and Simply Bits. The Wavelo segment includes our platform and professional services offerings, as well as the billing solutions to Internet services providers ("ISPs"). Tucows Domains includes wholesale and retail domain name registration services, as well as value added services derived through our OpenSRS, ENom, Ascio, EPAG and Hover brands.
Our CEO, who is also our chief operating decision maker, regularly reviews the operating results of Ting, Wavelo and Tucows Domains as three distinct segments in order to make key operating decisions as well as evaluate segment performance. Certain revenues and expenses disclosed under the Corporate category are excluded from Segment Adjusted EBITDA results as they are centrally managed and not monitored by or reported to our CEO by segment, including mobile retail services, eliminations of intercompany transactions, portions of finance and human resources that are centrally managed, legal and corporate Information Technology ("IT") shared services.
For the three months ended September 30, 2026 and September 30, 2025, we reported net revenue of $100.0 million and $98.6 million, respectively.
For the nine months ended September 30, 2026 and September 30, 2025, we reported net revenue of $297.2 million and $291.6 million, respectively.
Ting
Ting and its wholly owned subsidiaries - Cedar and Simply Bits, includes the provision of high-speed Internet access services to select towns throughout the
United States, with operations focused on serving existing markets. Our primary sales channel is through the Ting website. The primary focus of this segment is to provide reliable Gigabit Fiber and Fixed Internet services to consumer and business customers. Revenues from Ting Internet are all generated in the U.S. and are billed on a monthly basis and have no fixed contract terms, aside from certain bespoke contracts with business customers.
As of September 30, 2026, Ting Internet had access to 126,000 owned infrastructure serviceable addresses, 161,400 partner infrastructure serviceable addresses and 64,000 active subscribers under its management; compared to having access to 126,000 owned infrastructure serviceable addresses, 88,000 partner infrastructure serviceable addresses and 52,000 active subscribers under its management as of September 30, 2025. These figures exclude any changes in serviceable addresses and accounts attributable to Simply Bits.
On July 27, 2026, the Company, Ting and certain of its affiliated entities, entered the Exit Agreement with Generate. Under the Exit Agreement, the Company acquired all of the Series A Preferred Units of Ting held by Generate for $3.0 million in cash, and the units were subsequently surrendered, cancelled and retired. The Exit Agreement also provides for certain contingent payments to Generate, which is included as the deferred gain on restructured debt as of September 30, 2026. The Exit Agreement resolved the conditions disclosed with respect to Trigger Event, including the accrued and unpaid preferred return and the Return Breach and corresponding Trigger Event asserted by Generate and described in the Company's Current Report on Form 8-K filed on December 5, 2025 and the items discussed above in "Note 19. Redeemable Preferred Units" of the Notes to the Condensed Consolidated Financial Statements included in Part I of this Quarterly Report. As a result of the Exit Agreement, Generate ceased to be a preferred member of Ting, waived and released all rights, powers and preferences associated with the Series A Preferred Units (including all redemption, mandatory-redemption, conversion and call rights), and withdrew all outstanding notices, including the notice asserting a Return Breach and Trigger Event. The parties also exchanged mutual releases. The remaining carrying amount of the obligation of $146.1 million was deferred and is presented as "Deferred gain on restructured debt" in the Condensed Consolidated Balance Sheet, and will be recognized in earnings when the contingent payments are resolved or expire. See "Note 19. Redeemable Preferred Units" of the Notes to the Condensed Consolidated Financial Statements included in Part I of this Quarterly Report for further information.
Wavelo
Wavelo includes the provision of full-service platforms and professional services providing a variety of solutions that support CSPs, including subscription and billing management, network orchestration and provisioning, and individual developer tools. Wavelo's focus is to provide accessible telecom software to CSPs globally, minimizing network and technical barriers and improving Internet access worldwide. Wavelo's suite of flexible, cloud-based software simplifies the management of mobile and Internet network access, enabling CSPs to better utilize their existing infrastructure, focus on customer experience and scale their businesses faster. Wavelo launched as a proven asset for CSPs, with EchoStar using Wavelo's MONOS software to drive additional value within its Digital Operator Platform, and Ting integrating Wavelo's ISOS and SM software to enable faster subscriber growth and footprint expansion. The Wavelo segment also includes the Platypus brand and platform, our legacy billing solution for ISPs. The revenues from Wavelo's MONOS, ISOS, SM and professional services are all generated in the U.S. and our customer
agreements have set contract lengths with the underlying CSP. Similarly, Wavelo's revenues from Platypus are largely generated in the U.S., with a small portion earned
in Canada and other countries.
Tucows Domains
Tucows Domains includes wholesale and retail domain name registration services, as well as value added services derived through our OpenSRS, ENom, Ascio, EPAG, and Hover brands. Tucows Domains generates revenues primarily from the registration fees charged to resellers in connection with new, renewed and transferred domain name registrations. In addition, we earn revenues from the sale of retail domain name registration and email services to individuals and small businesses. Tucows Domains revenues are attributed to the country in which the contract originates, which is primarily in Canada and the U.S for OpenSRS and ENom brands whereas it is primarily in European nations for Ascio and EPAG.
Our primary distribution channel is a global network of approximately 32,000 resellers that operate in approximately 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 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.
We believe that the underlying platforms for our services are among the most mature, reliable and functional reseller-oriented provisioning and management platforms in our industry, and we continue to refine, evolve and improve these services for both resellers and end-users. Our business model is characterized primarily by non-refundable, up-front payments, which lead to recurring revenue and positive operating cash flow.
Wholesale Domains Services comprise Domain registration services provided to resellers, Tucows Registry Services and WHOIS Privacy Services.
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 21.3 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 by 1.0 million since September 30, 2025.
Value-Added Services include hosted email which provides email delivery and webmail access to millions of mailboxes, Internet security services, publishing tools and other value-added services. All of these services are made available to end-users through a network of web hosts, ISPs, and other resellers around the world. In addition, we also derive revenue by monetizing domain names which are near the end of their lifecycle through expiry auction sale.
Retail, primarily the Hover and ENom portfolio of websites, including ENom, and ENom Central, derive revenues from the sale of domain name registration and email services to individuals and small businesses. Our retail domain services also include our Personal Names Service - based on over 34,000 surname domains - which allows roughly two-thirds of Americans to purchase an email address based on their last name. The retail segment now includes the sale of the rights to its portfolio of surname domains used in connection with our RealNames email service and our Exact Hosting Service, that provides Linux hosting services for individuals and small businesses.
KEY BUSINESS METRICS AND NON-GAAP MEASURES
We regularly review a number of business metrics, including the following key metrics and non-GAAP measures, to assist us in evaluating our business, measure the performance of our business model, identify trends impacting our business, determine resource allocations, formulate financial projections and make strategic business decisions. The following tables set forth the key business metrics that we believe are the primary indicators of our performance for the periods presented:
| Ting Internet | September 30, | ||||||||||
| 2026 | 2025 | ||||||||||
| (in '000's) | |||||||||||
| Internet subscribers accounts under management | 64 | 52 | |||||||||
|
Internet owned infrastructure serviceable addresses1
|
126 | 126 | |||||||||
|
Internet partner infrastructure serviceable addresses1
|
161.4 | 88 | |||||||||
(1)Defined as premises to which Ting has the capability to provide a customer connection in a service area.
| Tucows Domains | September 30, | ||||||||||
| 2026 | 2025 | ||||||||||
| (in 000's) | |||||||||||
|
Total new, renewed and transferred-in domain name registrations provisions (1)
|
14,469 | 15,476 | |||||||||
| Domains under management | 21,291 | 22,289 | |||||||||
(1)Includes all transactions processed under our accreditations for our resellers and our retail brands, as well as transactions processed on behalf of other registrars using our platform.
Adjusted EBITDA
Tucows reports all financial information in accordance with U.S. GAAP. Along with this information, to assist financial statement users in an assessment of our historical performance, we typically disclose and discuss a non-GAAP financial measure, Adjusted EBITDA, on investor conference calls and related events that excludes certain non-cash and other charges as we believe that the non-GAAP information enhances investors' overall understanding of our financial performance, but should not be considered in isolation from or as a replacement for the most directly comparable GAAP financial measures. Please see discussion of Adjusted EBITDA as well as the Adjusted EBITDA reconciliation to net loss in the Results of Operations section below.
OPERATING OPPORTUNITIES, CHALLENGES AND RISKS
Our revenue is primarily realized in U.S. dollars and a major portion of our operating expenses are paid in Canadian dollars. Fluctuations in the exchange rate between the U.S. dollar and the Canadian dollar may have a material effect on our business, financial condition and results from operations. In particular, we may be adversely affected by a significant weakening of the U.S. dollar against the Canadian dollar on a quarterly and an annual basis. Our policy with respect to foreign currency exposure is to manage our financial exposure to certain foreign exchange fluctuations with the objective of neutralizing some or all of the impact of foreign currency exchange movements by entering into foreign exchange forward contracts to mitigate the exchange risk on a portion of our Canadian dollar exposure. We may not always enter into such forward contracts and such contracts may not always be available and economical for us. Additionally, the forward rates established by the contracts may be less advantageous than the market rate upon settlement.
Ting
As an ISP, we have invested and expect to continue to invest in selective fiber to the home ("FTTH") deployments in select markets in the United States. The investments are a reflection of our ongoing efforts to build FTTH networks via public-private partnerships in communities we identify as having strong, unmet demand for FTTH services. Given the significant upfront build and operational investments for these FTTH deployments, there is risk that we may not fully recover these investments as a result of future technological and regulatory changes, competitive responses from incumbent local providers, and slower than expected market penetration or otherwise.
Strategic Review and Developments
During the year ended December 31, 2025, Ting initiated and currently continues a review process for the Ting business focused on evaluating strategic alternatives to optimize its capital structure and long-term operating model given the ongoing capital needs of Ting. This process has included the exploration of potential asset sales, partnership structures and other strategic transactions involving Ting's fiber network assets. During the third quarter, Ting replaced its Memphis network agreement with a revised wholesale agreement. On October 21, 2026, Ting agreed to assign its Colorado Springs network lease to Google Fiber Colorado, LLC, with closing expected on March 31, 2027, subject to customary conditions. At closing, Ting will pay Colorado Springs Utilities $4.0 million. Following closing and satisfaction of certain post-closing obligations to CSU, which are expected to occur by the end of April 2027, the Company's parent guaranty will be released. Ting will continue to operate the Colorado Springs network until customers are migrated, expected no later than June 30, 2027. These exits are expected to reduce Ting's operating costs and eliminate long-term lease obligations.
