0000909494 TUCOWS INC /PA/ false --12-31 Q1 2026 1,383 1,295 0 0 33,333,333 33,333,333 15,243,600 15,243,600 15,243,600 15,243,600 0 0 250,000,000 250,000,000 11,134,174 11,134,174 11,111,453 11,111,453 39 196 1 12 130.4 2 15 7 3.75 1 0 3.75 3.00 5 0 1 1 1 1 1 10 12 1 10 15.62 15.32 3 3 0 0 0 0 4 7 1 5 3 7 4 7 0.1 0.1 10 10 5 25 false false false false Effective beginning in 2026, Network, other costs, Sales and marketing, Technical operations and development and General and administrative costs presented in segment reporting to the CODM are shown excluding stock-based compensation expenses for all business units. This presentation reflects a change from prior periods, in which stock-based compensation expenses was included within each expense category and subsequently adjusted in “Other segment” line items. To ensure comparability, the 2025 segment expense figures have been recast to conform to the 2026 presentation. Acquisition and other costs represent transaction-related expenses and transitional expenses. Expenses include severance or transitional costs associated with department, operational or overall company restructuring efforts, including geographic alignments. Purchase obligations include all other legally binding service contracts for mobile telephone services and other operational agreements to be delivered during Fiscal 2026 and subsequent years. Fiber network is presented net of $0.1 million government grants (2024: $1.6 million), with an impact of $0.1 million on accumulated depreciation (2024: $0.1 million). Intercompany 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. Corporate and all 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 all other for purposes of segment reporting. Intersegment revenues and expenses are eliminated in consolidation. Effective beginning in 2026, General and administrative costs presented in segment reporting to the CODM are shown excluding Gains and losses from unrealized foreign currency. This presentation reflects a change from prior periods, in which gains and losses from unrealized foreign currency was included within each expense category and subsequently adjusted in “Other segment” line items. To ensure comparability, the 2025 segment expense figures have been recast to conform to the 2026 presentation. Corporate and all 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 Segment Reporting ("ASC 280"). Ting Mobile is not managed as a separate reportable segment and is included within Corporate and all other for purposes of segment reporting. Intersegment revenues and expenses are eliminated in consolidation. Items that are centrally managed and not monitored by or reported to our CEO by segment, including retail mobile services, eliminations of intercompany transactions, portions of Finance and Human Resources that are centrally managed, Legal and Corporate IT. Other segment items for each reportable segment includes other income, as well as adjustments to add back (deduct) acquisition and transition costs, which are included in other line items but are excluded from our definition of Segment Adjusted EBITDA. The Company capitalizes stock-based compensation costs directly attributable to the development of qualifying assets. Qualifying assets include internal use software (“IUS”), assets under construction (“AUC”), equipment, or other long-lived assets that meet the capitalization criteria prescribed by ASC 350 Intangibles - Goodwill and Other ("ASC 350"). During the three months ended March 31, 2026 and March 31, 2025, the Company capitalized $0.1 million and $0.1 million respectively, of stock-based compensation directly attributable to the development of certain IUS assets. Ting capitalizes interest expenses directly attributable to the development of qualifying assets. Qualifying assets include IUS, AUC, equipment, or other long-lived assets that meet the capitalization criteria prescribed by ASC 350. During the three months ended March 31, 2026 and March 31, 2025 Ting capitalized $0.1 million of interest expenses pertaining to the redeemable preferred units directly attributable to the development of certain AUC assets. Includes $0.1 million of indefinite life intangible assets During the three months ended March 31, 2026 and March 31, 2025, the Company capitalized $0.1 million and $0.1 million of interest expenses pertaining to the 2023 and 2024 Term Notes directly attributable to the development of certain AUC assets, respectively. 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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

☒

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2026

☐

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 1-32600

TUCOWS INC.

(Exact Name of Registrant as Specified in Its Charter)

Pennsylvania	23-2707366
(State or Other Jurisdiction of	(I.R.S. Employer
Incorporation or Organization)	Identification No.)

96 Mowat Avenue,

Toronto, Ontario M6K 3M1, Canada

(Address of Principal Executive Offices) (Zip Code)

(416) 535-0123

(Registrant's Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Exchange Act:

Title of each class

Trading

Symbol(s)

Name of each exchange on which registered

Common Stock

TCX

NASDAQ

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days: Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T §232.405 of this chapter during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐	Accelerated filer ☒

Non-accelerated filer ☐	Smaller reporting company ☐

Emerging Growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes ☐ No ☒

As of May 5, 2026, there were 11,149,173 outstanding shares of common stock, no par value, of the registrant.

Table of Contents

TUCOWS INC.

Form 10-Q Quarterly Report

INDEX

PART I FINANCIAL INFORMATION

Item 1.	Condensed Consolidated Financial Statements	3

	Condensed Consolidated Balance Sheets (unaudited) as of March 31, 2026 and December 31, 2025	3

	Condensed Consolidated Statements of Operations and Comprehensive Loss (unaudited) for the three months ended March 31, 2026 and 2025	4

	Condensed Consolidated Statements of Cash Flows (unaudited) for the three months ended March 31, 2026 and 2025	5

	Notes to Condensed Consolidated Financial Statements (unaudited)	6

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	28

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	45

Item 4.	Controls and Procedures	46

PART II OTHER INFORMATION

Item 1.	Legal Proceedings	47

Item 1A.	Risk Factors	47

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	47

Item 3.	Defaults Upon Senior Securities	47

Item 4.	Mine Safety Disclosures	47

Item 5.	Other Information	47

Item 6.	Exhibits	48

Signatures		49

TRADEMARKS, TRADE NAMES AND SERVICE MARKS

Tucows®, EPAG®, Hover®, OpenSRS®, Ting®, ENom®, Ascio®, Simply Bits® and Wavelo® 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.

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements

Tucows Inc.

Condensed Consolidated Balance Sheets

(Dollar amounts in thousands of U.S. dollars)

(unaudited)

	*March 31,*			*December 31,*
	*2026*			*2025*

Assets

Current assets:
Cash and cash equivalents	$	44,306		$	46,759
Restricted cash		5,360			5,315
Accounts receivable, net of expected credit losses of $1,383 as of March 31, 2026 and $1,259 as of December 31, 2025		27,791			24,494
Deferred costs of fulfillment, current portion		101,408			97,151
Prepaid expenses and other		21,177			29,375
Total current assets		200,042			203,094

Deferred costs of fulfillment, long-term portion		16,368			15,883
Secured notes reserve funds		12,272			12,171
Property and equipment, net		275,543			281,955
Right of use lease asset		70,578			63,315
Intangible assets		19,479			19,703
Goodwill		130,410			130,410
Other assets		4,550			4,378
Total assets	$	729,242		$	730,909


Liabilities and Stockholders' Equity

Current liabilities:
Accounts payable and accrued liabilities	$	33,083		$	35,272
Derivative instrument liability		251			75
Operating lease liability, current portion		6,382			5,771
Contract liabilities, current portion		135,786			131,581
Redeemable preferred units - no par value, 33,333,333 units authorized; 15,243,600 units issued and outstanding as of March 31, 2026 and December 31, 2025		142,024			136,963
Other current liabilities		19,577			20,765
Total current liabilities		337,103			330,427

Contract liabilities, long-term portion		22,008			21,354
Operating lease liability, long-term portion		64,848			57,823
Syndicated revolver		189,645			189,531
Notes payable		292,639			291,646
Other long-term liability		1,366			1,366
Deferred tax liability		2,961			2,962

Stockholders' deficit
Common stock - no par value, 250,000,000 shares authorized; 11,134,174 and 11,111,453 shares issued and outstanding as of March 31, 2026 and December 31, 2025		38,788			38,308
Additional paid-in capital		24,158			23,526
Accumulated deficit		(244,084	)		(225,977	)
Accumulated other comprehensive loss		(190	)		(57	)
Total stockholders' deficit		(181,328	)		(164,200	)
Total liabilities and stockholders' deficit	$	729,242		$	730,909

See accompanying notes to the Condensed Consolidated Financial Statements

Table of Contents

Tucows Inc.

Condensed Consolidated Statements of Operations and Comprehensive Loss

(Dollar amounts in thousands of U.S. dollars, except per share amounts)

(unaudited)

	*For the Three Months Ended March 31,*
	*2026*			*2025*


Net revenues	$	96,657		$	94,609

Cost of revenues:
Direct cost of revenues		56,884			55,161
Network, other costs		5,868			5,175
Network, depreciation and amortization		9,775			10,742
Total cost of revenues		72,527			71,078

Gross profit		24,130			23,531

Expenses:
Sales and marketing		12,103			10,991
Technical operations and development		4,431			4,407
General and administrative		9,828			9,242
Loss on disposition of property and equipment		876			-
Depreciation and amortization		1,199			924
Total expenses		28,437			25,564

Loss from operations		(4,307	)		(2,033	)

Other income (expenses):
Interest expense, net		(13,865	)		(13,613	)
Other income, net		2,457			2,679
Total other income (expenses)		(11,408	)		(10,934	)

Loss before provision for income taxes		(15,715	)		(12,967	)

Provision (recovery) for income taxes		2,392			2,166

Net loss for the period		(18,107	)		(15,133	)

Other comprehensive income (loss), net of tax
Unrealized income (loss) on hedging activities		(213	)		42
Net amount reclassified to earnings		80			558
Other comprehensive income (loss) net of tax expense (recovery) of $39 and ($196) for the three months ended March 31, 2026 and March 31, 2025		(133	)		600

Comprehensive loss for the period	$	(18,240	)	$	(14,533	)


Basic and diluted loss per common share	$	(1.63	)	$	(1.37	)

Shares used in computing basic and diluted loss per common share		11,124,592			11,032,086

See accompanying notes to the Condensed Consolidated Financial Statements

Table of Contents

Tucows Inc.

Condensed Consolidated Statements of Cash Flows

(Dollar amounts in thousands of U.S. dollars)

(unaudited)

	*For the Three Months Ended March 31,*
	*2026*			*2025*
Cash provided by:
Operating activities:
Net loss for the period	$	(18,107	)	$	(15,133	)
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		10,974			11,666
Amortization of debt discount and issuance costs		1,153			1,167
Loss on disposal of assets		876			-
Impairment of property and equipment		280			204
Deferred income taxes (recovery)		43			(191	)
Accretion of redeemable preferred units		4,989			-
Stock-based compensation expense		1,094			1,505
Change in non-cash operating working capital
Accounts receivable		(3,297	)		(3,242	)
Prepaid expenses and deposits		6,763			875
Deferred costs of fulfillment		(4,742	)		(4,017	)
Accounts payable & accrued liabilities		(1,600	)		(10,622	)
Contract liabilities		4,859			5,538
Other operating assets and liabilities		239			999
Net cash provided by (used in) operating activities		3,524			(11,251	)

Financing activities:
Repayment of syndicated revolver		-			(2,500	)
Net cash provided by (used in) financing activities		-			(2,500	)

Investing activities:
Proceeds on disposal of property and equipment		578			966
Additions to property and equipment		(5,528	)		(5,437	)
Acquisition of intangible assets		(881	)		-
Net cash provided by (used in) investing activities		(5,831	)		(4,471	)

Increase (decrease) in cash and cash equivalents, restricted cash, and restricted cash equivalents		(2,307	)		(18,222	)

Cash and cash equivalents, restricted cash, and restricted cash equivalents beginning of period		64,245			73,238
Cash and cash equivalents, restricted cash, and restricted cash equivalents end of period	$	61,938		$	55,016

Reconciliation of cash, cash equivalents, restricted cash, and restricted cash equivalents within the interim consolidated balance sheets to the amounts shown in the interim consolidated statements of cash flows above:
Cash and cash equivalents		44,306			38,076
Restricted cash included in funds held by trustee		5,360			5,116
Restricted cash included in secured notes reserve funds		12,272			11,824
Total cash and cash equivalents, restricted cash, and restricted cash equivalents end of period	$	61,938		$	55,016

Supplemental cash flow information:
Interest paid	$	8,380		$	18,332
Income taxes paid, net	$	4,008		$	1,299
Supplementary disclosure of non-cash investing and financing activities:
Property and equipment acquired during the period not yet paid for	$	941		$	1,435

See accompanying notes to the Condensed Consolidated Financial Statements

Table of Contents

NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)

1. Organization of the Company

Tucows Inc. (referred to as the “Company”, “Tucows”, “we”, “us” or through similar expressions) is a corporate parent, allocating capital and providing efficient shared services to its three businesses: Ting, Wavelo and Tucows Domains Services. Ting provides retail consumers and businesses with high-speed fixed Internet access in a number of towns and cities across the United States. Wavelo offers platform services which provide solutions to support Communication Service Providers ("CSPs") including subscription and billing management, network orchestration and provisioning, individual developer tools, and other professional services. Tucows Domains Services is a global distributor of Internet services, including domain name registration, digital certificates, and email. It provides these services primarily through a global Internet-based distribution network of Internet Service Providers, web hosting companies and other providers of Internet services to end-users.

2. Basis of Presentation

The accompanying unaudited interim Condensed Consolidated Financial Statements reflect all adjustments, consisting of normal recurring adjustments, that are, in the opinion of management, necessary for a fair statement of the financial position of Tucows and its subsidiaries as of March 31, 2026 and the results of operations and cash flows for the interim periods ended March 31, 2026 and 2025. The results of operations presented in this Quarterly Report on Form 10-Q are not necessarily indicative of the results of operations that may be expected for future periods.

