Tucows Reports 41% Gross Profit Growth in Q4; Announces $40 Million Stock Buyback

Edward Kim  |

Video source: YouTube, Tucows

Tucows  TCX reported 17% growth in Q4 revenue over the prior year's quarter to $82.5 million. Gross profit was up 41% year-over-year to $24.6 million.

The Toronto-based provider of communications service technology, domain services and fiber-optic internet infrastructure incurred a net loss of of $2.0 million in the fourth quarter, or $0.18 per share, versus net income of $2.1 million, or $0.19 per share, in the prior year's quarter.

On the earnings conference call on Thursday, Tucows attributed the loss to a higher effective tax rate.

For the full year 2021, the company reported revenue of $304 million, down 2% from 2020, and gross profit of $78.3 million, down 8% from 2020.

Net income for the year was $3.4 million or $0.32 per share, down from $5.8 million or $0.55 per share, in 2020. The decline was attributed to the company's increased investment in its fiber business.

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Concurrent with the earnings release, Tucows announced a $40 million share buyback that commences Friday, Feb. 11, 2022, and that will terminate on or before Feb. 10, 2023.

Investment thesis

Click to enlarge

Tucows stock is down over 17% from its peak on Nov. 1, 2021, while the S&P Toronto Stock Exchange composite index is virtually flat over that time period. 

That delta appears overdone, and the stock also has key technical support at the current level. We expect that gap to narrow accordingly.

  • Tucows has a track record of 20 consecutive years of revenue and cash flow growth.
  • 18.2% annual ROI since going public 21 years ago.
  • Second largest domain name registrar in the world with 25 million domains under management.
  • Early mover in next generation services in the fiber-to-the-premise space.
  • Company is committed to returning capital to shareholders.

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Source: Equities News

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