Tucows Inc. (NASDAQ:TCX) Q3 2022 Earnings Call Transcript

In each of these 3 cases, the actual multiples used will vary over time. We are spending time internally following each of these three areas, but there is no secret sauce here. We are simply tracking public information, which is readily available. If an investor or a potential investor asks me what multiple to use, I will remind them, they also have Google and can look up the current state of play themselves. I also wish to be clear that I’m sharing our thinking as capital allocators. You, the investor, value our stock every day in the market. I felt it important for you to understand how we view things as the sum of those 3 parts plus whatever is happening in a TCX level. It is also clear that on this basis, by even very conservative multiples, TCX is quite undervalued.

We know we are like every parent who thinks highly of their children, but we wanted those listening to know the basis for our belief. Finally, we are expecting a period of economic uncertainty. I would not call it a recession or expansion. There are factors like interest rates, geopolitical uncertainty, economic inequality, and of course, climate change that will be a drag on the global economy. There are also things happening in the economy primarily around the continued progress of technology that are creating significant growth opportunities. When you combine the above with the world entering a period where the impact of demographics will be a headwind for the first time in the modern history, you get uncertainty. In uncertainty, the most important thing to focus on is cash generation.

When times are good, cash generation is good but often undervalued. When times are uncertain, cash generation is great. For better or worse, across more than a quarter century, this is what we have done, focus on cash generation. If I had to set up 2023 with one thought, it would be to put our heads down and focus on efficiency and cash generation while feeding responsible growth. And with that, I look forward to your written questions and exploring areas that interest you in greater detail. Again, please send your questions to ir@tucows.com by Thursday, November 10, and look for our recorded Q&A audio response and transcript to this call to be posted to the Tucows website on Tuesday, November 22, at approximately 4:00 p.m. Eastern Time. Thank you.

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