As previously disclosed in a Current Report on Form 8-K filed with the SEC on December 5, 2025, on December 1, 2025, Ting received written notice from Generate, the holder of Ting's Series A Preferred Units, asserting that under the LLC Agreement, a Return Breach and a Trigger Event had occurred as a result of Ting's failure to pay the quarterly preferred return for two consecutive quarters. Generate had reserved its right to pursue remedies available under the LLC Agreement and applicable law, including the ability to make a request for redemption of all Series A Preferred Units. Had Generate submitted a Redemption Request, Ting would have been required to redeem all outstanding Series A Preferred Units at the applicable redemption price, which was estimated at $204.9 million, within 30 days of such request. As a result of this contractual provision, the Series A Preferred Units were classified as current liabilities in the Company's Consolidated Balance Sheet as of December 31, 2025. Generate did not submit a Redemption Request prior to the Exit Agreement described below.
On July 27, 2026, the Company, Ting and certain of its affiliated entities entered into the Exit Agreement with Generate. Under the Exit Agreement, Tucows acquired all of the outstanding Series A Preferred Units of Ting from Generate for $3.0 million in cash, and the units were surrendered, cancelled and retired. As a result, no Series A Preferred Units remain outstanding as of September 30, 2026, Generate is no longer a preferred member of Ting, and the redemption exposure associated with the Return Breach and Trigger Event no longer exists. Exit Agreement also provides for certain contingent payments to Generate. The remaining carrying amount of the obligation of $146.1 million, which includes these contingent payments, was deferred and is presented as "Deferred gain on restructured debt" in the Condensed Consolidated Balance Sheet. See "Note 19. Redeemable Preferred Units" of the Notes to the Condensed Consolidated Financial Statements included in Part I of this Quarterly Report for further information.
The Company does not believe that the Return Breach or Trigger Event had a material adverse impact on Ting's day-to-day operations, customer service or network performance.
Wavelo
Wavelo launched as a proven asset for CSPs, with EchoStar using Wavelo's MONOS software to drive additional value within its Digital Operator Platform. More recently, Ting Internet has also integrated Wavelo's ISOS and SM software to enable faster subscriber growth and footprint expansion. With our external platform and professional services revenues concentrated to one customer in EchoStar, we are exposed to significant risk if we are unable to maintain this customer relationship or establish new relationships for any of our Platforms in the future. Additionally, our revenues as a platform provider are directly tied to the subscriber volumes of EchoStar's MVNO or MNO networks, and our profitability is contingent on the ability of EchoStar to continue to add subscribers, either from organic growth or from migration off legacy systems, onto our platforms.
Tucows Domains
The increased competition in the market for Internet services in recent years, which we expect will continue to intensify in the short and long term, poses a material risk for us. As new registrars are introduced, existing competitors expand service offerings and offer price discounts to gain market share, we face pricing pressure, which can adversely impact our revenues and profitability. To address these risks, we have focused on leveraging the scalability of our infrastructure and our ability to provide proactive and attentive customer service to aggressively compete to attract new customers and to maintain existing customers.
Substantially all of our Tucows Domains revenue is derived from domain name registrations and related value-added services from wholesale and retail customers using our provisioning and management platforms. The market for wholesale registrar services is both price sensitive and competitive and is evolving with the introduction of new gTLDs, particularly for large volume customers, such as large web hosting companies and owners of large portfolios of domain names. We have a relatively limited ability to increase the pricing of domain name registrations without negatively impacting our ability to maintain or grow our customer base. Growth in our Tucows Domains revenue is dependent upon our ability to continue to attract and retain customers by maintaining consistent domain name registration and value added service renewal rates and to grow our customer relationships through refining, evolving and improving our provisioning platforms and customer service for both resellers and end-users. In addition, Tucows Domains also generate revenues through the sale of names from our portfolio of domain names and through the OpenSRS, ENom, and Ascio Domain Expiry Streams. Our domains under management and transactions saw a moderate decrease in the latter half of Fiscal 2025, largely as a result of select, low margin customers taking their business in-house. These fluctuations occur occasionally in our business, and with broad, diverse and global nature of our reseller base ensures that margin remains healthy, and will be augmented by the strategies discussed above to continue to grow our revenue base.
From time-to-time certain vendors provide us with market development funds to expand or maintain the market position for their services. Any decision by these vendors to cancel or amend these programs for any reason may result in payments in future periods not being commensurate with what we have achieved during past periods.
Other opportunities, challenges and risks
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 were subject to the minimum revenue commitments previously agreed to with this excluded MNO agreement. The Company was 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 was unable to meet the minimum commitments with this MNO partner and incurred significant penalties through the prior year; and generated significant losses until the contract was renewed under different terms in August 2026. The initial contract obligation was completed in January 2026. Beyond the term of the contract, the agreement continued month-to-month thereafter, until the contract was renewed in August 2026 with more favorable per-subscriber rates to improve the margin profile associated with the business. The renewal provided a rerate credit for overcharges resulting from invoices issued at the previous rates from May to September 2026. It also includes a lower, more achievable Minimum Revenue Requirement ("MRR") at our current subscriber count, defers payment on the historical penalty that arose from the prior contract, and includes an earnback condition allowing us to reduce that payable over time should we meet certain usage requirements. As of September 30, 2026, the Company has earned back $0.1 million from this earnback program.
Critical Accounting Estimates
The preparation of our Condensed Consolidated Financial Statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. Management bases its estimates on historical experience, available market information, as applicable, and on various other assumptions that are believed to be reasonable under the circumstances at the time they are made. Under different assumptions or conditions, the actual results will differ, potentially materially, from those previously estimated. Many of the conditions impacting these assumptions and estimates are outside of the Company's control. Management evaluates its estimates on an on-going basis. There have been no material changes to the critical accounting estimates as previously disclosed in Part II, Item 8 of our 2025 Annual Report as of the reporting date.
RESULTS OF OPERATIONS FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2026 AS COMPARED TO THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2025 NET REVENUES
Ting
Ting and its subsidiaries, Cedar and Simply Bits, includes the provision of high-speed Internet access services to select towns throughout the United States. Our primary sales channel is through the Ting website. The primary focus of this segment is to provide reliable Gigabit Fiber and Fixed Wireless Internet services to consumer and business customers. Generally, Ting Internet services have no fixed contract terms, aside from certain bespoke contracts with business customers.
The Company's billing cycle for all Ting Internet customers is computed based on the customer's activation date. Since consideration is collected before the service period, revenue is initially deferred and recognized as the Company performs its obligation to provide Internet access within each reporting period. Incentive marketing credits given to customers are recorded as a reduction of revenue.
Our construction services generate revenue from the design, construction, and installation of a fiber optic network for a specific customer contract. Control of the network infrastructure transfers to the customer as it is constructed. Revenue from network construction is recognized over time, as Ting's performance creates or enhances an asset that the customer controls as it is being constructed. Progress toward completion is measured using an output method, based primarily on network build milestones such as served addresses completed and accepted by the customer. Amounts billed in advance of revenue recognition are recorded as contract liabilities, while amounts recognized in excess of billings are recorded as contract assets. Where services require installation, revenue is not recognized until a customer's service is billed.
In each case, the Company records a reduction of revenues that reflects expected refunds, rebates, and credit card charge-backs at the time of the sale based on historical experiences and current expectations.
Wavelo
Platform Services
Tucows' Platform Services include the following full-service platforms from Wavelo, including MONOS, ISOS, SM and our legacy Platypus ISP Billing software. Under each of these platforms there are a variety of solutions that support CSPs, including subscription and billing management, network orchestration and provisioning, and individual developer tools. Wavelo launched as a proven asset for CSPs, with EchoStar using Wavelo's MONOS software to drive additional value within its Digital Operator Platform. More recently, Ting Internet has also integrated Wavelo's ISOS and SM software to enable faster subscriber growth and footprint expansion. Wavelo's customers are billed monthly, on a postpaid basis. The monthly fees are variable, based on the volume of their subscribers utilizing the platform during a given month, to which minimums may apply. Customers may also be billed fixed platform fees and granted fixed credits as part of the consideration for long-term contracts. Consideration received is allocated to platform services and bundled professional services and recognized as each service obligation is fulfilled. Any fixed fees for Wavelo are recognized into revenue evenly over the service period, while variable usage fees are recognized each month as they are consumed. Professional services revenue is recognized as the hours of professional services granted to the customer are used or expire. When consideration for these platform services is received before the service is delivered, the revenue is initially deferred and recognized only as the Company performs its obligation to provide services. Likewise, if platform services are delivered before the Company has the unconditional right to invoice the customer, revenue is recognized as a Contract asset.
Other Professional Services
This revenue stream includes any other professional services earned in connection with the Wavelo business from the provision of standalone technology services development work. These are billed based on separate Statement of Work arrangements for bespoke feature development. The Company recognizes revenue at the point-in-time when the final acceptance criteria have been met.
Tucows Domains
The Company generates Tucows Domains revenues primarily through Wholesale Domains Services, Wholesale Value Added Services and Retail.
Wholesale Domains Services comprise Domain registration services provided to resellers, Tucows Registry Services and WHOIS Privacy Services.
Wholesale Value Added Services comprise Domain-related value-added services provided to resellers, as well as expiry and advertising revenue streams.
Retail services comprise Domain registration contracts provided to retail customers along with related email and WHOIS privacy services.
The Company is an Internet Corporation for Assigned Names and Numbers accredited registrar. The Company is the primary obligor with our reseller and retail registrant customers and is responsible for the fulfillment of our registrar services to those parties. As a result, the Company reports revenue in the amount of the fees we receive directly from our reseller and retail registrant customers. Our reseller customers maintain the primary obligor relationship with their retail customers, establish pricing and retain credit risk to those customers. Accordingly, the Company does not recognize any revenue related to transactions between our reseller customers and their ultimate retail customers.
Domain registration and WHOIS Privacy Services
Domain registration contracts, which can be purchased for terms of one to ten years, provide our resellers and retail registrant customers with the exclusive right to a personalized internet address from which to build an online presence. The Company enters into domain registration contracts in connection with each new, renewed and transferred-in domain registration. At the inception of the contract, the Company charges and collects the registration fee for the entire registration period. Though fees are collected upfront, revenue from domain registrations is recognized ratably over the registration period as the Company provides the customer with a domain registration service, which represents a distinct performance obligation satisfied over time. The registration period begins once the Company has confirmed that the requested domain name has been appropriately recorded in the registry under contractual performance standards.
WHOIS Privacy is an ongoing service that protects the personal information of Registrants from public access.
Tucows Registry Services
Tucows Registry Services provides registry platform and related technical services to operators of generic top-level domains, branded top-level domains, and country code top-level domains. These services include processing domain name transactions and maintaining the related infrastructure and support systems required to operate the registry. Revenue is primarily transaction-based and is calculated as a fixed fee per financial transaction processed during the month. Because customers simultaneously receive and consume the benefits of the registry services as they are provided, revenue is recognized in the period in which the transactions occur. Service level credits are treated as variable consideration and are recorded as a reduction of revenue in the period in which they are incurred.