The accompanying unaudited interim Condensed Consolidated Financial Statements have been prepared by Tucows in conformity with the rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”) and U.S. Generally Accepted Accounting Principles (“GAAP”). Certain information and footnote disclosures normally included in the Company's annual audited consolidated financial statements and accompanying notes have been condensed or omitted. These interim Condensed Consolidated Financial Statements and accompanying notes follow the same accounting policies and methods of application used in the annual financial statements and should be read in conjunction with the Company's audited consolidated financial statements and notes thereto for the year ended December 31, 2025 included in Tucows' 2025 Annual Report on Form 10-K filed with the SEC on March 12, 2026 (the “2025 Annual Report”). There have been no material changes to our significant accounting policies and estimates during the three months ended March 31, 2026 as compared to the significant accounting policies and estimates described in our 2025 Annual Report.

Subsidiary financial condition

The Company's subsidiary, Ting, has negative operating cash flows and continues to incur net losses. The Company has commenced a process to review strategic alternatives for the Ting business, however, Ting may not be able to meet its financial obligations over the twelve months following the date of the issuance of the financial statements without additional financing. Ting operates as a bankruptcy-remote entity and its debt has no recourse to the Company. Accordingly, the Company's direct financial exposure to Ting is limited to certain contractual guarantees as disclosed in “Note 20. Commitments and Contingencies.” The Company does not believe that Ting's financial condition gives rise to substantial doubt about the Company's ability to continue as a going concern.

3. Recent Accounting Pronouncements

Recent Accounting Pronouncements Not Yet Adopted

In November 2024, the FASB issued ASU No. 2024-03, “Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses” (ASU 2024-03), which requires that a public entity disclose the amounts of (a) purchases of inventory, (b) employee compensation, (c) depreciation and (d) intangible asset amortization included in each relevant expense caption presented on the face of the income statement. The standard also requires an entity to disclose a qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively as well as disclose the total amount of selling expenses and, annually, the entity’s definition of selling expenses. ASU 2024-03 will be effective for annual periods beginning after December 15, 2026, with either retrospective or prospective application. The standard allows for early adoption of these requirements; we are currently evaluating the disclosure impacts of our adoption.

In September 2025, the FASB issued ASU 2025‑06 “Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software.” The amendments update the accounting model for internal-use software by eliminating the prescriptive “development stage” framework and replacing it with a “probable-to-complete” threshold and a “significant development uncertainty” evaluation. The amendments also remove separate guidance for website development costs and require entities to apply the property, plant, and equipment disclosure requirements in Subtopic 360-10 to capitalized internal-use software. The amendments are effective for annual periods beginning after December 15, 2027, and interim periods within those annual periods, with early adoption permitted. The Company is currently evaluating the impact of this ASU on its consolidated financial statements and related disclosures.

4. Derivative Instruments and Hedging Activities

The Company is exposed to certain risks relating to its ongoing business operations. The primary risks managed by using derivative instruments are foreign exchange rate risk and interest rate risk.

Since October 2012, the Company has employed a hedging program with a Canadian chartered bank to limit the potential foreign exchange fluctuations incurred on its future cash flows related to a portion of payroll, taxes, rent and payments to Canadian domain name registry suppliers that are denominated in Canadian dollars and are expected to be paid by its Canadian operating subsidiary.

The Company does not use hedging forward contracts for trading or speculative purposes. The foreign exchange contracts typically mature between one and twelve months.

Table of Contents

The Company designates its foreign exchange contracts as hedging instruments in cash flow hedges for forecasted transactions. Where the critical terms of the hedging instrument and the entire hedged forecasted transaction are the same, in accordance with ASC 815 Derivatives and Hedging ("ASC 815"), the Company concludes that changes in fair value and cash flows attributable to the risk being hedged are expected to completely offset at inception and on an ongoing basis. The Company designated the foreign exchange hedge as a cash flow hedge of expected future payments at the inception of the contract. Accordingly, for the foreign exchange contracts, unrealized gains or losses on the effective portion of these contracts were included within other comprehensive income (loss) and reclassified to earnings when the hedged transaction is settled. Cash flows from hedging activities were classified under the same category as the cash flows from the hedged items in the Consolidated Statements of Cash Flows. The fair value of the foreign exchange contract, as of March 31, 2026 and December 31, 2025, is recorded as derivative instrument assets or liabilities. For certain contracts where the hedged transactions are no longer probable to occur, the loss on the associated forward contract is recognized in earnings.

As of March 31, 2026, the notional amount of forward contracts that the Company held to sell U.S. dollars in exchange for Canadian dollars was $12.9 million, all of which met the requirements of ASC 815 and were designated as hedges.

As of December 31, 2025, the notional amount of forward contracts that the Company held to sell U.S. dollars in exchange for Canadian dollars was $27.2 million, all of which met the requirements of ASC 815

and were designated as hedges.

As of March 31, 2026, we had the following outstanding forward contracts to trade U.S. dollars in exchange for Canadian dollars:

Maturity date (Dollar amounts in thousands of U.S. dollars)	*Notional amount of U.S. dollars*		*Weighted average exchange rate of U.S. dollars*		*Fair value Asset (Liability)*

April - June 2026		12,933		1.3609		(251	)
	$	12,933		1.3609	$	(251	)

Fair value of derivative instruments and effect of derivative instruments on financial performance

The effect of these derivative instruments on our Condensed Consolidated Financial Statements were as follows (amounts presented do not include any income tax effects).

Fair value of derivative instruments in the Condensed Consolidated Balance Sheets

Derivatives (Dollar amounts in thousands of U.S. dollars)	*Balance Sheet Location*	*As of March 31, 2026 Fair Value Asset (Liability)*			*As of December 31, 2025 Fair Value Asset (Liability)*
Foreign Currency forward contracts designated as cash flow hedges (net)	Derivative instruments	$	(251	)	$	(75	)
Total foreign currency forward contracts (net)	Derivative instruments	$	(251	)	$	(75	)

Movement in Accumulated other comprehensive income (AOCI) balance for the three months ended March 31, 2026 (Dollar amounts in thousands of U.S. dollars)

	*Gains and losses on cash flow hedges*			*Tax impact*			*Total AOCI*
Opening AOCI Balance - December 31, 2025	$	(79	)	$	22		$	(57	)
Other comprehensive income (loss) before reclassifications		(281	)		68			(213	)
Amount reclassified from AOCI		109			(29	)		80
Other comprehensive income (loss) for the three months ended March 31, 2026		(172	)		39			(133	)

Ending AOCI Balance - March 31, 2026	$	(251	)	$	61		$	(190	)

Effects of derivative instruments on income and AOCI for the three months ended March 31, 2026 and 2025 are as follows (Dollar amounts in thousands of U.S. dollars)

Derivatives in Cash Flow Hedging Relationship	*Amount of Gain or (Loss) Recognized in OCI, net of tax, on Derivative*			*Location of Gain or (Loss) Reclassified from AOCI into Income*	*Amount of Gain or (Loss) Reclassified from AOCI into Income*
				Operating expenses	$	(87	)
Foreign currency forward contracts for the three months ended March 31, 2026	$	(213	)	Cost of revenues	$	(22	)

				Operating expenses	$	(593	)
Foreign currency forward contracts for the three months ended March 31, 2025	$	42		Cost of revenues	$	(143	)

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5. Property and Equipment

Property and equipment consist of the following (Dollar amounts in thousands of U.S. dollars):

	*March 31,*		*December 31,*
	*2026*		*2025*
Computer equipment	$	26,637	$	26,665
Computer software		1,767		2,041
Capitalized internal use software		62,317		60,233
Furniture and equipment		1,662		1,662
Vehicles and tools		4,973		5,010
Fiber network⁽¹⁾		272,875		272,713
Customer equipment and installations		29,575		28,010
Land		1,109		1,109
Buildings		9,389		9,389
Assets under construction		7,852		8,246
Leasehold improvements		428		428
		418,584		415,506
Less:
Accumulated depreciation		143,041		133,551
	$	275,543	$	281,955

(1) Fiber network is presented net of $0.2 million of government grants ($0.1 million as of December 31, 2025), with an impact of $0.1 million on accumulated depreciation ($0.1 million as of December 31, 2025).

Depreciation of property and equipment (Dollar amounts in thousands of U.S. dollars):

	*Three Months Ended March 31,*
	*2026*		*2025*
Depreciation of property and equipment		9,871		10,460

Impairment of Property and Equipment

During the three months ended March 31, 2026 and March 31, 2025, the Company recognized a total impairment expense of $0.3 million and $0.2 million, respectively, related to specific network assets that were identified through routine inspections as being damaged and no longer in use and are recorded under “Network, other costs” in the Consolidated Statements of Operations and Comprehensive Loss.

6. Goodwill and Other Intangible Assets

Goodwill:

Goodwill represents the excess of the purchase price over the fair value of tangible and identifiable intangible assets acquired and liabilities assumed in our acquisitions.

The Company's Goodwill balance remained consistent at $130.4 million as of March 31, 2026 and December 31, 2025. The Company's goodwill relates 83% ($107.7 million) to the Tucows Domains operating segment and 17% ($22.7 million) to the Ting operating segment.

Goodwill is not amortized, but is subject to an annual impairment test, or more frequently if impairment indicators are present. No impairment charge was recognized during the three months ended March 31, 2026 and 2025.

Other Intangible Assets:

Intangible assets consist of acquired brand, technology, customer relationships, surname domain names, direct navigation domain names and network rights. The Company considers its intangible assets consisting of surname domain names and direct navigation domain names as indefinite life intangible assets. The Company has the exclusive right to these domain names as long as the annual renewal fees are paid to the applicable registry. Renewals occur routinely and at a nominal cost. The indefinite life intangible assets are not amortized but are subject to impairment assessments performed throughout the year. As part of the normal renewal evaluation process during the periods ended March 31, 2026 and March 31, 2025, the Company assessed that all domain names that were originally acquired in the June 2006 acquisition of Mailbank.com Inc. that were up for renewal, should be renewed.

Finite-life intangible assets, comprising brand, technology, customer relationships and network rights are being amortized on a straight-line basis over periods of two to fifteen years. The weighted average amortization period for all finite-life intangible assets is 2.6 years.

For the three months ended March 31, 2026, the Company acquired customer relationship assets through hosting agreements for $0.9 million. These assets are being amortized over seven years.

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Net book value of acquired intangible assets consists of the following (Dollar amounts in thousands of U.S. dollars):

	*Surname domain names*			*Brand*			*Customer relationships*			*Technology*			Network rights ⁽¹⁾			*Total*
Amortization period	*indefinite life*			*7 years*			*3 - 7 years*			*2 - 7 years*			*15 years*

Balances, December 31, 2025	$	12,263		$	90		$	5,787		$	893		$	670		$	19,703
Acquisition of customer relationships		-			-			881			-			-			881
Disposals from domain portfolio, net		(2	)		-			-			-			-			(2	)
Amortization expense		-			(68	)		(856	)		(155	)		(24	)		(1,103	)
Balances, March 31, 2026	$	12,261		$	22		$	5,812		$	738		$	646		$	19,479

(1) Includes $0.1 million of indefinite life intangible assets

The following table shows the estimated amortization expense for each of the next 5 years and thereafter, assuming no further additions to acquired intangible assets are made (Dollar amounts in thousands of U.S. dollars):

	*Year ending*
	*December 31,*
Remainder of 2026	$	2,127
2027		1,982
2028		1,608
2029		370
2030		227
Thereafter		884
Total	$	7,197

7. Long Term Debt

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 have been reflected as a reduction to the carrying amount of the loan payable and will be 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 extends the term of the 2023 Credit Agreement through September 22, 2027. The material terms of the 2023 Credit Agreement remain unchanged; however, the Extension Agreement amends 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 have been reflected as reduction to the carrying amount of the loan payable and will be amortized over the extended term from September 2026 to September 2027.

During the three months ended March 31, 2026 and March 31, 2025, the Company made repayments of NIL and $2.5 million, respectively, on the 2023 Credit Facility.

2023 Credit Facility Terms

The 2023 Credit Agreement contains customary representations and warranties, affirmative and negative covenants, and events of default. The 2023 Credit Agreement requires that the Company comply with certain customary non-financial covenants and restrictions. In addition, the Company has agreed to comply with the following financial covenants: (1) a leverage ratio by maintaining at all times a Total Funded Debt to Adjusted EBITDA Ratio of not more than 3.75:1.00; and (2) an interest coverage ratio by maintaining as of the end of each rolling four financial quarter period, an Interest Coverage Ratio (as defined in the Credit Agreement) of not less than 3.00:1.00. The required principal repayment of $190.4 million is due in September 2027.

During the three months ended March 31, 2026, and March 31, 2025, the Company was in compliance with the covenants under its credit agreements in effect at the time. During the three months ended March 31, 2026, and March 31, 2025, the Company recognized $0.1 million and $0.1 million of interest expense related to the amortization of the debt issuance costs of the 2023 Credit Facility, respectively.

