2014

Tucows Reports Financial Results for the First Quarter of 2013

- Company Achieves Twelfth Consecutive Quarter of Record Revenue -

TORONTO, May 15, 2013 /PRNewswire/ - Tucows Inc. (NYSE AMEX: TCX, TSX:TC), a global provider of domain names and other Internet services, today reported its financial results for the first quarter ended March 31, 2013. All figures are in U.S. dollars.

Summary Financial Results
(In Thousands of US Dollars, Except Per Share Data) 

  3 Months Ended
Mar. 31, 2013
(unaudited)
3 Months Ended
Mar. 31, 2012
(unaudited)
Net revenue 29,985 27,537
Income before provision for income taxes and change in fair value of forward
exchange contracts 
431  1,950
Net income 77 1,664
Net earnings per common share $0.00 $0.04
Net cash provided by operating activities 416 2,081

Summary of Revenues and Cost of Revenues
(In Thousands of US Dollars)

  Revenue Cost of Revenue
  3 Months Ended
Mar. 31, 2013
(unaudited)
3 Months Ended
Mar. 31, 2012
(unaudited)
3 Months Ended
Mar. 31, 2013
(unaudited)
3 Months Ended
Mar. 31, 2012
(unaudited)
Wholesale        
  Domain Services 21,896 21,108 18,454 17,620
  Value-Added Services 2,689 2,689 562 507
Total Wholesale 24,585 23,797 19,016 18,127
         
Retail 4,266 1,849 2,861 930
Portfolio 1,134 1,891 201 210
         
Network, other costs - - 1,254 1,257
Network, depreciation and amortization costs - - 173 183
Total revenue/cost of revenue 29,985 27,537 23,505 20,707

"The first quarter was a solid start to 2013, highlighted by our twelfth consecutive quarter of year-over-year revenue growth to another record total," said Elliot Noss, President and Chief Executive Officer, Tucows Inc. "The consistency and reliability of the more mature parts of our business have helped us return capital to shareholders while launching new growth opportunities such as Hover a few years ago and, to a greater extent, Ting just last year.  Hover continues to generate healthy gross margins and year-over-year growth in excess of 20%. We are even more excited about Ting, which is now demonstrating real momentum.

Mr. Noss continued, "Everything on Ting is moving in the right direction. Our customer base grew by 2,000 in Q2 2012, 3,000 in Q3, 5,000 in Q4 and now over 6,300 in Q1 2013. Gross margin per account is growing as customers gain confidence in the service and add additional devices. More customers are referring more of their friends to Ting. Timelines are shortening between our network provider, Sprint, getting coveted devices like the HTC One and the Samsung Galaxy 4 and us offering these devices to our customers. With all these trends in our favor, we have every reason to believe our momentum will continue."

Net revenue for the first quarter of 2013 increased 9% to a record $30.0 million from $27.5 million for the first quarter of 2012.

Net income for the first quarter of 2013 was $0.1 million, or $0.00 per share, compared with $1.7 million, or $0.04 per share, for the first quarter of 2012.  The decrease was primarily the result of the incremental investment of approximately $1.0 million made in the first quarter of 2013 for the acquisition and support of Ting customers, as well as the negative impact of a loss on foreign exchange contracts of $0.2 million in the first quarter of 2013 compared with a gain on foreign exchange contracts of $0.6 million in the first quarter of 2012.  In addition, net income for the first quarter of 2012 benefitted from other income of $0.5 million resulting from the sale of certain intangible assets with no book value which was not repeated in the first quarter of 2013.

Deferred revenue at the end of the first quarter of 2013 was $72.4 million, a decrease of 1% from $73.0 million at the end of the first quarter of 2012 and an increase of 2% from $71.0 million at the end of the fourth quarter of 2012.

Cash and cash equivalents at the end of the first quarter of 2013 were $4.3 million compared with $6.4 million at the end of the fourth quarter of 2012 and $6.4 million from the end of the first quarter of 2012.  During the first quarter of 2013, the Company generated cash flow from operations of $0.4 million compared with $2.1 million for the same quarter of 2012.  The decrease in cash flow from operations is primarily attributable to changes in working capital, due mainly to the timing of payments in the normal course of business.  The Company used $6.5 million to repurchase shares under its modified "Dutch auction" tender that concluded on January 7, 2013, under which the Company repurchased 4,114,121 million shares at a purchase price of $1.50 per share.  The Company also used $0.8 million for principal repayments under its credit facility and invested $0.4 million in equipment purchases. The repurchase of shares was partially funded through a drawdown of $5.2 million on the Company's credit facility.

Conference Call

Tucows management will host a conference call today, Wednesday, May 15, 2013 at 5:00 p.m. (ET) to discuss the Company's first quarter 2013 results. Participants can access the conference call via the Internet at www.tucowsinc.com/investors.

For those unable to participate in the conference call at the scheduled time, it will be archived for replay both by telephone and via the Internet beginning approximately one hour following completion of the call. To access the archived conference call by telephone, dial 416-849-0833 or 1-855-859-2056 and enter the pass code 59299893 followed by the pound key.  The telephone replay will be available until Wednesday, May 22, 2013 at midnight. To access the archived conference call as an MP3 via the Internet, go to http://tucowsinc.com/investors.