Value Added Services
Domain related value-added services like digital certificates and hosted email provide our resellers and retail registrant customers with tools and additional functionality to be used in conjunction with domain registrations. All domain related value-added services are considered distinct performance obligations which transfer the promised service to the customer over the contracted term. Fees charged to customers for domain related value-added services are collected at the inception of the contract, and revenue is recognized on a straight-line basis over the contracted term, consistent with the satisfaction of the performance obligations.
Expiry
The Company also sells the rights to the Company's portfolio domains or names acquired through the Company's domain expiry stream. The domain expiry stream involves domain names whose registration has expired and as per ICANN regulations are placed into a 40-day grace period. Though the domain names do not belong to the registrant during the 40-day grace period, the Company is restricted from allowing others to register them. The Company monetizes its domain expiry stream both through the sale of names and by allowing advertisers to place parked pages advertisements on the domains. Revenue from the sale of domain-name rights through the domain expiry stream is recognized at a point in time when control of the domain-name rights is transferred to the customer.
Advertising
Advertising revenue is derived through domain parking monetization, whereby the Company contracts with third-party Internet advertising publishers to direct web traffic from the Company's domain expiry stream domains, surname domains and direct navigation domains to advertising websites. Compensation from Internet advertising publishers is calculated variably on a cost-per-action basis based on the number of advertising links that have been visited in a given month. Given that the variable consideration is calculated and paid on a monthly basis, no estimation of variable consideration is required.
Corporate and other - Mobile services and eliminations
Although we still provide mobile telephony services to a small subset of customers retained through the Ting Mobile brand as part of the EchoStar Purchase Agreement executed in Fiscal 2020, this revenue stream no longer represents the Company's strategic focus going forward. Instead, we have transitioned towards being a platform provider for CSPs globally via Wavelo. Retail telephony services and transition services revenues are not part of our reportable segments under ASC 280 and their results are presented as part of the All Other category.
Ting Mobile wireless usage contracts grant customers access to standard talk, text and data mobile services. Ting Mobile contracts are billed based on the customer's selected rate plan, which can either be usage based or an unlimited plan. All rate plan options are charged to customers on a postpaid, monthly basis at the end of their billing cycle. All future revenues associated with Retail Mobile Services stream will only be for this subset of customers retained by the Company, as mentioned above. Ting Mobile services are primarily contracted through the Ting website, for one month at a time and contain no commitment to renew the contract following each customer's monthly billing cycle. The Company's billing cycle for all Ting Mobile customers is computed based on the customer's activation date. In order to recognize revenue as the Company satisfies its obligations, we compute the amount of revenues earned but not billed from the end of each billing cycle to the end of each reporting period. In addition, revenues associated with the sale of wireless devices and accessories are recognized when title and risk of loss is transferred to the customer and shipment has occurred. Incentive marketing credits given to customers are recorded as a reduction of revenue.
These mobile services revenue streams also include transitional services provided to EchoStar. These are billed monthly at set and established rates for services provided in period and include the provision of sales, marketing, order fulfillment, and data analytics related to the legacy customer base sold to EchoStar. The Company recognizes revenue as the Company satisfies its obligations to provide transitional services.
As a form of consideration for the sale of the customer relationships, the Company receives a payout on the margin associated with the legacy customer base sold to EchoStar, over a period of 10 years. This has been classified as Other Income and not considered revenue in the current period.
The following table presents our net revenues, by revenue source (Dollar amounts in thousands of U.S. dollars):
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Ting: | |||||||||||||||||||||||
| Fiber Internet Services | $ | 18,021 | $ | 16,976 | $ | 52,612 | $ | 49,701 | |||||||||||||||
| Construction revenue | 4,282 | - | 10,660 | - | |||||||||||||||||||
| Total Fiber | 22,303 | 16,976 | 63,272 | 49,701 | |||||||||||||||||||
| Wavelo: | |||||||||||||||||||||||
| Platform Services | 11,725 | 11,856 | 35,041 | 35,908 | |||||||||||||||||||
| Other professional services | - | - | - | - | |||||||||||||||||||
| Total Wavelo | 11,725 | 11,856 | 35,041 | 35,908 | |||||||||||||||||||
| Tucows Domains: | |||||||||||||||||||||||
| Wholesale | |||||||||||||||||||||||
| Domain Services | 48,875 | 51,888 | 146,514 | 153,448 | |||||||||||||||||||
| Value Added Services | 5,088 | 6,107 | 16,850 | 17,767 | |||||||||||||||||||
| Total Wholesale | 53,963 | 57,995 | 163,364 | 171,215 | |||||||||||||||||||
| Retail | 9,945 | 9,842 | 29,637 | 29,481 | |||||||||||||||||||
| Total Tucows Domains | 63,908 | 67,837 | 193,001 | 200,696 | |||||||||||||||||||
| Corporate and other*: | |||||||||||||||||||||||
| Mobile Services and eliminations | 2,039 | 1,889 | 5,874 | 5,325 | |||||||||||||||||||
| $ | 99,975 | $ | 98,558 | $ | 297,188 | $ | 291,630 | ||||||||||||||||
*Corporate and other includes revenues from Ting Mobile, corporate overhead functions, and other activities that do not meet the criteria for separate reportable segment disclosure under ASC 280. Ting Mobile is not managed as a separate reportable segment and is included within Corporate and other for purposes
of segment reporting. Intersegment revenues and expenses are eliminated on consolidation.
The following table presents our net revenues, by revenue source, as a percentage of total net revenues (Dollar amounts in thousands of U.S. dollars):
| (Dollar amounts in thousands of U.S. dollars) | For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Ting: | |||||||||||||||||||||||
| Fiber Internet Services | 18 | % | 17 | % | 18 | % | 17 | % | |||||||||||||||
| Construction revenue | 4 | % | 0 | % | 4 | % | 0 | % | |||||||||||||||
| Total Fiber | 22 | % | 17 | % | 22 | % | 17 | % | |||||||||||||||
| Wavelo: | |||||||||||||||||||||||
| Platform Services | 12 | % | 12 | % | 12 | % | 12 | % | |||||||||||||||
| Other professional services | 0 | % | 0 | % | 0 | % | 0 | % | |||||||||||||||
| Total Wavelo | 12 | % | 12 | % | 12 | % | 12 | % | |||||||||||||||
| Tucows Domains: | |||||||||||||||||||||||
| Wholesale | |||||||||||||||||||||||
| Domain Services | 49 | % | 53 | % | 48 | % | 53 | % | |||||||||||||||
| Value Added Services | 5 | % | 6 | % | 6 | % | 6 | % | |||||||||||||||
| Total Wholesale | 54 | % | 59 | % | 54 | % | 59 | % | |||||||||||||||
| Retail | 10 | % | 10 | % | 10 | % | 10 | % | |||||||||||||||
| Total Tucows Domains | 64 | % | 69 | % | 64 | % | 69 | % | |||||||||||||||
| Corporate and other*: | |||||||||||||||||||||||
| Mobile services and eliminations | 2 | % | 2 | % | 2 | % | 2 | % | |||||||||||||||
| 100 | % | 100 | % | 100 | % | 100 | % | ||||||||||||||||
*Corporate and other includes revenues from Ting Mobile, corporate overhead functions, and other activities that do not meet the criteria for separate reportable segment disclosure under ASC 280. Ting Mobile is not managed as a separate reportable segment and is included within Corporate and other for purposes
of segment reporting. Intersegment revenues and expenses are eliminated on consolidation.
Total net revenues for the three months ended September 30, 2026 increased by $1.4 million, or 1%, to $100.0 million when compared to the three months ended September 30, 2025. The increase in net revenue was driven by Ting and Mobile Services and eliminations; partially offset by a decline in revenues from Tucows Domains and Wavelo. The Ting segment increased $5.3 million in the current period as a result of new construction revenue in Laguna Woods Village, California, United States, as well as from subscriber growth on our Fiber network across the United States. Mobile Services and eliminations increased by $0.2 million, also attributable to subscriber growth. The Tucows Domains segment decreased $3.9 million primarily driven by a decline in domain names under management, as well as expiry auction revenue. The Wavelo segment decreased $0.1 million in the current period primarily driven by a decrease in subscribers under management.
Total net revenues for the nine months ended September 30, 2026 increased by $5.6 million, or 2%, to $297.2 million when compared to the nine months ended September 30, 2025. The increase in net revenue was driven by Ting and Mobile Services and eliminations; partially offset by a decline in revenues from Tucows Domains and Wavelo. The Ting segment increased $13.6 million in the current period as a result of new construction revenue in Laguna Woods Village, California, United States, as well as from subscriber growth on our Fiber network across the United States. Mobile Services and eliminations increased by $0.5 million attributable to subscriber growth. The Tucows Domains segment decreased $7.7 million primarily driven by a decline in domain names under management, as well as expiry auction revenue. The Wavelo segment decreased $0.9 million in the current period primarily driven by fewer bundled professional services hours recognized in the current period.
Contract liabilities at September 30, 2026, decreased by $2.0 million to $150.9 million from $152.9 million at December 31, 2025. This was primarily driven by Ting with the drawdown of previously deferred revenue recognized based on construction progress for the Laguna Woods Village project. This was partially offset by Tucows Domains due to the seasonal pattern of renewals being billed and deferred in the first half of the year, with the balance being drawn down and reaching its lowest balance towards the end of the year, resulting in a higher Tucows Domains contract liabilities balance at September 30, 2026 compared to December 31, 2025, despite the decline in domain names under management.
During both the three and nine months ended September 30, 2026, a customer, EchoStar, within our Wavelo segment accounted for 11% of total net revenues. EchoStar accounted for 11.5% of total net revenues during both the three and nine months ended September 30, 2025. EchoStar accounted for 46% of total accounts receivable at September 30, 2026 and 44% of total accounts receivable at December 31, 2025.
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 $0.9 million as of September 30, 2026 and $1.3 million as of December 31, 2025. Based on this assessment, we expect the carrying amount of our outstanding receivables, net of allowance for doubtful accounts, to be fully collected.
Ting
Ting generated $22.3 million in net revenue during the three months ended September 30, 2026, up $5.3 million, or 31%, compared to the three months ended September 30, 2025. This growth is driven primarily by new construction revenue and service revenue from Laguna Woods Village, California, United States, as well as from subscriber growth across our Fiber network and the continued growth of available serviceable addresses in Ting towns throughout the United States.