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Borrowings under the 2023 Credit Facility will accrue interest and standby fees based on the Company's Total Funded Debt to Adjusted EBITDA ratio and the availment type as follows:

	If Total Funded Debt to EBITDA is:
Availment type or fee	*Less than 2.00*			*Greater than or equal to 2.00 and less than 2.75*			*Greater than or equal to 2.75 and less than 3.50*			*Greater than or equal to 3.50 and less than 3.75*
Canadian dollar borrowings based on the Canadian overnight repo rate average or U.S. dollar borrowings based on SOFR and letter of credit fees (Margin)		1.50	%		2.00	%		2.50	%		3.00	%
Canadian borrowings based on Prime Rate or Canadian or U.S. dollar borrowings based on Base Rate (Margin)		0.25	%		0.75	%		1.25	%		1.75	%
Standby fees		0.30	%		0.40	%		0.50	%		0.60	%

The following table summarizes the Tucows businesses excluding Ting's borrowings under the credit facilities (Dollar amounts in thousands of U.S. dollars):

	*March 31, 2026*			*December 31, 2025*

Principal	$	190,400		$	190,400
Less: unamortized debt discount and issuance costs		(755	)		(869	)
Syndicated Revolver, long-term portion	$	189,645		$	189,531

Unused Commitments and Lines of Credit

As of March 31, 2026, the 2023 Credit Facility provided for aggregate borrowings of up to $240.0 million, of which $190.4 million was drawn and $4.3 million was committed to letters of credit, leaving $45.3 million available for future borrowings.

8. Notes Payable

2023 Term Notes

On May 4, 2023 (the “Closing Date”), Tucows Inc. through its indirect and wholly owned subsidiaries, including Ting Fiber, LLC entered into a definitive agreement relating to a securitized financing facility related the 2023 Term Notes. On the Closing Date, Ting Issuer LLC, a Delaware limited liability company (the “Issuer”), a limited purpose, bankruptcy-remote, indirect wholly owned subsidiary of the Company issued (i) $168,357,000 of its 5.95% Secured Fiber Revenue Notes, Series 2023-1, Class A-2, (ii) $23,289,000 of its 7.40% Secured Fiber Revenue Notes, Series 2023-1, Class B and (iii) $46,859,000 initial principal amount of 9.95% Secured Fiber Revenue Notes, Series 2023-1, Class C, together, the “2023 Term Notes”. The offering was exempt from registration under the Securities Act of 1933, as amended (the “Securities Act”). The net proceeds from the issuance of the 2023 Term Notes were $220.5 million, after deducting a debt discount of $11.2 million and issuing costs of $6.7 million.

The debt discount and issuance costs of the 2023 Term Notes are being amortized using the straight line method over a five-year period between the Closing Date and the anticipated repayment date.

The 2023 Term Notes are issued under an indenture, dated May 4, 2023 (the “Base Indenture”) between the Issuer and Citibank, N.A., as trustee (the “Indenture Trustee”) as supplemented by the Series 2023-1 supplemental indenture dated May 4, 2023, (the “Series 2023-1 Supplement” and, together with the Base Indenture, the “Indenture”), between the Issuer and the Trustee. Interest payments on the 2023 Term Notes are payable on a monthly basis. The legal final maturity date of the 2023 Term Notes is in April of 2053, but, unless earlier prepaid to the extent permitted under the Indenture, the anticipated repayment date of the 2023 Term Notes will be in April 2028. If the Issuer has not repaid or refinanced the 2023 Term Notes prior to the anticipated repayment date, additional interest will accrue on the 2023 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 2023 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) for the 2023 Class A-2 Notes, 3.50%, for the 2023 Class B Notes, 5.00% and for the 2023 Class C Notes, 7.82%.

2024 Term Notes

On August 20, 2024, Tucows Inc., through its indirect and wholly owned subsidiaries, including Ting Fiber, LLC, entered into a definitive agreement relating to a securitized financing facility related to a privately placed securitization transaction. On August 20, 2024, Ting Issuer LLC, the Issuer, a limited purpose, bankruptcy-remote, indirect wholly owned subsidiary of the Company, issued: (i) $55,000,000 of its 5.63% Secured Fiber Revenue Notes, Series 2024-1, Class A-2 (the “2024 Class A-2 Notes”), (ii) $8,000,000 of its 6.85% Secured Fiber Revenue Notes, Series 2024-1, Class B (the “2024 Class B Notes”), and (iii) $16,000,000 initial principal amount of 9.15% Secured Fiber Revenue Notes, Series 2024-1, (the “Class C Notes” together with the 2024 Class A-2 Notes and the 2024 Class B Notes, the “2024 Term Notes”). The Tranche C notes were not sold in this transaction, and they remain available for future sale depending on market conditions. The net proceeds from the issuance of the 2024 Term Notes were $61.0 million, after deducting a debt discount of NIL and issuance costs of $2.0 million.

The 2024 Term Notes were issued under the Base Indenture (the “Base Indenture”) dated May 4, 2023, and the related Series 2024-1 Supplement (the “Series 2024-1 Supplement”), dated August 20, 2024, by and between the Issuer, the asset parties thereto, and Citibank, N.A., as trustee (in such capacity, the “Indenture Trustee”) and securities intermediary. The Base Indenture and the Series 2024-1 Supplement 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.

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The debt discount and issuance costs of the 2024 Term Notes are being amortized using the straight-line method over a five-year period between August 20, 2024 and the anticipated repayment date.

The 2023 Term Notes and 2024 Term Notes are secured by certain of the Company’s revenue-generating assets, consisting principally of fiber-network related agreements, fiber-network assets and customer contracts (collectively, the “Securitized Assets”) that are owned by certain other limited-purpose, bankruptcy-remote, wholly owned indirect subsidiaries of the Company that act as the guarantors (collectively with the Issuer, the “Obligor”) under the Base Indenture. The 2023 Term Notes and 2024 Term Notes are subject to a series of covenants, restrictions and other investor protections including (i) that the Issuer maintains specified reserve accounts to be used to make required payments in respect of the 2023 Term Notes and 2024 Term Notes, (ii) provisions relating to optional and mandatory prepayments and the related payment of specified amounts, (iii) certain indemnification payments, (iv) the guarantors comply with standard bankruptcy-remoteness covenants, including not guaranteeing or being liable for other affiliates debts or liabilities, and (v) covenants relating to recordkeeping, access to information, and similar matters.

As of March 31, 2026, the Company was in compliance with all required covenants. As of March 31, 2026, the Company’s scheduled principal repayments for the 2023 Term Notes of $238.5 million is due in April 2028 and 2024 Term Notes of $63.0 million is due in August 2029.

During the three months ended March 31, 2026 and March 31, 2025, the Company recognized $1.0 million and $1.0 million of interest expense related to the amortization of the debt discount and issuance costs of the 2023 and 2024 Notes.

The following table summarizes Ting's borrowings under the 2023 and 2024 Term Notes (Dollar amounts in thousands of U.S. dollars):

	March 31, 2026			December 31,2025

Principal	$	301,505		$	301,505
Less: unamortized issuance costs		(4,151	)		(4,589	)
Less: unamortized discount		(4,715	)		(5,270	)
Note payable, long-term portion⁽¹⁾	$	292,639		$	291,646

(1) During the three months ended March 31, 2026 and March 31, 2025, the Company capitalized $0.1 million and $0.1 million of interest expenses pertaining to the 2023 and 2024 Term Notes directly attributable to the development of certain AUC assets, respectively.

Restricted Cash

Under the terms of the Indenture, revenues generated from the Securitized Assets are deposited into accounts controlled by the Indenture Trustee within two business days of receipt. The Company has no access to or control of the funds held in trust until they are disbursed by the Indenture Trustee on the 20th day of each calendar month (the “Payment Date”). In accordance with the Indenture, on each Payment Date the Indenture Trustee disburses, on behalf of the Obligor, administration fees to service providers, interest payments to the noteholders, liquidity reserve top-ups (if required), and the remaining funds to accounts controlled by the Obligor. Funds held in trust with the Indenture Trustee at the reporting date are presented as “Restricted cash” on the Company’s Condensed Consolidated Balance Sheet.

As of March 31, 2026, and December 31, 2025, Restricted cash totaled $5.4 million and $5.3 million, respectively.

Under the terms of the Indenture, the Company is also required to maintain a liquidity reserve fund equal to the sum of (A) six times the total amount of fund administration fees payable on each payment date after May 20, 2023 and (B) six times the total amount of monthly interest on the 2023 and 2024 Term Notes due and payable on each payment date after May 20, 2023. The liquidity reserve is maintained with the Indenture Trustee until the maturity of the 2023 and 2024 Term Notes and the balance is presented as “Secured notes reserve funds” on the Company’s Condensed Consolidated Balance Sheet.

As of March 31, 2026, and December 31, 2025, secured notes reserve funds totaled $12.3 million and $12.2 million, respectively.

9. Income Taxes

The Company’s provision for income taxes for interim periods is determined by using an estimated annual effective tax rate, adjusted for discrete items arising during the quarter. At each quarter, the Company updates the estimated annual effective tax rate and makes a year-to-date adjustment to the provision. The estimated annual effective tax rate is subject to volatility due to several factors, including accurately forecasting the Company’s net income before tax, taxable income or loss, the mix of tax jurisdictions to which they relate, intercompany transactions, and changes in statutes, regulations, and case law.

For the three months ended March 31, 2026, the Company recorded an income tax expense of $2.4 million on net loss before income taxes of $15.7 million, using an estimated effective tax rate for the fiscal year ending December 31, 2026. Our effective tax rates for the three months ended March 31, 2026 differ from the U.S. federal statutory rate primarily due to an increase in valuation allowance on net operating losses and the impact of foreign earnings.

Comparatively, for the three months ended March 31, 2025, the Company recorded an income tax expense of $2.2 million on net loss before income taxes of $13.0 million, using an estimated effective tax rate for the fiscal year ending December 31, 2025. Our effective tax rates for the three months ended March 31, 2025 differ from the U.S. federal statutory rate primarily due to an increase in valuation allowance on net operating losses and the impact of foreign earnings.

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10. Basic and Diluted Loss per Common Share:

The following table reconciles the numerators and denominators of the basic and diluted loss per common share computation (Dollar amounts in thousands of U.S. dollars, except for share data):

	*Three Months Ended March 31,*
	*2026*			*2025*

Numerator for basic and diluted loss per common share:
Net loss for the period	$	(18,107	)	$	(15,133	)

Denominator for basic and diluted loss per common share:
Basic and diluted weighted average number of common shares outstanding		11,124,592			11,032,086

Basic and diluted loss per common share	$	(1.63	)	$	(1.37	)

For the three months ended March 31, 2026 and March 31, 2025, the Company recorded a net loss, thus all outstanding options were considered anti-dilutive and excluded from the computation of diluted income per common share.

11. Revenue

Significant accounting policy

The Company’s revenues are derived from (a) the provisioning of retail fiber Internet services and the design and construction of Fiber Optic Networks for specific customer contracts through Ting, (b) Communication Service Providers ("CSP") solutions and professional services through Wavelo; and (c) domain name registration contracts, other domain related value-added services, domain sale contracts, other advertising revenue, and registry services through Tucows Domains Services. Certain revenues are disclosed under Corporate and all other as they are considered non-core business activities including retail mobile services, Transition Services Agreement ("TSA") revenue and eliminations of intercompany revenue. Amounts received in advance of meeting the revenue recognition criteria described below are recorded as contract liabilities. All products are generally sold without the right of return or refund.

Revenue is measured based on the consideration specified in a contract with a customer and excludes any sales incentives and amounts collected on behalf of third parties. The Company recognizes revenue when it satisfies a performance obligation by transferring control over a product or service to a customer.

Nature of goods and services

The following is a description of principal activities – separated by reportable segments – from which the Company generates its revenue. For more detailed information about reportable segments, see "Note 14. Segment Reporting."

(a)

Ting

The Company generates Ting revenues primarily through the provisioning of fixed high-speed Internet access, and the design and construction of fiber optic network assets for a specific customer.

Ting Internet contracts provide customers Internet access at their home or business through the installation and use of our fiber optic network. Ting Internet contracts are generally prepaid and grant customers with unlimited bandwidth based on a fixed price per month basis. Because consideration is collected before the service period, revenue is initially deferred and recognized as the Company performs its obligation to provide Internet access. Though the Company does not consider the installation of fixed Internet access to be a distinct performance obligation, the fees related to installation are immaterial and therefore revenue is recognized as billed.

Ting Internet access 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 Internet customers is computed based on the customer’s activation date. Incentive marketing credits given to customers are recorded as a reduction of revenue.

In those cases where payment is not received at the time of sale, revenue is not recognized at contract inception unless the collection of the related accounts receivable is reasonably assured. The Company records expected refunds, rebates and credit card charge-backs as a reduction of revenues at the time of the sale based on historical experiences and current expectations.

Our construction services relate to revenue earned 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.

The Company has determined that it acts as principal in providing construction services, as it is primarily responsible for fulfilling the contract, controls construction inputs, and bears the risk associated with design, materials procurement, and subcontracted construction activities. Accordingly, construction revenue is recognized on a gross basis.

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(b)

Wavelo

The Company generates Wavelo revenues by providing billing and provisioning platform services to CSPs to whom we also provide other professional services.

Platform service agreements contain both platform services and professional services. Platform services offer a variety of solutions that support CSPs, including subscription and billing management, network orchestration and provisioning, and individual developer tools through a single, cloud-based service. Professional services provided under platform service arrangements can include implementation, training, consulting or software development/modification services. Platform services and professional services are considered to be separate performance obligations.

