Tucows Capitalizes $0.1M in Stock-Based Compensation for Asset Development

TL;DR

Tucows capitalized $0.1M in stock comp for asset dev in Q3. Watch earnings.

AI Summary

Tucows Inc. reported its Q3 2024 results for the period ending September 30, 2024. The company capitalized $0.1 million in stock-based compensation costs directly attributable to the development of qualifying assets, such as internal use software and assets under construction, during the three and nine months ended September 30, 2024. This capitalization policy is in accordance with ASC 350.

Why It Matters

Capitalizing stock-based compensation can impact reported earnings by deferring the expense, potentially boosting short-term profitability. Investors should monitor how this affects the company's financial statements.

Risk Assessment

Risk Level: low — The filing is a standard quarterly report with no immediately apparent significant negative events or trends.

Key Numbers

• $0.1 million — Capitalized Stock-Based Compensation (Costs directly attributable to the development of qualifying assets during Q3 2024.)
• 20240930 — Reporting Period End Date (The end date for the financial information presented in the 10-Q.)

Key Players & Entities

• Tucows Inc. (company) — Filer of the 10-Q report
• September 30, 2024 (date) — End of the reporting period for the 10-Q
• $0.1 million (dollar_amount) — Amount of stock-based compensation costs capitalized
• ASC 350 (other) — Accounting standard governing capitalization criteria

FAQ

Filing Documents

• tcx20240930_10q.htm (10-Q) — 3162KB
• ex_719128.htm (EX-31.1) — 11KB
• ex_719129.htm (EX-31.2) — 11KB
• ex_719130.htm (EX-32.1) — 7KB
• ex_719131.htm (EX-32.2) — 7KB
• 0001437749-24-033982.txt ( ) — 14799KB
• tcx-20240930.xsd (EX-101.SCH) — 98KB
• tcx-20240930_cal.xml (EX-101.CAL) — 83KB
• tcx-20240930_def.xml (EX-101.DEF) — 640KB
• tcx-20240930_lab.xml (EX-101.LAB) — 523KB
• tcx-20240930_pre.xml (EX-101.PRE) — 686KB
• tcx20240930_10q_htm.xml (XML) — 3606KB

Notes to Consolidated Financial Statements (unaudited)

Notes to Consolidated Financial Statements (unaudited) 6 Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 32 Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 52 Item 4.

Controls and Procedures

Controls and Procedures 53 PART II OTHER INFORMATION Item 1.

Legal Proceedings

Legal Proceedings 54 Item 1A.

Risk Factors

Risk Factors 54 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 56 Item 3. Defaults Upon Senior Securities 56 Item 4. Mine Safety Disclosures 56 Item 5. Other Information 56 Item 6. Exhibits 57

Signatures

Signatures 58 TRADEMARKS, TRADE NAMES AND SERVICE MARKS Tucows, EPAG, Hover, OpenSRS, Platypus, Ting, eNom, Bulkregister, Ascio, Cedar, Simply Bits, Wavelo and YummyNames are registered trademarks of Tucows Inc. or its subsidiaries. Other service marks, trademarks and trade names of Tucows Inc. or its subsidiaries may be used in this Quarterly Report on Form 10-Q (this "Quarterly Report"). All other service marks, trademarks and trade names referred to in this Quarterly Report are the property of their respective owners. Solely for convenience, any trademarks referred to in this Quarterly Report may appear without the or TM symbol, but such references are not intended to indicate, in any way, that we or the owner of such trademark, as applicable, will not assert, to the fullest extent under applicable law, our or its rights, or the right of the applicable licensor, to these trademarks. 2 Table of Contents

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION

Consolidated Financial Statements

Item 1. Consolidated Financial Statements Tucows Inc. Consolidated Balance Sheets (Dollar amounts in thousands of U.S. dollars) (unaudited) September 30, December 31, 2024 2023 Assets Current assets: Cash and cash equivalents $ 75,209 $ 92,687 Restricted cash (note 7) 4,303 3,639 Accounts receivable, net of allowance for doubtful accounts of $ 497 as of September 30, 2024 and $ 511 as of December 31, 2023 18,892 22,206 Contract asset, net (note 10) - 1,417 Inventory 4,812 6,786 Prepaid expenses and deposits 16,453 17,387 Derivative instrument asset (note 4) 708 2,277 Deferred costs of fulfillment, current portion (note 11) 100,681 95,649 Income taxes recoverable 524 709 Total current assets 221,582 242,757 Deferred costs of fulfillment, long-term portion (note 11) 15,548 15,419 Investments 2,012 2,012 Secured notes reserve funds (note 7) 11,579 8,652 Property and equipment, net 355,689 339,644 Right of use lease asset 33,794 27,467 Contract costs 2,445 2,581 Intangible assets, net (note 5) 25,968 29,484 Goodwill (note 5) 130,410 130,410 Total assets $ 799,027 $ 798,426 Liabilities and Stockholders' Equity Current liabilities: Accounts payable $ 9,128 $ 12,676 Accrued liabilities 29,859 35,356 Customer deposits 17,187 19,335 Operating lease liability, current portion (note 12) 5,551 5,397 Deferred revenue, current portion (note 10) 134,745 126,733 Accreditation fees payable 627 609 Income taxes payable 1,775 1,235 Total current liabilities 198,872 201,341 Deferred revenue, long-term portion (note 10) 21,284 21,350 Operating lease liability, long-term portion (note 12) 23,949 18,255 Syndicated revolver (note 6) 196,261 210,354 Notes payable (note 7) 286,641 222,895 Redeemable preferred units - no par value, 33,333,333 units authorized 15,243,600 units issued and outstanding as of September 30, 2024 and December 31, 2023 (note 18) 122,128 111,390 Defe

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