Ting generated $63.3 million in net revenue during the nine months ended September 30, 2026, up $13.6 million, or 27%, compared to the nine months ended September 30, 2025. This growth is driven primarily by new construction revenue and service revenue from Laguna Woods Village, California, United States, as well as from subscriber growth across our Fiber network and the continued growth of available serviceable addresses in Ting towns throughout the United States.
As of September 30, 2026, Ting Internet had access to 126,000 owned infrastructure serviceable addresses, 161,400 partner infrastructure serviceable addresses and 64,000 active subscribers under its management; compared to having access to 126,000 owned infrastructure serviceable addresses, 88,000 partner infrastructure serviceable addresses and 52,000 active subscribers under its management as of September 30, 2025. These figures exclude any changes in serviceable addresses and accounts attributable to Simply Bits.
Wavelo
Platform Services
Net revenues from Wavelo Platform Services for the three months ended September 30, 2026, decreased by $0.1 million, or 1%, to $11.7 million as compared to the three months ended September 30, 2025. The decrease in net revenue is driven by a decrease in subscribers under management. Intersegment 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.
Net revenues from Wavelo Platform Services for the nine months ended September 30, 2026, decreased by $0.9 million, or 2%, to $35.0 million as compared to the nine months ended September 30, 2025. The decrease in net revenue is driven by fewer bundled professional services hours recognized in the current period. This decrease was partially offset by a performance excellence bonus received from EchoStar. Intersegment 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.
Other Professional Services
Net revenues from Other Professional Services was nil for both the three months ended September 30, 2026 and September 30, 2025, as well as the nine months ended September 30, 2026 and the nine months ended September 30, 2025. These revenues relate to the provision of standalone technology services development work for our CSP customers and are non-recurring and often one-time in nature, and expectedly 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.
Tucows Domains
Wholesale - Domain Services
During the three months ended September 30, 2026, Wholesale domain services net revenue decreased by $3.0 million, or 6%, to $48.9 million as compared to the three months ended September 30, 2025. Decreases from Wholesale domain services domain registrations were driven by lower billings due to a decline in domain names under management since September 30, 2025.
During the nine months ended September 30, 2026, Wholesale domain services net revenue decreased by $6.9 million, or 5%, to $146.5 million as compared to the nine months ended September 30, 2025. Decreases from Wholesale domain services domain registrations were driven by lower billings due to a decline in domain names under management since September 30, 2025.
As of September 30, 2026, together, the OpenSRS, ENom, EPAG, and Ascio Domain Services manage 21.3 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 by 1.0 million since September 30, 2025, driven by some resellers migrating management of their domains in-house.
Wholesale - Value Added Services
During the three months ended September 30, 2026, value-added services net revenue decreased by $1.0 million, or 17%, to $5.1 million as compared to the three months ended September 30, 2025. The decrease in value-added service revenue was primarily driven by lower expiry auction revenue, which is historically inconsistent and difficult to predict, as well as storefront revenue reclassified from value-added services to wholesale, and a small decrease in certificate sales.
During the nine months ended September 30, 2026, value-added services net revenue decreased by $0.9 million, or 5%, to $16.9 million as compared to the nine months ended September 30, 2025. The decrease in value-added service revenue was primarily driven by lower expiry auction revenue, which is historically inconsistent and difficult to predict, as well as a small decrease in certificate sales.
Retail
During the three months ended September 30, 2026, retail domain services net revenue increased by $0.1 million, or 1%, to $9.9 million as compared to the three months ended September 30, 2025. This was driven by an increase in portfolio sales and Exact hosting revenue, offset by a decrease in legacy ENom retail names revenue.
During the nine months ended September 30, 2026, retail domain services net revenue increased by $0.2 million, or less than 1%, to $29.6 million as compared to the nine months ended September 30, 2025. This was primarily driven by increased Hover retail names revenue, offset by the decline in portfolio sales and legacy ENom retail names revenue.
Corporate and other - Mobile Services and Eliminations
Net revenues from Mobile Services and eliminations for the three months ended September 30, 2026 increased by $0.2 million or 8%, to $2.0 million as compared to the three months ended September 30, 2025. This was driven by subscriber growth across both Ting and Mobile Services.
Net revenues from Mobile Services and eliminations for the nine months ended September 30, 2026 increased by $0.5 million or 10%, to $5.9 million as compared to the nine months ended September 30, 2025. This was driven by subscriber growth across both Ting and Mobile Services.
COST OF REVENUES
Ting
Cost of revenues primarily includes the costs for provisioning high speed Internet access for Ting and its subsidiaries, Cedar and Simply Bits, which is comprised of network access fees paid to third-parties to use their network, leased circuit costs to directly support enterprise customers, personnel and related expenses (excluding costs eligible for capitalization) for the physical planning, design, construction, and build out of the physical Fiber network, and as well as personnel and related expenses (excluding costs eligible for capitalization) for the installation, activation, repair, maintenance and overall field service delivery of the Ting business. Other costs include field vehicle expenses, and small sundry equipment and supplies consumed in building the Fiber network.
Cost of revenues for construction services relate to costs for the design, construction, and installation of a fiber optic network for a specific customer contract. Control of the network infrastructure transfers to the customer as it is constructed.
Wavelo
Platform Services
Cost of revenues to provide the MONOS, ISOS and SM platforms, as well as our legacy Platypus ISP Billing software services including network access, provisioning and billing services for CSPs. This includes the amortization of any capitalized contract fulfillment costs over the period consistent with the pattern of transferring network access, provisioning and billing services to which the cost relates. Additionally, this includes any fees paid to third-party public cloud hosting or other service providers for customer-specific platform deployment or delivery costs.
Other Professional Services
Cost of revenues to provide standalone technology services development work to our CSP customers to help support their businesses. This includes any personnel and contractor fees for any client service resources retained by the Company. Only a subset of the Company's employee base provides professional services to our customers. This cost reflects that group of resources.
Tucows Domains
Wholesale - Domain Services
Cost of revenues for domain registrations represents the amortization of registry and accreditation fees on a basis consistent with the recognition of revenues from our customers, namely ratably over the term of provision of the service. Registry fees, the primary component of cost of revenues, are paid in full when the domain is registered, and are initially recorded as prepaid domain registry fees. This accounting treatment reasonably approximates a recognition pattern that corresponds with the provision of the services during the period. Market development fund rebates, provided by registries as incentives for certain top-level domains, are reflected as a reduction to cost of goods sold in the month they are received.
Wholesale - Value-Added Services
Costs of revenues for value-added services include licensing and royalty costs related to the provisioning of certain components for hosted email and fees paid to third-party hosting services. Fees payable for trust certificates and storefront customer domains are amortized on a basis consistent with the provision of service, generally one year, while email hosting fees and monthly printing fees are included in cost of revenues in the month they are incurred.
Retail
Costs of revenues for our provision and management of Internet services through our retail site, Hover.com, include the amortization of registry fees on a basis consistent with the recognition of revenues from our customers, namely ratably over the term of provision of the service. Registry fees, the primary component of cost of revenues, are paid in full when the domain is registered, and are recorded as prepaid domain registry fees and are expensed ratably over the renewal term. Costs of revenues for our surname portfolio represent the amortization of registry fees for domains added to our portfolio over the renewal period, which is generally one year, the value attributed under intangible assets to any domain name sold and any impairment charges that may arise from our assessment of our domain name intangible assets.
Corporate and other- Mobile Services and Eliminations
Cost of revenues for retail mobile services includes the costs of provisioning mobile services, which is primarily our customers' voice, messaging, data usage provided by our MNO partner, and the costs of providing mobile phone hardware, which is the cost of mobile phone devices and SIM cards sold to our customers, order fulfillment related expenses, and inventory write-downs. Included in the costs of provisioning mobile services are any penalties associated with the minimum commitments with our MNO partner.
These mobile services costs also include the personnel and related costs of transitional services provided to EchoStar. These are billed monthly at set and established rates for services provided in period and include the provision of sales, marketing, order fulfillment, and data analytics related to the legacy customer base sold to EchoStar. The Company recognizes costs as the Company satisfies its obligations to provide professional services.
Network Expenses
Network expenses include personnel and related expenses related to platform and network site reliability engineering, network operations centers, IT infrastructure and supply chain teams that support our various business segments. It also includes the depreciation and any impairment charges of property and equipment related to our networks and platforms, amortization of any intangible assets related to our networks and platforms, communication and productivity tool costs, and equipment maintenance costs. Communication and productivity tool costs include collaboration, customer support, bandwidth, co-location and provisioning costs we incur to support the supply of all our services across our segments.
The following table presents our cost of revenues, by revenue source:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Ting: | |||||||||||||||||||||||
| Fiber Internet Services | $ | 7,418 | $ | 6,478 | $ | 20,436 | $ | 21,021 | |||||||||||||||
| Construction revenue | 3,175 | - | 8,429 | - | |||||||||||||||||||
| Total Fiber | 10,593 | 6,478 | 28,865 | 21,021 | |||||||||||||||||||
| Wavelo: | |||||||||||||||||||||||
| Platform Services | 326 | 88 | 1,044 | 320 | |||||||||||||||||||
| Other professional services | - | - | - | - | |||||||||||||||||||
| Total Wavelo | 326 | 88 | 1,044 | 320 | |||||||||||||||||||
| Tucows Domains | |||||||||||||||||||||||
| Wholesale | |||||||||||||||||||||||
| Domain Services | 38,906 | 41,793 | 116,472 | 123,368 | |||||||||||||||||||
| Value Added Services | 318 | 450 | 960 | 1,386 | |||||||||||||||||||
| Total Wholesale | 39,224 | 42,243 | 117,432 | 124,754 | |||||||||||||||||||
| Retail | 4,281 | 4,380 | 12,844 | 12,953 | |||||||||||||||||||
| Total Tucows Domains | 43,505 | 46,623 | 130,276 | 137,707 | |||||||||||||||||||
| Corporate and other*: | |||||||||||||||||||||||
| Mobile Services and eliminations | $ | (223) | 4,641 | 9,172 | 13,012 | ||||||||||||||||||
| Network Expenses: | |||||||||||||||||||||||
| Network, other costs | 6,513 | 5,855 | 18,619 | 17,488 | |||||||||||||||||||
| Network, depreciation and amortization cost | 10,134 | 10,692 | 30,171 | 32,260 | |||||||||||||||||||
| Total Network Expenses | 16,647 | 16,547 | 48,790 | 49,748 | |||||||||||||||||||
| $ | 70,848 | $ | 74,377 | $ | 218,147 | $ | 221,808 | ||||||||||||||||
| Decrease | $ | (3,530) | $ | (3,661) | |||||||||||||||||||
| Decrease - percentage | (5 | %) | (2 | %) | |||||||||||||||||||
*Corporate and other includes costs from Ting Mobile, corporate overhead functions, and other activities that do not meet the criteria for separate reportable segment disclosure under ASC 280. Ting Mobile is not managed as a separate reportable segment and is included within Corporate and other for purposes of segment reporting. Intersegment revenues and expenses are eliminated on consolidation.