Consideration under platform service arrangements includes both a variable component that changes each month depending on the number of subscribers hosted on the platform, as well as a fixed component of platform payments and credits.

Platform payments and associated credits are allocated between the platform services and professional services performance obligations by estimating the standalone selling price (“SSP”) of each performance obligation.

The Company estimates the SSP of professional services based on observable standalone sales. The SSP of platform services is derived using the residual approach by estimating the total contract consideration and subtracting the SSP of professional services.

Each month of providing access to the platform is substantially the same and the customer simultaneously receives and consumes the benefits as access is provided, therefore, the performance obligation consists of a series of distinct service periods. Accordingly, the platform services represent a single promise to provide continuous access (i.e. a stand-ready performance obligation) to the platform. Accordingly, the platform payment revenue allocated to platform services is recognized evenly over the term of the contract. Variable subscriber fees are allocated to the platform services and are recognized as the fees are invoiced.

Revenues related to professional services are distinct from the other promises in the contract(s) and are recognized as the related services are performed, on the basis of hours consumed.

Other professional services consist of professional service arrangements with platform services customers which are billed based on separate Statement of Work (“SOW”) arrangements for bespoke feature development. Revenues for professional services contracted through separate SOWs are recognized at a point-in-time when the final acceptance criteria have been met.

(c)

Tucows Domains

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 are recognized ratably over the registration period as domain registration contracts contain a ‘right to access’ license of IP, which is a distinct performance obligation measured 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.

Domain related value-added services like digital certifications, WHOIS privacy, website hosting 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.

The Company is an ICANN accredited registrar. Thus, 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.

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 generated from sale of domain name contracts, containing a distinct performance obligation to transfer the domain name rights under the Company’s control, is generally recognized once the rights have been transferred and payment has been received in full.

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.

Tucows Registry Services (“TRS”) provides registry platform and related technical services to operators of generic top-level domains (“gTLDs”), 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.

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Disaggregation of Revenue

The following is a summary of the Company’s revenue earned from each significant revenue stream (Dollar amounts in thousands of U.S. dollars):

	*Three Months Ended March 31,*
	*2026*		*2025*
Ting:
Fiber Internet Services	$	17,128	$	16,315
Construction services		2,246		-
Total Ting		19,374		16,315

Wavelo:
Platform Services		11,561		11,396
Other professional services		-		-
Total Wavelo		11,561		11,396

Tucows Domains
Wholesale
Domain Services		48,805		50,004
Value Added Services		5,460		5,903
Total Wholesale		54,265		55,907

Retail		9,835		9,348
Total Tucows Domains		64,100		65,255

Corporate and all other*:
Mobile Services and eliminations		1,622		1,643

	$	96,657	$	94,609

*Corporate and all 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 Segment Reporting ("ASC 280"). Ting Mobile is not managed as a separate reportable segment and is included within Corporate and all other for purposes of segment reporting. Intersegment revenues and expenses are eliminated in consolidation.

One customer in the Company's Wavelo operating segment accounted for 11% ($11.0 million) and 12% ($10.9 million) of total revenue during the three months ended March 31, 2026 and March 31, 2025, respectively.

At March 31, 2026, one customer represented 50% of total accounts receivable. As of December 31, 2025, one customer represented 44% of total accounts receivable.

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The following is a summary of the Company’s cost of revenue from each significant revenue stream (Dollar amounts in thousands of U.S. dollars):

	*Three Months Ended March 31,*
	*2026*		*2025*

Ting:
Fiber Internet Services	$	6,620	$	5,837
Construction services		2,007		-
Total Ting		8,627		5,837

Wavelo:
Platform Services		326		137
Other professional services		-		-
Total Wavelo		326		137

Tucows Domains:
Wholesale
Domain Services		38,782		40,381
Value Added Services		320		480
Total Wholesale		39,102		40,861

Retail		4,253		4,179
Total Tucows Domains		43,355		45,040

Corporate and all other*:
Mobile Services and eliminations		4,576		4,147

Network Expenses:
Network, other costs		5,868		5,175
Network, depreciation and amortization costs		9,775		10,742
Total Network Expenses		15,643		15,917

	$	72,527	$	71,078

*Corporate and all 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 all other for purposes of segment reporting. Intersegment revenues and expenses are eliminated in consolidation.

Contract Balances

The following table provides information about contract liabilities from contracts with customers. The Company accounts for contract assets and liabilities on a contract-by-contract basis, with each contract presented as either a net contract asset or a net contract liability accordingly.

Some of the Company’s long-term contracts with customers are billed in advance of service, such as domain contracts and some professional service contracts. Consideration received from customers related to performance obligations which have not yet been satisfied are recorded as contract liabilities.

Contract liabilities primarily relate to the portion of the transaction price received in advance related to the unexpired term of domain name registrations and other domain related value-added services, on both a wholesale and retail basis.

Significant changes in contract liabilities for the three months ended March 31, 2026 were as follows (Dollar amounts in thousands of U.S. dollars):

	*March 31, 2026*

Balance, beginning of period	$	152,935
Contract liabilities		67,289
Recognized revenue		(62,430	)
Balance, end of period	$	157,794

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Remaining Performance Obligations

For retail mobile and internet access services, where the performance obligation is part of contracts that have an original expected duration of one year or less (typically one month), the Company has elected to apply a practical expedient to not disclose revenues expected to be recognized in the future related to performance obligations that are unsatisfied (or partially unsatisfied).

Although domain registration contracts are deferred over the lives of the individual contracts, which can range from one to ten years, approximately 80 percent of our contract liabilities balance related to domain contracts is expected to be recognized within the next twelve months.

Professional services revenue related to platform services agreements is deferred and recognized as hours are incurred over the contract term. Any revenue for unused professional service hours is recognized as revenue at the end of the contract period.

12. Costs to obtain and fulfill a Contract

Deferred costs of fulfillment

Deferred costs to fulfill contracts primarily consist of domain registration costs which have been paid to a domain registry and are capitalized as deferred costs of fulfillment. These costs are deferred and amortized over the life of the domain which generally ranges from one to ten years. The Company also defers certain technology design and data migration costs it incurs to fulfill its performance obligations contained in our platform services arrangements. There were no impairment losses recognized in relation to the costs capitalized during the three months ended March 31, 2026. Amortization expense is included in cost of revenue.

The breakdown of the movement in the deferred costs of fulfillment balance for the three months ended March 31, 2026 is as follows (Dollar amounts in thousands of U.S. dollars).

	*March 31, 2026*

Balance, beginning of period	$	113,034
Deferral of costs		50,683
Amortized expense included in cost of revenue		(45,941	)
Balance, end of period	$	117,776

13. Leases

We lease datacenters, corporate offices, warehouses and fiber-optic cables under operating leases. The Company does not have any leases classified as finance leases.

Our leases have remaining lease terms of 1 year to 20 years, some of which may include options to extend the leases for up to 5 years, and some of which may include options to terminate the leases within 1 year.

The components of lease expense were as follows (Dollar amounts in thousands of U.S. dollars):

	*For the Three Months Ended March 31,*
	*2026*		*2025*
Operating lease expense (leases with a total term greater than 12 months)	$	3,524	$	2,253
Short-term lease expense (leases with a total term of 12 months or less)		20		6
Variable lease expense		523		112
Total lease expense	$	4,067	$	2,371

Lease expense is presented in general and administrative expenses and network expenses within our Condensed Consolidated Statements of Operations and Comprehensive Loss.

Variable lease payments are determined based on specific terms and conditions outlined in the lease agreements. These may include payments for utilities, which are based on actual usage, and maintenance costs, which are determined based on expenses incurred.

Information related to leases was as follows (Dollar amounts in thousands of U.S. dollars):

	*For the Three Months Ended March 31,*
Supplemental cash flow information:	*2026*		*2025*
Operating lease - operating cash flows (fixed payments)	$	3,017	$	2,112
Operating lease - operating cash flows (liability reduction)	$	1,615	$	1,551
New right of use assets - operating leases	$	14,367	$	5,084

Supplemental balance sheet information related to leases:	*March 31, 2026*			*December 31, 2025*
Weighted average discount rate		8.86	%		8.79	%
Weighted average remaining lease term	15.62 yrs			15.32 yrs

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Maturity of lease liability as of March 31, 2026 (Dollar amounts in thousands of U.S. dollars):

	*March 31, 2026*
Remaining of 2026	$	9,236
2027		11,455
2028		10,880
2029		11,410
2030		6,269
Thereafter		86,411
Total future lease payments		135,660
Less imputed interest		64,430
Total	$	71,230

Operating lease payments include payments under the non-cancellable term, without any additional amounts related to options to extend lease terms that are reasonably certain of being exercised.

We have agreements with several third-party network partners who construct and operate fiber networks used to deliver our internet services. Under these arrangements, the partners build and activate new serviceable addresses each month. The financial terms of these arrangements may include fixed fees, variable fees, or a combination of both. The partners control and manage the construction. We do not control the construction process and are therefore not considered the owner during buildout. The leases for these addresses will commence once the lessor makes the underlying assets available for our use, to deliver services to our customers.

The Company has elected to use the single exchange rate approach when accounting for lease modifications. Under the single exchange rate approach, the entire right of use asset is revalued at the date of modification in the Company’s functional currency provided the re-measurement is not considered a separate contract or if the re-measurement is related to change the lease term or assessment of a lessee option to purchase the underlying asset being exercised.

14. Segment Reporting

Reportable operating segments

We are organized and managed based on three operating segments which are differentiated primarily by their services, the markets they serve and the regulatory environments in which they operate. No operating segments have been aggregated to determine our reportable segments.

Our reportable operating segments and their principal activities consist of the following:

1. Ting - This segment derives revenue from providing retail high speed Internet access services to individuals and businesses. Revenues are generated in the United States.

2. Wavelo – This segment derives revenue from platform and other professional services related to communication service providers, including Mobile Network Operators and Internet Service Providers, and are primarily generated in the United States.

3. Tucows Domains – This segment includes wholesale and retail domain name registration services, value added services and portfolio services. The Company primarily earns revenues from the registration fees charged to resellers in connection with new, renewed and transferred domain name registrations; the sale of retail Internet domain name registration and email services to individuals and small businesses. Domain Services revenues are attributed to the country in which the contract originates, primarily Canada and the United States.

Our segmented results include shared services allocations, including a profit margin, for Finance, Human Resources and other technical services, to the operating units. In addition, Wavelo charges Ting a subscriber based monthly charge for services rendered. Financial impacts from these allocations and cross segment charges are eliminated as part of the consolidation.

Key measure of segment performance

The CEO, as the chief operating decision maker ("CODM"), regularly reviews the operations and performance by segment. The CEO reviews Segment Adjusted EBITDA (as defined below) as (i) key measures of performance for each segment and (ii) to make decisions about the allocation of resources. Depreciation of property and equipment, amortization of intangible assets, impairment of indefinite life intangible assets, gain on currency forward contracts and other income, net are organized along functional lines and are not included in the measurement of segment profitability. Total assets and total liabilities are centrally managed and are not reviewed at the segment level by the CEO.

Our key measure of segment performance is Segment Adjusted EBITDA.

We calculate this as segment revenue together with recurring income earned on sale of transferred assets, less cost of revenue, network expenses and certain operating expenses attributable to each segment, such as sales and marketing, technical operations and development, general and administration expenses. Segment Adjusted EBITDA excludes unrealized gains (losses) on foreign exchange, stock-based compensation and transactions that are not indicative of on-going performance, including acquisition and transition costs. Certain revenues and expenses 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 IT.

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The Company believes that Adjusted EBITDA is an important indicator of the operational strength and performance of its segments, by identifying those items that are not directly a reflection of each segment’s performance or indicative of ongoing operational and profitability trends.

The CODM uses Adjusted EBITDA to evaluate the overall recurring profitability of each operating segment after accounting for overhead costs. Adjusted EBITDA is evaluated by the CODM by comparing current period to historical and forecasted results and is used to inform strategic decisions over segment profitability, operational efficiency, pricing strategies, cost optimization, customer churn, competitor benchmarking and cash flow.

Information by reportable segments (with the exception of disaggregated revenue, which is discussed in "Note 11. Revenue" which is regularly reported to the chief operating decision maker, and the reconciliations thereof to our income before taxes, are set out in the following tables (Dollar amounts in thousands of U.S. dollars):

	*Ting*			*Wavelo*		*Tucows Domains*			*Consolidated Totals*
For the Three Months Ended March 31, 2026

Revenue from external customers	$	19,374		$	11,084	$	64,100		$	94,558
Intersegment revenues ⁽¹⁾		-		477			-		477
Total net revenues		19,374		11,561			64,100		95,035
Less:
Cost of revenues		8,627		326			43,355		52,308
Network, other costs ⁽²⁾		1,157		2,300			1,878		5,335
Sales and marketing ⁽²⁾		5,368		2,444			3,750		11,562
Technical operations and development ⁽²⁾		449		1,843			1,890		4,182
General and administrative ⁽²⁾⁽³⁾		4,226		1,027			1,620		6,873
Other segment items ⁽⁴⁾		(23	)	5			(20	)	(38		)
Segment Adjusted EBITDA	$	(430	)	$	3,616	$	11,627		$	14,813

	*Ting*			*Wavelo*			*Tucows Domains*		*Consolidated Totals*
For the Three Months Ended March 31, 2025

Revenue from external customers	$	16,315		$	10,952		$	65,255	$	92,522
Intersegment revenues ⁽¹⁾		-			444			-		444
Total net revenues		16,315			11,396			65,255		92,966
Less:
Cost of revenues		5,837			137			45,040		51,014
Network, other costs ⁽²⁾		896			2,249			1,654		4,800
Sales and marketing ⁽²⁾		4,275			2,327			3,563		10,165
Technical operations and development ⁽²⁾		245			1,694			2,154		4,093
General and administrative ⁽²⁾⁽³⁾		4,411			1,013			1,266		6,690
Other segment items ⁽⁴⁾		1,505			(474	)		38		1,069
Segment Adjusted EBITDA	$	(854	)	$	4,449		$	11,540	$	15,135

(1) Intercompany 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.