About Tucows

Tucows is a global Internet services company. OpenSRS (http://opensrs.com) manages over fourteen million domain names and millions of value-added services through a reseller network of over 13,000 web hosts and ISPs. Hover (http://hover.com) is the easiest way for individuals and small businesses to manage their domain names and email addresses. Ting.com (https://ting.com) is a mobile phone service provider dedicated to bringing clarity and control to US mobile phone users. YummyNames (http://yummynames.com) owns and operates premium domain names that generate revenue through advertising or resale. More information can be found on Tucows' corporate website (http://tucows.com).

  Tucows  Inc.      
  Consolidated Balance Sheets      
  (Dollar amounts in U.S. dollars)      
         
    March 31,   December 31,
    2013   2012
    (unaudited)   (unaudited)
         
Assets        
         
Current assets:        
  Cash and cash equivalents $ 4,286,319 $ 6,415,679
  Accounts receivable   4,961,583   4,413,265
  Inventory   308,804   587,104
  Prepaid expenses and deposits   5,419,706   5,081,408
  Derivative instrument asset, current portion   83,622   412,944
  Prepaid domain name registry and ancillary services fees, current portion   46,207,926   45,170,167
  Income taxes recoverable   830,631   1,730,631
    Total current assets   62,098,591   63,811,198
         
Derivative instrument asset, long-term portion   -   31,838
Prepaid domain name registry and ancillary services fees, long-term portion   12,322,678   12,318,723
Property and equipment   1,675,546   1,352,144
Deferred tax asset, long-term portion   5,970,237   5,970,462
Intangible assets   16,146,218   16,415,651
Goodwill   18,873,127   18,873,127
    Total assets $ 117,086,397 $ 118,773,143
         
         
Liabilities and Stockholders' Equity        
         
Current liabilities:        
  Accounts payable $ 2,599,091 $ 1,928,459
  Accrued liabilities   1,998,027   2,522,229
  Customer deposits   4,394,250   4,955,671
  Derivative instrument liability, current portion   249,155   -
  Loan payable, current portion   8,100,000   3,700,000
  Deferred revenue, current portion   56,417,381   54,997,887
  Accreditation fees payable, current portion   561,259   512,847
  Deferred tax liability, current portion   850,039   914,429
  Income taxes payable   464,261   1,255,108
    Total current liabilities   75,633,463   70,786,630
         
Derivative instrument liability, long-term portion   26,611   -
Deferred revenue, long-term portion   16,002,554   16,002,464
Accreditation fees payable, long-term portion   141,179   145,592
Deferred rent, long-term portion   59,654   54,150
Deferred tax liability, long-term portion   5,206,200   5,234,100
         
Stockholders' equity:        
  Preferred stock - no par value, 1,250,000 shares authorized; none issued and outstanding   -   -
  Common stock - no par value, 250,000,000 shares authorized; 40,121,797 shares issued
and outstanding as of March 31, 2013 and 44,322,159 shares issued and outstanding as
of December 31, 2012
  9,297,924   10,084,417
  Additional paid-in capital   28,293,757   33,931,529
  Deficit   (17,433,264)   (17,509,843)
  Accumulated other comprehensive income (loss)   (141,681)   44,104
    Total stockholders' equity   20,016,736   26,550,207
Total liabilities and stockholders' equity $ 117,086,397 $ 118,773,143

      Tucows  Inc.  
      Consolidated Statements of Operations  
      (Dollar amounts in U.S. dollars)  
         
        Three months ended March 31,  
    2013   2012
      (unaudited)  
         
Net revenues $ 29,985,022 $ 27,537,306
         
Cost of revenues:        
  Cost of revenues   22,077,899   19,267,125
  Network expenses (*)   1,254,213   1,256,890
  Depreciation of property and equipment   137,072   147,418
  Amortization of intangible assets   35,910   35,910
    Total cost of revenues   23,505,094   20,707,343
         
Gross profit   6,479,928   6,829,963
         
Expenses:        
  Sales and marketing (*)   2,847,086   2,184,635
  Technical operations and development (*)   1,133,830   1,113,145
  General and administrative (*) (note 1)   1,698,632   1,783,453
  Depreciation of property and equipment   50,939   47,415
  Amortization of intangible assets   219,030   219,030
  Loss (gain) on currency forward contracts (note 1)   234,638   (562,109)
    Total expenses   6,184,155   4,785,569
         
Income (loss) from operations   295,773   2,044,394
         
Other income (expenses):        
  Interest expense, net   (99,362)   (40,969)
  Other income   -   508,800
    Total other income (expenses)   (99,362)   467,831
         
Income before provision for income taxes   196,411   2,512,225
         
Provision for income taxes   119,832   848,606
Net income   76,579   1,663,619
         
Other comprehensive income (loss), net of tax of $96,777   (185,785)   -
Comprehensive income (loss) for the period $ (109,206) $ 1,663,619
         