The following table presents our cost of revenues, as a percentage of total cost of revenues for the periods presented:
| For the Three Months Ended September 30, | For the Nine Months Ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Ting: | |||||||||||||||||||||||
| Fiber Internet Services | 11 | % | 9 | % | 9 | % | 9 | % | |||||||||||||||
| Construction services | 4 | % | 0 | % | 4 | % | 0 | % | |||||||||||||||
| Total Ting | 15 | % | 9 | % | 13 | % | 9 | % | |||||||||||||||
| Wavelo: | |||||||||||||||||||||||
| Platform Services | 0 | % | 0 | % | 0 | % | 0 | % | |||||||||||||||
| Other professional services | 0 | % | 0 | % | 0 | % | 0 | % | |||||||||||||||
| Total Wavelo | 0 | % | 0 | % | 0 | % | 0 | % | |||||||||||||||
| Tucows Domains: | |||||||||||||||||||||||
| Wholesale | |||||||||||||||||||||||
| Domain Services | 56 | % | 56 | % | 54 | % | 56 | % | |||||||||||||||
| Value Added Services | 0 | % | 1 | % | 0 | % | 1 | % | |||||||||||||||
| Total Wholesale | 56 | % | 57 | % | 54 | % | 57 | % | |||||||||||||||
| Retail | 6 | % | 6 | % | 6 | % | 6 | % | |||||||||||||||
| Total Tucows Domains | 62 | % | 63 | % | 60 | % | 63 | % | |||||||||||||||
| Corporate and other*: | |||||||||||||||||||||||
| Mobile services and eliminations | 0 | % | 6 | % | 4 | % | 6 | % | |||||||||||||||
| Network Expenses: | |||||||||||||||||||||||
| Network, other costs | 9 | % | 8 | % | 9 | % | 8 | % | |||||||||||||||
| Network, depreciation and amortization cost | 14 | % | 14 | % | 14 | % | 14 | % | |||||||||||||||
| 23 | % | 22 | % | 23 | % | 22 | % | ||||||||||||||||
| 100 | % | 100 | % | 100 | % | 100 | % | ||||||||||||||||
*Corporate and other includes costs from Ting Mobile, corporate overhead functions, and other activities that do not meet the criteria for separate reportable segment disclosure under ASC 280. Ting Mobile is not managed as a separate reportable segment and is included within Corporate and other for purposes of segment reporting. Intersegment revenues and expenses are eliminated on consolidation.
Total cost of revenues for the three months ended September 30, 2026, decreased by $3.5 million or 5%, to $70.8 million from $74.4 million in the three months ended September 30, 2025. The three-month decrease in cost of revenues was driven by Mobile Service and eliminations, and Tucows Domains; partially offset by increases across Ting, Wavelo, and Network Expenses. The decrease in Mobile Services and eliminations of $4.9 million was due to the rerate credit related to the August MNO contract renewal, which stipulated that the MNO partner would credit the Company for any overcharges resulting from invoices issued at the previous rates from May to September 2026. The decrease in Tucows Domains of $3.1 million was primarily driven by a decline in domain names under management. The increase in Ting of $4.1 million is aligned with new costs associated with construction services, as well as growth in active subscribers. The increase in Wavelo of $0.2 million was primarily driven by the recognition of project costs related to bundled professional services. The increase in Network Expenses of $0.1 million was primarily driven by increased severance costs, offset by depreciation of all non-network assets, some of which were previously depreciated in network depreciation, being reclassified to operating expenses.
Total cost of revenues for the nine months ended September 30, 2026, decreased by $3.7 million or 2%, to $218.1 million from $221.8 million in the nine months ended September 30, 2025. The nine-month decrease in cost of revenues was driven by Tucows Domains, Mobile Service and eliminations, and Network Expenses, and partially offset by increases in Ting and Wavelo. The decrease in Tucows Domains of $7.4 million was primarily driven by a decline in domain names under management. The decrease in Mobile Services and eliminations of $3.8 million was primarily due to the lower MRR at our current subscriber count in the August MNO contract renewal. The lower MRR was retrospectively applied from May 2026 via the rerate credit recognized in Q3 2026. This was slightly offset by higher mobile telephony service costs due to plan mix changes impacting usage in the current period, as well as some bad debt costs related to long distance fraud charges. The decrease in Network Expenses of $1.0 million was primarily driven by a decrease in depreciation following sale of assets in the prior period, partially offset by increased severance costs. The increase in Ting of $7.8 million is aligned with new costs associated with construction services, as well as growth in active subscribers; offset by a one-time lease accounting adjustment in the prior period. The increase in Wavelo of $0.7 million was primarily driven by the recognition of project costs related to bundled professional services.
Deferred costs of fulfillment as of September 30, 2026, increased by $0.4 million to $113.4 million from $113.0 million at December 31, 2025. This was primarily driven by Tucows Domains due to the seasonal pattern of renewals being billed and deferred in the first half of the year, with the balance being drawn down and reaching its lowest balance towards the end of the year, resulting in a higher deferred costs of fulfillment balance at September 30, 2026 compared to December 31, 2025, despite the decline in domain names under management.
Ting
During the three months ended September 30, 2026, costs related to provisioning high speed Internet access for Ting and its subsidiaries - Cedar and Simply Bits, increased by $4.1 million, or 64%, to $10.6 million as compared to the three months ended September 30, 2025. $3.2 million related to new costs associated with construction services, while $0.9 million is aligned with the subscriber and serviceable address growth across our Fiber network. Both these increases are consistent with the discussion in the Net Revenue section above.
During the nine months ended September 30, 2026, costs related to provisioning high speed Internet access for Ting and its subsidiaries - Cedar and Simply Bits, increased by $7.8 million, or 37%, to $28.9 million as compared to the nine months ended September 30, 2025. The prior period included a $3.0 million one-time Ting lease accounting adjustment to true up lease expense for three partner network leases, increasing costs. Normalizing for this impact in the current period results in an increase of $10.8 million, of which $8.4 million related to new costs associated with construction services, while $2.4 million is aligned with the subscriber and serviceable address growth across our Fiber network. Both these increases are consistent with the discussion in the Net Revenue section above.
Wavelo
Platform Services
Cost of revenues from Wavelo Platform Services for the three months ended September 30, 2026 increased by $0.2 million, or 270%, to $0.3 million as compared to the three months ended September 30, 2025. This was driven by the recognition of project costs related to providing bundled professional services to EchoStar. Although fewer bundled professional services hours were recognized to revenue in the three months ended September 30, 2026, project costs were higher, as the hours recognized in the three months ended September 30, 2025 were recognized on an expiry basis with no corresponding costs associated with providing services.
Cost of revenues from Wavelo Platform Services for the nine months ended September 30, 2026 increased by $0.7 million, or 226%, to $1.0 million as compared to the nine months ended September 30, 2025. This was driven by the recognition of project costs related to providing bundled professional services to EchoStar. Although fewer bundled professional services hours were recognized to revenue in the nine months ended September 30, 2026, project costs were higher, as the hours recognized in the nine months ended September 30, 2025 were recognized on an expiry basis with no corresponding costs associated with providing services.
Other Professional Services
Cost of revenues from Other Professional Services was nil for both the three months ended September 30, 2026 and September 30, 2025, as well as the nine months ended September 30, 2026 and for the nine months ended September 30, 2025. 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. This is aligned to the net revenues from other professional services discussed above.
Tucows Domains
Wholesale - Domain Services
Costs for Wholesale domain services for the three months ended September 30, 2026, decreased by $2.9 million, or 7%, to $38.9 million, as compared to $41.8 million for the three months ended September 30, 2025. Decreases from Wholesale domain registrations were primarily driven by a decline in domain names under management since September 30, 2025 as some resellers migrated management of their domains in-house. The decrease is aligned to the decrease in Net Revenues discussed above.
Costs for Wholesale domain services for the nine months ended September 30, 2026, decreased by $6.9 million, or 6%, to $116.5 million, as compared to $123.4 million for the nine months ended September 30, 2025. Decreases from Wholesale domain registrations were primarily driven by a decline in domain names under management since September 30, 2025 as some resellers migrated management of their domains in-house. The decrease is aligned to the decrease in Net Revenues discussed above.
Wholesale - Value-Added Services
Costs for wholesale value-added services for the three months ended September 30, 2026, decreased by $0.1 million, or 29%, to $0.3 million, as compared to $0.5 million for the three months ended September 30, 2025. This was driven by storefront costs reclassified from value-added services to wholesale, as well as lower certificate costs, in line with lower certificate revenues.
Costs for wholesale value-added services for the nine months ended September 30, 2026, decreased by $0.4 million, or 31%, to $1.0 million, as compared to $1.4 million for the nine months ended September 30, 2025. This was driven by storefront costs reclassified from value-added services to wholesale, as well as lower certificate costs, in line with lower certificate revenues.
Retail
Costs for retail domain services for the three months ended September 30, 2026, decreased by $0.1 million, or 2%, to $4.3 million, as compared to $4.4 million for the three months ended September 30, 2025. This was driven by lower legacy Enom retail names, in line with revenue discussion above.
Costs for retail domain services for the nine months ended September 30, 2026, decreased by $0.1 million, or 1%, to $12.8 million, as compared to $13.0 million for the nine months ended September 30, 2025. This was driven by lower legacy Enom retail names, in line with revenue discussion above.
Corporate and other - Mobile Services and Eliminations
Cost of revenues from Mobile Services and Eliminations for the three months ended September 30, 2026, decreased by $4.9 million or 105%, to $0.2 million as compared to the three months ended September 30, 2025. The decrease is primarily driven by the $4.3 million rerate credit related to the August MNO contract renewal, which stipulated that the MNO partner would credit the Company for any overcharges resulting from invoices issued at the previous rates from May to September 2026. This was furthered by a $0.3 million credit received related to the usage costs associated with long-distance charges from an isolated instance of unauthorized traffic. The Company accrued no minimum penalties associated with the MNO minimum commitment shortfall in the three months ended September 30,
2026, as compared to $1.3 million in the three months ended September 30, 2025. The company incurred penalties through January 2026, at which point the initial term of the contract was complete. The contract automatically continued month-to-month thereafter, until the renewal in August 2026.