(2) Effective beginning in 2026, Network, other costs, Sales and marketing, Technical operations and development and General and administrative costs presented in segment reporting to the CODM are shown excluding stock‑based compensation expenses for all business units. This presentation reflects a change from prior periods, in which stock‑based compensation expenses was included within each expense category and subsequently adjusted in “Other segment” line items. To ensure comparability, the 2025 segment expense figures have been recast to conform to the 2026 presentation.

(3) Effective beginning in 2026, General and administrative costs presented in segment reporting to the CODM are shown excluding Gains and losses from unrealized foreign currency. This presentation reflects a change from prior periods, in which gains and losses from unrealized foreign currency was included within each expense category and subsequently adjusted in “Other segment” line items. To ensure comparability, the 2025 segment expense figures have been recast to conform to the 2026 presentation.

(4) Other segment items for each reportable segment includes other income, as well as adjustments to add back (deduct) acquisition and transition costs, which are included in other line items but are excluded from our definition of Segment Adjusted EBITDA.

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The following table reconciles Segment Adjusted EBITDA for the period to Net loss before tax for the three months ended March 31, 2026 and March 31, 2025 (Dollar amounts in thousands of U.S. dollars):

Reconciliation of Segment Adjusted EBITDA to Net loss before tax	*Three Months Ended March 31,*
(In Thousands of U.S. Dollars)	*2026*			*2025*

Segment Adjusted EBITDA	$	14,813		$	15,135
Reconciling items:
Corporate and other⁽¹⁾		(3,146	)		(1,464	)
Depreciation of property and equipment		(9,871	)		(10,460	)
Impairment and loss on disposition of property and equipment		(1,156	)		(204	)
Amortization of intangible assets		(1,103	)		(1,205	)
Interest expense, net		(13,865	)		(13,613	)
Stock-based compensation		(1,094	)		(1,505	)
Unrealized loss (gain) on foreign exchange revaluation of foreign denominated monetary assets and liabilities		(194	)		364
Acquisition and other costs ⁽²⁾		(99	)		(15	)

Net loss before tax	$	(15,715	)	$	(12,967	)

(1) Items that are centrally managed and not monitored by or reported to our CEO by segment, including retail mobile services, eliminations of intercompany transactions, portions of Finance and Human Resources that are centrally managed, Legal and Corporate IT.

(2) Acquisition and other costs represent transaction-related expenses and transitional expenses. Expenses include severance or transitional costs associated with department, operational or overall company restructuring efforts, including geographic alignments.

Revenue from sources outside of Canada and the United States of America comprises less than 10% of our total operating revenue.

(b) The following is a summary of the Company’s property and equipment by geographic region (Dollar amounts in thousands of U.S. dollars):

	*March 31, 2026*		*December 31, 2025*

Canada	$	734	$	797
United States		274,809		281,158
	$	275,543	$	281,955

(c) The following is a summary of the Company’s amortizable intangible assets by geographic region (Dollar amounts in thousands of U.S. dollars):

	*March 31, 2026*		*December 31, 2025*

Canada	$	557	$	695
United States		6,640		6,745
	$	7,197	$	7,440

Under ASC 326 Financial Instruments - Credit Losses, the Company assesses the adequacy of its allowance for expected credit losses based on historical loss experience, current economic conditions and reasonable forecasts. Our evaluation considers the short-term nature of our receivables and the high credit quality of our customer base, which mitigates significant credit risk exposure.

(d) The following table summarizes our expected credit losses ("ECL") (Dollar amounts in thousands of U.S. dollars):

Expected credit losses	*Balance at beginning of period*		*Increase in ECL provision*		*Write-offs during period*			*Balance at end of the period*

Three Months Ended March 31, 2026	$	1,259	$	144	$	(20	)		1,383
Twelve months ended December 31, 2025	$	923	$	370	$	(34	)		1,259

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15. Stockholders' Deficit

The following table summarizes stockholders' deficit transactions for the three months ended March 31, 2026 (Dollar amounts in thousands of U.S. dollars):

										*Accumulated*
					*Additional*					*other*			*Total*
	*Common stock*				*paid in*		*Retained earnings*			*comprehensive*			*stockholders'*
	*Number*		*Amount*		*capital*		*(Accumulated Deficit)*			*income (loss)*			*deficit*

Balances, December 31, 2025		11,111,453	$	38,308	$	23,526	$	(225,977	)	$	(57	)	$	(164,200	)

Stock-based compensation⁽¹⁾		22,721		480		632		-			-			1,112
Net loss		-		-		-		(18,107	)		-			(18,107	)
Other comprehensive loss		-		-		-		-			(133	)		(133	)
Balances, March 31, 2026		11,134,174	$	38,788	$	24,158	$	(244,084	)	$	(190	)	$	(181,328	)

(1) The Company capitalizes stock-based compensation costs directly attributable to the development of qualifying assets. Qualifying assets include internal use software (“IUS”), assets under construction (“AUC”), equipment, or other long-lived assets that meet the capitalization criteria prescribed by ASC 350 Intangibles - Goodwill and Other ("ASC 350"). During the three months ended March 31, 2026 and March 31, 2025, the Company capitalized less than $0.1 million of stock-based compensation directly attributable to the development of certain IUS assets.

2026 Stock Buyback Program

On February 12, 2026, the Company announced that its Board of Directors (“Board”) approved a stock buyback program to repurchase up to $40 million of its common stock in the open market. The $40 million buyback program commenced on February 13, 2026 and is expected to terminate on February 12, 2027. For the three months ended March 31, 2026, the Company did not repurchase shares under this program.

2025 Stock Buyback Program

On February 13, 2025, the Company announced that its Board approved a stock buyback program to repurchase up to $40 million of its common stock in the open market. The $40 million buyback program commenced on February 14, 2025 and terminated on February 12, 2026. For the three months ended March 31, 2026, and March 31, 2025 the Company did not repurchase shares under this program.

2024 Stock Buyback Program

On February 22, 2024, the Company announced that its Board approved a stock buyback program to repurchase up to $40 million of its common stock in the open market. The stock buyback program commenced on February 23, 2024 and terminated on February 22, 2025. For the three months ended March 31, 2025 the Company did not repurchase shares under this program.

16. Share-based Payments

2006 Tucows Equity Compensation Plan

On November 22, 2006, the shareholders of the Company approved the Company’s 2006 Equity Compensation Plan (the “2006 Plan”), which was amended and restated effective July 29, 2010 and which serves as a successor to the 1996 Plan. The 2006 Plan has been established for the benefit of the employees, officers, directors and certain consultants of the Company. The maximum number of common shares which had initially been set aside for issuance under the 2006 Plan is 1.25 million shares. On October 8, 2010, the 2006 Plan was amended to increase the number of shares set aside for issuance by an additional 0.475 million shares to 1.725 million shares. In September 2015, the 2006 Plan was amended to increase the number of shares set aside for issuance by an additional 0.75 million shares to 2.475 million shares. In November 2020, the 2006 Plan was amended to increase the number of shares set aside for issuance by an additional 1.53 million shares to 4.0 million shares. Generally, options issued under the 2006 Plan vest over a four-year period and have a term not exceeding seven years, except for automatic formula grants of non-qualified stock options, which vest after one year and have a five-year term. Prior to the September 2015 amendment to the 2006 Plan, automatic formula grants of non-qualified stock options vested immediately upon grant.

Our current equity-based compensation plans include provisions that allow for the “net exercise” of stock options by all plan participants. In a net exercise, any required payroll taxes, federal withholding taxes and exercise price of the shares due from the option holder can be paid for by having the option holder tender back to the Company a number of shares at fair value equal to the amounts due. These transactions are accounted for by the Company as a purchase and retirement of shares.

The fair value of each option grant ("Company Option") is estimated on the date of grant using the Black-Scholes option-pricing model. Because option-pricing models require the use of subjective assumptions, changes in these assumptions can materially affect the fair value of the options. The Company calculates expected volatility based on historical volatility of the Company’s common shares. The expected term, which represents the period of time that options granted are expected to be outstanding, is estimated based on historical exercise experience. The Company evaluated historical exercise behavior when determining the expected term assumptions. The risk-free rate assumed in valuing the options is based on the U.S. Treasury yield curve in effect at the time of grant for the expected term of the option. The Company determines the expected dividend yield percentage by dividing the expected annual dividend by the market price of Tucows Inc. common shares at the date of grant.

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Details of Company stock option transactions for the three months ended March 31, 2026 and March 31, 2025 are as follows (Dollar amounts in thousands of U.S. dollars, except per share amounts):

	*Three Months Ended March 31, 2026*					*Three Months Ended March 31, 2025*
	*Number of shares*			*Weighted average exercise price per share*		*Number of shares*			*Weighted average exercise price per share*

Outstanding, beginning of period		961,376		$	39.65		1,122,700		$	45.86
Granted		-			-		-			-
Exercised		-			-		-			-
Forfeited		(3,975	)		22.01		(18,228	)		40.76
Expired		(3,721	)		49.72		(60,509	)		60.30
Outstanding, end of period		953,680			39.69		1,043,963			45.11
Options exercisable, end of period		562,467		$	51.44		557,558		$	57.68

As of March 31, 2026, the exercise prices, weighted average remaining contractual life of outstanding options and intrinsic values were as follows (Dollar amounts in thousands of U.S. dollars, except per share amounts):

	Options outstanding								Options exercisable
Exercise price	Number outstanding		Weighted average exercise price per share		Weighted average remaining contractual life (years)		Aggregate intrinsic value		Number exercisable		Weighted average exercise price per share		Weighted average remaining contractual life (years)		Aggregate intrinsic value

$16.47 - $19.93		146,262	$	18.96		5.9	$	3		23,875	$	19.27		4.4	$	3
$20.25 - $28.37		369,564		22.70		5.1		-		131,531		23.30		4.8		-
$30.70 - $30.74		5,000		30.74		3.7		-		3,750		30.74		3.7		-
$40.04 - $48.00		127,465		42.00		3.2		-		97,922		42.02		3.2		-
$51.82 - $59.98		13,350		55.53		0.8		-		13,350		55.53		0.8		-
$60.01 - $68.41		142,416		60.94		0.7		-		142,416		60.94		0.7		-
$70.13 - $79.51		140,623		78.45		1.8		-		140,623		78.45		1.8		-
$80.61 - $82.07		9,000		80.61		2.5		-		9,000		80.61		2.5		-
		953,680	$	39.69		3.7	$	3		562,467	$	51.44		2.6	$	3

Total unrecognized compensation cost relating to unvested stock options at March 31, 2026, prior to the consideration of expected forfeitures, is approximately $2.5 million and is expected to be recognized over a weighted average period of 2.4 years.

2022 Wavelo Equity Compensation Plan

On November 9, 2022 the Board of Wavelo approved Wavelo's Equity Compensation Plan (“ECP”), which has been established for the benefit of the employees, officers, directors and certain consultants of Wavelo or Tucows. The Wavelo stock options were introduced in order to provide variable compensation that helps retain executives and ensures that our executives' interests are aligned with those stakeholders of the business to grow long-term value. The maximum number of Wavelo common shares which have been set aside for issuance under the 2022 Plan is 20 million shares. In June 2024, the Board approved an increase in the authorized share count to 120 million shares, with a corresponding increase in the option pool to 25 million shares. The options issued under the ECP primarily vest over a period of three years and have a seven-year term. For the initial grants under the plan, the first 25% became exercisable within three months and vesting ratably monthly thereafter, after the third year. Compensation costs for awards of stock-based compensation settled in shares are determined based on the fair value of share-based instrument at the time of the grant and are recognized as expense over the vesting period of the share-based instrument. The Company recognizes forfeitures as they occur.

The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model. Because option-pricing models require the use of subjective assumptions, changes in these assumptions can materially affect the fair value of the options. The Company calculates expected volatility based on the actual volatility of comparable publicly traded companies. The risk-free rate assumed in valuing the options is based on the U.S. Treasury yield curve in effect at the time of grant for the expected term of the option. The Company assumes the expected dividend yield to be zero.