Basic earnings (loss) per common share $ - $ 0.04
         
Shares used in computing basic earnings (loss) per common share   40,331,438   46,221,465
         
Diluted earnings (loss) per common share $ - $ 0.03
         
Shares used in computing diluted earnings (loss) per common share   44,311,323   48,954,451
         
(Note 1) The Company accounts for the fair value of currency forward contracts within the consolidated Balance Sheet
as a derivative financial asset or liability and the corresponding change in fair value is recorded in the consolidated
Statement of Operations.  In prior periods, the Company recorded the realized gain or loss upon settlement of the
currency forward contracts in "General and administrative expenses" and recorded the unrealized gain or loss in
"Loss (gain) on change in fair value of forward contracts".  The Company has determined that both of these amounts
are more appropriately classified in expenses as "Loss (gain) on currency forward contracts" and as a result a gain of
$0.3 million for the three months ended September 30, 2011 and a gain of $1.1 million for the nine months ended
September 30, 2011, has been reclassified from "General and administrative expense" to "Loss (gain) on currency
forward contracts" respectively. As a result of this reclassification, there was no change to previously reported net
income (loss), income from operations, net revenues, gross profit, reported cash flows or the amounts recorded in the
consolidated Balance Sheets.      
         
         
(*) Stock-based compensation has been included in expenses as follows:        
  Network expenses $ 6,126 $ 6,046
  Sales and marketing $ 26,410 $ 22,782
  Technical operations and development $ 15,247 $ 12,843
  General and administrative $ 27,059 $ 20,794

      Tucows  Inc.  
      Consolidated Statements of Cash Flows  
      (Dollar amounts in U.S. dollars)  
         
      Three months ended March 31,  
    2013   2012
Cash provided by:     (unaudited)  
Operating activities:        
         
  Net income for the period $ 76,579 $ 1,663,619
  Items not involving cash:        
    Depreciation of property and equipment   188,011   194,833
    Amortization of deferred financing charges   -   1,500
    Amortization of intangible assets   254,940   254,940
    Deferred income taxes (recovery)   (92,065)   212,088
    Deferred rent   5,504   7,269
    Acquisition of domain names     (3,664)
    Disposal of domain names   14,493   15,738
    Gain on disposition of intangible assets     (508,800)
    (Gain) loss on change in the fair value of forward contracts   451,141   (701,843)
    Stock-based compensation   74,842   62,465
  Changes in non-cash operating working capital:        
    Accounts receivable   (548,318)   (1,014,729)
    Inventory   278,300  
    Prepaid expenses and deposits   (338,298)   (1,108,098)
    Prepaid fees for domain name registry and ancillary services fees   (1,041,714)   (2,919,423)
    Income taxes recoverable/payable   109,153   619,073
    Accounts payable   605,924   913,969
    Accrued liabilities   (524,202)   268,911
    Customer deposits   (561,421)   257,000
    Deferred revenue   1,419,584   3,823,832
    Accreditation fees payable   43,999   41,954
  Net cash provided by operating activities   416,452   2,080,634
         
Financing activities:        
  Proceeds received on exercise of stock options   38,509   130,712
  Repurchase of common stock   (6,537,616)   (5,893,447)
  Proceeds received on loan payable   5,200,000   4,000,000
  Repayment of loan payable   (800,000)   (538,333)
  Net cash used in financing activities   (2,099,107)   (2,301,068)
         
Investing activities:        
  Additions to property and equipment   (446,705)   (330,273)
  Proceeds on disposition of intangible assets     508,800
  Net cash provided by (used in) investing activities   (446,705)   178,527
         
Decrease in cash and cash equivalents   (2,129,360)   (41,907)
         
Cash and cash equivalents, beginning of period   6,415,679   6,408,209
Cash and cash equivalents, end of period $ 4,286,319 $ 6,366,302
         
Supplemental cash flow information:        
  Interest paid $ 99,504 $ 41,176
         
Supplementary disclosure of non-cash investing activity:        
  Property and equipment acquired during the period not yet paid for $ 161,223 $ 50,401

 

  

This release includes forward-looking statements as that term is defined in the U.S. Private Securities Litigation Reform Act of 1995 including statements regarding our expectations regarding our future financial results and, in particular, our expectations for Ting and its impact on our financial performance. 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, including the acceptance of Ting in the market.  Information about other potential factors that could affect Tucows' business, results of operations and financial condition is included in the Risk Factors sections of Tucows' filings with the Securities and Exchange Commission. All forward-looking statements should be evaluated with the understanding of their inherent uncertainty. All forward-looking statements are based on information available to Tucows as of the date they are made.  Tucows assumes no obligation to update any forward-looking statements, except as may be required by law.

TUCOWS is a registered trademark of Tucows Inc. or its subsidiaries. All other trademarks and service marks are the properties of their respective owners.

 

SOURCE Tucows Inc.



More by this Source


Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

 

PR Newswire Membership

Fill out a PR Newswire membership form or contact us at (888) 776-0942.

Learn about PR Newswire services

Request more information about PR Newswire products and services or call us at (888) 776-0942.