Cost of revenues from Mobile Services and Eliminations for the nine months ended September 30, 2026, decreased by $3.8 million or 30%, to $9.2 million as compared to the nine months ended September 30, 2025. The decrease was primarily due to the lower MRR at our current subscriber count in the August MNO contract renewal. The lower MRR was retrospectively applied from May 2026 via the rerate credit recognized in Q3 2026. This was slightly offset 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, and less so from any transition services related costs. This increase is driven by subscriber growth with new subscribers joining on unlimited plans with higher data usage profiles. Some of the cost increase period-over-period is also a result of bad debt costs associated with long-distance charges from an isolated instance of unauthorized traffic. The Company accrued $0.2 million in penalties associated with the MNO minimum commitment shortfall in the nine months ended September 30, 2026, as compared to $3.5 million in the nine months ended September 30, 2025. The company incurred penalties through January 2026, at which point the initial term of the contract was complete. The contract automatically continued month-to-month thereafter, until the renewal in August 2026.
Network Expenses
Network expenses for the three months ended September 30, 2026, increased by $0.1 million or 1%, to $16.6 million, as compared to $16.5 million for the three months ended September 30, 2025. The increase was primarily driven by increased severance costs, offset by depreciation of all non-network assets, some of which were previously depreciated in network depreciation, being reclassified to operating expenses.
Network expenses for the nine months ended September 30, 2026, decreased by $1.0 million or 2%, to $48.8 million, as compared to $49.7 million for the nine months ended September 30, 2025. This was primarily driven by a decrease in depreciation following sale of assets in the prior period, slightly offset by incremental depreciation from continued development of Wavelo capitalized platform assets, as well as increased severance costs.
SALES AND MARKETING
Sales and marketing expenses consist primarily of personnel costs. These costs include commissions and related expenses of our sales, product management, public relations, call center, support and marketing personnel. Other sales and marketing expenses include customer acquisition costs, advertising and other promotional costs.
| (Dollar amounts in thousands of U.S. dollars) | For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Sales and marketing | $ | 11,701 | $ | 11,882 | $ | 36,358 | $ | 34,818 | |||||||||||||||
| Increase (decrease) over prior period | $ | (181) | $ | 1,540 | |||||||||||||||||||
| Increase (decrease) - percentage | (2) | % | 4 | % | |||||||||||||||||||
| Percentage of net revenues | 12 | % | 12 | % | 12 | % | 12 | % | |||||||||||||||
Sales and marketing expenses for the three months ended September 30, 2026, decreased by $0.2 million, or 2%, to $11.7 million as compared to the three months ended September 30, 2025. The decrease was primarily driven by a decrease in Wavelo bonus as costs are trued up to actual scorecard performance. This was partially offset by marketing and contracted labor spending as Ting ramps up marketing and customer acquisition efforts.
Sales and marketing expenses for the nine months ended September 30, 2026, increased by $1.5 million, or 4%, to $36.4 million as compared to the nine months ended September 30, 2025. The increase was primarily driven by marketing, contracted labor, and commissions spending as Ting ramps up marketing and customer acquisition efforts. This was furthered by a slight increase in contracted labor spend as Wavelo looks to grow its pipeline and team in support of top line growth.
TECHNICAL OPERATIONS AND DEVELOPMENT
Technical operations and development expenses consist primarily of personnel costs and related expenses required to support the development of new or enhanced service offerings and the maintenance and upgrading of existing infrastructure. This includes expenses incurred in the research, design and development of technology that we use to register domain names, provide Wavelo's platform services, provide Ting's Internet Services, email, retail, domain portfolio and other Internet services. All technical operations and development costs are expensed as incurred.
| (Dollar amounts in thousands of U.S. dollars) | For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Technical operations and development | $ | 4,816 | $ | 4,682 | $ | 14,108 | $ | 13,433 | |||||||||||||||
| Increase (decrease) over prior period | $ | 134 | $ | 675 | |||||||||||||||||||
| Increase (decrease) - percentage | 3 | % | 5 | % | |||||||||||||||||||
| Percentage of net revenues | 5 | % | 5 | % | 5 | % | 5 | % | |||||||||||||||
Technical operations and development expenses for the three months ended September 30, 2026, increased by $0.1 million, or 3%, to $4.8 million when compared to the three months ended September 30, 2025. The increase was primarily driven by Tucows Domains severance costs, slightly furthered by increased AI token costs. This was offset by decreases in payroll costs in Wavelo and Ting, reflective of a shift towards a smaller workforce, as well as increased capitalized labor in Tucows Domains.
Technical operations and development expenses for the nine months ended September 30, 2026, increased by $0.7 million, or 5%, to $14.1 million when compared to the nine months ended September 30, 2025. The increase was primarily driven by Tucows Domains severance costs, furthered by increased AI token costs and lower capitalized labor in Wavelo. This was offset by decreases in payroll costs in Wavelo and Ting, reflective of a shift towards a smaller workforce, as well as increased capitalized labor in Tucows Domains.
GENERAL AND ADMINISTRATIVE
General and administrative expenses consist primarily of compensation and related costs for managerial and administrative personnel, fees for professional services, public listing expenses, rent, foreign exchange and other general corporate expenses.
| (Dollar amounts in thousands of U.S. dollars) | For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| General and administrative | $ | 11,538 | $ | 9,650 | $ | 34,462 | $ | 28,552 | |||||||||||||||
| Increase (decrease) over prior period | $ | 1,887 | $ | 5,909 | |||||||||||||||||||
| Increase (decrease) - percentage | 20 | % | 21 | % | |||||||||||||||||||
| Percentage of net revenues | 12 | % | 10 | % | 12 | % | 10 | % | |||||||||||||||
General and administrative expenses for the three months ended September 30, 2026, increased by $1.9 million, or 20%, to $11.5 million as compared to the three months ended September 30, 2025. The increase was primarily driven by increased professional fees across the segments, as well as increased severance costs. Slightly offset by decreased facilities costs as a portion of Ting rent was reclassified to Other Expenses, to correspond with the related sublease income recorded to Other Income.
General and administrative expenses for the nine months ended September 30, 2026, increased by $5.9 million, or 21%, to $34.5 million as compared to the nine months ended September 30, 2025. The increase was primarily driven by increased professional fees across the segments, as well as increased severance costs and unrealized loss on foreign exchange. Slightly offset by decreased facilities costs as a portion of Ting rent was reclassified to Other Expenses, to correspond with the related sublease income recorded to Other Income.
IMPAIRMENT OF PROPERTY AND EQUIPMENT
| (Dollar amounts in thousands of U.S. dollars) | For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Impairment of property and equipment | $ | - | $ | 10,724 | $ | - | $ | 10,724 | |||||||||||||||
| Increase (decrease) over prior period | $ | (10,724) | $ | (10,724) | |||||||||||||||||||
| Increase (decrease) - percentage | (100) | % | (100) | % | |||||||||||||||||||
| Percentage of net revenues | 0 | % | 11 | % | 0 | % | 4 | % | |||||||||||||||
During the three months and nine months ended September 30, 2025, the Company recorded an impairment loss of $10.7 million primarily related to abandoned materials and supplies held for capital projects, as well as impairment of right-of-use operating lease assets. No such impairment was recorded in the three months ended September 30, 2026.
DEPRECIATION OF PROPERTY AND EQUIPMENT
| (Dollar amounts in thousands of U.S. dollars) | For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Depreciation of property and equipment | $ | 443 | $ | 78 | $ | 1,350 | $ | 241 | |||||||||||||||
| Increase (decrease) over prior period | $ | 365 | $ | 1,109 | |||||||||||||||||||
| Increase (decrease) - percentage | 466 | % | 461 | % | |||||||||||||||||||
| Percentage of net revenues | 0 | % | 0 | % | 0 | % | 0 | % | |||||||||||||||
Depreciation costs for the three months ended September 30, 2026, increased by $0.4 million, or 466%, to $0.4 million as compared to the three months ended September 30, 2025. The increase was primarily driven by depreciation of all non-network assets, some of which were previously depreciated in network depreciation, being reclassified to operating expenses for more relevant presentation. The majority of this increase relates to the Ting segment.
Depreciation costs for the nine months ended September 30, 2026, increased by $1.1 million, or 461%, to $1.3 million as compared to the nine months ended September 30, 2025. The increase was primarily driven by depreciation of all non-network assets, some of which were previously depreciated in network depreciation, being reclassified to operating expenses for more relevant presentation. The majority of this increase relates to the Ting segment.
AMORTIZATION OF INTANGIBLE ASSETS
| (Dollar amounts in thousands of U.S. dollars) | For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Amortization of intangible assets | $ | 331 | $ | 707 | $ | 1,402 | $ | 2,296 | |||||||||||||||
| Increase (decrease) over prior period | $ | (376) | $ | (894) | |||||||||||||||||||
| Increase (decrease) - percentage | (53) | % | (39) | % | |||||||||||||||||||
| Percentage of net revenues | 0 | % | 1 | % | 0 | % | 1 | % | |||||||||||||||
Amortization of intangible assets for the three months ended September 30, 2026, decreased by $0.4 million, or 53%, to $0.3 million as compared to the three months ended September 30, 2025. The decrease was driven by the completed amortization of Ascio brand assets, which was completed in March 2026.
Amortization of intangible assets for the nine months ended September 30, 2026, decreased by $0.9 million, or 39%, to $1.4 million as compared to the nine months ended September 30, 2025. The decrease was driven by the completed amortization of Ascio brand assets , which was completed in March 2026.
LOSS (GAIN) ON DISPOSITION OF PROPERTY AND EQUIPMENT
| (Dollar amounts in thousands of U.S. dollars) | For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| (Gain) loss on disposition of property and equipment | $ | (1) | $ | (3,965) | $ | 827 | $ | (5,753) | |||||||||||||||
| Increase (decrease) over prior period | $ | 3,964 | $ | 6,580 | |||||||||||||||||||
| Increase (decrease) - percentage | (100 | %) | (114 | %) | |||||||||||||||||||
| Percentage of net revenues | 0 | % | (4 | %) | 0 | % | (2 | %) | |||||||||||||||
In the three months ended September 30, 2026, the Company recorded minimal gains on disposition (less than $0.1 million). In the three months ended September 30, 2025, the Company recorded a gain on disposition of property and equipment of $4.0 million, primarily related to the disposition of Ting inventory held for capital projects.
In the nine months ended September 30, 2026, the Company recorded a loss on disposition of property and equipment of $0.8 million, primarily related to the disposition of Ting contract assets and inventory held for capital projects. In the nine months ended September 30, 2025, the Company recorded a gain on disposition of property and equipment of $5.8 million, primarily related to the disposition of Ting inventory held for capital projects.