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Details of Wavelo's stock option transactions for the three months ended March 31, 2026 and March 31, 2025 are as follows (Dollar amounts in thousands of U.S. dollars, except per share amounts):

	*Three Months Ended March 31, 2026*					*Three Months Ended March 31, 2025*
	*Number of shares*			*Weighted average exercise price per share*		*Number of shares*			*Weighted average exercise price per share*

Outstanding, beginning of period		15,305,714		$	1.34		15,887,997		$	1.28
Granted		15,500			1.81		226,000			1.78
Exercised		-			-		-			-
Forfeited		(6,250	)		1.27		(72,063	)		1.45
Expired		(22,812	)		1.36		(301,132	)		1.27
Outstanding, end of period		15,292,152			1.34		15,740,802			1.32
Options exercisable, end of period		13,765,473		$	1.30		11,656,385		$	1.28

	Options outstanding								Options exercisable
Exercise price	Number outstanding		Weighted average exercise price per share		Weighted average remaining contractual life (years)		Aggregate intrinsic value		Number exercisable		Weighted average exercise price per share		Weighted average remaining contractual life (years)		Aggregate intrinsic value

$0 - $1.81		15,292,152	$	1.34		3.6	$	7,186		13,765,473	$	1.30		3.6	$	7,075
		15,292,152	$	1.34		3.6	$	7,186		13,765,473	$	1.30		3.6	$	7,075

Total unrecognized compensation cost relating to unvested stock options at March 31, 2026, prior to the consideration of expected forfeitures, is approximately $2.1 million and is expected to be recognized over a weighted average period of 2.6 years.

2022 Ting Equity Compensation Plan

On January 16, 2023, the Board of Ting Fiber, LLC approved Ting's Equity Compensation Plan (Ting ECP), which has been established for the benefit of the employees, officers, directors and certain consultants of Ting or Tucows. The Ting stock options were introduced in order to provide variable compensation that helps retain executives and ensure that our executives' interests are aligned with those stakeholders of the business to grow the long-term value. The maximum number of Ting common units that have been set aside for issuance under the plan is 10 million units, currently there are 100 million common units outstanding. Generally, options issued under the Ting ECP vest over a four-year period and have a term not exceeding seven years. Compensation costs for awards of stock-based compensation settled in shares are determined based on the fair value of the share-based instrument at the time of the grant and are recognized as expense over the vesting period of the share-based instrument.

The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model. As option-pricing models require the use of subjective assumptions, changes in these assumptions can materially affect the fair value of the options. Ting calculates expected volatility based on the actual volatility of comparable publicly traded companies. The risk-free rate assumed in valuing the options is based on the U.S. Treasury yield curve in effect at the time of grant for the expected term of the option. The Company assumes the expected dividend yield to be zero.

Details of Ting's stock option transactions for the three months ended March 31, 2026 and March 31, 2025 are as follows (Dollar amounts in thousands of U.S. dollars, except per share amounts):

	*Three Months Ended March 31, 2026*					*Three Months Ended March 31, 2025*
	*Number of shares*			*Weighted average exercise price per share*		*Number of shares*			*Weighted average exercise price per share*

Outstanding, beginning of period		4,646,012		$	6.00		5,959,660		$	6.00
Granted		-			-		-			-
Exercised		-			-		-			-
Forfeited		(71,925	)		6.00		(91,658	)		6.00
Expired		(36,756	)		6.00		(930,891	)		6.00
Outstanding, end of period		4,537,331			6.00		4,937,111			6.00
Options exercisable, end of period		4,490,653		$	6.00		3,797,940		$	6.00

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	Options outstanding								Options exercisable
Exercise price	Number outstanding		Weighted average exercise price per share		Weighted average remaining contractual life (years)		Aggregate intrinsic value		Number exercisable		Weighted average exercise price per share		Weighted average remaining contractual life (years)		Aggregate intrinsic value

$0 - $6.00		4,537,331	$	6.00		4.0	$	-		4,490,653	$	6.00		4.0	$	-
		4,537,331	$	6.00		4.0	$	-		4,490,653	$	6.00		4.0	$	-

Total unrecognized compensation cost relating to unvested stock options at March 31, 2026, prior to the consideration of expected forfeitures, is approximately $0.4 million and is expected to be recognized over a weighted average period of 1.1 years.

The Company recorded total stock-based compensation expense of $1.1 million and $1.5 million for the three months ended March 31, 2026 and March 31, 2025. The Company details of the stock-based compensation expense are as follows:

	*Three Months Ended March 31,*
	*2026*			*2025*
Company options	$	953		$	1,102
Wavelo options		148			442
Ting options		11			31
Capitalized stock-based compensation		(18	)		(70	)
Total stock-based compensation expense	$	1,094		$	1,505

During the three months ended March 31, 2026 and March 31, 2025, the Company capitalized less than $0.1 million of stock-based compensation directly attributable to the development of certain IUS assets.

17. Fair Value Measurement

For financial assets and liabilities recorded in our financial statements at fair value we utilize a valuation hierarchy for disclosure of the inputs to valuation used to measure fair value. This hierarchy prioritizes the inputs into three broad levels. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 inputs are quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument. Level 3 inputs are unobservable inputs based on the Company’s own assumptions used to measure assets and liabilities at fair value. The classification of a financial asset or liability within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement.

Equity investments without readily determinable fair value include ownership rights that do not provide the Company with control or significant influence. Such equity investments are recorded at cost, less any impairment, and adjusted for subsequent observable price changes as of the date that an observable transaction takes place. Subsequent adjustments are recorded in other income (expense), net.

The following table provides a summary of the fair values of the Company’s derivative instruments measured at fair value on a recurring basis as of March 31, 2026 (Dollar amounts in thousands of U.S. dollars):

	*March 31, 2026*
	*Fair Value Measurement Using*							*Asset (Liability)*
	*Level 1*		*Level 2*			*Level 3*		*at Fair value*

Derivative instrument asset (liability), net	$	-	$	(251	)	$	-	$	(251	)

Total assets (liabilities), net	$	-	$	(251	)	$	-	$	(251	)

The following table provides a summary of the fair values of the Company’s derivative instruments measured at fair value on a recurring basis as of December 31, 2025 (Dollar amounts in thousands of U.S. dollars):

	*December 31, 2025*
	*Fair Value Measurement Using*							*Asset (Liability)*
	*Level 1*		*Level 2*			*Level 3*		*at Fair value*

Derivative instrument asset (liability), net	$	-	$	(75	)	$	-	$	(75	)

Total assets (liabilities), net	$	-	$	(75	)	$	-	$	(75	)

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18. Other income (expense)

On August 1, 2020, the Company entered into an Asset Purchase Agreement (the “Purchase Agreement”), by and between the Company and DISH Wireless L.L.C. ("EchoStar", DISH's post-merger parent). Under the Purchase Agreement and in accordance with the terms and conditions set forth therein, the Company sold to EchoStar its mobile customer accounts that are marketed and sold under the Ting brand (other than certain customer accounts associated with one network operator) (“Transferred Assets”). For a period of 10 years following the execution of the Purchase Agreement, EchoStar will pay a monthly fee to the Company generally equal to an amount of net revenue received by EchoStar in connection with the transferred customer accounts minus certain fees and expenses, as further set forth in the Purchase Agreement.

The Company accounts for investment in entities over which it has the ability to exert significant influence, but does not control and is not the primary beneficiary of, using the equity method of accounting. The Company includes the proportionate share of earnings (loss) of the equity method investees in Other Income.

The Company earned the amounts noted in the table below during the three months ended March 31, 2026 and March 31, 2025.

(Dollar amounts in thousands of U.S. dollars)	*Three Months Ended March 31,*
	*2026*			*2025*
Income earned on sale of transferred assets	$	2,516		$	2,741
Equity in earnings (loss) of unconsolidated businesses	(59		)		(62	)
Total other income	$	2,457		$	2,679

The following table provides additional information relating to Interest expense, net (Dollar amounts in thousands of U.S. dollars):

	*Three Months Ended March 31,*
	*2026*			*2025*
Interest expense	$	(14,168	)	$	(14,128	)
Interest income		303			515
Interest expense, net	$	(13,865	)	$	(13,613	)

19. Redeemable Preferred Units

On August 8, 2022 (the “Effective Date”), Ting Fiber, LLC (“Ting”) entered into a Series A Preferred Unit Purchase Agreement (the “Unit Purchase Agreement”) with Generate TF Holdings ("Generate"), and closed the transaction on August 11, 2022 (the “Transaction Close”). Ting issued and sold 10,000,000 Series A Preferred Units to Generate at $6.00 per unit, resulting in gross proceeds of $60.0 million. The investment provided an additional $140 million of capital commitments available to Ting over the subsequent three year period, if certain milestones were achieved.

On December 5, 2022, Ting issued and sold an additional 4,583,333 Series A Preferred Units for gross proceeds of $27.5 million. During the year ended December 31, 2023, Ting issued an aggregate of 5,833,333 additional Series A Preferred Units for gross proceeds of $35.0 million. On May 4, 2023, Ting redeemed 5,173,067 Series A Preferred Units for $45.7 million, including a make-whole premium of $14.7 million. The redemption was accounted for as a debt extinguishment, and the associated loss was recognized in other income (expense).

As of March 31, 2026, the redeemable preferred units have an aggregate liquidation preference of $91.5 million, plus a make-whole premium should redemption occur before the fourth anniversary of the Transaction Close and are senior to the Ting Fiber, LLC common units with respect to sale, dissolution, liquidation or winding up of Ting.

Ting had the option to issue additional Series A Preferred Units through August 8, 2025, subject to milestone achievement. Until this date, Ting was required to pay a standby fee of 0.50% per annum on the undrawn commitment, payable quarterly.

The Series A Preferred Units accrue a preferred return at 15% per annum, subject to adjustment between 13% and 17% based on certain project approval and contribution conditions. The preferred return accrues daily and compounds quarterly. The preferred return accrued during the first two years is not payable unless and until the Series A Preferred Units are redeemed. The preferred return accrued after the second anniversary of the Transaction Close is payable by Ting quarterly.

Ting incurred $0.8 million of legal fees related to the redeemable preferred unit issuance, which have been reflected as a reduction to the carrying amount of the redeemable preferred unit balance and will be amortized to interest expense, net in the accompanying Consolidated Statements of Operations and Comprehensive Loss over the expected six-year term of the instrument.

The liability was initially recorded at fair value and subsequently recorded at the present value of the settlement amount, which includes the preferred return payments required until the instrument's expected maturity on the sixth anniversary of the Transaction Close, August 10, 2028 using the implicit rate of return of the instrument, 15%. For the period ended March 31, 2026, Ting recorded an interest expense of $5.0 million, the total of which was accreted. For the year ended December 31, 2025, Ting recorded an interest expense of $19.3 million, of which $14.7 million was accreted. Interest expense related to amortization of issuance costs was $0.1 million in each of those periods.

Commencing in the second quarter of 2025, Ting has not paid the quarterly preferred return for more than two consecutive quarters. The unpaid amount as of March 31, 2026 is $19.7 million and has been added to the redeemable preferred units balance in the Consolidated Balance Sheets. The impact of this failure to pay is outlined below under Return Breach and Trigger Event.

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The following table summarizes Ting's borrowings under the Unit Purchase Agreement (Dollar amounts in thousands of U.S. dollars):

	*March 31, 2026*			*December 31, 2025*

Opening Balance	$	137,252		$	122,556
Add: Accretion of redeemable preferred units⁽¹⁾		5,032			14,696
Redeemable preferred shares balance		142,284			137,252
Less: Deferred preferred financing costs		(260	)		(289	)
Total Redeemable preferred units	$	142,024		$	136,963

⁽¹⁾Ting capitalizes interest expenses directly attributable to the development of qualifying assets. Qualifying assets include IUS, AUC, equipment, or other long-lived assets that meet the capitalization criteria prescribed by ASC 350. During the three months ended March 31, 2026 and March 31, 2025 Ting capitalized $0.1 million of interest expenses pertaining to the redeemable preferred units directly attributable to the development of certain AUC assets.

Return Breach and Trigger Event

On December 1, 2025, Ting received written notice from Generate asserting that a Return Breach had occurred due to Ting’s failure to pay the quarterly preferred return for the second and third quarter of 2025 and the failure to cure such nonpayment within 60 days of notice from Generate thereof. Generate further asserted that such Return Breach constituted a Trigger Event under the Ting Fiber LLC Amended and Restated Limited Liability Company Agreement, dated as of August 11, 2022 (the "LLC Agreement") and reserved its rights to pursue available remedies under the LLC Agreement and applicable law. Such remedies include the right to elect conversion of the Series A Preferred Units into common units of Ting and a call right to purchase certain fiber network assets of Ting at the lower of the fair market value of such assets, and the aggregate invested capital in such assets plus 10%. Generate has not exercised either of these rights as of March 31, 2026.

Additionally, as a result of the Return Breach and related Trigger Event asserted by Generate on December 1, 2025, Generate has the ability, at its option, to make a request for redemption of all Series A Preferred Units, requiring Ting to redeem all outstanding Series A Preferred Units within 30 days of such request (a "Redemption Request"). The redemption price under such a request includes the original issue price, any unsatisfied preferred return, as well as a make-whole premium. As Ting would be required to settle the obligation within 30 days of a Redemption Request being submitted, the redeemable preferred units were reclassified from long term to current liabilities in the Consolidated Balance Sheet as of December 31, 2025. If Ting did receive a Redemption Request from Generate, Ting would be required to pay Generate an estimated $204.9 million, representing the redemption price. As of March 31, 2026, Generate had not submitted a redemption request, and payment of the Redemption Price was not due.

