2COWS (TCX) Q3 2025: EBITDA Jumps 53% as Ting Sale and CEO Transition Reshape Strategic Focus
2COWS’ third quarter marks a strategic inflection point, with adjusted EBITDA up sharply and a formal Ting divestiture process underway. The company is pivoting to focus on its core domains and Wavelow segments, as founder and CEO Elliot Noss announces his departure after nearly three decades. Investors should watch for execution on asset-light strategies and the implications of leadership and business model shifts as 2COWS enters a new era.
Summary
- Ting Divestiture Process Begins: 2COWS is actively pursuing a sale of its Ting ISP business, signaling a sharper focus on domains and Wavelow.
- Leadership Transition Unfolds: Founder Elliot Noss steps down as CEO, with Dave Warwick taking the helm and a clear emphasis on culture continuity.
- Margin Expansion and Capital Discipline: Adjusted EBITDA surges, while asset sales and reduced leverage strengthen the balance sheet for future investments.
Performance Analysis
2COWS delivered robust consolidated results in Q3 2025, with revenue up 7% year-over-year and gross profit growing at a faster 9% clip, underscoring margin expansion. Adjusted EBITDA soared 53% to $13.3 million, driven by operational improvements across all major segments. The company’s net debt continued its downward trajectory, falling for the sixth consecutive quarter and bringing net leverage below three times.
Segment performance highlighted diverging trends beneath the surface. Domains posted steady revenue and margin growth, particularly in wholesale and value-added services such as the expiry stream, even as domains under management fell due to a known customer migration. Wavelow maintained double-digit growth in both revenue and EBITDA, fueled by new rate cards and disciplined customer qualification. Ting achieved 11% revenue growth and sharply narrowed its adjusted EBITDA loss, but gross margins declined as partner market revenues with higher associated costs grew faster than owned markets.
- Wavelow’s Operating Discipline: Gross margin held at over 99% of revenue, reflecting a scalable SaaS model with tight cost controls.
- Domains’ Value-Added Leverage: Expiry stream and ancillary services drove a 21% YoY gross margin gain, offsetting volume declines from a major customer exit.
- Ting’s Capital-Light Shift: Asset sales generated $8.5 million in Q3, supporting deleveraging and funding the pivot to a partner-led, less capital-intensive ISP model.
Non-cash impairment charges and asset recycling were notable, as the company wrote down $10.9 million at Ting to reflect its evolving business model and recognized $4 million in gains from asset divestitures. Cash flow remained positive, and the company ended the quarter with $70.8 million in cash and restricted cash, positioning it for flexibility as strategic changes accelerate.
Executive Commentary
"First, I noted last quarter that we were evaluating strategic paths for Ting, and I will share that we are formally involved in a process for the Ting business. We believe that the sale of Ting will strengthen 2Cows in the long term by enabling it to focus on its domain and wave low businesses, even though 2Cows does not expect to realize significant profit, if any, from the sale of Ting, given its asset-based debt and preferred share obligations."
Elliot Noss, President and Chief Executive Officer
"With 39.5 million of adjusted EBITDA generated through Q3, we are well on track to achieve our full-year adjusted EBITDA guidance of 47 million. Organizational-wide execution, cost discipline, and adoption of AI are the key levers. In summary, Q3 shows continued momentum of top-line growth, expanding adjusted EBITDA, and disciplined capital management."
Ivan Ivanov, Chief Financial Officer
Strategic Positioning
1. Ting Divestiture and Strategic Refocus
2COWS is formally pursuing a sale of Ting, its fiber and partner ISP business, marking a decisive move to streamline the company around its domains and Wavelow segments. Management expects little to no profit from the sale due to debt and preferred equity obligations, but sees long-term value in focusing resources and leadership attention on core, higher-margin businesses.
2. Domains Platform: Margin Resilience Amid Volume Headwinds
The domains segment continues to demonstrate operating leverage, with value-added services like expiry stream auctions offsetting declines in domains under management and transaction volumes. The impact of a major wholesale customer migrating portfolios in-house is expected to subside after Q4, positioning the segment for normalized growth into 2026. Partnerships with NIXI and Radix could expand managed domains to nearly 17 million, reinforcing the platform’s scale.