OTHER INCOME (EXPENSES)
| (Dollar amounts in thousands of U.S. dollars) | For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Other income (expense), net | $ | (8,583) | $ | (10,986) | $ | (31,876) | $ | (32,413) | |||||||||||||||
| Increase (decrease) over prior period | $ | 2,403 | $ | 537 | |||||||||||||||||||
| Increase (decrease) - percentage | (22 | %) | (2 | %) | |||||||||||||||||||
| Percentage of net revenues | (9 | %) | (11 | %) | (11) | % | (11 | %) | |||||||||||||||
Other income (expenses) during the three months ended September 30, 2026, increased by $2.4 million when compared to the three months ended September 30, 2025. The increase in other income (expense) was driven by lower interest expense, offset by lower income earned on sale of Transferred Assets to EchoStar and lower other income. Net interest expense associated with Generate's redeemable preferred units decreased by $3.2 million as there were fewer months of interest expense incurred following the acquisition of the preferred shares in July 2026. Income earned on sale of Transferred Assets to EchoStar decreased by $0.6 million from normal churn, as expected. Other income decreased by $0.2 million driven by the reclassification of rent expense from General and Administrative expenses, to correspond with income from Ting subleases recorded to Other Income.
Other income (expenses) during the nine months ended September 30, 2026, increased by $0.5 million when compared to the nine months ended September 30, 2025. The increase in other income (expense) was driven by lower interest expense, offset by lower income earned on sale of Transferred Assets to EchoStar and lower other income. Net interest expense decreased by $2.1 million, driven by a $2.0 million decrease associated with Generate's redeemable preferred units as there were fewer months of interest expense incurred following the acquisition of the preferred shares in July 2026, and a $1.2 million decrease in interest expense related to the Credit Facility for the Tucows businesses excluding Ting due to the reduction in outstanding principal balance; offset by a $0.7 million increase due to reduced money market fund interest income from lower rates, and a $0.3 million increase due to lower interest expense capitalization associated with Fiber network assets under construction. Income earned on sale of Transferred Assets to EchoStar decreased by $1.5 million from normal churn, as expected. Other income decreased by $0.1 million driven by the reclassification of 4 months of rent expense from General and Administrative expenses, to correspond with income from Ting subleases recorded to Other Income.
INCOME TAXES
| (Dollar amounts in thousands of U.S. dollars) | For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Provision for income taxes | $ | 1,988 | $ | 2,456 | $ | 7,510 | $ | 6,887 | |||||||||||||||
| Increase (decrease) over prior year | $ | (468) | $ | 623 | |||||||||||||||||||
|
Effective tax rate *not meaningful |
(24) | % | (12) | % | (18) | % | (15) | % | |||||||||||||||
Income tax expense for the three and nine months ended September 30, 2026, decreased by $0.5 million and increased by $0.6 million, respectively, when compared to the three and nine months ended September 30, 2025. The change in the effective tax rate is primarily due to the impact of foreign operations.
We regularly evaluate our deferred tax assets, including net operating losses, to determine whether a valuation allowance is necessary based on our expectations of future taxable income. The increase in our valuation allowance on net operating losses reflects our assessment of the likelihood of realizing future tax benefits associated with these losses.
ADJUSTED EBITDA
We believe that the provision of this non-GAAP measure allows investors to evaluate the operational and financial performance of our core business using similar evaluation measures to those used by management. We use Adjusted EBITDA to measure our performance and prepare our budgets. Since Adjusted EBITDA is a non-GAAP financial performance measure, our calculation of Adjusted EBITDA may not be comparable to other similarly titled measures of other companies; and should not be considered in isolation, as a substitute for, or superior to measures of financial performance prepared in accordance with GAAP. Because Adjusted EBITDA is calculated before certain recurring cash charges, including interest expense and taxes, and is not adjusted for capital expenditures or other recurring cash requirements of the business, it should not be considered as a liquidity measure. For liquidity measures, see the Condensed Consolidated Statements of Cash Flows included in Part I of this Quarterly Report. Non-GAAP financial measures do not reflect a comprehensive system of accounting and may differ from non-GAAP financial measures with the same or similar captions that are used by other companies and/or analysts and may differ from period to period. We endeavor to compensate for these limitations by providing the relevant disclosure of the items excluded in the calculation of Adjusted EBITDA to net loss based on GAAP, which should be considered when evaluating the Company's results. Tucows strongly encourages investors to review its financial information in its entirety and not to rely on a single financial measure.
Our Adjusted EBITDA definition excludes provision for income tax, depreciation, amortization of intangible assets, asset impairment and loss (gain) on disposition of property and equipment, interest expense (net), stock-based compensation, gains and losses from unrealized foreign currency transactions and costs that are one-time in nature and not indicative of on-going performance (profitability), including acquisition and transition costs. Gains and losses from unrealized foreign currency transactions removes the unrealized effect of the change in the mark-to-market values on outstanding foreign currency contracts not designated in accounting hedges, as well as the unrealized effect from the translation of monetary accounts denominated in non-U.S. dollars to U.S. dollars.
The following table reconciles net loss to adjusted EBITDA:
| Reconciliation of Net loss to Adjusted EBITDA | Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||
| (In Thousands of U.S. Dollars) | 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||
| Net Loss for the period | $ | (10,273) | $ | (23,019) | $ | (48,851) | $ | (53,789) | |||||||||||||||
| Less: | |||||||||||||||||||||||
| Provision for income taxes | 1,988 | 2,456 | 7,510 | 6,887 | |||||||||||||||||||
| Depreciation of property and equipment | 10,212 | 10,405 | 30,425 | 31,404 | |||||||||||||||||||
| Impairment and loss (gain) on disposition of property and equipment | (1) | 6,920 | 1,441 | 5,771 | |||||||||||||||||||
| Amortization of intangible assets | 696 | 1,072 | 2,497 | 3,393 | |||||||||||||||||||
| Interest expense, net | 10,689 | 13,901 | 39,004 | 41,135 | |||||||||||||||||||
| Stock-based compensation | 962 | 1,387 | 3,220 | 4,278 | |||||||||||||||||||
| Unrealized loss (gain) on foreign exchange revaluation of foreign denominated monetary assets and liabilities | (189) | (164) | 32 | (601) | |||||||||||||||||||
|
Acquisition, transaction and transition costs (1)
|
4,470 | 311 | 7,240 | 1,039 | |||||||||||||||||||
| Adjusted EBITDA | $ | 18,554 | $ | 13,269 | $ | 42,518 | $ | 39,517 | |||||||||||||||
1Acquisition and other costs represent transaction-related expenses, transitional expenses, such as redundant post-acquisition expenses. Expenses include severance or transitional costs associated with department, operational or overall company restructuring efforts, including geographic alignments.
Adjusted EBITDA increased by $5.3 million, or 40%, to $18.6 million for the three months ended September 30, 2026, when compared to the three months ended September 30, 2025. The increase in Adjusted EBITDA was primarily driven by increases across Corporate and other - Mobile Services and eliminations, Ting, and Wavelo. The increase in Corporate and other - Mobile Services and eliminations contribution of $3.6 million was primarily driven by the decrease in cost of revenues related to the rerate credit from the August MNO contract renewal, slightly offset by increased severance, legal, and professional fees. Ting contribution increased by $2.4 million, primarily driven by new construction revenue and continued subscriber growth across the markets we serve. Wavelo contribution increased by $0.3 million, driven by savings across operating expenses, slightly offset by a decrease in revenue driven by fewer subscribers under management. These increases in Adjusted EBITDA were partially offset by a $1.0 million decrease in Tucows Domains contribution, primarily driven by severance costs incurred in the current period, as well as a decrease in revenue due to declining domains under management and expiry auction revenue.
Adjusted EBITDA increased by $3.0 million, or 8%, to $42.5 million for the nine months ended September 30, 2026, when compared to the nine months ended September 30, 2025. The increase in Adjusted EBITDA was driven by $8.0 million increase in Ting, primarily driven by new construction revenue and continued subscriber growth across the markets we serve. This increase in Adjusted EBITDA was partially offset by decreases across Wavelo, Tucows Domains, and Corporate and other - Mobile Services and eliminations. Wavelo's contribution decreased by $3.1 million, driven by less bundled professional services revenues and higher costs, and higher operating costs in service of growth and go-to market activities. Tucows Domains contribution decreased by $1.6 million primarily driven by severance costs incurred in the current period. The decrease in Corporate and other - Mobile Services and eliminations contribution of $0.3 million was primarily driven by the expected decrease in Mobile income earned on sale of Transferred Assets to EchoStar, and increased corporate operating expenses, including legal, professional fees, and severance costs; offset by the decrease in cost of revenues related to the new MRR and to the rerate credit from the August MNO contract renewal.
LIQUIDITY AND CAPITAL RESOURCES
As of September 30, 2026, our cash and cash equivalents balance decreased by $22.0 million, our funds held by trustee balance decreased by $0.2 million, and our secured notes reserve funds balance decreased by $1.1 million when compared to December 31, 2025. The decrease in our cash balance was driven primarily by $15.7 million for additions to property and equipment, $6.0 million repayment of syndicated revolver, $3.0 million for the redemption of preferred shares, $0.9 million related to acquisition of intangible assets, and $0.7 million for syndicated revolver costs. These decreases were offset by $2.4 million in proceeds on disposal of property and equipment by Ting, and $0.8 million from cash earned from operating activities.
Ting Securitized Financing Facility
On August 20, 2024, the Company through its wholly owned subsidiaries, including Ting, entered into a definitive agreement relating to a securitized financing facility related to a privately placed securitized transaction. On the closing date, Ting issued (i) the 2024 Class A-2 Notes, (ii) the 2024 Class B Notes and (iii) the 2024 Class C Notes.
The offering was exempt from registration under the Securities Act. Subject to certain limitations, the 2024 Notes are secured by certain of the Company's revenue-generating assets, consisting principally of the Securitized Assets, that are owned by certain other limited-purpose, bankruptcy-remote, wholly-owned indirect subsidiaries of the Company (collectively, the "Securitization Entities") that act as guarantors under the Base Indenture.
The 2024 Term Notes were issued under the Base indenture, dated as of May 4, 2023 (as supplemented by the Base Indentures Supplement No. 1, dated as of November 10, 2023), by and between the Issuer, the asset parties party thereto and Citibank, N.A., as trustee (in such capacity, the "Indenture Trustee") and securities intermediary and a series supplement to the Base Indenture dated as of the Closing Date (the "Series 2024-1 Supplement"), by and among the Issuer, the asset parties party thereto and the Indenture Trustee. The Base Indenture and the Series 2024-1 Supplement will allow the Issuer to issue additional series of notes in the future, subject to certain conditions set forth therein.