The rights asserted by Generate in connection with the Return Breach relate to Ting and its subsidiaries, and such rights under the LLC Agreement do not extend to, or otherwise impose any liability upon, Tucows Inc. or its other subsidiaries. Under the LLC Agreement, the remedies available to Generate following a Return Breach are limited to the equity interests and assets of Ting and its subsidiaries, and are subordinate to the rights of the secured noteholders under Ting's asset-backed securitization facilities. Accordingly, the occurrence of the Return Breach and any exercise of rights by Generate do not affect Ting's securitized debt structure and have no impact on the ABS facilities or the collateral securing them. Further, there is no impact of the Return Breach or Trigger Event on the Company's 2023 Credit Facility described in "Note 7. Long Term Debt."

20. Commitments and Contingencies

(a) The Company has several non-cancelable lease and purchase obligations primarily for general office facilities, service contracts for mobile telephone services and equipment that expire over the next ten years. Future minimum payments under these agreements are as follows (Dollar amounts in thousands of U.S. dollars):

Contractual Obligations for the period ended March 31, 2026	*Capital Purchase Obligations*		*Purchase Obligations (1)*		*Total Obligations*

Remainder of 2026	$	3,522	$	1,871	$	5,393
2027		-		1,390		1,390
2028		-		864		864
2029		-		737		737
2030		-		532		532
Thereafter		-		1,074		1,074
	$	3,522	$	6,468	$	9,990

(1) Purchase obligations include all other legally binding service contracts for mobile telephone services and other operational agreements to be delivered during the remainder of 2026 and subsequent years.

(b) On February 9, 2015 Ting Fiber, Inc.(“Ting”) entered into a lease and network operation agreement with the City of Westminster, Maryland (the “City”) relating to the deployment of a new fiber network throughout the Westminster area (“WFN”). The agreement had an initial term of ten years, which expired in 2024. Following the expiration of the initial term, Ting and the City have continued to operate under the existing terms of the agreement while actively negotiating a new agreement.

Under the agreement, the City will finance, construct, and maintain the WFN which will be leased to Ting for a period of ten years. The network will be constructed in phases, the scope and timing of which shall be determined by the City, in cooperation with Ting.

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Under the terms of the agreement, Ting may be required to advance funds to the City in the event of a quarterly shortfall between the City’s revenue from leasing the network to Ting and the City’s debt service requirements relating to financing of the network. Ting could be responsible for shortfalls between $50,000 and $150,000 per quarter. In 2016, the City entered into financing for the construction of the WFN which allows the City to draw up to $21.0 million from their lenders over the next five years with interest only payments during that period with a loan maturity of 30 years. As of March 31, 2026, the City has drawn $16.2 million and the City’s revenues from Ting exceeded the City’s debt service requirements. The Company does not believe it will be responsible for any shortfall in the remainder of 2026.

(c) On September 17, 2018 Ting entered into a non-exclusive access and use agreement with SiFi Networks Fullerton, LLC (“SiFi”). The agreement established a fifteen-year term during which Ting has the non-exclusive right to act as an Internet service provider for a fiber-optic network constructed in the city of Fullerton, California. Under the terms of the agreement, SiFi is fully responsible for constructing, operating and maintaining a wholesale fiber-optic network, as well as the financing of those activities.

Ting is responsible for paying a fee per subscriber to SiFi. Through a “take or pay” arrangement, Ting has agreed to certain minimum charges based on minimum subscriber rates. These minimum fees are variable based on the percentage completion of the fiber optic network, and thus have not been considered an unconditional purchase obligation for the purposes of the table in Note 20 (a). Ting is currently disputing certain charges from SiFi and has ceased accruing for these amounts. The Company expects the maximum exposure from these disputed charges is $0.3 million as of March 31, 2026. The commitment amounts disclosed in the schedule reflect only the charges that Ting continues to accrue. Given the ongoing dispute, these amounts may be subject to change.

(d) On November 4, 2019 Ting entered into an access and use agreement with Netly, LLC, acquired by Ubiquity Management, LLC ("Ubiquity") in Fiscal 2022. The agreement establishes twelve-year term wherein Ting will be granted the right to act as an Internet service provider for fiber-optic networks being constructed in and around the cities of Solana Beach, California. Under the terms of the agreement, Ting will have a 3-year “Headstart” period over each completed segment of the network, whereby Ting shall be the exclusive provider of services to subscribers during the “Headstart” period. Ubiquity is fully responsible for constructing, operating and maintaining a wholesale fiber optic network, as well as the financing of those activities.

Ting is responsible for paying a fee per subscriber to Ubiquity, as well as an unlit door fee for each serviceable address not subscribed. Through a “take or pay” arrangement, Ting has agreed to certain minimum charges based on minimum subscriber rates. To the extent that construction of the fiber optic network is complete, our minimum commitments have been included in the contractual lease obligations of the table in Note 20 (a). The Company has an ongoing billing dispute with Ubiquity regarding the rates and methodology under which it can invoice our Ting Fiber division for our operations. For the purposes of calculating the table in Note 20 (a), the Company reflected its future commitment under this agreement consistent with the amounts it has historically accrued in accordance with ASC 450-20 Loss Contingencies and, in accordance with the definition of probable loss described therein, and paid. At this time the Company believes that the probability that this dispute will have a material adverse effect on the business, operating results or financial condition is remote.

(e) On January 7, 2022, Ting entered into a 25-year lease agreement with Colorado Springs Utilities (“CSU”), a municipally owned utility. The lease agreement named Ting the anchor tenant on a city-wide fiber network that is intended to pass 200,000 homes in Colorado Springs, Colorado. CSU began construction in Q2 of 2023. Under the terms of the lease, Ting is obligated to pay a per-month fee for addresses passed by the network, (as they are passed and become serviceable for customers to connect to the network) and for certain fiber infrastructure, including co-location space. The lease is guaranteed by Ting's ultimate parent, Tucows Inc. Total costs of the lease, over its twenty-five-year term, are approximately $593 million based on a fully completed fiber-to-the-home network, however the minimum fees are variable based on the number of active subscriber addresses. Future committed fees associated with completed portions of the network have been included in the contractual lease obligations of the table in Note 20 (a). Future fees associated with portions of the network that have yet to be constructed have not been considered an unconditional purchase obligation for the purposes of the table in Note 20 (a).

(f) On May 11, 2022, Ting Fiber, LLC ("Ting Fiber"), entered into a "Rights-of-Way" agreement with the City of Alexandria, Virginia whereby the City granted Ting Fiber the right to install, place, construct, maintain, operate, upgrade, repair, and replace a Communications System to provide Broadband Services within the Public Rights-of-Way (a space in, upon, above, along, across, over and below the public and City-owned property that is used as a public rights-of-way) for a fee. Per the agreement, Ting Fiber is to pay the City throughout the 20-year term of the agreement, an amount equal to 3% of Ting Fiber's Broadband Revenues once the network is live, and subscribers are obtained, and this fee is to be paid on a quarterly basis. The agreement commenced once Ting Fiber launched its network in Alexandria in March 2023. Since these fees are currently variable in nature, they have not been considered an unconditional purchase obligation for the purposes of the table in Note 20 (a).

(g) On November 1, 2023, the Company, entered into a Network Access and Use Agreement with Blue Suede Networks, LLC, which granted Ting Fiber the right to use the fiber communications network to be constructed by Blue Suede Networks, LLC to provide high-speed broadband Internet Access services to end-user residential and small and medium sized business customers in the city of Memphis, Tennessee. The agreement grants the Company an exclusivity period of 5 years. The agreement requires the Company to pay the greater of a minimum revenue commitment based on minimum subscriber rates and a revenue share. Future fees associated with portions of the network have not been considered an unconditional purchase obligation for the purposes of the table in Note 20 (a).

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(h) In the normal course of its operations, the Company becomes involved in various legal claims and lawsuits. The Company intends to vigorously defend these claims. While the final outcome with respect to any actions or claims outstanding or pending as of March 31, 2026 cannot be predicted with certainty, management does not believe that the resolution of these claims, individually or in the aggregate, will have a material adverse effect on the Company’s financial position.

21. Additional Financial Information

The following tables provide additional financial information related to our Condensed Consolidated Financial statements:

Balance Sheet Information
	*March 31,*		*December 31,*
Prepaid expenses and other	*2026*		*2025*
Prepaid expenses and deposits	$	17,355	$	24,177
Income tax receivable	149			111
Inventory	3,188			3,872
Contract asset	485			1,004
Assets held for sale	-			211
Prepaid expenses and other	$	21,177	$	29,375

Other Assets
Investments	$	2,012	$	2,012
Contract costs	2,538			2,252
Contract asset - long term	-			114
Total other assets	$	4,550	$	4,378

Accounts payable and accrued liabilities
Accounts payable	$	9,537	$	9,898
Accrued liabilities	23,546			25,374
Total accounts payable and accrued liabilities	$	33,083	$	35,272

Other Current Liabilities
Customer deposits	$	17,558	$	17,369
Accreditation fees payable	659			594
Income taxes payable	1,360			2,802
Total other current liabilities	$	19,577	$	20,765

Inventories

The components of the inventories as of March 31, 2026 and December 31, 2025 were as follows (Dollar amounts in thousands of U.S. dollars):

	*March 31,*		*December 31,*
	*2026*		*2025*
Raw materials	$	1,875	$	1,923
Finished goods		1,313		1,949
Total Inventories	$	3,188	$	3,872

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ITEM 2. 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, Euro and Indian Rupee; 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 generic top level domain (“gTLD”) expansion by the Internet Corporation for Assigned Names and Numbers (“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; our partnership arrangement with an affiliate of Generate (as defined below); 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 and preferred unit 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;

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	•	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.

Our Chief Executive Officer ("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 earnings before interest, tax, depreciation and amortization ("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 March 31, 2026 and March 31, 2025, we reported net revenue of $96.7 million and $94.6 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 March 31, 2026, Ting Internet had access to 126,000 owned infrastructure serviceable addresses, 123,000 partner infrastructure serviceable addresses and 57,000 active subscribers under its management; compared to having access to 133,000 owned infrastructure serviceable addresses, 54,000 partner infrastructure serviceable addresses and 52,000 active subscribers under its management as of March 31, 2025. These figures exclude any changes in serviceable addresses and accounts attributable to Simply Bits.

Wavelo

Wavelo includes the provision of full-service platforms and professional services providing a variety of solutions that support Communication Services providers ("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 Mobile Network Operating System ("MONOS") software to drive additional value within its Digital Operator Platform, and Ting integrating Wavelo’s Internet Service Operating System ("ISOS") and Subscriber Management ("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.

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Our primary distribution channel is a global network of more than 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 from renewals and positive operating cash flow.

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 21.5 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 2.8 million since March 31, 2025.

Value-Added Services include hosted email which provides email delivery and webmail access to millions of mailboxes, Internet security services, WHOIS privacy, 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 Hover, derives 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 – that 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 business websites.

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	March 31,
	2026		2025
	(in '000's)
Ting Internet accounts under management		57		52
Ting Internet owned infrastructure serviceable addresses ⁽¹⁾		126		133
Ting Internet partner infrastructure serviceable addresses ⁽¹⁾		123		54

⁽¹⁾

Defined as premises to which Ting has the capability to provide a customer connection in a service area.

Tucows Domains	March 31,
	2026		2025
	(in 000's)
Total new, renewed and transferred-in domain name registrations provisioned ⁽¹⁾		5,190		5,624
Domains under management		21,458		24,286

⁽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.

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Adjusted EBITDA

Tucows reports all financial information in accordance with 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 income 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 strategic 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.

In addition, as previously disclosed in a Current Report on Form 8-K filed with the Securities and Exchange Commission (“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 Ting Fiber LLC Amended and Restated Limited Liability Company Agreement, dated as of August 11, 2022 (the “LLC Agreement”), a Return Breach and a Trigger Event has occurred as a result of Ting’s failure to pay the quarterly preferred return for two consecutive quarters. Generate has 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 (a “Redemption Request”). As of the date of this report, Generate has not submitted a request for the redemption of all Series A Preferred Units nor sought to exercise any of its remedies under the LLC Agreement. Refer to “Note 19. Redeemable Preferred Units” to the Consolidated Financial Statements for further details.

Under the terms of the LLC Agreement, if Generate were to submit a Redemption Request following a Trigger Event, Ting would be required to redeem all outstanding Series A Preferred Units at the applicable redemption price within 30 days of such request, an estimated $204.9 million. As a result of this contractual provision, the Series A Preferred Units were reclassified from long-term to current liabilities in the Company’s Consolidated Balance Sheet as of December 31, 2025.

The Company does not believe that the Return Breach or Trigger Event has had a material adverse impact on Ting’s day-to-day operations, customer service or network performance. Ting continues to operate in the ordinary course while the Company evaluates strategic alternatives and engages in discussions with Generate.

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.

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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. The Company was subject to the minimum 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 continued to incur penalties until such a time that the term of the contract completed in January 2026. As of March 31, 2026, the Company accrued $0.2 million in penalties associated with the minimum commitment shortfall in the current period. Beyond the term of the contract, the agreement continues month-to-month thereafter, with no expected penalties in the month-to-month arrangement. However, if the Company seeks negotiation to renew the contract for an extended term in support of more favorable per-subscriber rates to improve the margin profile associated with the business, we may be bound by minimum commitments once again. These could be in excess of our customer-based usage, which could increase our cost of revenues and negatively impact our financial results.