3. Wavelow’s Differentiated SaaS Model
Wavelow’s modular, enterprise-grade BSS/OSS platform is benefitting from telecom operators’ need for flexible, modern alternatives to legacy systems. The business is seeing rising RFI and RFP activity, especially for AI-focused legacy replacement projects, and is prioritizing higher-value, transformational customers over smaller deals. Early systems integrator partnerships are beginning to deliver qualified pipeline, supporting both distribution and delivery efficiency.
4. Asset-Light and Capital Efficiency Execution
Across the group, capital discipline is a pronounced theme. Ting’s pivot to a partner-led model reduces capital intensity, with asset divestitures freeing up $20.8 million year-to-date. The company’s net leverage and interest coverage have improved, and deferred preferred returns at Ting preserve cash for operational priorities. This approach aims to balance growth with risk management as the company transitions leadership and business mix.
Key Considerations
2COWS’ Q3 is defined by a convergence of operational execution, portfolio reshaping, and leadership transition. Investors must weigh the implications of Ting’s exit, the durability of domains and Wavelow’s growth, and how the new management team will sustain culture and discipline.
Key Considerations:
- Execution on Ting Sale: The outcome and timing of the Ting divestiture will directly impact capital allocation and future earnings quality.
- Domains Segment Volume Recovery: Watch for stabilization in domains under management and the full-year impact of the customer migration rolling off in 2026.
- Wavelow’s Pipeline Conversion: The pace of RFP wins and expansion of systems integrator channels will determine whether Wavelow can sustain double-digit growth and margin profile.
- Leadership Continuity and Culture: Dave Warwick’s transition to CEO and the retention of key leaders will be tested as the company navigates a new era without its founder.
- Capital Allocation and Balance Sheet: Continued deleveraging and cash conservation are critical as the company retools its business mix and invests in growth levers.
Risks
The Ting sale process introduces uncertainty, especially as the company does not expect significant profit on the transaction and must manage associated debt and preferred equity obligations. Domains faces ongoing volume and renewal rate headwinds from customer churn, while Wavelow’s growth depends on telecom capex cycles and the successful execution of its systems integrator strategy. Leadership transition risk is elevated as founder Elliot Noss steps back, placing pressure on the new team to maintain culture and operational rigor.
Forward Outlook
For Q4 2025, 2COWS guided to:
- Continued top-line growth and margin expansion in domains and Wavelow
- Completion of the Ting customer migration impact and further asset-light execution
For full-year 2025, management maintained guidance:
- Adjusted EBITDA of $47 million
Management highlighted several factors that will shape results:
- Completion of Ting asset sales and formalizing the divestiture outcome
- Normalization of domains segment volumes post-customer migration
Takeaways
2COWS enters a pivotal phase, with its Q3 results demonstrating both operational momentum and foundational change. The company’s ability to execute on its asset-light pivot, sustain margin gains in its core businesses, and manage through a major CEO transition will define its trajectory into 2026.
- Margin Leverage and Capital Returns: Asset sales and improved EBITDA support deleveraging and future investment capacity.
- Strategic Refocus and Leadership Handover: The Ting sale and CEO succession signal a sharper, more disciplined business model, but execution risk rises in the near term.
- Watch For: Updates on Ting divestiture, domains volume stabilization, Wavelow’s contract wins, and evidence that new leadership can maintain culture and discipline.
Conclusion
2COWS’ Q3 was marked by strong operational results and a decisive strategic pivot, as the company moves to divest Ting and transitions to new leadership. The focus now shifts to execution on its core platforms and the ability to sustain momentum amid foundational change.
Industry Read-Through
2COWS’ experience highlights several industry currents: The shift to capital-light models in telecom and ISP businesses is accelerating, with asset recycling and partner-led expansion emerging as preferred strategies for margin resilience. The domains industry continues to consolidate around platforms that can pair scale with value-added services, while SaaS providers like Wavelow are gaining traction as legacy BSS/OSS replacement cycles intensify. Leadership transitions and portfolio reshaping are likely themes across tech and communications as companies seek to unlock value and streamline for growth in a slower macro environment.