TUCOWS Inc. Will the Cows come home?


Tucows began as a startup software distribution company back in 1993 and has evolved and grown to various business services.

Tucows is now a provider of network access, domain names and other Internet services. Ting (https://ting.com) delivers mobile phone service and fixed Internet access with outstanding customer support. OpenSRS (http://opensrs.com) manages nearly 15 million domain names and millions of value-added services through a global reseller network of over 13,000 web hosts and ISPs. Hover (http://hover.com) makes it easy for individuals and small businesses to manage their domain names and email addresses. More information can be found on Tucows’ corporate website (http://tucows.com).


Tucows reported a fantastic earnings recently.

  • Year-on-year EPS growth is 86%.
  • 3 year and 5 year average growth is more than 40%.
  • Overall revenue grew by 11% year-over-year.
  • Gross Margin for Network Services for current quarter increases by 31%.
  • Gross Margin for Domain Services for current quarter increases by 10%.

Total Network expenses increase by 23%.


Current growth plans:

  • Ting Internet (4 towns underway)
  • Ting mobile

Economic moat:



  • Key people risk (CEO received a high 99% rating for glassdoor and is instrumental to the company’s success)
  • Other big players might follow to offer pay as you use model
  • Slight increase in Short interests


Key Metrics:

  • Price as of recommendation: $27.45
  • P/E: 20.4
  • P/B: 9.8
  • P/S: 1.7
  • Price/Cash Flow: 19
  • ROA: 10.56
  • ROE: 46.5
  • ROIC: 38.82
  • Current Ratio: 0.85 (could be a red flag), from my understanding this is due to pre-paid subscription model for their domain services.
  • PEG: 0.63
  • D/E: 0.31

Insider Trade (Possibly red flag)


The company outlook is positive but there are some risks in their growth. The growth will depend how well they execute and grow in Ting.


Disclosure: I own a small position of shares in TCX.


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s