Interest payments on the 2024 Term Notes are payable on a monthly basis. The legal final maturity date of the 2024 Term Notes is in August of 2054, but, unless earlier prepaid to the extent permitted under the Indenture, the anticipated repayment date of the 2024 Term Notes will be in August 2029. If the Issuer has not repaid or refinanced the 2024 Term Notes prior to the anticipated repayment date, additional interest will accrue on the 2024 Term Notes in an amount equal to the greater of (A) 5.00% per annum and (B) a per annum interest rate equal to the excess, if any, by which the sum of the following exceeds the original interest rate of such 2024 Term Note (i) the yield to maturity (adjusted to a "mortgage equivalent basis" pursuant to the standards and practices of the Securities Industry and Financial Markets Association) on such anticipated repayment date of the United States Treasury Security having a term closest to 10 years, plus (ii) 5.00%, plus (iii) (x) for the 2024 Class A-2 Notes, 2.00%, (y) for the 2024 Class B Notes, 3.25% and (z) for the 2024 Class C Notes, 7.00%. Please see the discussion in the Material Cash Requirements section below.
2023 Credit Facility
On September 22, 2023, the Company and its wholly owned subsidiaries, Tucows.com Co., Ting Inc., Tucows (Delaware) Inc., Wavelo, Inc. and Tucows (Emerald), LLC (each, a "Borrower" and together, the "Borrowers") and certain other subsidiaries of the Company, as guarantors, entered into a Credit Agreement (the "2023 Credit Agreement") with Bank of Montreal, as administrative agent ("BMO" or the "Agent"), and the lenders party thereto (the "Lenders"), to, among other things, provide the Borrowers with a revolving credit facility in an aggregate amount not to exceed $240 million (the "2023 Credit Facility"). The Borrowers may request an increase to the Credit Facility through new commitments of up to $60 million if the Total Funded Debt to Adjusted EBITDA Ratio (as defined in the 2023 Credit Agreement) is less than 3.75:1.00. In connection with the 2023 Credit Facility, the Company incurred $0.9 million of fees paid to the Lenders and $0.3 million of legal fees related to the debt issuance. These fees were reflected as a reduction to the carrying amount of the loan payable and were fully amortized over the term of the 2023 Credit Agreement.
On September 8, 2025, the Borrowers entered into a one-year Extension Agreement (the "Extension Agreement"). The Extension Agreement extended the term of the 2023 Credit Agreement through September 22, 2027. The material terms of the 2023 Credit Agreement remained unchanged; however, the Extension Agreement amended certain definitions relating to the treatment of specified expenses in the calculation of Adjusted EBITDA for purposes of the Total Funded Debt to Adjusted EBITDA Ratio financial covenant. In connection with the Extension Agreement, the Company incurred $0.4 million of fees paid to the Lenders. These fees were reflected as reduction to the carrying amount of the loan payable and are being amortized over the extended term from September 2026 to September 2027.
On July 27, 2026, the Company entered into the Third Amendment. The Third Amendment extends the maturity date of the 2023 Credit Facility from September 22, 2027 to July 27, 2029, except with respect to the commitment of one syndicate member in the amount of $27.5 million, which continues to mature on September 22, 2027 unless assigned to a replacement lender. The Company has commenced discussions to replace this lender with an existing or new syndicate member. The outstanding balance attributable to this lender's commitment is classified as a current liability, as its maturity now falls within twelve months of the balance sheet date. The Company is required to maintain a Total Funded Debt to Adjusted EBITDA Ratio of not more than 3.75:1.00 and an Interest Coverage Ratio of not less than 3.00:1.00. The Third Amendment amends the negative covenants to permit the Company to make investments in the Ting business, subject to specified conditions and the existing financial covenants.
During the three and nine months ended September 30, 2026, the Company made repayments of $6.0 million. During the three and nine months ended September 30, 2025, the Company made repayments of $2.5 million and $5.0 million, respectively, on the 2023 Credit Facility. The Company ended September 30, 2026 with a remaining principal balance of $184.4 million, of which $21.1 million will be due in 2027 and $163.3 million will be due in 2029.
As of September 30, 2026, the Company held contracts in the amount of $9.4 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.
Cash Flow from Operating Activities
Net cash inflows from operating activities during the nine months ended September 30, 2026 totaled $0.8 million, compared to a net cash outflow of $3.2 million in the nine months ended September 30, 2025.
Net loss during the nine months ended September 30, 2026 was $48.9 million, which included non-cash charges of $53.1 million such as depreciation, impairment of property and equipment, accretion of redeemable preferred shares, loss (gain) on disposal of assets, stock-based compensation, amortization of debt discount and issuance costs, amortization of intangible assets, and deferred income taxes (recovery). This was furthered by changes in our working capital, which resulted in a net cash outflow of $3.4 million from cash utilization of $12.2 million driven by accounts receivable, deferred costs of fulfillment, inventory, income taxes recoverable, contract asset, accreditation fees payable, and net right of use operating assets. This was offset by positive contributions of $8.8 million driven by prepaid expenses and deposits, other liabilities, customer deposits, disposal of domain names, and undistributed earnings of equity method investee.
Cash Flow from Financing Activities
Net cash outflows from financing activities during the nine months ended September 30, 2026 was $9.8 million, compared to a net cash outflow of $5.4 million in the nine months ended September 30, 2025. $6.0 million related to repayment of the syndicated revolver, $3.0 million related to redemption of Generate preferred shares, $0.7 million for costs associated with the amendment of the syndicated revolver, and $0.1 million related to payment towards the repurchase of shares.
Cash Flow from Investing Activities
Net cash outflows from investing activities during the nine months ended September 30, 2026 totaled $14.4 million, compared to a net cash inflow of $6.1 million in the nine months ended September 30, 2025. Cash outflows totaled $16.8 million, with $15.7 million related to property and equipment additions (of which $9.1 million related to Ting, $3.3 million related to Wavelo, and $3.3 million related to Tucows Domains and Corporate), $0.9 million related to acquisition of intangible assets in Tucows Domains, and $0.2 million for the acquisition of equity interest in partnership. These cash outflows were partially offset by $2.4 million cash inflow related to proceeds on disposal of Ting property and equipment.
Material Cash Requirements
As of September 30, 2026, the Company's Cash and cash equivalents, restricted cash and secured notes reserve funds balances totaled $41.0 million, of which $29.8 million belonged to Ting Internet and $11.2 million belonged to the other Tucows' segments.
In our 2025 Annual Report, we disclosed our material cash requirements of both the Ting segment as well as the other segments excluding Ting. As of September 30, 2026, other than the items mentioned below, there have been no other material changes to our material cash requirements outside the ordinary course of business.
Ting
As of September 30, 2026, the balance owing on the Unit Purchase Agreement was nil, following the Unit Purchase and Exit Agreement, resulting in the restructuring of the debt ("Note 19. Redeemable preferred units" of the Notes to the Condensed Consolidated Financial Statements included in Part I, of this report).
On December 1, 2025, Ting received written notice from Generate asserting that a Return Breach and a Trigger Event had occurred as a result of Ting's failure to pay the quarterly preferred return for two consecutive quarters, and Generate reserved its rights to pursue certain remedies as described in "Note 19. Redeemable preferred units" to the Condensed Consolidated Financial Statements. On July 27, 2026, Tucows acquired all of the outstanding Series A Preferred Units from Generate for $3.0 million in cash, and the units were surrendered, cancelled and retired. In connection with the Exit Agreement, Generate waived all rights associated with the units, including its redemption rights, and withdrew its notice of Return Breach and Trigger Event. As a result, no preferred return accrues or is payable after July 27, 2026, no redeemable preferred units were outstanding as of September 30, 2026, and Ting is no longer subject to the redemption exposure previously described. Please see "Note 19. Redeemable Preferred Units" of the Notes to the Condensed Consolidated Financial Statements included in Part I of this Quarterly Report for further information, including the Company's remaining contingent payment obligations in connection with the Exit Agreement.
In connection with the Exit Agreement, the Company provided Ting with a $5.0 million intercompany term loan, and Ting sold its data center to the Company for $6.0 million in cash. In addition, the Company is required to make a $12.5 million investment in Ting within twelve months of closing; if it does not, the Company must pay Generate $5.0 million. Ting's Term Notes have no recourse to the Company, and the Company's direct financial exposure to Ting is limited to the intercompany loan, which eliminates on consolidation, and certain contractual guarantees. See "Note 2. Basis of Presentation", "Note 19. Redeemable Preferred Units" and "Note 20. Commitments and Contingencies" of the Notes to the Condensed Consolidated Financial Statements included in Part I, of this report.
Ting incurred a net loss of $15.1 million and $26.7 million for the three months ended September 30, 2026 and September 30, 2025, respectively. As of September 30, 2026, Ting had $13.6 million in unrestricted cash and cash equivalents, $2.7 million in accounts receivable, $1.3 million in accounts payable, and $7.7 million in accrued liabilities. Comparatively, as of December 31, 2025, Ting had $23.8 million in unrestricted cash and cash equivalents, $3.6 million in accounts receivable, $1.2 million in accounts payable, and $8.7 million in accrued liabilities. At September 30, 2026, Ting's long-term liabilities included $294.6 million payable on the 2023 and 2024 Term Notes. Ting incurred an operating cash flow deficit of $7.9 million and $7.0 million for the three months ended September 30, 2026 and September 30, 2025, respectively. Ting has scheduled interest payments of $20.1 million in the twelve months following September 30, 2026.
Tucows Businesses Excluding Ting
Tucows businesses excluding Ting, acquisitions and capital investments have been funded by the Company's operating income and the Company's existing 2023 Credit Agreement. As of September 30, 2026, the Company's 2023 Credit Facility had an outstanding balance of $184.4 million. Tucows businesses excluding Ting make principal repayments from time to time.
On July 27, 2026, in connection with the Exit Agreement, the Company entered into a Third Amendment to the 2023 Credit Agreement, which (i) extended the maturity date of the facility from September 22, 2027 to July 27, 2029 (with the exception of one syndicate member holding a $27.5 million commitment, which the Company has commenced discussions to replace with an existing or new syndicate member), and (ii) amend the negative covenants to permit the Company to invest in the Ting business, subject to specified conditions and the existing financial covenants. Key financial covenants remained substantially the same, including a Total Funded Debt to Adjusted EBITDA ratio of no greater than 3.75x and an interest coverage ratio of not less than 3.0:1.00x.
For Fiscal 2026, the Company plans to fund the cash requirements of Tucows businesses excluding Ting solely through operating income, while making discretionary loan repayments to create greater operating flexibility and access to additional financing.
In the long-term, Tucows businesses excluding Ting may seek additional financing to accelerate the growth of our business, repurchase shares or fund future acquisitions. The Company's 2023 Credit Facility, which was most recently amended to (i) extend the maturity date of the facility from September 22, 2027 to July 27, 2029 (with the exception of one syndicate member holding a $27.5 million commitment, which the Company has commenced discussions to replace with an existing or new syndicate member), and (ii) amended the negative covenants to permit the Company to invest in the Ting business, subject to specified conditions and the existing financial covenants, provides committed liquidity to the Company.
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