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 months ended March 31, 2026 AS COMPARED TO THE three months ended March 31, 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 activated.

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.

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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

Wholesale - Domain 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 are recognized ratably over the registration period as domain registration contracts contain a ‘right to access’ license of IP, which is a distinct performance obligation measured 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.

Historically, our wholesale domain service has constituted the largest portion of our business and encompasses all of our services as an accredited registrar related to the registration, renewal, transfer and management of domain names. In addition, this service fuels other revenue categories as it often is the initial service for which a reseller will engage us, enabling us to follow on with other services and allowing us to add to our portfolio by purchasing names registered through us upon their expiration. We expect Domain Services will continue to be the largest portion of our business and will continue to enable us to sell add-on services.

The Company is an ICANN accredited registrar. Thus, 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.

Wholesale – Value-Added Services

We derive revenue from domain related value-added services like digital certifications, WHOIS privacy and hosted email and by providing 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.

We also derive revenue from other value-added services, which primarily consists of proceeds from storefront and domain expiry streams.

Retail

We derive revenues mainly from Hover and Enom’s retail properties through the sale of retail domain name registration and email services to individuals and small businesses. The retail segment also includes the sale of the rights to its portfolio of surname domains used in connection with our RealNames email service and Linux hosting services for websites through our Exact Hosting brand.

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 Segment Reporting ("ASC 280") and their results are presented as part of the All Other category.

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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):

(Dollar amounts in thousands of U.S. dollars)	For the Three Months Ended March 31,
	2026			2025

Ting:
Fiber Internet Services	$	17,128		$	16,315
Construction services		2,246			-
Total Ting		19,374			16,315

Wavelo:
Platform Services		11,561			11,396
Other professional services		-			-
Total Wavelo		11,561			11,396

Tucows Domains:
Wholesale
Domain Services		48,805			50,004
Value Added Services		5,460			5,903
Total Wholesale		54,265			55,907

Retail		9,835			9,348
Total Tucows Domains		64,100			65,255

Corporate and all other*:
Mobile services and eliminations		1,622			1,643

	$	96,657		$	94,609
Increase over prior period	$	2,048
Increase - percentage		2	%

*Corporate and all 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 all other for purposes of segment reporting. Intersegment revenues and expenses are eliminated in consolidation.

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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 March 31,
	2026			2025

Ting:
Fiber Internet Services		18	%		17	%
Construction services		2	%		0	%
Total Ting		20	%		17	%

Wavelo:
Platform Services		12	%		12	%
Other professional services		0	%		0	%
Total Wavelo		12	%		12	%

Tucows Domains:
Wholesale
Domain Services		50	%		53	%
Value Added Services		6	%		6	%
Total Wholesale		56	%		59	%

Retail		10	%		10	%
Total Tucows Domains		66	%		69	%

Corporate and all other*:
Mobile services and eliminations		2	%		2	%

		100	%		100	%

Total net revenues for the three months ended March 31, 2026 increased by $2.1 million, or 2%, to $96.7 million when compared to the three months ended March 31, 2025. The increase in net revenue was driven by Ting and Wavelo; partially offset by a decline in revenues from Tucows Domains and Mobile Services and eliminations. The Ting segment increased $3.1 million in the current period as a result of subscriber growth on our Fiber network across the United States, as well as new construction revenue in Laguna Woods Village, California, United States. The Wavelo segment increased $0.2 million in the current period primarily driven by increased revenues from both existing and new customers. The Tucows Domains segment decreased $1.2 million primarily driven by a decline in domain names under management.

Contract liabilities at March 31, 2026 increased by $4.9 million to $157.8 million from $152.9 million at December 31, 2025. This was primarily driven by Tucows Domains as a result of the increase in current period billings for domain name registrations and service renewals, characteristic of the seasonal renewal pattern we see during the beginning of a fiscal year. This was furthered by a small increase in Wavelo from deferral of bundled professional services available in select customer contracts, that will be recognized into revenue as we provide those services.

A customer, EchoStar, within our Wavelo segment accounted for 11.4% of total net revenue during the three months ended March 31, 2026 and 11.5% of total net revenues during the three months ended March 31, 2025. EchoStar accounted for 50% of total accounts receivable at March 31, 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 expected credit losses were $1.4 million and $1.3 million as of March 31, 2026 and December 31, 2025, respectively. 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 $19.4 million in net revenue during the three months ended March 31, 2026, up $3.1 million, or 19%, compared to the three months ended March 31, 2025. This growth is driven primarily by new construction revenue and service revenue from Laguna Woods Village, California, United States, as well as by subscriber growth across our Fiber network and the continued growth of available serviceable addresses in Ting towns throughout the United States.

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Wavelo

Platform Services

Net revenues from Wavelo Platform Services for the three months ended March 31, 2026, increased by $0.2 million, or 1%, to $11.6 million as compared to the three months ended March 31, 2025. The increase in net revenue is driven by incremental revenues from existing customers, as well as new customers. Wavelo revenues continue to benefit from our customer's own subscriber growth. 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 all other - Mobile Services and Eliminations.

Other Professional Services

Net revenues from Other Professional Services was NIL million for both the three months ended March 31, 2026 and the three months ended March 31, 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 can be expected to 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 March 31, 2026, Wholesale domain services net revenue decreased by $1.2 million, or 2%, to $48.8 million as compared to the three months ended March 31, 2025. Decreases from Wholesale domain registrations were driven by lower billings due to a decline in domain names under management since March 31, 2025.

As of March 31, 2026, together, the OpenSRS, ENom, EPAG, and Ascio Domain Services manage 21.5 million domain names under the Tucows, ENom, EPAG and Ascio ICANN registrar accreditations and for other registrars under their own accreditations. Domains under management was down by 2.8 million domain names, or 12%, since March 31, 2025, driven by some resellers migrating management of their domains in-house.

Wholesale - Value Added Services

During the three months ended March 31, 2026, value-added services net revenue decreased by $0.4 million, or 7%, to $5.5 million as compared to the three months ended March 31, 2025. The decrease in value-added service revenue was driven by both a reduction of expired names going to auction as well as a reduction in share of auction proceeds from the underlying auctioneer.

Retail

During the three months ended March 31, 2026, retail domain services net revenue increased by $0.5 million, or 5%, to $9.8 million as compared to the three months ended March 31, 2025. This was driven by increased retail names sales in the current period due to passthrough price increases driven by registry side cost increases.

Corporate and all other - Mobile Services and Eliminations

Net revenues from Mobile Services and eliminations for the three months ended March 31, 2026 decreased by less than $0.1 million to $1.6 million, as compared to the three months ended March 31, 2025. This decrease was a result of increased elimination impact for Intersegment revenues as underlying subscriber growth in both Ting and Mobile Services increases the revenues earned by Wavelo for providing platform services to these businesses.

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, the 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.

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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 all 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.

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The following table presents our cost of revenues, by revenue source:

(Dollar amounts in thousands of U.S. dollars)	For the Three Months Ended March 31,
	2026			2025

Ting:
Fiber Internet Services	$	6,620		$	5,837
Construction services		2,007			-
Total Ting		8,627			5,837

Wavelo:
Platform Services		326			137
Other professional services		-			-
Total Wavelo		326			137

Tucows Domains:
Wholesale
Domain Services		38,782			40,381
Value Added Services		320			480
Total Wholesale		39,102			40,861

Retail		4,253			4,179
Total Tucows Domains		43,355			45,040

Corporate and all other*:
Mobile services and eliminations		4,576			4,147

Network Expenses:
Network, other costs		5,868			5,175
Network, depreciation and amortization		9,775			10,742
		15,643			15,917

	$	72,527		$	71,078
Increase over prior period	$	1,449
Increase - percentage		2	%

*Corporate and all 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 all other for purposes of segment reporting. Intersegment revenues and expenses are eliminated in consolidation.

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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 March 31,
	2026			2025

Ting:
Fiber Internet Services		9	%		8	%
Construction services		3	%		0	%
Total Ting		12	%		8	%


Wavelo:
Platform Services		0	%		0	%
Other professional services		0	%		0	%
Total Wavelo		0	%		0	%

Tucows Domains:
Wholesale
Domain Services		54	%		57	%
Value Added Services		0	%		1	%
Total Wholesale		54	%		58	%

Retail		6	%		6	%
Total Tucows Domains		60	%		64	%

Corporate and all other*:
Mobile services and eliminations		7	%		5	%

Network Expenses:
Network, other costs		8	%		7	%
Network, depreciation and amortization		13	%		16	%
		21	%		23	%

		100	%		100	%

Total cost of revenues for the three months ended March 31, 2026, increased by $1.4 million, or 2%, to $72.5 million from $71.1 million in the three months ended March 31, 2025. The three-month increase in cost of revenues was driven by increases across Ting, Mobile Service and eliminations, and Wavelo of $2.8 million, $0.4 million, and $0.2 million, respectively. The increase in Ting of $2.8 million was driven by the costs of revenues associated with growth in active subscribers, as well as new costs associated with construction services. The increase in Mobile Services and eliminations of $0.4 million was primarily a result of higher mobile telephony services costs due to plan mix changes impacting usage in the current period. The increase in Wavelo of $0.2 million was primarily driven by the recognition of project costs related to bundled professional services. These increases were partially offset by decreases in Tucows Domains and Network Expenses of $1.7 million and $0.3 million, respectively. The decrease in Tucows Domains of $1.7 million was primarily driven by a decline in domain names under management. The decrease in Network Expenses of $0.3 million was primarily driven by depreciation of all non-network assets, some of which were previously depreciated in network depreciation, being reclassified to operating expenses.

Deferred costs of fulfillment as of March 31, 2026, increased by $4.8 million, or 4%, to $117.8 million from $113.0 million at December 31, 2025. This was primarily driven by Tucows Domains with an increase of $3.3 million from the increase in current period billings for domain name registrations and service renewals, characteristic of the seasonal renewal pattern we see during the beginning of a Fiscal Year. This was furthered by an increase in Ting of $1.4 million related to Laguna Woods Village, California, United States construction mobilization.

Ting

During the three months ended March 31, 2026, costs related to provisioning high speed Internet access for Ting and its subsidiaries - Cedar and Simply Bits, increased by $2.8 million, or 48%, to $8.6 million as compared to the three months ended March 31, 2025. This is aligned with the subscriber and serviceable address growth across our Fiber network, as well as new costs associated with construction services, consistent with the discussion in the Net Revenue section above. This was furthered by a one-time activation costs accounting adjustment.

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Wavelo

Platform Services

Cost of revenues from Wavelo Platform Services for the three months ended March 31, 2026 increased by $0.2 million, or 138%, to $0.3 million as compared to the three months ended March 31, 2025. This was primarily driven by the recognition of project costs related to providing bundled professional services to EchoStar.

Other Professional Services

Cost of revenues from Other Professional Services was NIL million for both the three months ended March 31, 2026 and for the three months ended March 31, 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 March 31, 2026, decreased by $1.6 million, or 4%, to $38.8 million, as compared to $40.4 million for the three months ended March 31, 2025. Decreases from Wholesale domain registrations were primarily driven by a decline in domain names under management since March 31, 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 March 31, 2026, decreased by $0.2 million, or 33%, to $0.3 million, as compared to $0.5 million for the three months ended March 31, 2025. This decrease was driven by a reduction in share commission rate, as well as a reduction in expiry names going to auction. This is aligned to the discussion in Net Revenues above.

Retail

Costs for retail domain services for the three months ended March 31, 2026, increased by $0.1 million, or 2%, to $4.3 million, as compared to $4.2 million for the three months ended March 31, 2025. Increases were driven by an increase in retail name sales as well as various registry gTLD cost increases. This is aligned to the discussion in Net Revenues above.

Corporate and all other - Mobile Services and Eliminations

Cost of revenues from Mobile Services and Eliminations for the three months ended March 31, 2026, increased by $0.4 million or 10%, to $4.6 million, as compared to $4.1 million for the three months ended March 31, 2025. The increase is primarily driven 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. The Company accrued $0.2 million in minimum penalties associated with the MNO minimum commitment shortfall in the three months ended March 31, 2026, as compared to $1.3 million in the three months ended March 31, 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, with no expected penalties in the month-to-month arrangement.

Network Expenses

Network expenses for the three months ended March 31, 2026, decreased by $0.3 million or 2%, to $15.6 million, as compared to $15.9 million for the three months ended March 31, 2025. The decrease was primarily driven by depreciation of all non-network assets, some of which were previously depreciated in network depreciation, being reclassified to operating expenses.

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 March 31,
	2026			2025
Sales and marketing	$	12,103		$	10,991
Increase over prior period	$	1,112
Increase - percentage		10	%
Percentage of net revenues		13	%		12	%

Sales and marketing expenses for the three months ended March 31, 2026 increased by $1.1 million, or 10%, to $12.1 million as compared to the three months ended March 31, 2025. The increase was primarily driven by marketing, commissions, and contracted labor spend as Ting ramps up marketing and customer acquisition efforts. This was furthered by a slight increase in contracted labor and marketing spend as Wavelo attempts to grow its pipeline and team in support of top line growth.

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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.

TUCOWS INC /PA/ 10-Q